Describe the main issues/barriers that separate each side. The main issue that separated AT&T vs. The Department of Justice during this negations were Horizontal Merger Guidelines. Those guidelines include the Herfindahl-Hirschman Index (HHI), the analytical tool that regulators use to evaluate these deals to determine if the transaction is likely to be anticompetitive. The HHI is a measure of market concentration that factors in the number of firms in a given industry and their respective market shares. Drawing on decades of experience, the regulators are able to use the HHI to gauge whether a deal will enhance market power and lead to trouble. DoJ considers markets with an HHI below 1,500 to be “unconcentrated”. This is equivalent to a market
…show more content…
T-Mobile was arguable to be a maverick firm in which is one that has a greater economic incentive to deviate than do most. By eliminating T-mobile from the wireless industry through merger increases the risk of post-merger price increases. It was the first in the industry to introduce smart phone data plans and technology. T-Mobile’s service prices are also generally lower than the prices of the other major carriers. The merger would’ve tightened the oligopolistic structure of the industry and enhance the possibility of adverse effects through coordinated interaction. Smaller carriers such as Sprint-Nextel or the would not have access to enough spectrum to enable them to serve substantially more customers. Altogether possibly driving prices higher, reducing choice, and prevent innovation related to simplifying the spectrum problem. The wireless industry is where consumers are sometimes unhappy about service and billing running high, it is particularly important to maintain an adequate range of choices, so that consumers can switch service providers with relatively ease. The proposed merger would could’ve drove Sprint into a merger with Verizon, further concentrating the
T-Mobile was arguable to be a maverick firm in which is one that has a greater economic incentive to deviate than do most. By eliminating T-mobile from the wireless industry through merger increases the risk of post-merger price increases. It was the first in the industry to introduce smart phone data plans and technology. T-Mobile’s service prices are also generally lower than the prices of the other major carriers. The merger would’ve tightened the oligopolistic structure of the industry and enhance the possibility of adverse effects through coordinated interaction. Smaller carriers such as Sprint-Nextel or the would not have access to enough spectrum to enable them to serve substantially more customers. Altogether possibly driving prices higher, reducing choice, and prevent innovation related to simplifying the spectrum problem. The wireless industry is where consumers are sometimes unhappy about service and billing running high, it is particularly important to maintain an adequate range of choices, so that consumers can switch service providers with relatively ease. The proposed merger would could’ve drove Sprint into a merger with Verizon, further concentrating the