T-Mobile's Proposed Sprint Deal Draws Criticism From Democrats

(Bloomberg) -- T-Mobile US Inc.’s proposed $26.5 billion purchase of Sprint Corp. came under congressional scrutiny for the second time in as many months, with Democrats warning that the merger between two of the nation’s top four carriers could lead to higher prices for consumers.

T-Mobile's Proposed Sprint Deal Draws Criticism From Democrats

“I’m deeply skeptical that consolidation is the path forward” to lower prices and more competition, said Representative David Cicilline, of Rhode Island, the Democratic chairman of the House antitrust subcommittee, as he opened the panel’s hearing Tuesday.

T-Mobile Chief Executive Officer John Legere and Sprint Executive Chairman Marcelo Claure appeared before the panel to defend their bid to combine the third- and fourth-largest U.S. wireless carriers. The companies say that together they could build an advanced 5G network, and form a stronger competitor to mobile leaders AT&T Inc. and Verizon Communications Inc.

Legere on Tuesday said the companies plan “a faster, broader, deeper network that is truly nationwide.” The new company will win customers “through lower prices and better services,” Legere said.

Claims of benefits from the merger should be viewed with “healthy skepticism,” said Representative Jerrold Nadler, of New York, chairman of the Judiciary Committee.

T-Mobile's Proposed Sprint Deal Draws Criticism From Democrats

“I am concerned about any merger that would significantly increase the concentration in a market that is already highly concentrated,” Nadler said. The combined company “may no longer have any market-based incentive to lower prices and to offer pro-consumer policies once it becomes as large as the other two carriers.”

Paused Review

The Republican-led Federal Communications Commission last week paused its review of the merger, adding to a battle for approval that has extended for more than eight months at the agency. The FCC said more time’s needed to examine T-Mobile’s proposal for wireless in-home broadband.

The deal needs clearance from the FCC and from antitrust authorities at the Justice Department.

T-Mobile's Proposed Sprint Deal Draws Criticism From Democrats

Antritrust enforcement is facing heated debate, with critics contending that officials responsible for investigating mergers have fallen short, leaving large companies insulated from competition. While many lawyers and economists dispute that notion, some proponents have pushed the idea to center stage. Senator Elizabeth Warren, a Democratic presidential candidate, has proposed breaking up companies like Facebook Inc. and Alphabet Inc.’s Google.

‘Red Flags’

In February, Representative Mike Doyle, the Pennsylvania Democrat who’s chairman of the House communications subcommittee, used a hearing to warn that the merger would bring market concentration to “a level that raises lots of red flags.”

Members of Congress don’t have a direct role in merger reviews, but seek to influence authorities who directly vet the deals, such as antitrust officials and FCC commissioners.

T-Mobile and Sprint each have foreign owners that would have significant roles in the combined entity. Deutsche Telekom AG, based in Bonn, would own 42 percent of the new company, while Tokyo-based SoftBank Group Corp. would own 27 percent.

©2019 Bloomberg L.P.