[Federal Register Volume 64, Number 82 (Thursday, April 29, 1999)]
[Notices]
[Pages 23099-23114]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10678]


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DEPARTMENT OF JUSTICE

Antitrust Division
[Civil No. 99-0715]


United States v. SBC Communications Inc. and Ameritech 
Corporation; Proposed Final Judgment and Competitive Impact Statement

Filed: March 23, 1999.
    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Section 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. SBC Communications Inc. and Ameritech Corporation, 
Civil No. 99-0715 (D.D.C.). 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. Section 16(b)-(h).
    On March 23, 1999, the United States filed a Complaint alleging 
that the proposed acquisition of Ameritech Corporation by SBC 
Communications Inc. would violate Section 7 of the Clayton Act, 15 
U.S.C. 18. The Complaint alleges that if this merger is consummated, 
competition in the markets for wireless mobile telephone services in 
seventeen areas in Illinois, Indiana and Missouri would be lessened 
substantially. The areas affected include fourteen markets where SBC 
and Ameritech are the two providers of cellular mobile telephone 
services, including Chicago and St. Louis, and three markets where 
Ameritech is one of the providers of cellular mobile telephone services 
and Comcast Cellular Corporation, which SBC has entered into an 
agreement to acquire, owns the other cellular telephone system. The 
Complaint also alleges that competition would be lessened in the St. 
Louis area because, as a result of this merger, Ameritech would not 
provide local exchange and long distance telephone services bundled 
with its cellular mobile telephone services, as it had planned to do in 
St. Louis before agreeing to merge with SBC.
    The proposed Final Judgment, filed at the same time as the 
Complaint, requires SBC and Ameritech to divest one of the two 
overlapping cellular telephone systems in each of the seventeen market 
areas. In the areas presently served by Comcast, and in the areas in 
Missouri, the Ameritech cellular systems must be divested, while in the 
other SBC and Ameritech may choose which of the two systems will be 
divested. The assets Ameritech planned to use to provide local exchange 
and long distance telephone services together with its cellular mobile 
telephone services in the St. Louis area must also be divested. The 
proposed Final Judgment requires that the assets of these cellular 
telephone systems be divested no later than 180 days following the 
earlier of: (1) all final regulatory approvals needed for SBC and 
Ameritech to consummate their merger; or (2) the consummation of the 
merger of SBC and Ameritech. Before the merger can be consummated, any 
assets required to be divested that have not been sold must be 
transferred to a trustee, who will complete the divestiture during 
whatever part of the 180-day period remains.
    On April 7, 1999, SBC and Ameritech notified the Department of 
Justice, pursuant to the provisions of the proposed Final Judgment, 
that they have entered into an agreement to sell all of the assets of 
these cellular telephone systems required to be divested to a venture 
owned 93% by GTE and 7% by Georgetown Partners. This agreement is 
contingent on the consummation of the merger between SBC and Ameritech.
    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).
    The Competitive Impact Statement, filed by the United States on 
April 16, 1999, describes the Complaint, the proposed Final Judgment, 
the alleged violations, and the remedies available to private 
litigants. Copies of the Complaint, 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, as follows:
    (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 this Court.
    (2) The parties stipulate 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, 
which it may do at any time before entry of the proposed Final Judgment 
by serving notice thereof on defendants and by filing that notice with 
the Court.
    (3) Defendants shall abide by and comply with the provisions of the 
proposed Final Judgment pending entry of the Final Judgment by the 
Court, or until expiration of time for all appeals of any Court ruling 
declining entry of the proposed Final Judgment, and shall, from the 
date of the signing 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.
    (4) This Stipulation shall apply with equal force and effect to any 
amended proposed Final Judgment agreed upon in writing by the parties 
and submitted in the Court.
    (5) In the event plaintiff withdraws its consent, as provided in 
paragraph (2) above, or in the event that the Court declines to enter 
the proposed Final

[[Page 23100]]

Judgment pursuant to this Stipulation, the time has expired for all 
appeals of any Court ruling declining entry of the proposed Final 
Judgment, and the Court has not otherwise ordered continued compliance 
with the terms and provisions of the proposed Final Judgment, then the 
parties are released from all further obligations under this 
Stipulation, and the making of this Stipulation shall be without 
prejudice to any party in this or any other proceeding.
    (6) Defendants represent that the divestiture ordered in the 
proposed Final Judgment 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 
therein.

    Dated: March 23, 1999.

    For Plaintiff United States of America.
Joel I. Klein,
Assistant Attorney General.
A. Douglas Melamed,
Principal Deputy Assistant Attorney General.
Constance K. Robinson,
Director of Operations and Merger Enforcement.
Donald J. Russell,
Chief, Telecommunications Task Force.
Laury Bobbish,
Assistant Chief, Telecommunications Task Force.
Carl Willner,
D.C. Bar No. 412841.
Michael Chaleff,
Attorneys, Telecommunications Task Force.
U.S. Department of Justice, Antitrust Division, 1401 H Street, NW, 
Suite 8000, Washington, DC 20530.
    Date Signed: March 23, 1999.

    For SBC Communications Inc.
Donald L. Flexner,
D.C. Bar No. 343269, Crowell & Moring LLP, 1001 Pennsylvania Avenue, 
NW, Washington, DC 20004-2595.
    Date Signed: March 17, 1999.

    For Ameritech Corporation.
 Richard J. Favretto,
D.C. Bar No. 156588.
Mark W. Ryan,
D.C. Bar No. 359098, Mayer, Brown & Platt, 2000 Pennsylvania Avenue NW, 
Washington, DC 20006-1882.
    Date Signed: March 17, 1999.

Stipulation Approved for Filing
    Done this ____ day of ____, 1999
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United States District Judge

Final Judgment

    Whereas, plaintiff, United States of America, filed its Complaint 
on March 23, 1999:
    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, entry of this Final Judgment does not constitute any 
evidence against or an admission by any party with respect to any issue 
of law or fact;
    And whereas, defendants have further consented to be bound by the 
provisions of the 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 markets for 
mobile wireless telecommunications services in Illinois, Indiana and 
Missouri;
    And whereas, the essence of this Final Judgment is prompt and 
certain divestiture of certain cellular wireless systems that would 
otherwise be commonly owned and controlled, including their licenses 
and all relevant assets of the cellular systems, and the imposition of 
related injunctive relief to ensure that competition is not 
substantially lessened;
    And whereas, plaintiff the United States requires that defendants 
make certain divestitures of such licenses and assets for the purpose 
of ensuring that competition is not substantially lessened in any 
relevant market for mobile wireless telecommunications services in 
Illinois, Indiana or Missouri;
    And whereas, defendants have represented to plaintiff that the 
divestitures ordered herein can and will be made and that defendants 
will not raise any claims of hardship or difficulty as grounds for 
asking the Court to modify any of the divestiture provisions contained 
herein below;
    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:

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. 18, as 
amended.

II

Definitions

    A. Ameritech means Ameritech Corporation, a corporation with its 
headquarters in Chicago, Illinois, and includes its successors and 
assigns, its subsidiaries and affiliates, and its directors, officers, 
managers, agents and employees acting for or on behalf of any of the 
foregoing entities.
    B. Cellular System Assets means, for each cellular system to be 
divested under this Final Judgment, all types of assets, tangible and 
intangible, used by defendants in the operation of each of the cellular 
systems to be divested (including the provision of long distance 
telecommunications services for wireless calls), and with respect to 
the divested cellular system in the St. Louis Area (defined to mean the 
St. Louis MO-IL Metropolitan Statistical Area and the Missouri 8, 
Missouri 12, Missouri 18, and Missouri 19 Rural Service Areas), shall 
also include those assets acquired, developed, used or intended for use 
in connection with the provision of local exchange telecommunications 
services and long distance telecommunications services by such system. 
``Cellular System Assets'' shall be construed broadly to accomplish the 
complete divestitures of the entire business of one of the two cellular 
systems in each of the Overlapping Cellular Markets required by this 
Final Judgment and to ensure that the divested cellular systems remain 
viable, ongoing businesses. In the Overlapping Cellular Markets in the 
St. Louis Area, and in the Comcast Overlapping Cellular Markets 
(defined as the Joliet, IL, Aurora-Elgin, IL, and Kankakee, IL 
Metropolitan Statistical Areas), the Cellular System Assets to be 
divested shall be those currently owned and used by Ameritech. In the 
remaining Overlapping Cellular Markets, the Cellular System Assets to 
be divested shall be either those currently owned and used by Ameritech 
or those currently owned and used by SBC, but not both. These 
divestitures of the Cellular System Assets as defined in this Section 
II.B shall be accomplished by: (i) transferring to the purchaser the 
complete ownership and/or other rights to the assets (other than those 
assets used substantially in the operations of either defendant's 
overall cellular business that must be retained to continue the 
existing operations of the cellular properties defendants are not 
required to divest, and that either are not capable of being divided 
between the divested cellular systems and those that are not divested 
or are assets that the divesting defendant and the purchaser(s) agree 
shall not be divided); and (ii) granting to the purchaser an option to 
obtain a non-exclusive, transferable license from defendants for

[[Page 23101]]

a reasonable period at the election of the purchaser to use any of the 
divesting defendant's assets used in the operation of the cellular 
system being divested, so as to enable the purchaser to continue to 
operate the divested cellular systems without impairment, where those 
assets are not subject to complete transfer to the purchaser under (i). 
The assets acquired, developed, used or intended for use in connection 
with the provision of local exchange telecommunications services and 
long distance telecommunications services by the cellular system in the 
St. Louis Area are all subject to complete transfer of ownership and/or 
other rights under (i). Assets shall include, without limitation, all 
types of real and personal property, monies and financial instruments, 
equipment, inventory, office furniture, fixed assets and furnishings, 
supplies and materials, contracts, agreements, leases, commitments, 
spectrum licenses issued by the Federal Communications Commission 
(``FCC'') and all other licenses, permits and authorizations, 
operational support systems, customer support and billing systems, 
interfaces with other service providers, business and customer records 
and information, customer lists, credit records, accounts, and historic 
and current business plans, as well as any patents, licenses, sub-
licenses, trade secrets, know-how, drawings, blueprints, designs, 
technical and quality specifications and protocols, quality assurance 
and control procedures, manuals and other technical information 
defendants supply to their own employees, customers, suppliers, agents, 
or licensees, and trademarks, trade names and service marks (except for 
trademarks, trade names and service marks containing ``SBC,'' 
``Southwestern Bell,'' ``Ameritech,'' or ``Cellular One'') or other 
intellectual property, including all intellectual property rights under 
third party licenses that are capable of being transferred to a 
purchaser either in their entirety, for assets described above under 
(i), or through a license obtained through or from the divesting 
defendant, for assets described above under (ii). Defendants shall 
identify in a schedule submitted to plaintiff and filed with the Court, 
as expeditiously as possible following the filing of the Complaint in 
this case and in any event prior to any divestitures and before the 
approval by the Court of this Final Judgment, any intellectual property 
rights under third party licenses that are used by the cellular systems 
being divested but that defendants could not transfer to a purchaser 
entirely or by license without third party consent, and the specific 
reasons why such consent is necessary and how such consent would be 
obtained for each asset.
    C. Overlapping Cellular Markets means the following Metropolitan 
Statistical Areas and Rural Service Areas used to define cellular 
license areas by the FCC, in which Ameritech and SBC each held 
ownership interests in one of the cellular wireless licenses issued by 
the FCC as of the date of the filing of the Complaint in this action, 
or in which Comcast Cellular Corporation (which SBC has entered into an 
agreement to acquire as of January 19, 1999) and Ameritech each held 
ownership interests in one of the cellular wireless licenses issued by 
the FCC as of the date of the filing of the Complaint in this action:

