Risk & Compliance

Ten States Sue to Block T-Mobile, Sprint Merger

If the states obtain an injunction before the deal is consummated, "that would bring things to a halt."
Matthew HellerJune 12, 2019
Ten States Sue to Block T-Mobile, Sprint Merger

Ten states have thrown a potential roadblock in the way of the mega-merger of T-Mobile and Sprint, arguing in an antitrust lawsuit that the $26 billion deal would cause “irreparable harm.”

The merger, which would combine two of the four largest national mobile network operators, is awaiting approval from the U.S. Federal Communications Commission and the Department of Justice. FCC Chairman Ajit Pai appeared to give it his blessing last month.

But in a complaint filed on Tuesday, states led by New York and California requested the deal be permanently enjoined, saying it would stifle competition and increase the prices consumers pay for mobile service.

The suit cites preliminary estimates that the merger could cost Sprint and T-Mobile subscribers at least $4.5 billion annually.

“When it comes to corporate power, bigger isn’t always better,” New York Attorney General Letitia James said in a news release, adding that the deal would “cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans.”

When T-Mobile and Sprint announced in April 2018 that they had agreed to terms, they expressed the hope that they would be able to close the deal by July 2019.

“If the judge decides to grant an injunction before the transaction is consummated, that would bring things to a halt,” Scott Hemphill, a professor who teaches antitrust law at New York University, told The New York Times.

In signaling his approval of the deal, Pai said it would advance “critical objectives” such as “closing the digital divide in rural America and advancing United States leadership in 5G.”

But the state attorneys general said their investigation “found that many of the claimed benefits were unverifiable and could only be delivered years into the future, if ever,” with “any theoretical efficiencies that could be realized from the merger [being] outweighed by the transaction’s immediate harm to competition and consumers.”

“Although T-Mobile and Sprint may be promising faster, better, and cheaper service with this merger, the evidence weighs against it,” California Attorney General Xavier Becerra said.

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