[Congressional Record Volume 144, Number 83 (Tuesday, June 23, 1998)]
[Senate]
[Pages S6886-S6888]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEAHY:
  S. 2207. A bill to amend the Clayton Act to enhance the authority of 
the Attorney General to prevent certain mergers and acquisitions that 
would unreasonably limit competition; to the Committee on the 
Judiciary.


                   antitrust improvements act of 1998

 Mr. LEAHY. Mr. President, I know that consumers are becoming 
more and more concerned about the merger mania that has hit the United 
States--they see the potential for higher prices to consumers and 
poorer service as industries become far more concentrated in fewer 
hands.
  I am also concerned about this trend, particularly when mergers take 
place between incumbent monopolies. Specifically, the mergers among 
Regional Bell Operating Companies, which continue to have a virtual 
strangle-hold on the local telephone loop, pose the greatest threat to 
healthy competition in the telecommunications industry.
  Indeed, incumbent telephone companies still control over 99% of the 
local residential telephone markets. In other words, new entrants have 
captured less than 1% of local residential phone service.
  The Telecommunications Act's promise of competition was a sales pitch 
that has not materialized to benefit American consumers. Instead of 
competition, we see entrenchment, mega-mergers, consolidation and the 
divvying up of markets. Even Edward Whitacre, Jr., the Chairman and 
Chief Executive Officer of SBC Communications, testified several weeks 
ago before the Antitrust Subcommittee that ``The Act promised 
competition that has not come.''
  At a recent judiciary committee hearing on mergers, Alan Greenspan 
acknowledged that the Act has not lived up to its promises of lower 
consumer costs and more competition.
  Since passage of this law, Southwestern Bell has merged with PacTel 
into SBC Corporation, and Bell Atlantic has merged with NYNEX. Now, SBC 
Corporation is seeking to purchase Ameritech. What once had been seven 
separate local monopolies will soon be

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four, with the possibility of more on the horizon. One of my home state 
newspapers--the Rutland Daily Herald--commented in an editorial that, 
``It might even seem as if Ma Bell's corpse is coming back to life.''
  I voted against the Telecommunications Act because I did not believe 
it was sufficiently procompetitive. I raised a number of concerns as 
that Act was being considered by the Senate. I said in my floor 
statement on the day the new law passed:

       Mega-mergers between telecommunications giants, such as the 
     rumored merger between NYNEX and Bell Atlantic, or the 
     gigantic network mergers now underway, raise obvious concerns 
     about concentrating control in a few gigantic companies of 
     both the content and means of distributing the information 
     and entertainment American consumers receive. Competition, 
     not concentration, is the surest way to assure lower prices 
     and greater choices for consumers. Rigorous oversight and 
     enforcement by our antitrust agencies is more important than 
     ever to insure that such mega-mergers do not harm consumers.

  I am very concerned that this concentration of ownership in the 
telecommunications industry is currently proceeding faster than the 
growth of competition. We are seeing old monopolies getting bigger and 
expanding their reach.
  Upon completion of all the proposed mergers among the Bell companies, 
most of the local telephone lines in the country will be concentrated 
in the hands of three to four companies. This will affect not only the 
millions of people who depend on the companies involved for both basic 
telephone service and increasingly for an array of advanced 
telecommunications services, but also competition in the entire 
industry. The Consumers Union recently testified before the Judiciary 
Committee's Antitrust Subcommittee that the mergers between Regional 
Bell Operating Companies could lead to even more mega-mergers within 
this industry.
  I know personally that at my farm in Vermont and here at my office in 
the District of Columbia and at my home in Virginia, I still have only 
one choice for dial-tone and local telephone service. That ``choice'' 
is the Bell operating company or no service at all. The current mantra 
of the industry seems to be ``one-stop shopping.'' But if that stop is 
at a monopoly that is not competing on price and service, I do not 
think it is the kind of ``one-stop shopping'' consumers want.

  I have been concerned that the distraction of these huge mergers 
serve only to complicate and delay the companies' compliance with their 
obligations under the Telecommunications Act to open their networks. 
That is not good for competition in the local loop. Consolidation is 
taking precedence over competition. We need to reverse that priority, 
and make opening up the local loop the focus of the energies of the 
Bell Operating Companies. Then consolidation, if it happens, would not 
pose the current risk of creating additional barriers to effective 
competition.
  Big is not necessarily bad. But the Justice Department in the late 
1970's worked overtime to divide up the old Ma Bell to assure more 
competition and provide customers with better service at lower rates. 
It is ironic that the Telecommunications Act, which was touted as the 
way to increase competition, is having the reverse effect instead of 
promoting consolidation among telephone companies.
  Before all the pieces of Ma Bell are put together again, Congress 
should revisit the Telecommunications Act. To ensure competition among 
Bell Operating Companies and long distance and other companies, as 
contemplated by passage of this law, we need clearer guidelines and 
better incentives. Specifically, we should ensure that Bell Operating 
Companies do not gain more concentrated control over huge percentages 
of the telephone access lines of this country through mergers, but only 
through robust competition.
  As the Consumers Union recently testified, ``If Congress really wants 
to bring broad-based competition to telecommunications markets, it must 
rewrite the Telecommunications Act, giving antitrust and regulatory 
authorities more tools to eliminate the most persistent pockets of 
telephone and cable monopoly power.''
  Today I am introducing antitrust legislation that will bar future 
mergers between Bell Operating Companies or GTE, unless the federal 
requirements for opening the local loop to competition have been 
satisfied in at least half of the access lines in each State. I look 
forward to working with my colleagues on this legislation to make the 
Telecommunications Act live up to some of its promise.
  The bill provides that a ``large local telephone company'' may not 
merge with another large local telephone company unless the Attorney 
General finds that the merger will promote competition for telephone 
exchange services and exchange access services. Also, before a merger 
can take place the Federal Communications Commission must find that 
each large local telephone company has for at least one-half of the 
access lines in each State served by such carrier, of which as least 
one-half are residential access lines, fully implemented the 
requirements of sections 251 and 252 of the Communications Act of 1934.
  The bill requires that each large local telephone company that wishes 
to merge with another must file an application with the Attorney 
General and the FCC. A review of these applications will be subject to 
the same time limits set under the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976.
  The bill also provides that nothing in this Act shall be construed to 
modify, impair, or supersede the applicability of the antitrust laws of 
the United States, or any authority of the Federal Communications 
Commission, or any authority of the States with respect to mergers and 
acquisitions of large local telephone companies.
  The bill is effective on enactment and has no retroactive effect. It 
is enforceable by the Attorney General in federal district courts.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2207