Metropolitan Statistical Areas Served by SBC and Ameritech

Chicago, IL
St. Louis, MO-IL
Gary-Hammond-East Chicago, IN
Springifeld, IL
Champaign-Urbana-Rantoul, IL
Bloomington-Normal, IL
Decatur, IL

Rural Service Areas Served by SBC and Ameritech

Illinois 2--Bureau
Illinois 5--Mason
Illinois 6--Montgomery
Missouri 8--Callaway
Missouri 12--Maries
Missouri 18--Perry
Missouri 19--Stoddard

Metropolitan Statistical Areas Served by Comcast and Ameritech

Joliet, IL
Aurora-Elgin, IL
Kankakee, IL (Comcast 10.07% interest)

    D. SBC means SBC Communications Inc., a corporation with its 
headquarters in San Antonio, Texas, and includes its successors and 
assigns, its subsidiaries and affiliates, and its directors, officers, 
managers, agents and employees acting for or on behalf of any of the 
foregoing entities.
    E. SBC/Ameritech Merger means the merger of SBC and Ameritech, as 
detailed in the Agreement and Plan of Merger entered into by SBC and 
Ameritech on May 10, 1998, for which defendants have filed a 
notification pursuant to the Hart-Scott-Rodino Antitrust Improvements 
Act on July 20, 1998.

III

Applicability and Effect

    A. The provisions of this Final Judgment shall be applicable to 
each of the defendants, its affiliates, subsidiaries, successors, and 
assigns, and its directors, officers, managers, agents, employees, 
attorneys, and shall also be applicable to 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.
    B. Defendants shall require, as a condition of the sale or other 
disposition to an Interim Party, which shall be defined to mean any 
person other than a purchaser approved by the plaintiff pursuant to 
Section IV.C, of all or substantially all of their assets, or of a 
lesser business unit containing the Cellular System Assets required to 
be divested by this Final Judgment, that the Interim Party agrees to be 
bound by the provisions of this Final Judgment, and shall also require 
that any purchaser of the Cellular System Assets agree to be bound by 
Section X of this Final Judgment.

IV

Divestiture of Cellular Interests

    A. Defendants Ameritech and SBC shall divest themselves, at or 
before the time of consummation of the SBC/Ameritech Merger, of the 
Cellular System Assets as defined above in each of the Overlapping 
Cellular Markets, including both any direct or indirect financial 
ownership interests and any direct or indirect role in management or 
participation in control, to a purchaser or purchasers acceptable to 
plaintiff in its sole discretion, or to a trustee designated pursuant 
to Section V of this Final Judgment. Divestiture of the Cellular System 
Assets in each of the Overlapping Cellular Markets to a purchaser or 
purchasers acceptable to plaintiff in its sole discretion, as required 
in Section IV.C of this Final Judgment, shall occur no later than one 
hundred eighty (180) calendar days after the earlier of the following 
events: (i) issuance of all final authorizations by the FCC and state 
regulatory commissions that are necessary preconditions to the 
consummation of the SBC/Ameritech Merger, or (ii) the consummation of 
the SBC/Ameritech Merger; provided, however, that if applications have 
been filed with the FCC within the one hundred eighty day period 
seeking approval to assign or transfer licenses to the purchaser(s) of 
the Cellular System Assets but approval of such applications has not 
been granted before the end of the one hundred eighty day period, the 
period shall be extended with respect to the divestiture of those 
Cellular System Assets for which final FCC approval has

[[Page 23102]]

not been granted until five (5) days after such approval is received.
    B. Defendants agree to use their best efforts to accomplish the 
divestitures set forth in this Final Judgment (i) as expeditiously as 
possible, including obtaining all necessary regulatory approvals, and 
(ii) to a purchaser or purchasers at or before consummation of the SBC/
Ameritech Merger. The divestitures carried out under the terms of this 
decree shall also be conducted in compliance with the applicable rules 
of the FCC, including 47 CFR 20.6 (spectrum aggregation) and 47 CFR 
22.942 (cellular cross-ownership). Authorization by the FCC to conduct 
divestiture of a cellular system in a particular manner will not modify 
any of the requirements of this decree.
    C. Unless plaintiff otherwise consents in writing, the divestitures 
pursuant to Section IV, or by trustee appointed pursuant to Section V 
of the Final Judgment, shall be accomplished by (1) divesting all of 
the Cellular System Assets in any individual Overlapping Cellular 
Market entirely to a single purchaser (but Cellular System Assets in 
different Overlapping Cellular Markets may be divested to different 
purchasers), and (2) selling or otherwise conveying the Cellular System 
Assets to the purchaser(s) in such a way as to satisfy plaintiff, in 
its sole discretion, that each cellular system can and will be used by 
the purchaser(s) as part of a viable, ongoing business engaged in the 
provision of cellular mobile telephone service. The divestitures 
pursuant to this Final Judgment shall be made to a purchaser(s) for 
whom it is demonstrated to plaintiff's sole satisfaction that (1) 
purchaser(s) has the capability and intent of competing effectively in 
the provision of cellular mobile telephone service using the Cellular 
System Assets, (2) the purchaser(s) has the managerial, operational and 
financial capability to compete effectively in the provision of 
cellular mobile telephone service using the Cellular System Assets, (3) 
with respect to the purchaser of the Cellular System Assets in the St. 
Louis Area, if such Cellular System Assets are divested to the 
purchaser by Ameritech rather than by the trustee, the purchaser has 
the capability of competing effectively in the provision of local 
exchange telecommunications services and long distance 
telecommunications services in the St. Louis Area, and (4) none of the 
terms of any agreement between the purchaser(s) and either of the 
defendants shall give defendants the ability unreasonably (i) to raise 
the purchaser(s) costs, (ii) to lower the purchaser(s)'s efficiency, 
(iii) to limit any line of business which a purchaser(s) may choose to 
pursue using the Cellular System Assets (including, but not limited, to 
entry into local telecommunications services on a resale or facilities 
basis or long distance telecommunications services on a resale or 
facilities basis), or otherwise to interfere with the ability of the 
purchaser(s) to compete effectively.
    D. If they have not already done so, defendants shall make known 
the availability of the Cellular System Assets in each of the 
Overlapping Cellular Markets by usual and customary means, sufficiently 
in advance of the time of consummation of the SBC/Ameritech Merger 
reasonably to enable the required divestitures to be carried out at or 
before the consummation of the SBC/Ameritech Merger. Defendants shall 
inform any person making an inquiry regarding a possible purchase of 
the Cellular System Assets that the sale is being made pursuant to the 
requirements of this Final Judgment, as well as the rules of the FCC, 
and shall provide such person with a copy of the Final Judgment.
    E. Defendants shall offer to furnish to all prospective purchasers, 
subject to customary confidentiality assurances, access to personnel, 
the ability to inspect the Cellular System Assets, and all information 
and any financial, operational, or other documents customarily provided 
as part of a due diligence process, including all information relevant 
to the sale and to the areas of business in which the cellular system 
has been engaged or has considered entering, except documents subject 
to attorney-client or work product privileges, or third party 
intellectual property that defendants are precluded by contract from 
disclosing and that has been identified in a schedule pursuant to 
Section II.B. Defendants shall make such information available to the 
plaintiff at the same time that such information is made available to 
any other person.
    F. Defendants shall not interfere with any negotiations by any 
purchaser to retain any employees who work or have worked since May 11, 
1998 (other than solely on a temporary assignment basis from another 
part of Ameritech or SBC) with, or whose principal responsibility 
relates to, the divested Cellular System Assets.
    G. To the extent that the cellular systems to be divested use 
intellectual property, as required to be identified by Section II.B, 
that cannot be transferred or assigned without the consent of the 
licensor or other third parties, defendants shall cooperate with the 
purchaser(s) and trustee to seek to obtain those consents.
    H. Defendants shall preserve all records of all efforts made to 
preserve and divest any or all of the Cellular System Assets required 
to be divested until the termination of this Final Judgment.

V

Appointment of Trustee

    A. If, at or before the consummation of the SBC/Ameritech Merger, 
the defendants have not divested all of the Cellular System Assets 
required to be divested to a purchaser or purchasers that have been 
approved by plaintiff pursuant to Section IV.C, then, before defendants 
consummate the SBC/Ameritech Merger:
    1. Defendants shall notify plaintiff in writing whether the 
remaining Cellular System Assets to be divested in the Overlapping 
Cellular Markets, other than those in the St. Louis Area (the St. 
Louis, MO-IL Metropolitan Statistical Area and the Missouri 8, Missouri 
12, Missouri 18, and Missouri 19 Rural Service Areas), and the Comcast 
Overlapping Cellular Markets (the Joliet, IL, Aurora-Elgin, IL, and 
Kankakee, IL Metropolitan Statistical Areas), shall be those currently 
owned and used by Ameritech, or those currently owned and used by SBC 
(in the St. Louis Area and the Comcast Overlapping Cellular Markets, 
the divested Cellular System Assets must be those owned by Ameritech), 
and this written notification shall also be provided to the trustee 
promptly upon his or her appointment by the Court;
    2. The Court shall, on application of plaintiff, appoint a trustee 
selected by the plaintiff, who will be responsible for (a) 
accomplishing a divestiture of all Cellular System Assets transferred 
to the trustee from defendants, in accordance with the terms of this 
Final Judgment, to a purchaser or purchaser(s) approved by the 
plaintiff under Section IV.C, and (b) exercising the responsibilities 
of the licensee and controlling and operating the transferred Cellular 
System Assets, to ensure that the cellular systems remains ongoing, 
economically viable competitors in the provision of cellular mobile 
wireless telecommunications services in the Overlapping Cellular 
Markets, until they are divested to a purchaser or purchasers, and the 
trustee shall agree to be bound by this Final Judgment;
    3. Defendants shall submit a form of trust agreement (``Trust 
Agreement'') to the plaintiff, which must be consistent with the terms 
of this Final Judgment and which must have received approval

