[Federal Register Volume 60, Number 164 (Thursday, August 24, 1995)]
[Notices]
[Pages 44049-44078]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20834]



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DEPARTMENT OF JUSTICE
Antitrust Division


United States v. Sprint Corporation and Joint Venture Co.; 
Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Stipulation and Competitive Impact Statement have been filed with the 
United States District Court for the District of Columbia in United 
States v. Sprint Corporation and Joint Venture Co., Civil Action No. 
95-1304. The proposed Final Judgment is subject to approval by the 
Court after the expiration of the statutory 60-day public comment 
period and compliance with the Antitrust Procedures and Penalties Act, 
15 U.S.C. 16(b)-(h).
    The Complaint alleges that the proposed sale of 20% of the voting 
shares of Sprint Corporation (``Sprint'') to France Telecom (``FT'') 
and Deutsche Telekom A.G. (``DT''), and the proposed formation of a 
joint venture among Sprint, FT and DT to provide certain international 
telecommunications services, would violate Section 7 of the Clayton 
Act, as amended, 15 U.S.C. 18, in the markets for international 
telecommunications services between the United States and France and 
the United States and Germany, and in the markets for seamless 
international telecommunications services.
    Under the proposed consents decree, Sprint and the joint venture 
are subject to various restrictions affecting their relationship with 
FT and DT. These restrictions operate in two distinct phases, lessening 
over time as competition develops in France and Germany.
    During the first phase, while DT and FT still have monopoly rights 
in Germany and France and competitors have not been licensed, the 
relationship that Sprint and the joint venture have with DT and FT will 
be subject to close oversight. Sprint and the joint venture may not 
acquire ownership or control of certain types of facilities from FT and 
DT, may not provide services in which FT or DT have special rights 
except in limited, non-exclusive circumstances, and may not benefit 
from discriminatory treatment, disproportionate allocation of 
international traffic, or cross-subsidization by FT and DT. In 
addition, access to the French and German public switched networks and 
public data networks cannot be limited in such a way as to exclude 
competitors of Sprint and the joint venture.
    During both the first phase and the second phase, after FT and DT 
face licensed competitors in all areas of services and facilities in 
France and Germany, Sprint and the joint venture must make detailed 
information on their relationships with FT and DT available to 
competitors, will be precluded from receiving competitively sensitive 
information that FT and DT obtain from the competitors of Sprint and 
the joint venture, and may not offer particular services between the 
United States and France and Germany unless other United States 
providers also have or can readily obtain licenses from the French and 
Germany governments to offer the same services. These provisions of the 
decree will remain in effect for five years beyond the end of the first 
phase.
    Public comment is invited within the statutory 60-day comment 
period. Such comments, and the responses thereto, will be published in 
the Federal Register and filed with the Court. Comments should be 
directed to Donald Russell, Chief, Telecommunications Task Force, 
Antitrust Division, Room 89104, 555 Fourth Street, N.W., Washington, 
D.C. 20001 (202-514-5621).
    Copies of the Complaint, proposed Final Judgment and Competitive 
Impact Statement are available for inspection in Room 207 of the U.S. 
Department of Justice, Antitrust Division, 325 7th Street, N.W., 
Washington, D.C. 20530. (telephone: (202) 514-2481), and at the office 
of the Clerk of the United States District Court for the District of 
Columbia, Third Street and Constitution Avenue, N.W., Washington, D.C. 
20001. Copies of any of these materials may be obtained upon request 
and payment of a copying fee.
Constance K. Robinson,
Director of Operations, Antitrust Division.
    In the matter of United States of America, Plaintiff, v. Sprint 
Corporation and Joint Venture Company, Defendants.

[Civil Action No. 1:95CV01304]

Filed: July 13, 1995.

Stipulation

    It is stipulated and agreed by and between the undersigned parties, 
by their respective attorneys, that:
    1. The Court has jurisdiction over the subject matter of this 
action and over each of the parties hereto and venue of this action is 
proper in the District of Columbia. Defendants are hereby estopped from 
contesting the entry or enforceability of the Final Judgment on the 
ground that the Court lacks venue or jurisdiction over the subject 
matter of the action or over any defendant. For purposes of this 
stipulation defendant Joint Venture Company and any reference to Joint 
Venture Company herein, shall be understood to have the same meaning as 
the term ``Joint Venture Company'' in the attached proposed Final 
Judgment.
    2. The parties consent that a Final Judgment in the form hereto 
attached may be filed and entered by the Court, upon the motion of any 
party or upon the Court's own motion, at any time after compliance with 
the requirements of the Antitrust Procedures and Penalties Act (15 
U.S.C. 16), and without further notice to any party or other 
proceedings, provided that plaintiff has not withdrawn its consent. 
Plaintiff may withdraw its consent to entry of the Final Judgment at 
any time before it is entered, by serving notice on the defendants and 
by filing that notice with the Court.
    3. Pending entry of the Final Judgment, defendants shall abide by 
and comply with the provisions of the Final Judgment following 
consummation of the Investment Agreement dated June 22, 1995 (and 
related agreements), the Joint Venture Agreement dated June 22, 1995 
(and related agreements), or any similar arrangement between any 
defendant and France Telecom (``FT'') or Deutsche Telekom A.G. 
(``DT''). This obligation shall not be affected by the timing of 
execution of any agreements between defendants and FT or DT to provide 
to Sprint and Joint Venture Co. information needed for compliance with 
the requirements of Sections II.A.1-7 or III of the Final Judgment. Any 
such agreements, which shall be executed prior to the entry of the 
Final Judgment, shall be consistent with Section II.B of 

[[Page 44050]]
the Final Judgment and shall be provided to the Department of Justice 
upon execution.
    4. The agreements governing disclosure to United States 
international telecommunications providers (``providers''), referred to 
in Section V.F. of the Final Judgment, will provide that: (1) Non-
public information received from the Department of Justice is intended 
for use to complain to, or provide information to, any government 
authorities in the United States or France or Germany, and to identify 
and evaluate internally any conduct that may be made the subject of 
such a complaint or provision of information, but may not be used for 
commercial purposes; (2) such information may not be disclosed to 
persons other than officers, directors, employees, agents, or 
contractors of the provider, for permissible purposes under (1), and to 
government authorities in the United States or France or Germany 
(including, but not limited to, the Federal Communications Commission, 
Direction Generale des Postes et Telecommunications, and the 
Bundesministerium fur Post und Telekommunikation); (3) all persons to 
whom the information is disclosed will be advised of the limitations on 
use and disclosure of the information; and (4) if unauthorized use or 
disclosure occurs, the Department of Justice may, in its sole 
discretion, revoke or otherwise limit the provider's further access to 
such information. Plaintiff, in its discretion, may add further 
conditions to such agreements. Any actions taken by the Department to 
redress unauthorized use or disclosure will not diminish or create any 
ability in Sprint or Joint Venture Co. to pursue separately against 
persons receiving such information from the Department any legal 
remedies for unauthorized use or disclosure.
    5. FT and DT have reached an agreement with Infonet Services 
Corporation (``Infonet'') as of June 20, 1995, requiring FT and DT to 
divest part of their shareholdings in Infonet by August 3, 1995 (the 
``Initial Tranche'') and to divest fully their remaining shareholdings 
in Infonet (the ``Second Tranche'') forty-five days after the earlier 
of (1) the date as of which FT or DT directly or indirectly acquire any 
of the securities of Sprint, or (2) six months after all approvals 
necessary for the investment by FT and DT in Sprint and the 
consummation of the joint venture between FT, DT and Sprint have been 
received from the plaintiff, the Federal Communications Commission, the 
Commission of the European Communities and the Cartel Office of the 
Federal Republic of Germany. Infonet is a company that competes with 
Sprint in providing some types of telecommunications and enhanced 
telecommunications services and would compete with some of the planned 
telecommunications and enhanced telecommunications services of Joint 
Venture Co. Due to this competition between Sprint and Infonet, the 
United States has indicated that it has competitive concerns about FT 
and DT having ownership interests in both Sprint and Infonet and 
representation on the boards of directors of both companies. Sprint 
will not issue any equity of itself to be acquired by FT or DT, or 
acquire an ownership interest in or contribute assets to form Joint 
Venture Co., until FT and DT have each completed the divestiture of 
their Infonet shares in the Initial Tranche. In addition, until the 
complete divestiture of FT and DT shareholdings in Infonet is 
accomplished pursuant to the above referenced agreement, Sprint and 
Joint Venture Co. shall (a) be maintained as separate and independent 
businesses with their assets (including proprietary technology, 
customer base, management, operations and books and records) separate, 
distinct and apart from those of Infonet; and (b) take all steps 
necessary to assure that no proprietary business or financial 
information specific to Infonet is transferred, or otherwise becomes 
available to Sprint or Joint Venture Co., or is used by Sprint or Joint 
Venture Co. to compete with Infonet. Moreover, Sprint will not allow 
any director appointed by FT and DT to serve on the Sprint Board of 
Directors for such period as any director appointed by FT or DT is 
serving on the Infonet Board of Directors and exercises any voting 
rights in connection therewith, and if any director appointed by FT or 
DT serves on the Infonet Board of Directors, regardless of whether such 
director exercises any voting rights, for more than 45 days after the 
occurrence of the first of either of the following events: (i) FT or DT 
has acquired directly or indirectly any of Sprint's securities, or (ii) 
FT or DT has appointed any director to the Sprint Board of Directors, 
Sprint will remove all FT or DT appointed directors from the Sprint 
board.
    6. Joint Venture Co. is necessary as a defendant in this action, 
together with Sprint, for the relief specified in the proposed Final 
Judgment to be effective. Until it has been demonstrated to the 
satisfaction of the plaintiff, such satisfaction being confirmed in 
writing, that Joint Venture Co. (i) has been created as a legal entity, 
(ii) is subject to suit and is within the reach of the jurisdiction of 
the United States courts, and (iii) will have full authority and power 
to carry out all of the obligations imposed upon it by the proposed 
Final Judgment as those obligations take effect, and Joint Venture Co. 
has consented to and executed this Stipulation on the same terms as 
Sprint, without reservation or qualification, Sprint agrees that it 
will not issue any equity of itself to be acquired by FT or DT, until 
Joint Venture Co. has been formed and made a party to this stipulation. 
Sprint will not permit Joint Venture Co. to do any business until the 
conditions in this paragraph pertaining to Joint Venture Co. are 
satisfied. If for any reason the conditions pertaining to Joint Venture 
Co. in this paragraph are not satisfied, plaintiff shall be under no 
obligation to move for entry of the Final Judgment and may withdraw its 
consent to entry of the Final Judgment, and defendants shall not move 
for entry of the Final Judgment.
    7. In the event plaintiff withdraws its consent to entry of the 
proposed Final Judgment or if the proposed Final Judgment is not 
entered pursuant to this Stipulation, this Stipulation shall be of no 
effect whatsoever and its making shall be without prejudice to any 
party in this or any other proceeding, except that if the Court decides 
not to enter the Final Judgment, and the defendants and FT and DT have 
consummated pursuant to paragraph 3 of this Stipulation, defendants 
shall abide by and comply with the terms of the Final Judgment until 
the conclusion of this action, unless the parties otherwise agree or 
the Court otherwise orders.
    8. The Stipulation and the Final Judgment to which it relates are 
for settlement purposes only and do not constitute an admission by 
defendants in this or any other proceedings that Section 7 of the 
Clayton Act, 15 U.S.C. 18, as amended, or any other provision of law, 
has been violated.
    9. If the transactions contemplated by the Investment Agreement and 
Joint Venture Agreement are not consummated in any form, and Sprint, FT 
and DT withdraw their notifications under the Hart-Scott-Rodino 
Antitrust Improvements Act, then this Stipulation shall be null and 
void, and the parties shall be under no obligation to enter into or be 
bound by the proposed Final Judgment.

    Dated: July 13, 1995.

[[Page 44051]]

    For Plaintiff United States of America:
Anne K. Bingaman,
Assistant Attorney General.
Steven C. Sunshine,
Deputy Assistant Attorney General.
Constance K. Robinson,
Director of Operations, U.S. Department of Justice Antitrust Division.
Donald J. Russell,
Chief, Telecommunications Task Force.
Nancy M. Goodman,
Assistant Chief, Telecommunications Task Force.
Carl Willner,
D.C. Bar #412841.
Susanna M. Zwerling,
D.C. Bar #435774.
Michael J. Hirrel,
Joyce B. Hundley,
Attorneys, Telecommunications Task Force.
Phillip H. Warren,
Attorney, San Francisco Field Office.
U.S. Department of Justice,
Antitrust Division.
    For Defendant Sprint Corporation:

King & Spalding
    By:
Kevin R. Sullivan,
D.C. Bar #411718.
J. Richard Devlin,
Executive Vice President and General Counsel, Sprint Corporation.

STIPULATION APPROVED FOR FILING

    Done this ________ day of __________, 1995.
----------------------------------------------------------------------
UNITED STATES DISTRICT JUDGE

Disclosure Pursuant to Rule 108(k)

    Pursuant to Rule 108(k) of the Local Rules of this Court, the 
following is a list of all individuals entitled to be notified of the 
entry of the foregoing Stipulation and of the entry of the proposed 
Final Judgment:

Kevin U. Sullivan, Esquire, King & Spalding, 1730 Pennsylvania Avenue, 
NW., Washington, DC 20006

Counsel for Defendant Sprint

      and

Carl Willner, Esquire, Attorney, Telecommunications Task Force, 
Antitrust Division, U.S. Department of Justice, 555 4th St. NW., 
Washington, DC 20001

Counsel for Plaintiff the United States
    In the matter of: United States of America, Plaintiff, v. Sprint 
Corporation and Joint Venture Co., Defendants.

[Civil Action No. 1:95CV01304]

Filed: July 13, 1995.

Final Judgment

    Whereas, plaintiff, United States of America, filed its Complaint 
on July 13, 1995.
    And whereas, plaintiff and defendants, by their respective 
attorneys, have consented to the entry of this Final Judgment without 
trial or adjudication on any issue of fact or law,
    And whereas, defendants have further consented after any 
consummation as defined in the Stipulation entered into by defendants 
and the United States on July 13, 1995, to be bound by the provisions 
of this Final Judgment pending its approval by the Court,
    And whereas, plaintiff the United States believes that entry of 
this Final Judgment is necessary to protect competition in the United 
States telecommunications and enhanced telecommunications markets,
    Therefore, it is hereby ordered, adjudged, and decreed:

I

Jurisdiction

    This Court has jurisdiction of the subject matter of this action 
and of each of the parties consenting to this Final Judgment. The 
Complaint states a claim upon which relief may be granted against the 
defendants under Section 7 of the Clayton Act, 15 U.S.C. Sec. 18, as 
amended.

II

Substantive Restrictions and Obligations

Reporting and Disclosure Requirements

    A. Sprint or Joint Venture Co. shall not offer, supply, distribute, 
or otherwise provide in the United States any telecommunications or 
enhanced telecommunications service that makes use of 
telecommunications services provided by FT in France or between the 
United States and France, or DT in Germany or between the United States 
and Germany, unless the following information is disclosed in the 
United States by Sprint or Joint Venture Co., or such disclosure is 
expressly waived, in whole or in part, by plaintiff through written 
notice to defendants and the Court:
    1. By Joint Venture Co., within 30 days following any agreement or 
change to an agreement--The prices, terms and conditions, including any 
applicable discounts, on which FT or DT Products and Services are 
provided by FT to Joint Venture Co. in France or by DT to Joint Venture 
Co. in Germany pursuant to interconnection agreements;
    2. By Joint Venture Co., within 30 days following any agreement or 
change to any agreement, or the provision of service absent any 
specific agreement--The prices, terms, and conditions, including any 
applicable discounts, on which FT or DT Products and Services are 
provided by FT to Joint Venture Co. in France or by DT to Joint Venture 
Co. in Germany for use by Joint Venture Co. in the supply of 
telecommunications or enhanced telecommunications services between the 
United States and France or between the United States and Germany or 
are provided by FT in France or DT in Germany in conjunction with such 
Joint Venture Co. services where FT or DT is acting as the distributor 
for Joint Venture Co.;
    3. By Sprint, with respect to international switched 
telecommunications or enhanced telecommunications services jointly 
provided by FT and Sprint, or DT and Sprint, on a correspondent basis 
between the United States and France or between the United States and 
Germany, and to the extent not already disclosed publicly pursuant to 
the rules and regulations of the Federal Communications Commission, or 
otherwise to the corporations referred to in Section V.F:
    (i) Within 30 days following any agreement or change to an 
agreement, or the provision of service absent any specific agreement, 
the accounting and settlement rates and other terms and conditions for 
the provision of each such service, including the methodology by which 
proportionate return of traffic is calculated; and
    (ii) On an annual basis, for any such services for which more than 
one accounting and settlement rate may be applicable (e.g., rates for 
peak and off-peak services), or services with different accounting and 
settlement rates which are pooled or otherwise combined for calculating 
proportionate returns, if other United States international 
telecommunications providers do not have or receive data sufficient to 
determine whether they are receiving their appropriate share of return 
traffic in each accounting rate category (e.g., the total volumes of 
United States traffic to FT and DT, and total volumes of FT and DT 
traffic to the United States, for each type of traffic with a different 
accounting rate), Sprint's minutes of traffic to and from FT and DT in 
each accounting rate category and any other applicable measure of 
traffic volume;
    4. By Joint Venture Co., on a semiannual basis-Schedules of FT or 
DT Products and Services provided by FT to Joint Venture Co. in France 
and DT to Joint Venture Co. in Germany for use by Joint Venture Co. in 
the supply of telecommunications or enhanced telecommunications 
services between the United States and France or Germany or provided by 
FT in France or DT in Germany in conjunction with such Joint Venture 
Co. services where 

[[Page 44052]]
FT or DT is acting as the distributor for Joint Venture Co., showing:
    (i) The types of circuits (including capacity) and 
telecommunications services provided;
    (ii) The actual average time intervals between order and delivery 
of circuits (separately indicating average intervals for analog 
circuits, digital circuits up to 2 megabits, and digital circuits 2 
megabits and larger) and telecommunications services; and
    (iii) The number of outages and actual average time intervals 
between fault report and restoration of service for circuits 
(separately indicating average intervals for analog and for digital 
circuits) and telecommunications services; but excluding the identities 
of individual customers of FT, DT, Sprint, or Joint Venture Co. or the 
location of circuits or telecommunications services dedicated to the 
use of such customers;
    5. By Sprint--Schedules showing:
    (i) On a semiannual basis, separately for analog international 
private line circuits (``IPLCs'') and for digital IPLCs jointly 
provided by FT or DT and Sprint between the United States and France or 
Germany, the actual average time intervals between order and delivery 
by FT or DT;
    (ii) On an annual basis, separately for analog IPLCs and for 
digital IPLCs jointly provided by FT and Sprint between the United 
States and France, and by DT and Sprint between the United States and 
Germany, the number of outages and actual average time intervals 
between fault report and restoration of service, for any outages that 
occurred in the international facility, in the cablehead or earth 
station outside the United States, indicating separately the number of 
outages and actual average time intervals to restoration of service in 
each such area; and
    (iii) On a semiannual basis, for circuits used to provide 
international switched telecommunications services or enhanced 
telecommunications services on a correspondence basis between the 
United States and France or Germany, the average number of circuit 
equivalents available to Sprint and the percentage of calls that failed 
to complete during the busy hour.
    6. By Sprint and Joint Venture Co., within 30 days of receipt, any 
information from FT or DT relating to a Network Change. For purposes of 
this Section II.A6, a Network Change is any material change or decision 
relating to the design of, technical standards used in, or points of 
interconnection to, the FT or DT public switched telephone networks 
(``FT/DT PSTNs'') that would materially affect the terms or conditions 
on which Sprint, Joint Venture Co. or any other person are able to have 
access to, or intercorrect with, the FT/DT PSTNs for telecommunications 
or enhanced telecommunications services within France or Germany or 
between the United States and France or the United States and Germany.
    7. By Sprint and Joint Venture Co., within 30 days of receipt of 
any information from FT or DT, or otherwise learning of any discount or 
more favorable term--Any discounts or favorable terms offered by FT or 
DT to a customer of FT or DT, for FT or DT Products and Services, that 
is conditioned on Sprint or Joint Venture Co. being selected as the 
United States provider of telecommunications products or services for 
such customer.
    The obligations of Section II.A shall not extend to the disclosure 
of intellectual property or other proprietary information of the 
defendants, FT or DT that has been maintained as confidential by its 
owner, except to the extent that it is of a type expressly required to 
be disclosed herein, or is necessary for United States international 
telecommunications providers to interconnect with the FT/DT PSTNs, or 
for United States international telecommunications providers to use 
FT's or DT's international telecommunication or enhanced 
telecommunications correspondent services.

Restrictions on Sharing of Information Obtained by FT and DT

    B. Sprint and Joint Venture Co. shall not receive or seek to 
receive from FT or DT, or from any persons designated by FT or DT to 
sit on the Board of Directors of Sprint:
    1. Any information that is identified as proprietary by United 
States telecommunications or enhanced telecommunications service 
providers (and maintained as confidential by them) and is obtained by 
FT or DT from such providers as the results of FT's or DT's provision 
of interconnection or other telecommunications services to them in 
France or Germany;
    2. Any confidential, non-public information obtained by FT or DT as 
a result of their correspondent relationships or agreements to connect 
international half-circuits with other United States international 
telecommunications or enhanced telecommunications service providers, 
except to the extent necessary for Sprint to comply with its 
obligations under Section II.A3(ii) concerning disclosure of the total 
volume of traffic (but not the individual traffic volumes for other 
providers) received by FT or DT from the United States and sent by FT 
or DT to the United States that is subject to the Proportionate Return 
Commitment, or under Section II.A.5 (but not including individual 
information on other providers); and
    3. Any non-public information about the future prices or pricing 
plans of any provider of international telecommunications services 
between the United States and France or the United States and Germany 
with which Sprint competes in the provision of such services.
    Further, Sprint and Joint Venture Co. may not employ any personnel 
who (i) are at the same time employed by FT or DT and have access to 
any types of information that Sprint and Joint Venture Co. are not 
permitted to receive from FT or DT under this Section II.B, or (ii) are 
employed by the Joint Venture or by Sprint, and have been employed by 
FT or DT within the preceding six months, and had received within that 
time any of the types of information that Sprint and Joint Venture Co. 
are not permitted to receive under this Section II.B.

