[Federal Register Volume 64, Number 116 (Thursday, June 17, 1999)]
[Notices]
[Pages 32523-32538]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15418]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Bell Atlantic Corporation et al; Proposed Final
Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Section 16(b) through (h), that a proposed
Final Judgment has been filed with the United States District Court for
the District of Columbia in United States of America v. Bell Atlantic
Corporation et al., Civil Action 99-1119 (LFO). On May 7, 1999, the
United States filed a Compliant alleging that the proposed acquisition
of GTE Corporation by Bell Atlantic Corporation would lessen
competition in the markets for wireless mobile telephone services in 10
major trading areas, and 65 metropolitan statistical areas and rural
service areas in violation of Section 7 of the Clayton Act, 15 U.S.C.
18. The proposed Final Judgment, filed at the same time as the
Complaint, requires defendants to divest one of their two wireless
telephone businesses in each market where these businesses overlap
geographically. Copies of the Complaint, proposed Final Judgment and
Competitive Impact Statement are available for inspection at the
Department of Justice in Washington, DC in Room 200, 325 Seventh
Street, NW, and at the Office of the Clerk of the United States
District Court for the District of Columbia.
Public comment is invited within 60 days of the date of this
notice. 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 Street, NW, Room 8000,
Washington, DC 20530 (telephone: (202) 514-5621).
Constance K. Robinson,
Director of Operations and Merger Enforcement.
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Bell Atlantic Corporation
and GTE Corporation, Defendants.
[Civil No.: 1:99CV01119; Filed: 5/7/99]
Judge Louis F. Oberdorfer
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 to 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 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
[[Page 32524]]
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: May 7, 1999.
For Plaintiff United States of America:
Joel I. Klein,
Assistant Attorney General.
Donald J. Russell,
Chief, Telecommunications Task Force.
A. Douglas Melamed,
Principal Deputy Assistant Attorney General.
Constance K. Robinson,
Director of Operations and Merger Enforcement.
Laury Bobbish,
Assistant Chief, Telecommunications Task Force.
Hillary B. Burchuk, D.C. Bar No. 366755,
Lawrence M. Frankel, D.C. Bar No. 441532,
J. Philip Sauntry, Jr., D.C. Bar No. 142828.
Attorneys, Telecommunications Task Force, U.S. Department of Justice,
Antitrust Division, 1401 H Street, N.W., Suite 8000, Washington, D.C.
20530, (202) 514-5621.
Date Signed: May 6, 1999.
For Bell Atlantic Corporation:
John Thorne, D.C. Bar No. 421351
Bell Atlantic Corporation, 1320 North Courthouse Road, Eighth Floor,
Arlington, Virginia 22201, (703) 974-1600.
Date Signed: May 6, 1999.
For GTE Corporation:
Steven G. Bradbury, D.C. Bar No. 416430
Kirkland & Ellis, 655 15th Street, NW., Washington, DC 20005, (202)
879-5000.
Date Signed: May 6, 1999.
Stipulation Approved For Filing
Done this ____ day of ________, 1999
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United States District Judge
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Bell Atlantic Corporation
and GTE Corporation, Defendants.
[Civil No.: 1:99CV01119; Filed: 5/7/99]
Judge Louis F. Oberdorfer
Final Judgment
Whereas, plaintiff, United States of America, filed its Complaint
on May 7, 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 Alabama, Florida,
Illinois, Indiana, New Mexico, South Carolina, Texas, Virginia and
Wisconsin;
And Whereas, the essence of this Final Judgment is prompt and
certain divestiture of certain wireless businesses that would otherwise
be commonly owned and in many cases controlled, including their
licenses and all relevant assets of the wireless businesses, 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
Alabama, Florida, Illinois, Indiana, New Mexico, South Carolina, Texas,
Virginia or Wisconsin;
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
defendants under Section 7 of the Clayton Act, 15 U.S.C. 18, as
amended.
II Definitions
A. ``Bell Atlantic'' means Bell Atlantic Corporation, a corporation
with its headquarters in New York City, New York 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. ``Bell Atlantic/GTE Merger'' means the merger of Bell Atlantic
and GTE, as detailed in the Agreement and Plan of Merger entered into
by Bell Atlantic and GTE on July 28, 1998.
C. ``GTE'' means GTE Corporation, a corporation with its
headquarters in Irving, 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.
D. ``Overlapping Wireless Markets'' means the following
Metropolitan Statistical Areas (``MSA''), Major Trading Areas
(``MTA''), and Rural Service Areas (``RSA'') used to define cellular
and PCS license areas by the Federal Communications Commission
(``FCC''), in which, as of the date of the filing of the Complaint in
this case, Bell Atlantic, by virtue of its partnership interest in PCS
PrimeCo, L.P. (``PrimeCo''), held an interest in PCS businesses, and
GTE held, or has plans to acquire,\1\ an ownership interest in cellular
businesses which serve the following MSAs and RSAs that geographically
overlap with the applicable PrimeCo MTA, as indicated:
\1\ Pursuant to an April 2, 1999 purchase agreement, GTE plans
to acquire the following cellular systems from Ameritech Mobile
Phone Service of Illinois, Inc., and Ameritech Mobile Phone Service
of Chicago, Inc.: Aurora-Elgin, IL MSA, Bloomington-Normal, IL MSA,
Champaign-Urbana-Rantoul, IL MSA, Chicago, IL MSA, Decatur, IL MSA,
Gary-Hammond-East Chicago, IN MSA, Joliet, IL MSA, Kankakee, IL MSA,
Springfield, IL MSA, Illinois 2--Bureau (B3) RSA, Illinois 4--Adams
(B1) RSA, Illinois 5--Mason (B2) RSA, Illinois 6--Montgomery RSA,
Illinois 7--Vermilion RSA, and Indiana 1--Newton (B2) RSA.
