Oct 10, 2019

T-Mobile-Sprint merger deal approaches next hurdles

Illustration of a word-finder puzzle with the overlapping words "Sprint" and "TMobile" circled

Illustration: Rebecca Zisser/Axios

Opponents of the T-Mobile-Sprint merger are piling on the deal in the hopes of convincing a judge the Justice Department’s settlement isn’t good enough.

Why it matters: The DOJ’s agreement with the wireless companies has to receive final sign-off from Judge Timothy J. Kelly of the D.C. District Court, and critics want to make it a tough decision.

Driving the news: The comment period is closing this week for the DOJ’s deal, which will see the wireless companies sell assets to satellite TV company Dish so it can enter the wireless market.

  • But a group of economists — including Hal Singer, managing director at Econ One, and Nicholas Economides, an NYU economics professor — argue that this fix won’t restore the competition that will be lost when nation’s third and fourth largest carriers merge.
  • "The DOJ is going to have a hard time here defending this mess,” Singer said in an interview. “Even though this judge can’t block the merger per se, he can conclude that the remedy is deficient. If that is the best remedy the DOJ can come up with, that would be tantamount to blocking the merger."
  • The Communications Workers of America urged the Justice Department to abandon the settlement in its comments, arguing that the deal is not in the public interest.

The odds: Historically, the federal court review of a merger settlement has been an uneventful affair.

  • But U.S. District Court Judge Richard Leon — who stymied the DOJ's attempt to block the AT&T-Time Warner merger — also raised concerns this year about the DOJ’s consent decree in the CVS-Aetna merger and held a hearing before ultimately allowing it.
  • Merger opponents are hoping the DOJ’s settlement will get similar scrutiny.

Meanwhile: New York is leading a coalition of 16 states and D.C. in a separate lawsuit to block the merger. The states filed a brief with the D.C. court reviewing the settlement urging the judge to hold off on a decision until the states’ case plays out in New York. That case is set to go to trial in December.

  • T-Mobile and Sprint have agreed not to close their merger until the state litigation is resolved
  • The state attorney general of Mississippi withdrew his opposition to the merger this week after negotiating commitments from the companies.

What's next: The DOJ is collecting the settlement comments and will file them with the court, along with a response.

  • "In almost every case, the court rubber stamps the consent decree," said Joel Mitnick, a partner at Cadwalader, Wickersham & Taft. "Conceivably, a court could reject a consent decree if they find it’s not in the public interest ... but I can’t remember the last time a court has just rejected a consent decree."
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