Ability of Competitors to Obtain Licenses and Authorizations for Entry

    C. Sprint and Joint Venture Co. shall not offer (directly or 
through FT or DT), and shall not provide facilities to FT or DT 
enabling FT or DT to offer, any particular international 
telecommunications or enhanced telecommunications service between the 
United States and France or Germany, unless:
    1. Offering such a service between the United States and France 
does not require a license in France and offering such service between 
the United States and Germany does not require a license in Germany; or
    2. If a class license is required to offer such a service in France 
or Germany, such a license is in effect for other United States 
international telecommunications providers not affiliated with FT, DT, 
Sprint or Joint Venture Co. in France and in Germany; or
    3. If an individual license is required in France or Germany to 
offer such a service, established licensing procedures are in effect as 
of the time of the offering of the service by which other United States 
international telecommunications providers are also able to secure such 
a license, and (i) one or more United States international 
telecommunications providers other than FT, DT, Sprint or Joint Venture 
Co. and unaffiliated with FT, DT, Sprint or Joint Venture Co. have 
secured such a license in France and in Germany, or (ii) 

[[Page 44053]]
if Sprint or Joint Venture Co. or FT or DT is the first provider to 
seek a license to offer such a service, other United States 
international telecommunications providers are also able to secure such 
a license within a reasonable time and in no event longer than the time 
it took Sprint, Joint Venture Co., FT or DT to obtain such a license, 
after having applied for such a license, unless the additional time 
required is attributable to delay caused by the applicant.
    This Section II.C. shall operate separately for France and Germany. 
It shall not restrict Sprint or Joint Venture Co. from providing 
existing correspondent services to France or Germany pursuant to 
bilateral agreements with FT or DT that have also been made available 
to other United States international telecommunications providers. 
``License,'' for purposes of this Section II.C., means any form of 
authorization, whether or not formally characterized as a license, that 
must be obtained from a governmental body in order to offer a 
telecommunications or enhanced telecommunications service.
III

Obligations While Phase I of This Final Judgment Is in Effect Prior 
to Authorization of Facilities-Based Competition in France and 
Germany

Scope of Activities of the Joint Venture

    A. Joint Venture Co. and Sprint will not acquire an ownership 
interest in, or control over, (i) any facilities in France or Germany 
that are legally reserved to FT or DT, or (ii) any international half 
circuits terminating in France or Germany that are used for 
telecommunications service between the United States and France or the 
United States and Germany, except to the extent that, and in no greater 
than the aggregate quantity that, other providers unaffiliated with FT, 
DT, Sprint or Joint Venture Co. actually own and control such 
international half-circuits, or plaintiff and defendants agree that 
meaningful competition exists to such international half-circuits 
provided by FT or DT. ``Control'' for purposes of Section III.A and B 
shall not include publicly available leases or other publicly available 
uses of such facilities.
    B. Joint Venture Co. and Sprint will not acquire an ownership 
interest in, or control over, the Public Data Networks.
    C. Joint Venture Co. and Sprint may provide FT or DT Products and 
Services only pursuant to a sales agency or resale agreement, and 
provided that (i) such agreements are not exclusive, and (ii) other 
United States international telecommunications providers are able to 
obtain FT or DT Products and Services directly from FT or DT on a 
nondiscriminatory basis; provided, however, that such FT or DT Products 
and Services may be used by Joint Venture Co. and Sprint as inputs to 
their products and services to end users pursuant to the requirements 
of this Final Judgment.

Conduct of the Joint Venture and Sprint

    D. 1. Sprint and Joint Venture Co. shall not purchase, acquire or 
accept from FT or DT any FT or DT Products and Services on any 
discriminatory basis for use in the offer, supply, distribution or 
other provision by Sprint or Joint Venture Co. of any 
telecommunications or enhanced telecommunications service in the United 
States or between the United States and France or the United States and 
Germany.
    For purposes of this Section III.D, ``discriminatory basis'' shall 
mean terms more favorable to Sprint or Joint Venture Co. than are made 
available to other similarly situated United States international 
telecommunications providers with respect to:
    (i) The prices (including but not limited to accounting and 
settlement rates and division of settlements) of any FT or DT Products 
and Services, whether or not purchased, acquired or accepted from FT or 
DT alone or bundled with any other product or service of FT or DT;
    (ii) The availability of volume or other discounts, or material 
differences in non-price terms of service, including offers that while 
not restricted to Sprint or Joint Venture Co. on their face are 
available to Sprint or Joint Venture Co. but would not reasonably be 
available to any United States international telecommunications 
providers not affiliated with FT or DT, Sprint or Joint Venture Co.;
    (iii) Material differences in the type or quality of any FT or DT 
Products and Services, including but not limited to availability of 
leased lines and international half-circuits of the same type and 
capacity (including the average provisioning times, number of outages, 
and time intervals between fault report and restoration of service), 
and, for switched services, percentage of circuit equivalents available 
during the busy hour and percentages of calls blocked;
    (iv) Interconnection with the FT/DT PSTNs, including 
interconnection at no less advantageous points in the network, and 
comparable availability of numbers to the extent that FT and DT have 
responsibility for number assignments; and
    (v) Terms of operating agreements for correspondent services and 
connection of international half-circuits.

Persons that are ``similarly situated'' shall mean United States 
international telecommunications providers (including their 
subsidiaries and affiliates) that are generally comparable to Sprint 
and Joint Venture Co. with respect to the volume or type of FT or DT 
Products and Services purchased, acquired or accepted from FT and DT, 
provided that volume and type are relevant distinctions in establishing 
service conditions. If defendants seek to rebut a claim of 
discrimination by establishing the existence of a justification of 
costs, defendants shall have the burden of proof to establish such 
justification. Defendants shall make available to plaintiff all 
information that was available to them, whether possessed by them or 
obtained from FT or DT, in considering the relevance of such 
distinctions.
    2. Sprint and Joint Venture Co. may not benefit from any discount 
or more favorable term offered by FT or DT to any customer for FT or DT 
Products or Services, that is conditioned on Sprint or Joint Venture 
Co. being selected as the United States provider of a 
telecommunications or enhanced telecommunications service.
    E. Sprint shall not accept any correspondent telecommunications 
traffic from France or Germany, from FT or DT respectively, other than 
in a manner consistent with their Proportionate Return Commitment and 
the policies of the Federal Communications Commission concerning 
proportionate return. Sprint shall not accept or benefit from any 
alteration in the methodology (including assignment of new services to 
proportionate return categories) by which FT or DT allocate 
proportionate return traffic among United States international 
telecommunications providers with whom they have operating agreements 
if inconsistent with the policies of the Federal Communications 
Commission with respect to Sprint, FT, and DT, or the change in 
methodology has the effect of substantially favoring Sprint with 
respect to all other United States international telecommunications 
providers, either in the value of traffic (if types of minutes with 
different accounting rates are pooled for purposes of calculating 
proportionate return) or volume. In order to implement these 
requirements:
    1. Sprint and Joint Venture Co. shall disclose on a quarterly basis 
the volume of correspondent telecommunications 

[[Page 44054]]
traffic received by Sprint or Joint Venture Co. from France through FT 
or from Germany through DT, respectively (either in the form of reports 
received from FT or DT or from its own records, if no such reports are 
received or Sprint has reason to believe they are not accurate), and 
the volume of correspondent telecommunications traffic sent by Sprint 
to FT or DT from the United States (either in the form of its reports 
to FT or DT or from its own records, if no such reports are made), 
separately showing the volume of traffic in each accounting rate 
category, where types of correspondent traffic that have different 
accounting rates have been pooled for calculation of proportionate 
return, and also separately showing what volume of correspondent 
traffic has been counted for purposes of proportionate return and what 
has been excluded.
    2. If plaintiff believes that, in any quarterly period, Sprint has 
accepted correspondent telecommunications traffic in a manner 
inconsistent with the Proportionate Return Commitment or the policies 
of the Federal Communications Commission concerning proportionate 
return, or has benefited from an alteration of the methodology of 
proportionate return calculation in its favor, then it shall notify 
Sprint of such belief and the reasons therefor, and may also bring this 
notification and the supporting information to the attention of the 
Federal Communications Commission. Within 90 days after receipt of such 
notification, Sprint shall respond in writing thereto and take all 
necessary measures to ensure that its conduct complies with its 
obligations under Section III.E.
    F. In order to ensure that the activities of Joint Venture Co. and 
Sprint are not subsidized by FT and DT during Phase I of this Final 
Judgment:
    1. Joint Venture Co. shall be established and operated as a 
distinct entity separate from FT and DT until Phase II takes effect for 
both France and Germany;
    2. Joint Venture Co. and Sprint shall obtain their own debt 
financing on their own credit, provided that Sprint, FT and DT:
    (i) May make capital contributions or commercially reasonable loans 
to Joint Venture Co. as required to enable Joint Venture Co. to conduct 
the venture business;
    (ii) May pledge their venture interests in Joint Venture Co. in 
connection with nonrecourse financings for Joint Venture Co.; and
    (iii) May guarantee any indebtedness of Joint Venture Co., provided 
that Sprint, FT and DT may only make payments pursuant to any such 
guarantee following a default by Joint Venture Co. in respect of such 
indebtedness;
    3. Joint Venture Co. and Sprint shall maintain accounting systems 
and records separate from FT and DT, that identify, individually, 
payments or transfers to or from FT and DT relating to the purchase, 
acquisition or acceptance of any FT or DT Products and Services, and 
the Joint Venture services for which such FT or DT Products or Services 
are used. Such accounting systems and records of Joint Venture Co. will 
be made available pursuant to the visitorial provisions of Section VI;
    4. Joint Venture Co. and Sprint may not allocate directly or 
indirectly any part of their operating expenses, costs, depreciation, 
or other expenses of their businesses to any parts of FT or DT's 
business units responsible for FT or DT Products and Services 
(including without limitation the proportionate costs based on work 
actually performed that are attributable to shared employees or sales 
or marketing of Sprint or Joint Venture Co. products and services by FT 
or DT employees), provided, however, that nothing herein shall prevent 
Sprint and Joint Venture Co. from charging FT and DT for products and 
services provided to them by Sprint or Joint Venture Co., on the basis 
of prices charged to third parties (in the case of products or services 
sold to third parties in commercial quantities) or full cost 
reimbursement or other arm's length pricing method (in the case of 
products and services not sold to third parties in commercial 
quantities); and
    5. Joint Venture Co. and Sprint will not receive any material 
subsidy (including forgiveness of debt) directly or indirectly from FT 
or DT, or any investment or payment from FT or DT that is not recorded 
in the books of Joint Venture Co. or Sprint as an investment in debt or 
equity.
    G. 1. Sprint may not offer, supply, distribute or otherwise provide 
any correspondent telecommunications or correspondent enhanced 
telecommunications service between the United States and France or 
Germany pursuant to any operating agreement with FT or DT, unless with 
respect to such service, at least one other United States international 
telecommunications provider has also obtained an operating agreement 
with FT and DT for the provision of such service between the United 
States and France and Germany. This provision will operate separately 
for France and for Germany.
    2. If a licensed United States international telecommunications 
provider has requested but has not received an operating agreement with 
FT or DT for the provision of IDDD voice service or any other services 
that make use of the FT/DT PSTNs, then Sprint shall offer to carry the 
correspondent traffic of such United States international 
telecommunications provider between the United States and the countries 
for which an operating agreement has been requested, France or Germany, 
at rates and on terms and conditions that are commercially competitive 
to those on which other United States international telecommunications 
providers that have operating agreements are able to provide service, 
and at rate schedules to be updated on at least an annual basis (and 
filed with the FCC, as required) which reflect the estimated value of 
any adjustments in proportionate return traffic that may be received by 
Sprint from France or from Germany as a result of the traffic 
originated by United States international telecommunications providers 
whose traffic is being carried over Sprint's facilities.
    H. Sprint or Joint Venture Co. shall not offer, supply, distribute, 
or otherwise provide in the United States any telecommunications or 
enhanced telecommunications service that makes use of FT or DT Products 
and Services, if, with respect to such FT or DT Products and Services, 
(1) FT or DT have established any proprietary or nonstandardized 
interface or protocol used by Sprint and Joint Venture Co. to obtain 
access to such products or services, and (2) FT or DT no longer 
continue to provide on a basis consistent with previous operations, a 
non-proprietary or standardized interface or protocol used to obtain 
access to such FT or DT Products or Services.
    I. Sprint or Joint Venture Co. shall not offer, supply, distribute, 
or otherwise provide in the United States any data telecommunications 
or enhanced telecommunications service that makes use of the Public 
Data Networks to complete data telecommunications in France or Germany, 
unless the Public Data Networks that are based on the X.25 or any other 
protocol, continue to be available to all other United States 
international telecommunications providers on nondiscriminatory terms 
to complete data telecommunications between the United States and 
France and between the United States and Germany, and within France and 
Germany for traffic originating within the United States, France or 
Germany, using the X.75 standard protocol for 

[[Page 44055]]
interconnection between data networks, or any generally accepted 
standard network interconnecton protocol that may modify or replace the 
X.75 standard. If these requirements are met, Joint Venture Co. and 
Sprint may also offer data telecommunications services other than those 
based on the X.25/X.75 protocols using the Public Data Networks.

IV

Applicability and Effect

    The provisions of this Final Judgment shall be binding upon 
defendants, their affiliates, subsidiaries, successors and assigns 
(except for any Sprint business that is subsequently spun-off or 
otherwise divested and in which neither FT nor DT have any ownership 
interest), officers, agents, servants, employees and attorneys. 
Defendants shall cooperate with the United States Department of Justice 
in ensuring that the provisions of this Final Judgment are carried out. 
Neither this Final Judgment nor any of its terms or provisions shall 
constitute any evidence against, an admission by, or an estoppel 
against the defendants. The effective date of this Final Judgment shall 
be the date upon which it is entered.
V

Definitions

    For the purposes of this Final Judgment:
    A. ``Affiliate'' and ``subsidiary'' means any entity in which a 
person has equity ownership, or managerial or operational control, 
directly or indirectly through one or more intermediaries, provided 
that these terms, when used in connection with Sprint do not include 
Joint Venture Co., Atlas, FT or DT; when used in connection with FT do 
not include Joint Venture Co., Sprint or DT but do include Atlas; when 
used in connection with DT do not include Joint Venture Co., Sprint, or 
FT but do include Atlas; and when used in connection with Joint Venture 
Co. do not include Sprint, Atlas, FT or DT (but do include all entities 
which Joint Venture Co. controls, or which are jointly controlled by 
Sprint, FT and DT). Atlas, FT and DT shall not be deemed to be persons 
in active concert or participation with Joint Venture Co. or Sprint for 
purposes of this Final Judgment. Affiliates and subsidiaries of Sprint 
and Joint Venture Co. that are not controlled by Sprint or Joint 
Venture Co. do not have substantive compliance obligations under 
Sections II and III of this Final Judgment.
    B. ``Atlas'' means a joint venture identified in an agreement 
entered into between FT and DT on December 15, 1994, as amended, 
formed, or to be formed, by FT and DT to provide certain 
telecommunications services in Europe, regardless of the name that 
entity may subsequently have, or the percentages of ownership of FT or 
DT or the services or geographic areas in which that joint venture may 
operate, and any subsidiary, affiliate, predecessor, successor or 
assign of that joint venture, or any other entity jointly owned by FT 
and DT and having substantially similar purposes.
    C. ``Control'' means, with respect to any entity's relationship to 
another entity, any of the following, unless another standard of 
control is specified in a provision of this Final Judgment:
    (1) ownership, directly or indirectly, by such entity of equity or 
other ownership interest entitling it to exercise in the aggregate 50% 
or more of the voting power of the entity in question;
    (2) the possession by such entity of the power, directly or 
indirectly, to elect 50% or more of the board of directors (or 
equivalent governing body) of the entity in question;
    (3) the ability to direct or cause the direction of the management, 
operations, or policies of the entity in question, provided, however, 
that any party's obligations under the Joint Venture Agreement in the 
form entered into on June 22, 1995 (exclusive of any subsequent 
amendments) shall not constitute control under Section V.C. Where more 
than one entity exercises joint control over an entity, each shall be 
deemed to have control.
    D. ``Correspondent'' means a bilaterally negotiated arrangement 
between a provider of telecommunications services in the United States 
and a provider of telecommunications services in France, or between a 
provider of telecommunications services in the United States and a 
provider of telecommunications services in Germany, by which each party 
undertakes to terminate in its country through its public switched 
network or its public data network traffic originated by the other 
party, for provision of an international telecommunications or such 
enhanced telecommunications service. A service managed by Joint Venture 
Co., and provided without correspondent relationships with any other 
provider, shall not be deemed to constitute a correspondent service.
    E. ``Defendant'' or ``defendants'' means Sprint and Joint Venture 
Co.
    F. ``Disclose,'' for purposes of Section II.A.1-7 and III.E, means 
disclosure to the United States Department of Justice Antitrust 
Division, which may further disclose such information to any United 
States international telecommunications provider that directly or 
through a subsidiary or affiliate (i) holds or has applied for a 
license from either the United States Federal Communications Commission 
or the French Direction Generale des Postes et Telecommunications 
(``DGPT''), or successors in responsibility to such agencies, to 
provide international telecommunications or enhanced telecommunications 
services between the United States and France, or actually provides 
telecommunications or enhanced telecommunications services between the 
United States and France, for services where no license is required, or 
(ii) holds or has applied for a license from either the United States 
Federal Communications Commission or the German Bundesministerium fur 
Post und Telekommunication (``BMPT''), or successors in responsibility 
to such agencies, to provide international telecommunications services 
or enhanced telecommunications services between the United States and 
Germany, or actually provides telecommunications or enhanced 
telecommunications services between the United States and Germany, for 
services where no license is required. Disclosure by the Department of 
Justice to any provider described above shall be made only upon 
agreement by such provider, in the form prescribed in the Stipulation 
entered into by defendants and the United States on July 13, 1995, not 
to disclose any non-public information to any other person, apart from 
governmental authorities in the United States, France or Germany. Where 
Joint Venture Co. is required to disclose in Section II.A particular 
telecommunications services provided, this shall include disclosure of 
the identify of each of the services, and reasonable detail about each 
of the services to the extent not already published elsewhere, but 
shall not require disclosure of underlying facilities used to provide a 
particular service that is offered on a unitary basis, except to the 
extent necessary to identify the service and the means of 
interconnection with the service.
    G. ``DT'' means Deutsche Telekom A.G., and any entity controlled by 
DT, provided that DT does not include Joint Venture Co., FT, or Sprint, 
but does include Atlas.
    H. ``Enhanced telecommunications service'' means any 
telecommunications service that involves as an integral part of the 
service the provision of features or capabilities that are additional 
to the 

[[Page 44056]]
conveyance (including switching) of the information transmitted. 
Although enhanced telecommunications services use telecommunications 
services for conveyance, their additional features or capabilities do 
not lose their enhanced status as a result.
    I. ``Facility'' means: (i) Any line, trunk, wire, cable, tube, 
pipe, satellite, earth station, antenna or other means that is directly 
used or designed or adapted for use in the conveyance, transmission, 
origination or reception of a telecommunications or enhanced 
telecommunications service; (ii) any switch, multiplexer or other 
equipment or apparatus that is directly used or designed or adapted for 
use in connection with the conveyance, transmission, origination, 
reception, switching, signaling, modulation, amplification, routing, 
collection, storage, forwarding, transformation, translation, 
conversion, delivery or other provision of any telecommunications or 
enhanced telecommunications service, and (iii) any structure, conduit, 
pole, or other thing in, on, by or from which any facility as described 
in (i) or (ii) is or may be installed, supported, carried or suspended.
    J. ``France'' means the Republic of France, excluding its overseas 
departments and territories for which traffic is reported separately to 
the Federal Communications Commission.
    K. ``FT'' means France Telecom, and any entity controlled by FT, 
provided that FT does not include Joint Venture Co., DT, or Sprint, but 
does include Atlas and Transpac.
    L. ``FT or DT Products and Services'' shall mean any of the 
following telecommunications or enhanced telecommunications services or 
facilities in France or Germany, or between the United States and 
France or the United States and Germany, provided by FT or DT, 
regardless of whether such services or facilities are considered to be 
reserved exclusively to FT or DT under the national law of France or 
Germany:
    (i) Correspondent services (but not including enhanced 
telecommunications services provided by Atlas, unless Atlas is acting 
as a reseller or sales agent of such services or the services involve 
interconnection to the Public Data Networks);
    (ii) Dedicated or switched transit services;
    (iii) Leased lines or international half circuits between the 
United States and France or between the United States and Germany 
(including leased lines or international half circuits that may be 
provided with additional quality, provisioning or maintenance 
guarantees or alternate routing features), unless plaintiff and 
defendants agree that meaningful competition exists to such leased 
lines or international half-circuits provided by DT or FT; or
    (iv) Interconnection to the FT/DT PSTNs, including access to 
customers using ISDN services.
    M. ``Germany'' means the Federal Republic of Germany.
    N. ``Interconnection,'' ``interconnect'' and ``interconnection 
agreement'' mean interconnection under the FT Schedule of Obligations 
(``Cahier des Charges'') (or any subsequent or other condition 
governing interconnection with FT that may be imposed by government 
authorities in France), and under the Telecommunications Installation 
Act (``Fernmeldeanlagengesetz'') (or any subsequent or other condition 
governing interconnection with DT that may be imposed by government 
authorities in Germany), or access to the FT or DT public switched 
telephone networks that may be obtained outside the terms of such legal 
obligations.
    O. ``Joint Venture Co.'' means the entities referred to in the 
Joint Venture Agreement entered into by Sprint, FT and DT on June 22, 
1995, as the GBN Parent Entity, the ROW Parent Entity, and the ROE 
Parent Entity (including the governing boards or bodies of such 
entities) to be formed in accordance with Sections 4.2, 5.2 and 6.2 of 
the Joint Venture Agreement, and each other entity to be formed 
pursuant to the terms of the Joint Venture Agreement (including the 
Global Venture Board, Global Venture Committee and Global Venture 
Office to be formed in accordance with Section 3.1-3.10 of the Joint 
Venture Agreement), regardless of the name under which these entities 
may subsequently do business, or any other entity jointly owned by 
Sprint, FT and DT and having among its purposes substantially the same 
purposes as described for the Joint Venture or any of these entities in 
the Joint Venture Agreement, and any predecessor (whether the 
predecessor is jointly owned by Sprint, FT and DT or separately owned 
by any one of them and any one of them formed to conduct the Joint 
Venture Co. business), successor, or assign of such entities, or any 
entity controlled by any of these entities. Atlas, FT, DT and Sprint 
shall not be deemed to be a Joint Venture Co. The individual members of 
the Global Venture Board, Global Venture Committee and Global Venture 
Office, are not personally defendants, but are responsible in their 
official capacities as members of such entities for ensuring compliance 
of Joint Venture Co. with this Final Judgment, and responding to 
requests for documents and information under Section VI, in the same 
manner as any officer of a defendant.
    P. ``Phase I'' means that period of time after the entry of this 
Final Judgment and before the conditions in Phase II have been met.
    Q. ``Phase II'' means that time that begins when the national 
governments of France and Germany have:
    (1) Removed all of the legal prohibitions on provision of the 
following services and facilities by entities other than FT and DT and 
their subsidiaries and affiliates--
    (i) The construction, ownership or control of both domestic and 
international telecommunications facilities, and use of such facilities 
to provide any telecommunications or enhanced telecommunications 
services, and
    (ii) The provision of public switched domestic and international 
voice services; and
    (2) Issued one or more licenses or other necessary authorizations, 
to entities other than FT, DT, Sprint or Joint Venture Co. and 
unaffiliated with FT, DT, Sprint or Joint Venture Co., for--
    (i) The construction or ownership, and control, of both (a) 
domestic telecommunications facilities to serve territory in which one-
half or more of the national populations of France and Germany reside, 
and (b) international telecommunications facilities capable of being 
used to provide a competitive facilities-based alternative, directly or 
indirectly, between France and Germany and the United States, and
    (ii) The provision of public switched domestic long distance voice 
services, without any limitation on geographic scope or types of 
services offered, and international voice service between the United 
States and France and Germany.

