AT & T Merger Summary

Introduction
Mergers are regulated with the government in several businesses daily. T-Mobile and AT&T attempted to merge allowing the companies to control 38.8 percent of the market. The government prevented the two companies plans to merge explaining that it was in the best interest for the consumers (Rogowsky, 2014). AT&T offered the cellular company $39 billion to merge with them. This causing the company to be the largest wireless company on the market. In 2011 without the merger, the market shares of the U.S. wireless market were AT&T at 26.6 percent, T-Mobile with 12.2 percent, Verizon with 31.3 percent, Spring with 11.9 percent, TracFone with 5.0 percent, U.S. Cellular with 3.1 percent, MetroPCS with 2.3 percent, Cricket at 1.6 percent, and several smaller providers with the remaining 4 percent.
What would be the effect of the merger on the market’s concentration ratio? On the HHI?
Unlike other mergers with wireless companies, this was one of the first

If a company results above 2,500, it’s determined as “highly concentrated.” If the company results are between 1,500 and 2,500, it’s determined as “moderately concentrated.” If a merger increases a company’s HHI by more than 200 points in a highly concentrated market, or more than 100 points in a moderately concentrated market, the Department of Justice steps in. In the 2011 merger of AT&T and T-Mobile, the government stepped in and blocked the merger. This was due to the increase in the wireless company’s HHI scores by amounts that were considered off the charts (Roose, 2014). If a T-Mobile and Tracfone merged together, the HHI would increase and be moderately concentrated. The merger would not greatly impact the market like the AT&T and T-Mobile