Top DOJ antitrust official signals resistance to Sprint/T-Mobile deal

The Department of Justice's top antitrust official said that any wireless merger among the four Tier 1 carriers would face heightened scrutiny, a strong hint that any potential deal between Sprint (NYSE:S) and T-Mobile US (NYSE:TMUS) would face an uphill battle with the DOJ.

In an interview with the New York Times, William Baer, assistant attorney general for the antitrust division, said further consolidation among the top wireless carriers would face intense inspection because consumers have enjoyed "much more favorable competitive conditions" since the division sued to block AT&T's (NYSE:T) takeover of T-Mobile in 2011.

"It's going to be hard for someone to make a persuasive case that reducing four firms to three is actually going to improve competition for the benefit of American consumers," he said, without referring to any specific deal. "Any proposed transaction would get a very hard look from the antitrust division."

"We've looked long and hard at the wireless industry," Baer added. "We've seen the benefits over the last two and a half years of four-firm competition. Experience teaches us that the market is thriving and consumers are benefiting from the current competitive dynamic."

Sprint CEO Dan Hesse and SoftBank CEO Masayoshi Son met recently with antitrust officials at the Justice Department to pitch the idea of a merger between Sprint and T-Mobile but encountered skepticism and resistance, according to a Wall Street Journal report.

The report, citing unnamed sources, said the top Sprint executives met with the DOJ earlier this month and department officials indicated at the meeting that a deal could face regulatory hurdles, which many analysts have warned since speculation of such a deal surfaced in December. Bloomberg also reported on the meeting and similarly reported on the resistance Sprint faced.

Sprint has declined to comment on the speculation, while T-Mobile CEO John Leger has said he is leaving the door open for further consolidation in the industry.

According to Bloomberg, the Sprint executives argued that Verizon Wireless (NYSE:VZ) and AT&T won't face significant competition unless a merger is approved. The Journal said the thinking is that even if the industry may be going through a competitive period sparked by T-Mobile's aggressive moves in the market, it isn't likely to last.

Based on Baer's comments, those arguments likely would not sway antitrust regulators, who along with the FCC must approve wireless mergers. Analysts have said it is also unlikely the FCC would bless a merger that would reshape the industry before crucial spectrum auctions scheduled to start next year.

For more:
- see this NYT article

Related Articles:
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T-Mobile's Legere: A merger with Sprint would help fight 'duopoly'
Report: SoftBank starts direct talks with DT on Sprint/T-Mobile deal
Report: Sprint has backing from 2 banks for T-Mobile bid
T-Mobile's Legere doesn't rule out Sprint deal, but also casts doubt on it
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