Conservative Media Defend Anti-Consumer, Anti-Jobs AT&T/T-Mobile Merger
Research ››› ››› ANDY NEWBOLD
The right-wing has labeled the Department of Justice's decision to block the merger of AT&T and T-Mobile as politically motivated and anti-jobs. In fact, experts say the DOJ's decision was based on clear violations of antitrust laws and would both protect consumers and prevent significant job loss.
Conservatives Portray DOJ's Lawsuit Against AT&T's Takeover Of T-Mobile As Anti-Business
Limbaugh Suggests Obama Administration Is "Standing In The Way Of Roughly 100,000 New Jobs In America." From the August 31 broadcast of The Rush Limbaugh Show:
RUSH LIMBAUGH: By the way one more thing on this AT&T/T-Mobile merger. AT&T has also promised, as a result of the merger, to increase its U.S. infrastructure investment by more than $8 billion. There was a study by EPI, the Economic Policy Institute, projected that the investment would create up to 96,000 new U.S. jobs, and here comes Eric Holder and the regime opposing the merger. Basically standing in the way of roughly 100,000 new jobs in America. And they're doing it under the guise of protecting consumer, and they'll probably get away with it because you know what they'll say: "We're -- we want to do everything we can to preserve consumer choice, and if AT&T is allowed to swallow up T-Mobile that gets us back to closer and closer to a sole monopoly for AT&T one less competitor out there and therefore one less option for consumers and AT&T will be able to go rape them price-wise." That's the reasoning from the DOJ, class warfare kind of stuff. [Premiere Radio Networks, The Rush Limbaugh Show, 8/31/11]
Competitive Enterprise Institute: "The Suit Is Also Further Evidence Of This Administration's Antipathy Toward The Job-Creating Sector." In an August 31 statement, Ryan Radia, the associate director of technology studies at the Competitive Enterprise Institute, suggested that the AT&T and T-Mobile merger had the "potential to create hundreds of thousands of new jobs." He also stated that the DOJ's suit against the two companies proved the "[Obama] administration's antipathy toward the job-creating sector." From the statement:
The Department of Justice's lawsuit amounts to a subversion of the evolution of free enterprise and economic progress. Federal regulators and their arbitrary "merger guidelines" are woefully ill-equipped to judge the merits of proposed business deals, particularly in dynamic modern markets such as the wireless sector. To be sure, no business deal is ever guaranteed to benefit consumers or the economy. But market participants, including upstream suppliers, customers, potential entrants, and capital markets, stand ready to check detrimental concentration in telecommunications if it arises.
The suit is also further evidence of this administration's antipathy toward the job-creating sector. AT&T's acquisition of T-Mobile has the potential to create hundreds of thousands of new jobs by accelerating the rollout of advanced wireless networks nationwide. Indeed, 4G mobile broadband is expected to generate tens of billions of dollars in economic growth in coming years, as a new Deloitte report concluded.[Competitive Enterprise Institute, 8/31/11]
Daily Caller: Sources Say DOJ Decided To File A Complaint Specifically Because Of AT&T's Announcement That It Would Create Jobs If The Merger Went Through. From a September 1 Daily Caller article:
According to two sources familiar with the matter, on Tuesday of this week -- the day before the complaint -- AT&T representatives and DOJ attorneys had a meeting in which they discussed the wireless company's proposal for its divestitures. Both sources told TheDC there was absolutely no hint or indication given from the DOJ during that meeting that the next day, they would file suit to block the merger.
"We were talking about setting up another meeting..." said one of the sources. "Not once did they say, 'Don't worry about it because we're going to block it tomorrow!'"
"When we got the media advisory, we thought 'This can't be us ... who else could it be?'" said the other source.
Then, on the Wednesday before DOJ filed suit to block the merger, AT&T announced that even with the merger, the company would retain up to 35,000 jobs -- a fact that was sure to become a major talking point for those pushing consolidation of the two companies.
At that point, the theory goes, folks at the DOJ decided to file a complaint before the "mounting political pressure was too insurmountable for them," as one source put it.
