DoJ, FCC Intervene in States’ Sprint/T-Mobile Suit

The Department of Justice and the Federal Communications Commission filed a Statement of Interest in the ongoing lawsuit by thirteen U.S. states and the District of Columbia to prevent the T-Mobile/Sprint merger (State of New York et al v. Deutsche Telekom AG et al 1:19-cv-05434)

The FCC had tentatively agreed to allow the merger back in July after Sprint agreed to help Dish Network take its place as the fourth major cellular network in a post-merger market. The FCC formally approved the merger on November 5 with a 3-2 vote along party lines. The FCC’s approval did not drive the states to drop their suit against the companies; the states still feared that the merger would cause harm to consumers.

The DoJ and FCC are now interceding on behalf of the cellular companies and against the state governments.  They argue that the DoJ’s Antitrust Division investigated the merger and concluded that the merger plus the creation of Dish Network’s cellular arm would ultimately benefit the consumers. When the merger was approved, FCC Commissioners Jessica Rosenworcel and Geoffrey Starks spoke out vehemently against the decision, saying “history teaches us that the most likely effect of this merger will be higher prices and fewer options for all Americans.” Stark also cited past behavior as a reason for concerns, saying that “Sprint may be responsible for the most egregious violations of our Lifeline rules in FCC history.” (Lifeline is an FCC initiative that subsidizes phone and broadband service for those in need.) 

Some states, including Texas and Nevada, have dropped out of the lawsuit as T-Mobile, Sprint and Dish offer to provide their states with 5G networks and guarantee in-state jobs. The FCC and DoJ have also cited the company’s plans to build 5G networks as a positive for the country and a reason to allow the merger in their Statement of Interest, saying that the companies promised to provide 5G coverage to 85% of rural Americans within three years of the merger and 90% of rural Americans within six years. The FCC and Anti-Trust Division of the DoJ stated that, due to their experience and expertise in dealing with mergers like these, their conclusions on the matter should be given the appropriate amount of deference in the lawsuit.

The Statement of Interest describes that the states in the suit will face an uphill battle in challenging the merger because they have to prove that blocking the merger is not just reasonable but actually beneficial to the public. The federal agencies stated that “the key question is whether any additional relief is necessary to protect competition and advance the public interest.” They feel that they have already addressed the anti-trust concerns posed in the lawsuit by requiring the building of a fourth major cellular provider and that the court should not feel it has to choose between an injunction of the merger and relief from the potential formation of a trust.

The case is being presided over by Judge Victor Marrero in the New York Southern District Court. The trial is currently ongoing.