Unless otherwise noted in this Final Judgment, Phase II applies 
separately to France and Germany, and shall commence with respect to 
services and facilities between the United States and a country when 
the conditions are met for that country, even if they are not met in 
the other country.
    R. ``Proportionate Return Commitment'' means the commitment of each 
of FT and DT to transmit correspondent voice telecommunications 
services traffic to the United States, to licensed U.S. international 
telecommunications carriers holding operating agreements for such 
services with FT and DT, in the same proportions as the correspondent 
voice telecommunications traffic from 

[[Page 44057]]
the United States to France or Germany that FT and DT, respectively, 
receive from such U.S. carriers. If the Federal Communications 
Commission adopts proportionate return policies that are made 
specifically applicable to the relationship between Sprint, FT and DT 
and that conflict with this Proportionate Return Commitment, the 
Proportionate Return Commitment shall be modified to be consistent with 
such policies.
    S. ``Public Data Network'' means either or both of the public data 
network operated by Transpac in France and the public data network in 
Germany operated under the ``Datex'' designation (Datex-P, Datex-J, and 
the Datex-L service) as of the signing of the Stipulation to enter this 
Final Judgment, whether such networks are held by FT, DT, Atlas, or any 
subsidiary or affiliate of FT or DT now or in the future.
    T. ``Sprint'' means Sprint Corporation, and any entity controlled 
by Sprint. Sprint does not include Joint Venture Co., Atlas, FT, or DT, 
or any FT or DT employees who may serve on Sprint's Board of Directors.
    U. ``Telecommunications service'' means the conveyance, by 
electrical, magnetic, electromagnetic, electromechanical or 
electrochemical means (including fiber-optics), of information 
consisting of:

--Speech, music and other sounds;
--Visual images;
--Signals serving for the impartation (whether as between persons and 
persons, things and things or persons and things) of any matter, 
including but not limited to data, otherwise than in the form of sounds 
or visual images;
--Signals serving for the actuation or control of machinery or 
apparatus;
      or
--Translation or conversion that does not alter the form or content of 
information as received from that which is originally sent.

For these purposes ``convey'' and ``conveyance'' include 
transmission, switching, and receiving, and cognate expressions 
shall be construed accordingly. A telecommunications service 
includes all facilities used in providing such service, and the 
installation, maintenance, repair, adjustment, replacement and 
removal of any such facilities. A service that is considered a 
``telecommunications service'' under this definition retains that 
status when it is used to provide an enhanced telecommunications 
service, or when used in combination with equipment, facilities or 
other services.

    V. ``United States'' means the fifty states, the District of 
Columbia, and all territories, dependencies, or possessions of the 
United States.
    W. ``United States international telecommunications providers'' 
means any person or entity actually providing international 
telecommunications services or enhanced telecommunications services to 
providers or users in the United States, and that is incorporated in 
the United States, or that is ultimately controlled by United States 
persons within the meaning of 16 C.F.R. 801.1., including its 
subsidiaries and affiliates, or any provider of telecommunications 
services with which such a United States international 
telecommunications provider is affiliated. For purposes of this 
definition, an affiliate shall mean any entity in which a person or 
entity has a direct or indirect equity interest or whose equity is 
owned directly or indirectly by a person or entity in the amount of 10% 
or more.
VI

Visitorial and Compliance Provisions

    A. Sprint and Joint Venture Co. each agree to maintain sufficient 
records and documents to demonstrate compliance with the requirements 
of this Final Judgment.
    B. For the purposes of determining or securing compliance of 
defendants with this Final Judgment, duly authorized representatives of 
the plaintiff, upon written request of the Attorney General or the 
Assistant Attorney General in charge of the Antitrust Division, and on 
reasonable notice to the relevant defendant, shall have access without 
restraint or interference to Sprint and to Joint Venture Co. in the 
United States:
    1. during their office hours to inspect and copy all records and 
documents in their possession or control relating to any matters 
contained in this Final Judgment; and
    2. to interview or take sworn testimony from their officers, 
directors, employees, trustees, or agents, who may have counsel 
present, relating to any matter contained in this Final Judgment;
provided, however, that Joint Venture Co. officers who are or were 
employees of FT or DT shall be required to produce information only 
concerning Joint Venture Co., and that Joint Venture Co. or Sprint 
directors who are or were employees of FT or DT shall be required to 
produce only Joint Venture Co. and Sprint documents and to provide 
information only concerning Joint Venture Co. and Sprint.
    C. Joint Venture Co. consents to make available to duly authorized 
representatives of the plaintiff, for the purposes of determining 
whether defendants have complied with the requirements of this Final 
Judgment and to secure their compliance:
    1. at the premises of the Antitrust Division in Washington, D.C., 
within sixty days of receipt of written request by the Attorney General 
or Assistant Attorney General in charge of the Antitrust Division, 
records and documents in the possession or control of Joint Venture 
Co.; and
    2. for interviews or sworn testimony, in the United States if 
requested by plaintiff but subject to their reasonable convenience, 
officers, directors, employees, trustees or agents, who may have 
counsel present;
provided, however, that Joint Venture Co. officers who are or were 
employees of FT or DT shall be required to produce information only 
concerning Joint Venture Co., and Joint Venture Co. directors who are 
or were employees of FT or DT shall be required to produce only Joint 
Venture Co. documents and to provide information only concerning Joint 
Venture Co.
    D. Upon the written request of the Attorney General or the 
Assistant Attorney General in charge of the Antitrust Division, a 
defendant shall submit written reports, under oath if requested, 
relating to any of the matters contained in this decree.
    E. No information or documents obtained by the means provided in 
this Section VI shall be divulged by the plaintiff to any person other 
than the United States Department of Justice, the Federal 
Communications Commission, and their employees, agents and contractors, 
except in the course of legal proceedings to which the United States is 
a party, or for the purpose of securing compliance with this decree, or 
for identifying to the DGPT or other appropriate French regulatory 
agencies conduct by defendants or FT that may violate French law or 
regulations or FT's license to operate its French public 
telecommunications system (but no documents received from defendants 
pursuant to this Section VI shall be disclosed to French authorities by 
the Department of Justice), or for identifying to the BMPT or other 
appropriate German regulatory agencies conduct by defendants or DT that 
may violate German law or regulations or DT's license to operate its 
German public telecommunications system (but no documents received from 
defendants pursuant to this Section VI shall be disclosed to German 
authorities by the Department of Justice), or as otherwise required by 
law. Prior to divulging any documents, interviews or sworn testimony 
obtained pursuant to this Section VI to the Federal Communications 
Commission, or any French or German regulatory agencies, plaintiff will 
obtain assurances that such materials are protected from 

[[Page 44058]]
disclosure to third parties to the extent permitted by law.

VII

Retention of Jurisdiction

    Jurisdiction is retained by this Court for the purposes of enabling 
any of the parties to this Final Judgment to apply to this Court at any 
time for such further orders or directions as may be necessary or 
appropriate to carry out or construe this decree, to modify or 
terminate any of its provisions, to enforce compliance, and to punish 
any violations of its provisions.

VIII

Modification

    A. Any party to this Final Judgment may seek modification of its 
substantive terms and obligations and other parties to the Final 
Judgment shall have an opportunity to respond to such a motion. If the 
motion is contested by another party, it shall only be granted if the 
movant makes a clear showing that (i) a significant change in 
circumstances or significant new event subsequent to the entry of the 
Final Judgment requires modification of the Final Judgment to avoid 
substantial harm to competition or consumers in the United States, or 
to avoid substantial hardship to defendants, and (ii) the proposed 
modification is (a) in the public interest, (b) suitably tailored to 
the changed circumstances or new events and would not result in serious 
hardship to any defendant, and (c) consistent with the purposes of the 
antitrust laws of the United States and with the telecommunications 
regulatory regimes of the United States, France and Germany. If a 
motion to modify this Final Judgment is not contested by any party, it 
shall be granted if the proposed modification is within the reaches of 
the public interest.
    B. Neither the absence of specific reference to a particular event 
in the Final Judgment nor the foreseeability of such an event at the 
time this Final Judgment was entered, shall preclude this Court's 
consideration of any modification request. This standard for obtaining 
contested modifications shall not require the United States to initiate 
a separate antitrust action before seeking modifications. The same 
standard shall apply to any party seeking modification of this Final 
Judgment. Where modifications of the Final Judgment are sought, the 
provisions of Section VI of this Final Judgment may be invoked to 
obtain any information or documents needed to evaluate the proposed 
modification prior to decision by the Court.
    C. In addition to VIII.A and VIII.B, it is not the intent of the 
parties that Sprint should be competitively disadvantaged in such a way 
as to harm competition. If defendants believe that changed 
circumstances have caused any terms of the Final Judgment to operate in 
a way that is harmful to competition, they may present to plaintiff the 
reasons therefore and any supporting evidence, and if plaintiff in its 
sole discretion agrees that modification of the Final Judgment is 
appropriate, a request for modification shall be presented to the 
Court.

IX

Sanctions

    Nothing in this Final Judgment shall prevent the United States from 
seeking, or this Court from imposing, against defendants or any other 
person, any relief available under any applicable provision of law.

X

Further Provisions

    A. The entry of this Final Judgment is in the public interest.
    B. The substantive restrictions and obligations of this Final 
Judgment shall be removed five years from the date that Phase II of 
this Final Judgment has taken effect with respect to both France and 
Germany, unless this Final Judgment has been previously terminated. The 
substantive obligations of Section III of this Final Judgment shall be 
removed on the date that Phase I of this Final Judgment ends, 
separately with respect to France and with respect to Germany, unless 
otherwise specified in this Final Judgment.

    Dated:

----------------------------------------------------------------------
United States District Judge

    In the matter of United States of America, Plaintiff, v. Sprint 
Corporation and Joint Venture Co., Defendants.
[Civil Action No. 95 CV 1304]
Filed: July 13, 1995.

Competitive Impact Statement

    The United States, pursuant to section 2(b) of the Antitrust 
Procedures and Penalties Act (``APPA'' or ``Tunney Act''), 15 U.S.C. 16 
(b)-(h), files this Competitive Impact Statement relating to the 
proposed Final Judgment submitted for entry in this civil antitrust 
proceeding.

I

Nature and Purpose of the Proceeding

    On July 13, 1995, the United States filed a civil antitrust 
complaint under Section 15 of the Clayton Act, as amended, 15 U.S.C. 
25, alleging that the proposed acquisition of a total of 20% of the 
stock of Sprint Corporation (``Sprint'') by France Telecom (``FT'') and 
Deutsche Telekom A.G. (``DT''), and the proposed formation of a joint 
venture between Sprint, FT and DT to provide international 
telecommunications services, would violate Section 7 of the Clayton 
Act, as amended, 15 U.S.C. 18, by lessening competition in the markets 
for international telecommunications services between the United States 
and France and Germany, and for seamless international 
telecommunications services, thereby depriving United States consumers 
of the benefits of competition--lower prices and higher quality 
services. Defendants are Sprint and Joint Venture Co., a term 
collectively designating the entities which will become the joint 
venture of Sprint, FT and DT upon consummation of the agreements 
between them. The Complaint seeks injunctive and other relief.
    The United States and Sprint have stipulated to the entry of a 
proposed Final Judgment, after compliance with the Antitrust Procedures 
and Penalties Act, 15 U.S.C. 16(b)-(h). Joint Venture Co. will also 
enter into this stipulation once it has been formed and satisfied other 
preconditions stated in the stipulation. Entry of the proposed Final 
Judgment would terminate this action, except that the Court would 
retain jurisdiction to construe, modify, and enforce the proposed Final 
Judgment and to punish violations of the Judgment. The United States 
and Sprint have stipulated, and Joint Venture Co. will also stipulate, 
that the defendants will abide by the terms of the proposed Final 
Judgment after consummation of the transactions between them, pending 
entry of the Final Judgment by the Court, permitting the transactions 
to go forward prior to completion of the Tunney Act procedures. Should 
the Court decline to enter the Final Judgment, Sprint has also 
committed in the stipulation, and Joint Venture Co. will commit, to 
abide by the terms of the Final Judgment until the conclusion of this 
action.

II

Events Giving Rise to the Alleged Violation

A. The Proposed Transactions

    On June 22, 1995, Sprint, FT and DT entered into a Joint Venture 
Agreement, providing for the formation of an international joint 
venture to provide various types of international telecommunications 
and enhanced 

[[Page 44059]]
telecommunications services. In addition, FT and DT entered into an 
Investment Agreement with Sprint on July 31, 1995, entitling FT and DT 
to acquire a total of up to 20% of the voting equity in Sprint for a 
variable price that could be as high as approximately $4.2 billion. As 
a result of the acquisition of Sprint's equity, FT and DT would also 
acquire special shareholder rights, including the right to appoint 
directors to a number of seats on Sprint's Board of Directors in 
proportion to their ownership interest (a 20% investment would give FT 
and DT three of the fifteen seats on Sprint's Board of Directors), with 
a minimum of two directors. These agreements finalize transactions that 
have been contemplated since June 1994, when Sprint, FT and DT entered 
into a Memorandum of Understanding concerning the creation of the joint 
venture and the acquisition of equity in Sprint.
    Consummation of the Joint Venture Agreement between Sprint, FT and 
DT will establish Joint Venture Co., a group of related entities that 
will engage in the joint venture business, including the offering of 
(i) international data, voice and video business services for 
multinational corporations and business customers, (ii) international 
consumer services based on card services for travelers and (iii) 
carrier's carrier services including transport services for other 
carriers. In forming the joint venture, each of the parties will 
contribute most of their existing operations outside their respective 
home countries to Joint Venture Co., and will make capital 
contributions, for a total value of approximately $1 billion. FT and DT 
intend to hold and manage their interests in Joint Venture Co. together 
through their own joint venture, known as Atlas, which when formed will 
be owned 50% by DT and 50% by FT. Sprint, DT, and FT will have equal 
representation on Joint Venture Co.'s Global Venture Board, which will 
determine the strategic direction and oversee operations of Joint 
Venture Co. The international telecommunications facilities of Joint 
Venture Co., including switches, other transmission equipment, computer 
hardware and software, and leased lines, will form an international 
``backbone'' network used to carry the joint venture's services. This 
backbone network will be owned 50% by Sprint and 50% by DT and FT 
through Atlas. The Joint Venture Co. entity responsible for worldwide 
activities outside the United States and Europe (the ``Rest of World'' 
or ``ROW'' entity) will have the same 50-50 ownership structure as the 
backbone network. The Joint Venture Co. entity responsible for 
activities in Europe but outside of France and Germany (the ``Rest of 
Europe'' or ``ROE'' entity), however, will be owned 33\1/3\% by Sprint 
and 66\2/3\% by DT and FT through Atlas.
    Sprint will have the exclusive right to provide Joint Venture Co. 
services in the United States, its home country, and FT and DT are to 
refrain from competing with Sprint in the United States in the joint 
venture's services and certain other telecommunications services. 
Similarly, Sprint is to refrain from competing with FT and DT in their 
home countries, France and Germany. Moreover, none of the owners of 
Joint Venture Co. will compete with Joint Venture Co. Therefore, FT's 
and DT's direct participation in the areas of business in which Joint 
Venture Co. is engaged will be limited to their ownership interests in 
the joint venture entities and sales of the joint venture services, and 
they generally will only be able to participate directly in United 
States telecommunications markets through their ownership interests in 
Sprint.

B. The Parties to the Transaction and the Relevant Markets

1. The Parties
    This transaction is a strategic alliance between three of the 
largest telecommunications carriers in the world, creating vertical 
affiliation between a major U.S. long distance carrier and two of the 
largest foreign telecommunications monopolies. Together, DT, FT and 
Sprint had approximately $85 billion in revenues in 1994, considerably 
more than AT&T Corporation (``AT&T''), the largest carrier 
worldwide,\1\ and more than twice as much as the total revenues of 
British Telecommunications plc (``BT'') and MCI Communications 
Corporation (``MCI''), the partners in the Concert strategic alliance 
consummated in 1994.\2\ The United States, where Sprint's principal 
network is located, is by far the most important location for 
multinational customers of telecommunications services in the world. 
The home countries of the other two partners, France and Germany, are 
also key locations for multinational customers, matched in significance 
by only a handful of other countries.\3\ To illustrate, more 
multinational companies have their headquarters located in either 
France or Germany, in combination, than in any single country other 
than the United States or the United Kingdom. FT and DT are the 
government-owned dominant telecommunications carriers in their home 
countries, where they have monopolies over public switched voice 
services and transmission infrastructure, representing more than 75% of 
all telecommunications revenues, and market power in other key services 
such as public data networks.

    \1\ A large part of the revenues of AT&T do not even come from 
telecommunications services markets, but from equipment 
manufacturing and other businesses. Thus, the aggregate competitive 
significance of the parties to this alliance, all of which derive 
the great bulk of their revenues from telecommunications services 
markets, is even larger relative to AT&T alone than a comparison of 
total revenues would suggest.
    \2\ In June 1994, the United States filed a suit and entered 
into a proposed consent decree with MCI and the joint venture being 
established by BT and MCI to provide international 
telecommunications and enhanced telecommunications services, now 
called Concert. The decree was approved by this Court in September 
1994.
    \3\ Only the United States, the United Kingdom and Japan surpass 
Germany or France in numbers of headquarters of multinational 
corporations, though several other countries, including Switzerland, 
Sweden, Canada, the Netherlands, and Australia, also have a 
substantial number of multinational headquarters. Only in the United 
States and the United Kingdom have more multinational companies 
located their operations than in Germany or France, though there are 
a number of other countries, including Japan, Canada, the 
Netherlands, Australia, Switzerland, Italy, Belgium, and Spain, 
where many multinational companies have located their operations. 
The countries identified here are not the only ones where 
multinational corporations have a significant presence.
    Sprint is one of the three principal domestic long distance and 
international telecommunications carriers in the United States. It 
provides long distance telecommunications and enhanced 
telecommunications products and services in the United States and 
international telecommunications and enhanced telecommunications 
products and services between the U.S. and other nations, including 
France and Germany. Sprint's 1994 revenues were more than $12.6 
billion, about half of which came from domestic and international long 
distance services. Sprint's principal long distance domestic and 
international competitors in the United States are AT&T, the largest 
carrier, and MCI, the second largest carrier. These three carriers 
provide over 80% of domestic long distance service in the United States 
and almost all international voice telecommunications services 
originating in the United States; Sprint's market share in both 
domestic and international U.S. voice traffic is about 10%. Sprint, MCI 
and AT&T are also among the most important providers of international 
enhanced telecommunications services and data services in the United 
States, directly or through subsidiaries and affiliates (such 

[[Page 44060]]
as the Concert joint venture between MCI and BT). Sprint is one of the 
largest providers of domestic and international data telecommunications 
services in the United States. For these types of services, Sprint's 
market share is generally much larger than its share of voice services. 
Indeed, for some data services Sprint is larger than any of the other 
U.S. international carriers in terms of revenues.\4\

    \4\ International data services are also offered by some 
companies that are not voice carriers, such as Infonet Services 
Corporation.
---------------------------------------------------------------------------

    FT is owned by the government of France, and is the fourth largest 
provider of telecommunications services in the world. Its consolidated 
annual revenues in 1994 were 142.6 billion FF (approximately $28.5 
billion) and its net income for 1994 was 9.9 billion FF (approximately 
$2.1 billion). FT provides local, long distance, and enhanced 
telecommunications services in France, and international and enhanced 
telecommunications services between France and other countries, 
including the U.S. and Germany. FT owns and operates the French public 
switched network, with about 32 million telephone access lines in 
service. FT is the state authorized monopoly provider of all public 
switched voice service, as well as all transmission facilities for 
domestic and international telecommunications in France. FT also has 
market power in the provision of public data network services in 
France, even though that area has been legally opened to competition 
since 1993.
    DT is the second or third largest telecommunications company in the 
world, and Europe's largest telecommunications carrier. Its 1994 
revenues were 61.2 billion DM (approximately $44 billion). DT provides 
local, long distance, and enhanced telecommunications services in 
Germany, as well as international and enhanced telecommunications 
services between Germany and other countries, including the U.S. and 
France. Pursuant to a German telecommunications law enacted in 1994, DT 
became a private corporation on January 1, 1995, but the German 
government remains DT's sole shareholder. Sale of DT's shares to the 
public will not begin until sometime in 1996, and the German government 
is expected to hold a majority of DT's shares through 1999. DT owns and 
operates the German public switched network, with more than 37 million 
telephone access lines in service, and 87,000 kilometers of fiber optic 
lines installed, representing over a third of its total network. DT is 
the state authorized monopoly provider of all public switched voice 
service, as well as all transmission facilities for domestic and 
international telecommunications in Germany. DT also has market power 
in the provision of public data network services in Germany, even 
though this area of business has been legally opened to competition 
since 1990.
2. The Product and Geographic Markets
    Broadly speaking, there are two types of markets of concern under 
the antitrust laws of the United States that are affected by the 
vertical relationships created in this transaction: the markets for 
international telecommunications services (including enhanced 
telecommunications services) between the United States and France and 
the United States and Germany, and the emerging markets for seamless 
international telecommunications (including enhanced 
telecommunications) services.\5\ These broad markets may further 
encompass multiple distinct product markets. The various types of data 
telecommunications services, for example, are distinct from voice 
services in important respects, from the perspective of both consumers 
and service providers. For purposes of analyzing the vertical effects 
of this transaction, however, it is not necessary to distinguish 
between individual telecommunication services, since the monopoly power 
of DT and FT affects all of the possible markets at issue.

