1 00:00:00,200 --> 00:00:03,600 Speaker 1: Sprint and T Mobile haven't even announced their anticipated murder deal, 2 00:00:03,640 --> 00:00:07,960 Speaker 1: and it's already facing significant legal questions. Antitrust staff attorneys 3 00:00:07,960 --> 00:00:10,160 Speaker 1: at the Justice Department are likely to view the deal 4 00:00:10,200 --> 00:00:12,600 Speaker 1: as a threat to competition in the mobile phone market. 5 00:00:12,720 --> 00:00:15,200 Speaker 1: That's according to a new Bloomberg News story that cites 6 00:00:15,240 --> 00:00:18,759 Speaker 1: three people familiar with the staff. Thinking with us to 7 00:00:18,840 --> 00:00:22,919 Speaker 1: talk through the regulatory prospects of a Sprint T Mobile 8 00:00:23,160 --> 00:00:26,799 Speaker 1: acquisition if it indeed comes to pass. Is Jennifer Ree. 9 00:00:26,840 --> 00:00:30,760 Speaker 1: She is a senior litigation analyst for Bloomberg Intelligence and 10 00:00:30,840 --> 00:00:34,840 Speaker 1: a regular welcome guest here on Bloomberg Law. Jen thanks 11 00:00:34,840 --> 00:00:38,040 Speaker 1: for joining us. Um sketch out if you wait quickly. First, 12 00:00:38,080 --> 00:00:40,400 Speaker 1: just the state of the mobile phone market. Where do 13 00:00:40,520 --> 00:00:42,839 Speaker 1: Sprint and T Mobile fit? What share the market? Do 14 00:00:42,880 --> 00:00:45,040 Speaker 1: they have that sort of thing? Suret Thanks for having me, 15 00:00:45,159 --> 00:00:48,839 Speaker 1: Greg and June Um Well, right now, essentially in the 16 00:00:48,920 --> 00:00:51,440 Speaker 1: U s they're just really four big wireless players, and 17 00:00:51,600 --> 00:00:54,040 Speaker 1: I think most people know that with Verizon is the 18 00:00:54,040 --> 00:00:57,440 Speaker 1: biggest at a round percent based on Bloomberg data, which 19 00:00:57,520 --> 00:01:00,560 Speaker 1: which isn't precise, but it's close. Eighteen te at about 20 00:01:01,280 --> 00:01:04,880 Speaker 1: market share, T Mobile at about and Sprint at about 21 00:01:04,959 --> 00:01:07,440 Speaker 1: eleven and then leaves about ten percent for a lot 22 00:01:07,440 --> 00:01:11,039 Speaker 1: of smaller, non national type players. Had things in the 23 00:01:11,120 --> 00:01:15,520 Speaker 1: marketplace changed a lot since the previous attempt to merge 24 00:01:15,959 --> 00:01:18,560 Speaker 1: the companies was rejected, or is it more about the 25 00:01:18,640 --> 00:01:22,600 Speaker 1: change in administrations? You know, I think things have changed, 26 00:01:22,720 --> 00:01:24,720 Speaker 1: but a lot of things have also stayed the same. 27 00:01:24,800 --> 00:01:27,880 Speaker 1: About what was problematic in the past, some of those 28 00:01:27,920 --> 00:01:32,080 Speaker 1: factors will remain problematic today. And of course the administration 29 00:01:32,160 --> 00:01:34,319 Speaker 1: is changing too, and there's been a lot of speculation 30 00:01:34,360 --> 00:01:38,160 Speaker 1: about that. And I think historically Republican administrations do tend 31 00:01:38,200 --> 00:01:41,319 Speaker 1: to be easier on deals than democratic ones, but not 32 00:01:41,480 --> 00:01:44,120 Speaker 1: in an extreme manner, really only on the fringe, just 33 00:01:44,200 --> 00:01:47,200 Speaker 1: sort of the slightest bit. There isn't really a big 34 00:01:47,240 --> 00:01:51,520 Speaker 1: difference in the evaluation that that the antitrust regulators will 35 00:01:51,560 --> 00:01:53,720 Speaker 1: go through to determine