The subscribers argue that T-Mobile’s acquisition of Sprint drove up the prices of their wireless package
This week, a federal judge has ordered T-Mobile US must face a lawsuit from Verizon and AT&T customers over price increases.
More specifically, the customers (all seven of them) are claiming that T-Mobile’s $23 billion merger with Sprint back in April 2020 damaged competition in the market to such an extent that AT&T and Verizon were able drive up prices for their wireless services.
Prior to the merger’s completion, there was significant worries that the merger would be anticompetitive. Democratic senators urged the Federal Communications Commission and the Justice Department to reject the merger proposal in 2019, emphasising that the merger was “likely to raise prices for consumers, harm workers, stifle competition, exacerbate the digital divide, and undermine innovation”.
The lawsuit alleges that at least some of these fears have indeed become reality, with the court agreeing that the higher prices charged by AT&T and Verizon could “plausibly” be directly linked to the T-Mobile–Sprint merger.
“The merger also eliminated the two “maverick” firms that were responsible for much of the price competition and innovation among the carriers. Before the merger, T-Mobile and Sprint aggressively competed with the bigger brands (AT&T and Verizon) through offering discounts and new plans,” read court documents seen by Reuters.
“Sprint was financially viable and would have continued to compete vigorously absent the merge… Additionally, Plaintiffs allege that by making the newly merged T-Mobile’s scale and cost structure more like the other two big players, the merger curtailed its incentive to compete.”
The subscribers in question are seeking monetary compensation and a range of additional penalties, even including the reversal of the merger entirely.
“If plaintiffs are unhappy with Verizon and AT&T, there is a remedy available in the highly competitive market that wireless consumers enjoy today — they should switch to T-Mobile, not sue it,” lawyers for T-Mobile told the court.
T-Mobile have yet to comment on the situation directly.
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