    \5\ Other markets not within the scope of U.S. antitrust review, 
including markets for various types of telecommunications and 
enhanced telecommunications services in Europe, are also affected by 
this transaction. Issues involving those markets are being 
considered separately by the competition authorities of the European 
Union in a pending investigation.
---------------------------------------------------------------------------

    US-France and US-Germany international telecommunications services 
are used by individuals and companies in the US to exchange voice, data 
and video messages with individuals and companies in France and 
Germany. These services typically are provided on a correspondent 
basis, meaning that telecommunications providers in different countries 
agree to interconnect their facilities and services in order to permit 
international traffic to be completed.\6\ Correspondent relationships 
are established between international telecommunications carriers by 
entering into commercially negotiated operating agreements, and 
separate operating agreements often exist for distinct types of 
services and facilities. According to Federal Communications Commission 
data for 1993, the most recent year available, all U.S. international 
carriers received $600,869,527 in total revenues from traffic to 
Germany billed in the United States, and $261,896,962 in total revenues 
from traffic to France billed in the United States, for the standard 
type of switched voice telephone service provided under the 
correspondent system.\7\ France and Germany are among the most 
important destinations for U.S. international switched voice traffic, 
and in 1993 France and Germany in combination accounted for over 13% of 
total international billed revenues of all U.S. international carriers 
for switched voice service, a share surpassed only by Canada and 
Mexico.\8\ No close substitute exists for international 
telecommunications and enhanced telecommunications services between the 
U.S. and France or the U.S. and Germany. In order to compete 
effectively in providing international telecommunications services 
between the U.S. and France and the U.S. and Germany, U.S. providers 
must have nondiscriminatory access to FT's and DT's facilities and 
services in France and Germany to terminate traffic from the U.S., and 
to receive traffic from France and Germany.

    \6\ International correspondent telecommunications services 
primarily consist of the basic switched voice telephone call (which 
is known either as International Direct Dial (``IDDD'') or 
International Message Telephone Service (``IMTS'')), and 
International Private Line Service (``IPLS''). They also include 
certain other switched telecommunications and enhanced 
telecommunications services.
    ``Switched'' traffic makes use of switching facilities and 
common lines. Consumers typically obtain switched correspondent 
services from the provider in the country where a call originates, 
and calls are handed off to the provider in the other country 
without direct customer involvement. IPLS consists of circuits 
dedicated to the use of a single customer, and the providers of IPLS 
in each country typically sell their ``half'' of the circuit to the 
user separately. Switched services constitute the great majority of 
international telecommunications services in terms of both traffic 
and revenues.
    \7\ Federal Communications Commission, Common Carrier Bureau, 
Industry Analysis Division, 1993 Section 43.61 International 
Telecommunications Data, International Traffic Data for All U.S. 
Points, Table A1 (Nov. 1994) (hereinafter 1993 International 
Telecommunications Data). The revenue retained by U.S. international 
carriers from amounts billed to customers is greatly reduced, in the 
case of France and Germany by nearly half, due to payouts to the 
foreign carriers for delivering traffic, but at the same time 
revenues of U.S. carriers are augmented by payments from the foreign 
carriers for delivering traffic that is billed in the foreign 
countries. In the case of Germany, amounts paid out by all U.S. 
carriers for IMTS service to DT were $263,923,146, and amounts 
received from DT were $119,430,422, in 1993. For France, amounts 
paid out by all U.S. carriers for IMTS service to FT were 
$105,449,969, and amounts received from FT were $76,536,312, in 
1993. Id.
    \8\ Id.
---------------------------------------------------------------------------

    Seamless international telecommunications services are an 

[[Page 44061]]
    emerging area of international telecommunications, developing in 
response to the limitations of the traditional correspondent system, 
over which the great majority of international telecommunications 
traffic is still carried. Seamless services represent an important 
market for the evolution of international telecommunications. Seamless 
international telecommunications services would be made available by a 
single provider using an integrated international network of owned or 
leased facilities, and would have the same quality, features, 
characteristics, and capabilities wherever they are provided, making 
them significantly superior to ordinary correspondent 
telecommunications services for many customers, particularly 
multinational corporations and other large users of international 
telecommunications. These services could overcome many of the 
inadequacies and differences in standards that now exist in various 
national telecommunications systems, and they could offer scale 
economies by comparison with private networks individually organized by 
users.
    Some types of international telecommunications services, such as 
data services, already are being offered between some countries in a 
seamless fashion, as well as through the correspondent system. However, 
creating seamless international networks that reach a large number of 
countries with a wide range of services will require a major commitment 
of resources and expertise that few firms can supply. While the 
providers of seamless services aim eventually to have a global reach, 
today there remain many differences between particular countries 
affecting both the legality and the technical feasibility of offering 
seamless services. Other participants in this market include the 
Concert alliance of BT and MCI, and AT&T's international partnerships, 
including Worldpartners (a non-exclusive partnership with several 
foreign providers including Japan's KDD) and Uniworld (an alliance with 
the national or principal telecommunications providers in Switzerland, 
Sweden, Spain and the Netherlands). Though the BT-MCI alliance and 
AT&T's partnerships share a general interest in the emerging market for 
seamless international telecommunications services, these other 
transactions are structured in somewhat different ways and vary in 
their degrees of exclusivity and investment.
    Where available, seamless international telecommunications services 
will be used by multinational corporations and other users of 
international telecommunications services in the U.S. to exchange 
voice, data and video messages with corporate offices, vendors, 
operations and persons in France and Germany as well as in other 
countries. Other types of international telecommunications and enhanced 
telecommunications services provided through the correspondent system 
are not likely to be close substitutes for seamless international 
telecommunications services as they fully emerge. Existing services 
often lack international standardization or advanced features that 
customers are expected to prefer, and may require that customers deal 
with multiple providers. To compete effectively in seamless 
international telecommunications services, providers must have 
nondiscriminatory access to the U.S., France and Germany. All of these 
countries are key locations for multinational customers. In 
combination, the United States, France and Germany have nearly half of 
all headquarters of multinational corporations, and most potential 
customers of these services need telecommunications services into and 
out of the U.S., France and Germany.
3. Monopoly Power of FT and DT
    FT and DT occupy very similar market positions in their home 
countries, as both are the government-owned dominant providers of 
telecommunications services and continue to exercise extensive legal 
monopoly rights, making competitors dependent on FT and DT even in 
those areas of service that have been opened to competition. Access to 
FT's and DT's public switched network and transmission infrastructure 
is necessary for international telecommunications and enhanced 
telecommunications services that originate or terminate in France and 
Germany. FT's and DT's legal monopolies in the provision of public 
switched voice telecommunications services and transmission 
infrastructure together account for over 75% of all telecommunications 
revenues in France and in Germany. Virtually all international 
telecommunications traffic between the U.S. and France and between the 
U.S. and Germany originates or terminates over FT's or DT's public 
switched networks, their transmission infrastructure, or both.
    FT currently has a monopoly in the provision of both domestic 
leased lines in France and international half-circuits terminating in 
France, and DT has a similar monopoly in the provision of domestic 
leased lines in Germany and international half-circuits terminating in 
Germany.\9\ Third party service providers that want to offer data or 
value added services between France and the United States, or between 
Germany and the United States, must obtain their transatlantic half-
circuits terminating in France from FT \10\ and in Germany from DT. 
FT's domestic leased lines in France and DT's domestic leased lines in 
Germany are essential inputs for many services that are open to 
competition in those countries, such as data services and corporate 
networks serving closed user groups. A very large portion of the costs 
of competitors of FT and DT, both in domestic telecommunications and 
enhanced telecommunications services in France and Germany and 
international telecommunications and enhanced telecommunications 
services originating or terminating in France and Germany, are the 
costs of obtaining transmission infrastructure from FT and DT.

    \9\ DT also offers a managed leased line service referred to as 
DDV that is used by it and its competitors for transmission in much 
the same way as the monopoly leased line service. DDV, however, has 
better management and diagnostic facilities, back-up routing and 
service guarantees. Though DT's DDV service has been classified 
nominally as ``competitive'' under German law, DT effectively has a 
monopoly over this transmission infrastructure as well, since there 
is virtually no competition for DDV service.
    \10\ FT markets such facilities through its wholly owned 
subsidiary France Cables et Radio (``FCR'').
    No other facilities outside of FT's or DT's control that are 
permitted today to be used for transmission of some types of 
telecommunications services in France and Germany, including satellite 
``Very Small Aperture Terminal'' (VSAT) earth stations and cable TV 
infrastructure, are effective substitutes for FT's and DT's point-to-
point leased lines for most telecommunications traffic, due to 
technical or economic limitations, lack of sufficient geographic scope 
or other factors. Indeed, unlike the U.S. and U.K., where cable 
television infrastructure is owned by independent providers and 
substantial penetration exists, in France a significant share of the 
cable infrastructure is owned by FT and penetration is low overall, 
while in Germany all of the cable infrastructure is owned by DT. 
Although some competition to the FT and DT public switched voice 
services and network would likely emerge were all legal restrictions on 
competition lifted, replication of the entire public switched network 
would be prohibitively expensive for any new entrant. Accordingly, any 
provider of telecommunications or enhanced telecommunications services, 
or 

[[Page 44062]]
seamless international telecommunications services, whether in the 
U.S., France, Germany or elsewhere, is and will continue to be 
dependent to some extent for the foreseeable future on FT for 
origination and termination of telecommunications between France and 
anywhere else, and on DT for origination and termination of 
telecommunications between Germany and anywhere else.
    FT has a dominant market position and market power in France, and 
DT has a dominant position and market power in Germany, in providing 
public data network services. These are services that are offered to 
the general public, rather than to an exclusive user or limited group, 
to carry data telecommunications through a network of transmission 
lines and nodes, the points of interconnection with the network. FT's 
and DT's continuing market power in their home countries in public data 
network services, which are legally open to competition,\11\ is 
reinforced by their continuing monopolies over the transmission 
infrastructure used by their own data networks as well as those of 
their competitors. In addition, the German competition authority, the 
Federal Cartel Office, has found that DT extensively cross-subsidized 
its data network services from its transmission monopoly between 1989 
and 1993, in the amount of 1.9 billion DM (approximately $1.3 billion).

    \11\ To provide these services in France, operators must be 
individually licensed.
---------------------------------------------------------------------------

    FT offers these data network services through Transpac, a 
subsidiary that operates several types of data services, including the 
principal network based on the standard X.25 packet-switched protocol. 
FT and Transpac had a statutory monopoly in provision of public data 
network services in France until 1993, when competition in this area 
was first permitted. By the most current measures available, Transpac 
has a 94% share of French domestic data services, and a far more 
extensive network in France than any other competitor, including 597 
node sites \12\ and 105,000 customer connections.

    \12\ The number of nodes in a data network provides a reliable 
measure of the penetration of data services. Nodes are the points of 
access for customers. Additional nodes bring the network physically 
closer to more users, which generally makes it less expensive for 
the users to access the services. Providers and users who face 
distance-sensitive tariffs (including the choice of making a local 
call or a more expensive long distance call to access the network) 
are likely to be competitively affected by the penetration of a data 
network.
---------------------------------------------------------------------------

    DT has 833 data nodes and more than 86,500 access lines in its 
principal packet-switched data service network, Datex-P, which uses the 
standard X.25 data protocol. In 1994, DT had a share of more than 80% 
in packet-switched data network services in Germany. The next largest 
provider had less than 10% of the market, and the third largest 
provider was FT, through its 96.7% interest in its German-based 
subsidiary Info AG, which had a market share of less than 5%. All other 
providers of data network services in Germany depend on DT for access 
to DT's transmission infrastructure, and such access represents 50% to 
90% of their costs of doing business.
    Other means of delivering data through landline-based private 
networks, or through satellite-based telecommunications, are not fully 
adequate substitutes for FT's public data network in France or DT's 
public data network in Germany. FT and DT can be expected to continue 
to possess a dominant position in public data network services in their 
home countries, so long as they retain their legal or effective 
monopolies on transmission infrastructure.
4. Regulation and Opening of the French and German Markets
    The transaction between FT, DT and Sprint takes place within a 
context of significant regulatory changes in Europe. Regulation of 
telecommunications in Europe is carried out through a combination of 
European Union (``EU'') and national law. EU directives provide an 
overlay of requirements which all member states, including France and 
Germany, are obliged to transpose into national laws. Although EU 
authorities can intervene directly in some circumstances, such as 
enforcement of the competition provisions of the EU's governing 
treaties, for the most part telecommunications regulation is the 
responsibility of the authorities of the member states. In Germany, the 
Bundesministerium fur Post und Telekommunikation (Federal Ministry of 
Posts and Telecommunication) (``BMPT'') is the regulatory authority 
responsible for supervising the conduct of DT and granting licenses or 
otherwise determining conditions of entry for new providers of 
telecommunications services. BMPT also supervises the newly created 
federal agency in Germany that holds the government's ownership 
interest in DT. In France, the Direction Generale des Postes et 
Telecommunications (Directorate General of Posts and 
Telecommunications) (``DGPT'') is the regulatory authority, responsible 
for supervising the conduct of FT and granting licenses or otherwise 
determining conditions of entry for new providers of telecommunications 
services. The French government's ownership interest in FT is held by a 
separate government ministry.
    During the time that this transaction has been under investigation 
by the Department of Justice, regulatory developments in Europe have 
made it increasingly likely that the French and German 
telecommunications markets will be opened to competition within the 
next few years. The European Union, through its Commission and Council 
of Ministers, has set January 1, 1998 as the target date by which most 
member states, including France and Germany, are expected to fully 
``liberalize'' the existing monopolies on public voice 
telecommunications services and transmission infrastructure, abolishing 
all exclusive rights or prohibitions on competition. Voice services 
liberalization had already been scheduled for 1998, but the Council of 
Ministers' resolution to fully liberalize the infrastructure at the 
same time was announced, much more recently, in June 1995. Carrying out 
the political agreement of the Council, the Commission of the European 
Union (``European Commission'') adopted, on July 19, 1995, a draft 
directive that would mandate full liberalization of telecommunications 
infrastructure and voice services in most EU member states, including 
France and Germany, by 1998. Though the Council did not provide in its 
resolution for any partial liberalization of infrastructure at an 
earlier date, the European Commission's July 19 draft directive would 
also require EU member states to permit alternative infrastructure 
providers, such as electric, rail and water utilities, to begin using 
their networks in 1996 to carry all telecommunications services other 
than public switched voice. Although competitors would still need to 
make use of at least some of DT's and FT's infrastructure, owing to the 
much greater comprehensiveness of their networks, implementation of 
this directive would offer at least a partial infrastructure 
alternative to competitors and promote reductions in the prices for 
leased lines in France and Germany, which currently are several times 
higher than in the United States.
    To achieve the 1998 target for liberalization, however, many other 
specific directives, laws and regulations must still be developed and 
adopted both by EU bodies and the governments of the member states. 
This process is only now beginning at the EU level and in France and 
Germany. The changes to be adopted included not only the formal lifting 
of the legal monopolies, but also 

[[Page 44063]]
the establishment of conditions for licensing of competitors and the 
development of interconnection rights and requirements for the public 
switched networks of FT and DT. The EU has anticipated the necessary 
steps that will need to be taken and has outlined the principal 
measures, but neither the EU nor the German and French governments have 
reached a final resolution of the crucial regulatory issues 
accompanying liberalization. Mere lifting of the legal prohibitions on 
competition would not alone bring about real competition, since actual 
competitors must also be licensed to operate.
    The EU authorities have exercised a very significant role in 
bringing about telecommunications liberalization in Europe, but there 
are important limits on the scope of their authority. The decision 
whether to privatize the government-owned telecommunications carriers, 
and the pace at which this occurs, is wholly at the discretion of the 
member states. Moreover, the EU's powers to compel liberalization and 
protect competition relate to activities affecting commerce within or 
between the member states. The decision of whether and how to regulate 
the dealings of FT and DT with foreign telecommunications carriers 
outside the EU, including the terms on which operating agreements and 
leased lines are made available, has been left to the French and German 
authorities. It is not yet clear whether the EU's liberalization 
measures will confer any rights on providers from the United States and 
other countries outside the EU, or only on firms operating within the 
EU. The national governments at present are free to limit entry by such 
non-EU competitors, subject to the results of ongoing multilateral 
telecommunications trade negotiations.
C. The Competitive Effect of the Acquisition and Joint Venture

    The Complaint alleges that the acquisition of 20% of Sprint by FT 
and DT, and the formation of the joint venture between Sprint, FT and 
DT may substantially lessen competition in the provision of 
international telecommunications services between the United States and 
France and Germany and in the provision of seamless international 
telecommunications services. Sprint's and Joint Venture Co.'s 
competitors in those markets must have access to the French and German 
public switched networks, infrastructure and public data networks to 
provide competitive services, and access to these services and 
facilities is controlled by FT and DT. After this transaction is 
consummated, FT and DT would benefit, through their ownership 
interests, in the competitive success of the services offered by Joint 
Venture Co. and Sprint.
    FT and DT would therefore have increased incentives and the 
ability, using their monopolies and dominant positions in France and 
Germany respectively, to favor Sprint and Joint Venture Co. and to 
disfavor their United States competitors in international 
telecommunications services in various ways. This conduct would make 
competitors' offerings less attractive in quality and price than those 
of Sprint and Joint Venture Co., lessening the ability of Sprint and 
Joint Venture Co.'s rivals to compete effectively in these services. As 
a result of this anticompetitive conduct, the price of international 
telecommunications services to France and Germany available to United 
States consumers could be increased, and the quality lessened, relative 
to what United States consumers would pay and receive in the absence of 
this behavior.
    First, FT's and DT's acquisition of a total of 20% of Sprint, and 
their formation of the joint venture with Sprint, will increase their 
incentives to use their market power over the public switched networks, 
transmission infrastructure and public data networks in France and 
Germany to discriminate in favor of Sprint and Joint Venture Co. vis-a-
vis other United States international carriers, in the markets for 
international telecommunications services between the United States and 
France or Germany and for seamless international telecommunications 
services. Sprint could receive various forms of favorable treatment 
from FT and DT with respect to its international correspondent services 
between the United States and France and Germany. For example, FT or DT 
could favor Sprint or disfavor its competitors with respect to the 
prices, terms and conditions on which international services are 
provided, or the quality of the provision of those services, and could 
provide to Sprint advance information about planned changes to its 
network that is not made available to other providers. FT or DT could 
also alter protocols and network standards to exclude competitors' 
services. Such discrimination could place other United States 
international carriers at a competitive disadvantage to Sprint in 
international correspondent telecommunications services, enabling 
Sprint to charge more for its services or to provide a lower quality of 
service than it would otherwise be able to do without losing customers. 
It could also lessen the ability of the competitors of Sprint and Joint 
Venture Co. to develop and offer new seamless international 
telecommunications services to a compete effectively in these services. 
As a result of this anticompetitive conduct, the quality of seamless 
international telecommunications services available to United States 
consumers could be diminished, and the price increased, relative to 
what United States consumers would pay and receive in a competitive 
market.
    Second, FT and DT will have an incentive to favor Joint Venture Co. 
and Sprint over their competitors, particularly new entrants and 
providers of new services, by denying operating agreements to the 
competitors, or by offering such agreements only on discriminatory 
terms. In order to have international traffic terminate in France or 
Germany through the correspondent system, an international carrier must 
enter into an operating agreements with FT or DT, and FT and DT can 
choose which carriers receive those agreements. The correspondent 
system is the only way to send public switched voice traffic, which 
represents the great majority of all telecommunications traffic, to 
France or Germany today, because of the FT and DT public switched voice 
monopolies. If new entrants and providers of new services are refused 
operating agreements with FT and DT and cannot otherwise have their 
traffic delivered to France and Germany and terms competitive with the 
carriers that have agreements, that could prevent or inhibit the 
development of competition in the markets for U.S.-France and U.S.-
Germany international telecommunications services.
    Third, FT and DT will have an increased incentive and ability to 
direct their switched telecommunications traffic from France and 
Germany disproportionately to Sprint rather than other U.S. 
international carriers, either directly as part of the correspondent 
system, or outside that system through the Joint Venture Co. backbone 
network. Because U.S. international telecommunications carriers 
typically send more traffic to France and Germany than they receive, 
they must make net settlement payments to FT and DT for delivery of 
their switched traffic.\13\ Disproportionate return of 

[[Page 44064]]
incoming traffic from FT and DT to Sprint would increase the liability 
of Sprint's competitors to FT and DT for settlements paid on the net 
amounts of traffic sent and received between the U.S. and France or 
Germany, raising Sprint's competitors' costs of carrying such traffic. 
Because the settlement rates paid by FT and DT and the U.S. carriers to 
each other for delivering traffic are still well above the cost of 
delivery, notwithstanding decreases in recent years, this return 
traffic from France and Germany is of significant benefit to the 
carrier who receives it. The expectation of receiving a proportionate 
share of the return traffic has served to increase competition among 
the U.S. carriers for the traffic outbound from the U.S. This 
competition will be reduced to the extent that FT and DT are able to 
disproportionately return their traffic to Sprint. Moreover, to the 
extent that returning their traffic disproportionately to Sprint allows 
FT and DT to send traffic to the U.S. at a rate other than the 
settlement rate (which will still be the rate they receive from U.S. 
carriers for traffic sent to France or Germany) FT or DT will have an 
increased incentive to negotiate for higher settlement rates and resist 
efforts to lower accounting rates.