whether a deal might be harmful 36 00:01:53,760 --> 00:01:56,920 Speaker 1: to a market is the same no matter what political 37 00:01:56,960 --> 00:01:59,640 Speaker 1: party you come from. So, as you laid it out, 38 00:02:00,000 --> 00:02:02,320 Speaker 1: W and T Mobile are a distant third and fourth 39 00:02:02,320 --> 00:02:05,000 Speaker 1: in the market, and and I think one can anticipate 40 00:02:05,040 --> 00:02:07,760 Speaker 1: if they go forward with this, they will argue that 41 00:02:07,840 --> 00:02:10,960 Speaker 1: we will be a stronger competitor to Verizon and a 42 00:02:11,080 --> 00:02:14,880 Speaker 1: T and T um. Is that an argument that you 43 00:02:14,919 --> 00:02:19,200 Speaker 1: see as having the potential to have some legs to it, Greg, 44 00:02:19,240 --> 00:02:21,280 Speaker 1: I think it's one of the best arguments they have. 45 00:02:21,520 --> 00:02:23,600 Speaker 1: I think it's a good argument, and I think it's 46 00:02:23,639 --> 00:02:26,600 Speaker 1: it's likely, you know, a good argument for them to 47 00:02:26,600 --> 00:02:28,840 Speaker 1: go in with, and and if they have any chance 48 00:02:28,880 --> 00:02:31,520 Speaker 1: at all, it's it's probably based on something like that. 49 00:02:31,880 --> 00:02:34,360 Speaker 1: I think the problem here is that it's an uphill climb. 50 00:02:34,400 --> 00:02:37,120 Speaker 1: They walk in, you know, with the odds against them, 51 00:02:37,160 --> 00:02:40,880 Speaker 1: because as a threshold matter, the agencies will ask, the 52 00:02:40,960 --> 00:02:42,720 Speaker 1: d o J will ask what is the concentration in 53 00:02:42,760 --> 00:02:45,000 Speaker 1: the market, And that's just a matter of math, And 54 00:02:45,040 --> 00:02:47,480 Speaker 1: they take those market shares, they square them, and they 55 00:02:47,520 --> 00:02:49,919 Speaker 1: sum the squares, and they look at the difference before 56 00:02:49,919 --> 00:02:52,399 Speaker 1: the merger and after the merger, and if those numbers 57 00:02:52,840 --> 00:02:55,840 Speaker 1: exceed that change that difference exceeds two hundred, which it 58 00:02:55,880 --> 00:02:58,840 Speaker 1: does here in a market that is deemed to be 59 00:02:58,960 --> 00:03:03,240 Speaker 1: highly concentrated, which this is automatically, they consider that as 60 00:03:03,240 --> 00:03:05,880 Speaker 1: a threshold matter, to be a deal likely to cause 61 00:03:05,919 --> 00:03:10,119 Speaker 1: harm to the market. So once the staff attorneys make 62 00:03:10,240 --> 00:03:13,720 Speaker 1: their decision, and we assume that they're going to Let's say, 63 00:03:13,760 --> 00:03:16,560 Speaker 1: let's assume that they're going to decide against it. What 64 00:03:16,840 --> 00:03:21,120 Speaker 1: happens then, As far as the new antitrust chief, what 65 00:03:21,200 --> 00:03:24,560 Speaker 1: do we know about him and his opinions about things 66 00:03:24,600 --> 00:03:28,120 Speaker 1: like this? Really good question, June, because it's interesting. You know, 67 00:03:28,160 --> 00:03:30,160 Speaker 1: he is what I don't know him personally, but I 68 00:03:30,200 --> 00:03:33,760 Speaker 1: has a reputation as you know, a very good antitrust lawyers, 69 00:03:33,919 --> 00:03:37,160 Speaker 1: sort of a typical Republican, you know, his his evaluation 70 00:03:37,160 --> 00:03:40,440 Speaker 1: will be based in economics, based on the you know, 71 00:03:40,520 --> 00:03:42,600 Speaker 1: the guidelines that have been developed over