[Federal Register Volume 64, Number 9 (Thursday, January 14, 1999)]
[Notices]
[Pages 2506-2514]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-824]


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

DEPARTMENT OF JUSTICE

Antitrust Division


United States v. AT&T Corp. and Tele-Communications, Inc.; 
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) through (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. AT&T Corporation and Tele-Communications, Inc., Civil 
No. 1:98CV03170.
    On December 30, 1998, the United States filed a Complaint alleging 
that the proposed acquisition by AT&T Corporation of Tele-
Communications, Inc. would violate section 7 of the Clayton Act, 15 
U.S.C. 18. The Complaint alleges that AT&T is the largest provider of 
mobile wireless telephone services in the United States, and that Tele-
Communications, Inc. owns a 23.5 percent equity interest in the mobile 
wireless telephone business of Sprint Corporation. The Complaint 
further alleges that if consummated, the acquisition may substantially 
lessen competition in the provision of mobile wireless telephone 
services in many geographic areas throughout the United States. The 
proposed Final Judgment, filed at the same time as the Complaint, 
requires AT&T Corporation to divest its interest in the mobile wireless 
telephone business of Sprint Corporation.
    Public comment is invited within the statutory 60-day comment 
period. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to Donald J. Russell, Chief, Telecommunications Task Force, Antitrust 
Division, Department of Justice, 1401 H St., NW, Suite 8000, 
Washington, DC 20530 (telephone: (202) 514-5621).
    Copies of the Complaint, Stipulation, proposed Final Judgment, and 
Competitive Impact Statement are available for inspection in Room 215 
of the United States Department of Justice, Antitrust Division, 325 7th 
St., NW, Washington, DC 20530 (telephone (202) 514-2841) and at the 
Office of the Clerk of the United States District Court for the 
District of Columbia. Copies of these materials may be obtained upon 
request and payment of a copying fee.
Constance K. Robinson,
Director of Operations and Merger Enforcement, Antitrust Division.

Stipulation

    It is stipulated by and between the undersigned parties, by their 
respective attorneys, that:
    A. 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 for the District of Columbia.
    B. The parties to this Stipulation consent that a Final Judgment in 
the form attached may be filed and entered by the Court, upon the 
motion of any party or 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), without further notice to any party or 
other proceedings, provided that plaintiff has not withdrawn its 
consent, which it may do at any time before entry of the proposed Final 
Judgment by serving notice on the defendants and by filing that notice 
with the Court.
    C. Defendants shall abide by and comply with the provisions of the 
proposed Final Judgment pending entry of the Final Judgment, and shall, 
from the date of the filing of this Stipulation, comply with all the 
terms and provisions of the proposed Final Judgment as though the same 
were in full force and effect as an order of the Court.
    D. In the event plaintiff withdraws its consent, as provided in 
paragraph (B) above, or if the proposed Final Judgment is not entered 
pursuant to this Stipulation, this Stipulation shall be of no effect 
whatever, and the making of this Stipulation shall be without prejudice 
to any party in this or any other proceeding.

    For the Plaintiff:
A. Douglas Melamed,
Acting Assistant Attorney General.
Constance K. Robinson,
Director of Operations and Merger Enforcement.
Deborah A. Roy,
Attorney, Telecommunications Task Force.
Donald J. Russell,
Chief, Telecommunications Task Force.
Peter A. Gray,
Attorney, Telecommunications Task Force.

U.S. Department of Justice, Antitrust Division, 1401 H Street, NW., 
Suite 8000, Washington, DC 20530, (202) 514-5636.

    Dated: December 30, 1998.


[[Page 2507]]


    For the Defendants:
Mark C. Rosenblum,
Vice President-Law, AT&T Corp., 295 North Maple Avenue, Room 3244J1, 
Basking Ridge, New Jersey 07920.

    Dated: December 28, 1998.
Kathy Fenton,
Counsel for Tele-Communications, Inc., Jones, Day, Reavis & Pogue, 
Suite 700, 1450 G Street NW, Washington, DC 20005.

    Dated: December 28, 1998.

Final Judgment

    WHEREAS, plaintiff, the United States of America, having filed its 
Complaint herein on December 30, 1998, and plaintiff and defendants, by 
their respective attorneys, having consented to the entry of this Final 
Judgment without trial or adjudication of any issue of fact or law 
herein, and without this Final Judgment constituting any evidence 
against or an admission by any party with respect to any issue of law 
or fact herein;
    And whereas, defendants have agreed to be bound by the provisions 
of this Final Judgment pending its approval by the Court;
    And whereas, the essence of this Final Judgment is certain 
divestiture of specific assets and the imposition of related injunctive 
relief to ensure that competition is not substantially lessened;
    And whereas, plaintiff requires Liberty Media Corporation to make 
certain divestitures for the purpose of preventing a lessening of 
competition alleged in the Complaint;
    And whereas, defendants have represented to plaintiff that the 
divestiture ordered herein can and will be made and that defendants 
will later raise no claims of hardship or difficulty as grounds for 
asking the Court to modify any of the divestiture provisions contained 
herein;
    And, therefore, before the taking of any testimony, and without 
trial or adjudication of any issue of fact or law herein, and upon 
consent of the parties hereto, it is hereby ordered, adjudged, and 
decreed as follows:

I. Jurisdiction

    This Court has jurisdiction over each of the parties hereto and the 
subject matter of this action. The Complaint states a claim upon which 
relief may be granted against the defendants under section 7 of the 
Clayton Act, as amended (15 U.S.C. 18).