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I. PCS/Cellular Overlap Areas
A. Jacksonville MTA
1. Jacksonville MSA
2. Florida 5-Putman RSA
B. Miami-Fort Lauderdale MTA
1. Fort Myers MSA
2. Florida 1--Collier (B1) RSA
3. Florida 2--Glades (B1) RSA
4. Florida 3--Hardee RSA
5. Florida 11--Monroe (B2) RSA
C. Tampa-St. Petersburg-Orlando MTA
1. Tampa-St. Petersburg MSA
2. Lakeland-Winter Haven MSA
3. Sarasota MTA
4. Bradenton MSA
5. Florida 2--Glades (B1) RSA
6. Florida 3--Hardee RSA
7. Florida 4--Citrus (B1) RSA
D. New Orleans-Baton Rouge MTA
1. Mobile, AL MSA
2. Pensacola, FL MSA
E. Chicago MTA
1. Aurora-Elgin, IL MSA
2. Bloomington-Normal, IL MSA
3. Champaign-Urbana-Rantoul, IL MSA
[[Page 32525]]
4. Chicago, IL MSA
5. Decatur, IL MSA
6. Fort Wayne, IN MSA
7. Gary-Hammond-East Chicago, IN MSA
8. Joliet, IL MSA
9. Kankakee, IL MSA
10. Rockford, IL MSA
11. Springfield, IL MSA
12. Illinois 1--Jo Daviess RSA
13. Illinois 2--Bureau (b1) RSA
14. Illinois 2--Bureau (B3) RSA
15. Illinois 3--Mercer RSA
16. Illinois 4--Adams (B1) RSA
17. Illinois 5--Mason (B2) RSA
18. Illinois 6--Montgomery RSA
19. Illinois 7--Vermilion RSA
20. Indiana 1--Newton (B1) RSA
21. Indiana 1--Newton (B2) RSA
22. Indiana 3--Huntington RSA
F. Dallas-Fort Worth MTA
1. Dallas-Fort Worth MSA
2. Austin MSA
3. Sherman-Denison MSA
4. Texas 10--Navarro (B3) RSA
5. Texas 11--Cherokee (B1) RSA
6. Texas 16--Burleson RSA
G. Houston MTA
1. Houston MSA
2. Beaumont-Port Arthur MSA
3. Galveston MSA
4. Bryan-College Station MSA
5. Victoria MSA
6. Texas 10--Navarro (B3) RSA
7. Texas 11--Cherokee (B1) RSA
8. Texas 16--Burleson RSA
9. Texas 17--Newton RSA
10. Texas 20--Wilson (B2) RSA
11. Texas 21--Chambers RSA
H. San Antonio MTA
1. San Antonio MSA
2. Texas 16--Burleson RSA
3. Texas 20--Wilson (B2) RSA
I. Richmond-Norfolk MTA
1. Norfolk-Virginia Beach-Portsmouth MSA
2. Richmond MSA
3. Newport News-Hampton MSA
4. Petersburg-Colonial Heights MSA
5. Virginia 7-Buckingham (B1) RSA
6. Virginia 8-Amelia RSA
7. Virginia 9-Greensville RSA
8. Virginia 11-Madison (B1) RSA
9. Virginia 12-Caroline (B1) RSA
10. Virginia 12-Carolina (B2) RSA
J. Milwaukee MTA
1. Wisconsin 8-Vernon RSA
II. Cellular MSA Overlap Areas
A. Greenville, SC MSA
B. Anderson, SC MSA
C. El Paso, TX MSA
D. Las Cruces, NM MSA
E. ``Wireless System Assets'' means, for each wireless business to
be divested under this Final Judgment, all types of assets, tangible an
intangible, used by defendants in the operation of each of the wireless
businesses to be divested (including the provision of long distance
telecommunications services for wireless calls). ``Wireless System
Assets'' shall be construed broadly to accomplish the complete
divestitures of the entire business of one of the two wireless systems
in each of the Overlapping Wireless Markets required by this Final
Judgment and to ensure that the divested wireless businesses remain
viable, ongoing businesses. With respect to each overlap in the
Overlapping Wireless Markets, the Wireless System Assets to be divested
shall be either those in which Bell Atlantic has an interest or those
in which GTE has or will acquire an interest, but not both. These
divestitures of the Wireless System Assets as defined in this Section
II.E 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 wireless business that must be retained to continue the
existing operations of the wireless properties defendants are not
required to divest, and that either are not capable of being divided
between the divested wireless businesses 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(s) an option to obtain a non-exclusive, transferable license
from defendants for a reasonable period at the election of the
purchaser to use any of the divesting defendant's assets used in the
operation of the wireless business being divested, so as to enable the
purchaser to continue to operate the divested wireless businesses
without impairment, where those assets are not subject to complete
transfer to the purchaser under (i). Assets shall include, without
limitation, all types of real and personal property, monies and
financial instruments, equipment, inventory, inventory, office
furniture, fixed assets and furnishing, supplies and materials,
contracts, agreements, leases, commitments, spectrum licenses issued by
the 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 ``Airbridge,'' ``AmericaChoice,'' ``Bell
Atlantic Mobile,'' ``Cellular One,'' Conversation Card,''
DigitalChoice,'' ``EasternChoice,'' ``GTE,'' ``HomeChoice,''
``MetroMobile,'' ``Mobilnet,'' ``PCS Now,'' ``PCS Ultra,'' ``PrimeCo,''
``Welcome to the United State of America,'' and ``WesternChoice'') 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 wireless
businesses 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.
1. In the event that defendants elect to divest Bell Atlantic's
interest in a PCS business in one of the PCS/Cellular Overlap Areas,
defendants may retain up to 10 MHz of broadband PCS spectrum within
that PCS/Cellular Overlap Area upon completion of the divestiture of
the Wireless System Assets.
2. In the event that defendants elect to divest Bell Atlantic's
interest in a PCS business in one of the PCS/Cellular Overlap Areas,
defendants, at least 90 calendar days prior to the consummation of the
Bell Atlantic/GTE Merger, may request approval from plaintiff to
partition the PCS license along basic Trading Area (``BTA'') geographic
boundaries and retain assets in one or more specified non-overlapping
BTAs. Plaintiff's approval of the request shall be subject to a
determination by plaintiff in its sole discretion that the assets to be
sold in the non-overlapping BTAs are not needed to assure the
competitive viability of the divested business in the remainder of the
MTA, and that the purchaser of the Wireless System Assets in the
remainder of the MTA will be able to operate the divested PCS business
as a fully competitive entity.
3. In a PCS/Cellular Overlap Area where GTE holds a non-controlling
minority interest in an overlapping cellular business, defendants, at
least 90 calendar days prior to the consummation of the Bell Atlantic/
GTE
[[Page 32526]]
Merger, may request approval from plaintiff to retain both the PCS
business and GTE's interest in such overlapping cellular business.
Plaintiff's approval of the request shall be subject to a determination
by plaintiff in its sole discretion that the retention of a non-
controlling minority interest will be entirely passive and will not
significantly diminish competition.
III. Applicability and Effect
A. The provisions of this Final Judgment shall be applicable to
each of 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 plaintiff pursuant to Section
IV.C, of all or substantially all of their assets, or of a lesser
business unit containing the Wireless 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 Wireless System Assets agree to be bound by
Section X of this Final Judgment.
IV. Divestiture of Wireless Interests
A. Defendants Bell Atlantic and GTE shall divest themselves of the
Wireless System Assets in each of the Overlapping Wireless 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, in accordance with the following schedule:
1. On or before consummation of the Bell Atlantic/GTE Merger,
defendants shall divest Wireless System Assets in the Cellular MSA
Overlap Areas;
2. If Bell Atlantic has acquired 100% ownership of one or more of
the PCS businesses currently operated by PrimeCo in MTAs in the PCS/
Cellular Overlap Areas more than ninety (90) calendar days prior to
consummation of the Bell Atlantic/GTE Merger, defendants shall divest
the Wireless System Assets in the PCS/Cellular Overlap Areas on or
before consummation of the Bell Atlantic/GTE Merger;
3. If Bell Atlantic has not acquired, more than ninety (90)
calendar days prior to consummation of the Bell Atlantic/GTE Merger,
100% ownership of one or more of the PCS businesses currently operated
by PrimeCo in MTAs in the PCS/Cellular Overlap Areas:
(a) defendants will submit to plaintiff, on or before consummation
of the Bell Atlantic/GTE Merger, a definitive Divestiture List
identifying the specific Wireless System Assets in each of the PCS/
Cellular Overlap Areas that will be divested;
(b) the cellular MSA and RSA businesses on the Divestiture List
shall be divested within ninety (90) calendar days after consummation
of the Bell Atlantic/GTE Merger; except that if Bell Atlantic acquires
100% ownership of one or more of the PCS businesses currently operated
by PrimeCo in MTAs in the PCS/Cellular Overlap Areas within the ninety
(90) calendar day period prior to consummation of the Bell Atlantic/GTE
Merger, the cellular MSA and RSA businesses on the Divestiture List
shall be divested on or before consummation of the Bell Atlantic/GTE
Merger;
(c) the PCS MTA businesses on the Divestiture List shall be
divested within 90 calendar days after Bell Atlantic acquires 100%
ownership of one or more of the PCS businesses currently operated by
PrimeCo in MTAs in the PCS/Cellular Overlap Areas, but in no event
later than one hundred eighty (180) calendar days after consummation of
the Bell Atlantic/GTE Merger.
