This week, Judge Ellen Segal Huvelle – the one who is hearing the DoJ’s suit to stop the AT&T / T-Mobile merger – made a preliminary ruling which would allow AT&T competitors, Sprint and Cellular South (C Spire), to join the DoJ case. Though the action enabling them to jump on is reportedly unprecedented, Sprint and C Spire succeeded on only a small portion of their complaints. To this end, Huvelle ruled that they may participate to the extent they can show “injury” as it relates to their access to the latest wireless devices; and for C Spire only, how the merger would affect its ability to purchase GSM roaming services going forward.
Not surprisingly, both Sprint and C Spire were high-fiving themselves after the Order. To be sure, in a tactical sense their inclusion makes the DoJ suit more costly to combat for AT&T. Public Knowledge’s Harold Feld bluntly lays out this ugly aspect of the game, noting:
…[I]t directly raises the cost of settlement by keeping in two private parties who now must also be paid off to go away.
Wow. Gotta’ love that government-enabled extortion racket, eh?
Without going into more, if the suit proceeds to trial, I think Sprint and C Spire’s claims will fail. Thus the “win,” if in fact it is one, is small potatoes at best.
For me, one of the more interesting pieces in the Order was the Judge’s rejection of Sprint and C Spire’s wireless market “injury” argument. In this regard, they averred that they would be injured if – and this is a big “if” – prices lifted as a consequence of the merger. I think the Judge got a chuckle out of this, stating:
…Whether the result of an increase in market concentration by itself, or “the oligopolistic price coordination” that “excessive concentration . . . portends,” an increase in market prices alone does not harm competitors. To the contrary, “You want your competitors to charge high prices.” The possibility that a post-merger AT&T could raise market prices does not, without more, threaten injury-in-fact to Sprint and Cellular South. It therefore does not confer antitrust standing on them. (Citations omitted by author)
To me, it confirms the charade that Sprint in particular has been playing in this legal confidence game. They want prices to rise, contrary to their “we’re all for the consumer” public facing. It would mean they can charge more; that they could begin to hope to pay off that huge mountain debt they’re piling up by buying billions of dollars of iPhones for sale to its customers.
For Sprint, stopping AT&T’s merger has always been about avoiding “increased competition.” Sadly (for Sprint), what will likely occur after the merger gets approved is just the opposite – competition will in fact become even more intense as a result. And this will put immense pressure on an already fragile Sprint to eek out profit.
They should be so lucky to see prices increase (er, sorry, Mr. Consumer). That’s the least of their worries.
What a racket.