States file federal lawsuit to block T-Mobile-Sprint merger

Remigio Civitarese
Giugno 12, 2019

Several state attorneys general are set to file a lawsuit seeking to block T-Mobile's proposed takeover of Sprint on antitrust grounds. The New York state attorney general has a press conference scheduled for later today.

State attorneys general in 10 states filed a lawsuit on Tuesday to block a proposed $26 billion merger of Sprint and T-Mobile, a deal that would combine two of the four largest wireless carriers in the U.S.

Along with James, nine other attorneys general attached themselves to the suit from states including California, Connecticut, Colorado, the District of Columbia, Maryland, Michigan, Mississippi, Virginia, and Wisconsin. Consumer advocates and Democratic lawmakers worry about price increases and job cuts.

The concessions also included penalties if they failed to follow through.

T-Mobile and Sprint, the third- and fourth-largest wireless providers in the country, did not immediately respond to requests for comment. They have also argued that the promises made by T-Mobile and Sprint around rural coverage may never come to fruition.

Amanda Wait, an antitrust lawyer and former Federal Trade Commission lawyer, said states are acting because they disagree with what they have seen the federal government doing. But it does show that the state AGs are taking the issue seriously, and we can expect a serious fight over the merger approval.

Attorneys general from the ten states have been investigating the deal, which would reduce the number of nationwide wireless carriers to three from four.

The suit is a major blow for the merger, according to Blair Levin, an analyst with New Street Research. And, as stated in the complaint, the US previously won the "race to LTE" as a direct result of vigorous competition among wireless carriers.

T-Mobile now has more than 79 million subscribers and is a majority-owned subsidiary of Deutsche Telekom AG.

T-Mobile has a reputation for consumer-friendly changes to the cellphone industry. And if the deal closes, T-Mobile and Sprint have promised the FCC that it will sell off Sprint's Boost Mobile pre-paid unit.

That was enough for FCC Chairman Ajit Pai to back the deal. They have also indicated they were considering divesting from the wireless spectrum.

Regulators have yet to sign off on the deal.

The Justice Department evaluates deals using stricter criteria than the FCC's "public interest" standard - namely whether they harm competition and raise prices for consumers. It's unclear how Justice Department antitrust chief Makan Delrahim will decide, but the antitrust division staff has reportedly recommended that the merger be blocked. The lawsuit further alleges that "Competition in retail mobile wireless telecommunications will be lessened substantially", that retail prices are likely to go up, and that the "quality and quantity of mobile wireless telecommunications services are likely to be less than they otherwise would [be]". Shares of Sprint were down more than 5 percent in early afternoon trading, while T-Mobile's stock was down about 1.5 percent.

Perhaps most famously, in 1998 attorneys general from 20 states and the District of Columbia filed a joint civil action against Microsoft claiming that the software maker had sought to exploit its dominance in desktop computers to stifle competition. So with T-Mobile (TMUS) now trading at $75.35, Sprint's stock (S) should be closer to $7.73 than the current $6.58 if investors were 100% confident that the deal is going to go through.

Altre relazioniGrafFiotech

Discuti questo articolo

Segui i nostri GIORNALE