In analysis released today, antitrust expert Professor John Kwoka (Northeastern University and AAI Senior Fellow and Director) evaluates the U.S. Department of Justice’s (DOJ) proposed settlement of the Sprint/T-Mobile merger. The analysis, Masquerading As Merger Control: The U.S. Department of Justice Settlement With Sprint and T-Mobile, shows why the settlement will not plausibly and predictably succeed in achieving the objective of preserving the competition lost through the merger.
Kwoka’s analysis observes that the settlement permits a “four-to-three” Sprint-T-Mobile merger based on a remedy that accepts competitive harms in the short and medium term, in exchange for an exceedingly optimistic view of possible benefits in the longer term. Professor Kwoka observes, “This enforcement approach does not represent good policy.”
The paper also offers important observations on the perilous state of merger control policy implied by the settlement. The remedy suggests heroic efforts to devise a basis for approval of a merger that is anticompetitive on its face. Professor Kwoka’s analysis explains that if the substantial and acknowledged competitive problems with a four-to-three merger are fixable by a strategy of rearranging some assets, negotiating some contracts, and then hoping for the best some years down the road, it is unclear what merger is not fixable.
Professor Kwoka concludes, “We must hope this is not what masquerades as merger control in the future.”