the years and 72 00:03:42,640 --> 00:03:45,200 Speaker 1: the agencies, you know, not somebody who's going to be 73 00:03:45,240 --> 00:03:48,200 Speaker 1: you know, too crazy or creative with these things. Um. 74 00:03:48,320 --> 00:03:51,600 Speaker 1: He has said in the past that this was several 75 00:03:51,680 --> 00:03:54,600 Speaker 1: years ago and things were a little different, that he 76 00:03:54,680 --> 00:03:57,280 Speaker 1: did see that the a T and T T mobile 77 00:03:57,440 --> 00:04:00,360 Speaker 1: tie up would be a problem, but maybe perhaps a 78 00:04:00,400 --> 00:04:02,840 Speaker 1: Sprint T Mobile tie up would be more palatable. So 79 00:04:02,880 --> 00:04:05,040 Speaker 1: I think that's given a lot of people this idea 80 00:04:05,080 --> 00:04:07,800 Speaker 1: that maybe he'll look at this, consider it, and and 81 00:04:08,360 --> 00:04:11,120 Speaker 1: allow this deal to go through. But I think what 82 00:04:11,240 --> 00:04:13,800 Speaker 1: has changed, um in the last few years is that 83 00:04:13,840 --> 00:04:17,360 Speaker 1: we've seen T Mobile come back, become very competitive, sort 84 00:04:17,360 --> 00:04:20,360 Speaker 1: of act like a maverick in the industry, and incentives 85 00:04:20,360 --> 00:04:24,040 Speaker 1: could change if they get bigger emerging with sprint UM 86 00:04:24,120 --> 00:04:26,719 Speaker 1: and you know, this could be an issue, and I 87 00:04:26,720 --> 00:04:29,360 Speaker 1: think things are different now in that respect than when 88 00:04:29,400 --> 00:04:34,279 Speaker 1: he made that comment. There's also the Federal Communications Commission. Uh, 89 00:04:35,000 --> 00:04:38,880 Speaker 1: do they present a significant additional obstacle for the companies here? 90 00:04:39,480 --> 00:04:42,120 Speaker 1: They present an additional obstacle, But I think that the 91 00:04:42,200 --> 00:04:45,880 Speaker 1: prevailing opinion here is that the bigger obstacle will be 92 00:04:45,920 --> 00:04:48,280 Speaker 1: the d o J. You know, it's unclear on both 93 00:04:48,320 --> 00:04:53,560 Speaker 1: sides what those what those leading the two agencies will 94 00:04:53,640 --> 00:04:56,240 Speaker 1: do and how they think about this deal. But I 95 00:04:56,720 --> 00:04:59,200 Speaker 1: think there's more indication in the market that a g 96 00:04:59,440 --> 00:05:02,799 Speaker 1: pay on the FCC side seems to be more amenable 97 00:05:02,839 --> 00:05:04,520 Speaker 1: to it, perhaps than the d o J is. So 98 00:05:04,600 --> 00:05:07,359 Speaker 1: most think that the bigger um hurdle will be the 99 00:05:07,400 --> 00:05:11,120 Speaker 1: DOJ review. Jen, what's your bottom line and just twenty 100 00:05:11,120 --> 00:05:13,160 Speaker 1: seconds or so, what do you think based on what 101 00:05:13,200 --> 00:05:15,200 Speaker 1: you know now, what are the chances this deal would 102 00:05:15,240 --> 00:05:17,880 Speaker 1: would get approval? I think it has better chances than 103 00:05:17,920 --> 00:05:20,320 Speaker 1: it would have several years ago with Democrats. I still 104 00:05:20,320 --> 00:05:24,320 Speaker 1: think it's chances are very low below Okay, that was 105 00:05:24,440 --> 00:05:28,320 Speaker 1: Jennifer Ree. She's a senior litigation analyst for Bloomberg Intelligence, 106 00:05:28,800 --> 00:05:32,640 Speaker 1: saying that the chances might not be good assuming Sprint 107 00:05:32,640 --> 00:05:36,680 Speaker 1: and T Mobile go ahead with their anticipated merger proposal.