Antitrust Practices and Market Power: a case of AT and T
AT and T incorporated is a multinational communication company based in US. Its head quarter is at downtown Dallas, Texas. It is considered as the third largest provider in both fixed and mobile telephony in America. As of 2012, AT and T is placed at number 17th in terms of market value worldwide. It is the 20th largest mobile service provider world wide with more than 100.7 mobile clients (Forbes, 2012).
After AT&T announced that it was going to acquire T-mobile for $39 billion, the lawyers at Fisher and Bursor launched a campaign termed “fight the merger”. This campaign was ostensibly initiated to block the merger with T-mobile since it was anticipated that prices would sore up. The company however negotiated a settlement with the lawyers where it agreed to pay them some fee. Some of the lawyers however took the case to trial where they won $299 million jury verdict against Sprint in California. The campaign by the layers attracted thousands of people who filed complains of arbitration against AT and T with an aim to block the anticipated merger. The US Arbitration, an entity which is mandated to hear such issues refused the company’s request to withdraw the charges (Fisher, 2011).
The United States Antitrust Division in the Justice Department took up the matter, and sued the firm under United States v. AT&T, T-Mobile, and Deutsche Telekom. This lawsuit was aimed at blocking the merger of T- mobile and AT and T. Towards the end of 2011, AT and T bowed down to public and government pressure, and announced that the anticipated merger with T- mobile has been discontinued after what it called “a thorough review”. They ended up the announcement by asserting that, the failure of the merger will result into increased costs to the customers, and consequently hurt development and innovation in the wireless industry. The initial agreement of the merger was that T-mobile was to receive $3 billion in cash as well as getting full time access to AT and T wireless spectrum that was worth $1 billion. According to a regulatory filling dated February 2012, the compensation from this merger to AT and T CEO was cut to more than $2 million because of the failed purchase (Cowley, 2012).
According to the lawyers in the US antitrust division, AT and T violated the Sherman Antitrust Act passed by congress in 1980. This law prohibits specific business operations that are deemed by government authorities to be anti competitive, and which requires government authorities to investigate and to track trusts, organizations and companies suspected of violating this law (Boarman, 1993).
An oligopoly is a common market structure whereby an industry is dominated by a restricted number of firms. A stiff competition exists among these oligopolistic organizations as they have high production and low prices. These firms may employ trade practices that are restrictive in order to control their production, and also increase prices. Companies may also opt to collaborate so as to stabilize the unstable market. A good example of oligopoly is the mobile phone market in US. During 2011 and 2012, about 90% of the industry was controlled by Sprint, Verizon, AT an T and T-mobile firms.
In the oligopoly market, the high competition among the firms results into extreme spending on marketing, and advertising. In the long run, the leading companies make extreme profits as the new firms find a lot of barriers on the way. The mutual interdependence, homogenous products, few large players and high rate of entry barriers by small firms are some of the characteristics of Oligopoly firms.
Boarman, P. M. (1993). “Antitrust laws in a global market”. Challenge, 36(1), 30-30. Available
Cowley, T ( 2012). “AT&T CEO pay docked $2 million for T-Mobile debacle“.
Fisher, D (2008). “AT&T’s Arbitration Victory Breeds Swarm Of Antitrust Cases” Available
Forbes, (2012). “The World’s Biggest Public Companies”. Available on
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