Sprint has stepped up to put their money where their mouth is regarding the AT&T acquisition of T-Mobile from Deutsche Telekom. In a lawsuit filed today, Sprint claims that the purchase would be a violation of Section 7 of the Clayton Act. The Clayton act is usually what defines terms for anti-trust litigation and Sprint has made no secrets that it feels that AT&T’s purchase of T-Mobile would be anti-competitive and hurt the consumer long-term.
Section 7 of the Clayton Act elaborates on specific and crucial concepts of the Clayton Act. It defines a “holding company” as a “common and favorite method of promoting monopoly”,but more precisely as “a company whose primary purpose is to hold stocks of other companies” which the government saw as an abomination and a mere corporated form of the ‘old fashioned’ trust. There are further definitions given in the Celler-Kefauver amendments of the 1950’s that cover assets and stock acquisitions as well.
While there is still plenty to be played out on this topic, Sprint’s stance is very simple. Their lawsuit goes hand in hand with the Department of Justice. Sprint released the following objections to the merger and outlined them in the release today.
Sprint’s lawsuit focuses on the competitive and consumer harms which would result from a takeover of T-Mobile by AT&T. The proposed takeover would:
- Harm retail consumers and corporate customers by causing higher prices and less innovation.
- Entrench the duopoly control of AT&T and Verizon, the two “Ma Bell” descendants, of the almost one-quarter of a trillion dollar wireless market. As a result of the transaction, AT&T and Verizon would control more than three-quarters of that market and 90 percent of the profits.
- Harm Sprint and the other independent wireless carriers. If the transaction were to be allowed, a combined AT&T and T-Mobile would have the ability 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 to lessen competition.
Overall, Sprint has a very solid footing in the Clayton act from a legal standpoint, but will AT&T’s legal team be willing to fight this out or will they just cut Sprint a deal? Could we see Sprint’s blessing on this with a wonderfully crafted LTE roaming agreement? Could we see that 25% share of T-Mobile’s assets that AT&T offered to liquidate going to Clear and Sprint? There are plenty of scenarios left to play out on this one, but for now, Sprint has a foot in the door towards blocking this merger – at the very least, for now.