CTIA Amicus Brief Urges 7th Circuit to Grant T-Mobile’s Interlocutory Review Petition

AT&T and Verizon customers seeking to vacate T-Mobile’s 2020 Sprint buy “rest” their antitrust claims against T-Mobile on “a boundless theory of causation,” said CTIA’s amicus brief Monday (docket 24-8013) in the 7th U.S. Circuit Court of Appeals.

The brief supports T-Mobile’s petition for review to reverse the district court’s denial of its motion to dismiss (see 2404090059). A 7th Circuit decision favorable to the defendant likely would end the case.

Under the plaintiffs’ theory, T-Mobile’s Sprint buy “somehow caused third parties AT&T and Verizon to charge higher prices for their nationwide wireless plans,” thereby injuring the plaintiffs, said CTIA’s brief. “This theory raises significant concerns for CTIA, its members, and businesses generally because it weakens the guardrails that the courts have established to protect parties from expending significant time and energy to litigate speculative claims,” it said.

Antitrust standing is a “bedrock requirement” that ensures that the antitrust laws “properly serve their purpose” and help protect businesses from the burdens of “frivolous lawsuits seeking to extract settlement payments for meritless claims,” said CTIA’s brief. “Over-expansive application” of antitrust standing rules increases costs for businesses, and can lead to increased prices for consumers, it said.

As T-Mobile’s petition for interlocutory appellate review “ably shows,” the plaintiffs’ theory of standing, which the district court’s Nov. 2 denial order accepted, is at the very least highly contestable, said CTIA’s brief. The plaintiffs’ theory “is insufficient, as a matter of law, to establish antitrust standing,” it said. The theory also is “entirely implausible when viewed against the backdrop of robust competition that characterizes the market for wireless services in the wake of the merger,” it said.

The district court’s decision to allow the plaintiffs’ claims to proceed on that speculative basis “not only flies in the face of basic principles of antitrust standing,” but it also defies “common sense,” said CTIA’s brief. Following T-Mobile’s 2020 Sprint buy, competition among AT&T, Verizon and T-Mobile “remains fierce,” as a “simple comparison” between the price of wireless services and the prices of other consumer goods and services illustrates, it said. The prices that consumers pay for wireless services have actually fallen, “even while inflation reached historic levels in 2022,” it said.

Against that backdrop, it’s “unsurprising” that the plaintiffs haven’t identified a “plausible causal link” between the supposed reduction in competition that they allege followed T-Mobile/Sprint and AT&T’s and Verizon’s “independent pricing decisions,” said CTIA’s brief. The plaintiffs instead point to price increases “on a subset of wireless plans that occurred more than two years after the merger closed and while the national economy was still experiencing the aftershocks of the COVID-19 pandemic and record-high levels of inflation,” it said.

Even at the Rule 12(b) stage, the plaintiffs’ “bare allegations” don’t support an “inference” that their asserted injuries are “traceable” to T-Mobile/Sprint, said CTIA’s brief. That’s especially so where publicly available data show that consumer wireless prices have fallen since the combination, it said. Nor is the plaintiffs’ attempt to link price adjustments to the merger plausible “in light of broader, macroeconomic factors,” it said.

By accepting the plaintiffs’ theory, the district court’s denial order “permits wireless customers to pursue antitrust claims based on bare assertions that a third party increased its prices at some point after a competitor’s merger, without alleging any facts showing a plausible causal link between the merger and the subsequent price change,” said CTIA’s brief. That approach, if allowed to stand, “risks exposing businesses to the burden of defending against meritless antitrust suits any time another business in the same industry closes a merger,” it said.

Competitors may make independent business decisions to raise prices as inflation drives up costs, and prospective plaintiffs “may rely on alleged timing correlations to pursue antitrust claims against the recently merged business,” said CTIA’s brief: “This risk of liability may discourage competition and pro-consumer mergers, as well as having other destabilizing effects on the economy.”

The 7th Circuit should grant review of the district court’s order that allowed the plaintiffs’ “speculative claims to proceed,” said CTIA’s brief. The order is “inconsistent” with the antitrust pleading standard, which is important to all businesses, “including those in the wireless industry and throughout the mobile ecosystem,” it said.