Another source familiar with the merger proceedings put the speculation another way, telling TheDC that the "jobs announcement yesterday caused them [DOJ] to move [more quickly] than they had intended."[Daily Caller, 9/1/11]
Fox Business' Charles Payne: "It Felt Like The Administration Was...Attacking Another Large American Business." During an interview on Fox Business, Charles Payne asked Phil Marshall of Tolaga Research if the DOJ's complaint was "politically motivated." Marshall responded saying "I think there certainly is a certain amount of political undertones here" and that "political ramifications" were a part of the discussions between AT&T and the DOJ. From Fox Business:
CHARLES PAYNE (anchor): Phil here's the thing, when we had the press conference from Deputy Attorney General James Cole it had almost a--very aggressive tone to it, you know almost vitriolic. And we heard about how low-income people were going to be left out and rural area. Do you think that this was as politically motivated as anything else? I mean it felt like the administration was more or less--I don't know--attacking another large American business saying "were ganna hold you back."
PHIL MARSHALL(Tolaga Research): Well, you know, I think there certainly is a certain amount of political undertones involved here. But at the same time, you know, T-Mobile has traditionally targeted the value end of the market, in other words, those the -- what would be regarded as the lower income sector of the market. And one can perhaps understand from that perspective that there's some concern as to what would happen when the merged entity came under the umbrella of AT&T who's traditionally positioned and priced their solutions to a more affluent community. So I can certainly understand from that stand point that there would be some concerns and certainly some political ramifications in the discussion.[Fox Business, 8/31/11, via Media Matters]
Limbaugh Agrees With Caller That The DOJ Is A "Thugocracy" For Targeting AT&T. From the August 31 broadcast of The Rush Limbaugh Show:
CALLER: The Obama regime is a criminal enterprise equal to the mafia or Al Capone. They're just operating and they're flaunting the law, they're flouting the law, whatever. This AT&T thing -
RUSH LIMBAUGH: Yeah.
CALLER: It's just pushing their power around.
LIMBAUGH: I know, it's AT&T, it's the New Black Panther Party case, it's wanting to give Khalid Sheikh Mohammed and his cronies a multi-year --
CALLER: The raid on the Gibson Guitar company yesterday or this week or whatever it was is just a warning to all companies. The Republicans --
LIMBAUGH: That is interesting because the guy that runs Gibson is a Republican donor he gets raided for using wood that is somehow rare and protected. A Democrat owner of a guitar company making the same kind of wood donates to Obama doesn't get raided. And people are asking as if, I forget, National Review Online or something, really, is it just as simple as that? That this regime will target opponents who don't. Yeah, it is that simple. Gibson's also non-union. So I can understand-- if you want to call this bunch a thugocracy I can understand where you are coming from.[Premiere Radio Networks, The Rush Limbaugh Show, 8/31/11]
DOJ Alleges That AT&T/T-Mobile Deal Violates A Law Designed To Protect Consumers
DOJ Complaint: "AT&T's Acquisition Of T-Mobile Likely Would Substantially Lessen Competition In Violation Of Section 7 Of The Clayton Act." In an August 31 complaint against AT&T, the antitrust division of the United States Department of Justice explained their primary goal was to protect the consumer and prevent anticompetive practices through enforcement of the Clayton Antitrust Act of 1914. From the DOJ complaint:
AT&T's elimination of T-Mobile as an independent, low-priced rival would remove a significant competitive force from the market. Additionally, T-Mobile's investment in an advanced high-speed network and its innovations in technology and mobile wireless telecommunications services have provided, and continue to provide, consumers with significant value. Thus, unless this acquisition is enjoined, customers of mobile wireless telecommunications services likely will face higher prices, less product variety and innovation, and poorer quality services due to reduced incentives to invest than would exist absent the merger. Because AT&T's acquisition of T-Mobile likely would substantially lessen competition in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18, the Court should permanently enjoin this acquisition.[DOJ complaint, 8/31/11]
Experts Say That Proposed Merger Violates Federal Law And Would Hurt Consumers
Digital Technology Law Expert Harold Feld: "Politics Had Nothing To Do With" The DOJ's Decision To Challenge AT&T. In a statement given to Media Matters, Harold Feld, the legal director at Public Knowledge, a Washington, D.C. based public interest group working on protecting consumers of digital technology, explained that DOJ's decision to challenge AT&T revolved around the "conclusion that the deal would harm competition and hurt consumers." From the statement:
