Makan Delrahim, the head of the Justice Department’s antitrust division is concerned about the lawsuit filed by several state attorneys general that seeks to block the $26.5 billion merger of T-Mobile and Sprint. The plaintiffs argue that by reducing the number of major U.S. carriers by 25%, the remaining wireless operators will be able to raise prices more easily. There are a number of reasons why this is not true and we will explore them later in this article.

Justice Department’s antitrust chief says that the states should not be allowed to muck up a “national settlement”

Delrahim made a speech in Washington, complaining that if the states are allowed to block a national settlement from going through “that will wreak havoc on parties’ ability to merge and the government’s ability to settle cases, and cause real uncertainty in the market for mergers and acquisitions.” During the speech, Delrahim said that his argument isn’t that states shouldn’t have the ability to enforce merger laws. The point of his argument is that the courts shouldn’t block a deal or agree to a settlement that is “incompatible with the relief secured by the federal government.”

Sometime this month, Judge Vincent Marrero will announce his decision. During the bench trial (no jury was present), former Sprint CEO Marcelo Claure testified that if the merger with T-Mobile is blocked, Sprint will have to raise prices. DING! That rings a bell, doesn’t it? The outcome of a victory for the states would result in the very thing that they are suing to prevent. And if you can wrap your head around that, another Sprint executive says that if the deal does not get done, Sprint might have to shut its doors. DING! The states are concerned that if the merger goes through, Sprint will disappear reducing the number of major U.S. carriers to three. But here is a Sprint executive who says that the same thing could occur if the states are successful in blocking the merger. And frankly, we can’t imagine that Judge Marrero doesn’t see this either.

Besides the lawsuit filed by the state attorneys general, the merger needs to be approved by California’s Public Utility Commission and the deal between Sprint and Dish that the DOJ gave thumbs up to must be reviewed by Judge Thomas Kelly under the Tunney Act. The latter calls for an independent review of any agreement made by the Justice Department to make sure that it is in the public interest.