On the subject of whether US antitrust law can or should stop this merger, I have no opinions. Antitrust law is best left to people who understand it better than I.*
But back to our topic, in a move that seems wrongheaded from every hat I could possibly find (except, of course the hats owned by ATT and Deutsche Telekom shareholders), T-Mobile agreed to be bought out by AT&T. If consummated, this will leave the US with:
- A sole major GSM provider.
- Only 3 major wireless providers.
- One less provider of good commercials.
In short, I’m not a big fan. However, M&A is not (and should not be) accepted or rejected in the court of public opinion. I will however note that legacy industries in the US, in a truly biblical move, have organized into trinities. There are now three mega-airlines, Delta, United and American. There are still 3 major car companies (Ford, GM, Chrysler) after a frightening brush with there being 0-1. There always have been 3 major sports (NBA, NFL and MLB). And so on. By contrast, I could think of only 1 major duopoly (Coke vs Pepsi), which is really also a trinity once you include Dr. Pepper and their productions. So, a short question. Why?
*A summary I was once given on the subject: if prices go down, predatory pricing is alleged, prices staying flat is called collusion, and rising prices are attributed to monopolies.
please remember the divorce rate in this country is 50% and possibly rising…
also, don’t forget the NHL
I expect a theorem like “In a repeated rent-seeking game (or equivalently, all-pay auction), lawmakers’ collusive revenue is maximized with three competing rent-seekers.”
In practice, all anti-trust legislation uses the simple maxim “three’s a crowd” to determine whether to do anything.
Therefore having at least 3 players gets everyone the license to do as they please.
Since profits decrease in the number of participants, three is also the maximum steady state number we should expect to observe.