Sprint’s antitrust pitch hedges against DoJ miss

October 25, 2011

By Reynolds Holding
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Sprint’s antitrust pitch hedges against a swing and a miss by the U.S. Justice Department. The third-largest mobile operator has said it just wants to help the feds squelch AT&T’s $39 billion takeover of T-Mobile USA. But its separate lawsuit suggests a lack of confidence in Uncle Sam’s arguments. Though a court hearing on Monday showed the case faces hurdles, it may give Sprint insurance in case the government stumbles.

Judges generally look askance at competitors’ suits to block mergers. Antitrust law doesn’t protect rivals from harmful competition, the Supreme Court has ruled, unless it’s clear their injuries would also damage consumers. Merely filing a suit can appear self-serving and undercut a company’s arguments, and legal fees are costly. That’s why most firms let the DoJ do the heavy lifting and cheer from the sidelines.

Sprint, though, says stepping in frees it to make clearer legal points and give DoJ technical support about the industry. The latter may be harder to accomplish after a judge’s ruling on Monday denied the company access to AT&T documents already given to the government. Sprint also notes that the more lawsuits AT&T faces, the tougher a settlement — and consummation of the deal — will be.

But court documents suggest another reason. Justice argues that the merger would cut competition, curb innovation and raise prices. Sprint, on the other hand, says the deal would block smaller rivals from offering cutting-edge handsets, reaching roaming agreements and accessing backhaul services, which tie a central network to remote sites. Both results could harm consumers. But the first might benefit Sprint if higher prices gave it a competitive edge. The second would limit its market.

Antitrust-law experts critical of the DoJ‘s argument say Sprint’s is legally much stronger. They also say the stock market agrees. When the government announced its lawsuit on Aug. 31, Sprint’s stock jumped substantially. That’s a surprising reaction to a move that was intended to keep the mobile industry generally from boosting prices.

Sprint says the government’s case is very strong. That the company felt compelled to make its own arguments in a rare lawsuit may be telling nonetheless. With AT&T’s play for T-Mobile threatening to create a wireless behemoth, there’s a lot at stake for Sprint. Little wonder that it wants to have its own say in court.

Comments

Rajat is is just an ordinary human being and deserves the maximum punishment possible. The again proves to show that ivy league has little to do with integrity.
Calling from the boardroom or after a top secret meeting is absolute breach of trust.
The law of the land may imprison him for 105 years.
you could be a high profile worker but if you transgress the law its the flaw of common sense again that you lack and not financial intelligence.
Even rajat surrendered on diwali day as it is auspicious but diwali is not a festival of lights to be precise …its festival of triumph of good over evil ( lord Ram defeated the raavan ) hence to celebrate the defeat, Indians light up their houses and burst crackers. rajat is the financial evil that comes in a pleasing form – he is qualified and dignified. He has proven that appearances are deceptive.
Perhaps next birth he may be off the noose but this birth after readibng who is co-ordinated with rajaram he has to escape.

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