7 ms·

Not totally sure this is eventually going to survive a Twiqbal appellate review, and even then it's hard for me to buy the judge's "first step" harm analysis he

Not totally sure this is eventually going to survive a Twiqbal appellate review, and even then it's hard for me to buy the judge's "first step" harm analysis here. I'd love to see the bar for private antitrust suits loosened up, but the fact pattern (Sprint was not a particularly stable company at time of purchase, and no one's alleging any kind of price-fixing, collusion, or monopoly of essential facilities) and legal framework in this case don't feel like a great opportunity to do so. In general, I'm skeptical that we should punish a company, especially one that isn't the largest player in the market, based on (pretextual IMO) actions taken (or not taken) by its competitors. I don't think the merger should have been approved, but once that bell is rung I think the standard for judicial intervention needs to be very high, and I don't think bare market forces apply.

bobthepanda 3y ago
There is a better case against the airlines since like you said, Sprint was clearly about to go bust had the merger not happened, and there still would’ve been three cell phone companies.
- lotsofpulp 3y ago
  Pre consolidation airlines were not any more stable than Sprint. Even now, JetBlue is about to get merged with Spirit.
  - bobthepanda 3y ago
    JetBlue and Spirit are both profitable. IIRC the deal is more about the fact that they share a common aircraft type, and Airbus’ order backlog is measured in years.
    - lotsofpulp 3y ago
      JetBlue and Spirit do not have profits in recent years: https://www.macrotrends.net/stocks/charts/JBLU/jetblue-airways/net-income https://www.macrotrends.net/stocks/charts/JBLU/jetblue-airwa... https://www.macrotrends.net/stocks/charts/SAVE/spirit-airlines/net-income https://www.macrotrends.net/stocks/charts/SAVE/spirit-airlin... I am not an expert in airlines, and I am sure there are COVID effects, but it seems like the other domestic airlines have bounced back quicker since they are showing profits. But more importantly, I remember Jetblue wanting to provide a better than average flying experience when the airline started, so I presume the only reason they would want to merge with Spirit, a company who does the exact opposite, is because they are facing financial headwinds.
      - bobthepanda 3y ago
        Plane availability. Jetblue and Spirit both have a strategy of lowering costs by only running one aircraft type, the Airbus A320 family, which means that their pilots, flight attendants, mechanics, only need training on one type of aircraft and can be flexibly deployed, they only maintain one set of spare parts, etc. The Airbus order backlog is several years long. If you need planes earlier than that, your only recourse is to buy someone else's planes. --- FWIW, Q2 2023, JBLU reported highest quarterly net profit: https://simpleflying.com/jetblue-record-quarterly-revenues-q2-2023/ https://simpleflying.com/jetblue-record-quarterly-revenues-q...
        atlasunshrugged 3y ago
        That's the strategy that Southwest pioneered right?
        bobthepanda 3y ago
        Southwest, Ryanair, EasyJet etc. At this point it is the bread and butter of a low cost carrier. JBLU originally started as one. Legacy carriers are more likely to get different types of planes for different missions, and pit the duopolists against each other to secure better pricing.
        selectodude 3y ago
        JetBlue has been flying the E190 for like two decades now.
        bobthepanda 3y ago
        They’ve also committed to phasing them out by 2026 to go all in on Airbus. Still, the two aircraft fleet is a lot smaller than what you would see on a legacy carrier.
      - blessedwhiskers 3y ago
