Phone carrier giants Sprint and T-Mobile announced an unprecedented merger in the spring of 2018. The merger would create a $146 billion powerhouse company under the T-Mobile name. (Taylor Soper, GeekWire). As of now, T-Mobile and Sprint are the third and fourth-largest carriers in the U.S., just behind AT&T and Verizon. Id.

However, the Department of Justice (DOJ) initially wasn’t sold and filed suit to block the merger. (U.S. D.O.J. Compl. 3. July 26, 2019). A deal of this size raises fair market and antitrust concerns for both the D.O.J. and Federal Communications Commission (F.C.C.) and is dependent on the regulators’ approval. (Taylor Soper, GeekWire). Historically, the D.O.J. has blocked mergers with the potential to threaten market competition and diversity and, in 2011, sued to block the proposed $39 billion AT&T takeover of T-Mobile. (Thomas Catan and Spencer Ante, The Wall Street Journal). T-Mobile and Sprint argue their merger is different because it will not only save Sprint’s dwindling business but also deliver “the most transformative 5G network in the country, lower prices, better quality, unmatched value and thousands of jobs while unlocking an unprecedented $43B net present value in synergies.” (T-Mobile News). Synergies may distinguish this merger from previous telecommunications takeovers, and historically the D.O.J. has responded to the synergies argument with approval. (Melissa Lipman, Law360). In 2010, for example, the D.O.J. approved InBev's acquisition of Anheuser-Bush Cos based on a similar theory. Id.

After a year of regulatory concerns, the F.C.C. Chairman blessed the Sprint T-Mobile merger in May, followed by the D.O.J. go-ahead in July after the parties entered into a consent decree regarding specific actions. (Merrit Kennedy, NPR). Consent decrees are commonly used in antitrust disputes pursuant to the Antitrust Procedures and Penalties Act (Tunney Act). They create a binding and voluntary agreement between parties by approval of the court without having to endure a long and expensive trial. (Antitrust Procedures and Penalties Act, 15 U.S.C. § 16(b)-(h)). To explain further, “[a] consent decree embodies an agreement of the parties and is also an agreement that the parties desire and expect will be reflected in, and be enforceable as, a judicial decree that is subject to the rules generally applicable to other judgments and decrees.” (Frew v. Hawkins, 540 U.S. 431, 437 (2004)). The T-Mobile/Sprint consent decree essentially divests Sprint’s prepaid business assets and spectrum assets to Dish Network Corp., a Colorado-based satellite television provider. This will allow Dish to join the telecommunications industry as a new competitor and quell previous D.O.J. market competition concerns. (U.S. Department of Justice Office) Additionally, T-Mobile and Sprint are required to assist Dish in entering the market by providing Dish with cell sites, retail locations, and access to the T-Mobile network for seven years. (U.S. D.O.J. Prop. Final J. 19. July 26, 2019).

The merger still faces new opposition, however, as eighteen state attorneys general have tried to block the billion-dollar deal. (Corinne Reichert, CNet). As of September 2018, New York, California, Colorado, Connecticut, Hawaii, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, Texas, Illinois, Virginia, Wisconsin, Oregon, the District of Columbia, and Pennsylvania have all filed suit over fears the merger will drive up consumer prices by an estimated $450 billion annually because of reduced market competition. Id. New York Attorney General

Letitia James stated, “an investigation by her state, and others, found that the mega-company wouldn't be able to deliver on many of those promises until several years in the future, if ever,” which reflects the states’ concerns for consumer protection. (Law.com, The American Lawyer). 

This suit will operate under a different standard of review than the D.O.J. case and will hinge on whether the attorneys general can show that the merger will cause irreparable harm to consumers. (Litigation Daily, The American Lawyer). The case is pending in New York federal court and appears to remain the last roadblock to T-Mobile and Sprint’s "megamerger." (Chuck Murphy, CPR News).