Advocates Cite T-Mobile/Sprint in Push for Stronger Merger Scrutiny

The FTC and DOJ need to update their merger guidelines to avoid future anticompetitive effects like those from T-Mobile/Sprint (see 2002110026) and to prevent further consolidation in already concentrated markets, antitrust advocates told the agencies in comments closed Monday (see 2309050088). Biden administration opponents accused the agencies of trying to rewrite antitrust law through an ideologically driven guideline revision.

The agencies should do more merger retrospectives and publish the findings so that the public can understand their decisions, the Communications Workers of America commented. A federal court approved T-Mobile/Sprint “partly on the basis of statements by the parties about the merger’s benefits, including the promise of increased employment,” said CWA. “These statements were later proven false as the combined company has engaged in large-scale job cuts and may be currently suppressing compensation.” T-Mobile didn’t comment.

When there’s excessive concentration, “wages fall, workers are laid off, innovation is stifled, existing local businesses close and fewer new ones open, local and global supply chains are weakened, and prices rise for consumers,” wrote legislators from 22 states, including Arizona, Florida, Georgia, Maryland, Mississippi, Montana, New York, North Carolina, Ohio and Pennsylvania. They cited the negative impacts of the T-Mobile/Sprint deal, noting 75% of “U.S. industries have become more consolidated, largely through corporate mergers” over the past 10 years.

DOJ’s antitrust division correctly rejected AT&T/T-Mobile in 2011 due to the “head-to-head nationwide competition between the two companies,” Yale economics professor Fiona Scott Morton commented. “Economic analysis revealed that a merger would lead to higher prices, less innovation, and limited, if any, benefits.” In spite of the 2011 decision, a “wireless oligopoly” was allowed to proceed in the 2019 T-Mobile/Sprint deal, she said. Enforcers should focus on the intermediate effects of concentration, said Morton: The agencies need to make clear “that the difficulty of proving impacts on price, quality, and innovation to the level that courts demand has prevented the agencies from blocking harmful mergers.” She recommended abandoning “most” economic analysis: “Only market definition and the market share limits (HHIs) the agencies plan to use in their assessment of concentration need to be included.”

The Biden administration is overstepping its authority by abandoning decades of bipartisan consensus on economic analysis, opponents said in comments. The U.S. Chamber of Commerce urged the agencies to abandon the draft guidelines and “start over with a measured approach consistent with the past practice of incremental changes that incorporate a consensus view of the latest case law and empirical economic analysis.” The Chamber argued enforcers are trying to advance antitrust theories that multiple courts rejected.

The guidelines rely on U.S. Supreme Court decisions from the 1960s and 1970s to justify a “new structuralist, concentration-focused approach to merger enforcement,” said former FTC General Counsel Alden Abbott, now a researcher at George Mason University's Mercatus Center. The guidelines “ignore modern Supreme Court non-merger antitrust holdings that emphasize economic analysis and consumer welfare,” he said.

The Computer & Communications Industry Association questioned whether courts, which followed previous, consensus-driven iterations of the guidelines, will “accept this major departure from established economic learning and antitrust principles.” CCIA claimed the guidelines “lower the bar for what mergers would be presumptively illegal and base it on merger thresholds largely reflecting 1992 levels, and base their analysis on court decisions mostly dating from the 1970s and 1980s.” NetChoice argued the agencies are trying to circumvent Congress and reinterpret statutory authority: “The real danger to democracy is the administrative state’s bottomless appetite for more power and control.”

The draft guidelines have no force of law and serve more as a “manifesto against market concentration than useful guidance for courts or corporations,” the R Street Institute commented. “Continued efforts to block mergers under this expansive interpretation of antitrust law will likely produce the same result we have seen over the past several years -- expensive, wasteful litigation that adds to a growing losing streak for the FTC.” The Information Technology and Innovation Foundation accused the agencies of injecting “new concentration thresholds untethered to the economics surrounding the relationship between market structure and innovation,” which will result in a “major setback for protecting innovation.”