US Antitrust Enforcement Clearly Broken As Court Rubber Stamps T-Mobile Merger

from the ill-communication dept

When AT&T was busy trying to gain regulatory approval of its $86 billion merger with Time Warner, economists, consumer groups, antitrust experts, and opponents of the deal warned it should be blocked because a bigger AT&T would only act anti-competitively to raise rates and hamstring competitors. AT&T and the FCC denied those claims, only to have them all come true a short while later.

Fast forward to this week and we’re repeating history all over again. This morning U.S. District Judge Victor Marrero approved (pdf) T-Mobile’s controversial $26 billion merger with Sprint, shutting down a multi-state AG lawsuit aimed at stopping the deal. Citing ample evidence that the reduction of four major carriers to three would dull any incentive to compete on price, a coalition of AGs tried to stop the deal after it was rubber stamped by both the FCC and FTC. But in his decision, Marrero tied himself into bizarre, esoteric knots in a bid to try and justify approval of the deal:

“How the future manifests itself and brings to pass what it holds is a multifaceted phenomenon that is not necessarily guided by theoretical forces or mathematical models,? Marreno wrote. ?Instead, causal agents that engender knowing and purposeful human behavior, individual, and collective, fundamentally shape that narrative.”

That’s deep, bro.

Marreno at one point goes on at great length to suggest that it’s “unlikely” that U.S. telecom giants, among the least competitive companies on the planet, would ever possibly act anti-competitively in the wake of the deal:

“In this court’s view, in the intensely competitive and rapidly changing environment in which complex and dynamic markets operate, the anticompetitive business strategies and market effects Plaintiff States predict are unlikely. It is not likely, perhaps improbably or even not rational, that a major new or reinforced market participant, rather than vying aggressively to entire additional customers from competitor by introducing innovations, and investing more to protect and expand market share, would do the exact opposite, thereby risking har to its customer base.

Here in reality, there’s ample evidence from around the globe that such 4 to 3 market shifts result in higher prices and significant layoffs. From Canada to Ireland, this kind of consolidation almost never ends well for consumers, competition, or the market. Hell, you only need look at Comcast, whose legendary status as one of the most despised companies in America is a direct byproduct of mindless M&A and a patent refusal to scale customer service alongside its relentless growth. US telecom consolidation has not been a good thing, no matter how many telecom-linked think tanks spin themselves into butter insisting otherwise.

American antitrust enforcement and consumer protection has turned into a running joke. The Trump administration uses antitrust to pursue weird, petty and pointless vendettas, while deals that create obvious market harm (AT&T Time Warner, T-Mobile Sprint) are allowed to proceed. The FCC rubber stamped the T-Mobile merger before staffers had even read the full proposal. The DOJ approved the deal against the advice of its own staffers.

The grotesqueness of the T-Mobile approval process couldn’t have been any more blatant. Former FCC Commissioners from both parties, ranging from Mignon Clyburn to Robert McDowell, lobbied to help gain regulatory approval, often without identifying themselves (in Op/Eds and elsewhere) as being on T-Mobile’s payroll. T-Mobile also hired Trump ally Corey Lewandowski (just days after he mocked a kid with Down Syndrome on national TV), and made a point of ramping up executive stays at Trump’s DC hotel to further grease the wheels. It clearly worked.

To justify its approval of the deal, the DOJ created an absurd proposal that involves shoveling some spectrum off to Dish Network, which will then be tasked with building up a new fourth replacement carrier over a period of seven years. Economists pointed out repeatedly the plan isn’t likely to work.

Dish (whose history of flaky promises in wireless was even previously mocked by T-Mobile) will spend much of that time as little more than a rebranded T-Mobile MVNO, and may never become fully viable. The effort is also likely to be undermined by AT&T and Verizon, which have every incentive to make sure Dish never becomes a viable fourth competitor. Who is supposed to prevent AT&T and Verizon from scuttling the effort? Who makes sure T-Mobile and Dish live up to their promises? Ajit Pai? The guy who mindlessly rubber stamps every fever dream the telecom sector has?

US consumers already pay some of the highest prices in the developed world thanks to regulatory capture and muted competition. A laundry list of economists have made it abundantly clear that further consolidation in wireless will only make the problem worse. There’s literally forty years of documented history showing how these kinds of deals drive up prices, erode jobs, and result in worse overall service. While DC policy experts freak out about the perils of “big tech,” we’re giving big telecom a free pass to build something that could be arguably far worse.

