TR Daily As Trial Winds Down, DoJ, FCC Tout Benefits of T-Mobile Merger
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Friday, December 20, 2019

As Trial Winds Down, DoJ, FCC Tout Benefits of T-Mobile Merger

As a two-week trial winds down in the U.S. District Court for the Southern District of New York on a legal challenge filed by state attorneys general seeking to block T-Mobile US, Inc.’s proposed acquisition of Sprint Corp., the Department of Justice and the FCC today argued in a filing that a verdict in favor of the state AGs would result in harm to consumers.

“The United States, through the Department of Justice’s Antitrust Division and the FCC, investigated the proposed merger of T-Mobile US, Inc. (‘T-Mobile’) and Sprint Corporation (‘Sprint’). The Antitrust Division (along with a number of state Attorneys General) and the FCC concluded that consumers would benefit from the combination of T-Mobile and Sprint accompanied by the divestitures and other relief the Antitrust Division (in its proposed Final Judgment) and the FCC (in its order) secured to protect competition and promote the public interest,” said the filing, which was submitted in “State of New York et al. v. Deutsche Telekom AG et al.” (case 1:19-cv-05434-VM-RWL). “This outcome benefits consumers through the combination’s enhanced output—the increased availability of a higher quality mobile wireless network for consumers. Specifically, T-Mobile has committed to providing 5G coverage to 85% of the rural population within three years, and 90% of the rural population within six years. In addition, the relief the Antitrust Division and the FCC secured will maintain the competitive structure of the industry through a substantial divestiture of assets from T-Mobile to DISH Network Corporation (‘DISH’), which has committed to building a nationwide network that will put its idle spectrum holdings into use by mobile wireless consumers for the first time. As a result, the relief the Antitrust Division (and a number of state Attorneys General) and the FCC secured means consumers in rural areas will gain new access to high quality 5G networks and consumers nationwide will continue to have four fully competitive options for their mobile wireless services.”

The filing continued, “A group of thirteen states and the District of Columbia (the ‘Litigating States’) seek to block the merger in its entirety. In doing so, they ask this court to undo the benefits of the relief secured by the Antitrust Division (and our fellow state Attorneys General) and the FCC. The Litigating States face a high bar in their challenge. To win a permanent injunction that would block the merger, they must convince the court their request to block the merger in its entirety is in the public interest, among other obstacles. In other words, they must convince this honorable court that it is not merely acceptable, but beneficial to the public, to deprive consumers nationwide of a higher quality T-Mobile network and DISH’s commitment to build a nationwide retail mobile wireless network, and to deprive consumers in rural states, which have disproportionately chosen to support the Antitrust Division’s settlement rather than join in this litigation, of new access to 5G networks. Indeed, that the Litigating States’ proposed remedy will affirmatively harm consumers in rural states by denying them these benefits weighs strongly against a nationwide injunction.”

The filing added, “In determining whether to grant the Litigating States’ requested injunction, this court need not choose between a nationwide injunction and a merger unimpeded by any relief. The Antitrust Division and the FCC already have secured substantial relief to address harm to competition threatened by the merger—relief directly relevant to the inquiry into whether the Litigating States’ proposed injunction is necessary. Thus, the key question is whether any additional relief is necessary to protect competition and advance the public interest. Finally, a nationwide injunction would block not only the transaction, but also the substantial, long-term, and procompetitive benefits for American consumers the Antitrust Division and the FCC concluded will flow from the merger and the relief each secured. 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, and thus their conclusions that the merger as remedied is in the public interest deserve appropriate weight in this remedy inquiry by this honorable court.”

Meanwhile, Blair Levin, an adviser to New Street Research LLP and a former FCC chief of staff, suggested in a research note today that the chances of a settlement of the case might be a little higher because the judge has scheduled closing arguments in the case for after the holidays.

Mr. Levin said that “we think the case is close and both sides probably think they are winning but know there is a material risk that they will lose. In such a situation in a commercial litigation, we would see the prospects of settlement as fairly high. We do not see the odds as high here but think a settlement is slightly more possible than in a situation in which one side or the other appeared to be way ahead.” —Paul Kirby, [email protected]

MainStory: MergersAntitrust Courts WirelessDeployment

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