    \13\ The correspondent agreements governing switched services 
establish an ``accounting rate'' per minute of traffic, for each 
type of traffic sent over a particular international route. The 
carriers in each country pay half the accounting rate (the 
``settlement rate'') to their foreign correspondence for each minute 
of traffic completed. Settlement payments for outgoing traffic are 
offset by the settlement payments for incoming traffic. When there 
is an imbalance in the amount of outgoing and incoming traffic 
between carriers, the carrier with the most outgoing traffic makes a 
net settlement payment to its correspondent. In 1993, according to 
FCC data, the net outpayment of all U.S. international carriers to 
FT for IMTS calls between the U.S. and France was $28,913,657, and 
the net outpayment of all U.S. international carriers to DT for IMTS 
calls between the U.S. and Germany was $144,492,724. 1993 
International Telecommunications Data, International Traffic Data 
for All U.S. Points, Table A1.
    Today, United States carriers accept the same proportion of the 
total switched traffic from each of their correspondents in a 
foreign country as the proportion of total switched traffic to the 
correspondent that each of the United States carriers send. Federal 
Communications Commission policy supports this proportionate 
allocation of switched traffic, although the FCC has not adopted 
regulations governing proportionate allocation.
---------------------------------------------------------------------------

    Fourth, DT and FT will have an increased incentive and ability to 
cross-subsidize Joint Venture Co. and Sprint by providing revenues from 
the monopoly services or by shifting costs of Joint Venture Co. and 
Sprint to the monopoly services. In both France and Germany, over three 
quarters of the revenues of FT and DT are derived from services and 
facilities that are legally protected against competition. These 
monopoly activities can be used to cross-subsidize competitive 
services. Such cross-subsidization would facilitate a strategy of 
placing competitors of Joint Venture Co. and Sprint in a ``price 
squeeze'' by keeping prices for the monopoly inputs they need well 
above true economic costs, while simultaneously undercutting them on 
price in the competitive markets through Joint Venture Co. and Sprint, 
whose costs will have been artificially reduced. The result could be a 
substantial lessening of competition in both international 
telecommunications services and seamless international 
telecommunications services in the U.S.
    Fifth, FT's and DT's ownership interest in Sprint and Joint Venture 
Co. would increase FT's and DT's incentives to provide Sprint and Joint 
Venture Co. with confidential, competitively sensitive information that 
FT and DT obtain from other United States carriers and competitors 
through their correspondent relationships with FT and DT, or their 
arrangements to obtain interconnection with the French and German 
public switched networks or obtain transmission infrastructure from FT 
and DT. In order to use FT's and DT's correspondent switched and 
private line services and to negotiate terms of use, or to interconnect 
with FT and DT in France and Germany and obtain transmission 
infrastructure, United States international telecommunications 
providers must provide FT and DT various types of competitively 
sensitive information. This can include private line customer 
identities, service requirements, plans for the introduction of new 
services, changes in existing services, and future traffic projections. 
If FT or DT were to share this information with Sprint or Joint Venture 
Co., those firms could gain an anticompetitive advantage over their 
United States competitors. Disclosure of this competitively sensitive 
information to Sprint and Joint Venture Co. could substantially lessen 
competition in both international telecommunications services and in 
seamless international telecommunications services in the U.S. Allowing 
Sprint access to such competitively valuable information about its 
competitors would also increase the risk of price collusion.
(III)

Explanation of the Proposed Final Judgment

A. Prohibitions and Obligations

    Under the provisions of the Antitrust Procedures and Penalties Act, 
the proposed Final Judgment may only be entered if the Court finds that 
it is in the public interest. The United States has tentatively 
concluded that the proposed Final Judgment is in the public interest.
1. Overview of the Proposed Final Judgment
    Section 7 of the Clayton Act, 15 U.S.C. 18, prohibits an 
acquisition of stock or assets where ``the effect of such acquisition 
may be substantially to lessen competition, or to tend to create a 
monopoly.'' Thus, the United States has sought to address in the 
proposed Final Judgment the competitive effects on United States 
markets that would result from the consummation of the transaction 
between Sprint, FT and DT. The issue properly considered by the United 
States under Section 7 is how the creation of vertical relationships 
between United States providers of international telecommunications 
services and these foreign telecommunications monopolies could further 
lessen competition in markets within the scope of the United States 
antitrust laws.\14\

    \14\ In addition to the vertical issues presented by the 
affiliation between FT, DT, the joint venture and Sprint, the United 
States also considered in its investigation horizontal competitive 
issues involving Sprint and Infonet Services Corporation, which is 
one of Sprint's principal competitors in the provision of various 
types of domestic and international data telecommunications services 
in the United States. FT and DT, as of the time of entering into the 
Joint Venture Agreement and the Investment Agreement with Sprint, 
were the largest shareholders of Infonet Services Corporation and 
were represented on Infonet's Board of Directors. The United States 
was concerned that violations would occur of both Section 7 of the 
Clayton Act and Section 8 of the Clayton Act, which prohibits 
interlocking directorates, had FT and DT become the largest 
shareholders of both Sprint and Infonet, with representation on both 
companies' boards of directors. This horizontal issue has now been 
fully remedied, and so does not form a part of the terms of the 
proposed Final Judgment. On June 20, 1995, FT and DT entered into a 
separate agreement with Infonet, requiring FT and DT to sell a 
substantial part of their shareholdings back to Infonet by August 3, 
1995, and to fully divest the remainder of their shareholdings back 
to Infonet 45 days after the earlier of (1) the date as of which FT 
or DT acquire any of the securities of Sprint, or (2) six months 
after all governmental approvals necessary for the consummation of 
the investment in Sprint and the joint venture have been granted. 
Pursuant to the stipulation between Sprint and the United States 
entered on July 13, 1995, Sprint is prohibited from issuing any 
equity to be acquired by FT or DT, or acquiring an ownership 
interest in or contributing assets to the joint venture, until the 
initial divestiture of FT and DT shares in Infonet has been 
completed. The United States has been informed that as of the date 
of the filing of this Competitive Impact Statement, all but one of 
the several other shareholders of Infonet have completed repurchase 
of the initial divestiture of the FT and DT shares, but because a 
part of the shares included in the initial divestiture has not yet 
been sold, the initial divestiture has not yet been completed. The 
sale of the remaining shares in the initial divestiture is now 
scheduled to occur by the end of August 1995. Additionally, the 
stipulation requires Sprint and Joint Venture Co. to be maintained 
as separate and independent businesses from Infonet, with no 
transfer of proprietary business or financial information, pending 
completion of the full divestiture. Sprint is precluded by the 
stipulation from permitting any FT or DT directors to serve on its 
board if FT or DT directors of Infonet are still exercising voting 
rights, or if those directors remain on the Infonet board for more 
than 45 days after FT or DT have acquired any of Sprint's 
securities.

[[Page 44065]]

---------------------------------------------------------------------------

    This narrow question differs significantly from the issues relating 
to this transaction that are still under consideration by other United 
States and European authorities. Both the Federal Communications 
Commission (``FCC'') and the European Commission have separate pending 
investigations of this transaction, and the European Commission is also 
investigating the formation of the Atlas alliance between FT and DT. 
These authorities, based on their public statements, are expected to 
complete their investigations before the close of 1995. The FCC's 
review of this transaction, under the ``public interest'' mandate of 
the Communications Act of 1934, may involve broader issues of foreign 
market access and the appropriateness of permitting substantial 
investments in United States telecommunications carriers by foreign 
monopolists whose conduct already causes harm to United States 
consumers, subjects on which the FCC also has a general rulemaking 
procedure in progress.\15\ The European Commission's jurisdictional 
responsibilities differ from those of United States antitrust and 
regulatory authorities, being focused on commerce among and within EU 
member states. The European Commission has already indicated that it 
has serious concerns about the loss of actual or potential competition 
between FT and DT in Europe resulting from the formation of the Altas 
alliance, an issue that is outside the scope of United States antitrust 
review and so is not addressed by the relief in the proposed Final 
Judgment.\16\ Thus, the entry of this Final Judgment is not intended to 
affect the ability of the FCC or the European Commission to take 
additional measures they may find necessary to address the issues 
within their areas of responsibility.

    \15\ See Market Entry and Regulation of Foreign-affiliated 
Entities, IB Docket No. 95-22, FCC 95-53, Notice of Proposed 
Rulemaking (released February 17, 1995), and the Reply Comments of 
the United States Department of Justice, filed in this FCC 
rulemaking proceeding on May 12, 1995.
    \16\ On May 23, 1995, the European Commission sent a ``warning 
letter'' to FT and DT advising them of the intent of Commission 
staff to take a negative position with regard to the Atlas 
transaction and to propose to the Commission that the transaction be 
prohibited. The European Commission has expressed particular concern 
about the dominant positions of FT and DT in their home markets and 
the loss of competition in data telecommunications services. FT and 
DT have been given until September 15, 1995 to present proposals to 
change their transaction to meet the European Commission's 
competition concerns. If no satisfactory action is taken by that 
time, the next step in the European Commission's investigation would 
be to issue a formal ``statement of objections,'' the European 
equivalent of an antitrust complaint.3
    The proposed Final Judgment in this case has many features and 
provisions in common with the consent decree previously entered by this 
Court on September 29, 1994 in United States v. MCI Communications 
Corp., No. 94-1317 (TFH) (D.D.C.), and published in the Federal 
Register at 59 Fed. Reg. 33009 (June 27, 1994), following the United 
States' investigation of the strategic alliance between BT and MCI to 
form Concert. That transaction aimed to provide similar international 
telecommunications and enhanced telecommunications services, and also 
involved a 20% equity investment by a foreign telecommunications 
provider in a United States international carrier. There are, however, 
crucial differences between this transaction and the BT-MCI alliance. 
Although BT continued to have some market power in basic 
telecommunications services and facilities and control over local 
bottlenecks in the United Kingdom at the time it formed its alliance 
with MCI, all of its lines of business were already open to competition 
and BT actually faced facilities-based competition to some extent at 
all levels, from independent carriers and cable television companies. 
Moreover, since 1993 BT has ceased to be government-owned, so that it 
is independent from its government regulator in the United Kingdom. 
Here, in contrast, FT and DT retain legal monopolies over three-
quarters of all telecommunications business in France and Germany, as 
measured by revenues, and have market power over additional types of 
services such as public data networks that have already become 
competitive in the United Kingdom. FT and DT do not have the same 
degree of independent regulatory oversight of their conduct by national 
authorities as BT, because of their continuing government ownership. 
Accordingly, in this transaction it was necessary to impose more 
stringent conditions governing the relationship between FT and DT on 
the one hand, and Sprint and the joint venture on the other, 
particularly in the period before France and Germany fully liberalize 
their telecommunications markets pursuant to EU requirements, in order 
adequately to protect competition.
    The proposed Final Judgment reflects the differences between the 
French and German telecommunications markets and that in the United 
Kingdom by operating in two phases. The first phase, ``Phase I,'' is 
that period of time after the entry of this Final Judgment and before 
all of the conditions that must be met to commence Phase II have been 
satisfied. Essentially, Phase I of the proposed Final Judgment will be 
in effect until all prohibitions on competition have been removed, and 
actual competitors have been licensed, in France and Germany. The shift 
from Phase I to Phase II is assessed separately for France and for 
Germany, so that the development of a competitive market in one country 
will be taken into account notwithstanding delays in the other.
    Phase II begins for France, and for Germany, when the national 
government of that country has taken two key steps, as stated in 
Section V.Q. First, the government must have removed all of the legal 
prohibitions on (a) the construction, ownership or control of both 
domestic and international telecommunications facilities, and use of 
such facilities to provide any telecommunications or enhanced 
telecommunications services, and (b) the provision of public switched 
domestic and international voice services, by entities other than FT 
and DT and their affiliates. Second, the government must have issued 
one or more licenses or other necessary authorizations, to entities 
other than and unaffiliated with FT, DT, Sprint or Joint Venture Co., 
for all of the following: (a) The construction or ownership, control, 
of both (i) domestic telecommunications facilities to serve territory 
in which one-half or more of the national populations of France and 
Germany reside, and (ii) international telecommunications facilities 
capable of being used to provide a competitive facilities-based 
alternative, directly or indirectly, between France and Germany and the 
United States; and (b) the provision of public switched domestic long 
distance voice services, without any limitation on geographic scope or 
types of services offered, and international voice service between the 
United States and France and Germany. The phrase ``competitive 
facilities-based alternative,'' as used herein, signifies that the 
licensed competitors must have authority to construct or own a 
sufficiently large amount of international capacity that other 
providers would have a realistic alternative to the use of the 
international facilities of FT or DT, and is not satisfied by 
authorization to construct or own an insubstantial number of 
international circuits. The requirement herein that all legal 
prohibitions on the provision of services and facilities have been 
removed refers only to prohibitions on entities' ability to provide 
service and to construct, own 

[[Page 44066]]
and operate facilities. It is not intended to apply to the 
establishment of neutral conditions for the provision of service by the 
national governments of France or Germany, such as contributions to the 
funding of universal service or obligations to obtain a license.
    The substantive restrictions and requirements contained in Section 
II of the proposed Final Judgment continue throughout the entire term 
of the decree, which is five years from the commencement of Phase II in 
both France and Germany. The Section II restrictions are for the most 
part similar to those in the MCI decree, including transparency and 
confidentiality requirements, though in some respects they are broader, 
in particular with respect to open licensing of other United States 
competitors. Other restrictions, those contained in Section III, 
terminate at the onset of Phase II, separately for France and for 
Germany unless specifically stated otherwise. The Section III 
restrictions lasting through Phase I include limits on the scope of 
activities of Sprint and Joint Venture Co., and behavioral prohibitions 
applicable to Sprint and Joint Venture Co. These provisions are 
intended to foster competition in international telecommunications 
services and seamless services, by ensuring that Sprint and Joint 
Venture Co. do not receive various types of advantages over competitors 
from their association with the FT and DT monopolies.
    Generally speaking, during Phase II the proposed Final Judgment 
relies to a greater extent on enforcement by national regulatory 
authorities in Europe, the EU itself, and the FCC in the United States 
to protect competition, while during Phase I the proposed Final 
Judgment provides for additional types of injunctive relief to ensure 
that Sprint and Joint Venture Co. do not benefit from anticompetitive 
conduct by FT and DT. This distinction is reasonable in the 
circumstances of this transaction, because there is considerably 
greater potential for competitive abuses to occur in the period while 
competitors have no legal alternative to using FT's and DT's facilities 
and services, and before the EU and the French and German governments 
finish implementing their program of regulatory reform, which is 
necessary in order to ensure nondiscriminatory licensing and 
interconnection for competitors and provision of services by dominant 
carriers on an open and nondiscriminatory basis. Although the proposed 
Final Judgment does not specifically reference all of the directives 
and measures envisioned by the European authorities, an underlying 
assumption is that these authorities will carry out their publicly 
announced intention of having all the key regulatory measures needed 
for development of effective competition in place by the time full 
liberalization is to take effect in 1998.
    The various requirements and restrictions of this proposed Final 
Judgment, in combination, will substantially diminish the risk of abuse 
of FT and DT's market power to discriminate or otherwise afford 
anticompetitive advantages to Sprint and Joint Venture Co.\17\ They 
will do so by making discrimination, disproportionate return of traffic 
and cross-subsidization easier to detect and prevent, by precluding the 
misuse of confidential information obtained by FT and DT from Sprint's 
and Joint Venture Co.'s competitors, by precluding Sprint and Joint 
Venture Co. from benefiting by delays in licensing of competitors or 
refusal to license competitors by the French and German governments, by 
ensuring that Sprint and Joint Venture Co. are not the exclusive 
recipients of operating agreements from FT or DT for any services, and 
by ensuring that access to the public switched networks and public data 
networks in France and Germany is not impaired by adoption of 
proprietary or nonstandard protocols. The object of these substantive 
terms is to ensure that Sprint, as the result of its direct affiliation 
with FT and DT or its position as the exclusive distributor of Joint 
Venture Co. services in the United States, as well as Joint Venture Co. 
itself, are not given an advantage over their competitors in the United 
States to the detriment of competition or consumers.

    \17\ Joint Venture Co. is broadly defined in Sections V.A and 
V.O to ensure that the entire joint venture will be subject to the 
Final Judgment, regardless of the forms that it may take or 
restructuring that may occur.
---------------------------------------------------------------------------

    Several key terms are employed throughout the substantive 
obligations and restrictions of Sections II and III of the Final 
Judgment, defining the scope of these provisions. ``Telecommunications 
service'' (as defined in Section V.U) includes ordinary switched voice 
telephony and private circuits as well as conveyance (including 
transmission, switching and receiving) of data and video information, 
and signaling, translation and conversion in the network. These basic 
telecommunications services are the bulk of existing 
telecommunications, and are licensed and regulated to some degree in 
the United States and in France and Germany, although not in the same 
manner in each country. There are relatively few major providers of 
these services in the United States, and in France and Germany FT and 
DT remain the monopoly or the dominant providers of most of these 
services. In contrast, an ``enhanced telecommunications service'' (as 
defined in Section V.H), uses telecommunications services as a 
foundation to provide various advanced and intelligent applications of 
additional value to users. Enhanced telecommunications services are 
subject to little or no regulation in the United States, and face 
considerably less regulation than basic services in France and Germany, 
with few if any legal restrictions on entry.\18\ The number of 
providers of enhanced telecommunications services is often greater than 
for basic telecommunications services, although all such providers must 
have access to basic telecommunications services, including network 
interconnection and transmission facilities, in order to do 
business.\19\

    \18\ The definitions of ``telecommunications services'' and 
``enhanced telecommunications services'' in the Final Judgment are 
based on the distinction between basic services and enhanced 
services recognized by the FCC, as well as similar concepts in EU 
law and in France and Germany, where ``value-added services'' are 
referred to in a sense similar to enhanced services. The definitions 
do not duplicate those used by any of the national regulatory 
authorities, which differ somewhat in terminology, but they 
incorporate as much as possible the underlying concepts, while 
ensuring consistent treatment within the context of this judgment 
for services offered in the United States, France and Germany.
    \19\ If an activity is a ``telecommunications service'' as 
defined in the Final Judgment, it remains so when it is offered or 
bundled with enhanced services or other equipment, facilities, or 
services, or if it is called a ``package of facilities'' or 
something other than a telecommunications service.
---------------------------------------------------------------------------

    ``FT or DT Products and Services'' (as defined in Section V.L) are 
also referred to throughout the Final Judgment. This term encompasses 
any of an enumerated list of telecommunications and enhanced 
telecommunications services or facilities in France or Germany, or 
between the United States and France or the United States and Germany, 
that are provided by FT or DT. These services are correspondent 
services,\20\ dedicated or switched transit services, leased lines, 
international half circuits between the United States and France and 
the United States and Germany,\21\ and interconnection to the FT and DT 
public 

[[Page 44067]]
switched telephone networks (including Integrated Services Digital 
Network interconnection). All of the services covered by this term are 
ones over which FT and DT continue to exercise market power in their 
home countries, and many of the services described as ``FT or DT 
Products and Services'' are those within the scope of FT's and DT's 
legal monopolies, but the list of FT or DT Products and Services is not 
limited to services or facilities that are reserved exclusively to FT 
or DT under the laws of France or Germany.

