Home DoJ T-Mobile/Sprint merger faces big trouble at DOJ, despite FCC approval

T-Mobile/Sprint merger faces big trouble at DOJ, despite FCC approval

T-Mobile CEO John Legere and Sprint CEO Marcelo Claure speak during an interview.
Enlarge / T-Mobile CEO John Legere (left) and then-Sprint CEO Marcelo Claure during an interview on the floor of the New York Stock Exchange on April 30, 2018.

The Department of Justice’s antitrust staff has recommended blocking T-Mobile’s attempted purchase of Sprint, Reuters reported today, citing an anonymous source.

DOJ staff “fear that after the deal T-Mobile will no longer aggressively seek to cut prices and improve service to woo customers away from market leaders Verizon and AT&T,” Reuters wrote. A final decision is expected to come in about a month.

To block the merger, the DOJ would have to sue in federal court and convince a judge that the merger violates antitrust law. DOJ staff recommendations can influence agency decisions on whether to file antitrust lawsuits, but aren’t automatically followed. The DOJ’s decision will be made by antitrust chief Makan Delrahim, a Trump appointee.

Delrahim “is leaning against the merger,” Bloomberg reported yesterday. According to Bloomberg’s sources, the DOJ “is concerned the remedies don’t go far enough to resolve concerns that the combination of the No. 3 and No. 4 wireless carriers would hurt competition.”

T-Mobile has already gotten merger approval from Federal Communications Commission Chairman Ajit Pai, and the FCC’s Republican majority will almost certainly follow Pai’s lead.

Pai says that the merger’s anti-competitive harms can be remedied with conditions, such as forcing Sprint to divest its reseller subsidiary, Boost, and requiring T-Mobile to give Boost wholesale access to its network. Pai also proposed requirements that the merged company raise mobile speeds and deploy 5G throughout most of the US—but both T-Mobile and Sprint were planning to do that anyway regardless of whether they merge.

Delrahim has spoken out against using conditions to fix problems in mergers that should be blocked outright. Delrahim said in a 2017 speech that he’s skeptical of “allowing illegal mergers to proceed subject to certain behavioral commitments,” because “instead of protecting the competition that might be lost in an unlawful merger, a behavioral remedy supplants competition with regulation; it replaces disaggregated decision making with central planning.”

“Antitrust is law enforcement, it’s not regulation,” Delrahim also said.

Delrahim previously sued AT&T in an attempt to block the AT&T/Time Warner merger, but lost in court. Delrahim hasn’t announced any decision on T-Mobile/Sprint yet; he said in late April that he hasn’t made up his mind.

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