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Statement of the Department of Justice Antitrust Division on the Closing of Its Investigation of the Merger of T-Mobile and UScellular

Assistant Attorney General Gail Slater of the Justice Department's Antitrust Division issued the following statement today in connection with the closing of the Department’s investigation into the proposed acquisition of UScellular by T-Mobile:

“After a thorough investigation, the Antitrust Division determined prudentially not to seek an injunction to prevent T-Mobile from closing on its proposed acquisition of UScellular. The investigation nevertheless raised concerns about competition in the relevant markets for mobile wireless services and the availability of wireless spectrum needed to fuel competition and entry. Specifically, as part of the investigation, the Department considered the potential impact on consumers resulting from the elimination of UScellular from the market, the potential for consumer benefits, and the potential impact of the further consolidation of wireless spectrum.

“With respect to the potential impact on consumers, for years, Americans have witnessed the too-familiar pattern of local or regional companies that discern and cater to their customers’ needs vanishing in favor of the ‘one size fits all’ approach of national brands. UScellular, whose tagline was ‘America’s locally grown wireless,’ noted the ‘sea of sameness’ among the ‘Big 3’ national carriers — Verizon, AT&T, and T-Mobile — and resolved to be ‘fundamentally different’ in how it went to market. The company understood the unmet needs of customers whom they identified as ‘Heartland Families’ or ‘Farmtown Frugals’. UScellular met those needs by building networks, pricing plans, and service offerings that its customers valued, and which for many years the Big 3 often did not offer. To the chagrin of its Big 3 competitors, UScellular maintained a sizable customer base within its network footprint by virtue of its strong emphasis on transparency, integrity, and localized customer service. Accordingly, as part of its investigation, the Department considered the impact of the potential disappearance of the services offered to those customers of UScellular — soon to become T-Mobile customers following the merger — that chose UScellular over T-Mobile or its national competitors.

“In addition to the potential impact on consumers resulting from the elimination of UScellular from the market, the Department also investigated the potential for consumer benefits. Specifically, the Department considered how UScellular subscribers would fare if UScellular continued as a business without completing this transaction. That aspect of the investigation made clear that, due in part to its limited regional footprint and unique structural limitations, UScellular simply could not keep up with the escalating cost of capital investments in technology required to compete vigorously in the relevant market. This would, in turn, lead to the slow degradation of its network quality. In contrast, T-Mobile has publicly committed that it will integrate the two networks in a way that provides UScellular customers with faster data speeds, while T-Mobile customers will obtain broader coverage in rural areas. Accordingly, the Department concluded the loss of the local offerings that UScellular customers value was outweighed by the immediate improvements in network quality promised by this proposed transaction. That conclusion is bolstered by the competitive realities of future investment in wireless networks and spectrum.

“In sum, the Department evaluated the likelihood of harm to competition and the potential effects of the transaction on consumers and determined that, on balance, the potential harm and offsetting benefits of the transaction do not warrant an enforcement action. UScellular’s inability to maintain its competitive position would result in declining value to its subscriber base, whereas the transaction offers them hope that they will be able to experience the benefits of a more robust cellular network.

“More broadly, the Department’s investigation made clear that we stand at a pivotal moment for the wireless industry. The transaction comes near the tail end of a decades-long trend toward consolidation-by-acquisition that has now left most consumers with meaningful choices among just the ‘Big 3’ national carriers. Economists and historians, appropriately, will debate whether this trend ultimately redounded to the benefit of competition and consumers, but the stark facts of today merit our immediate attention: together, the Big 3 account for more than 90 percent of the roughly 335 million mobile subscriptions in the United States.

“As the Department observed in 2019, when T-Mobile acquired Sprint, ‘The merger would also leave the market vulnerable to increased coordination among the remaining three carriers. Increased coordination harms consumers through a combination of higher prices, reduced innovation, reduced quality, and fewer choices.’ The Department also noted at the time that ‘competition between Sprint and T-Mobile to sell wireless service wholesale to [mobile virtual network operators] has benefited consumers by facilitating innovation by some MVNOs.’  These concerns remain highly relevant.

“Spectrum, a national resource that belongs to the American people, is critical to competition in the relevant markets for mobile wireless services. This transaction, and two other deals contingent on its closing, will consolidate yet more spectrum in the Big 3’s oligopoly, which controls more than 80 percent of the mobile wireless spectrum in the country. The Department investigated these spectrum transfers and concluded that they would not result in sufficient harm to competition to warrant an enforcement action, yet the risks to future competition due to further spectrum aggregation by the Big 3 are acute. As revealed in the merging parties’ advocacy in defense of the proposed transaction, the increased revenues and profitability that the Big 3 obtain through transactions like these enable them to even more dramatically outbid independent rivals for spectrum at future auctions.

“It is of concern to the United States that continued spectrum aggregation by the Big 3 threatens to impede the path for a fourth national player to emerge and challenge the entrenched incumbents with new and innovative offerings. Where future spectrum consolidation transactions threaten this path, the Antitrust Division stands ready to investigate and, if warranted by the facts and evidence, use its enforcement power to protect competition and American consumers.”

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This statement is limited by the Department’s obligation to protect the confidentiality of certain information obtained in its investigations. As in most of its investigations, the Department’s evaluation has been highly fact-specific, and many of the relevant underlying facts are not public. Consequently, readers should not draw overly broad conclusions regarding how the Department is likely in the future to analyze other collaborations or activities, or transactions involving particular firms. Enforcement decisions are made on a case-by-case basis, and the analysis and conclusions discussed in this statement do not bind the Department in any future enforcement actions. 

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