[Federal Register Volume 65, Number 183 (Wednesday, September 20, 2000)]
[Notices]
[Pages 56926-56939]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-24085]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. SBC Communications Inc. 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. SBVC 
Communications Inc. et al., 1:00CV02073 (PLF). On August 30, 2000, the 
United States filed a Complaint alleging that the proposed joint 
venture between SBC Communications and BellSouth Corporation would 
lessen competition in the markets for wireless mobile telephone 
services in 16 geographic markets 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.

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 through 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, 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 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: August 30, 2000.

For Plaintiff United States of America

Joel I. Klein,
Assistant Attorney General.
A. Douglas Melamed,
Principal Deputy Assistant Attorney General.
Constance K. Robinson,
Director of Operations and Merger Enforcement.
Donald J. Russell,
Chief, Telecommunications Task Force.
Laury Bobbish,
Assistant Chief, Telecommunications Task Force.
Hillary B. Burchuk, D.C. Bar No. 366755,
Lawrence M. Frankel, D.C. Bar No. 441532,
Cynthia R. Lewis,
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: August 28, 2000.

For SBC Communications Inc.

Wm. Randolph Smith, D.C. Bar No. 356402,
Crowell & Moring LLP, 1001 Pennsylvania Avenue, N.W., Washington, 
D.C. 20004, (202) 624-2500.

Date Signed: August 25, 2000.

For BellSouth Corporation

Bernard A. Nigro, Jr., D.C. Bar No. 412357,
Fried, Frank, Harriss, Shriver & Jacobson, 1001 Pennsylvania Avenue, 
N.W., Suite

[[Page 56927]]

800, Washington, D.C. 20004, (202) 639-7159.

Date Signed: August 25, 2000.

Final Judgment

    Whereas, plaintiff United States of America, filed its Complaint on 
August 30, 2000;
    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 any 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 believes that entry of this Final Judgment 
is necessary to protect competition in markets for mobile wireless 
telecommunications services in California, Indiana, and Louisiana;
    And Whereas, the essence of this Final Judgment is prompt and 
certain divestiture of certain wireless businesses that would otherwise 
be commonly owned and 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 requires that defendants make certain 
diverstitures 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 California, Indiana, 
and Louisiana;
    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 over 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. ``SBC'' means SBC Communications Inc., a corporation with its 
headquarters in San Antonio, Texas, its successors and assigns, and its 
subsidiaries, divisions, groups, affiliates, partnerships and joint 
ventures, and their directors, officers, managers, agents and 
employees.
    B. ``BellSouth'' means BellSouth Corporation, a corporation with 
its headquarters in Atlanta, Georgia, its successors and assigns, and 
its subsidiaries, divisions, groups, affiliates, partnerships and joint 
ventures, and their directors, officers, managers, agents and 
employees.
    C. ``Wireless System Assets'' means, for each wireless business to 
be divested under this Final Judgment, all types of assets, tangible 
and 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; however, 
paging services are not included in the definition of Wireless System 
Assets). ``Wireless System Assets'' shall be construed broadly to 
accomplish the complete divestiture of the entire business of one of 
the two wireless businesses 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 BellSouth has an 
interest or in which SBC has an interest, but not both. The 
divestitures of the Wireless System Assets as defined in this Section 
II.C 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 he 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, office furniture, fixed assets and furnishings, supplies and 
materials, contracts, agreements, leases, commitments, spectrum 
licenses issued by the Federal Communications Commission(``FCC'') and 
all other licenses, permits and authorizations, operational support 
systems, customer support and billing systems, interfaces with other 
service providers, business and customer records and information, 
customer lists, credit records, accounts, and historic and current 
business plans, as well as any patents, licenses, sub-licenses, trade 
secrets, know-how, drawings, blueprints, designs, technical and quality 
specifications and protocols, quality assurance and control procedures, 
manuals and other technical information defendants supply to their own 
employees, customers, suppliers, agents, or licensees, and trademarks, 
trade names and service marks (except for trademarks, trade names and 
service marks containing ``SBC,'' ``Southwestern Bell,'' ``Pacific 
Bell,'' ``Ameritech,'' ``Cellular One,'' ``1-800-Mobile-1,'' 
``ClearPath,'' ``Pick-Up and Go,'' ``BellSouth,'' ``Bell,'' the Bell 
Symbol, or ``Mobile Memo'') 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). Notwithstanding the foregoing, in the Indianapolis MTA 
Overlapping Wireless Market, as defined below, the divesting defendant 
shall not be required to divest those assets used solely to provide 
wireless service on a resale basis and contracts with customers served 
on a resale basis. 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