[[Page 23103]]

by the plaintiff, who shall communicate to defendants within ten (10) 
business days approval or disapproval of that form; and
    4. After obtaining any necessary approval from the FCC for the 
transfer of control of the licenses of the remaining cellular systems 
to the trustee, defendants shall irrevocably divest the remaining 
Cellular System Assets to the trustee, who will own such assets (or own 
the stock of the entity such assets, if divestiture is to be effected 
by the creation of such an entity for sale to purchaser(s)) and control 
such assets, subject to the terms of the approved Trust Agreement.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the cellular system(s) to be 
divested, which shall be done within the time periods set forth in this 
Final Judgment. Those assets shall be the Cellular System Assets for 
the Ameritech cellular operations in the St. Louis Area (the St. Louis 
MO-IL Metropolitan Statistical Area and the Missiouri 8, Missouri 12, 
Missouri 18, and Missouri 19 Rural Service Areas) and the Comcast 
Overlapping Cellular Markets (the Joliet, IL, Aurora-Elgin, IL, and 
Kankakee, IL Metropolitan Statistical Areas) and the Cellular System 
Assets as designated by defendants prior to the consummation of the 
SBC/Ameritech Merger as set forth in Section V.A.1 for the remaining 
Overlapping Cellular Markets. The trustee shall have the power and 
authority to accomplish the divestiture at the best price then 
obtainable upon a reasonable effort by the trustee, subject to the 
provisions of Sections IV, V, and VI of this Final Judgment. Subject to 
Section V.C of this Final Judgment, the trustee shall have the power 
and authority to hire at the cost and expense of defendants any 
investment bankers, attorneys, or other agents reasonably necessary in 
the judgment of the trustee to assist in the divestiture and in the 
management of the Cellular System Assets transferred to the trustee, 
and such professionals and agents shall be accountable solely to the 
trustee. The trustee shall have the power and authority to accomplish 
the divestiture at the earliest possible time to a purchaser acceptable 
to the plaintiff in its sole discretion, and shall have such other 
powers as this Court shall deem appropriate. The defendants shall not 
object to a sale by the trustee on any grounds other than the trustee's 
malfeasance. Any such objections by the defendants must be conveyed in 
writing to plaintiff and the trustee within ten (10) days after the 
trustee has provided the notice required under Section VI of this Final 
Judgment.
    C. The trustee shall serve at the cost and expense of the 
defendants, on such terms and conditions as the Court may prescribe, 
and shall account for all monies derived from the sale of the cellular 
system(s) sold by the trustee and all costs and expenses so incurred. 
After approval by the Court of the trustee's accounting, including fees 
for its services and those of any professionals and agents retained by 
the trustee, all remaining money shall be paid to defendants and the 
trust shall then be terminated. The compensation of such trustee and of 
professionals and agents retained by the trustee shall be reasonable in 
light of the value of the divested cellular system(s) and based on a 
fee arrangement providing the trustee with an incentive based on the 
price and terms of the divestiture and the speed with which it is 
accomplished.
    D. The defendants shall use their best efforts to assist the 
trustee in accomplishing the required divestiture, including their best 
efforts to effect all necessary regulatory approvals. The trustee and 
any consultants, accountants, attorneys, and other persons retained by 
the trustee shall have full and complete access to the personnel, 
books, records, and facilties of the cellular system(s) to be divested, 
and the defendants shall develop financial or other information 
relevant to the business to be divested customarily provided in a due 
diligence process as the trustee may reasonably request, subject to 
customary confidentiality assurances. As required and limited by 
Sections IV.E and F of this Final Judgment, the defendants shall permit 
prospective purchaser(s) of the cellular system(s) to have reasonable 
access to personnel and to make such inspection of the Cellular System 
Assets to be sold and any and all financial, operational, or other 
documents and other information as may be relevant to the divestiture 
required by this Final Judgment.
    E. After being appointed and until the divestiture of the Cellular 
System Assets is complete, the trustee shall file monthly reports with 
the parties and the Court setting forth the trustee's efforts to 
accomplish the divestiture ordered under this Final Judgment; provided, 
however, that, to the extent such reports contain information that the 
trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. Such reports shall include the name, 
address, and telephone number of each person who, during the preceding 
month, made an offer to acquire, expressed an interest in acquiring, 
entered into negotiations to acquire, or was contacted or made an 
inquiry about acquiring the Cellular System Assets to be sold, and 
shall describe in detail each contact with any such person during that 
period. The trustee shall maintain full records of all efforts made to 
divest the Cellular System Assets.
    F. If the trustee has not accomplished the divestiture of all of 
the Cellular System Assets within the time specified for completion of 
divestiture to a purchaser or purchaser(s) under Section IV.A of this 
Final Judgment, the trustee thereupon shall file promptly with this 
Court a report setting forth: (1) the trustee's efforts to accomplish 
the required divestiture; (2) the reasons, in the trustee's judgment, 
why the required divestiture has not been accomplished; and (3) the 
trustee's recommendations; provided, however, that, to the extent such 
reports contain information that the trustee deems confidential, such 
reports shall not be filed in the public docket of the Court. The 
trustee shall at the same time furnish such report to the parties, who 
shall each have the right to be heard and to make additional 
recommendations consistent with the purpose of the trust. The Court 
shall enter thereafter such orders as it deems appropriate in order to 
carry out the purpose of the trust, which may, if necessary, include 
extending the trust and the term of the trustee's appointment by a 
period agreed to by the plaintiff.
    G. After defendants transfer the Cellular System Assets to the 
trustee, and until those Cellular System Assets have been divested to a 
purchaser or purchaser(s) approved by plaintiff pursuant to Section 
IV.C, the trustee shall have sole and complete authority to manage and 
operate the Cellular System Assets and to exercise the responsibilities 
of the licensee, and shall not be subject to any control or direction 
by defendants. Defendants shall not retain any economic interest in the 
Cellular System Assets transferred to the trustee, apart from the right 
to receive the proceeds of the sale or other disposition of the 
Cellular System Assets. The trustee shall operate the cellular 
system(s) as a separate and independent business entity from SBC or 
Ameritech, with sole control over operations, marketing and sales. SBC 
and Ameritech shall not communicate with, or attempt to influence the 
business decisions of, the trustee concerning the operation and 
management of the cellular systems, and shall not communicate with the 
trustee concerning the divestiture of the Cellular System Asset or take 
any action to influence, interfere with, or impede

[[Page 23104]]

the trustee's accomplishment of the divestitures required by this Final 
Judgment, except that defendants may communicate with the trustee to 
the extent necessary for defendants to comply with this Final Judgment 
and to provide the trustee, if requested to do so, with whatever 
resources or cooperation may be required to complete the divestitures 
of the Cellular System Assets and to carry out the requirements of this 
Final Judgment. In no event shall defendants provide to, or receive 
from, the trustee or the cellular systems under the trustee's control 
any non-public or competitively sensitive marketing, sales, or pricing 
information relating to their respective cellular mobile wireless 
telecommunications service businesses.

VI

Notification

    A. Within two (2) business days following execution of a binding 
agreement to effect, in whole or in part, any proposed divestiture 
required by this Final Judgment, whichever defendant is divesting the 
cellular system, or the trustee if the trustee is divesting the 
cellular system, shall notify plaintiff of the proposed divestiture. If 
the trustee is responsible for the divestiture, the trustee shall 
similarly notify the defendants. The notice shall set forth the details 
of the proposed transaction and list the name, address, and telephone 
number of each person not previously identified who theretofore offered 
to, or expressed an interested in or a desire to, acquire any ownership 
interest in the Cellular System Assets that are the subject of the 
binding agreement, together with full details of same.
    B. Within fifteen (15) calendar days of receipt by plaintiff of 
such notice, plaintiff may request from defendants, the proposed 
purchaser(s), any other third party, or the trustee (if applicable), 
additional information concerning the proposed divestiture and the 
proposed purchaser(s) or any other potential purchasers. Defendants and 
the trustee shall furnish any such additional information requested 
within fifteen (15) calendar days of the receipt of the request, unless 
the parties shall otherwise agree. Within thirty (30) calendar days 
after receipt of the notice, or within twenty (20) calendar days after 
plaintiff has been provided the additional information requested from 
defendants, the proposed purchaser(s), any third party, or the trustee, 
whichever is later, plaintiff shall provide written notice to 
defendants and the trustee, if there is one, stating whether or not 
plaintiff objects to the proposed divestiture. If plaintiff provides 
written notice to defendants and the trustee, if there is one, that it 
does not object, then the divestiture may be consummated subject only 
to defendants' limited right to object to the sale under Section V.B of 
this Final Judgment. Absent written notice that plaintiff does not 
object to the proposed purchaser(s) or in the event of an objection by 
plaintiff, a divestiture shall not be consummated. Upon objection by a 
defendant under the proviso of Section V.B. a divestiture proposed 
under Section V shall not be consummated unless approved by the Court.

VII

Affidavits

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter and every thirty (30) calendar days thereafter until the 
divestitures have been completed, defendants shall deliver to plaintiff 
an affidavit as to the fact and manner of defendants' compliance with 
this Final Judgment. With respect to the period preceding the 
consummation of the SBC/Ameritech Merger, each such affidavit shall (i) 
include, inter alia, the name, address, and telephone number of each 
person who, at any time after the period covered by the last such 
report, made an offer to acquire, expressed an interest in acquiring, 
entered into negotiations to acquire, or was contacted or made an 
inquiry about acquiring, any or all of the Cellular System Assets 
required to be divested, (ii) describe in detail each contact with any 
such person during that period, and (iii) include a summary of the 
efforts that defendants have made to solicit a purchaser(s) for the 
Cellular System Assets to be divested in the Overlapping Cellular 
Markets pursuant to this Final Judgment and to provide required 
information to prospective purchasers.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, defendants shall deliver to plaintiff an affidavit 
which describes in reasonable detail all actions defendants have taken 
and all steps defendants have implemented on an ongoing basis to 
preserve the Cellular System Assets to be divested pursuant to this 
Final Judgment. Defendants shall deliver to plaintiff another affidavit 
describing any changes to the efforts and actions outlined in 
defendants' earlier affidavits filed pursuant to Section VII.B of this 
Final Judgment within fifteen (15) calendar days after the change is 
implemented.

VIII

Financing

    Defendants shall not finance all or any part of any purchase by an 
acquirer made pursuant to Sections IV or V of this Final Judgment.

