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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA, et al.,

Civil Action No. 1:19-cv-02232-TJK

proceeding.

I. NATURE AND PURPOSE OF THE PROCEEDING

On April 29, 2018, Defendant T-Mobile US, Inc. (“T-Mobile”) agreed to acquire

Defendant Sprint Corporation (“Sprint”) in an all-stock transaction valued at approximately $26

billion. The United States filed a civil antitrust Complaint on July 26, 2019, seeking to enjoin

the proposed acquisition. The Complaint alleges that the likely effect of this acquisition would

be to substantially lessen competition for retail mobile wireless service in the United States,

resulting in increased prices and less attractive service offerings for American consumers, in

violation of Section 7 of the Clayton Act, 15 U.S.C. § 18.

At the same time the Complaint was filed, the United States filed a Stipulation and Order

and proposed Final Judgment, which are designed to preserve competition by enabling the entry

transition services in support thereof and all services, access, and assets necessary to facilitate

the Divestiture Assets, the “Divestiture Package”).

that T-Mobile and Sprint extend their current Mobile Virtual Network Operator (“MVNO”)

agreements until the expiration of the Final Judgment, and that T-Mobile, Sprint, and DISH

support remote SIM provisioning and eSIM technology.

operating its own mobile wireless services network by combining the Divestiture Package of

assets and other relief with DISH’s existing mobile wireless assets, including substantial and

as “Defendants.”

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fallow spectrum into use by American consumers. The required Divestiture Package and related

obligations in the proposed Final Judgment are intended to ensure that DISH can begin to offer

networks.

that, prior to the completion of all of the proposed divestitures, the Divestiture Assets are

preserved and remain economically viable and ongoing business concerns.

The United States and Defendants have stipulated that the proposed Final Judgment may

be entered after compliance with the APPA. Entry of the proposed Final Judgment will

terminate this action, except that the Court will retain jurisdiction to construe, modify, or enforce

the provisions of the proposed Final Judgment and to punish violations thereof.

largest mobile wireless carrier in the United States. In 2018, T-Mobile had nearly 80 million

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wireless subscribers and approximately $43.3 billion in total revenues. T-Mobile sells postpaid

mobile wireless service under its T-Mobile brand and prepaid mobile wireless service primarily

2018 fiscal year was ¥2.3539 trillion (approximately $21.25 billion).

largest mobile wireless carrier in the United States. At the end of its 2018 fiscal year, Sprint had

over 54 million wireless subscribers, and its fiscal year 2018 operating revenues were

approximately $32.6 billion. Sprint sells postpaid mobile wireless service under its Sprint brand,

and prepaid mobile wireless service primarily under its Boost and Virgin Mobile brands. Sprint

also sells mobile wireless service to businesses and indirectly through MVNOs, which resell the

service to consumers. Sprint also operates a wireline telecommunications business throughout

the United States.

an all-stock transaction. In recognition of the significant competitive concerns raised by the

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proposed merger, T-Mobile has agreed to divest certain retail mobile wireless business and

spectrum assets, and supporting assets, and to provide certain transitional and network services.

Chairman Ajit Pai on May 20, 2019.

The Complaint alleges that the proposed merger likely would substantially lessen

competition in the retail mobile wireless service market in the United States. Retail mobile

wireless service includes voice, text, and data services that consumers access on phones, tablets,

and other devices. Mobile wireless carriers deliver retail mobile wireless service over a network

of facilities, including, for example, towers, radios, antennas, and fiber, that support the various

frequencies of spectrum that transmit wireless service. Mobile wireless carriers with their own

such facilities that offer service throughout the United States are called national facilities-based

Verizon Communications, Inc., AT&T Inc., T-Mobile, and Sprint. These four national facilities-

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based mobile wireless carriers compete for retail mobile wireless service customers by offering a

variety of service plans and devices at different price points and by promoting their prices, plan

competition would be lost.

under Section 7 of the Clayton Act. Retail mobile wireless customers include consumers and

small and medium businesses who buy their mobile wireless services at retail stores or online,

choosing pricing and plans made available to the general public. Retail customers cannot

substitute the mobile wireless service they purchase with the mobile wireless service purchased

and receive different pricing than the general public. Accordingly, a hypothetical monopolist of

could raise prices.