II. Definitions

    As used in this Final Judgment:
    A. ``TCI'' means defendant Tele-Communications, Inc., a Delaware 
corporation with its headquarters in Englewood, Colorado and includes 
its successors and assigns, its subsidiaries, and the directors, 
officers, managers, agents and employees acting for or on behalf of 
TCI, except for Liberty, its successors and assigns, its subsidiaries, 
and the directors, officers, managers, agents and employees acting for 
or on behalf of Liberty.
    B. ``Liberty'' means Liberty Media Corporation, a Delaware 
corporation, as well as the assets, liabilities and businesses 
attributed to the Liberty Media Group (as defined in the AT&T/TCI 
Merger Agreement) and its successors and assigns, its subsidiaries and 
the directors, officers, managers, agents and employees acting for or 
on behalf of Liberty.
    C. ``Liberty Media Tracking Shares'' means the classes of common 
stock to be issued by AT&T, referred to as ``Liberty Media Tracking 
Shares'' in the AT&T/TCI Merger Agreement, and any shares of stock 
issued in respect of any of the foregoing (including by way of 
conversion, redemption, reclassification, distribution, merger, 
combination, or other similar event).
    D. ``AT&T'' means defendant AT&T Corp., a New York corporation with 
its headquarters in New York, New York and includes all of its 
successors and assigns, its subsidiaries, and the directors, officers, 
managers, agents and employees acting for or on behalf of AT&T, except 
for Liberty, its successors and assigns, its subsidiaries, and the 
directors, officers, managers, agents and employees acting for or on 
behalf of Liberty.
    E. ``AT&T/TCI Merger Agreement'' means the Agreement and Plan of 
Merger dated as of June 23, 1998, as produced to plaintiff on July 23, 
1998, with respect to the AT&T/TCI Merger.
    F. ``AT&T/TCI Merger'' means the merger of TCI with a subsidiary of 
AT&T, as contemplated by the AT&T/TCI Merger Agreement.
    G. ``AT&T Stock'' means all classes of common stock issued by AT&T, 
except for Liberty Media Tracking Shares.
    H. ``Sprint PCS Tracking Stock'' means, collectively, (i) the PCS 
Common Stock, Series 1, (ii) the PCS Common Stock, Series 2, (iii) the 
PCS Common Stock, Series 3, (iv) the shares of Sprint PCS Tracking 
Stock issuable in respect of Sprint's outstanding shares of Class A 
Common Stock, (v) the shares of Sprint PCS Tracking Stock issuable in 
respect of any ``inter-group interest'' of the ``Sprint FON Group'' in 
the ``Sprint PCS Group,'' (vi) the shares of Sprint's Series 7 
Preferred Stock and warrants to purchase shares of Sprint PCS Tracking 
Stock issued to TCI, Comcast Corporation (``Comcast'') and Cox 
Communications, Inc. (``Cox'') in connection with the Sprint PCS 
Restructuring (and the shares of Sprint PCS Tracking Stock issuable 
upon any exercise or conversion thereof), (vii) any other options, 
warrants or convertible securities exercisable for or convertible into 
any shares of Sprint PCS Tracking Stock, and (viii) any shares of 
capital stock Sprint issued in respect of any of the foregoing 
(including by way of conversion, redemption, reclassification, 
distribution, merger, combination, or other similar event).
    I. ``Liberty's Sprint Holdings'' means the Sprint PCS Tracking 
Stock acquired by TCI Ventures Group LLC and its subsidiaries in the 
Sprint PCS Restructuring and in which Liberty will have a beneficial 
interest after the closing of the AT&T/TCI Merger.
    J. ``Sprint PCS Restructuring'' means that series of transactions 
that occurred simultaneously on November 23, 1998 in which Sprint 
Corporation (``Sprint'') acquired through a number of mergers all of 
the outstanding partnership interests in a number of partnerships 
collectively holding all of the assets and businesses known as ``Sprint 
PCS'' held by affiliates of TCI, Cox, and Comcast.
    K. ``Private sale'' means any sale except for sales made through 
the public market.

III. Applicability

    The provisions of this Final Judgment apply to each of the 
defendants, its successors and assigns, its subsidiaries, directors, 
officers, managers, agents, employees and all other persons in active 
concert or participation with any of them who shall have received 
actual notice of this Final Judgment by personal service or otherwise, 
and with respect to Sections IV, V and VI of this Final Judgment, to 
the trustee and his or her successors.

IV. Creation of a Trust

    A. TCI is hereby ordered and directed, prior to closing of the 
AT&T/TCI Merger, to assign and transfer Liberty's Sprint Holdings to a 
trustee for the purpose of accomplishing a divestiture of such holdings 
in accordance with the terms of this Final Judgment. The trust 
agreement shall be in a form approved by the plaintiff, and its terms 
shall be consistent with the terms of this Final Judgment. Defendants 
shall submit a form of trust agreement to the plaintiff, who shall 
communicate to defendants within ten (10) business days its approval or 
disapproval of that form. The trustee shall agree to be bound by this 
Final Judgment.

[[Page 2508]]

    B. Prior to the closing of the AT&T/TCI Merger, TCI shall submit 
the name of its nominee for trustee to the plaintiff, who within ten 
(10) business days shall (i) approve the nominee as trustee, or (ii) 
request additional names until a nominee for trustee proposed by 
Liberty is approved by the plaintiff, with plaintiff reaching a 
decision on each nominee within ten (10) business days. The trustee 
shall not be a director, officer, manager, agent or employee of AT&T or 
Liberty. Defendants shall not consummate the Merger until such time as 
the trustee and the trust agreement have been approved by plaintiff, 
and the Liberty Sprint Holdings have been transferred to the trust.

