California Attorney General Xavier Becerra (L) and New York State Attorney General Letitia James have teamed up with attorneys general from eleven other states and the District of Columbia to block the merger between T-Moblie and Sprint.
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States suing to stop the $26 billion merger between T-Mobile and Sprint urged a federal judge not to defer to the Department of Justice when considering whether the merger is legal. The Trump Administration’s DOJ gave the deal a greenlight earlier this year, but states say it is anticompetitive and will harm consumers.
In late December, the DOJ, which isn’t a party to the litigation, filed a “Statement of Interest” asking the federal court hearing the case to defer to its view that the proposed merger should be approved. On Wednesday, the states, led by attorneys general in New York and California, filed a response stating, “no such deference was warranted.” The states argued that they “are independent enforcers of the antitrust laws, and it is the role of the Court – not any federal agency – to decide the lawfulness of this merger.”
The states added that the DOJ had conducted “what appears to be only a cursory examination of the approval conditions,” the states had investigated the deal for 15 months. The states also took issue with the DOJ’s claims that they had not considered the companies’ promised benefits of faster 5G services for rural residents should the merger go through.
“The Plaintiff States are home to some 19 million rural Americans — nearly a third of the national rural population,” the filing states. “Indeed, the total rural population in the Plaintiff States is more than 30% larger than the rural population in the States that joined the DOJ settlement.”
As part of the DOJ’s condition for approving the merger, T-Mobile worked out a deal with satellite TV provider Dish Network to buy assets and start a new fourth nationwide wireless competitor. In its filing to the court last month, the DOJ argued that the merger with the sale of assets to Dish would benefit consumers, especially those in rural areas. It also referenced the Federal Communications Commission’s approval for the deal, which it concluded would help accelerate next generation 5G wireless deployment.
“A nationwide injunction would block not only the transaction, but also the substantial, long-term, and pro-competitive benefits for American consumers the antitrust division and the FCC concluded will flow from the merger,” the DOJ said in its filing.
The states have questioned whether the deal to sell assets to Dish would result in a true nationwide competitor to replace Sprint in the market. And they reiterated that point in their response.
“Only a small fraction of the merged company’s assets will be sold to Dish; Dish has no experience in the wireless market and a history of broken promises; and Dish will be dependent on the new T-Mobile’s network and will lack the scale needed for long-term success as a national wireless provider,” the states said.
A two-week trial in federal court in New York started in December. Closing arguments from both sides are scheduled for Jan. 15. Several top executives from T-Mobile, Sprint, and Dish testified at trial. U.S. District Judge Victor Marrero will decide the case without a jury.