Last week, a federal judge rejected the government’s attempt to block the merger between AT&T and Time Warner. That shouldn’t come as a major shock — the government was pursuing an expensive antitrust witch hunt with a paper-thin legal case. Indeed, U.S. District Judge Richard Leon stated in his opinion that it’s hard to demonstrate consumer harm when “the Government’s own expert predicts that, due to a standard benefit of vertical integration, AT&T’s DirecTV and Uverse customers will pay a total of about $350 million less per year for their video distribution services.”
The merger was finalized soon after the ruling, which is good news for those who believe in the free market and minimal government intervention in the economy. The federal government has an important but limited role in antitrust review. Too often, antitrust investigations have been guided by politics and overzealousness rather than legitimate concerns for consumer well-being. Last week’s decision provides reason for optimism for future mergers and acquisitions.
Comcast was clearly heartened by the approval of the vertical transaction. Just hours after the decision was made public, it announced a bid to purchase 21st Century Fox for $65 billion, which is significantly larger than Disney’s initial $52.4 billion offer, which has since been boosted to $71 billion. If Comcast can successfully overcome Disney’s challenge and acquire Fox, it would dramatically expand the company’s TV and movie content offerings. When paired with Comcast’s distribution capabilities, this could be a huge boost to consumers.
Meanwhile, the pending merger between T-Mobile and Sprint is continuing to move along as the companies have formally filed their public interest statement with the Federal Communications Commission. The proposed deal between the nation’s third- and fourth-largest wireless providers comes at a pivotal time with the industry on the cusp of rolling out next-generation 5G networks. Having already pledged massive new investment in technology and network expansion, the combined company would be better situated to compete with other providers in the “race to 5G” and for consumers generally, pushing the market toward better plans and lower costs. Once again, we’re looking at a potential boon for consumers for a wide range of reasons.
The deal between T-Mobile and Sprint will also help fuel the economy and create jobs in a competitive marketplace which, according to an Accenture report from last year, is positioned to create 3 million jobs and boost the country’s GDP by $500 billion thanks to the rollout of 5G networks. Taxpayers win too, as these developments allow governments to provide a whole range of services, from traffic management to first responder communications, much more cost effectively. Even simple operations, such as sanitation services, can benefit. The small-cell infrastructure that supports 5G can allow garbage-removal crews to receive a signal from a dumpster when it’s ready to be emptied, rather than requiring trucks to visually check each and every receptacle on expensive, fuel-consuming routes.
One would think that a hyper-competitive wireless market should provide little reason for concern among regulators. Still, business transactions too often face larger threats from the government than from the marketplace. With a seasoned businessman in the Oval Office, many believed that the federal government would be more amenable to mergers and acquisitions; however that wasn’t the case with AT&T and Time Warner. Now that the merger has been consummated, despite the efforts of the Department of Justice, the businesses community appears to be optimistic.
It remains to be seen if federal regulators will intercede and try to disrupt future consolidations, such as the pending T-Mobile and Sprint merger and the potential Comcast and 21st Century Fox deal, or take a more free-market, laissez faire approach. Taxpayers, consumers, and the economy as a whole would be best served if they do the latter.
Brandon Arnold (@BrandonNTU) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is the executive vice president at the National Taxpayers Union.