    \20\ Correspondent services, under this proposed Final Judgment, 
include not only the standard switched IDDD international voice 
call, but also other services such as Virtual Private Networks 
offered on a correspondent basis.
    \21\ Leased lines and international half-circuits may be 
excluded from the list by mutual agreement of the United States and 
the defendants if they concur that effective competition exists to 
such facilities provided by DT or FT.
    One significant category of services over which FT and DT continue 
to have market power in their home countries, public data networks, is 
not included in the list of FT or DT Products and Services. Because 
data networks operate in significantly different ways from the public 
voice networks, and face some actual competition in France and Germany, 
the competitive risks arising from this transaction due to FT's and 
DT's market power in data services differed from the competitive risks 
associated with FT's and DT's provision of correspondent services, 
transit services, leased lines or connection to the French and German 
public switched networks. Several specific provisions of the proposed 
Final Judgment do, however, place restrictions and obligations on the 
relationship of the joint venture and Sprint with FT's and DT's public 
data networks in their home countries, in order to limit risks of abuse 
of FT's and DT's market power in this area. Moreover, the most 
important components of the public data networks, the leased lines, are 
included in the definition of FT or DT Products and Services.
    Although the proposed Final Judgment generally makes no distinction 
between FT, DT, and their Atlas alliance, but treats them all together 
so as to ensure that Atlas is not used as a vehicle to circumvent the 
decree, the definition of FT or DT Products and Services does not 
include enhanced correspondent services that Atlas provides on its own, 
rather than by reselling or acting as a sales agent for FT or DT, 
unless the enhanced correspondent services involve interconnection to 
the public data networks. This limited exception was intended to 
facilitate the development of enhanced services through Atlas, and not 
to permit FT or DT simply to transfer their existing correspondent 
activities into Atlas to escape the obligations of the proposed Final 
Judgment.
2. Restrictions in Effect for the Term of the Decree
    Section II contains substantive restrictions and obligations which 
continue throughout the full duration of the decree. These include 
transparency requirements (Section II.A), confidentiality requirements 
(Section II.B.), and limitations on the ability of Sprint and Joint 
Venture Co. to offer international services involving France or 
Germany, or provide facilities to FT or DT for such services, if other 
United States international telecommunications providers are not 
permitted to provide the same services (Section II.C).
    a. Transparency Requiremnts. Section II.A. forbids Sprint or Joint 
Venture Co. from offering, supplying, distributing, or otherwise 
providing any telecommunications or enhanced telecommunications service 
that makes use of telecommunications services provided by FT in France 
or between the United States and France, or DT in Germany or between 
the United States and Germany, unless Sprint or Joint Venture Co. 
disclose certain types of information. Because these transparency 
requirements may be affected by changes in regulation or other 
circumstances, Section II.A provides the United States with the ability 
to waive these requirements in whole or in part.
    Pursuant to Section V.F., Sprint and Joint Venture Co. will provide 
the information to the Department of Justice, which may then disclose 
the information to any United States international telecommunications 
provider that holds or has applied for a license, from either the FCC, 
the French DGPT or the German BMPT, to provide international 
telecommunications services between the United States and either France 
or Germany, or who actually provides international telecommunications 
services between the United States and either France or Germany, for 
services where no license is required. This will enable the principal 
competitors of Sprint and Joint Venture Co. to monitor whether either 
of these companies is receiving more favorable treatment from either FT 
or DT than competitors receive, and would provide them with evidence 
that could be used to make a complaint to any governmental authorities 
in the United States or France or Germany. In particular, this 
information could be used by competitors to identify violations of the 
Phase I restrictions of the proposed Final Judgment to the Department 
of Justice while those provisions remain in effect, and the Department 
of Justice could also use the information to detect violations on its 
own initiative.
    ``United States international telecommunications provider,'' as 
defined in Section V.W., includes subsidiaries and affiliates of such 
providers, as well as entities with which a United States international 
telecommunications provider is affiliated, where a 10% or greater 
equity interest exists, so that international joint ventures and 
foreign strategic allies with equity investments in a U.S. provider, as 
in the BT-MCI Concert relationship, can qualify for access to the 
information.
    Disclosure by the Department of Justice to any provider described 
above will be made only upon agreement by the provider, in the form 
prescribed in the Stipulation entered into by Sprint and Joint Venture 
Co. and the United States on July 13, 1995, not to use such non-public 
information for commercial purposes and not to disclose such non-public 
information to any other person, apart from governmental authorities in 
the United States, France or Germany. The term ``governmental 
authorities'' is used broadly and includes independent agencies. 
Entities receiving this information from the Department of Justice 
would be required to sign a confidentiality agreement with the 
Department, obligating them not to disclose non-public information to 
any persons other than governmental authorities. The stipulation 
between the defendants and the United States describes the form of a 
confidentiality agreement in more detail. This confidentiality 
provision was adopted to prevent wider dissemination of defendants' 
non-public business information than is necessary to detect and prevent 
anticompetitive conduct.
    Seven categories of information must be disclosed pursuant to the 
transparency provisions in Section II.A. Three of the categories apply 
to Joint Venture Co., two apply to Sprint, and two apply to both 
companies.
    Joint Venture Co. will make extensive use of interconnection with 
the public switched telephone networks of FT and DT in France and 
Germany to provide telecommunications and enhanced telecommunications 
services, as well as obtaining leased lines and international half-
circuits from FT and DT for Joint Venture Co.'s backbone network. These 
relationships make it necessary to impose disclosure obligations on 
Joint Venture Co. in the following areas.
    First, under Section II.A.1, Joint Venture Co. must disclose the 
prices, terms and conditions, including applicable discounts, on which 
FT or DT Projects and Services are provided in France or Germany to 
Joint Venture 

[[Page 44068]]
Co. pursuant to interconnection agreements. Interconnection agreements 
are specific arrangement (see Section V.N) by which other service 
providers in France and in Germany receive rights to connect their 
systems to FT's or DT's public switched telephone networks and have FT 
and DT complete delivery of traffic, on terms that may differ from 
those available to retail customers. Section II.A.1 will compel Joint 
Venture Co. to disclose to competitors that actual prices FT and DT 
charges it for interconnection, as well as non-price terms. Such 
publication is not required under current French or German law, which 
permits FT and DT to enter into individual commercial negotiations with 
their competitors for interconnection and not disclose the terms to 
other providers, thereby increasing opportunities for discrimination.
    Second, Section II.A.2 imposes similar disclosure obligations on 
Joint Venture Co. for the prices, terms and conditions, including any 
discounts, of any other FT or DT Products and Services it obtains in 
France from FT or in Germany from DT for use in providing 
telecommunications or enhanced telecommunications services between the 
United States and France or the United States and Germany. Among the 
most important FT or DT Products and Services covered by this provision 
are the leased lines and international half-circuits that would be used 
in Joint Venture Co.'s own backbone network for seamless services. 
Although some of these types of information are already disclosed by FT 
and DT in their retail tariffs pursuant to French and German 
regulation, Section II.A.2 ensures comprehensive transparency to 
prevent discrimination, including disclosure of any commercially 
negotiated off-tariff discounts or special service arrangements, and 
disclosure of arrangements for international facilities, which are 
subject to less regulatory oversight than are domestic services in 
France and Germany. This provision also applies to the terms on which 
FT and DT Products and Services are provided to customers in France and 
Germany in conjunction with Joint Venture Co. services when FT or DT is 
acting as the distributor for Joint Venture Co., thus facilitating 
detection of discrimination in bundling of services.
    Third, Section II.A.4 requires Joint Venture Co. to provide 
additional information about the specific FT or DT Products and 
Services that it receives from FT in France and DT in Germany for use 
by Joint Venture Co. to supply telecommunications or enhanced 
telecommunications services between the United States and France or 
Germany, as well as the services FT provides directly to customers in 
France and the services DT provides directly to customers in Germany as 
the distributor for Joint Venture Co. Joint Venture Co. is required to 
disclose (i) the types of circuits, including their capacity, and other 
telecommunications services provided, (ii) information concerning the 
actual average times between order and delivery of circuits, and (iii) 
the number of outages and actual average times between fault report and 
restoration for various categories of circuits. These types of 
information are not otherwise disclosed under existing regulations in 
France or Germany, which only provide for disclosure of much more 
general and non-provider specific information concerning service 
quality. The mandated disclosures here are important to the detection 
of various types of discrimination involving provisioning and quality 
of services. Where Joint Venture Co. has to disclose particular 
telecommunications services provided, it is required to identify the 
services and provide reasonable detail about them (if not already 
published). However, if a product or service is sold as a unit, 
separate underlying facilities need only be disclosed to the extent 
necessary to identify the product or service and the means of 
interconnection. Joint Venture Co. is not required to identify 
individual customers or the locations of circuits and services 
dedicated to particular customers.
    Sprint's relationship with FT and DT in the provision of 
international telecommunications services will be less complex than 
Joint Venture Co.'s, because of Sprint's agreements not to compete with 
Joint Venture Co. and not to compete with FT and DT in their home 
countries, France and Germany. Spring will continue to provide 
international correspondent switched services and private line services 
together with FT and DT. To ensure greater transparency in Sprint's 
dealings with FT and DT, Section II.A contains two sets of disclosure 
obligations specifically applicable to Sprint.
    Section II.A.3 applies to any international switched 
telecommunications or enhanced telecommunications services provided by 
Sprint and FT or by Sprint and DT on a correspondent basis between the 
United States and France or between the United States and Germany. It 
requires Sprint to disclose both the accounting and settlement rates, 
and other terms and conditions, applicable to any of these services, 
including the methodology by which proportionate return of 
international traffic is calculated. When there is no specific 
agreement between Sprint and FT or between Sprint and DT setting forth 
this information, Sprint must state the rates, terms and conditions on 
which the service is actually provided. In addition, where different 
accounting rates exist for types of services that FT or DT combine for 
purposes of calculating the proportionate return due to United States 
international telecommunications providers, Sprint must disclose its 
own minutes of traffic in each separate accounting rate category so 
that the other United States providers can determine whether they are 
being sent the appropriate shares of traffic from FT or DT, unless they 
already receive the necessary data (such as total traffic volumes in 
each rate category). This latter obligation addresses a particular type 
of possible discrimination in international services, known as 
``grooming,'' by which a foreign carrier can favor particular United 
States correspondents with traffic of superior value while appearing to 
allocate minutes of traffic on a proportionate basis. Today some of the 
types of information covered by Section II.A.3, such as agreed-upon 
accounting rates, are supplied to the FCC and are published, but other 
types of information, including proportionate return data, are only 
provided at the discretion of FT and DT pursuant to voluntary 
arrangements with U.S. Carriers. Where information has already been 
made available to competitors, Section II.A.3 of the Final Judgment 
does not require Sprint to provide it to the Department of Justice. 
Section III.E, however, contains additional and more extensive 
obligations concerning disclosure of information on proportionate 
return traffic that are in effect during Phase I.
     Section II.A.5 requires Sprint to provide information about the 
United States-France and the United States-Germany international 
circuits it provides jointly with either FT or DT. Sprint must disclose 
for international private circuits (i) the actual average times between 
order and delivery by FT or DT, and (ii) the actual average time 
intervals between fault report and restoration in specific areas of the 
international facility and the overseas network. This information is 
similar to types of information Joint Venture Co. provides under 
Section II.A.4 and serves similar purposes. Sprint is also required, 
for circuits used to provide international switched services on a 
correspondent basis between the United 

[[Page 44069]]
States and France and between the United States and Germany, to 
identify (i) average numbers of circuit equivalents available to Sprint 
during the busy hour and (ii) the percentage of calls that failed to 
complete during the busy hour. None of the information disclosed under 
Section II.A.5 is made public today under existing regulation, and this 
information would have substantial value in facilitating detection of 
discrimination in the provision and quality of services.
    Two types of information must be disclosed by both Joint Venture 
Co. and Sprint, as either company might be the beneficiary of 
discrimination in these areas. First, under Section II.A.6 Sprint and 
Joint Venture Co. are required to disclose information that either 
entity receives from FT or DT about any material change or decision 
relating to the design of, technical standards used in, or points of 
interconnection to the FT or DT public switched telephone networks that 
would materially affect the terms or conditions on which Sprint, Joint 
Venture Co. or any other person is able to have access to, or 
interconnect with these networks for telecommunications or enhanced 
telecommunications services within France or Germany or between the 
United States and France or the United States and Germany. Disclosure 
of information of this nature is important to ensure that Joint Venture 
Co. and Sprint, due to their affiliation with FT and DT, are not given 
commercial advantages over competitors through advance notice of 
network changes by FT and DT.
    Second, under Section II.A.7, Sprint and Joint Venture Co. are 
required to disclose any discounts or more favorable terms offered by 
FT or DT to their customers, for FT or DT Products and Services, that 
are conditioned on Sprint or Joint Venture Co. being selected by the 
customers as the United States provider of a telecommunications or 
enhanced telecommunications service. This provision is closely related 
to section III.D.2, which prohibits during Phase I any such bundling or 
tying arrangements, but it continues for the duration of the decree to 
ensure that even after competition has been authorized, any such 
arrangements by FT and DT will have to be disclosed, permitting 
complaints to be made to regulatory authorities.
    Under Section II.A, Sprint and Joint Venture Co. are required to 
disclose intellectual property or proprietary information only if it is 
one of the types of information expressly required to be disclosed by 
any of the transparency obligations, or if it is necessary for United 
States international telecommunications providers to interconnect with 
the public switched telephone networks of FT or DT, or is necessary for 
United States international telecommunications providers to use FT's or 
DT's international telecommunications or enhanced telecommunications 
correspondent services. Sprint and Joint Venture Co., as well as FT and 
DT indirectly, are thus protected against overly broad disclosure of 
such valuable commercial information.
    b. Confidentiality Requirements. Section II.B of the proposed Final 
Judgment constrains the ability of Sprint and Joint Venture Co. to 
receive, or seek to receive, from FT or DT (including FT or DT-
appointed directors on the board of Sprint), various types of 
confidential information that FT or DT obtain from Sprint and Joint 
Venture Co.'s United States competitors. Existing regulatory 
requirements do not adequately protect any of this information from 
disclosure.
    Under Section II.B.1 Sprint and Joint Venture Co. cannot receive 
information from FT or DT that other United States international 
telecommunications providers identify as proprietary and maintain as 
confidential, but that has been obtained by FT or DT as the result of 
their provision of interconnection or other telecommunications services 
to U.S. providers in France or Germany. In order to obtain 
interconnection with FT or DT, other providers would have to provide FT 
and DT with detailed information about their planned services and 
interconnection needs. As interconnection needs change over time, FT 
and DT would receive more confidential information. FT and DT may also 
learn the identities and service needs of particular customers of their 
competitors who need to have private circuits interconnected with FT or 
DT. Of course, there is no alternative to interconnection with either 
FT or DT because of their monopolies in France and Germany, 
respectively, and even after these monopolies are lifted, competitors 
will still need to interconnect with FT and DT to some extent because 
of their dominant market positions and the ubiquity of their networks 
in France and Germany.
    Section II.B.2 similarly forbids Sprint and Joint Venture Co. from 
receiving from FT or DT confidential, non-public information that FT or 
DT obtain from other United States international telecommunications 
providers through correspondent relationships. United States 
international telecommunications providers have no alternative at 
present to using FT or DT for the origination and termination of 
international correspondent traffic in France and Germany, and even 
after current monoploy restrictions are lifted, they are likely to 
remain at least partly dependent on FT and DT for delivery of much 
correspondent traffic. A limited exception is provided to allow Sprint 
to obtain certain types of aggregate information it may need to comply 
with its transparency obligations under Sections II.A.3(ii) and II.A.5, 
but in no circumstances may Sprint use this exception to receive 
individual information about other providers that is otherwise 
prohibited by this section.
    Finally, Section II.B.3 addresses a specific competitive risk in 
the context of international correspondent relationships, by 
prohibiting Sprint or Joint Venture Co. from seeking or accepting from 
FT or DT any non-public information about the future prices or pricing 
plans of any competitor of Sprint in the provision of international 
telecommunications services between the United States and France or the 
United States and Germany. FT and DT and their United States 
correspondents, in the course of accounting rate negotiations, exchange 
considerable information including business plans and traffic 
projections. Section II.B.3 addresses the substantial risk of violation 
of Section 1 of the Sherman Act that would arise if FT or DT were to 
obtain non-public pricing information from Sprint's competitors once FT 
and DT become Sprint's largest owners, by precluding any sharing of 
price information through FT or DT. Risks of price collusion, tacit or 
explicit, are considerable in an industry with a small number of large 
providers offering similar types of services.
    Finally, Section II.B.3 safeguards against the circumvention of the 
above prohibitions by prohibiting Sprint and Joint Venture Co. from 
employing personnel who either (i) are also employed by FT or DT and 
have access to the types of information that Sprint and Joint Venture 
Co. are not permitted to receive from FT or DT under Section II.B, or 
(ii) have been employed by FT or DT within the preceding six months if 
during that time, they received any of the types of information that 
Sprint and Joint Venture Co. are not permitted to receive under Section 
II.B.
    c. Open Licensing. Continued government ownership of FT and DT 
creates risks that other United States international telecommunications 
providers may not receive licenses or other authorizations for the 
French and German governments that are needed to provide international 
telecommunications and enhanced telecommunications services, or may 

[[Page 44070]]
have their applications substantially delayed. This is a particular 
concern in the emerging areas of seamless services, where a provider 
needs to able to offer a service on an end-to-end basis in both the 
United States and France or Germany. Conversely, Sprint and Joint 
Venture Co. may have more advantageous opportunities to obtain licenses 
in France and Germany due to their affiliation with FT or DT, or to 
provide seamless services using the licenses of their monopoly 
partners. Because the entire area of public voice services has not yet 
been opened to competition in France and Germany, and other new 
services may also be developed, it is not possible to identify each 
service for which this type of concern may arise. International voice 
resale services, however, clearly come within the area of potential 
concern. Competition in international telecommunications and enhanced 
telecommunications services between the United States and France and 
Germany, including seamless services, would be adversely affected if 
Sprint and Joint Venture Co. could obtain rights to provide any 
services that are not available to other U.S. firms. Exclusive 
licensing arrangements could also enable FT and DT to divert 
international traffic from their home countries to the United States 
disproportionately to Sprint through the Joint Venture Co's backbone 
network, or other facilities supplied by Sprint.
    Accordingly, Section II.C precludes Sprint and Joint Venture Co. 
from offering, or providing facilities to FT or DT enabling them to 
offer, any particular international telecommunications or enhanced 
telecommunications service between the United States or France or 
Germany, unless one of the following three conditions, designed to 
ensure competitive entry, is met. First, the service may be offered if 
no license is required in France, or in Germany, to offer the service. 
Second, if a ``class license,'' a form of general regulatory 
authorization that does not require individual application, is 
required, the service may be offered if such a class license is in 
effect in France and in Germany for other United States international 
telecommunications providers not affiliated with FT, DT, Sprint or 
Joint Venture Co. Third, if an individual license is required to offer 
a service in France or in Germany, established licensing procedures 
must be in effect as of the time of offering of the service by which 
other United States international telecommunications providers are also 
able to secure a license, and either (i) one or more United States 
international telecommunications providers other then, and unaffiliated 
with, FT, DT, Sprint or Joint Venture Co. must already have a license 
in France and in Germany, or (ii) if Sprint, Joint Venture Co., FT or 
DT is the first to seek a license, other United States international 
telecommunications providers are able to secure a license in France and 
in Germany within a reasonable time, in no event longer than it took 
Sprint, Joint Venture Co, FT or DT to obtain its license (unless the 
additional time required is due to delay caused by the applicant). 
These requirements are both service-specific and country-specific, so 
that Sprint and Joint Venture Co. would not be precluded from providing 
a service for which open licensing had been established merely because 
some other type of service remained closed, nor would they be precluded 
from providing a service involving one country that had open licensing 
merely because the other country had not satisfied any of the three 
conditions. Because government ownership of FT and DT is likely to 
continue even after the conditions for Phase II of the proposed Final 
Judgment have been satisfied, it is necessary to have this provision 
remain in effect for the entire duration of the decree.
    Section II.C does not apply to existing correspondent services 
provided pursuant to bilateral agreements with FT or DT that have also 
been made available to other United States international 
telecommunications providers. It is not necessary for a U.S. carrier to 
have a license in France or Germany to offer voice services, or other 
types of telecommunications service, from the United States to France 
or Germany on a correspondent basis using FT or DT, although it is 
necessary to have an operating agreement with FT or DT to do so.
3. Restrictions Lasting Through Phase I
    Section III contains the additional restrictions and obligations 
that are in effect through Phase I of the decree, prior to the removal 
of all prohibitions on facilities-based telecommunications competition 
in France and Germany and the licensing of competitors in those 
countries providing a substantial competitive alternative to FT and DT. 
These restrictions are necessary now to protect competition, due to the 
monopolies FT and DT continue to hold in their home countries combined 
with their government ownership, and the significant limitations on 
effective protection of competitors and consumers under the current 
French and German regulatory regimes. These restrictions in Section III 
are expected to become less necessary once competition has been 
introduced in France and Germany, which should occur concurrently with 
the regulatory reform program being undertaken by the EU authorities. 
At that point, competitors will be less vulnerable to abuses of market 
power by FT and DT because of the alternatives available for 
transmission infrastructure, and should be better protected by European 
regulatory requirements to the extent that they continue to depend on 
the services and facilities of FT and DT.
    The Section III restrictions include: (i) Limitations on the 
ability of Sprint or Joint Venture Co. to acquire ownership interests 
in or control over certain types of facilities now owned or controlled 
by FT or DT (Section III. A-B); (ii) a prohibition on Sprint or Joint 
Venture Co. providing FT or DT Products and Services on an exclusive 
basis (III.C); (iii) a prohibition on Sprint or Joint Venture Co. 
obtaining FT or DT Products and Services on a discriminatory basis 
(III.D); (iv) prohibitions on Sprint's acceptance of correspondent 
telecommunications traffic on a disproportionate basis (III.E), or 
having any exclusive operating agreements with FT or DT (III.G); (v) 
prohibitions on cross-subsidization of Sprint or Joint Venture Co. by 
FT and DT (III.F), and (vi) requirements that Sprint and Joint Venture 
Co. not provide telecommunications or enhanced telecommunications 
services using FT or DT Products and Services or public data networks, 
if FT or DT have established proprietary or nonstandardized protocols 
or interfaces and have failed to continue to provide other competitors 
with access to those services and networks on a standardized basis 
(III.H-I).
    a. Limitations on Facilities Ownership. Section III.A of the 
proposed Final Judgment prohibits Sprint and Joint Venture Co. from 
acquiring ownership interests in or control over (i) any facilities in 
France or Germany that are legally reserved to FT or DT (which would 
include, for example, the public switched networks and transmission 
infrastructure), or (ii) international half circuits terminating in 
France or Germany that are used for telecommunications services between 
the United States and France or Germany. If other providers 
unaffiliated with FT, DT, Sprint or Joint Venture Co. actually own and 
control such international half-circuits, Sprint and Joint Venture Co. 
can also acquire ownership and control of international 

