— As Justice Dept approves merger, CR says it would harm competition, consumers
— State attorneys general actions to block the merger are pending
WASHINGTON, D.C. — The U.S. Department of Justice today said it will not challenge the proposed merger of T-Mobile and Sprint. The approval comes as the two wireless companies have reportedly agreed to a divestiture plan to sell some of their assets to satellite TV company DISH to help that company build a new wireless network.
Consumer Reports, which opposes the merger, said the DISH deal will do little to address the serious concerns that a combined Sprint-T-Mobile would harm competition, and harm consumers and others in the marketplace who depend on that competition.
George Slover, senior policy counsel for Consumer Reports, said, “The reported deal would eliminate Sprint, an established competitor in the wireless marketplace, and replace it with DISH, an unproven newcomer that has no experience in building its own wireless network, which it will need to build essentially from scratch.
“The deal reportedly gives DISH some of the building blocks it will need to make a go of it. But it could take years for DISH to get to the point where Sprint is now — if it ever gets there.
“They are trading a bird in the hand for a pig in a poke,” says Slover.
He noted that attorneys general from 13 states and the District of Columbia have already brought enforcement action to block the merger. That action is pending in federal court in New York. The states share full federal antitrust enforcement authority with DOJ and the Federal Trade Commission.
“Going from four established nationwide wireless networks to only three — with the possibility that we might someday, eventually, get some version of a fourth network added back into the mix — will be extremely damaging to competition. It will degrade the choices available to consumers, the options for network access, and the incentives to create better and more innovative service,” Slover said.
“Sprint is not just any wireless carrier. It’s the one with the demonstrated commitment, as a core part of its business plan, to make sure quality wireless service reaches rural areas and other under-served communities. And it has taken the lead in pushing the wireless marketplace to offer better deals to consumers. So its loss is even more damaging than indicated by the dramatic resulting increase in market concentration.
“The Justice Department tried too hard to get to ‘yes,’ instead of staying focused on its mission of protecting competition and consumers.
“The merging corporations, and now the Justice Department, claim that Sprint is not viable enough on its own, despite all of its experience, assets, and current operations and customer base. But somehow, they are saying that DISH can come in, starting from scratch, and take Sprint’s place, and be viable in a way Sprint cannot be, if it’s just given a few assets for building blocks, and a wing and a prayer.
“DISH would be utterly dependent on the new T-Mobile to stand any chance. The deal depends on T-Mobile giving a sustained, reliable assist to its new competitor as it tries to get established. Fundamentally, T-Mobile has no interest in doing that. It is making that promise to get its merger approved. If the past history of mergers is any indication, it will quickly look for ways to get around that promise.”
Slover said it is fortunate that the state attorneys general opposing this anti-competitive combination are committed to pressing forward with their court challenge, and it is disappointing that the Department of Justice will not be there standing alongside them.
Contact: David Butler, dbutler@consumer.org, 202-719-5916
Consumer Reports is an independent, nonprofit membership organization that works side by side with consumers to create a fairer, safer, and healthier world. For more than 80 years, CR has provided evidence-based product testing and ratings, rigorous research, hard-hitting investigative journalism, public education, and steadfast policy action on behalf of consumers’ interests. Unconstrained by advertising or other commercial influences, CR has exposed landmark public health and safety issues and strives to be a catalyst for pro-consumer changes in the marketplace. From championing responsible auto safety standards, to winning food and water protections, to enhancing healthcare quality, to fighting back against predatory lenders in the financial markets, Consumer Reports has always been on the front lines, raising the voices of consumers.