B. Defendants agree to use their best efforts to accomplish the
divestitures set forth in this Final Judgment and to seek all necessary
regulatory approvals as expeditiously as possible. 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), or
any waiver of such rules or other authorization granted by the FCC.
Authorization by the FCC to conduct divestiture of a cellular business
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 Wireless System Assets in any individual Overlapping Wireless
Market entirely to a single purchaser (but Wireless System Assets used
by GTE in the operation of its cellular business in different
Overlapping Wireless Markets may be divested to different purchasers),
and (2) selling or otherwise conveying the Wireless System Assets to
the purchaser(s) in such a way as to satisfy plaintiff, in its sole
discretion, that each wireless business can and will be used by the
purchaser(s) as part of a viable, ongoing business engaged in the
provision of wireless mobile telephone service. The divestitures
pursuant to this Final Judgment shall be made to one or more purchasers
for whom it is demonstrated to plaintiff's sole satisfaction that (1)
the purchaser has the capability and intent of competing effectively in
the provision of wireless mobile telephone service using the Wireless
System Assets, (2) the purchaser has the managerial, operational and
financial capability to compete effectively in the provision of
wireless mobile telephone service using the Wireless System Assets, and
(3) none of the terms of any agreement between the purchaser and either
of defendants shall give defendants the ability unreasonably (i) To
raise the purchaser's costs, (ii) to lower the purchaser's efficiency,
(iii) to limit any line of business which a purchaser may choose to
pursue using the Wireless System Assets (including, but not limited to,
entry into local telecommunications services on a resale of facilities
basis or long distance telecommunications services on a resale or
facilities basis), or otherwise to interfere with the ability of the
purchaser to compete effectively.
D. If they have not already done so, defendants shall make known
the availability of the Wireless System Assets in each of the
Overlapping Wireless Markets by usual and customary means, sufficiently
in advance of the time of consummation of the Bell Atlantic/GTE Merger
reasonably to enable the required divestitures to be accomplished
according to the schedule outlined herein. Defendants shall inform any
person making an inquiry regarding a possible purchase of the Wireless
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 Wireless System Assets, and all information
and any financial, operational, or other documents customarily provided
as part of a due diligence process, including all
[[Page 32527]]
information relevant to the sale and to the areas of business in which
the cellular business 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.E. 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 July
29, 1998 (other than solely on a temporary assignment basis from
another part of Bell Atlantic or GTE) with, or whose principal
responsibility relates to, the divested Wireless System Assets.
G. To the extent that the wireless businesses to be divested use
intellectual property, as required to be identified by Section II.E,
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. Defendant shall preserve all records of all efforts made to
preserve and divest any or all of the Wireless System Assets required
to be divested until the termination of this Final Judgment.
V. Appointment of Trustee
A. If defendants have not divested all of the Wireless System
Assets required to be divested in accordance with the schedule in
Section IV to a purchaser or purchasers that have been approved by
plaintiff pursuant to Section IV.C, then:
1. Defendants shall identify to plaintiff in writing the remaining
Wireless System Assets to be divested in the Overlapping Wireless
Markets, 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 plaintiff, who will be responsible for (a) Accomplishing a
divestiture of all Wireless System Assets transferred to the trustee
from defendants, in accordance with the terms of this Final Judgment,
to a purchaser or purchasers approved by plaintiff under Section IV.C,
and (b) exercising the responsibilities of the licensee and controlling
and operating the transferred Wireless System Assets to ensure that the
wireless businesses remain ongoing, economically viable competitors in
the provision of mobile wireless telecommunications services in the
Overlapping Wireless 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 plaintiff, which must be consistent with the terms of
this Final Judgment and which must have received approval by plaintiff,
who shall communicate to defendants within ten (10) business days
approval or disapproval of that form; and
4. After obtaining any necessary approvals from the FCC for the
transfer of control of the licenses of the remaining Wireless System
Assets to the trustee, defendants shall irrevocably divest the
remaining Wireless System Assets to the trustee, who will own such
assets (or own the stock of the entity owning such assets, if
divestiture is be effected by creation of such an entity for sale to
purchser(s)) and control such assets, subject to the terms of approved
Trust Agreement.
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the wireless business(es) to be
divested, which shall be done within the time periods set forth in this
Final Judgment. Those assets shall be the Wireless System Assets as
designated by defendants as set forth in Section V.A.1 for the
Overlapping Wireless Markets. In addition, notwithstanding any
provision to the contrary, plaintiff may, in its sole discretion,
require defendants to include additional assets that substantially
relate to the wireless mobile telephone business in the Wireless System
Assets to be divested if it would facilitate a prompt divestiture to an
acceptable purchaser. 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
Wireless 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
plaintiff in its sole discretion, and shall have such other powers as
this Court shall deem appropriate. 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 sever at the cost and expense of defendants,
on such terms and conditions as the Court may prescribe, and shall
account for all monies derived from the sale of the wireless
business(es) 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 wireless
business(es) 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. 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 facilities of the wireless business(es) to be divested,
and 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, defendants shall permit prospective
purchaser(s) of the Wireless System Assets to have reasonable access to
personnel and to make such inspection of the Wireless 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 Wireless
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
[[Page 32528]]
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 Wireless 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 effects made to divest the Wireless System Assets.
F. The Trustee shall divest the Wireless System Assets in each of
the PCS/Cellular Overlap Areas to a purchaser or purchasers acceptable
to plaintiff in its sole discretion, as required in Section IV.C of
this Final Judgment, no later than one hundred and eighty (180)
calendar days after the Wireless Systems Assets are transferred to a
trustee in accordance with the schedule outlined in Section IV;
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 Wireless 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 Wireless System Assets for which
final FCC approval has not been granted until five (5) days after such
approval is received.
G. If the trustee has not accomplished the divestiture of all of
the Wireless System Assets within the time specified for completion of
divestiture to a purchaser or purchasers under Section V.F. 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 order 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 plaintiff.
H. After defendants transfer the Wireless System Assets to the
trustee, and until those Wireless System Assets have been divested to a
purchaser or purchasers approved by plaintiff pursuant to Section IV.C,
the trustee shall have sole and complete authority to manage and
operate the Wireless 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
Wireless System Assets transferred to the trustee, apart from the right
to receive the proceeds of the sale or other disposition of the
Wireless System Assets. The trustee shall operate the wireless
business(es) as a separate and independent business entity from Bell
Atlantic or GTE, with sole control over operations, marketing and
sales. Bell Atlantic and GTE shall not communicate with, or attempt to
influence the business decisions of, the trustee concerning the
operation and management of the wireless businesses, and shall not
communicate with the trustee concerning the divestiture of the Wireless
System Assets or take any action to influence, interfere with, or
impede 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 Wireless 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 wireless businesses
under the trustee's control any non-public or competitively sensitive
marketing, sales, or pricing information relating to their respective
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
Wireless System Assets, or the trustee if the trustee is divesting the
Wireless System Assets, shall notify plaintiff of the proposed
divestiture. If the trustee is responsible for the divestiture, the
trustee shall similarly notify 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 interest in or a desire to,
acquire any ownership interest in the Wireless 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 purchaser(s). 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 all
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 Bell Atlantic/GTE 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
[[Page 32529]]
inquiry about acquiring, any or all of the Wireless 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
Wireless System Assets to be divested in the Overlapping Wireless
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 at actions defendants have taken
and all steps defendants have implemented on an ongoing basis to
preserve the Wireless 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 outlines in
defendants' earlier affidavit 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 Wireless System
Assets to purchase(s) approved by plaintiff pursuant to Section IV.C,
each defendant shall take all steps necessary to ensure that each of
the wireless businesses that it owns or operates in the Overlapping
Wireless Markets shall continue to be operated as a separate,
independent, ongoing, economically viable and active competitor to the
other 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 wireless businesses (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 wireless business, and the books, records,
and competitively sensitive sales, marketing, and pricing information
associated with said wireless businesses will be kept separate and
apart from the books, records, and competitively sensitive sales,
marketing, and pricing information associated with the other wireless
business; provided that defendants may continue to use any trademarks,
trade names or service marks used in the operation of such wireless
businesses prior to the consummation of the Bell Atlantic/GTE Merger.
