Antitrust chief: Top carrier mergers hard to justify
The Justice Department has warned that merger plans between any of the top four U.S. carriers would likely be unjustifiable in the name of market competition.
According to the New York Times, assistant attorney general for the antitrust division of the Justice Department, William J. Baer, said that the agency would deeply scrutinize any merger plans between the largest U.S. carriers in order to protect competition.
AT&T, T-Mobile, Sprint and Verizon, the largest carriers by subscription in the United States, are continually jostling for spectrum resources in order to boost network capabilities and snag additional customers. However, mergers proposed between the companies have to be approved by antitrust regulators in order to maintain a competitive market and prevent a monopoly that could be detrimental to U.S. consumers.
Baer's comments suggest that recent speculation concerning a deal between T-Mobile and Sprint this year could be blocked by the DoJ -- leading from the example of the refused merger between AT&T and T-Mobile in 2011, in which Baer said consumers have enjoyed "much more favorable competitive conditions" since the block was established.
In Q3 2013, after the merger plans were abandoned, T-Mobile went on the attack and managed to secure roughly 650,000 new subscribers due to rejuvenated, competitive pricing plans and increased network investment. This, in turn, has been met by other operators -- and such price wars, which can only benefit the consumer, may not have taken place if the 2011 deal was allowed to proceed.
"It's going to be hard for someone to make a persuasive case that reducing four firms to three is actually going to improve competition for the benefit of American consumers," the antitrust chief said. "Any proposed transaction would get a very hard look from the antitrust division."
However, it is not just wireless carriers that will face intense scrutiny in the future. The same investigations will apply to cable television firms -- especially as reports suggest Comcast is interesting in buying a number of Time Warner Cable markets from Charter, if Charter manages to acquire Time Warner. The company, the second-largest cable operator in the U.S., was offered $37.8 billion -- but Charter's offer was rejected as inadequate.
"We've looked long and hard at the wireless industry," Baer commented. "We've seen the benefits over the last two and a half years of four-firm competition. Experience teaches us that the market is thriving and consumers are benefiting from the current competitive dynamic."