T-Mobile will have to argue in court that its acquisition of Sprint did not hurt consumers and raise prices after a federal judge denied the carrier’s attempt to dismiss a proposed class-action lawsuit that was filed last year.
U.S. District Judge Thomas Durkin issued his opinion in the ruling (spotted by Reuters), saying the “plaintiffs have acted with reasonable diligence in bringing this suit,” and will let it continue. The Chicago-based judge, however, did grant the dismissal of Softbank, the former owner of Sprint, as a defendant. The lawsuit was filed in 2022 by seven AT&T or Verizon customers in Chicago on behalf of millions of wireless consumers.
At issue is whether T-Mobile’s acquisition of Sprint, which reduced the number of national wireless players to three, hurt consumers by reducing competition and enabling them all to either keep prices high or raise them. It’s a question that government also raised when reviewing the deal before it was approved in 2020, with several state attorneys general suing to block the deal at the time.
The Justice Department ultimately arranged to “create” a fourth national carrier to replace Sprint by propping up DISH Network. As a condition of the merger, T-Mobile would have to divest various assets like spectrum and Sprint’s Boost prepaid wireless service to DISH. It also struck a wireless reseller agreement with DISH to bolster its reach.
But the government’s plan to present DISH as a viable fourth option has fallen flat over the last three years. While the company continues to build out its 5G network across the country, it’s a virtual non-presence with consumers, having shown only a flicker of life with its partnership with Amazon. On Monday, it reported losing 225,000 net wireless customers in the third quarter, reversing a slight gain of 1,000 in the year-earlier period. Chairman Charlie Ergen said on an earnings call today that the company was focused on adding more profitable customers.
“T-Mobile, in fact, knew even before the merger that the DISH spinoff would never effectively replace the competition provided by Sprint,” the plaintiffs claimed in the original lawsuit.
T-Mobile, meanwhile, benefited greatly from the takeover of Sprint. Beyond adding new customers, the company was able to tap into Sprint’s valuable horde of spectrum, effectively allowing it to supercharge its 5G network. As a result, T-Mobile regularly tops wireless speed and coverage tests, and is in a far stronger position than it was prior to the deal.
It’s important to note that Durkin’s ruling wasn’t on the merits of the claim itself, which still needs to be decided in a separate trial. His ruling just allowed the suit to move forward in the legal process.
T-Mobile said as much in its statement to Cord Cutters News.
“The Court’s decision is procedural, going only to the initial question whether these customers can bring the lawsuit,” said a T-Mobile spokesperson. “It says nothing about whether an antitrust violation has occurred. It’s clear that our merger with Sprint has enhanced competition, and delivered customers everything we said it would – more reliable connectivity, more value and more competition – and we’ll continue to defend its merits.”
In its motion to dismiss filed in December 2022, T-Mobile called the lawsuit “impermissibly speculative,” noting that any impact on AT&T and Verizon customers would be indirect.