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DOJ Antitrust Boss Delrahim Ignored Hard Data As He Rubber Stamped T-Mobile Merger

from the dysfunction-junction dept

Technically, the head of the DOJ’s antitrust division, Makan Delrahim, is supposed to enforce antitrust law and derail harmful monopolies when they arise. But that’s certainly not what’s happening with the DOJ review of T-Mobile’s $26 billion merger with Sprint, which antitrust experts (and even the DOJ’s own economists) have repeatedly warned will indisputably reduce competition, raise rates, and result in thousands of layoffs as duplicative positions are eliminated.

As state AGs continue their lawsuit to stop the merger, details were revealed last week in court showing that Delrahim did everything in his power to help shovel the deal through the merger approval process, including providing T-Mobile tips (via both personal and business accounts) on which officials they should focus their lobbying attention on in order to get the deal across the finish line:

“As the $26 billion blockbuster merger between T-Mobile and Sprint teetered this summer, Makan Delrahim, the head of the Justice Department?s antitrust division, labored to rescue it behind the scenes, according to text messages revealed this week in a lawsuit to block the deal.

Mr. Delrahim connected company executives with the F.C.C. and members of Congress. And he gave executives insight into the thinking of Ajit Pai, the chairman of the F.C.C. who would also have to approve the merger.

He is ?open and willing? to discussions about the deal, Mr. Delrahim said in one text message in June, a month before regulators blessed the transaction.”

Delrahim’s job is to look at the evidence and protect markets where necessary, not help companies push deals that erode competition, harm workers, and hurt markets. Keep in mind, past deals just like this one (AT&T/T-Mobile 2011, T-Mobile/Sprint 2014) were blocked because the harm was so obvious there was simply no way to justify it. This latest merger is no different, yet government officials have stopped even pretending to care. They’re intent on shoveling this turd of a deal across the finish line at all costs at the behest of T-Mobile, Sprint, and Japan’s Softbank.

The FCC rubber stamped the merger before Commissioners had even seen their own staff’s full economic analysis. FCC staffers privately met with T-Mobile numerous times to massage their underlying and fragile arguments. Former FCC officials (Clyburn, McDowell) have happily lobbied on T-Mobile’s behalf, and T-Mobile executives ramped up patronage of Trump’s DC hotels to curry favor with the administration. That’s all capped off by Delrahim all but putting out runway lights for T-Mobile in a bid to shine up a deal that, again, is going to be indisputably bad for consumers and the market.

Former FCC staffers like Gigi Sohn were not what you’d call impressed:

To justify its mindless rubber stamp of the deal, the DOJ has pushed forth a shaky plan that involves giving Dish Network some spectrum (and prepaid brand Boost Mobile), then just hoping the company can build a replacement fourth wireless carrier over the next 7 years. But with T-Mobile, Verizon, and AT&T all heavily incentivized to make sure a strong fourth competitor never emerges, Dish having a reputation for empty promises and bluster, and regulators largely captured by industry players (who again, want less competition to boost revenues) few serious analysts actually think the plan’s going to work.

This is, of course, the same DOJ that folks seriously hope will come in and “fix big tech” via an ocean of new antitrust inquiries. But it’s pretty damn clear this DOJ doesn’t actually give a damn about those responsibilities, and has been largely captured by the telecom industry under former Verizon lawyer Bill Barr. And while US corruption is nothing new, we seem to be entering a new era where we can’t even be bothered with the faintest pretense to the contrary.

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Companies: sprint, t-mobile

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Comments on “DOJ Antitrust Boss Delrahim Ignored Hard Data As He Rubber Stamped T-Mobile Merger”

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60 Comments
Anonymous Anonymous Coward (profile) says:

Click your heels three times...

When members of congress conflate big tech with telecom how could we expect the DoJ to be able to tell the difference. When the demands for anti-trust come down, Makan Delrahim will just ask Ajit Pai what to do. In that case, we can expect that enforcement will happen when big tech overlaps with some of the telecom’s new businesses, like entertainment or maybe instant messaging.

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Anonymous Coward says:

Re: laws ?

Fair an Just laws require clarity.

Exactly what "criminal behavior" has T-Mobile/Sprint committed that authorizes any government agency to forcibly block their voluntary merger ??

U.S. AntiTrust Law is couched in vague, indefinable terms — permitting the government and its courts to omit defining in advance what is a "monopolistic" or "anti-competitive" crime… and what is not.

Basic Anglo-Saxon law rests on a structure of clear definitions of crime, known in advance and discoverable by a jury after due legal process.
But U.S. antitrust laws thrive on deliberate vagueness and ex post facto rulings.
No businessman knows when he has committed an antitrust crime and when he has not — and he will never know until some government bureaucrat arbitrarily decides to swoops down upon him and prosecute.

AntiTrust law is bunk and primarily used to bludgeon politically disfavored businesses.
Government itself is the ultimate monopoly and restrainer of market competition … and yet beloved by the antitrust enthusiasts.

This comment has been deemed insightful by the community.
Anonymous Anonymous Coward (profile) says:

Re: Re: laws ?

Wouldn’t there be something about a DoJ department head aiding and abetting the target of an investigation? While it is a transaction being investigated rather than an individual or a corporation, the investigators should not be assisting the transaction they are supposed to be investigating. But, as you point out, laws are not necessarily clear making me unsure of what law might have been transgressed.

