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The chairman of the powerful Senate Antitrust Subcommittee, Herbert Kohl, D-Wis., sent a strongly worded letter opposingthe AT&T-T-Mobile merger to U.S. Attorney General Eric Holder and Federal Communications Commission Chairman Julius Genachowski.
Kohl’s subcommittee is part of the Committee on the Judiciary, which effectively oversees the Department of Justice, the federal department that must ultimately decide whether or not to approve merger. While the FCC doesn’t report to the Committee or to the Antitrust Subcommittee, Kohl’s opposition should carry great weight.
But that wasn’t the only word to come out of Washington today. T-Mobile’s vice president of government affairs, Tom Sugrue, chimed in to say, “While we have a great deal of respect for Sen. Kohl, we strongly disagree with his analysis of this transaction.”
In other words, T-Mobile’s lawyer is saying that the senior senator who heads the Antitrust Subcommittee doesn’t understand antitrust. I presume that Sugrue is saying that his years in telecom have prepared him to be an antitrust expert to such an extent that the senator in charge of such things is simply wrong.
But Sugrue, whose statement was likely prepared for him by AT&T’s lawyers, wasn’t the only telecom executive making a statement on the Senate Democrat’s position.
Vonya McCann, Sprint’s senior vice president for government affairs, added her own thoughts, agreeing with the senator:“Sprint shares Senator Kohl’s extensive concerns and believes that the growing chorus of concern from policymakers, public interest advocates, and industry officials, along with tens of thousands of consumers who have filed objections with the FCC, cannot be ignored by the DOJ and FCC.” Surely by now, Ms. McCann knows well that the FCC can ignore anyone, for any reason. Just look at theLightSquared fiasco for a case study in the FCC making its own rules.
But wait! There’s more! Also today, three members of Congress added their support to Sen. Kohl’s opposition. Congresswoman Anna Eshoo, D-Calif., Edward Markey, D-Mass., and John Conyers, D-Mich.,wrote a letter to the FCC and the DOJ asking for great scrutiny over the proposed merger. All three representatives hold senior positions in committees that have an interest in the merger. In the letter, the representatives said, “We believe that AT&T’s acquisition of T-Mobile would be a troubling backward step in federal public policy-a retrenchment from nearly two decades of promoting competition and open markets to acceptance of a duopoly in the wireless marketplace.”
In his letter,Kohl pointed out that under antitrust law, “a merger or acquisition from four to three main competitors in an already significantly concentrated market is highly suspect under Section 7 of the Clayton Act, the statute that forbids mergers and acquisitions which ‘may tend to substantially lessen competition.'”
Republicans Remain on the Sidelines
Furthermore, Kohl contends that AT&T and T-Mobile’s defenses are without merit and the contention by both companies that the merger shouldn’t be considered on a national basis but on a regional basis is contrary to the facts. Kohl also called into question claims by AT&T that acquiring T-Mobile would enable the company to better serve rural (T-Mobile has little if any presence in rural areas) and urban areas. Kohl agreed with statements from other opponents of the merger asserting that AT&T only needs to build more cell sites and use the spectrum it already has.
Kohl closed by saying the one thing that the FCC has so far refused to acknowledge-that approval of the merger would reverse “the historic triumph of competition policy of three decades ago and that the breaking up of the AT&T phone monopoly into numerous competitors unleashed an explosion of innovation that led to such technologies as cell phones and the Internet.” Kohl said that to replace the AT&T phone monopoly with a near-duopoly of AT&T and Verizon would be “harmful to consumers, contrary to antitrust law and not in the public interest.” He then urged the DOJ and the FCC to take all necessary actions to deny approval of the merger.
If this makes you think that the Democrats in the Senate and the House are saying “No” to this deal, you’d be right. The question is whether the FCC will pay attention to the Senator or the Members of Congress. The FCC is an independent agency, it reports to the President, and if Julius Genachowski wants to ignore Congress, he can. But will he?
The same isn’t necessarily true of the Justice Department. The Attorney General is also part of the Executive Branch, but he has to work closely with Congress. To defy the clear will of the Chairman of the Senate Antitrust subcommittee would probably have consequences. More importantly, the DOJ is bound to follow the antitrust law, which Senator Kohl quotes in great detail in his letter. He doesn’t have the freedom to decide what part of the law to follow.
Of course, if the House and the Senate were to pass a resolution opposing it and maybe start some legislation moving through committee that would specifically stop it, then the merger would be unlikely. But that’s not going to happen. The Republicans in Congress haven’t said where they stand on this issue, but they’re focused on beating the Democrats in 2012, so they’d likely be in favor of the merger if only because the Democrats aren’t and to show their richest donors how business-friendly they are.