Lawsuit poses major threat to T-Mobile, Sprint merger

The $26 billion T-Mobile–Sprint merger is facing a new and potentially devastating obstacle after 10 attorneys general from nine states and Washington, D.C., filed a federal lawsuit to block the deal.

The state attorneys general in the lawsuit, filed Tuesday, argue the bid to combine two of the nation’s four top mobile carriers would jack up prices for customers, particularly low-income consumers, and result in unhealthy market concentration.

Legal experts who spoke to The Hill said the states have a strong antitrust case, predicting the ensuing legal battle could drag on for months, if not years.

“[The case] materially increases the odds that the deal will never close,” Blair Levin, an analyst with New Street Research and a former Federal Communications Commission (FCC) official, said in an interview.

What makes this unique: The lawsuit marks one of the first times a group of state attorneys general has sued to block a deal before the federal agencies overseeing the merger have both weighed in. The Republican-controlled FCC last month signaled it will approve the merger, but the Department of Justice (DOJ) has not yet made its decision on the deal.

Gigi Sohn, a former adviser at the FCC during the Obama administration, called the states’ move “unprecedented.”

What this means for the DOJ: The multistate lawsuit to block the merger ups the ante for the DOJ and could be a way for the states to sway the department against the deal, experts said.

“I think it could mean that the deal is dead,” Sohn said. “At a minimum, it’s an opening salvo to [top DOJ antitrust attorney] Makan Delrahim to join in.”

The unusual decision to sue at this point could indicate the states have gotten some insight into the DOJ’s plan and are not happy with it, according to John Mark Newman, a former DOJ antitrust official and assistant law professor at the University of Memphis.

“It sounds like DOJ has been asking for some pretty significant concessions and if the states are not happy with what DOJ’s doing, that would maybe suggest that they just … want to block the deal outright,” Newman told The Hill.

Who is on board: The attorneys general, led by New York’s Letitia James and Xavier Becerra of California, filed the federal lawsuit in the Southern District of New York on Tuesday. Colorado, Connecticut, the District of Columbia, Maryland, Michigan, Mississippi, Virginia and Wisconsin have also joined the effort, with more Democratic attorneys general likely to join in.

Dems are applauding the effort: Democrats in both chambers on Capitol Hill have pushed hard against the deal, sending letters to the DOJ and FCC urging them to block the merger out of concern for consumers.

“I have repeatedly raised serious antitrust concerns about the harmful effects of merging T-Mobile and Sprint, two of the four remaining nationwide wireless carriers,” Sen. Amy Klobuchar (D-Minn.), who is running for president, said in a statement. “This merger would harm competition and consumers, and I am pleased that action is being taken by state attorneys general to block it.”

“Now, the Justice Department must take similar action to stop this transaction,” she said.