Saying No to Merger Review Regulation by Arbitration

The latest and most far-fetched attempt to bog down the proposed AT&T/T-Mobile merger is the subject of a handful of recent press reports. A law firm has been recruiting customers and filed arbitration claims on their behalf against AT&T in a number of jurisdictions across the country in an attempt to try to get arbitrators to tie up the deal.

Apparently, the law firm argues that AT&T customer contracts regarding individual billing disputes gives arbitrators the ability to decide antitrust claims under the Clayton Act. On the face of things, it seems bizarre to suggest that arbitrators are empowered to decide antitrust issues concerning AT&T/T-Mobile. Not surprisingly, AT&T has now filed lawsuits in those same jurisdictions to put a stop to the ploy.

AT&T/T-Mobile is already subject to review by two federal agencies – the U.S. Department of Justice as well as the FCC. DOJ's merger review, in fact, includes an antitrust analysis, focusing on anticompetitive concerns. Regardless of one's views of the competitive merits of the AT&T/T-Mobile merger, those merits are best assessed through the federal regulatory process we have in place. And antitrust issues, in particular, are here best left to DOJ.

We've previously raised concerns about unnecessary duplication of federal merger review processes, as well as the drawbacks from saddling telecom mergers – including wireless mergers – with assorted state regulatory reviews. Now we see yet another unhelpful and most likely harmful obstacle to a sound merger review process, this time through a misuse of the arbitration process to disrupt AT&T/T-Mobile.

Tying up proposed mergers by ginning up lawsuits premised on strange notions of arbitrator activism is bad policy. And it's hardly the best approach to ensuring careful market analysis and promoting overall consumer welfare. In the end, the only good that could come of this legal excursion would be an eventual court appeal and definitive precedent to stand in the way of any similar future attempt to roadblock proposed telecom mergers.