NEW YORK (Reuters Breakingviews) - Qualcomm, T-Mobile US and Sprint have been thrown for a loop this week. And they and their investors have the random nature of oversight in President Donald Trump’s administration to thank for it.
The chipmaker lost some 11% off its $94 billion market value in Wednesday morning trading after a judge ruled it had engaged in anti-competitive practices. Sprint, meanwhile, dipped almost 6% after the Department of Justice staffers indicated they wouldn’t recommend its $26 billion merger with T-Mobile.
These are usual risks companies face. Trouble is, guidance from Washington is all over the place. Qualcomm’s case was brought by the Federal Trade Commission in the dying days of Barack Obama’s time in the White House. Trump’s FTC has a majority of Republican appointees, but didn’t stop the process, even though the president’s decision to sink Broadcom’s hostile $117 billion bid last year effectively crowned Qualcomm as a national champion. Meanwhile, the DOJ tried and failed to persuade U.S. District Judge Lucy Koh to hold a hearing, arguing harsh remedies could harm competition.
The T-Mobile-Sprint deal is going through its own loopy process. The DOJ and the Federal Communications Commission both have to approve the deal. Usually agencies coordinate on such matters – as the two did when nixing the two telecom rivals’ earlier attempt to tie the knot in 2014. In this case, the two are at loggerheads: FCC Chair Ajit Pai endorses the merger.
Antitrust boss Makan Delrahim has the final decision at Justice and has another issue to factor in: the duo’s claim they will build better 5G infrastructure together is one of Trump’s favorite initiatives. Even if he does give the nod, his team’s disapproval gives state attorneys general an opening to file a lawsuit against the merger.
There are other examples. In 2017 the DOJ sued AT&T to try to block its acquisition of Time Warner. Yet it waved through Walt Disney’s $71 billion deal for parts of Rupert Murdoch’s Fox empire with only a few conditions.
Overseers’ ties to industry complicate matters, too. FTC Chair Joseph Simons took himself out of the Qualcomm case because of past work with the firm. U.S. Attorney General William Barr recused himself from ruling on T-Mobile-Sprint because he owned their bonds.
The message this all sends to company executives is that policy is blowing in the wind. That’s bad for business.
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