[[Page 44071]]
half-circuits, but only to the extent that and in no greater quantity 
than the aggregate amount of such half-circuits that other providers 
have. The limitation on ownership or control of international half-
circuits can be lifted, if the United States and defendants agree that 
meaningful competition exists to the half-circuits provided by FT or 
DT. At present, although the international half-circuits terminating 
within France and Germany are strictly speaking not within the scope of 
the domestic monopolies, no providers other than FT and DT have been 
authorized to operate such facilities, and no meaningful competition to 
FT's and DT's international half-circuits exists. Precluding Sprint and 
the joint venture from acquiring ownership interests in, or any form of 
managerial or operational control over, these types of facilities will 
help to reinforce the effectiveness of the behavioral prohibitions and 
obligations and ensure that misconduct is more readily detected.
    In addition, Section III.B of the proposed Final Judgment prohibits 
Sprint and Joint Venture Co. from acquiring ownership interests in or 
control over the Public Data Networks in France and Germany, which are 
now owned and controlled by FT and DT, respectively, either directly or 
through subsidiaries (the French public data network is operated by a 
company called Transpac, almost entirely owned by FT). While the Public 
Data Networks are not subject to any legal monopoly rights and face 
limited competition, the unmatched size and ubiquity of these networks 
in France and Germany give FT and DT effective market power in the 
provision of data telecommunications services in their home countries. 
Precluding Sprint or the joint venture from acquiring ownership 
interests in, or any operational or managerial control over, these 
Public Data Networks will help to ensure that the behavioral 
restrictions pertaining to those networks remain enforceable, and that 
Joint Venture Co. is not placed in a dominant position in providing 
data telecommunications services to and from France and Germany.
    b. Non-Exclusive Distribution. Pursuant to Section III.C of the 
proposed Final Judgment, Sprint and Joint Venture Co. are prohibited 
from providing FT or DT Products and Services, except pursuant to a 
sales agency or resale agreement, and then only if the sales agency or 
resale agreements are non-exclusive. Non-exclusivity will be assessed 
not only on the facial terms of the agreement but also on the actual 
practice of FT and DT. Moreover, FT or DT Products and Services must 
continue to be available directly to other United States international 
telecommunications providers directly from FT and DT on a 
nondiscriminatory basis. The term ``nondiscriminatory'' in Section 
III.C will be construed in the same manner as the more specific 
nondiscrimination provisions of Section III.D. Section III.C ensures 
that Sprint and Joint Venture Co. cannot through their association with 
FT and DT obtain any exclusive rights or special advantages in 
marketing or providing any of the FT or DT Products and Services, which 
are needed by other United States international telecommunications 
providers to offer their own services, and over which FT and DT 
continue to have monopoly rights or market power.
    c. Non-Discrimination Provisions. There are two antidiscrimination 
provisions of the proposed Final Judgment in Section III.D. The first, 
Section III.D.1, prohibits Sprint or Joint Venture Co. from purchasing, 
acquiring or accepting FT or DT Products and Services on terms which 
are more favorable to Sprint or Joint Venture Co. than are made 
available to other United States international telecommunications 
providers.\22\ This section is designed to prevent FT or DT from using 
their monopolies and market power in France and Germany to favor Sprint 
and Joint Venture Co. in the provision of products and services that 
other providers must also have to compete effectively. In order to 
ensure clarity and specificity, and aid enforcement, Section III.D.1 
specifies various types of conduct as to which discrimination is not 
permitted, including (i) prices of products and services, (ii) volume 
and other discounts, and material differences in non-price terms of 
service, (iii) material differences in the type and quality of service, 
including leased lines and international half-circuits, (iv) 
interconnection with the FT and DT public switched telephone networks 
and number availability, and (v) the terms of operating agreements for 
correspondent services and connection of international half-circuits. 
If defendants seek to rebut a claim of discrimination pursuant to this 
section by establishing the existence of a cost justification, they 
have the burden of proof, and must make available to the United States 
all of the information that was available to them, directly or 
indirectly from FT or DT.

    \22\ The proposed Final Judgment provides that for 
discrimination to exist, the United States international 
telecommunications providers who receive less favorable treatment 
must be ``similarly situated'' to Sprint and Joint Venture Co. For 
the purposes of this paragraph ``similarly situated'' means that the 
provider is generally comparable to Sprint and Joint Venture Co. 
with respect to the volume and type of service acquired from FT or 
DT, provided that volume and type are relevant distinctions in 
establishing service conditions.
---------------------------------------------------------------------------

    Section III.D.2 prohibits Sprint and Joint Venture Co. from 
benefiting from any discount or more favorable term offered by FT or DT 
to any customer for FT or DT Products and Services, that is conditioned 
on Sprint or Joint Venture Co. being selected as the United States 
provider of a telecommunications or enhanced telecommunications 
service. This provision is designed to prevent Sprint and Joint Venture 
Co. from receiving benefits of discrimination indirectly, through 
special deals or arrangements that FT and DT offer to customers in 
order to induce them to obtain services from Sprint or Joint Venture 
Co., rather than through more favorable terms offered directly to 
Sprint or Joint Venture Co. addressed by III.D.1. Thus, this provision 
encompasses forms of discrimination in addition to those specified in 
III.D.1, including activities involving the sale marketing, and 
distribution of Sprint and Joint Venture Co. services by FT and DT. Any 
offering of such conditional deals by FT or DT would be considered a 
benefit to Sprint or Joint Venture Co.
    Although FT and DT have some nondiscrimination obligations under 
French and German law and regulations, and the FCC has authority to 
preclude Sprint from accepting ``special concessions'' from foreign 
carriers, the provisions of the proposed Final Judgment are 
considerably more specific and comprehensive than any existing 
regulatory obligations applicable to Sprint, FT or DT, because Joint 
Venture Co. may not be subject to direct to complete oversight by any 
United States, French or Germany telecommunications regulator. 
Moreover, during the period while FT and DT continue both to be 
government-owned and to enjoy monopoly rights in France and Germany, 
and regulatory regimes in France and Germany are not fully developed, 
it is important for the protection of competition that additional 
safeguards be in place to that United States international 
telecommunications providers can have access to FT's and DT's 
facilities and services comparable to Sprint and Joint Venture Co.
    d. Proportionate Return of Traffic. Section III.E prohibits Sprint 
from accepting correspondent voice telecommunications traffic from FT 
in France or DT in Germany, unless that traffic is transmitted to all 
licensed U.S. international telecommunications 

[[Page 44072]]
carriers that have operating agreements with FT and DT in the same 
proportions as the correspondent voice telecommunications traffic from 
the United States to France or to Germany that FT and DT receive from 
such U.S. carriers. Nor may Sprint accept any correspondent 
telecommunications traffic from FT in France, or DT in Germany, in a 
manner inconsistent with the policies of the FCC concerning 
proportionate return. In addition, Sprint is also prohibited from 
accepting or benefiting from any change in the methodology by which FT 
or DT allocates proportionate return traffic among United States 
international telecommunications providers, if such a change would 
substantially favor Sprint in relation to all other United States 
international telecommunications providers either in the value or 
volume of traffic, or would be inconsistent with the policies of the 
FCC with respect to Sprint, FT and DT.
    In order to ensure compliance with these provisions, section 
III.E.1 requires Sprint and Joint Venture Co. to disclose on a 
quarterly basis the volume of correspondent telecommunications traffic 
sent to and received from FT and DT, showing each type of traffic, how 
traffic has been pooled for purposes of calculating proportionate 
return, and what volume of traffic has been counted for the purposes of 
proportionate return and what has been excluded. These reporting 
requirements, which are substantially more detailed than the 
proportionate return reporting obligations in Section II.A.3, are in 
addition to the obligations of Section II.A.3 while Phase I of the 
decree remains in effect. Section III.E.2 provides that the United 
States, if it believes that Joint Venture Co. has accepted 
correspondent traffic in violation of Section III.E, shall notify 
Sprint and may also notify the FCC. Within 90 days of receipt of such 
notification, Sprint is required to respond in writing and take all 
necessary measures to ensure its compliance with the provisions of 
Section III.E.
    At present, the FCC has a policy generally requiring proportionate 
allocation of incoming international traffic among U.S. international 
carriers, but this policy is not embodied in specific regulations, and 
the FCC does not supervise the methodology or details of proportionate 
return, or require the approval of proportionate return arrangements, 
which are negotiated among U.S. and foreign carriers. Nonetheless, the 
FCC has historically been the only regulatory agency that has addressed 
proportionate return at all, since foreign telecommunications 
regulators, including those in France and Germany, generally have dealt 
with a single international carrier in their home countries and have 
not imposed any form of proportionate allocation requirement on their 
national carriers. The provisions of Section III.E are intended to 
supplement for this particular transaction, not to supplant, the FCC's 
role in regulating proportionate return. Indeed, Section V.R provides 
that if the FCC adopts specific proportionate return policies for the 
relationship of Sprint, FT and DT that would conflict with the 
proportionate return commitment in this decree, Sprint's proportionate 
return obligation herein shall be modified to be consistent with the 
FCC policies.
    e. Preclusion of Cross-Subsidization. Section III.F contains 
several provisions intended to ensure that FT and DT do not cross-
subsidize Sprint or Joint Venture Co. during Phase I of this Final 
Judgment, while FT and DT continue to realize most of their revenues 
from their state-sanctioned monopolies. Existing regulatory safeguards 
against cross-subsidization in France and Germany are very limited and 
have not prevented instances of massive cross-subsidy, in particular 
the $1.3 billion transfer to DT's Datex-P public data network over 
several years that was uncovered by the German competition authorities 
in 1994. Once FT and DT face competition in the areas of their business 
now protected by monopoly rights, and the EU authorities have improved 
safeguards against cross-subsidy as part of their liberalization 
program, there is reason to believe that the risks of such conduct 
should diminish, but for now it is not possible to rely entirely on 
national regulatory authorities to prevent cross-subsidization of the 
joint venture or of Sprint by FT and DT.
    The preclusion of cross-subsidization is here addressed by a 
combination of structural, behavioral and accounting requirements. 
Section III.F.1 requires that Joint Venture Co. be established and 
operated as a distinct entity separate from FT or DT until Phase II of 
the Final Agreement takes effect for both France and Germany. Under 
Section III.F.2, Joint Venture Co. and Sprint are required to obtain 
their own debt financing on their own credit, though Sprint, FT and DT 
may make capital contributions and commercially reasonable loans to 
Joint Venture Co., may pledge their business interests in Joint Venture 
Co. for non-recourse financings, and may guarantee the indebtedness of 
Joint Venture Co., provided that Sprint, FT and DT only make payments 
pursuant to such guarantee following a default by Joint Venture Co. 
Section III.F.3 requires that Sprint and Joint Venture Co. maintain 
accounting systems and records which are separate from those of FT and 
DT and which identify any payments or transfers to or from FT or DT 
relating to the purchase, acquisition or acceptance of any FT or DT 
Products and Services, as well as identifying those Joint Venture Co. 
services for which the FT or DT Products and Services are used. Section 
III.F.4 prohibits Sprint and Joint Venture Co. from allocating any part 
of their operating expenses, costs, depreciation, or other business 
expenses directly or indirectly to any parts of FT's or DT's business 
units responsible for FT or DT Products and Services. Finally, Section 
III.F.5 prohibits Joint Venture Co. and Sprint from receiving any 
material subsidy, including debt forgiveness, from FT or DT, and also 
prohibits any other investment or payment from FT or DT that is not 
recorded by Sprint or Joint Venture Co. as an investment in debt or 
equity. The net effect of these provisions is to allow FT and DT, as 
parent entities, to make their initial investments and capital 
contributions in Joint Venture Co., and to follow up those investments 
with legitimate loans in order to enable Joint Venture Co. to start up 
and conduct its business, but to prevent FT and DT otherwise from 
subsidizing Joint Venture Co. or Sprint, or from shifting costs from 
Joint Venture Co. or Sprint to FT's or DT's monopoly services.
    f. Operating Agreements. FT and DT are not obligated by any French 
or German law or regulatory requirement to make operating agreements 
available to particular United States international telecommunications 
providers. Although four United States international carriers--AT&T, 
MCI, Sprint and IDB--now have operating agreements with both FT and DT 
for standard switched voice services and other types of traffic, the 
discretion that FT and DT enjoy to award or deny operating agreements 
to particular carriers could be used to favor Sprint with exclusive 
rights to provide new types of correspondent services. Moreover, denial 
of operating agreements can act as a barrier to new entry by smaller 
providers by limiting their ability to achieve cost economies and large 
volumes of traffic. For several years, IDB, the smallest of the U.S. 
facilities-based international carriers, was unable to obtain an 
operating agreement with DT, and only received its agreement in 
November 1994, during 

[[Page 44073]]
the pendency of this antitrust investigation.
    The potential competitive problems associated with denial of 
operating agreements are dealt with in two ways in the proposed Final 
Judgment. Section III.G.1 prohibits Sprint from offering, supplying, 
distributing or otherwise providing any correspondent 
telecommunications or enhanced telecommunications service between the 
United States and France or Germany, pursuant to any operating 
agreement with FT or DT, unless at least one other United States 
international telecommunications provider has also obtained an 
operating agreement with FT and DT to provide the same service between 
the United States and France and Germany. While Section III.G.1. does 
not mandate that all carriers seeking operating agreements have 
received them, Section III.G.2 ensures a competitive alternative for 
providers that have not yet been able to obtain operating agreements. 
Under this provision, where another United States international 
telecommunications provider has requested but not received an operating 
agreement to provide IDDD voice service or any other service that uses 
interconnection with the FT and DT public switched telephone networks, 
Sprint must offer to carry the international traffic for that provider 
on rates and terms that are competitive with other United States 
international telecommunications providers that are able to provide 
service pursuant to operating agreements. The rates charged by Sprint 
to carry traffic for these providers must reflect the estimated value 
of proportionate return traffic from France and Germany that is 
attributable to the traffic originated by providers that are using 
Sprint's international facilities to carry their traffic.
    g. Access to FT and DT Products and Services. Section III.H. 
prohibits Sprint and Joint Venture Co. from providing 
telecommunications or enhanced telecommunications services involving 
use of FT or DT Products and Services, if FT or DT have established any 
proprietary or nonstandard protocols or interfaces used by Sprint or 
Joint Venture Co. for access to these products and services, and FT and 
DT no longer provide access to the products or services through non-
proprietary or standardized interfaces or protocols on a basis 
consistent with previous operations. This provision ensures that Sprint 
and Joint Venture Co. will not be given effectively exclusive access to 
any FT or DT Products and Services, through the control that FT and DT 
can exercise over the protocols and interfaces used for access to their 
facilities and services. This provision will have a significant role in 
ensuring that competitors can obtain interconnection to the public 
switched networks in France and Germany. At the same time, it does not 
forbid FT and DT from developing any proprietary and nonstandardized 
protocols or interfaces for the seamless services to be offered by 
Joint Venture Co., so long as competitors are left with an alternative, 
nonproprietary means of obtaining access, and so strikes a balance 
between the goals of protecting competition and promoting the 
availability of new and innovative services for consumers.
    h. Access to Public Data Networks. Section III.I is the counterpart 
to Section III.H. for the FT and DT public data networks, which are not 
within the definition of FT or DT Products and Services. This provision 
prohibits Sprint and Joint Venture Co. from providing any data 
telecommunications service or enhanced data telecommunications service 
making use of FT's and DT's public data networks in France and Germany, 
unless access to such networks is available to all other United States 
telecommunications providers on nondiscriminatory terms to complete 
data telecommunications between the United States and France or 
Germany, and within France and Germany, through standard protocols. The 
X.75 protocol for interconnection of data networks, specifically 
identified in this provision, is the standard one used in conjunction 
with data services operating on the X.25 protocol, which is the basis 
of both FT's and DT's public data networks. X.75 may not remain the 
only standard interconnection protocol, or may be changed, and so this 
provision permits use of any generally accepted standard network 
interconnection protocol that may modify or replace the X.75 standard. 
Section III.I is the principal safeguard in this proposed Final 
Judgment for competitive access to DT's and FT's public data networks 
in France and Germany.
4. Persons to Whom the Final Judgment is Applicable
    Section IV of the proposed Final Judgment makes the judgment 
binding upon the defendants, who are Sprint and Joint Venture Co. as 
defined in Sections V.O. and V.T. It also makes the judgment binding on 
Sprint's and Joint Venture Co.'s affiliates, subsidiaries, successors 
and assigns, officers, agents, servants, employees and attorneys. 
However, the proposed Final Judgment will not continue to bind any 
Sprint business that is spun-off or otherwise divested and in which 
neither FT or DT has any ownership interest, thus facilitating Sprint's 
planned divestiture of its cellular radio proprieties. In addition, 
because affiliates and subsidiaries are broadly defined in Section V.A. 
to include any entity in which a person has equity ownership, Section 
V.A. also specifies that affiliates and subsidiaries of Sprint and 
Joint Venture Co. that are not controlled, as defined in Section V.C., 
by Sprint or by Joint Venture Co. do not have substantive compliance 
obligations under Sections II and III of the proposed Final Judgment.
5. Visitorial Provisions
    Section VI of the Final Judgment allows the Department of Justice 
to monitor defendants' compliance by several means. Section VI.A 
obliges defendants to maintain records and documents sufficient to show 
their compliance with the Final Judgment's requirements. Sections VI.B 
and VI.C enable the United States to gain access to inspect and copy 
the records and documents of defendants, and also to have access to 
their personnel for interviews or to take sworn testimony. Section VI.B 
covers access to Sprint, as well as to Joint Venture Co.'s operations 
in the United States. To avoid difficulties that might arise in 
applying this visitorial procedure to discovery directed at foreign 
operations of Joint Venture Co., Section VI.C provides that Joint 
Venture Co. documents and personnel, wherever located (including 
abroad), would be produced by Joint Venture Co. in the United States, 
within sixty days of the request in the case of documents, and subject 
to the reasonable convenience of the persons involved in the case of 
requests for interviews or sworn testimony. Section VI.D permits the 
United States also to require any defendant to submit written reports 
relating to any matters contained in the Final Judgment. Finally, 
Section VI.E supplies confidentiality protections for information and 
documents furnished by defendants to the United States under the other 
provisions of Section VI. It permits the Department of Justice to share 
information and documents with the Federal Communications Commission 
(subject to confidentiality protections), and to share information with 
the French and German telecommunications regulators, DGPT and BMPT.
6. Modifications
    Section VIII, the modifications provision, affords the means of 
expanding, altering or reducing the substantive terms of the Final 
Judgment, 

[[Page 44074]]
and is essential to the protection of competition. Modifications that 
are not contested by any party to the Final Judgment are reviewed under 
a ``public interest'' test. See, e.g., United States v.  Western 
Electric Co., 993 F.2d 1572, 1576-77 (D.C. Cir. 1993). As it is not the 
intent of the parties to place Sprint at a competitive disadvantage in 
such a way as to harm competition, the Final Judgment recognizes in 
VIII.C that defendants are permitted to identify to the United States 
any changed circumstances that they believe cause any terms of the 
Final Judgment to operate in a way that is harmful to competition, but 
it is in the sole discretion of the United States whether to agree to 
any modification on this basis. The only grounds on which a 
modification can be obtained over the opposition of a party are those 
stated in VIII.A for contested modifications.
    Where a proposed modification is contested by any party to the 
Final Judgment, the Court must determine both whether modification is 
required, and whether the particular modification proposed is 
appropriate. The United States is able to seek changes to the 
substantive terms and obligations of the Final Judgment from the Court, 
including additional requirements to prevent receipt of discriminatory 
treatment by defendants, in order to avoid substantial harm to 
competition or consumers in the United States. The defendants are able 
to seek modifications removing obligations of the Final Judgment in 
order to avoid substantial hardship to themselves. In either case, the 
party seeking modifications must make a clear showing that modification 
is required, based on a significant change in circumstances or a 
significant new event subsequent to the entry of the Final Judgment. As 
recognized in VIII.B, such a change in circumstances or an event 
subsequent to the entry of judgment need not have been unforeseen, nor 
need it have been referred to in the Final Judgment.
    Section VIII.A would, for example, enable the United States to seek 
modification of the decree if, after the termination of Phase I, 
discrimination against other United States international 
telecommunications providers or other types of conduct occur that would 
have been prohibited under the Phase I restrictions, resulting in a 
substantial harm to competition. Such a harm to competition could occur 
if the entry of other licensed competitors in France or Germany has 
been significantly delayed after the granting of licenses, or has 
otherwise not proven sufficient to provide a competitive alternative, 
and the regulatory authorities in France or Germany have failed to take 
effective steps to prevent the misconduct. Before concluding that such 
discrimination or other conduct during Phase II required the United 
States to seek a modification of the Final Judgment to protect 
competition or consumers, the Department of Justice would ordinarily 
inquire at the outset whether injured competitors had availed 
themselves of existing regulatory remedies, if any, in France or 
Germany as well as the United States, and what relief had been provided 
or action taken, if any, by the telecommunications regulatory agencies.
    If the Court concludes that any party has met its burden of showing 
that the Final Judgment should be modified over the opposition of 
another party, it would then be empowered to grant any particular 
modification that meets three criteria. The modification must be (i) in 
the public interest, (ii) suitably tailored to the changed 
circumstances or new event that gave rise to its adoption, and must not 
result in serious hardship to any defendant, and (iii) consistent with 
the purposes of the antitrust laws of the United States, and the 
telecommunications regulatory regimes of the United States, France and 
Germany. This standard protects against overbroad modifications. It 
also recognizes that mere inconvenience or some hardship to a defendant 
will not preclude a modification, by only ``serious'' hardship. The 
loss of opportunity to profit from anticompetitive conduct is not a 
``serious'' hardship within the meaning of this standard. Any proposed 
modification, to be consistent with the antitrust laws, must not be of 
an anticompetitive character, and must protect competition or consumers 
in the United States. Modifications must also be consistent with the 
system of regulation of telecommunications in the United States, France 
and Germany. This does not mean that modifications must mirror the 
telecommunications regulations, but at the least, conflicting 
obligations should not be created.
    Section VIII.B permits the United States, where any party has 
sought modifications of the Final Judgment, to invoke any of the 
visitorial provisions contained in Section VI of the Final Judgment in 
order to obtain from defendants any information or documents needed to 
evaluate the proposed modification prior to decision by the Court.
7. Term of Agreement
    Section X.B of the proposed Final Judgment species that the 
substantive restrictions and obligations of the Final Judgment shall 
expire five years after the date that Phase II has taken effect with 
respect to both France and Germany. Only the substantive restrictions 
in Section III are removed at the conclusion of Phase I, but for these 
purposes the date on which Phase II has taken effect is assessed 
separately for France and for Germany, as one country might liberalize 
its telecommunications markets significantly sooner than the other. The 
duration of the proposed decree is reasonable because the international 
telecommunications markets, including the markets for international 
telecommunications services between the United States and France and 
Germany and the emerging markets for seamless international 
telecommunications services, may evolve rapidly during the next several 
years, in part due to the transactions under consideration in this case 
and the Final Judgment, as well as the regulatory changes taking place 
in the EU. In the BT-MCI transaction, this Court approved a duration 
for the consent decree of five years. The greater duration here is 
based on the important differences that now exist between the French 
and German telecommunications regimes and the more open environment in 
the United Kingdom. It is possible for this decree to have an 
indefinite duration, should France or Germany fail ever to meet the 
conditions set forth in Section V.Q for the shift to Phase II, but if 
liberalization is completed and competitors are licensed on the 
schedule now projected by the EU authorities, the total duration of the 
decree is most likely to be about eight years. The five-year duration 
of Phase II will give the United States ample time to evaluate whether 
competition is developing in France and Germany as anticipated, and to 
seek modifications of the decree if competition fails to develop and 
United States international telecommunications providers are subjected 
to anticompetitive conduct by FT or DT. Under these circumstances, the 
United States does not consider it necessary to impose a lengthier 
duration on the substantive provisions of the proposed Final Judgment.