B. Until the Wireless System Assets in each Overlapping Wireless
Market have been divested to purchaser(s) approved by plaintiff, or
transferred to a trustee pursuant to Section V of this Final Judgment,
each defendant shall in accordance with past practices, with respect to
each wireless business that it has an ownership interest in or operates
in the Overlapping Wireless Markets:
1. Use all reasonable efforts to maintain and increase sales of
wireless mobile telephone services, and maintain and increase
promotional, advertising, sales, technical assistance, and marketing
support for the mobile telephone services sold by the wireless
businesses;
2. Take all steps necessary to ensure that each wireless business
that it has an ownership interest in or operates in the Overlapping
Wireless Markets is fully maintained in operable condition and shall
maintain and adhere to normal maintenance schedules;
3. Provide and maintain sufficient working capital and lines and
sources of credit to maintain the Wireless System Assets as viable
ongoing businesses;
4. Not remove, sell, lease, assign, transfer, pledge or otherwise
dispose of or pledge as collateral for loans, any asset of each
wireless business that it has an ownership interest in or operates in
the Overlapping Wireless Markets, other than in the ordinary course of
business, except as approved by plaintiff;
5. Maintain, in accordance with sound accounting principles,
separate, true, accurate and complete financial ledgers, books and
records that report, on a periodic basis, such as the last business day
of each month, consistent with past practices, the assets, liabilities,
expenses, revenues, income, profit and loss of each wireless business
that it has an ownership interest in or operates in the Overlapping
Wireless Markets;
6. Be prohibited from terminating, transferring, or altering to the
detriment of any employees who work with each wireless business that it
has an ownership interest in or operates in the Overlapping Wireless
Markets as of the date of consummation of the Bell Atlantic/GTE Merger,
any current employment or salary agreements, except (a) in the ordinary
course of business, (b) for transfer bids initiated by employees
pursuant to defendants' regular, established job posting policies, (c)
for an individual who has written offer of employment from a third
party for a like position, or (d) as necessary to promote
accomplishment of defendants' obligations under this Final Judgment;
and
7. Take no action that would impede in any way or jeopardize the
sale of each wireless business that it has an ownership interest in or
operates in the Overlapping Wireless Markets.
C. On or before the consummation of the Bell Atlantic/GTE Merger,
defendants shall assign complete managerial responsibility over each
wireless business that they have an ownership interest in or operate in
the Overlapping Wireless Markets to a specified manager who shall not
participate, during the period of such responsibility, in the
management of any of the defendants' other businesses.
D. Defendants shall, during the period before all Wireless 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 Wireless 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
[[Page 32530]]
Antitrust Division, made to defendants at their principal offices,
defendants shall submit writ ten 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 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 a 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
United States District Court for the District of Columbia
United States of America, Plaintiff, v. Bell Atlantic Corporation
and GTE Corporation, Defendants.
[Civil No.: 99-119 (LFO); Filed: May 7, 1999]
Competitive Impact Statement
The United States, pursuant to Section 2(b) of the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16(b)-(h)(``APPA''), files this
Competitive Impact Statement relating to the proposed Final Judgment
submitted for entry in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
The United States filed a civil antitrust Complaint on May 7, 1999,
alleging that the proposed acquisition of GTE Corporation (``GTE'') by
Bell Atlantic Corporation (``Bell Atlantic'') would violate Section 7
of the Clayton Act, 15 U.S.C. Sec. 18 by lessening competition in the
markets for wireless mobile telephone services in 10 major trading
areas (``MTAs''), 65 metropolitan statistical areas (``MSAs'') and
rural service areas (``RSAs'') in Florida, Alabama, Illinois, Indiana,
Texas, Virginia, Wisconsin, New Mexico, and South Carolina. In the 10
MTAs, Bell Atlantic has a 50% interest in PCS PrimeCo, L.P.
(``PrimeCo''), a firm that provides personal communications services
(``PCS'') in 61 MSAs and RSAs where cellular mobile telephone services
are provided by GTE, or by a firm that GTE has an interest in or will
acquire. In addition, this acquisition affects four additional MSAs
where competing cellular mobile wireless telephone businesses are owned
in whole or in part by Bell Atlantic and GTE. These areas are
identified in the Complaint as the ``Overlapping Wireless Markets.''
Shortly before the Complaint in this matter was filed the United
States and defendants reached agreement on the terms of a proposed
Final Judgment, which requires Bell Atlantic and GTE to divest one of
the wireless telephone businesses in each of the Overlapping Wireless
Markets. In each of the Overlapping Wireless Markets, defendants can
choose which wireless business to divest. 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 and a Stipulation by
plaintiff and defendants consenting to its entry were filed
simultaneously with the Complaint.
The United States and defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the Antitrust
Procedures and Penalties Act, 15 U.S.C. Sec. 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 defendants have also stipulated that
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. Should the Court decline to enter the Final
Judgment, 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
Bell Atlantic is one 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. GTE is the largest non-RBOC local telephone operating
company in the United States. Bell Atlantic and GTE each provide local
exchange services in distinct regions, and they also provide wireless
mobile telephone services, including cellular mobile telephone services
and PCS, both within and outside of their local exchange service
regions. Bell Atlantic is a 50% partner in PrimeCo, a firm that
provides wireless mobile telephone services in many areas of the
country.
Bell Atlantic, with headquarters in New York City, New York, is one
of the largest RBOCs in the United States, with approximately 42
million total local telephone access lines. In 1998, Bell Atlantic had
revenues in excess of $31 billion. Bell Atlantic provides local
telephone services to retail customers in Connecticut, Delaware, the
District of Columbia, Maine, Maryland, Massachusetts, New Hampshire,
New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia,
and West Virginia, as well as cellular mobile telephone services in
those states. Bell Atlantic also provides cellular mobile telephone
services in some areas outside its local exchange service region,
including areas within the states of Arizona, Georgia, North Carolina,
New Mexico, South Carolina, and Texas. Through its 50% partnership in
PrimeCo, Bell Atlantic provides wireless service in the states of
Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa,
Louisiana, Michigan, Minnesota, Mississippi, New Mexico, North
Carolina, Ohio, Oklahoma, Texas,
[[Page 32531]]
Virginia, and Wisconsin. Bell Atlantic is the nation's fourth largest
wireless mobile telephone service provider, with about 6.6 million
subscribers nationwide.
