This week, Illinois U.S. District Judge Thomas Durkin has given T-Mobile the green light to appeal a potentially costly class-action lawsuit stemming from its $26 billion merger with Sprint, completed in 2020. The suit, brought forward by subscribers of AT&T and Verizon, alleges that the merger significantly reduced competition in the wireless market, compelling AT&T and Verizon to hike their prices. As a result, they argue, millions of consumers ended up paying more for their wireless services than they otherwise would have, with the plaintiffs seeking not only monetary compensation but also other remedies, potentially including the reversal of the merger itself.
Judge Durkin’s decision to allow the appeal at this stage—rather than later in the case—marks a significant moment in the lawsuit, which claims that the reduction of major U.S. mobile operators from four to three has cost AT&T and Verizon customers billions of dollars. The judge had previously noted in November that the plaintiffs “plausibly” demonstrated how higher prices could be directly linked to the merger. However, he has now stated that the plaintiffs have not adequately shown antitrust standing, thus granting T-Mobile the opportunity to challenge the lawsuit’s progression.
T-Mobile has countered the suit, asserting that AT&T and Verizon’s customers do not have the legal standing to sue. It argues that the two companies independently set their own pricing, unrelated to the merger’s effects. T-Mobile also suggested that customers dissatisfied with rising costs could “switch to T-Mobile, not sue it,” describing the plaintiffs’ claims for damages as “speculative.”
The class action lawsuit, filed last year, is being watched closely by antitrust lawyers, given its potential implications for future antitrust proceedings. Federal antitrust law permits consumers to initiate private challenges against mergers and acquisitions, but cases alleging a company’s M&A activity adversely affected a rival’s customers are exceedingly rare. If the lawsuit is allowed to proceed and succeeds, it could notably broaden the scope of antitrust actions in the future, impacting how mergers and acquisitions are approached and regulated.