Federal anti-trust staff want to block T-Mobile-Sprint merger, report says

by Steve Blum • , , , ,

Despite Monday’s raucous cheerleading from republican members of the Federal Communications Commission, the federal justice department is moving toward blocking T-Mobile’s proposed takeover of Sprint. According to a Reuters report, a staff review has concluded that allowing the two companies to combine, thereby reducing the competitive landscape from four nationwide mobile carriers to three, would do too much damage to the telecoms marketplace…

The U.S. Justice Department’s antitrust division staff has recommended the agency block T-Mobile US Inc’s $26 billion acquisition of smaller rival Sprint Corp, according to two sources familiar with the matter…

The final decision on whether to allow two of the four nationwide wireless carriers to merge now lies with political appointees at the department, headed by antitrust division chief Makan Delrahim…

One critic of the deal, Gene Kimmelman, president of Public Knowledge, the nonprofit public interest group, said top brass in the Justice Department’s antitrust division do not generally overrule the staff but they occasionally do.

“I’d be extremely surprised if the front office overruled this,” added Kimmelman, a veteran of the Obama Justice Department.

The federal justice department’s opinion will matter in California, too. The substantive objection to the deal made during the ongoing California Public Utilities Commission review is, likewise, that it’s anti-competitive. The economic analysis done by the CPUC’s public advocates office reaches that conclusion using the DOJ’s methodology. T-Mobile’s rebuttal relies on novel techniques developed by the “world renowned” economists it hired to make its case. Assuming the Reuters report is correct, they did not impress federal anti-trust enforcers.

A final decision by the DOJ is expected to come within a month or so. The CPUC’s review will probably run longer, for a lot of reasons, including that it might not be a bad idea to wait until a decision is made at the federal level. That could mean a CPUC vote won’t come until August, at the earliest.