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&Tand 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.