T-Mobile’s Showdown With California Challenges State Review of Wireless Mergers

Abstract

On April 1, T-Mobile USA officially completed its acquisition of Sprint Corporation. The milestone marked the end of a two-year regulatory review process that included settlement deals with two federal agencies, negotiations with myriad state regulators, and a trial court victory in a case brought by several state attorneys general who alleged the merger violated antitrust law.

But this final chapter was not without last-minute drama. California, which played a leading role in last year's antitrust suit, had not approved the merger by the companies' self-appointed deadline. Instead, the California Public Utilities Commission (CPUC) released a proposed decision approving the merger with significant conditions, and announced it would discuss the proposal in its own time, at its April 16 meeting. Rather than waiting around, the companies took action to sidestep the Commission's jurisdiction. Defying an explicit Commission order, they proceeded to complete the transaction without California's blessing.

This article assesses the strength of the companies' claims to proceed without waiting for the California Commission's decision, and it concludes that the Commission may face an uphill battle in light of Ninth Circuit precedent. If California loses a confrontation with T-Mobile and Sprint in court over the extent of the CPUC's merger review authority, the state likely will have overplayed its hand, jeopardizing its future review of wireless mergers. And, significantly, such a decision may well impact the extent of other states' merger review authority as well.