[[Page 56928]]

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.
    In the event that defendants elect to divest an 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.
    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 FCC, in which BellSouth and SBC each hold 
ownership interests in one of the wireless licenses issued by the FCC 
as of the date of the filing of the Complaint in this action:

I. Cellular Overlap Areas
    A. Baton Rouge MSA
    B. New Orleans MSA
    C. Louisiana 6 RSA--Iberville
    D. Louisiana 8 RSA--St. James
    E. Louisiana 9 RSA--Plaquemines
II. PCS/Cellular Overlap Areas
    A. Los Angeles-San Diego MTA
    1. Los Angeles MSA
    B. Indianapolis MTA
    1. Anderson MSA
    2. Bloomington MSA
    3. Indianapolis MSA
    4. Lafayette MSA
    5. Muncie MSA
    6. Terre Haute MSA
    7. Indiana 5 RSA--Warren
    8. Indiana 7 RSA--Owen
    9. Indiana 8 RSA--Brown
    10. Indiana 9 RSA--Decatur

    E. ``SBC/BellSouth Wireless Joint Venture'' means the joint venture 
between SBC and BellSouth, as detailed in the Contribution and 
Formation Agreement between SBC and BellSouth dated as of April 4, 
2000, for which defendants have filed a notification pursuant to the 
Hart-Scott-Rodino Antitrust Improvements Act on May 8, 2000.

III

Applicability and Effect

    A. The provisions of this Final Judgment shall be applicable to 
each of the defendants, as defined above, and 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 System Assets

    A. Defendants BellSouth and SBC shall divest themselves of the 
Wireless System Assets of one of the two wireless businesses 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. The divestitures of the Wireless System Assets for each Cellular 
Overlap Area and the Indianapolis MTA PCS/Cellular Overlap Area shall 
occur prior to or at the same time as consummation of the transaction 
that gives rise to the overlap.
    2. The divestiture of the Wireless System Assets for the Los 
Angeles-San Diego MTA PCS/Cellular Overlap Area shall occur prior to or 
at the same time as consummation of the transaction that gives rise to 
the overlap, or by January 27, 2001, whichever is later.
    3. For the Wireless Overlap Markets defined in Section II.D.II, 
plaintiff may, in its sole discretion, extend the date by which the 
divestitures must occur by up to two thirty-day periods.
    If the divestitures in the Overlapping Wireless Markets have not 
been completed as of the date of the consummation of the transaction 
that gives rise to the overlap, then on or before the date of the 
consummation of the transaction that gives rise to the overlap, 
defendants will submit to plaintiff a definitive Divestiture List 
identifying the specific Wireless System Assets to be divested; 
provided, however, that the identification of the specific Wireless 
System Assets to be divested in the Los Angeles-San Diego MTA PCS/
Cellular Overlap Area is not required before December 18, 2000.
    B. Defendants agree to use their best efforts to accomplish the 
divestitures set forth in this Final Judgment (i) as expeditiously as 
possible, including obtaining all necessary regulatory approvals, and 
(ii) except for the Los Angeles-San Diego MTA PCS/Cellular Overlap 
Area, to a purchaser or purchasers at or before consummation of the 
transaction that gives rise to the overlap. The divestitures carried 
out under the terms of this decree also shall 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 authorizations granted by the FCC. 
Authorization by the FCC to conduct divestiture of a wireless business 
in a particular manner will not modify any of the requirements of this 
Final Judgment.
    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 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 to compete 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 provisions 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 the 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 or facilities 
basis or long distance telecommunications services on a resale or 
facilities basis), or otherwise to

[[Page 56929]]

