Published: Fri, May 24, 2019
Electronics | By Kelly Massey

DOJ Staffers Think T-Mobile's Merger Benefit Claims Are Nonsense

DOJ Staffers Think T-Mobile's Merger Benefit Claims Are Nonsense

The sources allege that the antitrust staff at the U.S. Justice Department will eventually advise blocking the merger.

Approval from the Justice Department antitrust division "seems likely" since it never has diverged from the FCC on a merger, said Paul Gallant, a Washington-based analyst for Cowen & Co.

The Justice Department, which often follows staff recommendations, is expected to make a final decision in about a month, the sources said.

Altice had urged the FCC to reject the deal because it was concerned it would be stopped from offering the phone service. FCC Chairman Ajit Pai said Monday that he would recommend approval of the deal after the companies offered a package of concessions.

The FCC's seal of approval came after the carriers agreed to sell off Sprint subsidiary Boost Mobile to spur competition at the low-priced end of the market.

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But Delrahim does face other pressures to nix the transaction, including the possibility that state attorneys general in California and NY may oppose a transaction that his staff is recommending he should oppose as well. Consumer advocacy groups oppose the deal, arguing that the consolidation will result in less competition and higher prices.

"Two of the FCC's top priorities are closing the digital divide in rural America and advancing United States leadership in 5G, the next generation of wireless connectivity", Pai said at the time. Democratic lawmakers have also been skeptical of the companies' promises.

History and antitrust data is pretty clear on this point: when you reduce the overall number of major competitors in telecom, the end result is nearly always higher prices, fewer jobs, and worse service. T-Mobile announced plans to acquire Sprint for $26 billion to merge the two telecom companies.

The Obama administration rebuffed the companies' earlier effort to merge, as well as an attempted deal between AT&T and T-Mobile, on concerns that such deals would hurt competition in the wireless industry. The department declined to comment.

Shares of T-Mobile rose $2.93, or nearly 4%, to $78.29, while Sprint's stock soared 19% to $7.34.

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