Speaker 1: Sprint and T Mobile haven't even announced their anticipated murder deal,
Speaker 1: and it's already facing significant legal questions. Antitrust staff attorneys
Speaker 1: at the Justice Department are likely to view the deal
Speaker 1: as a threat to competition in the mobile phone market.
Speaker 1: That's according to a new Bloomberg News story that cites
Speaker 1: three people familiar with the staff. Thinking with us to
Speaker 1: talk through the regulatory prospects of a Sprint T Mobile
Speaker 1: acquisition if it indeed comes to pass. Is Jennifer Ree.
Speaker 1: She is a senior litigation analyst for Bloomberg Intelligence and
Speaker 1: a regular welcome guest here on Bloomberg Law. Jen thanks
Speaker 1: for joining us. Um sketch out if you wait quickly. First,
Speaker 1: just the state of the mobile phone market. Where do
Speaker 1: Sprint and T Mobile fit? What share the market? Do
Speaker 1: they have that sort of thing? Suret Thanks for having me,
Speaker 1: Greg and June Um Well, right now, essentially in the
Speaker 1: U s they're just really four big wireless players, and
Speaker 1: I think most people know that with Verizon is the
Speaker 1: biggest at a round percent based on Bloomberg data, which
Speaker 1: which isn't precise, but it's close. Eighteen te at about
Speaker 1: market share, T Mobile at about and Sprint at about
Speaker 1: eleven and then leaves about ten percent for a lot
Speaker 1: of smaller, non national type players. Had things in the
Speaker 1: marketplace changed a lot since the previous attempt to merge
Speaker 1: the companies was rejected, or is it more about the
Speaker 1: change in administrations? You know, I think things have changed,
Speaker 1: but a lot of things have also stayed the same.
Speaker 1: About what was problematic in the past, some of those
Speaker 1: factors will remain problematic today. And of course the administration
Speaker 1: is changing too, and there's been a lot of speculation
Speaker 1: about that. And I think historically Republican administrations do tend
Speaker 1: to be easier on deals than democratic ones, but not
Speaker 1: in an extreme manner, really only on the fringe, just
Speaker 1: sort of the slightest bit. There isn't really a big
Speaker 1: difference in the evaluation that that the antitrust regulators will
Speaker 1: go through to determine whether a deal might be harmful
Speaker 1: to a market is the same no matter what political
Speaker 1: party you come from. So, as you laid it out,
Speaker 1: W and T Mobile are a distant third and fourth
Speaker 1: in the market, and and I think one can anticipate
Speaker 1: if they go forward with this, they will argue that
Speaker 1: we will be a stronger competitor to Verizon and a
Speaker 1: T and T um. Is that an argument that you
Speaker 1: see as having the potential to have some legs to it, Greg,
Speaker 1: I think it's one of the best arguments they have.
Speaker 1: I think it's a good argument, and I think it's
Speaker 1: it's likely, you know, a good argument for them to
Speaker 1: go in with, and and if they have any chance
Speaker 1: at all, it's it's probably based on something like that.
Speaker 1: I think the problem here is that it's an uphill climb.
Speaker 1: They walk in, you know, with the odds against them,
Speaker 1: because as a threshold matter, the agencies will ask, the
Speaker 1: d o J will ask what is the concentration in
Speaker 1: the market, And that's just a matter of math, And
Speaker 1: they take those market shares, they square them, and they
Speaker 1: sum the squares, and they look at the difference before
Speaker 1: the merger and after the merger, and if those numbers
Speaker 1: exceed that change that difference exceeds two hundred, which it
Speaker 1: does here in a market that is deemed to be
Speaker 1: highly concentrated, which this is automatically, they consider that as
Speaker 1: a threshold matter, to be a deal likely to cause
Speaker 1: harm to the market. So once the staff attorneys make
Speaker 1: their decision, and we assume that they're going to Let's say,
Speaker 1: let's assume that they're going to decide against it. What
Speaker 1: happens then, As far as the new antitrust chief, what
Speaker 1: do we know about him and his opinions about things
Speaker 1: like this? Really good question, June, because it's interesting. You know,
Speaker 1: he is what I don't know him personally, but I
Speaker 1: has a reputation as you know, a very good antitrust lawyers,
Speaker 1: sort of a typical Republican, you know, his his evaluation
Speaker 1: will be based in economics, based on the you know,
Speaker 1: the guidelines that have been developed over the years and
Speaker 1: the agencies, you know, not somebody who's going to be
Speaker 1: you know, too crazy or creative with these things. Um.
Speaker 1: He has said in the past that this was several
Speaker 1: years ago and things were a little different, that he
Speaker 1: did see that the a T and T T mobile
Speaker 1: tie up would be a problem, but maybe perhaps a
Speaker 1: Sprint T Mobile tie up would be more palatable. So
Speaker 1: I think that's given a lot of people this idea
Speaker 1: that maybe he'll look at this, consider it, and and
Speaker 1: allow this deal to go through. But I think what
Speaker 1: has changed, um in the last few years is that
Speaker 1: we've seen T Mobile come back, become very competitive, sort
Speaker 1: of act like a maverick in the industry, and incentives
Speaker 1: could change if they get bigger emerging with sprint UM
Speaker 1: and you know, this could be an issue, and I
Speaker 1: think things are different now in that respect than when
Speaker 1: he made that comment. There's also the Federal Communications Commission. Uh,
Speaker 1: do they present a significant additional obstacle for the companies here?
Speaker 1: They present an additional obstacle, But I think that the
Speaker 1: prevailing opinion here is that the bigger obstacle will be
Speaker 1: the d o J. You know, it's unclear on both
Speaker 1: sides what those what those leading the two agencies will
Speaker 1: do and how they think about this deal. But I
Speaker 1: think there's more indication in the market that a g
Speaker 1: pay on the FCC side seems to be more amenable
Speaker 1: to it, perhaps than the d o J is. So
Speaker 1: most think that the bigger um hurdle will be the
Speaker 1: DOJ review. Jen, what's your bottom line and just twenty
Speaker 1: seconds or so, what do you think based on what
Speaker 1: you know now, what are the chances this deal would
Speaker 1: would get approval? I think it has better chances than
Speaker 1: it would have several years ago with Democrats. I still
Speaker 1: think it's chances are very low below Okay, that was
Speaker 1: Jennifer Ree. She's a senior litigation analyst for Bloomberg Intelligence,
Speaker 1: saying that the chances might not be good assuming Sprint
Speaker 1: and T Mobile go ahead with their anticipated merger proposal.