        JetBlue also has pretty limited landing slots on the west coast, and missed out on purchasing Virgin Atlantic to Alaska a few years ago, which would have allowed them to diversify more outside the eastern US. Spirit isn't a perfect match (different market segments), but otherwise they use the same model of aircraft and have some operational efficiencies. I'd hazard a guess Spirit's branding and low cost model will be tossed out in favor of JetBlue's operating model, and that segment of the market will be left to Frontier.
- cma 3y ago
  > Sprint was clearly about to go bust had the merger not happened, and there still would’ve been three cell phone companies. Or alternatively, Sprint's shareholders would have been wiped out, and its creditors could have continued operating it after taking a loss on their loans, preserving competition in the cellular service market. My source is that they reported they were set to be cash flow positive (meaning profitable outside of servicing debt) in 2019: https://seekingalpha.com/news/3413933-sprint-cfo-sees-t-mobile-deal-progressing-positive-cash-flow-ahead https://seekingalpha.com/news/3413933-sprint-cfo-sees-t-mobi... That still might have been untenable for their shareholders, but it is misleading to say the alternative was still three cellular service companies.
  - paulddraper 3y ago
    Or the creditors would have sold assets to TMobile anyway.
- silisili 3y ago
  There's not three: do not forget Dish. They bought a ton of spectrum prior, and got Boost, spectrum, and partnership with TMo after the merger. Despite a brutal earnings call yesterday, they are expanding network aggressively. They have the bankroll to ramp up, unlike Sprint who was circling the drain. I think ultimately there will be 4 healthy competitors, not 3.
  - bobthepanda 3y ago
    I legitimately did not know Dish had a phone network. (I also don’t have TV.) Best of luck to them, some disruption would be nice. I would like at least one cell provider to not have dead zones in my area.
akira2501 3y ago
> I don't think the merger should have been approved, but once that bell is rung I think the standard for judicial intervention needs to be very high Why? What particular harm are you worried about here? If there's harm to market participants then why should the players be immune? Why is a merger approval so inviolate? > and I don't think bare market forces apply. Why _wouldn't_ they? What forces _would_ you invoke to achieve justice? Or are you saying that because it's too inconvenient, we have to ignore the harms? Market's don't exist for the benefit of companies. They exist for the benefit of citizens who both participate in them as consumers and as laborers. We wrote a lot of anti monopoly law for very good reasons, if shareholders are inconvenienced by having to unwind bad deals that shouldn't have been approved in the first place, I see no reason to afford them greater protection or deference than the fundamental participants of that market.
- sydbarrett74 3y ago
  Exactly. Companies should be the servants, not the masters, of civil society.
- danielmarkbruce 3y ago
  You may want markets to exist for the benefit of citizens as labor and consumers only. But that's not an agreed upon position. If there is no benefit for humans as investors, markets won't exist. Companies are legal fictions created for humans as investors to pool their capital today and turn it into more capital for tomorrow.
  - ClumsyPilot 3y ago
    > If there is no benefit for humans as investors, markets won't exist. This is so breathtakingly wrong, that 'Earth is flat' is more accurate. Ten thousand years ago, before investors, central banks, before currency, before the concept of money, primitive people had Markets Primordial market consists only of two peope - labourer and a customer. I trade my sheep for your fish. Even in the modern day, many companies have no investors - for example limited partnerships. The idea that markets would disappear without investment reads like an attempt by the pope to take credit for creating the world in 3 days.