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 transaction that gives 
rise to the overlap to enable the required divestitures to be carried 
out at or before the consummation of the transaction that gives rise to 
the overlap. 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. With respect to the Wireless System Assets 
in the Los Angeles-San Diego MTA PCS/Cellular Overlap Area, the 
requirements of this Section IV.D. shall not be imposed until December 
18, 2000.
    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 information relevant 
to the sale and to the areas of business in which the wireless 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.C. Defendants shall make such information available to 
plaintiff at the same time that such information is made available to 
any other person.
    F. Except for the Los Angeles MSA, defendants shall provide the 
purchaser(s) and plaintiff information relating to the personnel whose 
principal responsibility relates to the Wireless System Assets to 
enable the purchaser(s) to make offers of employment.
    G. Defendants shall not interfere with any negotiations by any 
purchaser to employ any employees who work or have worked since April 
4, 2000 (other than solely on a temporary assignment basis from another 
part of BellSouth or SBC) with, or whose principal responsibility 
relates to, the divested Wireless System Assets.
    H. To the extent that the wireless businesses to be divested use 
intellectual property, as required to be identified by Section II.C, 
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 these consents.
    I. Except for the Los Angeles MSA, defendants shall warrant to all 
purchasers of the Wireless System Assets that the Wireless System 
Assets will be operational on the date of sale.

V

Appointment of Trustee

    A. If defendants have not divested all of the Wireless System 
Assets in accordance with Section IV, 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 also shall 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 or other ownership interest of the entity 
owning such assets, if divestiture is to be effected by the creation of 
such an entity for sale to purchaser(s)) and control such assets, 
subject to the terms of the approved Trust Agreement.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the Wireless System Assets, which 
shall be done within the time periods set forth in this Final Judgment. 
In addition, notwithstanding any provision to the contrary, plaintiff 
may, in its sole discretion, require the divesting defendant to include 
any additional PCS spectrum it would propose to retain under Section 
II.C in the Wireless System Assets to be divested if it would 
facilitate the prompt divestiture to an acceptable purchaser. The 
trustee shall have the power and authority to accomplish the 
divestiture to a purchaser acceptable to plaintiff at such price and at 
such terms as are then obtainable upon reasonable effort by the 
trustee, subject to the provisions of Sections IV, V, and VI of this 
Final Judgment, and shall have such other powers as this Court deems 
appropriate. 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.
    C. Defendants shall not object to a sale by the trustee on any 
grounds other than the trustee's malfeasance. Any such objections by 
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.
    D. The trustee shall serve at the cost and expense of defendants, 
on such terms and conditions as plaintiff approves, and shall account 
for all monies derived from the sale of the Wireless System Assets 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 the trustee and any 
professionals and agents retained by the trustee shall be reasonable in 
light of the value of the Wireless System Assets 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, but timeliness is paramount.

[[Page 56930]]

    E. 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 System Assets, and defendants 
shall develop financial or other information relevant to the Wireless 
System Assets as the trustee may reasonably request, subject to 
reasonable protection for trade secrets or other confidential research, 
development, or commercial information. 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. Defendants 
shall take no action to interfere with or to impede the trustee's 
accomplishment of the divestiture.
    F. After its appointment, the trustee shall file monthly reports 
with the parties and the Court setting forth the trustee's efforts to 
accomplish the divestiture ordered under this Final Judgment; provided, 
however, that, to the extent such reports contain information that the 
trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. Such reports shall include the name, 
address, and telephone number of each person who, during the preceding 
month, made an offer to acquire, expressed an interest in acquiring, 
entered into negotiations to acquire, or was contacted or made an 
inquiry about the Wireless System Assets to be sold, and shall describe 
in detail each contact with any such person. The trustee shall maintain 
full records of all efforts made to divest the Wireless System Assets.
    G. The Trustee shall divest the Wireless System Assets in each of 
the Overlapping Wireless Markets 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; 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 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.
    H. If the trustee has not accomplished the divestiture of all of 
the Wireless System Assets within the time specified in Section V.G of 
this Final Judgment, the trustee 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. 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 plaintiff. The parties shall have the 
right to be heard and to make additional recommendations consistent 
with the purpose of this Final Judgment. The Court thereafter shall 
enter such orders as it deems appropriate in order to carry out the 
purpose of the Final Judgment, which may, if necessary, include 
extending the trust and term of the trustee's appointment by a period 
requested by plaintiff.
    I. 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 
or Section V, 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 SBC or BellSouth, with sole control over 
operations, marketing and sales. SBC and BellSouth 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 carryout 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, the defendant that is divesting the 
Wireless System Assets, or the trustee, whichever is responsible for 
effecting the required divestitures, 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 divestiture and list the 
name, address, and telephone number of each person not previously 
identified who offered to, or expressed an interest in or a desire to, 
acquire any ownership interest in the Wireless System Assets being 
divested, 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, the 
proposed purchaser(s), and 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.
    C. Within thirty (3) 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, and the trustee, whichever is later, 
plaintiff shall provide written notice to defendants and the trustee, 
if

