T-Mobile Pricing Concessions Suggest Possible Trouble for Sprint Deal, New Street Says
Pricing concessions T-Mobile offered the FCC Monday (see 1902040064) could show the carrier's proposed buy of Sprint faces difficulty winning clearance from the FCC and DOJ, New Street’s Blair Levin wrote investors Tuesday. “Generally when it comes to mergers, the…
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first side to offer concessions is likely to be the side that is losing,” Levin wrote. “Implicitly conceding that market forces alone are not sufficient to constrain prices is not a sign that the economic arguments at the DOJ about the impact of the deal on competition are working.” The commitment goes against antitrust chief Makan Delrahim's views that regulators shouldn't impose behavioral remedies “like pricing commitments.” Such a remedy “supplants competition with regulation [and] replaces disaggregated decision making with central planning” and “most behavioral decrees cure neither the incentive nor the ability of the merged company to exert enhanced leverage gained through an anticompetitive merger,” Delrahim believes, Levin said. “Offering such a concession suggests the company is seeking to garner support in the political realm." Timing is also off, since such commitments usually come at a process' end and DOJ appears to still be gathering evidence, he said. Levin said T-Mobile’s hiring of former Commissioner Mignon Clyburn likely won’t have a major effect on how regulators treat the deal. She's recused from lobbying at the FCC, he said, and is "not close to the DOJ antitrust division staff or the states attorneys generals, where we think the risks to the deal are greatest."