GTE, with headquarters in Irving, Texas, is the largest non-RBOC
local telephone company in the United States, with over 23 million
total local telephone access lines. In 1998, GTE had revenues in excess
of $25 billion. GTE provides local telephone service to retail
customers in Alabama, Alaska, Arizona, Arkansas, California, Florida,
Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota,
Missouri, Nebraska, Nevada, New Mexico, North Carolina, Ohio, Oklahoma,
Oregon, Pennsylvania, South Carolina, Texas, Virginia, Washington, and
Wisconsin, and it also provides wireless mobile telephone service in
most of these states. GTE is a major wireless mobile telephone service
provider with about 4.8 million subscribers nationwide. GTE also has
entered in to an agreement, dated April 2, 1999, to acquire certain
cellular mobile telephone businesses from Ameritech Mobile Phone
Service of Illinois, Inc., and Ameritech Mobile Phone Services of
Chicago, Inc., (``Ameritech'') for $3.27 billion, which would make GTE
a provider of cellular mobile telephone services in additional areas in
Illinois and Indiana. The acquisition of the Ameritech cellular
businesses would add about 1.7 million subscribers to GTE's total
number of wireless subscribers nationwide.
On July 28, 1998, Bell Atlantic and GTE entered into a merger
agreement whereby the two firms would merge in a transaction valued at
approximately $53 billion dollars at the time of the agreement. If this
transaction is consummated, the combined total of Bell Atlantic's and
GTE's cellular and other wireless mobile telephone service subscribers,
absent divestitures, would be 13.1 million, including the number of
subscribers GTE would receive from its acquisition of Ameritech
cellular business.
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 MSA and RSA license area.
Cellular licenses were awarded by the Federal Communications Commission
(``FCC'') beginning in the early 1980s, within any given MSA or RSA.\1\
Providers of Specialized Mobile Radio (``SMR'') services typically were
also authorized to operate with some additional spectrum in these
areas, including the Overlapping Wireless Markets.
---------------------------------------------------------------------------
\1\ 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, and 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 provision of PCS, a type of wireless
telephone service that 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 Wireless Markets. While the areas for
which PCS providers are licensed (MTAs and basic trading areas
(``BTAs'')) differ somewhat from the cellular MSAs and RSAs, they
generally overlap with them. In many areas, including most of the
Overlapping Wireless Markets, not all of the PCS license holders have
started to offer services or even begun to construct the facilities
necessary to begin offering service. The PCS providers have tended to
enter in the largest cities first, entering in smaller markets only
later and not on as wide a scale. Moreover, even in those areas where
one or more PCS providers have constructed their networks and have
started to offer service, including the Overlapping Wireless Markets,
the incumbent cellular providers, such as Bell Atlantic and GTE, still
typically have substantially larger market shares than the new
entrants.
C. Anticompetitive Consequences of the Proposed Acquisition
Bell Atlantic and GTE, or firms in which they have an interest, are
or will be competing providers of wireless mobile telephone services in
65 cellular license areas in nine states. These areas are referred to
in the Complaint as follows:
I. PCS/Cellular Overlap Areas
A. Jacksonville MTA
1. Jacksonville MSA
2. Florida 5--Putnam RSA
B. Miami-Fort Lauderdale MTA
1. Fort Myers MSA
2. Florida 1--Collier (B1) RSA
3. Florida 2--Glades (B1) RSA
4. Florida 3--Hardee RSA
5. Florida 11--Monroe (B2) RSA
C. Tampa-St. Petersburg-Orlando MTA
1. Tampa-St. Petersburg MSA
2. Lakeland-Winter Haven MSA
3. Sarasota MSA
4. Bradenton MSA
5. Florida 2--Glades (B1) RSA
6. Florida 3--Hardee RSA
7. Florida 4--Citrus (B1) RSA
D. New Orleans-Baton Rouge MTA
1. Mobile, AL MSA
2. Pensacola, FL MSA
E. Chicago MTA
1. Aurora-Elgin, IL MSA
2. Bloomington-Normal, IL MSA
3. Champaign-Urbana-Rantoul, IL MSA
4. Chicago, IL MSA
5. Decatur, IL MSA
6. Fort Wayne, IN MSA
7. Gary-Hammond-East Chicago, IN MSA
8. Joliet, IL MSA
9. Kankakee, IL MSA
10. Rockford, IL MSA
11. Springfield, IL MSA
12. Illinois 1--Jo Daviess RSA
13. Illinois 2--Bureau (B1) RSA
14. Illinois 2--Bureau (B3) RSA
15. Illinois 3--Mercer RSA
16. Illinois 4--Adams (B1) RSA
17. Illinois 5--Mason (B2) RSA
18. Illinois 6--Montgomery RSA
19. Illinois 7--Vermilion RSA
20. Indiana 1--Newton (B1) RSA
21. Indiana 1--Newton (B2) RSA
22. Indiana 3--Huntington RSA
F. Dallas-Fort Worth MTA
1. Dallas-Fort Worth MSA
2. Austin MSA
3. Sherman-Denison MSA
4. Texas 10--Navarro (B3) RSA
5. Texas 11--Cherokee (B1) RSA
6. Texas 16--Burleson RSA
G. Houston MTA
1. Houston MSA
2. Beaumont-Port Arthur MSA
3. Galveston MSA
4. Bryan-College Station MSA
5. Victoria MSA
6. Texas 10--Navarro (B3) RSA
7. Texas 11--Cherokee (B1) RSA
8. Texas 16--Burleson RSA
9. Texas 17--Newton RSA
10. Texas 20--Wilson (B2) RSA
11. Texas 21--Chambers RSA
H. San Antonio MTA
1. San Antonio MSA
[[Page 32532]]
2. Texas 16--Burleson RSA
3. Texas 20--Wilson (B2) RSA
I. Richmond-Norfolk MTA
1. Norfolk-Virginia Beach-Portsmouth MSA
2. Richmond MSA
3. Newport News-Hampton MSA
4. Petersburg-Colonial Heights MSA
5. Virginia 7--Buckingham (B1) RSA
6. Virginia 8--Amelia RSA
7. Virginia 9--Greensville RSA
8. Virginia 11--Madison (B1) RSA
9. Virginia 12--Caroline (B1) RSA
10. Virginia 12--Caroline (B2) RSA
J. Milwaukee MTA
1. Wisconsin 8--Vernon RSA
II. Cellular MSA Overlap Areas
A. Greenville, SC MSA
B. Anderson, SC MSA
C. El Paso, TX MSA
D. Las Cruces, NM MSA
In the Overlapping Wireless Markets, the population potentially
addressable by wireless mobile telephone systems exceeds 25 million.
GTE and Bell Atlantic are direct competitors in wireless mobile
telephone services in the Cellular MSA Overlap Areas. The cellular
businesses owned in whole or in part by Bell Atlantic and GTE are the
only two providers of cellular mobile telephone services, and the two
primary providers of all wireless mobile telephone services, in the
Cellular MSA Overlap Areas. In addition, GTE and PrimeCo, and Ameritech
and PrimeCo, are direct competitors in wireless mobile telephone
services in the PCS/Cellular overlap Areas. In each of the Overlapping
Wireless Markets, the wireless businesses owned or to be owned in whole
or in part by Bell Atlantic and GTE compete to sell the best quality
service at the lowest possible rates and are among each other's most
significant competitors. In each of the PCS/Cellular Overlap Areas, the
cellular business to be acquired or owned in whole or in part by GTE
and the PCS business owned by PrimeCo are two of a small number of
providers of wireless mobile telephone services.
