loss of actual or potential competition. Likewise, one of the merging firms may have the incentive
to take the lead in price cutting or other competitive conduct or to resist increases in industry prices.
A firm that may discipline prices based on its ability and incentive to expand production rapidly
using available capacity also can be a maverick, as can a firm that has often resisted otherwise
prevailing industry norms to cooperate on price setting or other terms of competition.
While “maverick” has no specific definition in the FTC-DOJ guidelines, the merging parties and
their opponents seem to agree that T-Mobile is one.
A 2016 study by the British telecommunications regulator Ofcom found that wireless markets
with a maverick tend to have lower consumer prices than markets without one.
It was partly for
this reason that the DOJ challenged the proposed merger of AT&T and T-Mobile in 2011,
noting, “AT&T's elimination of T-Mobile as an independent, low-priced rival would remove a
significant competitive force from the market.”
Several petitions against the proposed merger
cite the rejection of the AT&T––T-Mobile merger as evidence that the government should reject
this merger, too.
The AT&T merger, however, involved T-Mobile disappearing as a distinct, independent
company and merging with one of the top two providers. The proposed merger between T-
Mobile and Sprint leaves the maverick in place, but as a larger entity as a third competitor. The
key question that comes from the maverick debate, then, seems to be whether the merger is likely
to create incentives that cause T-Mobile to change its behavior and compete less aggressively in
ways different from their approach today.
In other words, the maverick debate is a variation on the 4-3 question addressed above: Will a
maverick firm remain a maverick if it grows larger to compete with its two main rivals? More
specifically, is the merger likely to affect the firm’s costs and incentives in ways that change its
approach to gaining and keeping customers? Similarly, did Sprint generate competitive pressure
on T-Mobile that caused it to differentiate itself as a maverick, or was Sprint irrelevant to T-
Mobile’s ‘un-carrier” marketing and network investments?
Economic theory does not suggest that small firms are necessarily more innovative or likely to
take risks than large firms, or vice versa.
We do not know T-Mobile’s behavior as a maverick
U.S. Department of Justice and the Federal Trade Commission, “Horizontal Merger Guidelines,” 3–4.
Ofcom, “A Cross-Country Econometric Analysis of the Effect of Disruptive Firms on Mobile Pricing,” March 15,
2016, https://www.ofcom.org.uk/__data/assets/pdf_file/0019/74107/research_document.pdf.
U.S. Department of Justice, “Complaint: United States of America v AT&T Inc. and T-Mobile USA Inc. and
Deutsche Telekom AG,” August 31, 2011, para. 3.
See, for example, American Antitrust Institute, “Petition to Deny,” August 27, 2018,
https://ecfsapi.fcc.gov/file/1082877863636/AAI_Sprint-T-Mobile_FCC%20Petition%20to%20Deny.pdf.
Saturday Night Live addressed the question of what a maverick does in a 2008 parody of the vice-presidential
debate:
Gwen Ifill: How will you solve the financial crisis by being a maverick?
Gov. Sarah Palin: You know, we’re gonna take every aspect of the crisis and look at it and then we’re gonna ask
ourselves, “What would a maverick do in this situation?” And then, you know, we’ll do that!
For an early test of firm size and innovation, see Zoltan J. Acs and David B. Audretsch, “Innovation in Large and
Small Firms: An Empirical Analysis,” American Economic Review 78, no. 4 (1988): 678–90.