What's At Stake in the DoJ Challenge to AT&T/T-Mobile? The Future of Antitrust

[Commentary] The Department of Justice (DoJ) Antitrust Division challenge to the AT&T/T-Mobile deal, United States v. AT&T, Inc., in addition to being a huge deal for us in the telecom world, is probably the single most important merger review case for the next ten years.

In two ways, this has become a battle about the future of antitrust enforcement and the soul of the Antitrust Division. This case has become a test case for the nature of antitrust and whether traditional metrics of concentration and market share, notably the Herfendahl-Hirschman Index (“HHI”), coupled with the concerns that such concentration predicts both the ability of the largest company to raise process and for all surviving companies to raise process (the “coordinated effects” test), will still have validity going forward. If the court accepts the arguments from AT&T and its defenders that the traditional measures of concentration are irrelevant, then antitrust review of mergers will essentially end for the next 5-10 years while economists and antitrust enforcers struggle to develop a new set of metrics for predicting the likely impact of mergers. More importantly, however, this case represents a clear decision of the Antitrust Division to move ahead with enforcement despite the possible political consequences.