US Antitrust Enforcement Clearly Broken As Court Rubber Stamps T-Mobile Merger (original) (raw)

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.

Filed Under: antitrust, competition, consolidation, judge, state ags, victor marrero, wireless
Companies: sprint, t-mobile