IX

Hold Separate Order

    A. Until accomplishment of the divestitures of the Cellular System 
Assets to purchaser(s) approved by plaintiff pursuant to Section IV.C, 
each defendant shall take all steps necessary to ensure that each of 
the cellular systems that it owns or operates in the Overlapping 
Cellular Markets shall continue to be operated as a separate, 
independent, ongoing, economically viable and active competitor to the 
other cellular system and mobile wireless telecommunications providers 
operating in the same license area; and that except as necessary to 
comply with this Final Judgment, the operation of said cellular systems 
(including the performance of decision-making functions relating to 
marketing and pricing) will be kept separate and apart from, and not 
influenced by, the operation of the other cellular system, and the 
books, records, and competitively sensitive sales, marketing, and 
pricing information associated with said cellular systems will be kept 
separate and apart from the books, records, and competitively sensitive 
sales, marketing, and pricing information associated with the other 
cellular system.
    B. Until the Cellular System Assets in each Overlapping Cellular 
Market have been divested to purchaser(s) approved by the plaintiff, or 
transferred to a trustee pursuant to Section V of this Final Judgment, 
defendants shall in accordance with past practices, with respect to the 
Cellular System Assets in the Overlapping Cellular Markets (including 
the assets of both cellular systems in any Overlapping Cellular Market 
where the cellular system that will be divested has not yet been 
decided):
    1. Use all reasonable efforts to maintain and increase sales of 
cellular mobile telephone services, and maintain and increase 
promotional, advertising, sales, and marketing support for the cellular 
mobile telephone services sold by the cellular systems;
    2. Take all steps necessary to ensure that the Cellular System 
Assets are fully maintained in operable condition and shall maintain 
and adhere to normal maintenance schedules;
    3. Provide and maintain sufficient lines of sources of credit and 
working

[[Page 23105]]

capital to maintain the Cellular System Assets as viable ongoing 
businesses;
    4. Be prohibited from, except as part of a divestiture approved by 
plaintiff, removing or selling any of the Cellular System Assets, other 
than sales in the ordinary course of business;
    5. Be prohibited from terminating, transferring, or reassigning any 
employees who work with the Cellular System Assets, except (a) in the 
ordinary course of business, (b) for transfer bids initiated by 
employees pursuant to defendants' regular, established job posting 
policies, or (c) as necessary to promote accomplishment of defendants' 
obligations under this Final Judgment; and
    6. Take no action that would impede in any way or jeopardize the 
sale of the Cellular System Assets.
    C. Following consummation of the SBC/Ameritech Merger, defendants 
shall take no action that would impede in any way or jeopardize the 
sale of the Cellular System Assets.
    D. Defendants shall, during the period before all Cellular System 
Assets have been divested to a purchaser(s) or transferred to the 
trustee pursuant to Section V of this Final Judgment, each appoint a 
person or persons to oversee the Cellular System Assets owned by that 
defendant, who will be responsible for defendants' compliance with the 
requirements of Sections VII and IX of this Final Judgment. Such 
person(s) shall not be an officer, director, manager, employee, or 
agent of the other defendant.

X

Compliance Inspection

    For the purposes of determining or securing compliance of 
defendants with this Final Judgment, and subject to any legally 
recognized privilege, from time to time.
    A. Duly authorized representatives of the United States Department 
of Justice, 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 made to its principal 
office, shall be permitted without restraint or interference from 
defendants.
    1. to have 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 any matters 
contained in this Final Judgment; and
    2. to interview, either informally or on the record, and to take 
sworn testimony from the officers, directors, employees, or agents of 
defendants, who may have counsel present, relating to any matters 
contained in this Final Judgment.
    B. Upon the written request of the Attorney General or the 
Assistant Attorney General in charge of the Antitrust Division, made to 
defendants at their principal offices, defendants shall submit written 
reports, under oath if requested, relating to any of the matters 
contained in this Final Judgment.
    C. No information or documents obtained by the means provided in 
this section X or sections VI and VII shall be divulged by the 
plaintiff to any person other than a duly authorized representative of 
the Executive Branch of the United States, or to the FCC (pursuant to a 
customary protective order or a waiver of confidentiality by 
defendants), 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 as to which a claim 
of protection may be asserted under Rule 26(c)(7) of the Federal Rules 
of Civil Procedure, and mark each pertinent page of such material, 
``Subject to claim of 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) to which 
defendants are not a party.

XI

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 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.

XII

Further Provisions and Termination

    A. The entry of this judgment is in the public interest.
    B. Unless this Court grants an extension, this Final Judgment shall 
expire on the tenth anniversary of the date of its entry.

----------------------------------------------------------------------
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. Sec. 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 March 23, 
1999, alleging that the proposed acquisition of Ameritech Corporation 
(``Ameritech'') by SBC Communications, Inc. (``SBC'') would violate 
Section 7 of the Clayton Act, 15 U.S.C. 18 by lessening competition in 
the markets for wireless mobile telephone services in seventeen 
cellular license areas in Illinois, Indiana and Missouri. In these 
seventeen areas, which are identified in the Complaint as the 
``Overlapping Markets'', Ameritech is one of two providers of cellular 
mobile telephone services. The other provider of cellular mobile 
telephone services in the Overlapping Markets is either SBC or Comcast 
Cellular Corporation (``Comcast''), which SBC has entered into an 
agreement to acquire.
    Shortly before the Complaint in this matter was filed, the 
Department and the defendants reached agreement on the terms of a 
proposed Final Judgment, which requires SBC and Ameritech to divest one 
of the cellular telephone systems in each of the Overlapping 
Markets.\1\ In nine of the Overlapping Markets in Illinois and Indiana, 
the defendants can choose which cellular system to divest, but in the 
five Overlapping Markets in Missouri in the St. Louis area, as well as 
the three Overlapping Markets in Illinois where Comcast and Ameritech 
both own cellular systems, the Ameritech cellular systems must be the 
ones divested. The proposed Final Judgment also contains provisions, 
explained below, designed to minimize any risk of competitive harm that 
otherwise might arise pending completion of the divestiture. The 
proposed Final Judgment embodying the settlement, and a Stipulation by 
plaintiff and defendants consenting to

[[Page 23106]]

its entry, were filed simultaneously with the Complaint.
---------------------------------------------------------------------------

    \1\ The proposed Final Judgment describes the seventeen license 
areas containing overlapping cellular systems as the ``Overlapping 
Cellular Markets.'' That term has the same meaning as the 
``Overlapping Markets'' referred to in the Complaint, and the two 
terms are used interchangeably herein.
---------------------------------------------------------------------------

    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. The United States and the defendants have also stipulated that 
the defendants will comply with the terms of the proposed Final 
Judgment from the date of signing of the Stipulation, pending entry of 
the Final Judgment by the Court, permitting the required divestitures 
to be carried out and the acquisition to be consummated prior to 
completion of the APPA procedures. Should the Court decline to enter 
the Final Judgment, the defendants have also committed to continue to 
abide by its requirements until the expiration of time for any appeals 
of such ruling.

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

A. The Defendants and the Proposed Transaction

    SBC and Ameritech are two of the remaining five Regional Bell 
Operating Companies (``RBOCs'') created in 1984 by the consent decree 
settling the United States' antitrust case against American Telephone & 
Telegraph Co. SBC and Ameritech each provide local exchange telephone 
services indistinct regions, and also provide wireless mobile telephone 
services, including cellular mobile telephone services, both within and 
outside of their local exchange service regions.
    SBC, with headquarters in San Antonio, Texas, is the second largest 
RBOC in the United States, with approximately 43 million total local 
access lines. In 1998, SBC had revenues in excess of $28 billion. SBC 
provides local telephone services to retail customers in Arkansas, 
California, Connecticut, Kansas, Missouri, Nevada, Oklahoma, and Texas 
as well as cellular mobile telephone services or other wireless mobile 
telephone services in those states. SBC also provides cellular mobile 
telephone services or other wireless mobile telephone services in some 
areas outside its local exchange service region, including the District 
of Columbia and areas within the states of Illinois, Indiana, Maryland, 
Massachusetts, Rhode Island, New York, Virginia, and West Virginia. 
SBC, through its Cellular One cellular systems out of region and its 
in-region Southwestern Bell, Pacific Bell, Nevada Bell and SNET 
cellular or other wireless mobile systems, is the nation's third 
largest wireless mobile telephone service provider, serving areas with 
a total population of about 82 million, and it has about 6.5 million 
subscribers nationwide.
    Ameritech, with headquarters in Chicago, Illinois, is the fourth 
largest RBOC in the United States, with approximately 24 million total 
local access lines. In 1998, Ameritech had revenues in excess of $17 
billion. Ameritech provides local telephone service to retail customers 
in Illinois, Indiana, Michigan, Ohio, and Wisconsin, and also provides 
cellular mobile telephone service in these states, as well as in some 
states outside its local exchange service region including Missouri and 
Hawaii. Ameritech is a major wireless mobile telephone service 
providers, serving areas with a total population of about 30 million, 
and it has about 3.2 million subscribers nationwide.
    On May 10, 1998, SBC and Ameritech entered into a purchase 
agreement, the Agreement and Plan of Merger, whereby SBC would acquire 
Ameritech in exchange for SBC stock valued at approximately $58 billion 
dollars at the time of the agreement. Defendants filed a notification 
of this transaction pursuant to the Hart-Scott-Rodino Antitrust 
Improvements Act, 15 U.S.C. 18a, on July 20, 1998.
    SBC has also entered into an agreement as of January 19, 1999, to 
acquire Comcast Cellular Corporation for $1.67 billion, which would 
give SBC all of Comcast's cellular telephone systems. Notification of 
this transaction also was filed pursuant to the Hart-Scott-Rodino 
Antitrust Improvements Act. By acquiring Comcast's cellular telephone 
systems, SBC would become a provider of cellular mobile telephone 
services in additional areas in Delaware, Illinois, Indiana, New Jersey 
and Pennsylvania. The acquisition of the Comcast cellular systems would 
add about 800,000 subscribers to SBC's total of wireless subscribers 
nationwide.
    If both transactions were consummated, the combined total of SBC's 
and Ameritech's cellular and other wireless mobile telephone service 
subscribers would be 10.5 million, including the number of subscribers 
SBC would receive from its acquisition of Comcast.

