Daily Dicta: Get Ready for the Next Antitrust Mega-Fight (Hint: It Doesn't Involve DOJ)
It's not just nature that abhors a vacuum. So too does regulatory enforcement. And the fight to watch this fall will pit AGs from more than a dozen states against lawyers for T-Mobile and Sprint.
July 30, 2019 at 01:01 PM
5 minute read
Here's a funny thing about the Justice Department's Antitrust Division these days.
When a merger involves an entity the president openly despises—cough, CNN—antitrust enforcers are all about super-aggressive enforcement, bringing (and losing) the first challenge to a vertical merger since the Carter administration.
Or take Google and Facebook—which President Trump has blasted for their alleged anti-conservative bias—as well as Amazon, which is owned by Trump nemesis Jeff Bezos. Last week, Antitrust Division head Makan Delrahim announced a wide-ranging review of “market-leading online platforms” that's virtually certain to put the trio on the hot seat as calls mount for their breakups.
But when it comes to the merger of T-Mobile and Sprint—politically neutral companies that have not found themselves in the president's crosshairs?
Their union raises classic antitrust concerns, combining the third and fourth largest players in a highly-concentrated market. Based on the government's own guidelines, it's presumptively anticompetitive because it sends the Herfindahl-Hirschman Index, which measures market concentration, soaring. Estimates by economists for Sprint and T-Mobile allegedly show that the merger could cost the companies' subscribers at least $4.5 billion annually.
And the erstwhile diligent Trump antitrust enforcers' response?
Meh. Make some divestitures to Dish Network and you're good to go.
Never let anyone claim antitrust isn't political.
But it's not just nature that abhors a vacuum. Apparently so too does regulatory enforcement.
That's why the fight to watch this fall will pit AGs from 13 states plus the District of Columbia along with outside counsel for California from Munger, Tolles & Olson against lawyers for T-Mobile and Sprint.
The states filed suit in U.S. District Court for the Southern District of New York in June to block the $26.5 billion merger—a challenge that took center stage after the DOJ greenlighted the deal on Friday. (The Federal Communication Commission has yet to formally approve the transaction, but the three Republican commissioners have expressed their support—enough to outvote the Democrats.)
The wireless carriers have assembled a formidable defense team. Cleary Gottlieb Steen & Hamilton partners George Cary, Dave Gelfand and Mark Nelson are taking the lead for both T-Mobile and Deutsche Telekom.
Cary, who was named a Dealmaker of the Year by The American Lawyer in 2018 for his role as lead antitrust counsel to Dow Chemical in its $130 billion merger with DuPont, is a seasoned antitrust counselor. Gelfand has high-level government experience, serving from 2013 to 2016 as the deputy assistant attorney general for litigation in DOJ's Antitrust Division, while Nelson has worked on a wide range of antitrust matters.
In addition, Deutsche Telekom has tapped Gibson, Dunn & Crutcher's Richard Parker, who has extensive antitrust trial experience, including Sysco/ U.S. Foods and Triton Coal/ Arch Coal. Also on the team: Joshua Soven of Wilson Sonsini Goodrich & Rosati, who preceded Gelfand as the DOJ's Antitrust Division litigation chief, serving from 2007 to 2012.
T-Mobile has also retained commercial litigator Hallie Levin of Wilmer Cutler Pickering Hale and Dorr.
As for Sprint, it has turned to counsel from Skadden, Arps, Slate, Meagher & Flom led by antitrust practice head Steven Sunshine, another giant in the field.
Morrison & Foerster lawyers including David Meyer represent Sprint and its controlling shareholder Softbank Group Corp. Meyer joined the firm in 2009 from the Antitrust Division, where he was a senior official, responsible for matters including the XM-Sirius merger and Monsanto's acquisition of Delta.
It's a stellar team—but they'll have their work cut out for them.
In addition to the state AGs, defense counsel will face Munger Tolles lawyers led by Glenn Pomerantz. In 2011, Pomerantz temporarily resigned from the firm to join the Justice Department, where he was co-lead trial counsel in the government's successful suit blocking AT&T's attempt to merge with T-Mobile. This assignment should be familiar turf for him.
That's not all. The merger is also of keen interest to T-Mobile and Sprint competitors, which have joined in on the side of the state AGs as movants.
Per the docket, Comcast has tapped Arthur Burke, who heads the antitrust practice at Davis Polk & Wardwell.
Charter Communications Inc. is represented by Mark Popofsky of Ropes & Gray—a DOJ veteran who played a key role in U.S. v. Microsoft and now leads the firm's antitrust group.
Altice USA Inc. has turned to Paul Weiss litigation leader Jay Cohen, along with Jonathan Kanter, who co-heads the firm's antitrust practice.
AT&T has called on Crowell & Moring's Olivier Antoine, who recently represented the company in its $108.7 billion acquisition of Time Warner Inc. as well as its attempted acquisition of T-Mobile.
Trial is scheduled to begin on October 7, 2019 before U.S. District Judge Victor Marrero in Manhattan.
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