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carriers, each with roughly one-third share of the national market.

remove competition from Sprint and restructure the retail mobile wireless service market. The

combination of T-Mobile and Sprint would eliminate head-to-head competition between the

companies and threaten the benefits that customers have realized from that competition in the

form of lower prices and better service. 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. Finally, competition between Sprint and T-Mobile to sell wireless service

de novo entry by a facilities-based mobile wireless carrier is very difficult. Without the relief

provided in the proposed Final Judgment, neither entry nor expansion is likely to occur in a

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timely manner or on a scale sufficient to replace the competitive influence now exerted on the

market by Sprint.

market structure that otherwise would have occurred as a result of the merger.

After careful scrutiny of Defendants’ businesses, the United States identified a divestiture

package to address the United States’ concerns about the likely anticompetitive effects of the

acquisition. The proposed divestiture requires T-Mobile to divest to DISH certain retail mobile

wireless business assets and to facilitate DISH building its own mobile wireless network with

which it will compete in the retail mobile wireless service market.

• Prepaid Assets. The proposed Final Judgment requires T-Mobile to divest to

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including the Boost-

of the Virgin Wireless business), or Sprint’s prepaid customers receiving services through its

Swiftel and Shentel affiliates, due to various contractual and regulatory obligations.

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branded, the Virgin-branded, and the Sprint-branded businesses. These Prepaid

Assets, coupled with required network support from T-Mobile described more

of existing customers is expected to increase the returns on such investment.

acquire the spectrum if DISH can meet certain network buildout and service

requirements without it. In such case, T-Mobile will auction the 800 MHz

spectrum licenses to any person who is not already a national facilities-based

wireless carrier.

• Cell Sites and Retail Stores. The proposed Final Judgment also requires T-

Mobile to provide to DISH an exclusive option to acquire all cell sites and retail

store locations being decommissioned by the merged firm. This requirement will

enable DISH to utilize such existing cell sites and retail stores that are useful to

service to consumers.

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Judgment against a Defendant, whether litigated or resolved before litigation, that Defendants

will reimburse the United States for attorneys’ fees, experts’ fees, and other costs incurred in

connection with any enforcement effort, including the investigation of the potential violation.

violating the Final Judgment for up to four years after the Final Judgment has expired or been

terminated. This provision is meant to address circumstances such as when evidence that a

violation of the Final Judgment occurred during the term of the Final Judgment is not discovered

until after the Final Judgment has expired or been terminated or when there is not sufficient time

for the United States to complete an investigation of an alleged violation until after the Final

entry, the Final Judgment may be terminated upon notice by the United States to the Court and

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Defendants that the divestitures have been completed and that the continuation of the Final

Judgment is no longer necessary or in the public interest.

Section 4 of the Clayton Act, 15 U.S.C. § 15, provides that any person who has been

injured as a result of conduct prohibited by the antitrust laws may bring suit in federal court to

recover three times the damages the person has suffered, as well as costs and reasonable

attorneys’ fees. Entry of the proposed Final Judgment neither impairs nor assists the bringing of

any private antitrust damage action. Under the provisions of Section 5(a) of the Clayton Act, 15

U.S.C. § 16(a), the proposed Final Judgment has no prima facie effect in any subsequent private

lawsuit that may be brought against Defendants.

OF THE PROPOSED FINAL JUDGMENT

be entered by the Court after compliance with the provisions of the APPA, provided that the

United States has not withdrawn its consent. The APPA conditions entry upon the Court’s

determination that the proposed Final Judgment is in the public interest.

The APPA provides a period of at least sixty days preceding the effective date of the

proposed Final Judgment within which any person may submit to the United States written

comments regarding the proposed Final Judgment. Any person who wishes to comment should

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do so within sixty days of the date of publication of this Competitive Impact Statement in the

Federal Register, or the last date of publication in a newspaper of the summary of this

comments will be posted on the U.S. Department of Justice, Antitrust Division’s internet website

and, under certain circumstances, published in the Federal Register.

Written comments should be submitted to:

Scott Scheele

Antitrust Division

450 Fifth Street NW, Suite 7000

interpretation, or enforcement of the Final Judgment.

As an alternative to the proposed Final Judgment, the United States considered a full trial

on the merits challenging the merger. The United States could have continued this litigation and

sought preliminary and permanent injunctions against T-Mobile’s acquisition of Sprint. The

United States is satisfied, however, that the relief described in the proposed Final Judgment will

provide a reasonably adequate remedy for the harm to competition in the retail mobile wireless

service market. Thus, the proposed Final Judgment would achieve all or substantially all of the

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relief the United States would have obtained through litigation, but avoids the time, expense, and

uncertainty of a full trial on the merits of the Complaint.