B. Wireless Mobile Telephone Services

    Wireless mobile 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 this service is a valuable 
feature to consumers, and cellular and other wireless mobile telephone 
services are commonly priced at a substantial premium above landline 
services. In order to provide this capability, wireless carriers must 
deploy an extensive network of switches and radio transmitters and 
receivers, and interconnect this network with the networks of local and 
long distance landline carriers, and with the networks of other 
wireless carriers. In 1998, revenues from the sale of wireless mobile 
telephone services totaled approximately $30 billion in the United 
States.
    Initially, wireless mobile telephone services were provided 
principally by two cellular systems in each license area, as was the 
case in the Overlapping Markets. Cellular licenses were awarded by the 
Federal Communications Commission (``FCC'') beginning in the early 
1980s, within any given Metropolitan Statistical Area (``MSA'') or 
Rural Service Area (``RSA'').\2\ Providers of Specialized Mobile Radio 
(``SMR'') services typically were also authorized to operate with some 
additional spectrum in these areas, including the Overlapping Markets.
---------------------------------------------------------------------------

    \2\ 25 MHZ of spectrum was allocated to each cellular system in 
an MSA or RSA. MSAs are the 306 urbanized areas in the United States 
defined by the federal government, used by the FCC to define the 
license areas for urban cellular systems. RSAs are the 428 areas 
defined by the FCC used to define the license areas for rural 
cellular systems outside of MSAs.
---------------------------------------------------------------------------

    In 1995 the FCC allocated (and subsequently issued licenses for) 
additional spectrum for the provisions of PCS, a category of services 
which includes wireless mobile telephone services comparable to those 
offered by cellular carriers. In 1996 one SMR spectrum licensee began 
to use its SMR spectrum to offer wireless mobile telephone services, 
comparable to that offered by cellular providers and bundled with 
dispatch services, in a number of areas including some of the 
Overlapping Markets. The areas for which PCS providers are licensed 
differ from the cellular MSAs and RSAs but overlap with them.\3\ 
However, in many areas, including the Overlapping Markets, not all of 
the PCS license holders have started to offer services or

[[Page 23107]]

have even begun to construct the facilities necessary to begin offering 
service. The PCS providers have tended to enter first in the largest 
cities, entering in smaller markets only later and not to as great an 
extent. Moreover, even in those are where one or more PCS providers 
have constructed their networks and have started to offer service or 
some SMR spectrum is also used for wireless mobile telephone services, 
including the Overlapping Markets, the incumbent cellular providers, 
such as SBC and Ameritech, still typically control the great majority 
of the market.
---------------------------------------------------------------------------

    \3\ There can be as many as three PCS providers, with 30 MHZ of 
spectrum each, authorized to serve areas considerably larger than a 
single MSA or RSA. In addition, there can be as many as three PCS 
providers, with 10 MHZ of spectrum each, licensed to provide service 
in smaller areas that overlap more closely with a given MSA or RSA.
---------------------------------------------------------------------------

C. Anticompetitive Consequences of the Proposed Acquisition

    SBC and Ameritech are the sole providers of cellular mobile 
telephone services, and the two primary providers of all wireless 
mobile telephone services, in fourteen cellular license areas in the 
states of Illinois, Indiana, and Missouri. These fourteen areas are 
referred to in the Complaint as the ``SBC/Ameritech Overlapping 
Markets.'' SBC and Ameritech are direct competitors in the markets for 
wireless mobile telephone services in the SBC/Ameritech Overlapping 
Markets.
    In three cellular license areas in the state of Illinois, the 
cellular systems owned entirely or in part by Ameritech and Comcast are 
the sole providers of cellular mobile telephone services, and the two 
primary providers of all wireless mobile telephone services. These 
three areas, which are in addition to the fourteen cellular license 
areas where Ameritech and SBC own overlapping cellular systems, are 
referred to in the Complaint as the ``Comcast/Ameritech Overlapping 
Markets.'' Comcast and Ameritech are direct competitors in the markets 
for wireless mobile telephone services in the Comcast/Ameritech 
Overlapping Markets. SBC already manages the Comcast cellular systems 
in the Comcast/Ameritech Overlapping Markets. When the Comcast 
acquisition is consummated, SBC and Ameritech will own, entirely or in 
part, the overlapping cellular systems in these additional three 
cellular license areas in the state of Illinois.
    In the Overlapping Markets, the population potentially addressable 
by cellular mobile telephone systems totals about 11 million, including 
over 10.8 million in the SBC/Ameritech Overlapping Markets and nearly 
200,000 in the Comcast/Ameritech Overlapping Markets. The Overlapping 
Markets are listed below:
SBC/Ameritech Overlapping Markets

MSAs

Chicago, IL
St. Louis, MO-IL
Gary-Hammond-East Chicago, IN
Springfield, IL
Champaign-Urbana-Rantoul, IL
Bloomington-Normal, Il
Decatur, IL

RSAs

Illinois 2--Bureau
Illinois 5--Mason
Illinois 6--Montgomery
Missouri 8--Callaway
Missouri 12--Maries
Missouri 18--Perry
Missouri 19--Stoddard
Comcast/Ameritech Overlapping Markets

MSAs

Joliet, IL
Aurora-Elgin, IL
Kankakee, IL (Comcast has a 10.07% interest in this cellular system)

    If SBC's plan to acquire Ameritech were consummated, only one 
provider of cellular mobile telephone services would remain available 
to consumers in the Overlapping Markets. SBC would own both cellular 
systems in the SBC/Ameritech Overlapping Markets. In addition, because 
SBC already manages the Comcast cellular systems in Illinois, SBC would 
operate both of the cellular systems in the Comcast/Ameritech 
Overlapping Markets if SBC were to acquire Ameritech. If both the 
Comcast and Ameritech acquisitions were consummated, SBC would own, 
entirely or in part, both of the cellular systems in the Comcast/
Ameritech Overlapping Markets.
    Therefore, SBC's acquisition of Ameritech would cause the level of 
concentration among firms providing wireless mobile telephone services 
in the Overlapping Markets to increase significantly. Already a high 
level of concentration in the provision of wireless mobile telephone 
services exists in the Overlapping Markets. In the SBC/Ameritech 
Overlapping Markets, the individual market shares of SBC and Ameritech, 
measured on the basis of the numbers of subscribers or wireless lines 
served, range from 30% to over 50%. The combined market share of SBC 
and Ameritech in the provision of wireless mobile telephone services is 
in the range of 80 to 90%, taking into account other operational 
wireless mobile competitors.\4\ As measured by the Herfindahl-Hirschman 
Index (HHI), which is commonly employed by the Department of Justice in 
merger analyses and is explained in more detail in Appendix A to the 
Complaint, concentration in these markets is already in the range of 
3200 to 4100, well above the 1800 threshold at which the Department 
normally considers a market to be concentrated. After the merger, the 
HHI in these markets will greatly increase and will range from 6400 to 
8100. In the Comcast/Ameritech Overlapping Markets, the combined market 
share of Comcast and Ameritech similarly is much larger than that of 
all other wireless mobile competitors, and the merger would similarly 
lead to large increases in concentration.
---------------------------------------------------------------------------

    \4\ The United States has used subscriber data here to estimate 
market shares because those data are more readily available. In some 
contexts, however, other measures of market share may provide a more 
precise indication of market concentration or a firm's competitive 
significance. The use of subscriber data here is reasonable, given 
that measuring market share in other ways would not affect the 
Department's conclusions. The market shares of SBC and Ameritech 
would also be very high if measured on a variety of dimensions other 
than subscribers or lines served, such as revenues or volumes of 
traffic handled.
---------------------------------------------------------------------------

    Competition between SBC and Ameritech, and between Comcast and 
Ameritech, as the two largest providers of wireless mobile telephone 
services in the Overlapping Markets, has resulted in lower prices and 
higher quality of service in these markets than would otherwise have 
existed absent such competition. If SBC and Ameritech were to merge, 
the competition between SBC and Ameritech and between Comcast and 
Ameritech in wireless mobile telephone services in these markets would 
be eliminated, and competition overall for wireless mobile 
telecommunications services would be substantially lessened in the 
Overlapping Markets by SBC's acquisition of Ameritech. As a result of 
the loss in competition between SBC and Ameritech, and between Comcast 
and Ameritech, there would be an increased likelihood both of 
unilateral actions by the combined firm in these markets to increase 
prices, diminish the quality or quantity of service provided, or 
refrain from making investments in network improvements, and of 
coordinated interaction among the limited number of remaining 
competitors that could lead to similar anticompetitive results.
    Competition would also be adversely affected in another, related 
way by the consummation of SBC's acquisition of Ameritech. In the SBC/
Ameritech Overlapping Markets in the St. Louis area, including the St. 
Louis MSA and the four RSAs in Missouri, Ameritech planned, prior to 
its announcement of its agreement to be acquired by SBC, to

[[Page 23108]]

provide local exchange and long distance telephone services in SBC's 
local telephone service area. Ameritech would have competed with SBC 
primarily by selling bundled packages of such local exchange and long 
distance telephone services, together with its cellular mobile 
telephone service, to existing Ameritech residential cellular 
customers. There is no alternative source of such a bundled product in 
the St. Louis area at present. Ameritech expected that its plan would 
enhance its ability to retain existing cellular customers. Ameritech 
had made extensive preparations for entry, over the course of more than 
a year, and was ready to begin providing local exchange and long 
distance telephone services to its cellular mobile telephone customers 
at the time it agreed to be acquired by SBC. Shortly thereafter, 
because it was being acquired by SBC, Ameritech decided not to 
implement its local exchange and long distance entry plans in the St. 
Louis area. The consummation of SBC's acquisition of Ameritech thus 
would preclude such competition by Ameritech.
    It is unlikely that entry within the next two years into wireless 
mobile telephone services in the Overlapping Markets would be 
sufficient to mitigate the competitive harm resulting from this 
acquisition, if it were to be consummated.
    For these reasons, the United States concluded that the merger as 
proposed may substantially lessen competition, in violation of Section 
7 of the Clayton Act, in the provision of wireless mobile telephone 
services in the Overlapping Markets.

