Public Knowledge: DOJ Should Follow Staff Recommendation, Block T-Mobile/Sprint MergerMay 22, 2019
This morning, Reuters reported that the career attorneys at the Department of Justice Antitrust Division have recommended the agency file a lawsuit to block the proposed T-Mobile/Sprint merger. This reporting follows Monday’s announcement by Federal Communications Commission Chairman Ajit Pai that he would recommend the FCC approve the deal. State Attorneys General and the California Public Utilities Commission also continue to review the transaction. Public Knowledge opposes the transaction as a member of the 4Competition Coalition, filed a Petition to Deny with the FCC, and testified against the deal on Capitol Hill.
The following can be attributed to Phillip Berenbroick, Senior Policy Counsel at Public Knowledge:
“If accurate, this morning’s report that the expert antitrust attorneys at the Department of Justice have recommended that DOJ file a lawsuit to block the T-Mobile/Sprint transaction is a welcome sign for wireless consumers. The public record is clear that permitting T-Mobile to acquire Sprint will harm consumers and substantially reduce competition and innovation in the wireless market. This transaction is not even a close call under the DOJ’s prior precedents and Section 7 of the Sherman Act, and the Department of Justice should file suit to block the deal.
“Earlier this week, the FCC announced it was likely to approve the transaction with mild conditions. As we noted, Chairman Pai’s statement endorsing the merger omitted any reference to competition issues or the DOJ’s ongoing review. The standards of review for mergers under the antitrust laws and the Communications Act are very different, but the FCC traditionally incorporates competition analysis into its merger review. However, the FCC’s proposed behavioral conditions do nothing to remedy the dramatic harms to consumers and competition that would result from allowing the wireless market to consolidate down to only three nationwide carriers.
“The wireless market is already ‘highly concentrated’ under the DOJ’s Horizontal Merger Guidelines, and the transaction would cause such significant additional concentration that the merger was presumptively illegal when filed. A combined T-Mobile/Sprint would have enhanced market power to raise prices, leaving retail consumers to pay higher prices and have fewer choices in the marketplace. These higher prices would fall especially hard on low-income and prepaid customers who are least likely to be able to afford to pay higher prices and most likely to rely entirely on their mobile subscription for internet access.
“Further, the transaction will also harm competition in the wireless market, likely impeding the ability of smaller and rural telecommunications providers to serve their customers and increasing the barriers to new market entry. These harms would leave consumers paying higher prices and with less access to wireless service, particularly in rural areas.
“In 2011, the DOJ rightly concluded that allowing further consolidation in the wireless market would mean ‘customers of mobile wireless telecommunications services likely will face higher prices, less product variety and innovation, and poorer quality services due to reduced incentives to invest than would exist absent the merger.’ The DOJ’s analysis was correct then, and continues to be true today.”