By Eleanor M. Fox
The opinions expressed are her own.

Just as I was bracing for the headline, “U.S. approves AT&T’s acquisition of its fiercest competitor subject to a few conditions,” I had a happy surprise. “U.S. Files Lawsuit to Block Merger of Phone Rivals.” In another era, this would not have been a surprise. The surprise would have been that AT&T would have had the audacity to propose a merger with T-Mobile and confidently predict that it will close (betting a 6 billion dollar break-up fee that it will). After all, US antitrust law prohibits mergers where “the effect … may be substantially to lessen competition.”

AT&T accounts for about 32 percent of the wireless mobile service market, Verizon has 34 percent, and T-Mobile nearly 12 percent. The only other possibly significant national player is Sprint Nextel, whose survival is unassured.  Thus, the merger would create the nation’s largest wireless carrier and in the post-merger world the top two would have more than 75 percent and possibly more than 90 percent of the market in the near future.   Immediately after the merger, in more than half of the Cellular Market Areas (areas used by the FCC to license mobile wireless services), AT&T-Mobile would occupy more than 50 percent.

T-Mobile is a maverick. According to the DOJ complaint, “T-Mobile has positioned itself as the value option for wireless services, focusing on aggressive pricing, value, leadership, and innovation.” T-Mobile viewed itself as “the No. 1 value challenger of the established big guys in the market.” It designed a “disruptive” rate plan. It provided the first Android handset, Blackberry wireless e-mail, national hot spot access, and a nation-wide network based on advanced 4G technology. AT&T innovated in response to T-Mobile’s “threat.”

How could this not be a merger whose “effect … may be substantially to lessen competition”?

The question would have answered itself some years ago, before antitrust became a technologically specialized field and the law became undergirded by presumptions that markets work, businesses act efficiently, and firms’ incentives almost always align with the best interests of consumers.