III. Explanation of the Proposed Final Judgment

A. The Divestiture Requirement

    The proposed Final Judgment will preserve competition in the sale 
of mobile wireless services in the Overlapping Markets by requiring the 
defendants to divest one of their two cellular telephone systems in 
each of the Overlapping Markets. This divestiture will eliminate the 
change in market structure caused by the merger.
    The divestiture requirements of the proposed Final Judgment, as 
stated in Sections IV.A and II.B, direct Ameritech to divest its 
cellular telephone systems in St. Louis and other markets in Missouri, 
as well as its cellular telephone systems in the three markets in 
Illinois where is overlaps with Comcast. In the remaining markets in 
Illinois and Indiana where SBC's and Ameritech's cellular telephone 
systems overlap, SBC and Ameritech may choose which of the two systems 
in each market must be divested. Section IV.C permits the different 
cellular systems in separate Overlapping Cellular Markets to be 
divested to different purchasers, but requires that, for any individual 
cellular system, the Cellular System Assets be divested entirely to a 
single purchaser, unless the United States otherwise consents in 
writing.
    In the Comcast/Ameritech Overlapping Markets, because Comcast is 
not a party to the consent decree, the necessary divestitures to avoid 
loss of competition between the overlapping cellular systems could be 
effected only through Ameritech. Comcast was not considered a necessary 
party to this action because SBC's acquisition of Comcast, standing 
alone, is not a competitive problem. A violation of Section 7 of the 
Clayton Act only arises in the three Comcast/SBC Overlapping Markets 
when the Comcast acquisition is considered together with SBC's merger 
with Ameritech.
    The reason for requiring the divestiture of the five Ameritech 
cellular systems in the St. Louis area is different, arising from 
Ameritech's plans prior to the merger to compete with SBC in providing 
local exchange and long distance telephone services together with its 
cellular mobile telephone services in St. Louis. Ameritech had made 
extensive preparations to provide local exchange and long distance 
services in SBC's local telephone service area, over the course of the 
year preceding the announcement of the merger, and was ready to launch 
its bundled offering of these services together with cellular telephone 
service at the time the merger was announced. In contrast, the SBC 
cellular systems in the St. Louis area, being owned by the incumbent 
local telephone service provider, had made no preparations to offer 
local exchange telephone service competition in any of the relevant 
markets in Missouri.
    The loss of competition in cellular mobile telephone services 
between the Ameritech and SBC cellular systems in Missouri, standing 
alone, required one of the two cellular systems to be divested, as in 
the other Overlapping Markets. However, a buyer of the Ameritech 
cellular systems would be much more favorably positioned to enter 
rapidly into local exchange and long distance telephone services in St. 
Louis and provide a bundled product together with its cellular services 
than would a buyer of the SBC cellular systems in the St. Louis area. 
Therefore, in order to remedy this aspect of the competitive harm 
arising from the merger, the United States concluded that the 
divestiture of the Ameritech cellular systems in the St. Louis area, 
together with ``those assets acquired, developed, used or intended for 
use in connection with the provision of local exchange 
telecommunications services and long distance telecommunications 
services by such system[s],'' would be necessary, as required by 
Section II.B of the proposed Final Judgment.
    The proposed Final Judgment's divestiture provisions are intended 
to accomplished the ``complete divestiture of the entire business of 
one of the two cellular systems in each of the Overlapping Cellular 
Markets,'' as Section II.B states. Section II.B also specifies in 
detail the types of assets to be divested, which collectively are 
described throughout the consent decree as ``Cellular System Assets,'' 
and addresses some special circumstances concerning the divestiture of 
those assets. In all of the Overlapping Markets, Cellular System Assets 
means all types of assets, tangible and intangible, used by defendants 
in the operation of each of the cellular systems to be divested, 
including the provision of long distance telecommunications service for 
wireless calls. For the five Ameritech cellular systems to be divested 
in the St. Louis area, additional types of assets related to 
Ameritech's plans for providing local exchange and long distance 
telecommunications services are also included, as described above. 
Section II.B enumerates in detail, without limitation, particular types 
of assets covered by the divestiture requirement.
    For the most part, the divesting defendant is required to transfer 
to the purchaser the complete ownership and/or other rights to the 
Cellular System Assets. However, the merged firm will retain a number 
of other cellular systems in areas that do not overlap, and prior to 
the merger each defendant may have had certain assets that were used 
substantially in the operations of its overall cellular business and 
that must be retained to some extent to continue the exiting operations 
of the cellular properties not being divested. Section II.B permits 
special divestiture arrangements for such assets either if they are not 
capable of being divided between the divested and retained cellular 
systems, or if the divesting defendant and the purchaser agree not to 
divide them. For these assets, the divestiture requirement is satisfied 
if the divesting defendant grants to the purchaser, at the election of 
the purchurer, an option to obtain a non-exclusive, transferable 
license for a reasonable period to use the assets in

[[Page 23109]]

the operation of the cellular system being divested, so as to enable 
the purchaser to continue to operate the divested cellular systems 
without impairment. None of the Cellular System Assets associated with 
Ameritech's plans to provide local exchange and long distance 
telecommunications service in the St. Louis are covered by this 
licensing requirement, because all of those assets are required to be 
transferred completely to the purchaser.
    The definition of Cellular system Assets in section II.B contains 
the special provisions relating to intellectual property. One addresses 
intellectual property rights that defendants may have under third-party 
licenses that could not be transferred to a purchaser entirely or by 
license without the consent of the third-party licensor. If any such 
assets are used by the cellular systems being divested, defendants must 
identify them in a schedule submitted to plaintiff and filed with the 
Court as expeditiously as possible following the filing of the 
Complaint, in any event, prior to any divestiture and before the Court 
approves the proposed Final Judgment. Defendants must explain the 
necessary consents and how a consent would be obtained for each asset. 
This proviso is not intended to afford defendants any opportunity to 
withhold intellectual property rights over which they have any control, 
which could impair the ability of a purchaser to use the divested 
cellular system to compete effectively. It relates only to intellectual 
property assets that defendants have no power to transfer themselves, 
and defendants must do all that is possible to transfer the entire 
business of the divested cellular systems. To make this clear, section 
IV.G obligates defendants to cooperate with any purchaser as well as a 
trustee, if any, to seek to obtain the necessary third-party consents, 
if any assets require such consents before they may be transferred to a 
purchaser.
    The second proviso relates to certain specific trademarks, trade 
names and service marks. Section II.B, defining the Cellular System 
Assets to be divested, generally requires the divestiture of 
trademarks, trade names and service marks, with the four specified 
exceptions of ones containing ``SBC'', ``Southwestern Bell'', 
``Ameritech'', or ``Cellular One,'' which are the names under which the 
defendants' retained cellular systems, or their corporate parents, do 
business. Such trademarks, trade names and service marks, like other 
assets, are either to be divested in their entirety or in the case of 
such marks and names that must be retained to continue the existing 
operations of defendants' remaining cellular properties, and that are 
not capable of being divided or that the divesting defendant and 
purchaser agree not to divide, are to be made available to the 
purchaser through a non-exclusive, transferable license. Section II.B 
therefore creates an obligation on the part of SBC and Ameritech to 
license the ``Clearpath'' trade name, currently used in connection with 
Ameritech's digital cellular services, to a purchaser of Cellular 
System Assets currently owned by Ameritech. The Department has been 
advised by Ameritech, and recognizes on that basis, that (1) 
Ameritech's use of the trade name ``Clearpath'' is subject to a letter 
agreement between Ameritech and Unisys Corporation, (2) any use by a 
purchaser of Ameritech Cellular System Assets would be pursuant to a 
license agreement which the purchaser would need to enter into with SBC 
and/or Ameritech; and (3) such a license agreement would need to 
contain terms and conditions that would protect SBC and Ameritech from 
claims by Unisys related to the use of that trade name.
    Section IV contains other provisions to facilitate divestiture, 
including notification of the availability of the Cellular System 
Assets for purchase in Section IV.D, access to information about the 
Cellular System Assets in Section IV.E, and preservation of records in 
Section IV.H. In addition, to ensure that a purchaser will be able to 
operate the divested cellular systems without impairment, section IV.F 
prohibits defendants from interfering with a purchaser's negotiations 
to retain any employees who work or have worked since the date of the 
announcement of the merger with the Cellular System Assets, or whose 
principal responsibility relates to the Cellular System Assets.\5\
---------------------------------------------------------------------------

    \5\ There is a limited exception for employees working with the 
Cellular System Assets solely on a temporary basis from another part 
of SBC or Ameritech.
---------------------------------------------------------------------------

B. Timing of Divestiture

    In antitrust cases involving mergers in which the United States 
seeks a divestiture remedy, it requires completion of the divestiture 
within the shortest time period reasonable under the circumstances. The 
proposed Final Judgment in this case requires, in section IV.A, that 
the divestitures of the Cellular System Assets in the seventeen 
Overlapping Cellular Markets to a purchaser or purchasers approved by 
the United States must be completed within 180 days of the time that 
SBC and Ameritech consummate their merger, or the time that they 
receive the final regulatory approvals from the FCC and state 
regulatory commissions that are necessary preconditions to consummation 
of the merger, whichever is earlier. These alternative starting dates 
were chosen because, at the time SBC and Ameritech entered into the 
Stipulation and agreed to the proposed Final Judgment, the FCC and two 
state regulatory commissions, the Illinois Commerce Commission and the 
Ohio Public Utilities Commission, were still reviewing SBC's 
acquisition of Ameritech. The approval of these three regulatory bodies 
is necessary for the acquisition to be consummated.\6\ If SBC's 
acquisition of Ameritech were not consummated because any of those 
regulatory bodies denied the necessary approval, defendants would not 
be required to divest their cellular systems in the Overlapping 
Markets.
---------------------------------------------------------------------------

    \6\ The merger is also being reviewed by other state 
telecommunications regulators, e.g., in Indiana, but the United 
States understands that prior approval by other state regulators is 
not necessary for the merger to proceed.
---------------------------------------------------------------------------

    Even though approval by these three regulatory bodies is a 
necessary precondition for the merger to be consummated, after an 
initial favorable decision by any of those regulatory bodies, a brief 
period of time would exist for reconsideration before the decision 
would become final Defendants could agree to consummate their merger 
based on the initial decisions, before the period for reconsideration 
has run. Therefore, the time for divestiture has been linked to the 
first event that would allow the acquisition to take place, either the 
last of the three necessary final regulatory approvals or a decision by 
the defendants to consummate the merger without any or all of these 
final regulatory approvals.
    Defendants are also required by Section IV.B to use their best 
efforts to accomplish the divestitures of the Cellular System Assets in 
the Overlapping Cellular Markets to a purchaser or purchasers at or 
before the consummation of the merger of SBC and Ameritech, and to do 
so as expeditiously as possible, including obtaining all required 
regulatory approvals.
    In addition, the proposed Final Judgment requires in Section IV.B 
that defendants comply with all of the applicable rules of the FCC in 
carrying out the divestitures. These rules include 47 CFR 20.6 
(spectrum aggregation) and 47 CFR 22.942 (cellular cross-

[[Page 23110]]

ownership).\7\ These FCC requirements may add to, but cannot subtract 
from or impair, the requirements of this proposed Final Judgment, since 
Section IV.B specifies that authorization by the FCC to conduct 
divestiture of a cellular system in a particular manner will not modify 
any of the requirements of the decree. The provisions of the proposed 
Final Judgment have been designed to avoid any conflict with the FCC's 
rules. In particular, the inclusion of the trusteeship requirements 
discussed below ensures that impermissible control of both cellular 
systems by the merged company should not arise even if defendants were 
to consummate their merger during the 180-day period authorized for 
divestiture, at a time when some of the cellular systems have not yet 
been sold to any purchaser approved by the Department of Justice. Since 
the FCC's approval is required for the transfer of the cellular system 
licenses to a purchaser, Section IV. A provides one exception to the 
180-day divestiture period. If applications for transfer of a cellular 
license have been filed by the FCC within the 180 day period, but the 
FCC has not granted approval before the end of that time, the period 
for divestiture of the specific Cellular System Assets covered by the 
license that cannot yet be transferred shall be extended until five 
days after FCC's approval is received. This extension is to be applied 
only to the individual cellular system affected by the delay in 
approval of the license transfer and does not entitle defendants to 
delay the divestiture of any other Cellular System Assets for which 
license transfer approval has been granted.
---------------------------------------------------------------------------

