Free Press Analyzes Antitrust Problems in AT&T/T-Mobile Deal

Free Press has issued a preliminary analysis of key antitrust problems with AT&T's proposed $39 billion purchase of T-Mobile.

In a letter sent to the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, Free Press shows why existing law and past precedent should compel the Department of Justice to challenge the merger based on its likely harms to consumers, innovation and competition.

Key findings include:

• AT&T and Verizon already dominate the national wireless market to such an extent that no new competitor realistically could enter the market. This merger would only exacerbate that problem.
• The merger would result in unilateral harms, with AT&T reducing overall capital investment and removing popular pricing plans and handsets from the market.
• The DOJ should focus its inquiry on the nationwide, post-paid smartphone service market. Smaller regional and pre-paid carriers will not provide enough competitive pressures to mitigate the harms of this merger and the resulting wireless duopoly of AT&T and Verizon.
• The market is already vulnerable to anti-competitive coordinated conduct, and the transaction's concentration of so much market share at the top between AT&T and Verizon would lead to further competitive harms. In fact, AT&T and Verizon have grown market share and profit margins during a period when their prices were far higher than those of their competitors.
• The DOJ's approach to prior smaller wireless mergers was to order divestiture of assets in certain local markets. But the negative impacts of this merger would be felt at the national level and not mitigated by local market divestitures. The market is now so concentrated that ordering local divestitures is “like shuffling the deck chairs on the Titanic.”