AT&T/T-Mobile Merger is Pro-Consumer
By David Henderson
The share prices of AT&T and T-Mobile parent Deutsche Telekom AG fell sharply, while shares of No. 3 cellphone company Sprint Nextel Corp., seen as the biggest loser if the proposed merger goes through, were up nearly 6%.
This is from Thomas Catan and Spencer E. Ante, “U.S. Sues to Stop AT&T Deal,” Wall Street Journal, September 1, 2011.
In that one short paragraph is powerful evidence that the merger the U.S. government is blocking would be pro-competitive and pro-consumer.
The evidence: share prices of one of their competitors, Sprint Nextel, rose on the news that the merger would be blocked. Imagine you’re Sprint Nextel. Your market value rises when the merger is blocked. Why would that be? Because you’re better off without the merger. But if the merger really were anti-competitive, it would cause prices to rise. If prices rose, then the merger would help Sprint Nextel and blocking the merger would hurt Sprint Nextel. If Sharis Pozen, the acting antitrust chief, really cared about consumers, she would let the merger sail through.
I made the same point in “Sirius Business,” Wall Street Journal, February 28, 2007.