    \7\ The FCC's spectrum aggregation rules, in 47 CFR 20.6, do not 
permit a licensee to have an attributable interest in more than 45 
MHz of spectrum licensed for cellular, PCS or SMR with significant 
overlap in any geographic area. The FCC will attribute an interest 
if it is controlling, or if in most cases it is 20% or more of the 
equity, outstanding stock or voting stock of the licensee. The FCC's 
cellular cross-ownership rules, in 47 CFR 22.942, also prohibit a 
licensee or any person controlling a licensee from having a direct 
or indirect ownership interest of more than 5% in both cellular 
systems in an overlapping cellular geographic service area, unless 
such interests pose ``no substantial threat to competition.''
---------------------------------------------------------------------------

C. Use of a Trustee Subsequent to Consummation of the Acquisition

    The proposed Final Judgment provides in Section IV.A that, at or 
before the time that SBC and Ameritech consummate their merger, they 
must divest the Cellular System Assets in each of the Overlapping 
Cellular Markets, either to purchasers acceptable to plaintiff in its 
sole discretion, or to a trustee designated pursuant to Section V of 
the Final Judgment. As part of this divestiture, SBC and Ameritech must 
relinquish any direct or indirect financial ownership interests and any 
direct or indirect role in management or participation in control. 
Thus, if SBC and Ameritech want to consummate their merger before they 
have completed the divestitures of Cellular System Assets to approved 
purchasers, by the time of consummation, they must have transferred any 
remaining Cellular System Assets to a trustee chosen by the Department 
of Justice. Pursuant to Section V of the proposed Final Judgment, the 
trustee will own and control the systems until they are sold to a final 
purchaser, subject to safeguards to prevent SBC and Ameritech from 
influencing their operation.
    This trust arrangement is an option available to defendants, to 
enable them to consummate their merger once all regulatory approvals 
have been received, even if the 180-day period for divestitures has not 
yet run and some Cellular System Assets that must be divested have not 
yet been purchased. It is not the preferred option, however, as 
indicated by the requirement in Section IV.B that defendants use their 
best efforts to accomplish the divestitures before consummation of the 
merger. The overall period of 180 days to complete the divestitures 
continues to apply, whether the divestitures are made by SBC and 
Ameritech or by the trustee. In other words, the transfer of any 
Cellular System Assets to the trustee does not extend the time to 
complete the divestitures. The trustee simply has whatever part of the 
180-day period remains from the time SBC and Ameritech transfer the 
cellular systems. If, for any reason, the trustee has not completed all 
of the required divestitures to purchasers within this period, the 
trustee is required, under Section V.F, to report to the Court on the 
efforts made and the reasons why divestiture has not been accomplished, 
but the trust period may be extended by the Court only if plaintiff 
agrees to the period involved.
    Section V details the requirements for the establishment of the 
trust, the selection and compensation of the trustee, the 
responsibilities of the trustee in connection with divestiture and 
operation of the Cellular System Assets, and the termination of the 
trust. If defendants have not divested all of their Cellular System 
Assets in the Overlapping Cellular Markets to approved purchasers by 
the time of consummation of the merger, Section V.A requires that 
before consummating the merger: (1) defendants must have notified the 
United States which Cellular System Assets in each Overlapping Market 
will be divested; (2) the Court must have appointed a trustee, which 
shall be selected by the United States; (3) defendants must have 
submitted a form of Trust Agreement consistent with the terms of the 
Final Judgment, and the form agreement must have received approval by 
the United States; and (4) after receiving FCC approval for the license 
transfers, defendants must irrevocably divest the unsold Cellular 
System Assets to the trustee. As a practical matter, the process of 
establishing a trust arrangement for any Cellular System Assets will 
take some time, so if defendants plan to make use of this option, they 
will need to begin preparations for it soon after the 180 days has 
begun to run.
    The trustee will have the obligation and the sole responsibility, 
under Section V.B, for the divestiture of any transferred Cellular 
System Assets. The trustee has the authority to accomplish divestitures 
at the earliest possible time and ``at the best price then obtainable 
upon a reasonable effort by the trustee.'' The defendants are not 
entitled to object to divestiture based on the adequacy of the price 
the trustee obtains or any other ground, unless the trustee's conduct 
amounts to malfeasance. The terms of the trustee's compensation, under 
Section V.C, will provide incentives based on the price and terms of 
the divestiture and the speed with which it is accomplished. As 
provided by Sections V.B and V.C., defendants will pay the compensation 
and expenses of the trustee, and of any investment bankers, attorneys 
or other agents that the trustee finds reasonably necessary in his 
judgment to assist in the divestiture and the management of the 
Cellular System Assets.
    The trusteeship mechanism has been used by the FCC, in a variety of 
contexts, to provide a short period of time in which to complete a sale 
of a spectrum licensee that must be divested, while permitting the 
broader merger or acquisition that necessitates the divestiture to go 
forward. In this context, the critical feature of the trusteeship 
arrangement is that the trustee will not only have responsibility for 
sale of the Cellular System Assets, but will also be the authorized 
holder of the cellular system license, with full responsibility for the 
operations, marketing and sales of the cellular system to be divested, 
and will not be subject to any control or direction by defendants. The 
defendants will no longer have any role in the ownership, operation or 
management of the Cellular

[[Page 23111]]

System Assets to be divested following consummation of their merger, as 
provided by Section V.G, other than the right to receive the proceeds 
of the sale, and certain obligations to provide cooperation to the 
trustee in order to complete the divestiture, as indicated in Section 
V.D. Defendants are precluded under Section V.G from communicating with 
the trustee, or seeking to influence the trustee, concerning the 
divestiture or the operation and management of the cellular systems 
transferred, apart from the limited communications necessary to carry 
out the Final Judgment and to provide the trustee with the necessary 
resources and cooperation to complete the divestitures. Defendants and 
the trustee are subject to an absolute prohibition on exchanging any 
non-public or competitively sensitive marketing, sales or pricing 
information relating to either of the cellular system businesses in the 
Overlapping Markets. These safeguards will protect against any 
competitive harm that could arise from coordinated behavior or 
information sharing between the two cellular systems after the merger, 
during the limited period while sale of the Cellular System Assets is 
not yet complete. They ensure that the trusteeship arrangement is 
consistent with the FCC's rules.

D. Criteria for the United States' Approval of Purchasers

    Under the proposed Final Judgment, the United States has an 
important role in the approval of purchasers for each of the divested 
cellular systems, to ensure that the purchasers chosen by the 
defendants or the trustee are adequate from a competitive viewpoint. 
The United States' approval or rejection of a purchaser is at its sole 
discretion, as Section IV.A specifies, but the consent decree also 
embodies certain criteria that the United States will apply in making 
the approval decision.
    Specifically, Section IV.C of the proposed Final Judgment requires 
that the divestitures of Cellular System Assets be made to a purchaser 
or purchasers for whom it is demonstrated to plaintiff's sole 
satisfaction that: (1) the purchaser(s) has the capability and intent 
of competing effectively in the provision of cellular mobile telephone 
service using the Cellular System Assets; (2) the purchaser(s) has the 
managerial, operational and financial capability to compete effectively 
in the provision of cellular mobile telephone service using the 
Cellular System Assets; (3) with respect to the purchaser of the 
Cellular System Assets in the St. Louis Area, if such Cellular System 
Assets are divested to the purchaser by Ameritech rather than by the 
trustee, the purchaser has the capability of competing effectively in 
the provision of local exchange telecommunications services and long 
distance telecommunications services in the St. Louis Area, and (4) 
none of the terms of any agreement between the purchaser(s) and either 
of the defendants shall give defendants the ability unreasonably (i) to 
raise the purchaser(s)'s costs, (ii) to lower the purchaser(s)'s 
efficiency, (iii) to limit any line of business which a purchaser(s) 
may choose to pursue using the Cellular System Assets (including, but 
not limited, to entry into local telecommunications services on a 
resale or facilities basis or long distance telecommunications services 
on a resale or facilities basis), or otherwise to interfere with the 
ability of the purchaser(s) to compete effectively.
    All of these criteria must be satisfied whether the divestiture is 
accomplished by defendants or the trustee, with the exception of (3), 
which applies only to divestitures made by defendants and not if the 
trustee assumes control over the Cellular System Assets in the St. 
Louis Area. In the case of any divestiture, by defendants or the 
trustee, it is important to ensure that the ongoing cellular businesses 
go to purchasers with the capability and intent of operating them as 
effective competitors in the lines of business they already serve, and 
that there are no conditions restricting competition in the terms of 
the sale. The United States, however, viewed the issue of potential 
competition in local exchange and long distance telecommunications 
services in the St. Louis Area somewhat differently. Defendants have 
incentives to divest Ameritech's Missouri cellular properties in a way 
that could minimize the risk of their use for such competition to SBC, 
while a trustee charged with seeking the best price obtainable would 
not have similar incentives. Also, the United States has sought only to 
ensure that the purchaser of Ameritech's St. Louis-area cellular 
systems would have the capability to compete effectively in these 
additional lines of business; it has not insisted on proof of intent to 
compete. Such claims of intent are inherently less subject to 
verification when dealing with a new line of business, and, unlike the 
situation with an ongoing profitable business, a purchaser could 
reasonably decide to enter local exchange and long distance 
telecommunications services in St. Louis in a somewhat different way 
than Ameritech had planned to do, or not to pursue those lines of 
business, depending on their economic attractiveness.
    In exercising its sole discretion to approve a purchaser under 
Section IV.C, the United States will take into account the following 
considerations. In evaluating the capability of a purchaser to provide 
cellular mobile telephone service under (1) or (2), or local exchange 
telecommunications services and long distance telecommunications 
services under (3), the United States will consider the capabilities 
not only of the immediate purchaser of Cellular System Assets, but also 
of any parent, subsidiary, corporate affiliate or partner of the 
immediate purchaser, to the extent that the United States is satisfied 
that such capabilities of related entities would actually be available 
to the immediate purchaser to provide the services. Moreover, in 
evaluating a purchaser's capability to provide services under (1), (2), 
or (3), the United States will consider all of the assets and 
capabilities of the purchaser (including their affiliated entities 
where it is appropriate to take these into account, as discussed above) 
that are actually available at present to provide the relevant 
services, including, without limitation, financial assets, the assets 
being acquired from SBC and/or Ameritech, and the experience of members 
of the purchaser's management team. The capability to compete 
effectively in providing both local exchange service and long distance 
service under (3) can be on either a resale or facilities basis. The 
United States would look most favorably, in assessing capability, on 
those purchasers (including their affiliated entities where these are 
appropriate to take into account, as discussed above) that have 
significant experience in providing cellular mobile telephone service 
for purposes of (1) and (2), and on those purchasers that have 
significant experience in providing local exchange and long distance 
services for purposes of (3). Conversely, a purchaser without such 
experience would need to make a more compelling demonstration to 
satisfy the United States. The United States' evaluation of a purchaser 
with limited or no experience in providing the relevant services would 
take into account the nature and extent of efforts made by the 
defendants (or trustee, if applicable) to find purchasers with more 
substantial experience. A conclusion by the United States that a 
purchaser satisfies (1) and (2) is relevant to whether (3) is also 
satisfied, but not determinative, since (3) represents an additional 
requirement that must be met by a purchaser of the St. Louis Area

[[Page 23112]]

Cellular System Assets. No single factor or group of factors is 
determinative in the United States' exercise of its sole discretion in 
evaluation of a purchaser, and none of these considerations necessarily 
predetermines the outcome of the United States' review of any 
particular purchaser.