The Clayton Act, as amended by the APPA, requires that proposed consent judgments in

antitrust cases brought by the United States be subject to a 60-day comment period, after which

the Court shall determine whether entry of the proposed Final Judgment “is in the public

interest.” 15 U.S.C. § 16(e)(1). In making that determination, the Court, in accordance with the

statute as amended in 2004, is required to consider:

15 U.S.C. § 16(e)(1)(A) & (B). In considering these statutory factors, the Court’s inquiry is

necessarily a limited one as the government is entitled to “broad discretion to settle with the

defendant within the reaches of the public interest.” United States v. Microsoft Corp., 56 F.3d

1448, 1461 (D.C. Cir. 1995); United States v. U.S. Airways Grp., Inc., 38 F. Supp. 3d 69, 75

(D.D.C. 2014) (explaining that the “court’s inquiry is limited” in Tunney Act settlements);

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violations alleged in the complaint was reasonable, and whether the mechanism to enforce the

final judgment are clear and manageable”).

positively harm third parties. See Microsoft, 56 F.3d at 1458-62. With respect to the adequacy

of the relief secured by the proposed Final Judgment, a court may not “engage in an unrestricted

evaluation of what relief would best serve the public.” United States v. BNS, Inc., 858 F.2d 456,

462 (9th Cir. 1988) (quoting United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981));

see also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40

(D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, at *3. Instead:

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).

[APPA] is limited to approving or disapproving the consent decree”); United States v. Gillette

“look at the overall picture not hypercritically, nor with a microscope, but with an artist’s

reducing glass”).

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deference by the Court. See, e.g., Microsoft, 56 F.3d at 1461 (recognizing courts should give

“due respect to the Justice Department’s . . . view of the nature of its case”); United States v. Iron

for the alleged harms.” (internal citations omitted)); United States v. Republic Servs., Inc., 723 F.

Supp. 2d 157, 160 (D.D.C. 2010) (noting “the deferential review to which the government’s

proposed remedy is accorded”); United States v. Archer-Daniels-Midland Co., 272 F. Supp. 2d

1, 6 (D.D.C. 2003) (“A district court must accord due respect to the government’s prediction as

to the effect of proposed remedies, its perception of the market structure, and its view of the

nature of the case.”). The ultimate question is whether “the remedies [obtained by the Final

Judgment are] so inconsonant with the allegations charged as to fall outside of the ‘reaches of the

public interest.’” Microsoft, 56 F.3d at 1461 (quoting United States v. Western Elec. Co., 900

F.2d 283, 309 (D.C. Cir. 1990)).

decisions such that its conclusions regarding the proposed settlements are reasonable); InBev,

2009 U.S. Dist. LEXIS 84787, at *20 (“[T]he ‘public interest’ is not to be measured by

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comparing the violations alleged in the complaint against those the court believes could have, or

even should have, been alleged[.]”). Because the “court’s authority to review the decree depends

In its 2004 amendments to the APPA, Congress made clear its intent to preserve the

practical benefits of using consent judgments proposed by the United States in antitrust

enforcement, Pub. L. 108-237, § 221, and added the unambiguous instruction that “[n]othing in

this section shall be construed to require the court to conduct an evidentiary hearing or to require

the court to permit anyone to intervene.” 15 U.S.C. § 16(e)(2); see also U.S. Airways, 38 F.

Supp. 3d at 76 (indicating that a court is not required to hold an evidentiary hearing or to permit

intervenors as part of its review under the Tunney Act). This language explicitly wrote into the

statute what Congress intended when it first enacted the Tunney Act in 1974. As Senator

Tunney explained: “[t]he court is nowhere compelled to go to trial or to engage in extended

In formulating the proposed Final Judgment, the United States considered (1) the

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“Network and In-Home Commitments” commitments made to the FCC by T-Mobile and Sprint,

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and (2) the “DISH Network 5G Buildout Commitments and Related Penalties” commitments

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Dated: July 30, 2019

Respectfully submitted,

D.C. Bar No. 421285

Telecommunications and Broadband Section

U.S. Department of Justice

Washington, D.C. 20530

(Counsel for T-Mobile and Sprint, respectively), May 20, 2019 at Attachment 1, available at

https://www.fcc.gov/sites/default/files/t-mobile-us-sprint-letter-05202019.pdf.

Policy & Government Affairs), July 26, 2019 at Attachment A, available at

https://www.fcc.gov/sites/default/files/dish-letter-07262019.pdf.

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