It has been almost 21 months since T-Mobile CEO John Legere first announced his company's intention to buy Sprint. Since then, the proposed merger has consumed hundreds of hours worked by dozens of people at T-Mobile, Sprint, SoftBank, Deutsche Telekom, the FCC, the DOJ, 16 state attorney general offices, and at least seven private law firms and investment banks. Now, the final decision about whether the merger can happen could rest with one judge, U.S. District Judge Victor Marrero of the Southern District of New York.
Judge Marrero will decide the case brought against the companies by 13 state attorneys general and the District of Columbia. (Two of the states that were originally part of the case dropped out before the trial.) The attorneys general, all Democrats, sued to stop the deal on behalf of their states' residents, whom they said could be harmed by higher prices due to reduced competition. The case ended last week, with Judge Marrero asking no questions of either side after closing arguments and saying he would decide the case "as promptly as possible." Analysts expect his decision to stand, saying appeals are unlikely.
Judge Marrero, a 78-year-old Puerto Rico native, is a former Fulbright scholar and was editor of the Yale Law Journal during his time as a law student there. Former President Bill Clinton appointed him a U.S. District judge in 1999. Since then, Judge Marrero has presided over a number of high-profile cases.
Last year, when President Trump tried to shield his tax returns by arguing that he is immune from criminal investigations, Judge Marrero rejected the claim, calling the President's argument "repugnant to the nation's governmental structure and constitutional values," according to The New York Times. The President's lawyers bought some time by appealing the case to another court, so the tax returns are still not public, but Judge Marrero's opinion of President Trump's argument is. "The Court cannot square a vision of presidential immunity that would place the President above the law with the text of the Constitution, the historical record, the relevant case law or even the DOJ Memos on which the President relies most heavily for support," Judge Marrero wrote in his 75-page opinion.
This dismissal strongly suggests that the Trump Administration's support for the T-Mobile/Sprint deal will not sway Judge Marrero. (Even the Trump-appointed federal judge charged with completing the cursory Tunney Act review of the deal appears to be unconcerned with the Administration's position -- Judge Timothy Kelly has unexpectedly decided to consider friend-of-the-court briefs.)
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Judge Marrero also has experience with telecom and wireless companies, having ruled in 2007 that the federal government cannot require these companies to surrender information about their customers without a court order. Marrero struck down part of the Patriot Act which gave the FBI authority to secretly gather information from communications companies.
Marrero also ruled against PriceWaterhouseCoopers LLP when the accounting firm tried to limit its exposure to a $3 billion malpractice lawsuit brought by the bankruptcy administrator for MF Global Holdings. That case was ultimately settled so Marrero did not decide the final amount the bankrupt company could collect.
Now Marrero may have bankruptcy on his mind again as he ponders the T-Mobile/Sprint decision. The states have argued that consumers may be hurt by the merger, but Sprint has argued that its future as a standalone company is bleak. Some analysts agree with that prediction.
"It’s increasingly questionable whether Sprint has any equity value as a standalone company," LightShed Partners analyst Walter Piecyk wrote in a recent note. "In addition, we believe it’s highly unlikely that Comcast or Charter are interested in Sprint given its cash burn and current debt load. Court testimony demonstrated their lack of interest in buying Sprint in 2017 and we do not think that has changed."
Of course SoftBank, which owns 80% of Sprint, could rescue the company as it has in the past. But if Sprint did eventually end up in bankruptcy court, its spectrum, infrastructure and customers could be up for grabs, with T-Mobile, Verizon and AT&T the most likely buyers. This possibility has to be one of the many scenarios Judge Marrero is considering. However, his job as a judge is to decide the case based on its legal merits, not based on the likely outcome for any one company.