There is no question that the Justice Department's decision to challenge AT&T's takeover of T-Mobile was the result of an intensive fact-based analysis that resulted in the inevitable conclusion that the deal would harm competition and hurt consumers. Politics had nothing to do with it, as shown by the fact that both the company and its labor allies are highly critical of the Department's actions. [Email from Harold Feld to Media Matters, 9/1/11]
Antitrust Expert Joseph Bauer: "This Merger Would Seriously Reduce Competition In The Wireless Market" Leading To "Diminishing Consumer Choice" And "Higher Prices." Joseph Bauer, an expert in antitrust and professor of law at Notre Dame University, expressed that he was "pleasantly surprised" by the DOJ's challenge against the proposed AT&T, T-Mobile merger. From the statement:
"I'm pleasantly surprised, in light of reluctance on the part of the Justice Department and Federal Trade Commission to go after a number of other highly problematic mergers in the past 5 to 10 years,"
"This merger would seriously reduce competition in the wireless market. By eliminating one of only four firms in the market and by creating what would be the largest entity in the industry and in which the two largest firms would have more than 80 percent of the market, the merger has the strong likelihood of diminishing consumer choice and leading to higher prices."[Notre Dame News, 8/31/11]
NYU Antitrust Law Professor Eleanor Fox "Astound[ed]" "Some Media" Are Suggesting DOJ Suit Was "Politically Motivated." In a September 6 statement given to Media Matters, Eleanor Fox, a New York University law professor and expert in antitrust, explained that "this merger would lessen competition" and "antitrust law prohibits mergers that "may...lessen competition."" From the statement:
It is astounding that some media are calling the DOJ suit to enjoin the AT&T - T-Mobile merger politically motivated, as if it had no legal merit and therefore must be explainable by some conspiracy theory. The antitrust law prohibits mergers that "may ... lessen competition." Of course this merger would lessen competition. T-Mobile is the biggest competitive thorn-in-the-side of AT&T. It is one of only two strong competitors against AT&T, in price and innovation; Verizon being the other one. Sprint is also a competitor, but not as strong. After the merger the merged firm would have at least 75% of national wireless revenues. The only question is whether, although the merger lessens competition, efficiencies save it. Is it true that AT&T would not and could not roll out 4G services to a large segment of the unserved population with, and only with, this merger? The Justice Department listened to the story but did not think it credible. (All companies wanting to avoid the antitrust laws make such an argument.) That is the issue that will get litigated, and AT&T will have the burden of proof. If the answer is yes, AT&T is (once again) a "natural monopoly" and will (once again) need to be regulated. [E-mail from Eleanor Fox to Media Matters, 9/6/11]
FCC Chairman Julius Genachowski: "AT&T's Acquisition Of T-Mobile Would Substantially Lessen Competition In Violation Of The Antitrust Laws." From the press release:
"By filing suit today, the Department of Justice has concluded that AT&T's acquisition of T-Mobile would substantially lessen competition in violation of the antitrust laws. Competition is an essential component of the FCC's statutory public interest analysis, and although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition. Vibrant competition in wireless services is vital to innovation, investment, economic growth and job creation, and to drive our global leadership in mobile. Competition fosters consumer benefits, including more choices, better service and lower prices."[FCC, 8/31/11]
Moreover, Experts Fear The Merger Would Lead To Job Losses
David Neumark: The Effect Of The AT&T Merger With T-Mobile Is "Likely To Be Many Thousands Of Lost Jobs." In a study commissioned by Sprint, David Neumark, professor of economics and director of the Center for Economics & Public Policy at UC Irvine, explained that the merger between AT&T and T-Mobile would inevitably reduce jobs for American workers over time. From the study:
The merger may or may not have other benefits that have to be weighed against its potential costs. But there is no basis for claiming that job creation is one of these benefits, and the direct effect of the merger is far more likely to be many thousands of lost jobs.[AT&T/T-Mobile Jobs Report, August 2011]
Free Press' Derek Turner: "AT&T Will Most Likely Put Thousands Of Americans Out Of Work And On The Unemployment Line If It Is Allowed To Acquire T-Mobile." In a September 1 statement, Derek Turner, the Free Press Research Director, said:
"Thankfully the facts have trumped AT&T's expensive corporate spin. Yesterday the Justice Department confirmed AT&T's takeover of T-Mobile would be a disaster for competition. And now we have Professor Neumark's study confirming the obvious: AT&T's takeover of T-Mobile would also kill jobs, and leave thousands of Americans families in jeopardy in this horrible economic climate.
