T-Mobile/MetroPCS Merger Receives Regulatory Approval

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The combination of T-Mobile USA Inc. and MetroPCS Communications Inc. has been approved by both the Federal Communications Commission (FCC) and the Department of Justice Antitrust Division without divestitures or similar conditions. Today, the FCC released its Memorandum Opinion and Order, finding the transaction to be in the public interest. The Antitrust Division also issued a statement, saying that it had closed its investigation after concluding that the combination was unlikely to harm consumers or substantially lessen competition.

T-Mobile is one of four nationwide providers of mobile wireless services. The three others are AT&T, Verizon, and Sprint.

MetroPCS is the fifth-largest mobile wireless telecommunications provider in the United States; however, it provides services in only certain regions of the country. Each of the markets served by MetroPCS is also served by all four of the national carriers.

Last October, Deutsche Telekom, parent of T-Mobile, and MetroPCS announced that they had signed a definitive agreement to combine T-Mobile and MetroPCS. The parties said the transaction would “create the leading value carrier in the U.S. wireless marketplace.”

The announcement of the T-Mobile/MetroPCS deal came less than a year after plans for AT&T Inc. to acquire T-Mobile from Deutsche Telekom were abandoned in the face of a Justice Department challenge. The FCC staff also had concluded that the AT&T/T-Mobile transaction raised a number of potential public interest harms.

Regulators quickly approved this latest deal. The parties announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on March 5. The wireless license transfer between T-Mobile and MetroPCS was approved before the expiration of the FCC's180-day deadline.

In its statement announcing the closure of its investigation, the Antitrust Division said that it considered whether the proposed combination might tend to lessen competition substantially in any particular local area, for instance by combining the two carriers with the best local coverage. However, it decided that the deal was not likely to lessen competition substantially at local levels.

The Justice Department also noted that many dimensions of competition in the mobile wireless industry take place at a national level, including plan pricing, device offerings, and network technology. “Like many local and regional providers, MetroPCS faces limitations, stemming from its lack of nationwide spectrum, networks and scale, and therefore exerts little influence on these aspects of mobile wireless competition,” the Justice Department said.

The Justice Department went on to say that the proposed combination of T-Mobile and MetroPCS might have a procompetitive impact in that it would improve T-Mobile’s scale and spectrum position, particularly since MetroPCS’s spectrum holdings are compatible with T-Mobile’s existing network. In any event, the Justice Department pledged to continue monitoring competition in the mobile wireless industry and to bring enforcement actions where warranted.

FCC Chairman Julius Genachowski said the agency's approval of the transaction “will benefit millions of American consumers and help the U.S maintain the global leadership in mobile it has regained in recent years.”

In a statement, T-Mobile President and CEO John Legere said that the company “look[s] forward to completing the transaction and delivering the significant customer and stockholder benefits that this combination will make possible.” A special meeting of MetroPCS stockholders to vote on matters relating to the proposed combination is set for April 12.

Government Suit to Block AT&T Acquisition of T-Mobile Stayed

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The federal district court in Washington, D.C. on December 12 stayed further proceedings in a federal/state enforcement action seeking to block AT&T Corporation’s proposed acquisition of T-Mobile USA Inc. from Deutsche Telekom.

The stay came at the request of the Justice Department and AT&T. The parties must inform the court by January 12, 2012, of the status of the proposed transaction.

The Justice Department, seven states, and the Commonwealth of Puerto Rico allege in the suit that the combination of two of the four largest providers of mobile wireless telecommunications services would violate the antitrust laws. (See “Department of Justice Seeks to Block AT&T’s Acquisition of T-Mobile,” Trade Regulation Talk, August 31, 2011).

AT&T and Deutsche Telekom are “actively considering whether and how to revise our current transaction to achieve the necessary regulatory approvals,” according to a December 12 AT&T statement.

The stay order in U.S. v. AT&T Inc. appears here on the Department of Justice Antitrust Division website.

Sprint Files Own Antitrust Suit to Block AT&T/T-Mobile Combination

This posting was written by John W. Arden.

In the wake of the Department of Justice’s filing of an antitrust lawsuit to block AT&T Corp.’s proposed acquisition of T-Mobile USA Inc. on August 31, mobile wireless carrier Sprint Nextel brought its own antitrust action today, seeking to prohibit the acquisition as a violation of Section 7 of the Clayton Act.

Sprint filed the lawsuit against AT&T Corp., AT&T Mobility, T-Mobile USA Inc., and Deutsche Telekom (T-Mobile’s parent) in the federal district court in the District of Columbia as a related case to the Department of Justice’s lawsuit.

The suit alleged that the proposed $39 billion acquisition would harm consumers and competition in the market for mobile wireless services. Specifically, Sprint claimed that completion of the transaction would:

• Harm retail consumers and corporate customers by causing higher prices and less innovation.

• Entrench “duopoly control” by “Ma Bell” descendants AT&T and Verizon of the almost quarter of a trillion dollar wireless market.

• Injure Sprint and other independent wireless carriers.

According to Sprint, a combined AT&T and T-Mobile would control more than three-quarters of the wireless market and 90 percent of the profits. The combined companies would be able to use its control over backhaul, roaming, and spectrum and its increased market position to exclude competitors, raise their costs, restrict their access to handsets, damage their businesses, and ultimately less competition, Sprint charged.

According to last week’s Department of Justice complaint, the four nationwide providers of mobile wireless service—Verizon, AT&T, Sprint, and T-Mobile—account for more than 90 percent of the national market. T-Mobile, the smallest of the four, has historically challenged the top three competitors by providing value, innovation, and aggressive pricing.

The elimination of T-Mobile as an independent, low-priced alternative rival would therefore “remove a significant competitive force from the market” and “substantially reduce competition,” the Justice Department claimed.

On August 31, Sprint issued a statement supporting the Department of Justice lawsuit, but did not hint that it was considering filing an action of its own.

“The DOJ today delivered a decisive victory for consumers, competition and our country,” the news release said. “By filing suit to block AT&T’s proposed takeover of T-Mobile, the DOJ has put consumers’ interests first. Sprint applauds the DOJ for conducting a careful and thorough review and for reaching a just decision–one which will ensure that consumers continue to reap the benefits of a competitive U.S. wireless industry. Contrary to AT&T’s assertions, today’s action will preserve American jobs, strengthen the American economy, and encourage innovation.”

A news release on Sprint’s filing of today’s action appears here.

Further information about the Justice Department’s lawsuit appears here in an August 31 posting on Trade Regulation Talk.