Reuters Insider - Breakingviews TV: Poor oversight
23/05/2019 03:32
Click the following link to watch video: https://share.insider.thomsonreuters.com/link?entryId=0_ta3u0d9a&referenceId=0_ta3u0d9a&pageId=ReutersNews Source: Reuters Insider Description: May 22 - Two recent cases make it far harder to read U.S. regulators’ tea leaves: two D.C. agencies with differing views of the T-Mobile US-Sprint merger, and the story behind a judge’s ruling against Qualcomm. Antony Currie and Jennifer Saba explain why this is bad for business. Short Link: https://reut.rs/2LZ4yrE Video Transcript: So Jen, here we are to talk about a couple of big things happening in the world of business in the US. First of all, Qualcomm's business model seems to be completely destroyed by a judge, and the Sprint-T-Mobile US deal that seems to have been given a nod on Monday now might not be going through, thanks to another department of the government. What's going on? Yeah. So basically, what's happening is the regulatory landscape is just a big mess and confusion. Basically what's going on, let's take Qualcomm first, so a judge ruled that it was being anti-competitive in how it licensed out its chips and whatnot. It was sued by the Federal Trade Commission, the US FTC. So then the DOJ, another agency, intervened just trying to stop the lawsuit and saying hey listen, we'd like to have a hearing instead. Shouldn't at least they be talking to each other? Exactly. But the problem is that the FTC case actually was an Obama era case, right? Yes, it was Obama era case. But the FTC now has basically a majority of Republicans on the commission. So it's a little confusing that the DOJ was trying to intervene in this and trying to stop it. The FTC had to let it go. So that's just one instance of kind of confusion. Then we have the Sprint-T-Mobile deal. Earlier on Monday, the head of the FCC which has to approve the deal Ajit Pai basically said hey, I think this deal is a good thing. I'm going to vote to—I'm going to recommend to vote to approve it. Then we have a report coming out of Reuters saying that the Department of Justice, which also has to approve this deal, the staff of the Antitrust Division is recommending to block it. Typically, these two agencies work very closely together. Now just because a staff is recommending to block it doesn't necessarily mean their boss will, who's Makan Delharim. It's just like, how do you know what's going on? The whole point is this administration, especially it's meant to be a business-friendly administration. Exactly. And even if you know a business-friendly administration, you want to be at least showing that you know what you want business to do and how things may change. Regardless of some persons may think about business, these companies do have to plan. They do have to make sure they know—where they're going over the next year, two years, five years, whatever. Yeah. I mean, so basically you can kind of—and past administrations kind of look at the tea leaves and get a fairly clear reading. Like for example when Sprint and T-Mobile tried to merge in 2014, basically the FCC and the DOJ got together and said no way. And so at least it was like they were on the same page and they kind of gave their reasons. In this instance, it seems like everybody's on different pages. Everybody kind of wants something different, a different agenda, and that makes it very difficult to plan. In Qualcomm's case, chances are the company's going to repeal. We'll see where that goes. But for the vast majority of businesses looking at this, they're going to be thinking what? Let's just sit back and do nothing or, how do you they respond to this? Actually, I don't even know. If you're a business and you're looking to merge and you're looking for approval, it's not necessarily business as usual. Alright, great. Thanks for talking us through that, Jen. We'll be back with more Breakingviews tomorrow