UPDATE Illinois U.S. District Judge Thomas Durkin ruled last week that T-Mobile (NASDAQ: TMUS) can proceed with an appeal of a class action lawsuit. If it were to be successful, that lawsuit could cost T-Mobile billions of dollars in compensation, Total Telecom reported.
The class action lawsuit, brought by seven subscribers of AT&T (NYSE: T) or Verizon (NYSE: VZ), argues that the merger of Sprint and T-Mobile reduced competition in the wireless market to such an extent that it “forced” AT&T and Verizon to increase their prices. As a consequence, they claim tens to hundreds of millions of consumers are paying more for their wireless services than they would have otherwise.
Analysis by Inside Towers Intelligence of U.S. Tier 1 mobile network operator service revenues in the 2016-2023 period, shows that prior to the T-Mobile-Sprint merger, wireless service revenues at both companies were lagging significantly behind those of both AT&T Mobility and Verizon Wireless. While there were four national MNOs in play prior to the April 1, 2020, merger, neither T-Mobile or Sprint prior to that point had the market presence or market share to compete effectively with either of the top two companies. By integrating its network with Sprint’s, the new T-Mobile then became a viable, competitive alternative to both AT&T and Verizon.
The plaintiffs are seeking monetary compensation as well as other remedies, which could even include the reversal of the Sprint–T-Mobile merger entirely.
In November, courts declined to dismiss the lawsuit at T-Mobile’s request, saying that AT&T and Verizon’s price increases could “plausibly” be linked to the merger.
T-Mobile immediately signaled its intention to appeal the decision, saying that the case’s “expansive conception of antitrust standing is unprecedented.”
The plaintiffs’ lawyers, on the other hand, argued that a lengthy appeal process would delay potential compensation and could make dissolving the merger more difficult. They subsequently argued that the case should be put before a jury before an appeal was presented.
With Judge Durkin confirming that T-Mobile will be allowed to proceed with its appeal, the company’s position is that the plaintiffs have not sufficiently alleged antitrust standing.
Total Telecom wrote that antitrust lawyers will be watching the proceedings of the case closely. Federal antitrust law allows consumers to bring private challenges against mergers and acquisitions, but cases arguing that a company’s M&A activity had negatively affected a rival’s customers are very rare. If allowed to proceed, the case could significantly expand the scope of future antitrust proceedings.
By John Celentano, Inside Towers Business Editor