bobthepanda 3y ago

There is a better case against the airlines since like you said, Sprint was clearly about to go bust had the merger not happened, and there still would’ve been three cell phone companies.

lotsofpulp 3y ago
Pre consolidation airlines were not any more stable than Sprint. Even now, JetBlue is about to get merged with Spirit.
- bobthepanda 3y ago
  JetBlue and Spirit are both profitable. IIRC the deal is more about the fact that they share a common aircraft type, and Airbus’ order backlog is measured in years.
  - lotsofpulp 3y ago
    JetBlue and Spirit do not have profits in recent years: https://www.macrotrends.net/stocks/charts/JBLU/jetblue-airways/net-income https://www.macrotrends.net/stocks/charts/JBLU/jetblue-airwa... https://www.macrotrends.net/stocks/charts/SAVE/spirit-airlines/net-income https://www.macrotrends.net/stocks/charts/SAVE/spirit-airlin... I am not an expert in airlines, and I am sure there are COVID effects, but it seems like the other domestic airlines have bounced back quicker since they are showing profits. But more importantly, I remember Jetblue wanting to provide a better than average flying experience when the airline started, so I presume the only reason they would want to merge with Spirit, a company who does the exact opposite, is because they are facing financial headwinds.
    - bobthepanda 3y ago
      Plane availability. Jetblue and Spirit both have a strategy of lowering costs by only running one aircraft type, the Airbus A320 family, which means that their pilots, flight attendants, mechanics, only need training on one type of aircraft and can be flexibly deployed, they only maintain one set of spare parts, etc. The Airbus order backlog is several years long. If you need planes earlier than that, your only recourse is to buy someone else's planes. --- FWIW, Q2 2023, JBLU reported highest quarterly net profit: https://simpleflying.com/jetblue-record-quarterly-revenues-q2-2023/ https://simpleflying.com/jetblue-record-quarterly-revenues-q...
      - atlasunshrugged 3y ago
        That's the strategy that Southwest pioneered right?
        bobthepanda 3y ago
        Southwest, Ryanair, EasyJet etc. At this point it is the bread and butter of a low cost carrier. JBLU originally started as one. Legacy carriers are more likely to get different types of planes for different missions, and pit the duopolists against each other to secure better pricing.
      - selectodude 3y ago
        JetBlue has been flying the E190 for like two decades now.
        bobthepanda 3y ago
        They’ve also committed to phasing them out by 2026 to go all in on Airbus. Still, the two aircraft fleet is a lot smaller than what you would see on a legacy carrier.
    - blessedwhiskers 3y ago
      JetBlue also has pretty limited landing slots on the west coast, and missed out on purchasing Virgin Atlantic to Alaska a few years ago, which would have allowed them to diversify more outside the eastern US. Spirit isn't a perfect match (different market segments), but otherwise they use the same model of aircraft and have some operational efficiencies. I'd hazard a guess Spirit's branding and low cost model will be tossed out in favor of JetBlue's operating model, and that segment of the market will be left to Frontier.
cma 3y ago
> Sprint was clearly about to go bust had the merger not happened, and there still would’ve been three cell phone companies. Or alternatively, Sprint's shareholders would have been wiped out, and its creditors could have continued operating it after taking a loss on their loans, preserving competition in the cellular service market. My source is that they reported they were set to be cash flow positive (meaning profitable outside of servicing debt) in 2019: https://seekingalpha.com/news/3413933-sprint-cfo-sees-t-mobile-deal-progressing-positive-cash-flow-ahead https://seekingalpha.com/news/3413933-sprint-cfo-sees-t-mobi... That still might have been untenable for their shareholders, but it is misleading to say the alternative was still three cellular service companies.
- paulddraper 3y ago
  Or the creditors would have sold assets to TMobile anyway.
silisili 3y ago
There's not three: do not forget Dish. They bought a ton of spectrum prior, and got Boost, spectrum, and partnership with TMo after the merger. Despite a brutal earnings call yesterday, they are expanding network aggressively. They have the bankroll to ramp up, unlike Sprint who was circling the drain. I think ultimately there will be 4 healthy competitors, not 3.
- bobthepanda 3y ago
  I legitimately did not know Dish had a phone network. (I also don’t have TV.) Best of luck to them, some disruption would be nice. I would like at least one cell provider to not have dead zones in my area.

akira2501 3y ago

> I don't think the merger should have been approved, but once that bell is rung I think the standard for judicial intervention needs to be very high Why? What particular harm are you worried about here? If there's harm to market participants then why should the players be immune? Why is a merger approval so inviolate? > and I don't think bare market forces apply. Why _wouldn't_ they? What forces _would_ you invoke to achieve justice? Or are you saying that because it's too inconvenient, we have to ignore the harms? Market's don't exist for the benefit of companies. They exist for the benefit of citizens who both participate in them as consumers and as laborers. We wrote a lot of anti monopoly law for very good reasons, if shareholders are inconvenienced by having to unwind bad deals that shouldn't have been approved in the first place, I see no reason to afford them greater protection or deference than the fundamental participants of that market.

sydbarrett74 3y ago
Exactly. Companies should be the servants, not the masters, of civil society.
danielmarkbruce 3y ago
You may want markets to exist for the benefit of citizens as labor and consumers only. But that's not an agreed upon position. If there is no benefit for humans as investors, markets won't exist. Companies are legal fictions created for humans as investors to pool their capital today and turn it into more capital for tomorrow.
- ClumsyPilot 3y ago
  > If there is no benefit for humans as investors, markets won't exist. This is so breathtakingly wrong, that 'Earth is flat' is more accurate. Ten thousand years ago, before investors, central banks, before currency, before the concept of money, primitive people had Markets Primordial market consists only of two peope - labourer and a customer. I trade my sheep for your fish. Even in the modern day, many companies have no investors - for example limited partnerships. The idea that markets would disappear without investment reads like an attempt by the pope to take credit for creating the world in 3 days.