California’s attorney general has more than one roadblock he can try to throw into T-Mobile’s path to a takeover of Sprint. The antitrust suit that Xavier Becerra and other state attorneys general filed in a New York federal court is one possibility. Closing arguments were made in that case last week – the judge hearing it didn’t ask any questions, so there are no clues about what he’s thinking. His decision is expected in the late February/early March time frame. Maybe.
Becerra’s other option lies with the California Public Utilities Commission, which is also reviewing the deal. Assuming it’s treated as a major merger (i.e. involves a utility company under CPUC jurisdiction with at least $500 million of annual Californian revenue – that’s one of many points lawyers are wrangling), California law says…
Before authorizing the merger, acquisition, or control of any…telephone corporation organized and doing business in this state…the commission shall find that the proposal not adversely affect competition. In making this finding, the commission shall request an advisory opinion from the Attorney General regarding whether competition will be adversely affected and what mitigation measures could be adopted to avoid this result.
That opinion is requested and delivered privately, and typically doesn’t become public until the CPUC publishes a proposed decision. But it’s not hard to guess what Becerra will say. After the New York hearing wrapped up, Becerra put out a statement saying…
There should be no question now: this attempted megamerger would thwart competition in the telecom market and harm consumers from California to New York, and everywhere in between…At trial, we have repeatedly demonstrated the dramatically increased market concentration that would result if T-Mobile and Sprint were to merge.
Right now, Sprint and T-Mobile compete intensely with each other on price, features and quality. That’s competition we can’t afford to lose.
As you might expect in the middle of litigation, Becerra didn’t publicly suggest any “mitigation measures” – his stated solution is to not allow the merger at all. If that’s the advice he’s offering privately, then the CPUC will either have to try to block it (whether it can or not is another billing bonanza for the lawyers), or reach into the evidence presented and demonstrate why Becerra is wrong.
It’s one thing to sort out the arguments made by litigating parties – in this case it’s the CPUC’s public advocates office, the Communications Workers of America, consumer advocacy groups versus T-Mobile, Sprint and, following megabuck payoffs to buy their support, DISH and the California Emerging Technology Fund. It’s quite another for the CPUC to argue T-Mobile’s case against the California attorney general.