V. Divestiture of Sprint PCS Interest

    A. The trustee is hereby ordered and directed, in accordance with 
the terms of this Final Judgment, on or before May 23, 2002, to divest 
that portion of Liberty's Sprint Holdings sufficient to cause Liberty 
to own no more than 10% of the outstanding shares of Sprint PCS 
Tracking Stock. On or before May 23, 2004, the trustee shall divest the 
remainder of Liberty's Sprint Holdings. The number of outstanding 
shares of Sprint PCS Tracking Stock for such purposes shall be 
calculated on a share of Series 1 PCS Stock equivalent basis assuming 
the issuance of all shares of Series 1 PCS Stock ultimately issuable in 
respect of the applicable Sprint PCS Tracking Stock upon the exercise, 
conversion or other issuance thereof in accordance with the terms of 
such securities. Notwithstanding the provisions of this paragraph, if a 
motion to terminate this Final Judgment in which plaintiff has joined 
has been filed, and is pending before the Court, the trustee shall not 
proceed with the divestitures provided by this paragraph until the 
motion to terminate the Final Judgment has been decided by the Court.
    B. After Liberty's Sprint Holdings have been transferred to the 
trustee, only the trustee shall have the right to sell Liberty's Sprint 
Holdings. The trustee shall have the power and authority to accomplish 
the divestiture only in a manner reasonably calculated to maximize the 
value of Liberty's Sprint Holdings to the holders of the Liberty Media 
Tracking Shares, without regard to any costs or benefits to AT&T 
(including any costs or benefits of such divestiture to AT&T that may 
be directly or indirectly transferred to the holders of the Liberty 
Media Tracking Shares.) However, the trustee may in accomplishing the 
divestiture, take into account income or gain tax costs or benefits for 
AT&T that flow to the holders of the Liberty Media Tracking Shares. The 
trustee shall have the powers provided by the trust agreement and such 
other powers as the Court shall deem appropriate.
    C. All decisions regarding the divestiture, in whole or in part, of 
Liberty's Sprint Holdings shall be made by the trustee without 
discussion or consultation with AT&T, with any of the Class A Directors 
of Liberty, or with any other officer, director or shareholder of 
Liberty who individually owns more that 0.10% of the outstanding shares 
of AT&T Stock. The trustee shall consult with the Board of Directors of 
Liberty, but the Class A Directors of Liberty and any director, 
officer, or shareholders of Liberty who owns more than 0.10% of the 
outstanding shares of AT&T Stock shall not participate in such 
consultation. The decision to divest part or all of the Liberty Sprint 
Holdings shall be made by the trustee in his or her sole discretion, 
except as provided for in Section V.D. of this Final Judgment. Liberty 
shall not take any action to block a sale by the trustee, on any 
grounds other than the trustee's malfeasance as defined in the trust 
agreement. Where the trustee intends to effect a private sale of part 
or all of Liberty's Sprint Holdings, the trustee shall notify Liberty 
and plaintiff of that intention. Any objection by Liberty, based on the 
trustee's malfeasance, must be made within ten (10) business days of 
notice from the trustee of an intention to make a private sale. Subject 
to Section V.G. of this Final Judgment, the trustee shall have the 
power and authority to hire at the cost and expense of Liberty any 
investment bankers, attorneys, or other agents reasonably necessary in 
the judgment of the trustee to assist in the divestiture, and such 
professionals or agents shall be solely accountable to the trustee.
    D. The trustee shall not divest part or all of Liberty's Sprint 
Holdings in a private sale without a premerger notification form having 
been filed pursuant to the Hart-Scott-Rodino Antitrust Improvement Act 
of 1976 or, if the private sale is not reportable under the Hart-Scott-
Rodina Act, without obtaining the prior written consent of the 
plaintiff, which shall be granted or denied within thirty (30) calendar 
days of the request for such consent.
    E. Defendants shall not provide financing in connection with the 
divestiture to the purchaser of any of Liberty's Sprint Holdings 
required to be divested by this Final Judgment.
    F. Except as provided for in Section V.C. of this Final Judgment, 
defendants shall take no action to influence, interfere with or impede 
the trustee's accomplishment of the divestiture of Liberty's Sprint 
Holdings and Liberty shall, if requested by the trustee, use its best 
efforts to assist the trustee in accomplishing the required 
divestiture, provided that Liberty is not required to take any action 
with respect to any of Liberty's non-Sprint PCS asset or businesses. 
Subject to a customary confidentiality agreement, the trustee shall 
have full and complete access to the defendants' personnel, books, 
records, and facilities related to Liberty's Sprint Holdings. Subject 
to a customary confidentiality agreement, the trustee shall permit 
prospective purchasers of part or all of Liberty's Sprint Holdings in a 
private sale to have access to any and all financial or operational 
information to which the trustee has access, as may be relevant to the 
divestiture required by this Final Judgment.
    G. The trustee shall serve at the cost and expense of Liberty and 
shall account for all monies derived from the sale of the assets sold 
by the trustee and all costs and expenses so incurred. The compensation 
of the trustee and of any professionals and agents retained by the 
trustee shall be reasonable in light of value of the Liberty Sprint 
Holdings and based on a fee arrangement set forth in the trust 
agreement.

VI. Liberty Governance and Economic Interest

    Until the divestitures required by the Final Judgment have been 
accomplished:
    A. Any economic interest arising in connection with Liberty's 
Sprint Holdings, without limitation, and including but not limited to 
any interest or dividends earned or net proceeds received upon the 
disposition of Liberty's Sprint Holdings, shall be for the sole and 
exclusive benefit of the holders of the Liberty Media Tracking Shares. 
AT&T shall not engage in any transaction that transfers either directly 
or indirectly the benefits of Liberty's Sprint Holdings to any other 
class of AT&T shareholders or to AT&T. AT&T shall adhere to the Policy 
Statement Regarding Liberty Tracking Stock Matters contained in Exhibit 
D to the AT&T/TCI Merger Agreement.
    B. TCI shall, on or before the consummation of the merger, (i) 
amend and restate the certificate of incorporation and bylaws of 
Liberty to be in substantially the form set forth in Schedule 2.1(c)(i) 
of the AT&T/TCI Merger Agreement and (ii) appoint all of the Class B 
Directors and the Class C Directors (as such terms are defined in 
Schedule 2.1(c)(i) to the AT&T/TCI

[[Page 2509]]

Merger Agreement) of Liberty Media Corporation.
    C. AT&T shall, on or before the consummation of the AT&T/TCI Merger 
or promptly thereafter, form a Capital Stock Committee as described in 
the Bylaw Amendment for the Capital Stock Committee set out in Exhibit 
D of the AT&T/TCI Merger Agreement and agree to have the Capital Stock 
Committee have the responsibilities described in Exhibit D of the AT&T/
TCI Merger Agreement.
    D. The trustee shall be instructed not to vote Liberty's Sprint 
Holdings for so long as they are held in the trust.
    E. Liberty shall not purchase additional shares of Sprint PCS 
Tracking Stock (other than in connection with the exercise of warrants 
to purchase such shares or the conversion of shares of Series 7 
Preferred Stock acquired in the Sprint PCS Restructuring) without the 
prior written consent of the plaintiff, which shall act on any request 
for such consent within thirty (30) calendar days.
    F. Liberty shall not hold or acquire any interest, direct or 
indirect, in AT&T's mobile wireless operations without a premerger 
notification form having been filed pursuant to the Hart-Scott-Rodino 
Antitrust Improvement Act of 1976, or if the acquisition is not 
reported under the Hart-Scott-Rodino Act, without obtaining the prior 
written consent of the plaintiff, which shall be granted or denied 
within thirty (30) calendar days of the request for such consent. This 
paragraph shall not apply to any cumulative holding or acquisition by 
Liberty of 1.0% or less of the outstanding shares of AT&T Stock 
indirectly through the acquisition of an interest in a third party, 
with such percentage to be calculated by multiplying the percentage 
interest owned by Liberty in such third party by the third party's 
interest in AT&T Stock (and such third party's interest being 
determined in the same manner, if also held indirectly).

