States Make Closing Arguments in Bid to Halt Merger of Sprint and T-Mobile
A Munger, Tolles & Olson partner told a Manhattan federal judge that the proposed combination of the country's third- and fourth-largest cellphone carriers would eliminate Sprint from the market and cost consumers billions of dollars in higher annual bills.
January 15, 2020 at 04:09 PM
4 minute read
New York Attorney General Letitia James was in court Wednesday morning as attorneys from 13 states and the District of Columbia made their final case for blocking the planned merger of Sprint Corp. and T-Mobile US Inc. on antitrust grounds.
Glenn Pomerantz, a Munger, Tolles & Olson partner who is representing the coalition, told a Manhattan federal judge that the proposed combination of the country's third- and fourth-largest cellphone carriers would eliminate Sprint from the market and cost consumers billions of dollars in higher annual bills.
Closing statements in the closely watched antitrust case followed a two-week trial in December, where attorneys from Sprint and T-Mobile argued that the $26 billion deal would create a more efficient competitor to market leaders AT&T and Verizon.
On Wednesday, T-Mobile attorney David Gelfand defended the deal and its benefit to customers, but Pomerantz argued that the companies had failed to prove that the supposed benefits to consumers outweighed the anti-competitive nature of the deal. With Sprint gone, Pomerantz said, T-Mobile would be more likely to coordinate with the market's major players and charge more for services.
He pointed to internal documents and other internal communications that, he said, showed T-Mobile's parent company, Deutsche Telekom AG, had pursued the deal, at least in part, to reduce competition.
"You can't get much clearer about anti-competitive intent than this document," Pomerantz said, referencing one file from 2010.
In statements that spanned nearly two hours, Gelfand discounted those communications as "snippets, mostly older documents," with "no probative value" to the case currently before the court.
"Those documents were talking about another time, another possible merger, another situation," he said.
The Sprint and T-Mobile merger, Gelfand said, was fundamentally pro-competition because it would drastically lower costs and lead to increased capacity that would translate to lower prices for consumers. Faced with a growing "arms race" to improve speed and services for consumers, AT&T and Verizon would be forced to follow suit, he said.
"Neither one of those companies welcomes this merger," he said.
Gelfand also countered Pomerantz's arguments regarding the burden of proof in the case, saying it was up to the states to show that the merger, if completed, would lead to "substantially less" competition in the form of higher prices and lower-quality services.
T-Mobile has argued in court papers and at trial that each of the merging firms had assets that would fix the other's main competitive challenges, and said a combined company would be better positioned to "take it to" AT&T and Verizon than they would be as stand-alone companies.
For instance, T-Mobile said it would be able to capitalize on Sprint's midband spectrum to increase capacity, while its own low-band spectrum assets would address Sprint's coverage issues. In the end, the company said, a combination of the "complimentary assets" would create a network with double the total capacity and three times the 5G capability of the stand-alone networks.
The states' experts, meanwhile, had done little to undermine that vision of a postmerger landscape and thus had failed to carry their burden, Gelfand said.
"I know Mr. Pomerantz wants to shift all the burden in this case to us, but it remains with them," Gelfand said.
U.S. District Judge Victor Marrero, who is presiding over the case, adjourned Wednesday's hearing without a ruling. A decision on whether to enjoin the merger is expected in the coming weeks.
The U.S. Department of Justice already approved the merger in July, a month after the states filed their lawsuit.
They claim that promises of lightning-fast speeds and increased capacity could not be verified through an investigation and might not be available to consumers until several years in the future, if at all.
Any decision from Marrero could be appealed to the U.S. Court of Appeals for the Second Circuit.
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