DOJ Floats A Truly Stupid Idea To Salvage The Sprint, T-Mobile Merger
from the ill-communication dept
While the Pai FCC is chomping at the bit to approve T-Mobile and Sprint's competition and job killing megaunion, rumors are that DOJ staffers remain highly skeptical about the purported benefits of the deal. The sticking point remains the same: that the merger would reduce overall competition in the space by 25%, a move that historically almost always results in higher consumer prices, and less effort and innovation overall. Unions and Wall Street analysts also believe the deal will eliminate anywhere between 10,000 and 30,000 jobs as redundant positions are inevitably eliminated, something T-Mobile continues to deny.
While Sprint and T-Mobile lobbyists continue to apply as much pressure as they can in a bid for regulatory approval, there's every indication the DOJ remains highly resistant to their charms. For example, Bloomberg reports that one proposed condition being pushed by the DOJ is the mandatory creation of an entirely new fourth competitor in the wake of the deal. In short, T-mobile and Sprint would be forced to divest spectrum and other assets to create a fourth competitor to keep the market semi-healthy:
"Top Justice Department officials want T-Mobile US Inc. and Sprint Corp. to lay the groundwork for a new wireless carrier -- with its own network -- as a condition to clearing their $26.5 billion merger, according to a person familiar with matter.
The two companies have been pondering additional concessions that could help win Justice Department approval for their deal, said people with knowledge of the discussions, who asked not to be identified because the talks are private. But the idea of spinning off a full-fledged national competitor would be a high bar for T-Mobile and Sprint to meet.
And while that might sound good to some folks as a way to mitigate overall competitive harm, the problem would be one of enforcement.
When they can be bothered to impose beneficial conditions on telecom mergers at all, US regulators have a long, proud history of not really bothering to enforce them. Comcast, for example, not only volunteered most of the conditions affixed to the company's 2011 mega union with NBC, it repeatedly failed to adhere to most of them with little to no penalty. And Spectrum was recently found to have largely lied to regulators about meeting broadband deployment promises affixed to its megaunion with Time Warner Cable. In telecom it's a problem that goes back decades, with companies like AT&T also routinely being allowed to tap dance around numerous conditions affixed to its acquisition of BellSouth and countless other companies.
Having regulators enforce merger conditions on a good day is usually an uphill climb. Expecting them to steer the creation and protection of an entirely new company for decades isn't something government's likely to excel at. And given his FCC has yet to stand up to the industry on a single issue of substance, anybody expecting Ajit Pai to be a functional beat cop here hasn't been paying much attention.
It's unlikely Sprint and T-Mobile are particularly keen on such a proposal, given it hamstrings what is, to them, the two biggest benefits of the deal: less overall competition, and a massive trove of wireless spectrum. But even if they did sign off on such a plan, it's hard to see how just blocking the deal outright to protect the four competitors we already have isn't a much cleaner and simpler solution.
Filed Under: antitrust, competition, doj, mobile carriers
Companies: sprint, t-mobile
