One Merger, Two Agencies: Dual Review in the Breakdown of the AT&T / T-Mobile Merger and a Proposal for Reform

INTRODUCTIONOn March 20, 2011, two of the four largest U.S. wireless telephone companies, AT&T Inc. ("AT&T") and T-Mobile USA ('T-Mobile"), announced their intention to merge.1 The merger proposal instigated a heated debate among the public and within the government, ultimately leading to the implosion of the deal.2 Putting aside the merits of the proposed merger, AT&T and T-Mobile's experience has broad implications for governmental review of mergers in the telecommunications industry.3 AT&T and T-Mobile needed approval from both the U.S. Department of Justice (DOJ) and the Federal Communications Com mission (FCC) before they could move forward with the deal.4 All telecommunications mergers are subject to review by the DOJ and the FCC-each agency analyzes the impact of the merger under different legal standards, different burdens of proof, and different policy guidelines.5 The result is a system of delay, redundancy, and inefficiency.6 This Note examines the system of dual review through the lens of the AT&T/T-Mobile merger, highlighting the relative ease with which the DOJ can challenge mergers in the telecommunications industry, compared to mergers in other industries.7 Although in most industries the DOJ must make an evidentiary showing at a preliminary injunction hearing, the dual review by the FCC eliminates this requirement in the telecommunications context.8 This Note does not pass judgment on whether the AT&T/T-Mobile merger should have been approved, nor does it comment on the appropriate methodology for governmental merger scrutiny.9 It merely seeks to highlight the inconsistencies caused by dual review and the way that these inconsistencies undermine and pervert the application of current antitrust policy.10Part I of this Note outlines the development and current operation of the dual review system, focusing first on the DOJ and then on the FCC.11 Part II begins by using the AT&T/T-Mobile merger to demonstrate the DOJ's ability to stall telecommunications mergers without seeking a preliminary injunction.12 It then discusses the inefficiencies created by this preliminary injunction problem.13 Finally, Part III outlines four approaches to addressing this problem, and concludes that severely limiting the substance of FCC merger review and imposing a strict time limit on this review offers the best solution.14I. DOJ & FCC Dual Review of Telecommunications MergersBefore the merger between AT&T and T-Mobile could move forward, the parties needed the blessing of two federal agencies.15 Mergers between companies in the telecommunications industry are subject to review by the DOJ and the FCC.16 The Antitrust Division of the DOJ is the primary enforcer of the U.S. antitrust laws.17 The Telecommunicadons Act of 1996 ("1996 Act"), granted the DOJ authority to review telecommunications mergers in the same way it reviews mergers in most other industries.18 Congress created the FCC in 1934 as an expert agency tasked with regulating a broad swath of telecommunications issues and technologies.19 It has the narrow authority to review mergers that implicate the transfer of licenses for the use of electromagnetic spectrum or common carriage wires.20 The two agencies conduct their merger review independently and without formal cooperation.21 As a result, a merger in the telecommunications industry is subject to review by both the DOJ and the FCC under differing standards.22This Part outlines the history of and statutory basis for this concurrent review process.23 Section A focuses on the development of the DOJ's authority to review mergers in general, and telecommunications mergers in particular.24 Section B discusses the procedure and relevant legal standard used by the DOJ to review mergers.25 Section C considers the history of the FCC and its authority to review mergers.26 Finally, Section D details the FCC's procedural and legal standards for merger review.A. …