Court Requests More Information in Merger Review

In his review of the megamergers, Judge Emmet G. Sullivan of the U.S. District Court for the District of Columbia on Tuesday said he did not have enough information to approve or reject the consent decrees for the mergers of SBC Communications Inc. with AT&T Corp. and Verizon Communications Inc. with MCI Inc. And, he said it was premature to conduct an evidentiary hearing.

Judge Sullivan has agreed to help decide whether the governments requirement that AT&T and Verizon divest some of their unused fiber networks was sufficient and in the public interest. The Department of Justice (DoJ) last fall said such a move would satisfy antitrust statutes. The case is based on the 1974 Tunney Act, which requires federal courts to approve antitrust consent decrees, or agreements, filed by the DoJ. A 2004 amendment allows a judge to independently determine whether mergers have served the public good. Cases based on the Tunney Act presume the government failed to consider the publics best interest.

In a hearing on Tuesday, Judge Sullivan noted the lack of materials and facts before him to support the allegations in the DoJ’s complaints and the remedy proposed in the consent decrees. He ordered the DoJ, Verizon and AT&T Inc. to submit material by Aug. 7 demonstrating to the court that the consent decrees restore the competition the DoJ alleges will be lost as a result of the mergers.

COMPTEL and other friends of the court, including ACTel, Sprint Corp., the New York Attorney Generals Office and the National Association of State Utility Consumer Advocates, have until Aug. 17 to respond to this material. The DoJ, Verizon and AT&T, in turn, will then have until Aug. 27 to file their responses, at which point Judge Sullivan will determine how he wants to proceed.

COMPTEL is pleased that Judge Sullivan continues to conduct a thoughtful and thorough review of the merger consent decrees reached between the DoJ and the Bell companies and we look forward to providing the Court with further information demonstrating the gross failure of the limited divestitures required by the consent decrees to restore the competition lost as a result of the mergers and to protect consumers from the monopolistic interests of the Bell companies, said Jonathan Lee, general counsel for COMPTEL.

COMPTEL in May was granted friend of the court status and is acting as a consultant should the judge have questions best answered by a party other than the DoJ or Verizon or the new AT&T.

Consumer groups opposing the mergers also lauded the courts action. The Department of Justice has never made the case that its flimsy settlement protects the public from the devastating impacts of these megamergers, said Jeannine Kenney, senior policy analyst for Consumers Union, the nonprofit publisher of Consumer Reports. Today, the court agreed and sent the encouraging message that it will carefully scrutinize, not merely rubber-stamp, these merger agreements. The courts decision to allow state consumer advocates to respond to the departments filings means that at least now someone finally will consider consumers concerns.

AT&T Inc.
Consumers Union
Verizon Communications Inc.

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