Sen. Kohl argues that consumers would lose a low-priced option while Sen. Lee claims the merger would generate efficiencies.
In a recent letter addressed to Attorney General Eric Holder and Federal Communications Commission Chair Julius Genachowski, Senator Herb Kohl (D-WI) has requested that the Department of Justice and the Federal Communications Commission block the AT&T/T-Mobile merger on antitrust grounds.
Senator Kohl, the chairman of the U.S. Senate Committee of the Judiciary’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, argues that the $39 billion merger “would amount to a four-to-three merger among national cell phone providers in an already highly concentrated market.” These four providers are AT&T, Verizon, Sprint, and T-Mobile, which together account for 90% of the national market measured by revenue. Merging T-Mobile with AT&T would be troubling, Kohl argues, because T-Mobile has been a “price leader on the cell phone market, offering prices and rate plans significantly less expensive than the other three national cellphone providers.”
Senator Kohl also argues that the merger might jeopardize the future of Sprint because it would concentrate 80% of the national market in only two players, AT&T and Verizon. At a Senate hearing earlier this year, Sprint’s CEO testified that AT&T and Verizon would have “tremendous scale advantages” over Sprint with smartphone and other manufacturers. While Senator Kohl acknowledges that “antitrust policy is not designed to protect any specific competitor, but competition generally,” he adds that “we cannot turn a blind eye to the dangerous possibility that this acquisition could ultimately result in a duopoly in the national cell phone market.”
Proponents of the AT&T/T-Mobile merger argue that it will create efficiencies that would benefit consumers. In a Senate hearing earlier this year, representatives from AT&T and T-Mobile claimed that the merger would provide efficiencies including a more robust path to the next generation of 4G mobile technology for existing T-Mobile customers. Senator Mike Lee (R-UT), the ranking Republican on the Senate Subcommittee on Antitrust, released a statement agreeing with the merging parties on the same day that Senator Kohl released his letter.