"The finding that AT&T's takeover of T-Mobile would kill jobs should come as no surprise -- Ma Cell has made false promises about job creation before. But the fact that it's put nearly 100,000 Americans out of work over the last decade is evidence that it doesn't deliver on its claims. Don't forget that in 2004 AT&T moved to slash thousands of jobs just one month after its merger with Cingular was approved, in large part due to its promise to protect and expand jobs in the merged company.
"Professor Neumark's study is further evidence that no matter what promises it makes to secure approval for the merger, AT&T will most likely put thousands of Americans out of work and on the unemployment line if it is allowed to acquire T-Mobile.
"The Federal Communications Commission should join the Department of Justice and reject this job-killing deal so it can focus on creating policies that increase competition and consumer choice in our already concentrated wireless market."[Free Press, 9/1/11]
LA Times: "Combining AT&T And T-Mobile Could Lead To The Loss Of As Many As 20,000 Jobs." From a September 1 Los Angeles Times article:
The Justice Department's lawsuit challenging AT&T Inc.'s $39-billion takeover of T-Mobile USA Inc. was based on worries that consumers would be hit with higher prices, worse wireless service and dwindling mobile phone options.
But administration officials acknowledged that another concern colored the decision: jobs.
Combining AT&T and T-Mobile could lead to the loss of as many as 20,000 jobs as redundant positions are eliminated, putting a drag on unemployment in the wireless sector for years.
That's not exactly the kind of news President Obama wants as he rolls out a new initiative next week to boost employment, including an address to a joint session of Congress. The sour state of the economy stands as the single biggest obstacle to Obama's reelection.[Los Angeles Times, 9/1/11]
Even A Fox News Opinion Piece Lauded DOJ's Complaint Against AT&T
Fox News Blog Post: "Why Killing AT&T-Mobile Is a Good Thing." In a September 6 post on FoxNews.com, Fox News blogger John Quain wrote:
The Justice Department said the merger would decrease competitiveness, hurt consumers, and result in fewer innovative products. An examination of the marketplace would seem to show that the government has a slam dunk case.
Ending the deal is also a good thing for T-Mobile. It's made a reputation on delivering less expensive service while still offering state-of-the-art phones. It was the first to sell an Android phone, for example, and one of the first to push for Wi-Fi on smartphones in the U.S. (saving consumers money once again by providing less expensive Internet access). If it becomes part of a bigger company, that's one less innovator and one less competitor in the market.
Killing the deal is also a good thing for AT&T. We all know from experience what happens when one or two companies dominate a market: Quality suffers and prices go up. Right now, AT&T needs to focus on building rather than buying. It's got the customers, it's got the iPhone, but it's got to do better. A multi-billion-dollar merger is a distraction from its real business.
Ultimately, whoever controls the wireless space will control the flow of information, how much we pay for that information, and where we can get that information. Having that kind of control in the hands of just a couple of companies doesn't seem like a good idea.[FoxNews.com, 9/6/11]