AAI Applauds Justice Department’s Suit to Block AT&T Acquisition of T-Mobile – DOJ’s Evaluation of Efficiencies is “Right on the Mark”

The American Antitrust Institute (AAI) praised the Antitrust Division of the U.S. Department of Justice (DOJ) for filing a complaint today to block AT&T’s acquisition of T-Mobile from Deutsche Telekom.

“We are delighted that the Administration is committed to the vigorous use of antitrust even at a time of economic difficulties. Mergers of giant corporations generally do not increase employment or growth,” said AAI President Bert Foer. “The DOJ agrees with our view that consumers of mobile wireless telecommunications services, as well as businesses that buy wireless services for their employees’ use, would be harmed by this mega-merger in the wireless industry.”

The merger would reduce the number of national competitors from four to three and result in highly concentrated markets nationwide and locally, according to the AAI’s white paper on the proposed merger that was submitted to the DOJ on August 17.

Reviewing the DOJ complaint, Foer noted that the parties’ internal documents confirmed the obvious: that T-Mobile’s innovation and aggressive pricing behavior affected AT&T and the other national carriers. “DOJ recognized that the elimination of T-Mobile as the fourth national competitor of wireless services, and an industry maverick, would likely lead to higher prices, lower quality service, and reduced innovation,” said Foer.

The DOJ found that AT&T could not demonstrate merger-specific efficiencies that would reverse the merger’s anticompetitive effects, concluding that AT&T could obtain the same efficiencies if it simply invested in its own network without eliminating a close competitor. “The DOJ’s evaluation of AT&T’s claimed efficiencies was right on the mark,” said Foer.

Foer added, “We particularly applaud the DOJ’s expeditious action in light of its conclusion that the proposed merger itself lessened the threat of T-Mobile engaging in aggressive and disruptive competitive behavior.”