May, 10 2011, 12:31pm EDT
Free Press Analyzes Antitrust Problems in AT&T Merger
Says takeover of T-Mobile is ‘inconceivable’
WASHINGTON
In advance of a Senate hearing on Wednesday about the proposed $39 billion merger of AT&T and T-Mobile, Free Press has issued a preliminary analysis of key antitrust problems with the transaction.
In a letter sent to the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, Free Press shows why existing law and past precedent should compel the Department of Justice to challenge the merger based on its likely harms to consumers, innovation and competition.
Key findings include:
* AT&T and Verizon already dominate the national wireless market to such an extent that no new competitor realistically could enter the market. This merger would only exacerbate that problem.
* The merger would result in unilateral harms, with AT&T reducing overall capital investment and removing popular pricing plans and handsets from the market.
* The DOJ should focus its inquiry on the nationwide, post-paid smartphone service market. Smaller regional and pre-paid carriers will not provide enough competitive pressures to mitigate the harms of this merger and the resulting wireless duopoly of AT&T and Verizon.
* The market is already vulnerable to anti-competitive coordinated conduct, and the transaction's concentration of so much market share at the top between AT&T and Verizon would lead to further competitive harms. In fact, AT&T and Verizon have grown market share and profit margins during a period when their prices were far higher than those of their competitors.
* The DOJ's approach to prior smaller wireless mergers was to order divestiture of assets in certain local markets. But the negative impacts of this merger would be felt at the national level and not mitigated by local market divestitures. The market is now so concentrated that ordering local divestitures is "like shuffling the deck chairs on the Titanic."
"When a company gets so big that it can devour smaller competitors and elbow others out of the market, the result is bad for everyone," said Free Press Research Director S. Derek Turner. "That's why antitrust law exists. The Senate is rightly concerned with the impact of this merger, and we hope that policymakers will conclude that the harms of the takeover of T-Mobile will far outweigh any so-called efficiencies proclaimed by AT&T. Just as putting Humpty Dumpty back together again in the nursery rhyme was impossible, the approval of this transaction is inconceivable."
To view the letter and analysis, click here: https://www.freepress.net/resource/free-press-antitrust-analysis-proposed-att-t-mobile-merger
The Senate Judiciary Subcommittee hearing is scheduled for Wednesday, May 11, at 10:15 a.m.
Free Press was created to give people a voice in the crucial decisions that shape our media. We believe that positive social change, racial justice and meaningful engagement in public life require equitable access to technology, diverse and independent ownership of media platforms, and journalism that holds leaders accountable and tells people what's actually happening in their communities.
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