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Antitrust Improvements Act 
     of 1998''.

     SEC. 2. PURPOSE.

       The purpose of this Act is to enhance the authority of the 
     Attorney General to prevent certain mergers and acquisitions 
     that would unreasonably limit competition in the 
     telecommunications industry in any case in which certain 
     Federal requirements that would enhance competition are not 
     met.

     SEC. 3. RESTRAINT OF TRADE.

       The Clayton Act (15 U.S.C. 12 et seq.) is amended by adding 
     at the end the following new section:

     ``SEC. 27. RESTRAINT OF TRADE REGARDING TELECOMMUNICATIONS.

       ``(a) Large Local Telephone Company Defined.--In this 
     section, the term `large local telephone company' means a 
     local telephone company that, as of the date of a proposed 
     merger or acquisition covered by this section, serves more 
     than 5 percent of the telephone access lines in the United 
     States.
       ``(b) Restraint of Trade Regarding Telecommunications.--
     Notwithstanding any other provision of law, a large local 
     telephone company, including any affiliate of such a company, 
     shall not merge with or acquire a controlling interest in 
     another large local telephone company unless--
       ``(1) the Attorney General finds that the proposed merger 
     or acquisition will promote competition for telephone 
     exchange services and exchange access services; and
       ``(2) the Federal Communications Commission finds that each 
     large local telephone company that is a party to the proposed 
     merger or acquisition, with respect to at least \1/2\ of the 
     access lines in each State served by that company, of which 
     at least \1/2\ are residential access lines, has fully 
     implemented the requirements of sections 251 and 252 of the 
     Communications Act of 1934 (47 U.S.C. 251, 252), including 
     the regulations of the Commission and of the States that 
     implement those requirements.
       ``(c) Report of the Attorney General.--Not later than 10 
     days after the Attorney General makes a finding described in 
     subsection (b)(1), the Attorney General shall submit to the 
     Committee on the Judiciary of the Senate and the Committee on 
     the Judiciary of the House of Representatives a report on the 
     finding, including an analysis of the effect of the merger or 
     acquisition on competition in the United States 
     telecommunications industry.
       ``(d) Application Process.--
       ``(1) In general.--Each large local telephone company or 
     affiliate of a large local telephone company proposing to 
     merge with or acquire a controlling interest in another large 
     local telephone company shall file an application with both 
     the Attorney General and the Federal Communications 
     Commission, on the same day.
       ``(2) Decisions.--The Attorney General and the Federal 
     Communications Commission

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     shall issue a decision regarding the application within the 
     time period applicable to review of mergers under section 7A 
     of this Act.
       ``(e) Jurisdiction of the United States Courts.--
       ``(1) In general.--The district courts of the United States 
     are vested with jurisdiction to prevent and restrain any 
     mergers or acquisitions described in subsection (d) that are 
     inconsistent with a finding under subsection (b) (1) or (2).
       ``(2) Actions.--The Attorney General may institute 
     proceedings in any district court of the United States in the 
     district in which the defendant resides or is found or has an 
     agent and that court shall order such injunctive, and other 
     relief, as may be appropriate if--
       ``(A) the Attorney General makes a finding that a proposed 
     merger or acquisition described in subsection (d) does not 
     meet the applicable condition under subsection (b)(1); or
       ``(B) the Federal Communications Commission makes a finding 
     that 1 or more of the parties to the merger or acquisition 
     referred to in subsection (b)(2) do not meet the requirements 
     specified in that subsection.''.

     SEC. 4. PRESERVATION OF EXISTING AUTHORITIES.

       (a) In General.--Nothing in this Act or the amendments made 
     by this Act shall be construed to modify, impair, or 
     supersede the applicability of the antitrust laws, or any 
     authority of the Federal Communications Commission under the 
     Communications Act of 1934 (47 U.S.C. 151 et seq.), with 
     respect to mergers, acquisitions, and affiliations of large 
     incumbent local exchange carriers.
       (b) Antitrust Laws Defined.--In this section, the term 
     ``antitrust laws'' has the meaning given that term in the 
     first section of the Clayton Act (15 U.S.C. 12).

     SEC. 5. APPLICABILITY.

       This Act and the amendments made by this Act shall apply to 
     a merger or acquisition of a controlling interest of a large 
     local telephone company (as that term is defined in section 
     27 of the Clayton Act, as added by section 3 of this Act), 
     occurring on or after the date of enactment of this 
     Act.
                                 ______