The U.S. Justice Department’s antitrust division staff has reportedly asked the agency to squash the giant merger between T-Mobile and Sprint.
The massive deal would see the third and fourth largest U.S. carriers combine. It was previously signed off by the Chairman of the Federal Communications Commission.
The FCC sign-off represented an important step in the deal. However, it does not represent a final verdict. An FCC vote on the plan still has yet to be scheduled. More significantly, the DOJ needs to agree to it taking place. The head of the agency’s Antitrust Division recently stated that he hadn’t yet decided whether to approve the deal.
The concern is the extent to which cutting down the number of top nationwide carriers in the United States could hurt competition. Specifically, they worry that after the deal is approved there will be less of a reason for T-Mobile to seek price reductions. It may also be less likely to aggressively improve its quality of service to win over customers.
What happens next?
Although frequently characterized as a merger, the $26 billion deal is technically an acquisition by T-Mobile of Sprint.
CNBC, which reported on the potential nixing of the deal, doesn’t name names. But it does cite “two sources familiar with the matter.” Whether that turns out to be accurate remains to be seen. A verdict is expected to be made in around one month.
As CNBC reports:
“The final decision on whether to allow two of the four nationwide wireless carriers to merge now lies with political appointees at the department, headed by antitrust division chief Makan Delrahim.”
Sprint share prices fell 6.2% in premarket trading after the news was reported.