B. Effects of the Proposed Final Judgment on Competition

    The transaction contemplated between Sprint, FT and DT represents 
the second opportunity that the Department of Justice has had within 
the past three years to consider the major changes now taking place in 
international telecommunications, and the competitive significance for 
United 

[[Page 44075]]
States consumers of the development of strategic alliances. 
Notwithstanding the many common features that the Sprint-FT-DT alliance 
and the MCI-BT alliance share, including the overall level of 
investment in the U.S. carrier, the non-compete agreements and the wide 
range of international services contemplated by the parties' joint 
venture, the important differences between the two transactions have 
meant that the Department has had to conduct a separate and thorough 
investigation of this new alliance, lasting for over a year from the 
initial announcement of the planned transaction. The differences 
between these transactions turn principally on the market positions of 
the foreign parents.
    The Sprint-FT-DT joint venture may enable the parties to offer some 
international services of a type or on a scale that they would not 
otherwise provide. But the alliance as currently structured also poses 
substantial risks to competition in the United States, of an even 
greater magnitude than did the MCI-BT alliance. FT's and DT's 
monopolies over public voice services, the public switched network and 
transmission infrastructure in France and Germany, as well as their 
market power in public data network services, would when combined with 
Sprint's competitive long distance services and facilities in the U.S. 
and its strong position in data services give rise to increased 
incentives for FT's and DT's monopoly power to be used to favor Sprint 
and Joint Venture Co. and to disadvantage competitors in the United 
States. These factors made it necessary for the United States to 
obtain, by agreement with the parties, considerably more extensive 
relief than in the BT-MCI transaction, in order to be assured that the 
competitive problems here were adequately addressed.
    In other circumstances involving vertical integration between large 
monopoly providers of local exchange telecommunications services and 
competitive long distance providers in the United States, the 
Department of Justice has obtained various forms of relief under the 
antitrust laws to protect competition. See, e.g., United States v. 
American Telephone and Telegraph Co., 552 F. Supp. 131 (D.D.C. 1982), 
aff'd mem. sub nom. Maryland v. United States, 460 U.S. 1001 (1983); 
United States v. GTE Corp., 603 F. Supp. 730 (D.D.C. 1984). In each of 
these cases, the United States has dealt with distinct factual 
situations and legal contexts. The relief proposed here, while not the 
same as in the other cases, serves a similar competitive purpose, 
taking into account the particular circumstances and risks associated 
with the transactions between Sprint, FT and DT. These include, as in 
the BT-MCI case, the unique practices and relationships between 
carriers in the provision of international telecommunications services, 
the continued existence of Sprint as a separate entity following these 
transactions, and the involvement of foreign telecommunications 
providers subject to distinct regulatory regimes overseas. In this 
case, an added complication was created by the government ownership of 
the foreign carriers at issue. While it was not appropriate in this 
transaction to accord deference to separate telecommunications 
regulation in France and Germany to the same extent as was done for the 
United Kingdom in the BT-MCI transaction, given the absence of 
privatization and the continued existence of de jure monopolies in 
France and Germany, the progress toward a more competitive 
telecommunications environment now being made in the EU and the plans 
for introduction of full competition in France and Germany by 1998 have 
been taken into account. These regulatory developments have 
fundamentally affected the two-stage structure of the proposed decree, 
and the feasibility of shifting to a more limited form of relief in 
Phase II.
    The United States believes that the relief proposed here, including 
both the substantive restrictions and obligations and the ability of 
the Court to modify the Final Judgment to respond to additional 
competitive problems, will substantially benefit competition. The 
ability of Sprint and of Joint Venture Co. to realize anticompetitive 
advantages in the United States will be substantially constrained.
    Entry of the proposed Final Judgment will allow the transactions 
between Sprint, FT and DT to proceed and any benefits to consumers to 
be realized, subject to further review by the Federal Communications 
Commission and the European Commission, and any additional 
modifications that may be made to satisfy their separate concerns. At 
the same time, entry of the proposed Final Judgment will provide 
extensive protections to competing United States international 
telecommunications providers during the period preceding full 
liberalization in France and Germany, as needed to protect competition. 
After liberalization, the Final Judgment will continue to provide 
United States competitors with increased means to detect 
discrimination, protection against the misuses of confidential business 
information, and safeguards against licensing advantages for Sprint and 
Joint Venture Co. for an additional five years, while competition 
develops in France and Germany. During the entire duration of the 
decree, the United States will have a mechanism to seek modification of 
the Final Judgment without having to initiate separate antitrust 
litigation, should competition and regulatory protections in the EU, 
France and Germany not develop as anticipated and substantial 
competitive harms arise. This opportunity to impose additional 
restrictions on defendants, or to extend the existing restrictions in 
Phase I for a longer time, in order to protect competition and 
consumers in the United States, responds to any risk that the other 
substantive provisions of the Final Judgment and separate regulatory 
requirements may prove insufficient to protect competition. Thus, the 
modification provision will serve as an additional important deterrent 
to anticompetitive behavior.

IV

Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages suffered, as well as costs and reasonable attorney's fees. 
Entry of the proposed Final Judgment will neither impair nor assist the 
bringing of such actions. Under the provisions of Section 5(a) of the 
Clayton Act, 15 U.S.C. 16(a), the proposed Final Judgment has no prima 
facie effect in any subsequent private lawsuits that may be brought 
against defendants in this matter.
    In addition, persons affected by unreasonable discrimination on the 
part of Sprint, in violation of 47 U.S.C. 202, may complain to the 
Federal Communications Commission as provided by 47 U.S.C 208, for such 
relief as is available under the Communications Act and the 
Commission's regulations, or bring suit for damages pursuant to 47 
U.S.C. 206. Persons affected by discrimination, refusal to interconnect 
or other conduct by FT or DT in violation of French or German law may 
complain to the French DGPT or the German BMPT for such relief as those 
bodies are authorized to provide, or to the competition authorities in 
Germany, France and the European Union. Entry of the proposed Final 
Judgment will not impair the bringing of such complaints 

[[Page 44076]]
and actions, and indeed will likely facilitate the effective detection 
and prevention of anticompetitive conduct through existing regulatory 
mechanisms.

V

Procedures Available for Modification of the Proposed Final 
Judgment

    As provided by the Antitrust Procedures and Penalties Act, any 
person believing that the proposed Final Judgment should be modified 
may submit written comments to Donald J. Russell, Chief, 
Telecommunications Task Force, U.S. Department of Justice, Antitrust 
Division, 555 Fourth Street, N.W., Room 8104, Washington, D.C. 20001, 
within the 60-day period provided by the Act. These comments and the 
Department's responses, will be filed with the Court and published in 
the Federal Register. All comments will be given due consideration by 
the Department of Justice, which remains free to withdraw its consent 
to the proposed Judgment at any time prior to entry. The proposed Final 
Judgment provides that the Court retains jurisdiction over this action, 
and the parties may apply to the Court for any order necessary or 
appropriate to carry out or construe the Final Judgment, to modify or 
terminate any of its provisions, to enforce compliance, and to punish 
any violations of its provisions. Modifications of the Final Judgment 
may be sought by the United States or by the defendants under the 
standards described therein.

VI

Alternatives to the Proposed Final Judgment

    As an alternative to the proposed Final Judgment, the United States 
considered litigation to seek an injunction to prevent the proposed 
transaction between Sprint, FT or DT. The United States rejected that 
alternative based on a combination of the following considerations. 
First, the relief in the proposed Final Judgment, together with the 
planned liberalization of all telecommunications markets and developing 
regulatory safeguards in the EU, France and Germany, and existing U.S. 
telecommunications regulation applicable to Sprint, should provide a 
reasonable degree of protection against significant lessening of 
competition in the U.S. markets at issue. Second, litigation of this 
matter would have been highly complex and the result uncertain, in part 
because the United States would have borne the burden of proof in 
demonstrating the extent to which this transaction would have led to 
additional lessening of competition and also because foreign markets 
were involved. Therefore, avoiding litigation represents a substantial 
savings of public resources.
    The United States also considered, in formulating the proposed 
Final Judgment, significantly limiting the level of equity investment 
that FT or DT would be permitted to make in Sprint prior to full 
liberalization of the telecommunications markets in France and Germany. 
Extensive changes to the equity investment contingent on full 
liberalization would, however, have created a substantial likelihood 
that the parties would have declined to consummate the transaction in 
any form, since full liberalization is still some three years away. To 
insist on such changes would have made it likely that the parties could 
not have entered into any settlement, leading to litigation. Had a 
restriction on the equity investment been the only way to prevent this 
transaction from giving rise to a further lessening of competition 
(beyond that already occurring in international markets due to the 
existence of DT's and FT's monopolies), this might nevertheless have 
been necessary. But, while the level of equity investment here does 
play a substantial role in creating additional incentives for FT and DT 
to favor Sprint, it was not clear that reducing the current investment 
in Sprint would have eliminated those incremental incentives, given the 
additional extensive investments that the parties also are planning to 
make in the joint venture. Ultimately, the United States concluded that 
the other provisions of the decree, particularly those in Section III, 
would provide a reasonable level of protection against increased harm 
to competition in United States markets arising from this specific 
transaction, so that it was not essential to insist on a change to the 
equity investment to accomplish the purposes of the antitrust laws.
    The United States has also considered issues of international 
comity in shaping the proposed Final Judgment. International 
transactions, particularly where activities of foreign governments and 
their enterprises are in issue, give rise to special considerations not 
present in the domestic context. Consistently with its longstanding 
enforcement policy, see, e.g., U.S. Department of Justice and Federal 
Trade Commission, Antitrust Enforcement Guidelines for International 
Operations, at 20-28 (1995), the United States sought in the 
substantive restrictions and obligations of Sections II and III of the 
proposed Final Judgment to avoid situations that could give rise to 
international conflicts between sovereign governments and their 
agencies. The United States is not aware of any such conflict that 
would arise from the implementation of the substantive provisions of 
the proposed Final Judgment as currently drafted. FT and DT have not 
been made defendants in this case, so that the United States is not 
imposing direct obligations on any foreign government-owned entity. 
Moreover, the substantive obligations, to the extent that they may 
indirectly affect the conduct of FT and DT, apply to practices over 
which either foreign regulation is insubstantial or nonexistent, or, to 
the extent that regulation exists, it also condemns in a general sense 
the practices that the proposed Final Judgment seeks to prevent. The 
latter is particularly true with respect to the key prohibitions on 
discrimination and cross-subsidy. Here, the competitive concern is not 
that French or German regulation directs FT or DT to discriminate 
against competitors or to cross-subsidize their own competitive 
services--quite the contrary--but that regulation is at present 
insufficiently developed to safeguard competition adequately by itself, 
in the absence of alternative telecommunications infrastructure that 
can be used by all competitors in France and Germany.

VII

Standard of Review Under the Tunney Act for the Proposed Final 
Judgment

    The APPA requires that proposed consent judgments in antitrust 
cases brought by the United States are subject to a sixty-day comment 
period, after which the court shall determine whether entry of the 
proposed final judgment ``is in the public interest.'' In making that 
determination, the court may consider:

    (1) the competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration or relief sought, anticipated effects of 
alternative remedies actually considered, and any other 
considerations bearing upon the adequacy of such judgment;
    (2) the impact of entry of such judgment upon the public 
generally and individuals alleging specific injury from the 
violations set forth in the complaint including consideration of the 
public benefit, if any, to be derived from a determination of the 
issues at trial.

15 U.S.C. 16(e) (emphasis added). The courts have recognized that the 
term ``public interest'' ``take[s] meaning from the purposes of the 
regulatory legislation.'' NAACP v. Federal Power 

[[Page 44077]]
Comm'n, 425 U.S. 662, 669 (1976); United States v. American Cyanamid 
Co., 719 F.2d 558, 565 (2d Cir. 1983), cert. denied, 465 U.S. 1101 
(1984). Since the purpose of the antitrust laws is to ``preserv[e] free 
and unfettered competition as the rule of trade,'' Northern Pacific 
Railway Co. v. United States, 356 U.S. 1, 4 (1958), the focus of the 
``public interest'' inquiry under the Tunney Act is whether the 
proposed final judgment would serve the public interest in free and 
unfettered competition. United States v. Waste Management, Inc., 1985-2 
Trade Cas. para. 66,651, at 63,046 (D.D.C. 1985). In conducting this 
inquiry, ``the Court is nowhere compelled to go to trial or to engage 
in extended proceedings which might have the effect of vitiating the 
benefits of prompt and less costly settlement through the consent 
decree process.'' \23\ Rather,

    \23\ 119 Cong. Rec. 24598 (1973). See United States v. Gillette 
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest'' 
determination can be made properly on the basis of the Competitive 
Impact Statement and Response to Comments filed pursuant to the 
APPA. Although the APPA authorizes the use of additional procedures, 
15 U.S.C. Sec. 16(f), those procedures are discretionary. A court 
need not invoke any of them unless it believes that the comments 
have raised significant issues and that further proceedings would 
aid the court in resolving those issues. See H.R. Rep. 93-1463, 93rd 
Cong. 2d Sess. 8-9 (1974), reprinted in 1974 U.S.C.C.A.N. 6535, 
6538-39.
---------------------------------------------------------------------------

    absent a showing of corrupt failure of the government to 
discharge its duty, the Court, in making the public interest 
finding, should * * * carefully consider the explanations of the 
government in the competitive impact statement and its responses to 
comments in order to determine whether those explanations are 
reasonable under the circumstances.

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. para. 
61,508, at 71,980 (W.D. Mo. 1977).
    It is also unnecessary, and inappropriate, for the district court 
to ``engage in an unrestricted evaluation of what relief would best 
serve the public.'' United States v. Bechtel Corp., 648 F.2d 660, 666 
(9th Cir.), cert. denied, 454 U.S. 1083 (1981), quoted with approval in 
United States v. Microsoft Corp., 56 F.3d 1448, 1995-1 Trade Cas. para. 
71,027, at para. 74,830 (D.C. Cir. 1995). In the recent Microsoft 
decision by the United States Court of Appeals for the District of 
Columbia Circuit, which reversed the district court's refusal to enter 
an antitrust consent decree proposed by the United States, the court of 
appeals held that the provision in Section 16(e)(1) of the Tunney Act 
allowing the district court to consider ``any other considerations 
bearing upon the adequacy of such judgment,'' does not authorize 
extensive inquiry into the conduct of the case. 1995-1 Trade Cas. para. 
71,027, at para. 74,830. The court of appeals concluded that ``Congress 
did not mean for a district judge to construct his own hypothetical 
case and then evaluate the decree against that case.'' Id. To the 
contrary, ``[t]he court's authority to review the decree depends 
entirely on the government's exercising its prosecutorial discretion by 
bringing a case in the first place,'' and so the district court ``is 
only authorized to review the decree itself,'' not other matters that 
the government might have but did not pursue. Id.
    The district court's legitimate functions in reviewing a proposed 
consent decree, according to the Microsoft decision, include 
consideration of both the decree's ``clarity'' in order to protect 
against ambiguity, and also its ``compliance mechanisms'' in order to 
avoid future ``difficulties in implementation.'' United States v. 
Microsoft Corp., 1995-1 Trade Cas. para. 71,027, at Paras. 74,832-33. 
The court may also appropriately consider claims of third parties 
``that they would be positively injured by the decree,'' when brought 
to the court's attention consistent with the requirements of the Tunney 
Act and accepted process in federal courts. Id. at Paras. 74,833-34. 
But

    [t]he balancing of competing social and political interests 
affected by a proposed antitrust consent decree must be left, in the 
first instance, to the discretion of the Attorney General. The 
court's role in protecting the public interest is one of insuring 
that the government has not breached its duty to the public in 
consenting to the decree. The court is required to determine not 
whether a particular decree is the one that will best serve society, 
but whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.\24\

    \24\ United States v. Bechtel, 648 F.2d at 666 (quoting United 
States v. Gillette Co., 406 F. Supp. at 716). See United States v. 
Microsoft Corp., 1995-1 Trade Cas. para. 71,027, at para. 74,832; 
United States v. BNS, Inc., 858 F.2d 456, 463 (9th Cir. 1988); 
United States v. National Broadcasting Co., 449 F. Supp. 1127, 1143 
(C.D. Cal.; 1978); see also United States v. American Cyanamid Co., 
719 F.2d at 565.
---------------------------------------------------------------------------

    Although the court ``is not obliged to accept [a proposed decree] 
that, on its face and even after government explanation, appears to 
make a mockery of judicial power * * * [s]hort of that eventuality, the 
Tunney Act cannot be interpreted as an authorization for a district 
judge to assume the role of Attorney General.'' United States v. 
Microsoft Corp., 1995-1 Trade Cas. para. 71,027, at para. 74,833. In 
sum, a district judge ``must be careful not to exceed his or her 
constitutional role.'' Id.
    A proposed consent decree is an agreement between the parties which 
is reached after exhaustive negotiations and discussions. Parties do 
not hastily and thoughtlessly stipulate to a decree because, in doing 
so, they

    waive their right to litigate the issues involved in the case 
and thus save themselves the time, expense, and inevitable risk of 
litigation. Naturally, the agreement reached normally embodies a 
compromise; in exchange for the saving of cost and the elimination 
of risk, the parties each give up something they might have won had 
they proceeded with the litigation.

United States v. Armour & Co., 402 U.S. 673, 681 (1971).
    The proposed consent decree, therefore, should not be reviewed 
under a standard of whether it is certain to eliminate every 
anticompetitive effect of a merger or whether it mandates certainty of 
free competition in the future. The court may reject the agreement of 
the parties as to how the public interest is best served only if it has 
``exceptional confidence that adverse antitrust consequences will 
result * * *.'' United States v. Western Electric Co., 993 F.2d 1572, 
1577 (D.C. Cir.), cert. denied, 114 S. Ct. 487 (1993), quoted with 
approval in United States v. Microsoft Corp., 1995-1 Trade Cas. para. 
71,027, at para. 74,831.
    Court approval of a final judgment requires a standard more 
flexible and less strict than the standard required for a finding of 
liability. ``[A] proposed decree must be approved even if it falls 
short of the remedy the court would impose on its own, as long as it 
falls within the range of acceptability or is `within the reaches of 
public interest.' '' \25\ Under the public interest standard, the 
court's role is limited to determining whether the proposed decree is 
within the ``zone of settlements'' consistent with the public interest, 
not whether the settlement diverges from the court's view of what would 
best serve the public interest. United States v. Western Electric Co., 
993 F.2d at 1576 (quoting United States v. Western Electric Co., 900 
F.2d 283, 307 (D.C. Cir. 1990)); United States v. Microsoft Corp., 
1995-1 Trade Cas. para. 71,027, at para. 74,831. Indeed, a district 
court should give a request for entry of a proposed decree even more 
deference 

[[Page 44078]]
than a request by a party to an existing decree for approval of a 
modification, for in dealing with an initial settlement the court is 
unlikely to have substantial familiarity with the market involved. 
United States v. Microsoft Corp., 1995-1 Trade Cas. para. 71,027, at Paras.  
74,831-32.

    \25\ United States v. American Tel. and Tel. Co., 552 F. Supp. 
131, 151 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 
460 U.S. 1001 (1983) (quoting United States v. Gillette Co., 406 F. 
Supp. at 716); United States v. Alcan Aluminum, Ltd., 605 F. Supp. 
619, 622 (W.D. Ky 1985). See also, United States v. Microsoft Corp., 
1995-1 Trade Cas. para. 71,027, at para. 74,831, citing United 
States v. Western Electric Co., 900 F.2d 283, 309 (D.C. Cir. 1990) 
(citing and quoting Bechtel. 648 F.2d at 666, in turn quoting 
Gillette, 406 F. Supp. at 716).
---------------------------------------------------------------------------

VIII

Determinative Materials and Documents

    No documents were determinative in the formulation of the proposed 
Final Judgment. Consequently, the United States has not attached any 
such documents to the proposed Final Judgment.

    Dated: August 14, 1995.
Anne K. Bingaman,
Assistant Attorney General.
Constance K. Robinson,
Director, Office of Operations, Antitrust Division, U.S. Department of 
Justice.
Donald J. Russell,
Chief, Telecommunications Task Force.
Nancy M. Goodman,
Assistant Chief, Telecommunications Task Force.
Carl Willner,
D.C. Bar # 412841.
Susanna M. Zwerling,
D.C. Bar # 435774.
Joyce B. Hundley,
Attorneys, Telecommunications Task Force, U.S. Department of Justice.
[FR Doc. 95-20834 Filed 8-23-95; 8:45 am]
BILLING CODE 4410-01-M