Anonymous Coward says:

Re: Re: laws ?

obviously a paid shill or lobbyist for Telecom industry…

they can pay so much to spread FUD, but can’t be bothered to actually follow the contracts and agreements they have signed. Their word means nothing and they will not follow through on anything they promise, yet due to the significant bribes being paid, this will not change.

Anonymous Coward says:

Re: Re: "will indisputably reduce competition"

"nope, that is highly disputable speculation by anonymous "experts"."
Which of the following have already happened?
1) reduce competition
2) raise rates
3) thousands of layoffs

""Competition" is not a measurable "quantity""
Who said it was?

"spontaneously occurs in free markets"
That would be quite the trick if there was such a thing as a free market.

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That One Guy (profile) says:

Uhhh...

This is, of course, the same DOJ that folks seriously hope will come in and "fix big tech" via an ocean of new antitrust inquiries. But it’s pretty damn clear this DOJ doesn’t actually give a damn about those responsibilities, and has been largely captured by the telecom industry under former Verizon lawyer Bill Barr.

That being the same industry that’s been using ‘big tech’ as a distraction/punching bag in order to draw attention away from themselves? The one that effectively owns at the very least the DOJ’s anti-trust division?

I’m pretty sure they’d be very interested in and energetic about those ‘responsibilities’ when it comes to the likes of Google and Facebook, even if they ignore them when dealing with AT&T and friends.

Anonymous Coward says:

Nothing has greater effect than money. I have to wonder how much it took to make Delrahim give this his approval, knowing full well what is going to happen to jobs, prices etc? I also have to adk if there is a single person heafing up any government dept or agency eho is actually doing what they are supposed to? This merger ‘go ahead’ stinks and everyone knows it!

James Burkhardt (profile) says:

Re: Just to ask..

Since you seem unaware of basic finance, I might suggest avoiding commentary in the future.

In the case of a buyout, The purchase price is paid to the owners of the company being bought. Basic capitalism 101, if you buy something the owners get paid. Sprint is a Public corporation, which means ts owners are the stockholders. Therefore, if T-Mobile purchases Sprint, the stockholders get a share of the sale price based on their percentage of ownership (how much stock they own and what kind of stock they own). The specifics change company to company.

This income is then taxed as a capital gain on the tax returns of those who owned the stock.

This is considered a expense for t-mobile. They are buying assets. They are capitalized and expensed over a period of time, based on the type of asset and expected useful life. And while that expense does reduce their tax burden, they also must pay taxes on the new income that comes in. In theory, they carry over a similar profit or loss as Sprint would have had. In fact, on balance, they likely owe more, because they pair down the expenses when they work out all the excess labor and storefront leasing. The big issue is the tax advantages of the loan they will take out, and the ability to take advantage of more deductions by having more assets, rather than the purchase itself.

ECA (profile) says:

Re: Just to ask..

Also,
The idea of over paying and showing a Loss for the next 10 years..
Which would probably make it a free purchase and very little tax, as they get to write off the Loss.

Which has little to do with the Infrastructure they are paying for… And wont update/fix/repair, and then Write off estimated costs as Future loss’s..

So how about Finance and capitalism 102. or havnt you been watching this for the last 40+ years.,

ECA (profile) says:

Is it time..

for the States to install their OWN versions of the backbone, Fiber, Cellphone system, Internet…?

the only really stupid thing I see here, tends to be that they are creating a mess, and hoping the Gov takes it, and fixes all the old crap, and improves it, then Gives it back to them.
The Old telephone system was Very limited. and I think those running it now, tend to get tired of re-building the system as tech changes, about every 10-20 years.

Scrap it all and start over.
Make it better, Make it all integrated, and Make it work.
But dont give it back to the corps..
USE it to get the State and fed taxes..

Anonymous Coward says:

$26B seems like a yawner anymore especially as the cost of merging or total cost of two companies that rake in billions annually. Walmart brings in profits that exceed that merger annually! It must be the desensitization of hearing these ghastly amounts so frequently nowadays that it barely raises an eyebrow or instills the need to sigh.

AlexisR200 says:

It’s clear that the system is broken when its set up to not legally bind agencies to obey the verifiable data they themselves produce and collect. Its also clear politicians with no morals and even less conscience are actively exploiting that fact For their own greedy benefit. If objective data doesn’t matter anymore I’m afraid the U.S. is irreversibly declining as all other empires from the past un der the weight of our own hubris.

Anonymous Coward says:

Re: Fun time..

When the telecom companies bought the state and federal politicians, probably around 40-50 years ago… after they were given billions to build out networks that have still not been built.

That doesn’t count the billions in subsidies, tax breaks, and direct ‘gifts’ from the governments if they promise to do what they were supposed to do (this time charlie brown will kick the football…. yeah right, we know what happens there and we know what happens here, but we do nothing).

You get the government the Telecom’s bought, now be happy with it or you will get cut off from the internet so you can’t complain about it…

Anonymous Coward says:

Re: Re: Fun time..

Well you could go to court and argue that such things are actually anti competition i guess.

I mean what are the feds and ajit “I park my car in the middle of the road when I go to work” pai going to do? Say that’s illegal and only SOME PEOPLE can lay fiber in the ground?

….holy crap could that actually work?

Anonymous Coward says:

Re: Re: Re: Fun time..

Blowing in fibre is the easy and cheap part. Planning routes, negotiating rights of way, permits and digging the trenches is the difficult, time consuming and expensive part of the job. However it can be done as shown by hpr0980 :: Broadband for Rural North. Note the project was carried out by the community as private individuals, no politicians involved in their official capacity,

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