Cicilline Criticizes FCC’s Rush to Approve T-Mobile’s Proposed Merger with Sprint, Calls for Additional Public Input

Aug 15, 2019

PAWTUCKET – House Antitrust Subcommittee Chairman David N. Cicilline (RI-01) sent a letter today criticizing the Federal Communications Commission (FCC) for rushing to approve the Sprint and T-Mobile merger. In July, the Justice Department announced a settlement with the merging parties that includes substantial changes to the transaction as originally proposed.. Despite these changes, FCC Chairman Ajit Pai circulated a draft order yesterday behind closed doors to approve the merger without providing for additional public comment on how these changes to the deal will affect competition or the public interest.

 

“As I have noted before, the proposed transaction is presumptively illegal under decades of black letter law and the Justice Department’s merger enforcement guidelines. Both the original transaction and proposed settlement agreement raise the threat of higher phone bills, less choice, fewer jobs, and worse wages for hardworking Americans. The prospect of these harmful effects for working people demands a thorough and transparent review.”

 

“There is no urgency to forgo an opportunity for additional public comment. The proposed transaction has been challenged in court by a bipartisan coalition of 16 state attorneys general, which have raised concerns that the merger will result in higher prices and reduced quality.”

 

“These circumstances weigh heavily in favor of the Commission issuing a notice seeking additional comments. I therefore urge the Commission to protect the public’s opportunity to comment on the merits of the proposed merger as modified by the Department’s proposed settlement.”

 

The full text of Cicilline’s letter can be found below, and a signed copy can be found here.

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August 15, 2019

 

The Honorable Ajit Pai

Chairman

Federal Communications Commission

445 12th Street NW

Washington, D.C. 20554

 

Chairman Pai:

 

I write to urge the Federal Communications Commission to issue a Public Notice seeking additional comment on the proposed merger between T-Mobile and Sprint.

 

On July 26, 2019, the Justice Department announced that it reached a settlement with T-Mobile and Sprint, stating that a divestiture to Dish Network Corporation of Sprint’s prepaid business would resolve its concerns with the transaction.  The Department’s proposed settlement agreement is significantly different than the underlying transaction as originally proposed,  raising substantial new issues that affect competition and the public interest.  In addition to the inclusion of remedies that raise new concerns about the competitive effects of the proposed merger, the proposed settlement adds Dish as a new party to the transaction,  along with other changes not reflected in the public record on the proposed transaction.  

 

As I have noted before, the proposed merger of T-Mobile and Sprint is presumptively illegal under decades of black letter law and the Justice Department’s merger enforcement guidelines.  Both the original transaction and proposed settlement agreement raise the threat of higher phone bills, less choice, fewer jobs, and worse wages for hardworking Americans.  The prospect of these harmful effects for working people demands a comprehensive and transparent review.

 

Notwithstanding these wide-ranging and substantial negative effects, the Commission’s review of the transaction appears to be incomplete. Commissioner Jessica Rosenworcel recently testified that the Commission’s process for reviewing the proposed transaction has been “highly unusual” and resembles “backroom dealing.”  As she noted, “I have no economic analysis, legal analysis or paper before me and yet my colleagues have announced that they are going to support this transaction via press release.”  Since then, both Commissioners Rosenworcel and Geoffrey Starks have called for a public comment on the proposed settlement due to the substantial changes of the structure of the transaction. 

 

A coalition of public interest and labor groups—including Public Knowledge, Free Press, and the Communications Workers of America (CWA)—have also expressed concerns about the Commission’s review process. They note that the remedies negotiated by the Commission and Department “represent significant changes to the original transaction and raise new and important competition issues.”  In light of these changes, this coalition has likewise urged to the Commission to seek public comment to protect the integrity of the agency’s merger review process.

 

In addition to these considerations, several trade associations that represent rural wireless customers have also noted that the lack of public comment for the proposed settlement may violate the Administrative Procedure Act.  In a request filed with the Commission in support of Public Notice seeking comment, they note that it “would be arbitrary and capricious to rule on the pending applications without considering evidence of the substantial changes to what is being proposed.”  In response to this concern, the merging parties argue that the APA’s guarantees of procedural fairness do not apply to this proceeding because it is not a rulemaking.  Notwithstanding this claim, judicial review under the APA applies broadly to agency action—including orders and licensing—and not solely to agency rulemaking. 

           

Finally, there is no urgency that would trump the importance of additional opportunity for public comment.  The proposed transaction has been challenged in court by a bipartisan coalition of 16 state attorneys general,  which have raised concerns that the merger will result in higher prices and reduced quality. This case will not go to trial until December, and the merging parties have agreed not to close their deal until after the trial.  The Department’s proposed settlement agreement—which is necessary to address the Department’s antitrust concerns—is also under review by the U.S. District Court under the Tunney Act, which requires a comment period of 60 days.  As the Department has not yet published the proposed consent decree or a competitive impact statement in the Federal Register, the Tunney Act comment period has not yet even begun. 

 

These circumstances weigh heavily in favor of the Commission issuing a notice seeking additional comments. I therefore urge the Commission to protect the public’s opportunity to comment on the merits of the proposed merger as modified by the Department’s proposed settlement.

 

Sincerely,

 

 

David N. Cicilline

Chairman

Subcommittee on Antitrust, Commercial and Administrative Law

Committee on the Judiciary

U.S. House of Representatives