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T-Mobile and Sprint win lawsuit and will be allowed to merge

T-Mobile and Sprint win lawsuit and will be allowed to merge


The deal cleared one of its final hurdles Tuesday morning

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Illustration by Alex Castro / The Verge

On Tuesday, a federal judge allowed the $26 billion merger between T-Mobile and Sprint to proceed, dismissing a challenge brought by a group of state attorneys general.

The state attorneys general sued to block the deal last year after the merger received approval from both the Federal Communications Commission and the Justice Department. In January, the states argued that shrinking the national wireless carrier pool down from four to three providers would decrease competition and create higher prices for consumers if the deal were approved.

In his decision, Southern District of New York judge Victor Marrero rejected that argument. “The court concludes that the proposed merger is not reasonably likely to substantially lessen competition in the” mobile service market, Marrero wrote, and would likely “enhance competition in the relevant markets to the benefit of all consumers.”

“The proposed merger is not reasonably likely to substantially lessen competition.”

T-Mobile and Sprint confirmed that they will be moving to finalize the merger now that it’s received final approval from the court. Incoming T-Mobile CEO Mike Sievert said the deal could close as early as April 1st, 2020.

As part of its deal with the Justice Department, T-Mobile agreed to enter a limited-term MVNO (or mobile virtual network operator) deal with Dish Network, essentially leasing the company access to its network so it could compete with the new T-Mobile as soon as the merger with Sprint closed. In theory, this would give the new company time to build out its own 5G network, and eventually compete as a standalone carrier. But throughout January’s trial, the states argued that the deal would incentivize Dish to coast on its favorable MVNO deal and eventually sell off its own spectrum holdings at a profit later.

In Tuesday’s decision, Marrero said: “Dish as a new entrant will constitute a substantial incentive to competition.” Dish has failed to launch its own wireless network with old spectrum holdings in the past.

California Attorney General Xavier Becerra led the state coalition suing to block the deal and said in a statement, “Our fight to oppose this merger sends a strong message: even in the face of powerful opposition, we won’t hesitate to stand up for consumers who deserve choice and fair prices.” He continued, “We’ll stand on the side of competition over megamergers, every time. And our coalition is prepared to fight as long as necessary to protect innovation and competitive costs.”

FCC chairman Ajit Pai, whose commission approved the deal last year, applauded the judge’s approval. “The T-Mobile-Sprint merger will help close the digital divide and secure United States leadership in 5G,” Pai said. “This is a big win for American consumers.”

Still, the merger has already spurred new calls for stricter antitrust laws from many consumer groups who see the failed challenge as proof that existing statutes can no longer restrain large carriers.

“I call on Congress to strengthen U.S. antitrust law without delay,” said former FCC counselor Gigi Sohn in response to the ruling, “as this decision will inevitably open the floodgates to combinations as bad or worse than the one approved today.”