VII. Compliance Inspection

    For the purposes of determining or securing compliance with the 
Final Judgment and subject to any legally recognized privilege, from 
time to time:
    A. Duly authorized representatives of the plaintiff, upon written 
request of the Attorney General or of the Assistant Attorney General in 
charge of the Antitrust Division, and on reasonable notice to 
defendants made to their principal offices, shall be permitted:
    (1) Access during office hours of defendants to inspect and copy 
all books, ledgers, accounts, correspondence, memoranda, and other 
records and documents in the possession or under the control of 
defendants, who may have counsel present, relating to matters contained 
in this Final Judgment; and
    (2) Subject to the reasonable convenience of defendants and without 
restraint or interference from them, to interview, either informally or 
on the record, officers, employers, and agents of defendants, who may 
have counsel present, regarding any such matters.
    B. Upon the written request of the Attorney General or of the 
Assistant Attorney General in charge of the Antitrust Division, made to 
defendants' principal offices, defendants shall submit such written 
reports, under oath if requested, with respect to any matter contained 
in this Final Judgment.
    C. No information or documents obtained by the means provided in 
this Section VII shall be divulged by a representative of the plaintiff 
to any person other than a duly authorized representative of the 
Executive Branch of the United States, except in the course of legal 
proceedings to which the United States is a party (including grand jury 
proceedings), or for the purpose of securing compliance with this Final 
Judgment, or as otherwise required by law.
    D. If at the time information or documents are furnished by 
defendants to plaintiff, defendants represent and identify in writing 
the material in any such information or documents to which a claim of 
protection may be asserted under Rule 26(c)(7) of the Federal Rules of 
Civil Procedure, and defendants mark each pertinent page of such 
material ``Subject to claim to protection under Rule 26(c)(7) of the 
Federal Rules of Civil Procedure,'' then ten (10) calendar days notice 
shall be given by plaintiff to defendants prior to divulging such 
material in any legal proceeding (other than a grand jury proceeding).

VIII. Reporting Requirement

    Until the divestitures have been accomplished as provided for in 
Section V. of this Final Judgment, the trustee shall file a report 
every six months with the plaintiff, commencing on November 1, 1999, 
setting forth the efforts to accomplish the divestitures required by 
this Final Judgment.

IX. Retention of Jurisdiction

    Jurisdiction is retained by this Court for the purpose of enabling 
any of the parties to this Final Judgment to apply to this Court at any 
time for such further orders and directions as may be necessary or 
appropriate for the construction or carrying out of this Final 
Judgment, for the modification of any of the provisions hereof, for the 
enforcement of compliance herewith, and for the punishment of any 
violations hereof.

X. Termination

    This Final Judgment will expire upon the tenth anniversary of its 
entry.

XI. Public Interest

    Entry of this Final Judgment is in the public interest.
Dated:-----------------------------------------------------------------
----------------------------------------------------------------------
United States District Judge

Competitive Impact Statement

    The United States, pursuant to section 2(b) of the Antitrust 
Procedures and Penalties Act, 15 U.S.C. 16(b)-(h) (``APPA''), 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

    The United States filed a civil antitrust complaint on December 30, 
1998, alleging that the proposed merger of Tele-Communications Inc. 
(``TCI'') with a wholly owned subsidiary of AT&T Corporation (``AT&T'') 
would violate section 7 of the Clayton Act, 15 U.S.C. 18. Among its 
other telecommunications businesses, AT&T is the largest provider of 
mobile wireless telephone services in the nation. TCI, through a wholly 
owned subsidiary, holds a 23.5% equity interest in the mobile wireless 
telephone business of Sprint Corporation (``Sprint'') another large 
provider of mobile wireless telephone services through its personal 
communications services (``PCS'') subsidiary, Sprint PCS.\1\ The 
complaint alleges that AT&T's acquisition of this

[[Page 2510]]

interest in one of its principal competitors may substantially lessen 
competition in the sale of mobile wireless telephone services. The 
prayer for relief seeks a judgment that the proposed acquisition would 
violate section 7 of the Clayton Act, a 15 U.S.C. 18, and a preliminary 
and permanent injunction preventing AT&T and TCI from carrying out the 
proposed merger.
---------------------------------------------------------------------------

    \1\ When the proposed merger with AT&T was announced, TCI 
(through a subsidiary) owned 23.5% of Sprint Spectrum Holdings, Co., 
L.P. as a general partner. This partnership was restructured on 
November 23, 1998, through transactions in which TCI and the other 
cable partners (Cox Communications, Inc. and Comcast Corporation) 
received Series 2 (Sprint) PCS tracking stock in exchange for their 
partnership interests. In relinquishing their governance rights as 
partners, the cable partners, including TCI, received the right to 
liquidate their interests over the next few years. Their Sprint PCS 
tracking stock has full voting power on issues relating to changing 
the number or nature of the PCS stock, spinoffs or acquisition of 
the PCS business. On all other issues TCI's shares (and those of the 
other two cable partners) have only one-tenth (\1/10\) the voting 
rights that shareholders of other classes of Sprint PCS stock enjoy. 
The restructuring contemplates that the Sprint Corporation Board of 
Directors will manage Sprint's PCS business, with TCI and the other 
cable company owners of the Sprint PCS tracking stock playing a 
passive or lesser role, due to their minimal voting powers on 
matters relating to those issues. Sprint owns 53% of the voting 
power and equity of Sprint PCS.
---------------------------------------------------------------------------

    Shortly before this complaint was filed, the Department and the 
defendants reached agreement on the terms of a proposed consent decree, 
which requires the complete divestiture of the interest in Sprint PCS 
now owned by TCI. The proposed consent decree also contains provisions, 
explained below, designed to minimize any risk of competitive harm that 
otherwise might arise pending completion of the divestiture. In light 
of this agreement, the Department concluded that there was no 
competition-based reason to seek to prohibit AT&T's merger with TCI. A 
Stipulation and proposed Final Judgment embodying the settlement were 
filed simultaneously with the complaint.
    The United States and the defendants have stipulated that the 
proposed Final Judgment may be entered after compliance with the 
Antitrust Procedures and Penalties Act, 15 U.S.C. 16 (``APPA''). Entry 
of the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. Description of the Events Giving Rise to the Alleged Violation

A. The Defendants and the Proposed Transaction
    Defendant AT&T is a New York corporation with headquarters in New 
York, New York. AT&T is a provider of a wide range of 
telecommunications services internationally and in the United States. 
Among other things, it is the largest provider of long distance 
telecommunications services in the United States, as well as the 
largest provider of mobile wireless telephone services. In 1998, AT&T's 
mobile wireless operations reported total revenues of approximately $5 
billion.
    TCI is a Delaware corporation with its headquarters in Englewood, 
Colorado. TCI is the second largest cable system operator in the 
nation. At the time of the proposed merger closing, TCI, through its 
wholly owned subsidiary, Liberty Media Corporation, will own a partial 
interest in Sprint PCS, one of the principal competitors to AT&T's 
mobile wireless telephone business in a large number of markets 
throughout the country. In 1998, Sprint`s PCS revenues totaled 
approximately $975 million.
    On June 24, 1998, AT&T and TCI entered into an agreement pursuant 
to which TCI will merge with a wholly owned subsidiary of AT&T in a $48 
billion transaction. Through this transaction, AT&T will acquire TCI's 
cable television operations, TCI's shares of the Internet Service 
Provider @Home and of Teleport Communications Group, and assume $11 
billion of TCI debt. A variety of other assets now owned by 
subsidiaries of TCI, including the Sprint PCS holdings, will be 
transferred to Liberty Media Corp. (``Liberty'').\2\ Liberty will be a 
wholly-owned subsidiary of AT&T Corp. Although the shares of Liberty 
will be entirely owned by AT&T, the Class B and Class C directors of 
Liberty, who will hold two-thirds (\2/3\) of the seats on the board of 
directors, will be appointed prior to the merger with AT&T by the 
current (TCI) Liberty media shareholders. These directors may be 
removed only for cause for a defined period of time.\3\ AT&T will issue 
a separate class of stock, Liberty Media Tracking Stock, the 
performance of which will reflect the assets held and businesses 
conducted by Liberty.\4\
---------------------------------------------------------------------------