Therefore, bell Atlantic's acquisition of GTE would cause the level
of concentration among firms providing wireless mobile telephone
services in each of the Overlapping Wireless Markets to increase
significantly. A high level of concentration in the provision of
wireless mobile telephone services already exists in each of the
Overlapping Wireless Markets. In the Cellular MSA Overlap Areas, Bell
Atlantic's and GTE's individual market shares, measured on the basis of
the number of subscribers, exceed 35%. The combined market share of GTE
and Bell Atlantic in the provision of wireless mobile telephone
services, measured by the number of subscribers, is in the range of 75
to 95%, taking into account other operational wireless mobile
competitors. As measured by the Herfindahl-Hirschman Index (``HHI''),
which is commonly employed by the Department of Justice in merger
analysis and is explained in more detail in Appendix A to the
Complaint, concentration in these markets is already in excess of 2800,
well above the 1800 threshold at which the Department normally
considers a market to be highly concentrated. After the merger, the HHI
in these markets will be in excess of 5500.
In each of the PCS/Cellular Overlap Areas, the GTE or Ameritech
cellular business has one of the two largest market shares in the
provision of wireless mobile telephone services, and PrimeCo is one of
a small number of new PCS entrants into these markets. In some of these
markets, such as Richmond, Houston, and Tampa, PrimeCo was the first
new PCS entrant, is the third largest wireless firm in terms of number
of subscribers, and has managed to garner a significant share.
Competition between PrimeCo and GTE or Ameritech, created by PrimeCo's
entry into markets that were previously an effective duopoly, has
resulted in lower prices and higher quality in these markets than would
otherwise have existed absent such competition. There is already a high
level of concentration in the provision of wireless mobile telephone
services in the PCS/Cellular Overlap Areas. In virtually all, the
individual shares of the two cellular carriers--one of which is GTE or
Ameritech--are in the range of 30 to 40% and the HHI exceeds 2000. In
the PCS/Cellular Overlap Areas, the combined market share of PrimeCo
and the cellular business in question is generally in the 35 to 50%
range.
If GTE and Bell Atlantic merge, and GTE completes its acquisition
of the Ameritech cellular businesses, the PCS/Cellular Overlap Areas
will become significantly more concentrated, and the competition
between PrimeCo and GTE or Ameritech in wireless mobile telephone
services in these markets will be eliminated. As a result of the loss
in competition between the PrimeCo and GTE or Ameritech cellular
businesses, there will 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. Therefore, the likely
effect of the merger of Bell Atlantic and GTE is that prices would
increase, and the quality or quantity of service together with
incentives to improve network facilities would decrease, in the
provision of wireless mobile telephone services in the PCS/Cellular
Overlap Areas.
It is unlikely that entry within the next two years into wireless
mobile telephone services in the Overlapping Wireless 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 Wireless 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 telephone services in each of the Overlapping
Wireless Markets by requiring defendants to divest one of their two
wireless telephone businesses in each of the Overlapping Wireless
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.E, direct defendants to divest one of
their wireless telephone businesses (to be selected by defendants) in
each of the Overlapping Wireless Markets. Section IV.C permits
different wireless businesses in separate Overlapping Wireless Markets
to be divested to different purchasers, but requires that, for any
individual wireless business, the Wireless System Assets be divested
entirely to a single purchaser, unless the United States otherwise
consents in writing.
The proposed Final Judgment's divestiture provisions are intended
to accomplish the ``complete divestiture of the entire business of one
of the two wireless systems in each of the Overlapping Wireless
Markets,'' as Section II.E states. Section II.E also specifies in
detail the types of assets to be divested, which collectively are
described throughout the consent decree as ``Wireless System Assets,''
and addresses some special circumstances concerning the divestiture of
those assets. In all of the Overlapping Wireless Markets, Wireless
System Assets means all types of assets, tangible and intangible, used
by defendants in the operation of each of the wireless
[[Page 32533]]
businesses to be divested, including the provision of long distance
telecommunications service for wireless calls. Section II.E 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
Wireless System Assets. However, the merged firm will retain a number
of other wireless businesses 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 wireless business and
that must be retained to some extent to continue the existing
operations of the wireless businesses not being divested. Section II.E
permits special divestiture arrangements for such assets if they are
not capable of being divided between the divested and retained wireless
businesses, 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 purchaser, an option to obtain a non-exclusive,
transferable license for a reasonable period to use the assets in the
operation of the wireless business being divested, so as to enable the
purchaser to continue to operate the divested wireless businesses
without impairment.
The definition of Wireless System Assets in Section II.E contains
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 wireless businesses 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
wireless business 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 wireless businesses. 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.
Another proviso relates to certain specific trademarks, trade names
and service marks. Section II.E, defining the Wireless System Assets to
be divested, generally requires the divestiture of trademarks, trade
names and service marks, with the sixteen specified exceptions which
contain names under which defendants' retained wireless businesses, or
their corporate parents or affiliates, do business. Such trademarks,
trade names and service marks, like other assets, are either to be
divested in their entirety, except for marks and names that must be
retained to continue the existing operations of defendants' remaining
wireless properties and that are not capable of being divided (or that
the divesting defendant and purchaser agree not to divide), which are
to be made available to the purchaser through a non-exclusive,
transferable license.
Under limited circumstances, defendants are allowed to retain
specified portions of the Wireless System Assets in the Overlapping
Wireless Markets. First, Section II.E.1 provides that if defendants
elect to divest Bell Atlantic's interest in a PCS business in one of
the PCS/Cellular Overlap Areas, defendants may retain up to 10 MHz of
broadband PCS spectrum within that PCS/Celluar Overlap Area upon
completion of the divestiture of the Wireless System Assets. In this
instance, defendants will still be required to divest the entire PCS
business, including 20 MHz of broadband PCS spectrum, to insure that
the market structure does not change as a result of the merger and that
the divested business will be able to compete as effectively under new
ownership as under its current ownership.
Second, Section II.E.2 of the Final Judgment allows defendants to
request approval from plaintiff to partition the PCS license along BTA
geographic boundaries and retain assets in one or more specified non-
overlapping BTAs, in the event that defendants elect to divest Bell
Atlantic's interest in PCS business in one of the PCS/Cellular Overlap
Areas. Plaintiff's approval of the request shall be subject to a
determination by plaintiff in its sole discretion that the assets to be
sold in the non-overlapping BTAs are not needed to assure the
competitive viability of the divested business in the remainder of the
MTA, and that the purchaser of the Wireless System Assets in the
remainder of the MTA will be able to operate the divested PCS business
as a fully competitive entity. Section II.E.2 requires defendants to
seek this approval at least 90 calendar days prior to the consummation
of the Bell Atlantic/GTE Merger.
Finally, Section II.E.3 allows, with approval from plaintiff, the
merged entity to retain both Bell Atlantic's PCS business and GTE's
non-controlling minority interest in an overlapping cellular business
in a PCS/Cellular Overlap Area. Plaintiff's approval of the request
shall be subject to a determination by plaintiff in its sole discretion
that the retention of a non-controlling minority interest will be
entirely passive and will not significantly diminish competition. GTE
has a number of non-controlling minority interests in cellular
businesses, ranging from 2% to 40%, in the Overlapping Wireless
Markets. To be permitted to retain a minority cellular interest,
defendants will be required to demonstrate that the interest they wish
to keep is entirely passive, such that they receive no competitively
sensitive information about the competing cellular business, and have
no input into the business decisions of the competing cellular provider
that could have anticompetitive consequences. Plaintiff, in its sole
discretion, will determine that the retention of the non-controlling
minority interest will not significantly diminish competition before
approval will be granted for the merged firm to retain a minority
interest. Section II.E.3 requires defendants to seek this approval at
least 90 calendar days prior to the consummation of the Bell Atlantic/
GTE Merger.
