Judge approves T-Mobile plan to buy Sprint

NEW YORK — A federal judge has cleared a major path for T-Mobile to buy Sprint for $26.5 billion, citing T-Mobile’s track record in promoting competition, even as legal scholars and consumer advocates warn about higher phone bills.

Judge Victor Marrero in New York said he believed the new T-Mobile would continue to compete aggressively with Verizon and AT&T, the industry giants whose size it now rivals.

T-Mobile, the No. 3 U.S. phone company, has been known for such measures as abolishing two-year service contracts and restoring unlimited data plans.

Though the deal still needs a few more approvals, T-Mobile expects to close it as early as April 1.

T-Mobile has promised not to raise prices for three years and said “efficiencies” it gets from a more powerful network will translate to lower prices down the road. T-Mobile also argued that the combined T-Mobile and Sprint would be able to build a better next-generation, 5G cellular network than either company could alone.

But more than a dozen state attorneys general had sued to block the deal, saying one fewer phone company, even a smaller rival like Sprint, would cost Americans billions of dollars in higher bills. One of the leading parties, New York Attorney General Letitia James, said her office was considering an appeal. She said Tuesday’s ruling “marks a loss for every American who relies on their cellphone.”

Gigi Sohn, a former Federal Communications Commission adviser who is now a fellow at Georgetown’s law school, said that while consumers are often promised benefits from mergers, “what they are left with each time are corporate behemoths” that can raise prices and destroy competition.

In the airline industry, there have been price increases and quality deterioration, like flight delays, on routes where carriers used to compete and then merged, said John Kwoka, an economics professor at Northeastern University.

He said that mergers that shrink an industry from four to three players “almost invariably result in price increases.” He said that while economists used to be concerned that the government was challenging too many mergers, the more prevalent worry these days is about too much industry concentration.

Eleanor Fox, an antitrust expert at New York University’s law school, said it was “quite strange” for the judge to accept the companies’ argument that prices won’t go up. Still, many U.S. economists do see mergers as positive for competition, she acknowledged, as they assume that markets operate better without government intervention.