    \2\ TCI, at the time of the merger announcement, was organized 
into three groups, the TCI Cable Group, the TCI Ventures Group, and 
the Liberty Media Group, each group having its own TCI tracking 
stock reflecting the assets owned by different sets of TCI 
subsidiaries. TCI is reorganizing so that before the merger closes, 
all of the TCI Cable Group and some of the TCI Ventures assets will 
be in the TCI Cable Group, to be managed post-merger by AT&T's Board 
of Directors. The remainder of TCI Ventures, including TCI's 
international cable plant holdings, a joint satellite venture with 
news Corporation Limited, an educational and training company, 
partial ownership of two technology companies, and the shares of 
Sprint PCS stock now held by TCI Wireline, Inc., will be merged with 
the cable programming assets of Liberty Media, into Liberty Media 
Corporation, a Delaware Corporation and subsidiary of TCI. Upon 
consummation of the merger, each share of the Liberty Media Group 
tracking stock issued by TCI can be exchanged for one share of 
Liberty Media Tracking stock to be issued by AT&T.
    \3\ See Schedule 2.1(c)(i) of the AT&T/TCI Merger Agreement, 
dated June 23, 1998.
    \4\ See Exhibit D of the AT&T/TCI Merger Agreement, dated June 
23, 1998.
---------------------------------------------------------------------------

B. Mobile Wireless Telephone Services
    The complaint alleges that the proposed merger may substantially 
lessen competition in the provision of mobile wireless telephone 
services in a number of cities throughout the United States.
    Mobile wireless telephone services permit users to make and receive 
telephone calls, using radio transmissions, while traveling by car or 
by other means. The mobility afforded by these services is a valuable 
feature to consumers. In order to provide this capability, wireless 
carriers must deploy an extensive network of switches and radio 
transmitters and receivers. Prior to 1995, mobile wireless telephone 
services were provided primarily by two licensed cellular carriers in 
each geographic area. AT&T owned cellular licenses in a large number of 
areas throughout the country. In 1995, the Federal Communications 
Commissions (``FCC'') allocated (and subsequently issued licenses for) 
additional spectrum for PCS providers, which include mobile wireless 
telephone services comparable to those offered by cellular carriers. In 
addition, in 1996 Nextel Communications, Inc. (``Nextel'') began to 
offer mobile wireless telephone services comparable to that offered by 
cellular and PCS carriers, bundled with dispatch services, using 
spectrum that had been allocated for the provision of specialized 
mobile radio (``SMR'') services.
    In most major metropolitan markets today, there are two cellular 
license holders, each of which is authorized to use 25 MHZ of spectrum, 
up to three PCS licensees each authorized to use 30 MHZ of spectrum, up 
to three PCS licensees each authorized to use 10 MHZ of spectrum, and 
one carrier, Nextel, that uses SMR spectrum. There is substantial 
variation among different geographic areas, however, in terms of the 
number of independent firms that are currently offering mobile wireless 
telephone services, the time frame in which additional firms are 
expected to enter the market using the PCS licenses described above, 
and the scope of geographic coverage that the various carriers can 
offer, in light of the fact that their networks have not yet been fully 
built. Most of the relevant geographic markets have between four and 
six carriers providing mobile wireless telephone services for consumers 
and business, including the two incumbent cellular providers and 
Nextel. The emergence of PCS providers has generally resulted in lower 
rates and/or higher quality services in those areas in which they have 
constructed their networks. Measured by current subscribers and 
revenues, however, the two cellular carriers still control a large 
share of the market, with a collective share of 80% or more in many 
markets.
    There is significant differentiation among the mobile wireless 
telephone services offered by different carriers. Carriers use a 
variety of different technologies, offer a variety of service and 
pricing plans, and offer a variety of product bundles which combine

[[Page 2511]]

wireless telephone service with other services (such as paging and 
messaging services) and/or with a variety of wireless telephone 
handsets. For a significant segment of customers, the services offered 
by AT&T and Sprint PCS appear to be particularly close substitutes. In 
contrast to other mobile wireless telephone service providers that 
offer services only on a local or regional basis on their own 
facilities, both AT&T and Sprint PCS have licenses and facilities in 
most large metropolitan areas and in many smaller metropolitan areas 
throughout the country. In addition, AT&T and Sprint are two of the 
largest providers of long distance telecommunications, as well as a 
wide range of other telecommunications services, and therefore have a 
high degree of brand recognition. For customers who travel frequently, 
and therefore use their mobile phones frequently outside their home 
metropolitan areas, the broad geographic coverage provided by AT&T and 
Sprint is an important competitive advantage. Customers of other 
wireless carriers which have local or regional networks may be able to 
place and receive calls outside of their ``home'' areas, but when they 
do so, they typically incur significant ``roaming'' charges assessed by 
the carrier whose wireless network is being used. Both AT&T and Sprint 
have attempted to exploit this advantage by, among other things, 
offering a single-rate national plan.\5\
---------------------------------------------------------------------------

    \5\ ``Single Rate'' refers to plans that involve a flat per 
minute usage charge, regardless of the location at which the call 
originates or terminates. These plans usually require the purchase 
of a minimum number of minutes per month.
---------------------------------------------------------------------------

C. Anticompetitive Consequences of the Proposed Merger
    The complaint alleges that AT&T's proposed merger with TCI, which 
would result in AT&T's acquisition of TCI's interest in Sprint PCS, may 
substantially lessen competition in the provision of mobile wireless 
telephone services in the metropolitan areas of New York City; Los 
Angeles; Dallas-Fort Worth; San Francisco-Oakland-San Jose; Miami-Ft. 
Lauderdale; Minneapolis-St. Paul; Seattle; Pittsburgh; Denver; 
Portland, OR; Sacramento; Salt Lake City; Las Vegas; and at least 18 
other metropolitan markets. In each of these markets, AT&T is one of 
two licensed cellular service providers, and Sprint PCS provides mobile 
wireless telephone services pursuant to a PCS license. AT&T is the 
largest or second largest provider of mobile wireless telephone 
services in these markets, which are highly concentrated.\6\
---------------------------------------------------------------------------

