The U.S. District Court of the Southern District of New York dismissed a lawsuit brought by several State Attorneys General ("AGs") to block a proposed merger between T-Mobile and Sprint. On the same day, FTC issued Special Orders requiring five technology firms to provide information about prior unreported acquisitions.
As previously covered, T-Mobile and Sprint agreed to an FCC-approved divestiture package to (i) ensure that a viable facilities-based competing Mobile Network Operator ("MNO") would enter the MNO market and (ii) establish multiple high-quality 5G networks. In accordance with the divestiture package, Sprint and T-Mobile must divest Sprint's prepaid businesses, including Boost Mobile, Virgin Mobile and Sprint prepaid, to DISH Network Corp. ("DISH"). In addition, "20,000 cell sites and hundreds of retail locations" must be made available to DISH by T-Mobile and Sprint.
The State AGs' complaint before the U.S. District Court alleged that the merger would eliminate "head-to-head" competition between T-Mobile and Sprint, resulting in higher mobile phone service prices and lowered service quality. The DOJ argued as an amicus that the divestiture would result in a stronger T-Mobile as a third competitor behind Verizon and AT&T, and would restore any competition that may otherwise be lost to the merger.
The U.S. District Court concluded that the proposed merger is not likely to "substantially lessen" competition within its respective market. The Court called T-Mobile's business plan "undeniably successful," stating that it has implemented numerous pro-consumer changes, while Sprint has struggled to remain competitive in a capital-intensive market. The Court also stated that because of the successful history DISH has had in other consumer industries, combined with the DOJ and FCC's close scrutiny of the transaction, DISH is poised to become the fourth nationwide competitor.
FTC ordered Alphabet Inc. (including Google), Amazon.com, Inc., Apple Inc., Facebook, Inc. and Microsoft Corp. to provide information regarding acquisitions between January 1, 2010 and December 31, 2019 that were not reported under the Hart-Scott-Rodino Act ("HSR Act"). Specifically, FTC ordered the tech companies to provide information on:
the terms, scope, structure and purpose of the transactions within the specified timeframe;
corporate acquisition strategies;
agreements concerning (i) voting and board appointments, (ii) the hiring of "key" personnel from outside parties and (iii) post-employment covenants not to compete; and
the development and pricing of products following an acquisition.
In a joint statement, FTC Commissioners Christine S. Wilson and Rohit Chopra supported the decision, stating that it will allow FTC to assess the sufficiency of the HSR Act thresholds regarding technology mergers that hold competitive significance. However, the Commissioners urged FTC to prioritize studies that assess consumer protection issues originating from technology companies' privacy and data security practices. Specifically, they recommended that FTC study how data collection is impacted based on a company's content curation and targeted advertising practices.
To address issues related to their proposed merger, T-Mobile and Sprint agreed to settle an antitrust case brought by the DOJ and Attorneys General for five states.