Section IV contains other provisions to facilitate divestiture,
including notification of the availability of the Wireless System
Assets for purchase in Section IV.D, access to information about the
Wireless 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 wireless businesses without impairment, Section
IV.F prohibits defendants from interfering with a purchaser's
negotiations to retain any employees who work or have worked with the
Wireless System Assets since the date of the announcement of the
merger, or whose principal responsibility relates to the Wireless
System Assets.
[[Page 32534]]
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, the
divestitures of the Wireless System Assets in the Overlapping Wireless
Markets on a strict schedule, but provides defendants with some
flexibility in recognition of the special circumstances regarding Bell
Atlantic's interest in PrimeCo.
Currently, Bell Atlantic has a 50% interest in PrimeCo, and its
ability to divest this interest is limited by its partnership
agreement. Bell Atlantic has publicly announced plans to dissolve the
PrimeCo partnership. If this dissolution does occur, Bell Atlantic may
take full ownership of some or all of the PrimeCo PCS businesses, and
the other PrimeCo partner, Airtouch, may also take full ownership of
some or all of the other PrimeCo PCS businesses. To the extent that
Bell Atlantic's interest in one or more of the PrimeCo businesses is
transferred to Airtouch, one or more of the wireless overlaps would be
eliminated, thereby obviating the need for any further divestiture. To
the extent that Bell Atlantic takes full control over one or more
PrimeCo properties, it will enhance its ability to completely and
satisfactorily divest its interest to an interested purchaser.
Under Section II.A, defendants must divest the Wireless System
Assets in the Cellular MSA Overlap Areas to a purchaser or purchasers
approved by the United States on or before consummation of Bell
Atlantic/GTE merger. Similarly, if Bell Atlantic has acquired 100%
ownership of one or more of the PCS businesses currently operated by
PrimeCo in MTAs in the PCS/Cellular Overlap Areas more than ninety (90)
calendar days prior to consummation of the Bell Atlantic/GTE Merger,
defendants will be required to divest the Wireless System Assets in the
PCS/Cellular Overlap Areas on or before consummation of the Bell
Atlantic/GTE Merger.
If, ninety (90) calendar days prior to consummation of the Bell
Atlantic/GTE Merger, the PrimeCo dissolution is not complete and Bell
Atlantic has not acquired 100% ownership of one or more of the PCS
businesses currently operated by PrimeCo in MTAs in the PCS/Cellular
Overlap Areas, defendants will submit to plaintiff, on or before
consummation of the Bell Atlantic/GTE Merger, a definitive Divestiture
List identifying the specific Wireless System Assets in each of the
PCS/Cellular Overlap Areas that will be divested. The cellular MSA and
RSA businesses on the Divestiture List are required to be divested
within ninety (90) calendar days after consummation of the Bell
Atlantic/GTE Merger; except that if Bell Atlantic acquires 100%
ownership of one or more of the PCS businesses currently operated by
PrimeCo in MTAs in the PCS/Cellular Overlap Areas within the ninety
(90) calendar day period prior to consummation of the Bell Atlantic/GTE
Merger, the cellular MSA and RSA businesses on the Divestiture List
shall be divested on or before consummation of the Bell Atlantic/GTE
Merger. Additionally, the PCS MTA businesses on the Divestiture List
shall be divested within 90 calendar days after Bell Atlantic acquires
100% ownership of one or more of the PCS businesses currently operated
by PrimeCo in MTAs in the PCS/Cellular Overlap Areas, but in no event
later than one hundred eighty (180) calendar days after consummation of
the Bell Atlantic/GTE Merger. If all Wireless System Assets have not
been divested upon consummation of the Bell Atlantic/GTE merger, there
will be no adverse impact on competition, because defendants are
required to operate the businesses independently, pursuant to the Hold
Separate Order contained in Section IX of the Final Judgment.
Defendants are also required by Section IV.B to use their best efforts
to accomplish the divestitures of the Wireless System Assets in the
Overlapping Wireless Markets and to obtain all required regulatory
approvals as expeditiously as possible.
The divestiture timing provisions of the proposed Final Judgment
will ensure that the divestitures are carried out in a timely manner,
and at the same time do not burden the parties unnecessarily. Although
the proposed Final Judgment, in some circumstances, permits the parties
to retain both wireless properties for some period of time after
closing, the primary reason for this involves the nature of Bell
Atlantic's interest in PrimeCo. The proposed Final Judgment is designed
to provide time for the PrimeCo partnership to be dissolved. The
additional time period, beyond the closing date of the Bell Atlantic/
GTE merger, in which the merged firm can hold both wireless properties
pending divestiture applies only to PCS/cellular overlaps and is
dependent in part on when Bell Atlantic takes control of one or more
PrimeCo properties. However, in no event can the merged firm retain
both wireless properties beyond 180 days after closing. Thus, the Final
Judgment strikes a balance between allowing the parties time to resolve
their special situation and guaranteeing a timely divestiture. The
period in which the merged firm will own both entities should not pose
any significant competitive risks because the Hold Separate Order,
contained in Section IX, will be in place during this time, and the
time will be short.
In addition, the proposed Final Judgment requires in Section IV.B
that, in carrying out the divestitures, defendants comply with all of
the applicable rules of the FCC, or any waiver of such rules or other
authorization granted by the FCC. These rules include 47 CFR 20.6
(spectrum aggregation) and 47 CFR 22.942 (cellular cross-ownership).\2\
These FCC requirements may add to, but cannot subtract from or impair,
the requirements of the proposed Final Judgment, since Section IV.B
specifies that authorization by the FCC to conduct divestiture of a
wireless business 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.
Since the FCC's approval is required for the transfer of the wireless
licenses to a purchaser, Section V.F provides one exception to the 180-
day divestiture period. If applications for transfer of a wireless
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 Wireless System Assets covered by the
license that cannot yet be transferred shall be extended until five
days after the FCC's approval is received. This extension is to be
applied only to the individual wireless license affected by the delay
in approval of the license transfer and does not entitle defendant to
delay the divestiture of any other Wireless System Assets for which
license transfer approval has been granted.
---------------------------------------------------------------------------
\2\ 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 22.941, 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.''
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[[Page 32535]]
C. Use of a Trustee Subsequent to Consummation of the Acquisition
The proposed Final Judgment provides in Section IV.A that Bell
Atlantic and GTE must divest the Wireless Assets in each of the
Overlapping Wireless Markets in accordance with the schedule contained
therein, 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, Bell Atlantic and GTE must
relinquish any direct or indirect financial ownership interests and any
direct or indirect role in management or participation in control.
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 Bell Atlantic and GTE from influencing
their operation.
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 Wireless System Assets, and the termination of the
trust. If defendants have not divested all of their Wireless System
Assets in the Overlapping Wireless Markets to approved purchasers in
accordance with Section IV.A, Section V.A requires: (1) Defendants to
identify the Wireless System Assets in each Overlapping Wireless Market
to be divested; (2) the Court to appoint a trustee, which shall be
selected by the United States; (3) defendants to submit a form of Trust
Agreement consistent with the terms of the Final Judgment, and which
form agreement must have received approval by the United States; and
(4) defendants, after receiving FCC approval for the license transfers,
to divest irrevocably the unsold Wireless System Assets to the trustee.