    \6\ The Department of Justice utilizes the Herfindahl-Hirschman 
Index (``HHI'') as a measure of market concentration. The HHI is 
calculated by summing the squares of the market shares of every firm 
in the relevant market. A market with an HHI level greater than 
1,800 is considered highly concentrated. Department of Justice 
Federal Trade Commission Horizontal Merger Guidelines Sec. 1.5 
(April 2, 1992, revised April 8, 1997). Here, most if not all of the 
relevant markets have pre-merger HHIs well over 2500.
---------------------------------------------------------------------------

    The proposed merger may affect the incentives that govern AT&T's 
competitive behavior (relating to either pricing or service quality) in 
these markets. When a firm makes pricing decisions (or decisions on 
potential investments to improve service quality) it weighs two effects 
that its decision may produce. A higher price (or reduced investment in 
service quality) will generate greater revenues from those customers 
who continue to purchase services from the firm. But a higher price (or 
reduced service quality) also is likely to cause some portion of 
current or potential new customers to purchase services from a 
competitor, thereby reducing the firm's revenues. Weighing these two 
countervailing factors, firms attempt to choose the price (or service 
quality) level that will maximize their profits.
    A firm that acquires a full or partial equity interest in a 
competitor--as AT&T proposes to do here--will face a different 
calculation of its profit-maximizing price (or service quality) after 
such an acquisition. After the acquisition, some portion of the 
customers who would turn to a competitor in response to a price 
increase (or decline in service quality) would likely purchase services 
from the firm being acquired; thus, the revenue generated by those 
customers' purchases will continue to be earned indirectly (through the 
competitor that has been acquired) by the firm raising its price (or 
lowering its service quality). Thus an acquisition can cause an 
individual firm, acting unilaterally, to raise its price more than it 
would have otherwise (or invest less in service quality than it would 
have otherwise) because its profit-maximizing price will be higher (or 
service quality lower) as a result of the acquisition. These adverse 
effects are greater to the extent that the service offered by the 
acquired firm is a particularly close substitute for the service 
offered by the acquiring firm. Under those conditions, a larger share 
of the customers who switch service providers as a result of a price 
increase (or reduction in quality) will switch to the acquired firm.\7\
---------------------------------------------------------------------------

    \7\ Another factor that affects the magnitude of the potential 
price effects is the size of the equity interest that has been 
acquired. If a 100% equity interest has been acquired, the acquiring 
firm will recapture 100% of the revenue earned by the acquired firm 
from customers who switch as a result of the price increase. If a 
20% equity interest has been acquired, only 20% of that revenue 
would be recaptured. Thus, all other things equal, acquisition of a 
larger equity interest in the acquired firm will generate larger 
adverse price effects than would the acquisition of a smaller 
interest.
---------------------------------------------------------------------------

    In light of the high level of concentration in mobile wireless 
telephone services markets, and the fact that AT&T and Sprint PCS 
services appear to be close substitutes for one another for a 
significant segment of customers, the Department was concerned that the 
acquisition of a substantial portion of the equity of Sprint PCS by 
AT&T could reduce AT&T's incentive to compete aggressively in those 
areas in which Sprint PCS is a significant rival and thereby lead to 
higher prices or reduced service quality for mobile wireless telephone 
services.\8\
---------------------------------------------------------------------------

    \8\ Acquisitions of shares with significant voting rights may 
raise additional competitive concerns, beyond those described here 
in connection with acquisitions of equity interests. An acquisition 
of voting rights may allow the acquiring firm to exert control or 
influence over the competitive behavior of the acquired firm in ways 
that reduce competition. These concerns are not present in this 
case. Sprint will retain a majority of the voting power (53%) of the 
Sprint PCS shares and the voting rights conferred by TCI's Sprint 
PCS investment are insignificant. Furthermore, Section VI.D. of the 
proposed Final Judgment will prohibit the trustee from even voting 
those shares during the pre-divestiture period. The Department also 
considered whether the proposed acquisition would distort the 
incentives of Sprint PCS to compete in this market and concluded 
that this was not a significant risk. The defendants will be under a 
court order to divest the Sprint PCS stock. Thus, there is no 
prospect that AT&T will ultimately control Sprint PCS and no reason 
to believe that Sprint PCS's incentives to compete with AT&T during 
the pre-divestiture period will be diminished.
---------------------------------------------------------------------------

    It appears unlikely that, in the immediate future, entry into the 
relevant markets will be sufficient to mitigate this competitive harm. 
For at least the next two years, the only potential entrants will be 
firms using the spectrum already allocated for PCS by the FCC. While 
the FCC may eventually allocate additional spectrum which could be used 
to provide mobile wireless telephone services, it is unlikely that such 
spectrum could be allocated and licensed, and that licensees could 
construct their networks and begin offering service, within the next 
two years. Additional entry within the next two years may come from 
firms using the spectrum that the FCC has already allocated for PCS. 
However, in

[[Page 2512]]

that time frame, it appears unlikely that a firm could acquire a 
sufficient number of PCS licenses and construct its networks so as to 
be able to offer geographic coverage comparable to AT&T's and Sprint 
PCS's nearly nationwide footprint.
    For these reasons, the Department concluded that the merger as 
proposed may substantially lessen competition, in violation of section 
7 of the Clayton Act, in the provision of mobile wireless telephone 
services in those markets where AT&T is one of two cellular licensees 
and where Sprint PCS also provides mobile wireless telephone 
services.\9\
---------------------------------------------------------------------------

    \9\ AT&T also offers mobile wireless telephone services in other 
geographic areas, using PCS licenses. AT&T's market share in those 
markets, which it has only recently entered, is considerably smaller 
than its share in markets where AT&T has a cellular license. The 
Department has reached no judgment as to the competitive effects of 
the proposed merger in those markets. To the extent that the merger 
might produce anticompetitive effects in those markets, however, the 
divestiture requirements in the proposed Final Judgment would 
provide an effective remedy.
---------------------------------------------------------------------------

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment will preserve competition in the sale 
of mobile wireless services in the relevant geographic markets by 
requiring the defendants to execute a complete divestiture of the 
Sprint PCS stock. This divestiture will eliminate the change in market 
structure caused by the merger; after this divestiture, AT&T would be 
unable to recapture any of the revenues that might be diverted from 
AT&T to Sprint PCS as a result of an increase in the price of AT&T's 
mobile wireless telephone services.
    In merger cases in which the Department seeks a divestitute remedy, 
the Department requires completion of the divestiture within the 
shortest time period reasonable under the circumstances. In this case, 
the proposed Final Judgment requires that Liberty's holdings of Sprint 
PCS be reduced to 10% or less of the outstanding Sprint PCS stock by 
May 2002, approximately three years from the expected date of entry of 
the decree, and that the holding be divested completely by May 2004, 
approximately five years from the expected entry of the decree.
    These time periods for divestiture are significantly longer than 
the Department ordinarily would accept. The Department believes they 
are appropriate in this case, however, because of concerns that a more 
rapid divestiture might harm competition by adversely affecting 
Sprint's ability to raise capital to complete the build out of its 
wireless network. Sprint anticipates that it will have near-term needs 
for a substantial amount of capital, both debt and equity, in order to 
purchase and deploy additional infrastructure for its wireless network. 
A complete divestiture in the time period required by the Department in 
the typical case (e.g., six months) potentially could adversely affect 
the value of new stock that would be issued by Sprint, thereby 
increasing its cost of raising additional capital and potentially 
delaying or limiting the completion of Sprint's wireless network 
construction efforts.\10\
---------------------------------------------------------------------------

