T-Mobile / Sprint merger in court –
States blast DOJ and FCC as T-Mobile / Sprint merger case nears finish.
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Enlarge/The logo of Deutsche Telekom, owner of T-Mobile, seen at Mobile World Congress in February (in Barcelona, Spain.) ***************** Getty Images | NurPhoto The United States government approved the T-Mobile / Sprint merger without fully investigating whether the deal’s anti-competitive harms can be offset by merger conditions, state attorneys general argued in a court filing.
The US Department of Justice and Federal Communications Commission both found that the merger would harm consumers, a group of states that are trying to block the merger pointed out in acourt filinglast week. The DOJ and FCC approved the deal with conditions they claim will make the merger good for consumers, but the states say both US agencies failed to properly evaluate whether the conditions are likely to achieve that goal.
The US approved the merger on the conditions that the merging companiesdeploy 5G nationwideand sell spectrum licenses and other assets to Dish Network tohelp Dish create a new mobile service. With states having sued the companies to block the merger, the DOJ and FCC last monthurged the courtto reject the lawsuit andtrust the federal government conclusions.“I don’t think I’m smart enough”
The DOJ and FCC did do enough research to overcome Delrahim’s skepticism of merger conditions, the states argued: (************************************
**************** DOJ conducted an initial investigation of the proposed merger in cooperation with the Plaintiff States, and concluded that the merger “would substantially lessen competition and harm consumers.” Yet DOJ then agreed to the merger subject to certain conditions, without the benefit of formal discovery on whether, when, and under what circumstances the merging companies and Dish might fulfill those conditions. Similarly, the FCC recognized that the merger would likely lead to significant price increases, and it approved the merger only subject to conditions. The FCC has not, however, approved conditions related to Dish or license transfers as called for by the DOJ settlement; some of those conditions remain pending and some have not even been formally proposed. Moreover, the FCC has not undertaken the sort of extensive investigation of the likelihood that the merging companies and Dish will fulfill the merger-approval conditions that the Plaintiff States have undertaken.
“[O] nly a small fraction of the merged company assets will be sold to Dish; Dish has no experience in the wireless market and a history of broken promises; and Dish will be dependent on the new T-Mobile’s network and will lack the scale needed for long-term success as a national wireless provider, “they wrote.
While the US government “agreed to the merger based on conditions it had not thoroughly investigated and with incomplete information,” the states “conducted a far deeper investigation of the proposed merger remedies in this litigation, including extensive document discovery, sworn testimony, and expert economic analyzes,” the states’ filing said. The states conducted “an intensive – – month investigation “into the merger, they wrote.“For example, the Plaintiff States procured additional documents from Deutsche Telekom, the controlling shareholder of both current T-Mobile and the potential new T-Mobile; deposed three Deutsche Telekom executives; and examined two of those executives at trial, including CEO Timotheus Höttges, who acknowledged under oath that reducing price competition was one of the reasons for the T-Mobile-Sprint merger, “the filing said.The merger is being challenged by New York, California, Connecticut, the District of Columbia, Hawaii, Illinois, Maryland , Massachusetts, Michigan, Minnesota, Oregon, Pennsylvania, Virginia, and Wisconsin. They sued the merging companies in US District Court for the Southern District of New York. Testimony in the trial ended last month (***************. Closing arguments are scheduled for Wednesday this week.Sides await court rulingThe DOJ / FCC brief that the states were responding to argued that the court should defer to the federal agencies’ expertise because they examine the market from a nationwide level rather than from a state-by-state perspective.“Both the Antitrust Division and the FCC have significant experience and expertise in analyzing these types of transactions and do so from a nationwide perspective, “the federal agencies wrote. “Thus, their conclusions that the merger as remedied is in the public interest deserve appropriate weight in this remedy inquiry by this honorable court.”
In response, the states pointed out that they represent more than 40 percent of the US population and that “[t] here is no serious option of providing relief on a less-than-nationwide basis.” The state attorneys general wrote that blocking the merger “is the only relief that will protect the public interest.”
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