An Economic Analysis of the AT&T-T-Mobile USA Wireless Merger

On March 20, 2011, wireless provider AT&T announced its intention to merge with T-Mobile USA, a competing wireless provider. This article reviews the economic analysis of this proposed acquisition that we carried out for Sprint and explains why the merger would have been anticompetitive. We analyze how the merger would have led to adverse unilateral, coordinated, and exclusionary effects. AT&T and T-Mobile contended that their proposed merger would not adversely affect competition in wireless services because T-Mobile USA was not an effective rival, because other wireless providers could easily replace any competition that was lost as a result of the merger, and because the efficiencies from the merger would be so substantial that they would outweigh any perceived anticompetitive effects. Our analysis concludes that AT&T failed to provide convincing evidence of the lack of anticompetitive effects and failed to document the claimed efficiencies in a manner consistent with the Horizontal Merger Guidelines of the U.S. Department of Justice and the Federal Trade Commission.