400 North Capitol Street, NW
Washington, DC 20001
- Toll Free 1.888.564.6273
- Local 202.783.3870
It goes without saying that at FreedomWorks Foundation (FWF), we keep our eye on cronyism rearing its ugly head in the regulatory process. But another type of cronyism is bouncing around Washington these days, and it flies under cover of anti-trust protections against monopolies.
When big mergers are proposed – for example, the currently-advancing merger between T-Mobile and Sprint – a slew of government reviews take place. After all, we wouldn’t want anything to happen without government approval, right??? [sarcasm alert]
As you might imagine, we at FWF take a very, very skeptical view of possible government interference in these transactions between two businesses.
Among the government reviews that take place in the case of the T-Mobile/Sprint merger are House and Senate subcommittee hearings, review by the Federal Communications Commission, and the grand-daddy of them all: review by the U.S. Department of Justice’s Anti-Trust Division. All the while state Attorneys General are taking their own look at the merger.
You might forgive the T-Mobile/Sprint folks if they start to feel like a swimmer with a bleeding cut in shark-infested waters…
Of course, not all the sharks are in the government. As is typically the case, the government itself is a tool that is used or manipulated by others in the private sector for their own gain. Thus the cronyism.
How can that work in the case of a merger you may ask? An excellent question, and the T-Mobile/Sprint merger offers up a case study of how the anti-trust laws might be used to achieve cronyist goals.
The T-Mobile/Sprint merger is the combination of the #4 and #3 biggest wireless carriers (Verizon and AT&T are the two biggest), and they each own subsidiaries that focus on pre-paid wireless customers. But one person is trying to get the government “reviewers” to treat pre-paid wireless customers as a completely separate market to try and force T-Mobile and Sprint to have to spin off (i.e., sell) their pre-paid wireless customers.
That one person is Peter Adderton, the former CEO of Boost Mobile and Amp’d Mobile. Adderton has decided that he personally wants to get back into the wireless business, and his chosen method is to get the government to do his dirty work for him by forcing T-Mobile/Sprint to make the spin-off of the pre-paid wireless part of their business a condition of the government agreeing to the merger.
Are you following the cronyist piece of this now? So far, the government hasn’t agreed to Adderton’s suggested merger conditions, but this process is a long way from over.
Adderton’s goal is to get the Department of Justice (and other government entities) to threaten to sue to stop the T-Mobile/Sprint merger as a violation of the anti-trust laws UNLESS they agree to sell off – at fire sale prices of course – some or all of their pre-paid wireless business. That way, Adderton can get back into the business by picking up a fire sale bargain worth hundreds of millions of dollars!
Put differently, Adderton wants the government to hold T-Mobile/Sprint hostage until they agree to cough up their pre-paid wireless business. Adderton wants to get the ransom without even taking the hostage himself!
That, my liberty loving friends, is cronyism using anti-trust law.
At FWF, we believe that it is a rare day indeed when the government should be able to stop or put conditions on freely entered business deals, like the T-Mobile/Sprint merger, and Mr. Adderton is in the process of validating our view as he attempts to use the anti-trust laws to achieve his cronyist goals.
Mr. Adderton and the government should get out of the way and let our economy work – and that means letting mergers like T-Mobile/Sprint happen without harassment or cronyism.
Freedom works. Let’s try more of it!