DOJ’s Proposed T-Mobile/Sprint Merger Remedy Puts Consumers, Competition at Risk, State AGs Should Continue LitigationJuly 26, 2019
After more than a year of review, the Department of Justice announced today that it has approved the proposed T-Mobile/Sprint merger, the divestiture of prepaid brands and customers, as well as several side agreements designed to accelerate Dish Network’s entry into the wireless market.
The Federal Communications Commission’s Chairman Ajit Pai and the agency’s Republican commissioners said in May they plan to approve the merger — leaving consumers with only three facilities-based competitors. Fourteen state attorneys general, led by New York Attorney General Letitia James and California Attorney General Xavier Becerra, rejected the FCC’s reasoning and filed a multi-state lawsuit to block the merger. The states’ lawsuit will now proceed in the Southern District of New York, and is scheduled for trial in October.
The following can be attributed to Phillip Berenbroick, Policy Director at Public Knowledge:
“Allowing T-Mobile to acquire Sprint and consolidate the wireless market from four competitors to three would inevitably mean higher prices for consumers and a less competitive and dynamic marketplace. When the FCC tried to sell consumers short, the state Attorneys General stepped in and stood up for real competition in the wireless market. The good news is that the DOJ firmly rejects the FCC’s rubber-stamp approach and affirms the need for four nationwide, facilities-based wireless providers. The proposed consent decree concedes that the state AGs are right — letting the national market go from four players to three would create a tight oligopoly that would keep prices high and new competitors out.
“The bad news is that rather than simply reject the deal, the DOJ proposes a risky bet on creating a new facilities-based competitor. This creates significant potential that consumers will be left with a substantially less competitive marketplace with higher prices, lower service quality, and less innovation. As we understand at this time, the consent decree includes extensive behavioral conditions on T-Mobile to facilitate Dish’s entry into the wireless market. We remain concerned, as with any behavioral conditions, there is considerable risk that these conditions will be ineffective or unenforced, leaving consumers to bear the costs.
“Sprint is a significantly stronger competitor today than a new fourth competitor could be for the foreseeable future. The struggles that Dish and other would-be new entrants have consistently faced underscore that even with the best of intentions and a full commitment to deploy and compete, nothing is certain. Consumers will face considerable harm if the marketplace does not develop as the DOJ envisions.
“In short, the state AGs should continue their lawsuit. While we applaud the DOJ’s efforts to protect consumers and facilitate necessary competition, we remain concerned that consumers face considerable risk of a substantially less competitive marketplace. Based on what we know of the proposed consent decree, blocking the transaction remains the best way to preserve competition and prevent consumer harm.
“In the meantime, the FCC should put the new proposed transaction out for public scrutiny and comment. Public Knowledge will continue to challenge any transaction that falls short of the competition consumers enjoy today, and we urge the public to continue the fight at the FCC and comment on the DOJ’s proposed consent decree as well.”