WEBVTT - Rie on Concerns with Sprint, T-Mobile Merger (Audio)

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<v Speaker 1>Sprint and T Mobile haven't even announced their anticipated murder deal,

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<v Speaker 1>and it's already facing significant legal questions. Antitrust staff attorneys

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<v Speaker 1>at the Justice Department are likely to view the deal

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<v Speaker 1>as a threat to competition in the mobile phone market.

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<v Speaker 1>That's according to a new Bloomberg News story that cites

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<v Speaker 1>three people familiar with the staff. Thinking with us to

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<v Speaker 1>talk through the regulatory prospects of a Sprint T Mobile

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<v Speaker 1>acquisition if it indeed comes to pass. Is Jennifer Ree.

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<v Speaker 1>She is a senior litigation analyst for Bloomberg Intelligence and

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<v Speaker 1>a regular welcome guest here on Bloomberg Law. Jen thanks

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<v Speaker 1>for joining us. Um sketch out if you wait quickly. First,

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<v Speaker 1>just the state of the mobile phone market. Where do

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<v Speaker 1>Sprint and T Mobile fit? What share the market? Do

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<v Speaker 1>they have that sort of thing? Suret Thanks for having me,

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<v Speaker 1>Greg and June Um Well, right now, essentially in the

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<v Speaker 1>U s they're just really four big wireless players, and

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<v Speaker 1>I think most people know that with Verizon is the

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<v Speaker 1>biggest at a round percent based on Bloomberg data, which

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<v Speaker 1>which isn't precise, but it's close. Eighteen te at about

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<v Speaker 1>market share, T Mobile at about and Sprint at about

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<v Speaker 1>eleven and then leaves about ten percent for a lot

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<v Speaker 1>of smaller, non national type players. Had things in the

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<v Speaker 1>marketplace changed a lot since the previous attempt to merge

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<v Speaker 1>the companies was rejected, or is it more about the

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<v Speaker 1>change in administrations? You know, I think things have changed,

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<v Speaker 1>but a lot of things have also stayed the same.

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<v Speaker 1>About what was problematic in the past, some of those

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<v Speaker 1>factors will remain problematic today. And of course the administration

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<v Speaker 1>is changing too, and there's been a lot of speculation

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<v Speaker 1>about that. And I think historically Republican administrations do tend

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<v Speaker 1>to be easier on deals than democratic ones, but not

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<v Speaker 1>in an extreme manner, really only on the fringe, just

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<v Speaker 1>sort of the slightest bit. There isn't really a big

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<v Speaker 1>difference in the evaluation that that the antitrust regulators will

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<v Speaker 1>go through to determine whether a deal might be harmful

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<v Speaker 1>to a market is the same no matter what political

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<v Speaker 1>party you come from. So, as you laid it out,

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<v Speaker 1>W and T Mobile are a distant third and fourth

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<v Speaker 1>in the market, and and I think one can anticipate

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<v Speaker 1>if they go forward with this, they will argue that

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<v Speaker 1>we will be a stronger competitor to Verizon and a

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<v Speaker 1>T and T um. Is that an argument that you

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<v Speaker 1>see as having the potential to have some legs to it, Greg,

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<v Speaker 1>I think it's one of the best arguments they have.

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<v Speaker 1>I think it's a good argument, and I think it's

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<v Speaker 1>it's likely, you know, a good argument for them to

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<v Speaker 1>go in with, and and if they have any chance

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<v Speaker 1>at all, it's it's probably based on something like that.

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<v Speaker 1>I think the problem here is that it's an uphill climb.

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<v Speaker 1>They walk in, you know, with the odds against them,

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<v Speaker 1>because as a threshold matter, the agencies will ask, the

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<v Speaker 1>d o J will ask what is the concentration in

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<v Speaker 1>the market, And that's just a matter of math, And

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<v Speaker 1>they take those market shares, they square them, and they

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<v Speaker 1>sum the squares, and they look at the difference before

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<v Speaker 1>the merger and after the merger, and if those numbers

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<v Speaker 1>exceed that change that difference exceeds two hundred, which it

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<v Speaker 1>does here in a market that is deemed to be

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<v Speaker 1>highly concentrated, which this is automatically, they consider that as

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<v Speaker 1>a threshold matter, to be a deal likely to cause

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<v Speaker 1>harm to the market. So once the staff attorneys make

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<v Speaker 1>their decision, and we assume that they're going to Let's say,

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<v Speaker 1>let's assume that they're going to decide against it. What

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<v Speaker 1>happens then, As far as the new antitrust chief, what

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<v Speaker 1>do we know about him and his opinions about things

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<v Speaker 1>like this? Really good question, June, because it's interesting. You know,

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<v Speaker 1>he is what I don't know him personally, but I

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<v Speaker 1>has a reputation as you know, a very good antitrust lawyers,

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<v Speaker 1>sort of a typical Republican, you know, his his evaluation

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<v Speaker 1>will be based in economics, based on the you know,

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<v Speaker 1>the guidelines that have been developed over the years and

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<v Speaker 1>the agencies, you know, not somebody who's going to be

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<v Speaker 1>you know, too crazy or creative with these things. Um.

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<v Speaker 1>He has said in the past that this was several

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<v Speaker 1>years ago and things were a little different, that he

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<v Speaker 1>did see that the a T and T T mobile

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<v Speaker 1>tie up would be a problem, but maybe perhaps a

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<v Speaker 1>Sprint T Mobile tie up would be more palatable. So

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<v Speaker 1>I think that's given a lot of people this idea

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<v Speaker 1>that maybe he'll look at this, consider it, and and

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<v Speaker 1>allow this deal to go through. But I think what

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<v Speaker 1>has changed, um in the last few years is that

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<v Speaker 1>we've seen T Mobile come back, become very competitive, sort

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<v Speaker 1>of act like a maverick in the industry, and incentives

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<v Speaker 1>could change if they get bigger emerging with sprint UM

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<v Speaker 1>and you know, this could be an issue, and I

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<v Speaker 1>think things are different now in that respect than when

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<v Speaker 1>he made that comment. There's also the Federal Communications Commission. Uh,

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<v Speaker 1>do they present a significant additional obstacle for the companies here?

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<v Speaker 1>They present an additional obstacle, But I think that the

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<v Speaker 1>prevailing opinion here is that the bigger obstacle will be

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<v Speaker 1>the d o J. You know, it's unclear on both

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<v Speaker 1>sides what those what those leading the two agencies will

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<v Speaker 1>do and how they think about this deal. But I

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<v Speaker 1>think there's more indication in the market that a g

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<v Speaker 1>pay on the FCC side seems to be more amenable

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<v Speaker 1>to it, perhaps than the d o J is. So

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<v Speaker 1>most think that the bigger um hurdle will be the

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<v Speaker 1>DOJ review. Jen, what's your bottom line and just twenty

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<v Speaker 1>seconds or so, what do you think based on what

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<v Speaker 1>you know now, what are the chances this deal would

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<v Speaker 1>would get approval? I think it has better chances than

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<v Speaker 1>it would have several years ago with Democrats. I still

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<v Speaker 1>think it's chances are very low below Okay, that was

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<v Speaker 1>Jennifer Ree. She's a senior litigation analyst for Bloomberg Intelligence,

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<v Speaker 1>saying that the chances might not be good assuming Sprint

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<v Speaker 1>and T Mobile go ahead with their anticipated merger proposal.