    \10\ Sprint has also expressed concerns that if AT&T were to 
control the divestiture of Sprint PCS stock, it could strategically 
time the sale of those shares so as to exacerbate, rather than 
mitigate, any possible adverse effect on the value of Sprint PCS 
stock that might be issued by Sprint. Unlike the usual divestitures 
in consent decrees entered into by the Department, the acquiring 
firm here (AT&T) will not be permitted a period of time to 
accomplish the divestiture; rather, it will go immediately to a 
trustee who will effect the sale of the stock.
---------------------------------------------------------------------------

    Sprint's wireless business has recently been restructured through 
transactions in which TCI's former partnership interest in the business 
was converted to TCI's current holding of Sprint PCS stock. In 
connection with that restructuring, Sprint, TCI, and others negotiated 
contractual limitations on the ability of TCI to sell its Sprint PCS 
shares during the period in which Sprint would be seeking to raise 
capital for its build out. The proposed Final Judgment will not 
interfere in any way with TCI's compliance with its contractual 
obligations pursuant to the Sprint PCS restructuring.
    The terms of the proposed Final Judgment reflect a balancing of the 
potential harm to competition that might arise from a divestiture that 
proceeds either too slowly or too rapidly. By permitting the 
divestiture of the Sprint PCS shares to be accomplished by a trustee 
over a period of five years, the proposed Final Judgment should 
minimize the risk of any potential adverse effect on Sprint's build out 
of its wireless network. The anticompetitive effects that could arise 
from the ownership of a substantial interest in Sprint's PCS business 
by a subsidiary of AT&T are addressed by the requirement that a major 
portion of the Sprint PCS holding be divested within three years, and 
that there be a complete divestiture within five years. In addition, 
other supplementary provisions in the Final Judgment, described below, 
are designed to reduce the risk that AT&T's partial ownership of Sprint 
PCS would create anticompetitive incentives during the interim period 
before the completion of the required divestitures.
    Section VI.A. of the proposed Final Judgment requires all economic 
benefits of the Sprint PCS Holding to inure exclusively to the benefit 
of the holders of Liberty Media Tracking Shares, and forbids AT&T from 
engaging in any transaction that would directly or indirectly transfer 
such benefits to AT&T or to any other class of AT&T shareholders. It 
also requires AT&T to adhere to the Policy Statement Regarding Liberty 
Tracking Stock Matters that is an exhibit to its merger agreement. 
Section VI.B. requires TCI to complete the amendment of the Liberty 
certificate of incorporation and bylaws, contemplated by its merger 
agreement with AT&T, and to appoint the Class B and Class C Directors 
of Liberty, prior to the consummation of the merger. Section VI.C. 
requires AT&T to form the Capital Stock Committee contemplated by its 
merger agreement. The Policy Statement, the amendment of Liberty's 
certificate of incorporation and bylaws, and the Capital Stock 
Committee are integral parts of the framework establishing the 
governance arrangements for Liberty, and controlling certain financial 
relationships between and among the various classes of stock issued by 
AT&T Corp., including the Liberty Media Tracking Stock. Section VI.F. 
of the proposed Final Judgment is also intended to ensure substantial 
separation between Liberty's Sprint PCS holding and AT&T's wireless 
business, by restricting Liberty's ability to acquire any interest in 
AT&T's wireless business.
    Collectively, these provisions are meant to promote a ``hold 
separate'' relationship between AT&T and its Sprint PCS holdings during 
the pre-divestiture period, (i) reducing the risk that Liberty will be 
operated for the benefit of holders of other classes at AT&T stock 
(including those other shareholders who will collectively own and 
control AT&T's wireless business), rather than for the benefit of the 
Liberty Tracking Stock shareholders, and (ii) reducing the risk that 
AT&T could recapture any of the revenues that might be diverted to 
Sprint PCS as a result of an AT&T price increase, because the holders 
of the Liberty Media tracking stock, rather than the shareholders of 
AT&T's wireless business, would be the beneficiaries to the extent that 
AT&T customers switch to Sprint PCS.
    As a general matter, the Department does not believe that decree 
restrictions dealing with corporate governance arrangements and the 
separation of economic interests among different

[[Page 2513]]

components of a single corporate enterprise are an appropriate remedy 
for the anticompetitive effects that might arise from mergers and 
acquisitions. Such restrictions will have limited efficacy as a long-
term protection against anticompetitive effects, and may require 
ongoing oversight of the conduct of a corporation's internal affairs 
that neither the Department nor a Court is well-suited to perform on an 
ongoing basis. The proposed settlement of this case adopts such 
provisions only because of the unique factors that are present here, 
and only as an interim measure designated to mitigate any 
anticompetitive incentives that could otherwise arise during the 
unusually lengthy period permitted for complete divestiture.
    Sections IV and V of the proposed Final Judgment set forth the 
process and substantive requirements for the complete divestiture of 
the Sprint PCS Holding, a divestiture that will cure the potential 
anticompetitive effects of the AT&T/TCI merger. Prior to the closing of 
the merger, TCI is required to establish a trust, appoint a trustee, 
and transfer the Sprint PCS Holding to the trust. TCI must secure the 
Department's approval of both the terms of the trust agreement and the 
appointment of the trustee nominated by TCI. The trustee will have the 
obligation and the sole responsibility for executing the divestiture of 
the Sprint PCS Holding.\11\ The trustee is required, by Section V.B., 
to exercise this responsibility in a manner reasonably calculated to 
maximize the value of the Sprint PCS Holding to the holders of Liberty 
Media Tracking Shares. The trustee is prohibited from considering 
possible costs or benefits of a sale to AT&T (Section V.B.), from 
consulting with AT&T, with any Liberty director appointed by AT&T, or 
with any Liberty director, officer, or shareholder who owns a 
substantial interest in AT&T, concerning the sale of the Sprint PCS 
stock (Section V.C.). The trustee will, however, consult with the Class 
B and Class C directors of Liberty, who will be appointed by TCI prior 
to the completion of the merger. The trustee is also prohibited from 
voting the Sprint PCS shares.
---------------------------------------------------------------------------

