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With One Move, New York Cuts Sprint and T-Mobile Down to Size

 |  June 13, 2019

By Tim Wu, New York Times

In December 2016, Masayoshi Son, the billionaire owner of Sprint, paid a visit to Trump Tower to meet the president-elect. Afterward, the two announced that Mr. Son had spontaneously decided to invest $50 billion in the United States and create 50,000 jobs. There was an unspoken but widely understood quid pro quo. The Trump administration would finally agree to do what the Obama administration had refused: allow a giant, anticompetitive merger of Sprint with T-Mobile, leaving just three gigantic wireless carriers in the country.

“A Sprint/T-Mobile merger is a done deal,” a business columnist for PC magazine proclaimed after the meeting, as Sprint’s stock surged. In April 2018, with Trump-appointed officials in place at the Justice Department and the Federal Communications Commission, Sprint and T-Mobile announced their $26 billion union. The chief executives of the two companies vaguely promised, in an interview on CNBC, that the merger and leadership in 5G would bring “3 million jobs.” (Most major mergers, in fact, lead to firings). But President Trump and Mr. Son had made a giant miscalculation, one the business press also missed. They forgot about the states.

This week, nine states and the District of Columbia, led by New York’s attorney general, Letitia James, filed suit in federal court in New York to block the merger. With this move, the states have jumped the gun on the federal government, which has yet to fully approve or reject the deal. And if the states win in court, as they seem likely to, the merger is dead. Inadvertently, this corporate blunder has created a new role for the states in merger review: acting as a backstop in cases of gross dereliction of duty by the federal government.

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