If HHI Score for Sprint Merger with T-Mobile US is Not Different, How Will Antitrust Recommendation be Different?

The last time Sprint and T-Mobile US talked about merging, that transaction would have boosted HHI scores by as much as 486 points. So it came as no surprise that DoJ likewise opposed that merger.

One has to ask whether the U.S. mobile has become less concentrated than it was three years ago, and whether the HHI score for the exact same transaction is going to be different.

The Herfindahl-Hirschman index (HHI) is a commonSome of us find curious the argument that the DoJ will reverse course and approve the recent Sprint-T-Mobile US merger when the likely increase in HHI scores is likely to remain in the vicinity of a 400-point increase in HHI scores that scuttled prior proposed transactions.

While the Herfindahl-Hirschman index (HHI) is a tool used by regulators to determine market concentration, it is a tool, not an absolute dictator of policy, of course.

On the other hand, recent proposed blockbuster mergers in the U.S. mobile market that would have increased HHI scores by 400 points have been opposed by the antitrust officials, and the latest merger is likely to generate an HHI score in about that same range.  

When the U.S. Department of Justice signaled opposition to the proposed AT&T purchase of T-Mobile, the transaction would have raised HHI scores by more than 200 points in 94 percent of markets.

The proposed AT&T acquisition of T-Mobile would have resulted in AT&T having 43.7 market share, resulting in an HHI of 3,335, an increase of 951 points. It is no surprise that the merger effort failed.

By some estimates, HHI would have increased by more than 416 points in more than 93 percent of local markets.ly accepted measure of market concentration. It is calculated by squaring the market share of each firm competing in a market, and then summing the resulting numbers, and can range from close to zero (virtually unlimited competition) to 10,000 (actual monopoly).

As a general rule, mergers that increase the HHI by more than 200 points in highly concentrated markets raise antitrust concerns. So there is no reason to believe HHI will be much less an issue this time around.