Monday, October 9, 2017

Senators Urge Investigation Into Sprint, T-Mobile Merger -

Sprint and T-Mobile's long-awaited merger is likely arriving later this month, but several Senators want an investigation into the possible anti-competitive, anti-consumer implications of the deal. Sprint's previous attempts to acquire T-Mobile were blocked by regulators because such a deal would reduce the number of major competitors in the space from four to three. Historically, such a notable reduction results in the remaining companies competing far less intensely on price (aka non-price competition).

Most analysts believe the Trump administration and embattled FCC boss Ajit Pai will approve the deal all the same.

Sprint executives have been buttering up the Trump administration for much of the year, at one point letting him take credit for thousands of jobs that were technically announced before Trump was even elected. When the deal is approved, expect plenty of claims of how it will boost competition and job creation, despite the fact M&A history suggests the exact opposite will happen.

As a result, several Senators including Amy Klobuchar, Ron Wyden and Al Franken have fired off a letter urging the FCC and DOJ to more closely investigate the drawbacks of such a mammoth deal.

"Beginning an investigation into a merger of T-Mobile and Sprint now will allow your agencies to quickly, but fully, review the agreement if it is announced," they wrote.

"Indeed, multiple news sources are reporting that the two parties are close to a deal in principle. The likelihood of the transaction occurring combined with the serious issues that it raises provide compelling reason for DOJ and the FCC to begin investigating the potential transaction."

Given Trump and Ajit Pai's track record so far of gutting consumer protections and rubber stamping every industry whim, the plea seems more than likely to fall upon deaf ears. Still, the Senators appear hopeful that their letter will at least draw some public attention to the potential problems of such a deal.

"An anticompetitive acquisition would increase prices, burdening American consumers, many of whom are struggling to make ends meet, or forcing them to forego their internet connection altogether," the Senators said. "Neither outcome is acceptable."

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