Nine states and the District of Columbia today filed a lawsuit against T-Mobile and Sprint in an attempt to stop the wireless carriers from merging.
New York Attorney General Letitia James and California AG Xavier Becerra are leading the way, with co-plaintiffs from Colorado, Connecticut, the District of Columbia, Maryland, Michigan, Mississippi, Virginia, and Wisconsin.
“When it comes to corporate power, bigger isn’t always better,” James said in an announcement of the lawsuit. “The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country. That’s why we are going to court to stop this merger and protect our consumers, because this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.”
Becerra argued that the “merger would hurt the most vulnerable Californians and result in a compressed market with fewer choices and higher prices.”
The AGs filed their complaint in US District Court for the Southern District of New York.
AGs: Merger violates antitrust law
The T-Mobile/Sprint deal would leave the US with three major nationwide carriers instead of the current four. The AGs’ lawsuit alleges that the merger “likely would substantially lessen competition in interstate trade and commerce across the nation for mobile wireless telecommunications services, in violation of Section 7 of the Clayton Act,” a US antitrust law.
“Actual and potential competition between Sprint and T-Mobile will be eliminated,” the complaint says. The lawsuit further alleges that “Competition in retail mobile wireless telecommunications will be lessened substantially,” that retail prices are likely to go up, and that the “quality and quantity of mobile wireless telecommunications services are likely to be less than they otherwise would [be].”
The lawsuit asks for a judgment that the merger violates antitrust law and a permanent injunction that would prevent the companies from merging. We contacted T-Mobile about the lawsuit today and will update this story if we get a response.
T-Mobile could also face an antitrust lawsuit from the Department of Justice’s antitrust division, which has not yet said whether it will sue to block the deal.
FCC poised to approve deal
Federal Communications Commission Chairman Ajit Pai has proposed allowing the merger. Among other things, T-Mobile committed to the FCC that it will “make available the same or better rate plans as those offered by T-Mobile or Sprint as of February 4, 2019 for three years following the merger.” But the post-merger company could introduce new plans with higher prices and phase out the current plans after three years.
“Consumer prices for mobile wireless telecommunications services have decreased over time,” the states’ lawsuit said. “Thus, a promise not to raise prices, when those prices would be falling in a competitive market, does not address the harm to competition that will result. Nor does it prevent T-Mobile from raising prices after the commitment ends.”
Besides the price guarantee, the companies are promising to build out 5G services, offer wireless home Internet service, and to divest the Sprint-owned Boost Mobile.
“The proposed commitments do not provide verifiable, merger-specific benefits to retail mobile wireless telecommunications subscribers when compared to the probable state of competition without the merger, including the progress the Big Four [carriers], including Sprint and T-Mobile, have already made on deploying 5G technology,” the lawsuit said.
The home Internet promise is not significant, as T-Mobile has already begun offering that service, the lawsuit said.
Boost becoming independent also would not restore lost competition, because Boost is a reseller that “would be required to purchase (or attempt to purchase) network access from one of the three remaining [carriers],” the AGs wrote.
Overall, “[t]he proposed commitments that Sprint and T-Mobile made to the FCC do not ameliorate the harms to competition, and the resulting harms to consumers, that will result if the merger is completed,” the state AGs’ lawsuit said.