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Companies: sprint, t-mobile

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Comments on “US Antitrust Enforcement Clearly Broken As Court Rubber Stamps T-Mobile Merger”

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14 Comments
Anonymous Coward says:

Can't states still regulate them?

a coalition of AGs tried to stop the deal

13 states, plus DC, tried to stop it and failed. But don’t they still have their normal regulatory powers over the resulting company? As with Net Neutrality, if the Feds aren’t regulating prices etc., they shouldn’t be able to stop the states from doing so. Like the public utilities commissions used to do (and some still do) with landlines.

That One Guy (profile) says:

'If I close my eyes the bad stuff doesn't exist!'

"In this court’s view, in the intensely competitive and rapidly changing environment in which complex and dynamic markets operate, the anticompetitive business strategies and market effects Plaintiff States predict are unlikely.

Ah, I see, the judge is from bizarro world, where there actually is a competitive market, that explains it.

I mean, it’s either that or they knew full well that what they were saying was nothing but lies and they were just throwing out piles of bullshit in hopes that fancy language would hide that, but I’m sure a judge would never do something like that.

This comment has been deemed insightful by the community.
John van Deenecamo says:

Bad news for the customers indeed. Here in The Netherlands, we drown in a vast pool of mobile providers. T-Mobile, KPN, Vodafone, Telfort, Youfone, Truphone, Ziggo, Lebara, Tele2, Ben, etc etc. Competition here has led to super low prices and fees, with ever better, stabile and faster speeds and connections. You can opt for full-on memberships for as little as €7,50 (about 10 bucks) a month. 5gigs of data or more, unlimited calls, free calling amongst friends, unlimited texting etc etc. Family of the Mrs. in the US pay close to a hundred (!!!) dollars a month for a lot less than that. In other words: that judge rubberstamping this merger was either paid off or promised a high ranking job. This is not good. Period.

ECA (profile) says:

Lets ask a stupid question, time.

Why in hell are they paying so much.
There isnt a reason to pay this much money.
UNLESS:
Its going to be considered a loss and written off.

In the past there was always something strange happening. The Corp had Sub companies, and they would buy them back and forth, and buy each other over and over and over. It was very strange. Even Yahoo was doing it. It was like playing the game of Hide the pea. Things swapped back and forth and around so much, no one could figure who owned whom for more then a few months.
The real thing about this, is to think how the IRS had to deal with this mess. And understand that the IRS has one of the Last 1969 Mainframes still in use, and their system hasnt been upgraded for over 20 years.. (Anyone for a well used Pentium?? maybe its that new).. wont even deal with the programming and the piles and piles of paperwork.

Im waiting for the news that All of them are owned by 1 corp/company/bank.. Which could be. as the amount of money ATT has paid recently for 3 corps…is HUGE. and will probably Break ATT and they sell off everything and Quit. Sell it all at a major loss to 1 other corp. And Quit.

Anonymous Coward says:

I am not surprised to see another article of misinformation coming from Karl, whose resources and understanding of the telecommunication market seems to be no different of a 13 year old freshman cheerleader.

The last time he posted misinformed rhetoric, I challenged him to review all the current options available to customers currently, so he could see for himself there were no price differences between the companies.

Despite T-Mobile’s "uncarrier" ad campaigns, the company did not reduce its prices to gain more customers, instead it misinformed its new customers of "better" services, such as unlimited data which would be curtailed to a slow delivery once a cap had been met.

As one who has monitored both telecommunication and ISP prices for many decades, I have yet to see this so-called "competition" Karl keeps fantasizing about in his articles.

It should also be noted Karl’s attempt to misinform his readers literally starts off using a merger block of AT&T with an acquisition which is outside of the market AT&T was in.

T-Mobile’s purchase of Sprint is not the same as AT&T and its Disney-esque rampage of buying entertainment companies. The resultant buyout will create 3 very strong entities, and it now gives T-Mobile exceptional strength to being working in breaking the current price-fixed market.

Will it happen? That’s unknown. But to automatically assume the sky is falling is nonsense, regardless what history has shown.

I should also point out both AT&T and Verizon have, in the past, absorbed so many smaller independents across the country that I never once saw an article by Karl writing about how this will "destroy" competition.

Care to explain?

Please don’t bother. I already know the excuse you’ll use.

I’m optimistic, Karl. I truly hope that the combination between two smaller telecoms can stand up to the two remaining giants in the US.

Perhaps you should have some faith, too.

After all, I can absolutely bet you’d be much more upset had it been AT&T or Verizon buying Sprint, because we absolutely know these two giants are definitely price-gouging and price-fixing its customers.

ECA (profile) says:

Re: Re:

Problem I see happening is ATT is Breaking itself, and will file Bankruptcy and sell it all off to 1 of the Other corps..
And get a HUGE write off, for loss of profit.
But will condense it even More.

And something I dont think you have seen, is hat all these corps are Creating Smaller Business’s to make it look as if there is competition, when there isnt any.

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