    \11\ The Sprint PCS shares may be sold either in the public 
markets or in a private sale negotiated with an identified buyer. 
With respect to a private sale, the proposed Final Judgment requires 
prior notice to the Department, so that the Department can ensure 
that such a sale would not raise competitive concerns. There is no 
such requirement with respect to sales in the public market, where 
there is no means of determining in advance who the buyer would be.
---------------------------------------------------------------------------

    By requiring the trustee to act solely in the interests of the 
Liberty Media Tracking Stock shareholders, the proposed Final Judgment 
seeks to minimize any possibility that the divestiture would be carried 
out in a manner designed to provide anticompetitive benefits to AT&T's 
wireless business.
    Collectively, these provisions of the proposed Final Judgment are 
meant to provide a structural remedy (i.e., complete divestiture) for 
the anticompetitive effects that might otherwise result from the 
acquisition; to minimize the risk that this strucural remedy might 
adversely affect competition by impairing Sprint's ability to raise 
capital to complete its wireless build out (by affording a reasonable 
period of time in which to complete the divestiture); and to minimize 
the possibility of interim competitive harm during the period prior to 
completion of the divestiture.
    In order to ensure compliance with the Final Judgment, Section VII 
authorizes plaintiff to conduct an inspection of the defendant's 
records. Plaintiff may copy any records under the control of the 
defendant, interview officers, employees and agents of the defendant, 
and request that the defendant submit written reports. The inspection 
is subject to any legally recognized privilege. All information 
obtained by plaintiff under section VII will be held as confidential 
except in the course of legal proceedings to which the United States is 
a party, or for purposes of securing compliance with the Final 
Judgment, or as otherwise required by law.
    Section IX of the proposed Final Judgment provides that the Court 
will retain jurisdiction over this action, and permits the parties to 
apply to the Court for any order necessary or appropriate for the 
modification of the Final Judgment. In the Department's view, a 
complete legal and economic separation between AT&T's wireless business 
and the Sprint PCS Holdings would constitute a material change in 
circumstances that would justify termination of the divestiture 
obligation. Section IX also provides for the Court's continuing 
jurisdiction to interpret or enforce the Final Judgment.

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 the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
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 lawsuit that may be brought against defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The plaintiff and defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register. The United States will 
evaluate and respond to the comments. All comments will be given due 
consideration by the Department of Justice, which remains free to 
withdraw its consent to the proposed Final Judgment at any time prior 
to entry. The comments and the response of the United States will be 
filed with the Court and published in the Federal Register.
    Written comments should be submitted to: Donald J. Russell, Chief, 
Telecommunications Task Force, Antitrust Division, United States 
Department of Justice, 1401 H Street, NW, Suite 8000, Washington, DC 
20530.

VI. Alternatives to the Proposed Final Judgment

    The plaintiff considered, as an alternative to the proposed Final 
Judgment, action to block consummation of the merger. The plaintiff is 
satisfied, however, that the divestiture of the Sprint PCS Tracking 
Stock and other relief contained in the proposed Final Judgment will 
preserve competition in the provision of mobile wireless telephone 
services, and that there is no competition-related reason to seek to 
block the merger.

VII. Standard of Review Under the APPA for Proposed Final Judgment

    The APPA requires that proposed consent judgments in antitrust 
cases brought by the United States be subject to a sixty (60) day 
comment period, after

[[Page 2514]]

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). As the United States Court of Appeals 
for the D.C. Circuit recently held, this statute permits a court to 
consider, among other things, the relationship between the remedy 
secured and the specific allegations set forth in the government's 
complaint, whether the decree is sufficiently clear, whether 
enforcement mechanisms are sufficient, and whether the decree may 
positively harm third parties. See United States v. Microsoft, 56 F.3d 
1448, 1461-62 (D.C. Cir. 1995).
    In conducting this inquiry, ``[t]he 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.'' \12\ Rather,

    \12\ 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. 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, 93d Cong. 2d 
Sess. 8-9 (1974), reprinted in U.S.C.C.A.N. 6535, 6538.

[a]bsent a showing of corrupt failure of the government to discharge 
its duty, the Court, in making its 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. (CCH) 
para. 61,508, at 71.980 (W.D. Mo. 1977).
    Accordingly, with respect to the adequacy of the relief secured by 
the decree, a court may not ``engage in an unrestricted evaluation of 
what relief would best serve the public.'' United States v. BNS, Inc., 
858 F.2d 456, 462 (9th Cir. 1988) (citing United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083 
(1981)); see also Microsoft, 56 F.3d at 1460-62. Precedent requires 
that

the 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.\13\

    \13\ Bechtel, 648 F.2d at 666 (emphasis added); see BNS, 858 
F.2d at 463; United States v. National Broadcasting Co., 449 F. 
Supp. 1127, 1143 (C.D. Cal. 1978); Gillette, 406 F. Supp. at 716. 
See also Microsoft, 56 F.3d at 1461 (whether ``the remedies 
(obtained in the decree are) so inconsonant with the allegations 
charged as to fall outside of the `reaches of the public interest' 
'').

    The proposed Final Judgment, therefore, should not be reviewed 
under a standard of whether it is certain to eliminate every 
anticompetitive effect of a particular practice or whether it mandates 
certainty of free competition in the future. 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.' '' \14\
---------------------------------------------------------------------------

    \14\ 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 Gillette Co., 406 F. Supp. at 716); 
United States v. Alcan Aluminum, Ltd., 605 F. Supp. 619, 622 (W.D. 
Ky. 1985).
---------------------------------------------------------------------------

VIII. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final judgment.

      Respectfully submitted,
Donald J. Russell,
Chief, Telecommunications Task Force, U.S. Department of Justice, 
Antitrust Division, 1401 H Street, NW, Suite 8000, Washington, DC 
20530, (202) 514-5621.
    Dated: December 30, 1998.

Certificate of Service

    I hereby certify that copies of the foregoing Plaintiff's 
Competitive Impact Statement were served by hand and/or first-class 
U.S. mail, postage prepaid, this 30th day of December, 1998 upon 
each of the parties listed below:
Betsy Brady, Esq (by hand), Vice President-Federal Government Affairs, 
Suite 1000, 1120 20th Street, NW, Washington, DC 20036, (Counsel for 
AT&T Corp.).
Kathy Fenton (by hand), Jones, Day, Reavis and Pogue, Suite 700, 1450 G 
Street, NW, Washington, DC 20005, (Counsel for Tele-Communications, 
Inc.).
Peter A. Gray,
Counsel for Plaintiff.
[FR Doc. 99-824 Filed 1-13-99; 8:45 am]
BILLING CODE 4410-11-M