There are some arguments that over-qualified people lose out in job hunts in the corporate sector.

One reason I could think of is that hiring managers or HR reps may not want to be outshone by someone who has reached the pinnacle of an educational pursuit. They do not want to rock the organisational boat where everyone else has at most only a basic or professional degree.

Do you think having a PhD/DBA would deny the person a job which he normally would be able to obtain under normal circumstances?

While I do understand the reason why your friend do this, I just wonder how he gets away or explains the supposedly 'missing' say, 3++ years in doing PhD? Well, also that puts him in some sort of risk which I think he is willing to take --- for not being honest on education qualification can be a good reason to get fired, if found.

I don't see what would be his joy of working if he has to keep concealing his real degree. He might as well also conceal his masters too and probably get the same pay at Merril.