T-Mobile/Sprint merger ruling will make it harder for states to challenge future deals, DOJ antitrust chief says

Key Points
  • The court ruling in favor of the T-Mobile/Sprint merger last week sets a high bar for state challenges and prevents highly decentralized antitrust enforcement, said Makan Delrahim, assistant attorney general of the Department of Justice's antitrust division.
  • A federal judge ruled in favor of the merger last week after a challenge from a group of state attorneys general failed to convince the court that the deal would be anticompetitive.
  • In an interview on CNBC's "Squawk Box," Delrahim said there is still a role for the states to step in when federal regulators fail to act.
Watch CNBC's full interview with DOJ antitrust chief Makan Delrahim

A federal judge's ruling in favor of the Department of Justice in the T-Mobile-Sprint merger case last week reinforced a high bar for state antitrust challenges, according to DOJ antitrust chief Makan Delrahim.

"Had that gone the other way, you would have had 53 antitrust agencies," Delrahim said in an interview Wednesday on CNBC's "Squawk Box," adding that it would have allowed every state to have "whacks of the pinata"

Attorneys general from 13 states and the District of Columbia sued to block the $26 billion telecom merger after the DOJ and Federal Communications Commission cleared the deal with certain remedies. The states argued that combining the No. 3 and No. 4 U.S. carriers would result in higher prices for consumers due to limited competition. The companies countered that the merger would enable them to effectively compete against top players AT&T and Verizon.

In his decision, Judge Victor Marrero wrote, "The resulting stalemate leaves the Court lacking sufficiently impartial and objective ground on which to rely in basing a sound forecast of the likely competitive effects of a merger."

The ruling could open the door for future mergers in the industry and has also raised fears of a chilling effect on state actions. New York Attorney General Letitia James, who helped lead the states' effort, said Sunday that she would not move forward with an appeal.

But Delrahim said there's still an important role for the states to play in antitrust cases.

"Where the federal agencies have not acted for example and there's some localized effects within a state, I think it's perfectly appropriate" for the states to step in, Delrahim said.

Still, he acknowledged that "the bar is going to be high whether or not the states go down this route" in the future.

The federal antitrust division and state attorneys general have both opened investigations into Google to probe its competitive practices. Several state attorneys general have met with top DOJ officials about the investigation, but have not yet formally decided to coordinate, CNBC previously reported. Delrahim has recused himself from the DOJ's investigation of Google since he previously worked as a lobbyist during the company's $3.1 billion acquisition of DoubleClick in 2007.

"It would have raised some serious issues of uncertainty had the states won in this case," Delrahim said of the T-Mobile/Sprint decision.

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