The trustee will have the obligation and the sole responsibility,
under Section V.B, for the divestiture of any transferred Wireless
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.'' In addition, notwithstanding
any provision to the contrary, plaintiff may, in its sole discretion,
require defendants to include additional assets that substantially
relate to the wireless mobile telephone business in the Wireless System
Assets to be divested if it would facilitate a prompt divestiture to an
acceptable purchaser. This provision allows plaintiff, in its
discretion, to require defendants to divest additional Wireless System
Assets that substantially relate to the wireless mobile telephone
business to insure that the trustee can promptly locate and divest to a
purchaser acceptable to plaintiff. 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 to assist in
the divestiture and the management of the Wireless 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 content, the critical feature of the trusteeship
arrangement is that the trustee will not only have responsibility for
sale of the Wireless System Assets, but will also be the authorized
holder of the wireless license, with full responsibility for the
operations, marketing and sales of the wireless business to be
divested, and will not be subject to any control or direction by
defendants. Defendants will no longer have any role in the ownership,
operation or management of the Wireless System Assets to be divested
following consummation of their merger, as provided by Section V.H,
other than the right to received 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.H. from communicating with the trustee, or seeking to
influence the trustee, concerning the divestiture or the operation and
management of the wireless businesses 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 wireless businesses in the Overlapping Wireless Markets. These
safeguards will protect against any competitive harm that could arise
from coordinated behavior or information sharing between the two
wireless businesses during the limited period while sale of the
Wireless 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
wireless businesses, to ensure that the purchasers chosen by 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.
In the case of any divestiture, by defendants or the trustee, it is
important to ensure that the ongoing wireless businesses go to
purchasers with the capability and intent to operate 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.
Specifically, Section IV.C of the proposed Final Judgment requires that
the divestitures of Wireless 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 to compete
effectively in the provision of wireless mobile telephone service using
the Wireless System Assets; (2) the purchaser(s) has the managerial,
operational and financial capability to compete effectively in the
provision of wireless mobile telephone service using the Wireless
System Assets; and (3) none of the terms of any agreement between the
purchaser(s) and either of 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 Wireless System Assets, 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.
E. Other Provisions of the Decree
Section III specifies the persons to whom the Final Judgment is
applicable,
[[Page 32536]]
and provides for the Final Judgment to be applicable to certain Interim
Parties to whom defendants might transfer the Wireless 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 Wireless 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 a 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 Wireless System
Assets prior to consummating their merger, and their actions to
preserve the Wireless System Assets to be divested. Under V.E, the
trustee also has monthly reporting obligations concerning the efforts
made to divest the Wireless System Assets.
Section VIII prohibits defendants from financing all or any part of
a purchase made by an acquirer of the Wireless 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 wireless businesses before
divestiture is complete, and the preservation of the Wireless System
Assets as a viable, ongoing business. The obligations of Section IX.A
fall on both defendants and both wireless businesses in any Overlapping
Wireless Market, obliging them to ensure that such wireless businesses
continue to be operated as separate, independent, ongoing, economically
viable and active competitors to the other wireless mobile
telecommunications providers in the same area. Section XI.A requires
separation of the operations of the two wireless businesses and their
books, records and competitively sensitive information. The
requirements of Section IX.A serve to ensure that defendants maintain
their two wireless businesses in the Overlapping Wireless 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.H concerning the separation of
defendants and the trustee after the merger is consummated but while
there are still Wireless System Assets awaiting sale.
Section IX.B 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 including
maintaining and increasing sales, maintaining the assets in operable
condition, providing sufficient credit and working capital, not selling
the assets (except with approval of plaintiff), 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.D obliges each defendant,
during the period while they still control Wireless System Assets, to
appoint persons not affiliated with the other defendant to oversee the
Wireless 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 permit sharing of information with
the FCC under a customary protective order issued by the agency or a
waiver of confidentiality. Under Section III.B, purchasers of the
Wireless 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.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 USC 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
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, NW, Suite 8000, Washington, DC
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 construe the
Final Judgment, to modify any if its provisions, to enforce compliance,
and to punish any violations of its provisions.
[[Page 32537]]
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 Wireless 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 Wireless Markets. This proposed Final Judgment 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 Wireless
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 USC 16(e) (emphasis added). As the United States Court of Appeals
for the D.C. Circuit 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 his 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.'' \3\ Rather,
\3\ 119 Cong. Rec. 24598 (1973). See United States v. Gillette
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest''
determination can be made properly on the basis of the Competitive
Impact Statement and Response to Comments filed pursuant to the
APPA. Although the APPA authorizes the use of additional procedures,
15 U.S.C. Sec. 16(f), those procedure are discretionary. A court
need not invoke any of them unless it believes that the comments
have raised significant issues and that further proceedings would
aid the court in resolving those issues. See H.R. Rep. 93-1463, 93d
Cong. 2d Sess. 8-9 (1974), reprinted in U.S.C.C.A.N. 6535, 6538.
[a]bsent a showing of corrupt failure of the government to discharge
its duty, the Court, in making its public interest finding, should *
* * carefully consider the explanations of the government in the
competitive impact statement and its responses to comments in order
to determine whether those explanations are reasonable under the
---------------------------------------------------------------------------
circumstances.
United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. (CCH)
para.61,508, at 71,980 (W.D. Mo. 1977).
Accordingly, with respect to the adequacy of the relief secured by
the decree, a court may not ``engage in an unrestricted evaluation of
what relief would best serve the public.'' United States v. BNS, Inc.,
858 F.2d 456, (9th Cir. 1988) (citing United States v. Bechtel Corp.,
648 F.2d 660,666 (9th Cir.), cert denied, 454 U.S. 1083 (1981)); see
also Microsoft, 56 F.3d at 1460-62. Precedent requires that
the balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.\4\
\4\ Bechtel, 648 F.2d at 666 (emphasis added); see BNS, 858 F.2d
at 463; United States v. National Broadcasting Co., 449 F. Supp.
1127, 1143 (C.D. Cal. 1978); Gillette, 406 F. Supp. at 716. See also
Microsoft, 56 F.3d at 1461 (whether ``the remedies [obtained in the
decree are] so inconsonant with the allegations charged as to fall
outside of the reaches of 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 that 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 Gillette Co., 406 F. Supp. at 716); United States v. Alcan
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.
Dated: June 7, 1999.
[[Page 32538]]
Respectfully submitted,
Joe 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.
Hillary B. Burchuk, D.C. Bar #366755,
Lawrence M. Frankel, D.C. Bar #441532,
J. Philip Sauntry, Jr., D.C. Bar #142828,
Trial Attorneys, U.S. Department of Justice, Antitrust Division,
Telecommunications Task Force, 1401 H Street, NW., Suite 8000,
Washington, DC 20530, (202) 514-5621.
Certificate of Service
I hereby certify that copies of the foregoing Plaintiff United
States' Competitive Impact Statement, were served via U.S. Mail, first
class postage prepaid, on this 7th day of June, 1999 upon each of the
parties listed below:
John Thorne, Senior Vice President & Deputy General Counsel, Bell
Atlantic Corporation, 1320 North Court House Road, Eighth Floor,
Arlington, VA 22201, Counsel for Bell Atlantic Corporation.
Steven G. Bradbury, Kirkland & Ellis, 655 Fifteenth Street, NW.,
Washington, DC 20005, Counsel for GTE Corporation.
Hillary B. Burchuk,
Counsel for Plaintiff.
[FR Doc. 99-15418 Filed 6-16-99; 8:45 am]
BILLING CODE 4410-11-M