E. Other Provisions of the Decree

    Section III specifies the persons to whom the Final Judgment is 
applicable, and provides for the Final Judgment to be applicable to 
certain Interim Parties to whom defendants might transfer the Cellular 
System Assets, other than purchasers approved by the United States.
    Section VI obliges defendants, or the trustee if applicable, to 
notify the United States of any planned divestiture of Cellular System 
Assets within two business days of executing a binding agreement with a 
purchaser. It enables the United States to obtain information to 
evaluate the chosen purchaser as well as other prospective purchasers 
who expressed interest and establishes procedure for the United States 
to notify defendants and the trustee whether it objects to a 
divestiture. The United States' notification of its lack of objection 
is necessary for a divestiture to proceed. This section also provides 
for an objection by defendants to a sale by the trustee under the 
limited situation of alleged malfeasance, but in that case it is 
possible for the Court to approve a sale over defendants' objection.
    Section VII establishes affidavit requirements for defendants to 
report to the United States on their compliance with the proposed Final 
Judgment, their activities in seeking to divest the Cellular System 
Assets prior to consummating their merger, and their actions to 
preserve the Cellular System Assets to be divested. Under V.E, the 
trustee also has monthly reporting obligations concerning the efforts 
made to divest the Cellular System Assets.
    Section VIII prohibits defendants from financing all or any part of 
a purchase made by an acquirer of the Cellular System Assets, whether 
the divestiture is carried out by defendants or by the trustee.
    Section IX, the Hold Separate Order, contains important 
requirements concerning the operation of the cellular systems before 
divestiture is complete, and the preservation of the Cellular System 
Assets as a viable, ongoing business. The obligations of Section IX.A 
fall on both defendants and both cellular systems in any Overlapping 
Market, obliging them to ensure that such cellular systems continue to 
be operated as separate, independent, ongoing, economically viable and 
active competitors to the other cellular system and all other wireless 
mobile telecommunications providers in the same area. Section IX.A 
requires separation of the operations of the two cellular systems and 
their books, records and competitively sensitive information. The 
requirements of Section IX.A both serve to ensure that defendants 
maintain their two cellular systems in the Overlapping Markets as fully 
separate competitors prior to consummating their merger, 
notwithstanding their expectations that the merger will take place, and 
reinforce the provisions of Section V.G concerning the separation of 
defendants and the trustee after the merger is consummated but while 
there are still Cellular System Assets awaiting sale.
    Because SBC already operates the three Comcast systems in the 
Comcast/Ameritech Overlapping Markets, and the hold separate 
requirements of Section IX.A of the Final Judgment apply to ``each of 
the cellular systems'' that either defendant ``owns or operates'' in 
the Overlapping Markets, SBC is obliged to ensure that the three 
Comcast systems are operated in a way that complies with Section IX.A, 
pending divestiture of the Ameritech systems in these areas to 
purchasers approved by the Department of Justice.
    Section IX.B, in contrast, applies only to the Cellular System 
Assets to be divested and to the period before consummation of the 
merger, while defendants still control those assets. It requires the 
defendant whose assets will be divested (or both, if it has not yet 
been decided which system will be divested in a particular market) to 
take certain specified steps to preserve the assets in accordance with 
past practices. These steps include maintaining and increasing sales, 
maintaining the assets in operable condition, providing sufficient 
credit and working capital, not removing the assets, not terminating, 
transferring or reassigning employees who work with the assets (with 
certain limited exceptions), and not taking any actions to impede or 
jeopardize the sale of the assets. Section IX.C similarly obliges 
defendants not to take any actions that would impede or jeopardize the 
sale of the assets after the merger has been consummated but while 
Cellular System Assets remain in the control of a trustee. Finally, 
Section IX.D obliges each defendant, during the period while they still 
control Cellular System Assets, to appoint persons not affiliated with 
the other defendant to oversee the Cellular System Assets to be 
divested and to be responsible for compliance with the Final Judgment.
    In order to ensure compliance with the Final Judgment, Section X 
gives the United States various rights, including inspection of 
defendants' records, the ability to conduct interviews and take sworn 
testimony of defendants' officers, directors, employees and agents, and 
to require defendants to submit written reports. These rights are 
subject to legally recognized privileges, and information the United 
States obtains using these powers is protected by specified 
confidentiality obligations, which do permit sharing of information 
with the FCC under a customary protective order issued by that agency 
or a waiver of confidentiality. Under Section III.B, purchasers of the 
Cellular System Assets must also agree to give the United States 
similar access to information.
    The Court retains jurisdiction under Section XI, and Section XII 
provides that the proposed Final Judgment will expire on the tenth 
anniversary of the date of its entry, unless extended by the Court. 
Although the required divestitures will be accomplished in a 
considerably shorter time, defendants are also precluded from 
reacquiring the divested properties within the term of the decree.

F. Divestiture-Related Developments Since the Complaint Was Filed

    On April 5, 1999, Ameritech announced that it has agreed to sell 20 
of its cellular telephone systems to a venture owned 97% by GTE and 7% 
by Georgetown Partners, for $3.27 billion. The systems being sold, 
according to Ameritech, cover a population of 11.4 million, and have 
nearly 1.5 million subscribers.\8\ This agreement, of which the United 
States was notified on April 7, 1999, pursuant to Section VI.A of the 
proposed Final Judgment, is contingent on the closing of the merger 
between SBC and Ameritech. It is intended to eliminate all of the 
cellular overlaps alleged in the complaint and to satisfy all of the 
divestiture requirements of the proposed Final Judgment.\9\ Ameritech

[[Page 23113]]

will continue to provide services to its cellular customers until the 
closing of the merger. Up to 1,700 Ameritech employees of the cellular 
systems will be transferred to GTE as a result of the sale.
---------------------------------------------------------------------------

    \8\ GTE's announcement of the sale estimated that the cellular 
systems being transferred were slightly larger, covering a 
population of 12.9 million and having 1.7 million subscribers.
    \9\ In addition to the 17 cellular telephone systems in 
Overlapping Markets that are specified in the proposed Final 
Judgment, Ameritech and the purchasers agreed to include in the sale 
three other cellular telephone systems, in parts of the Indiana 1, 
Illinois 4, and Illinois 7 RSAs, which have been operated in close 
association with the other properties being sold. The inclusion of 
these additional properties in the agreement also has the effect of 
eliminating a limited overlap between Ameritech and SBC in part of 
the area of the Illinois 4 RSA.
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    The United States will evaluate this proposal for sale of the 
cellular systems, pursuant to Section IV and VI of the proposed Final 
Judgment. Under the schedule specified by Section VI, the United 
States' evaluation of the acceptability of this proposal is likely to 
be completed before the 60-day period for comments pursuant to the APPA 
has expired.

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 that 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 United States, which remains free to withdraw its 
consent to the proposed Final Judgment at any time prior to entry. The 
comments and the responses 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, N.W., Suite 8000, Washington, 
D.C. 20530.
    The proposed Final Judgment provides, in Section XI, 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 any of its provisions, to enforce 
compliance, and to punish any violations of its provisions.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, seeking an injunction to block consummation of the 
merger and a full trial on the merits. The United States is satisfied, 
however, that the divestiture of cellular system assets and other 
relief contained in the proposed Final Judgment will preserve 
competition in the provision of wireless mobile telephone services in 
the Overlapping Markets. This settlement will also avoid the 
substantial costs and uncertainty of a full trial on the merits on the 
violations alleged in the complaint. Therefore, the United States 
believes that there is no reason under the antitrust laws to proceed 
with further litigation if the divestitures of the cellular system 
assets are carried out in the manner required by the proposed Final 
Judgment.

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 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.'' \10\ Rather,
---------------------------------------------------------------------------

    \10\ 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 
---------------------------------------------------------------------------
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

[[Page 23114]]

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.\11\
---------------------------------------------------------------------------

    \11\ 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 (D.C. Cal. 1978); Gillette, 406 F. Supp. at 716. 
See also Microsoft, 56 F.3d at 1561 (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.' '' United 
States v. American Tel. & 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 Gillett Co., 406 F. Supp. at 716); United States v. Alcon 
Aluminum, Ltd. 605 F. Supp. 619, 622 (W.D. Ky. 1985).
    Moreover, the court's role under the Tunney Act is limited to 
reviewing the remedy in relationship to the violations that the United 
States has alleged in its complaint, and does not authorize the court 
to ``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459. Since ``[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,'' it follows that the court ``is only authorized to review the 
decree itself,'' and not to ``effectively redraft the complaint'' to 
inquire into other matters that the United States might have but did 
not pursue. Id.

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. Consequently, the United 
States has not attached any such materials to the proposed Final 
Judgment.

    Respectfully submitted.
Joel I. Klein,
Assistant Attorney General.
A. Douglas Melamed,
Principal Deputy Assistant Attorney General.
Constance K. Robinson,
Director of Operations and Merger Enforcement.
Donald J. Russell,
Chief, Telecommunications Task Force.
Laury E. Bobbish,
Assistant Chief, Telecommunications Task Force.
Carl Willner,
D.C. Bar #412841.
Michael D. Chaleff,
Juanita Harris,
John M. Lynch,
D.C. Bar #418313.
Anne M. Purcell,
Trial Attorneys, Department of Justice, Antitrust Division, 
Telecommunications Task Force, 1401 H Street, NW, Suite 8000, 
Washington, DC 20530, (202) 514-5813.

    Dated: April 16, 1999.

Certificate of Service

    I hereby certify that copies of the foregoing Competitive Impact 
Statement in the matter of United States versus SBC Communications Inc. 
and Ameritech Corp., Civ. No. 99-0715, were served on April 16, 1999 by 
hand and/or first-class U.S. mail, postage prepaid, upon each of the 
parties listed below:

Donald L. Flexner, Esq., Crowell & Moring LLP, 1001 Pennsylvania 
Avenue, NW, Washington, DC 20004-2595, Counsel for SBC Communications 
Inc.
Richard Favretto, Mayer, Brown, & Platt, 1909 K Street, NW, Washington, 
DC 20006-1101, Counsel for Ameritech Corporation.
Carl Willner,
Counsel for Plaintiff.
[FR Doc. 99-10678 Filed 4-28-99; 8:45 am]
BILLING CODE 4410-11-M