The Washington PostDemocracy Dies in Darkness

Justice Department staff had urged rejection of Sprint-T-Mobile merger

The recommendation came before the companies offered a list of concessions this week

The decision rests with Makan Delrahim, the assistant attorney general for the Justice Department's anti-trust division. (Patrick T. Fallon/Bloomberg)

Justice Department staff members who’ve have been reviewing the proposed merger of T-Mobile and Sprint had recommended that the U.S. government sue to block the $26 billion deal, fearing the combination of the country’s third- and fourth-largest wireless carriers could threaten competition.

The recommendation — confirmed Wednesday by a source familiar with DOJ’s thinking but not authorized to speak on record — came before the two companies offered new concessions this week meant to appease regulators, including pledges to divest certain lines of business and cap prices for consumers. Reuters first reported the recommendation.

Despite the recommendation, a decision to bring such a case has not been made. That authority rests with the DOJ’s top antitrust official, Makan Delrahim. A spokesman for DOJ declined to comment.

A lawsuit to block the merger — if it is brought — would mark a rare break within the government’s own ranks. Earlier this week, the Federal Communications Commission offered its early blessings to the merger, arguing that the deal would benefit consumers by bringing ultra-fast, 5G wireless service to more Americans.

Rift emerges between federal agencies reviewing the Sprint and T-Mobile merger

The FCC declined to comment. Sprint and T-Mobile did not respond to requests for comment.

Both the Justice Department and the FCC have been reviewing the proposed merger between T-Mobile, operated by Germany’s Deutsche Telekom, and Sprint, run by the Japanese conglomerate SoftBank, since the companies announced their plans in April 2018. The wireless carriers have argued that their combination would allow them to keep pace with their larger competitors, AT&T and Verizon. But critics contend that further consolidation in the telecom industry would result in higher prices, fewer choices and worse service for consumers.

In a bid to satisfy regulators reviewing the deal, T-Mobile and Sprint this week announced a series of concessions, including a commitment to build out 5G service to 97 percent of the country in three years. Sprint and T-Mobile also said they would provide “same or better rate plans at the same or better prices” for the next three years. And the companies pledged to divest Sprint’s prepaid phone business, called Boost Mobile, to a third party following the deal’s approval.

The announcements helped the two companies win support from the FCC, but the Justice Department seemed unswayed. Unlike the FCC, which broadly reviews mergers to determine if they’re in the public interest, the DOJ has a strict focus on determining if deals improve or worsen competition. To that end, a person familiar with the agency’s thinking told the Post that DOJ’s antitrust lawyers had doubts about the deal and weren’t immediately sold on the promises the companies had made.

If the DOJ proceeds with a lawsuit, it would not be its first major assault against consolidation in the telecom industry. Under Delrahim, the agency’s antitrust lawyers had sought to block AT&T’s purchase of Time Warner, though the DOJ ultimately lost that case in court.