Accounting for Innovation in the Coming Consolidation: Telecom Merger Analysis Under a Trump Administration

Abstract

The merger analyses performed under the Trump administration may prove to be some of the most consequential in decades. Many expect a flurry of proposed transactions after the lifting of the incentive auction quiet period. Potential M&A activity will grow out of rapidly shifting markets in the tech and telecom arena. The analytical challenges in accounting for the changes in market definition and competitive dynamics brought by dynamic innovation make for real risk of over- or under-enforcement of antitrust and/or regulatory authority.

This paper operates under the theoretical framework offered by Katz and Shelanski, analyzing the dynamic effects of possible or proposed near-term transactions in tech, media, and telecom. It advances their recommendation that innovation demands appreciation beyond normal static considerations like price, but cautions against under-enforcement. Most notably, it attempts an analysis of competitive dynamics under expected 5G technologies and urges against maintaining a pre-conceived number of mobile competitors.