Sprint, T-Mobile Merger Facing Antitrust Challenge from States

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The big telecom merger between Sprint and T-Mobile looked like it was going to happen without any real hiccups. That has now changed as attorneys general from nine states and the District of Columbia have filed antitrust actions seeking to stop the merger.

States usually differ from the DOJ’s decision on whether to pursue antitrust actions related to mergers, and the FCC chairman had already approved of the deal. However, the state AGs see the merger as damaging for innovation and consumers, and they didn't want to wait to put a stop to it. Notably, other state AGs have commented that they too are considering joining the case to prevent the merger.

Stifling Competition and Raising Costs

The states' case explains that the merger would be harmful for consumers because Sprint and T-Mobile are each other's biggest competitor. By merging, the competition between them would effectively be killed, which would ultimately result in worse service and higher prices for consumers.

The carriers have explained that the merger will be good for innovation and consumers because it will allow Sprint and T-Mobile to be more competitive with AT&T and Verizon, as well as deploy the latest infrastructure faster. But critics do not believe that the merger will have these results, noting that the two companies offer consumers better and more options as separate entities.

Mobile and Antitrust

Some commentators predict that as a result of the antitrust action, Sprint and T-Mobile may just walk away from the deal. The evidence cited by the states is rather damning. Wired reported that the companies' own economist estimated that the merger would cost the companies’ customers $4.5 billion annually. And while the merger came with an agreement not to raise prices for three years, the state AGs noted that there was no requirement or likelihood that the companies would lower prices, as they routinely did while competing against each other.

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