[[Page 56931]]

there is one, stating whether or not plaintiff objects to the proposed 
divestiture. If plaintiff provides written notice 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.C. 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 proposed under Section IV or V shall not be 
consummated. Upon objection by a defendant under Section V.B, a 
divestiture proposed under Section V shall not be consummated unless 
approved by the Court.

VII

Affidavits

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter and every thirty (30) calendar days thereafter until the 
divestitures have been completed, each defendant shall deliver to 
plaintiff an affidavit as to the fact and manner of its compliance with 
Section IV or V of this Final Judgment. Each such affidavit shall 
include the name, address, and telephone number of each person who, 
during the preceding thirty (30) days, made an offer to acquire, 
expressed an interest in acquiring, entered into negotiations to 
acquire, or was contacted or made an inquiry about acquiring, any 
interest in the Wireless System Assets and shall describe in detail 
each contact with any such person during that period. Each such 
affidavit shall also include a summary of the efforts that defendants 
have made to solicit a purchaser(s) for the Wireless System Assets and 
to provide required information to prospective purchasers, including 
the limitations, if any, on such information. Assuming the information 
set forth in the affidavit true and complete, any objections by 
plaintiff to information provided by defendants, including limitations 
on information, shall be made within fourteen (14) days after receipt 
of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, defendants shall deliver to plaintiff an affidavit 
which describes in reasonable detail all actions defendants have taken 
and all steps defendants have implemented on an ongoing basis to 
preserve the Wireless System Assets pursuant to this Final Judgment. 
Defendants shall deliver to plaintiff an affidavit describing any 
changes to the efforts and actions outlined in defendants' earlier 
affidavits filed pursuant to this section within fifteen (15) calendar 
days after the change is implemented.
    C. Defendants shall preserve all records of all efforts made to 
preserve and divest any or all of the Wireless System Assets until one 
year after such divestiture has been completed.

VIII

Financing

    Defendants shall not finance all or any part of any purchase made 
pursuant to Section IV or V of this Final Judgment.

IX

Hold Separate

    A. Until accomplishment of the divestitures of the Wireless System 
Assets to purchaser(s) approved by plaintiff pursuant to Section IV.C, 
each defendant shall take all steps necessary to ensure that each of 
the 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.
    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 (including the assets of both 
wireless businesses in any Overlapping Wireless Market where the 
wireless business that will be divested has not yet been decided):
    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 the Wireless System 
Assets are fully maintained in operable condition and shall maintain 
and adhere to normal maintenance schedules;
    3. Provide and maintain sufficient lines and sources of credit and 
working capital 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 reassigning any 
employees who work or have worked since April 4, 2000 (other than 
solely on a temporary assignment basis from another part of SBC or 
BellSouth) with, or whose principal responsibility relates to the 
Wireless System Assets, except (a) in the ordinary course of business, 
(b) for transfer bids initiated by employees pursuant to defendants' 
regular, established job-posting policies, or (c) as necessary to 
promote accomplishments of defendants' obligations under this Final 
Judgment; and
    7. Take no action that would impede in any way or jeopardize the 
licensing, operation, or divestiture of the Wireless System Assets.
    C. On or before the consummation of the SBC/BellSouth Wireless 
Joint Venture, 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 in the management of any of 
defendants' other businesses, until, for each Overlapping Wireless 
Market, defendants have submitted a definitive Divestiture List 
pursuant to Section IV.A. Upon submission of the definitive Divestiture 
List, only the defendant who owns the Wireless System Assets to be 
divested shall be subject to the provisions of this Section IX of this

[[Page 56932]]

Final Judgment. Notwithstanding any of the foregoing, for the purposes 
of Section IX and for the Los Angeles-San Diego MTA PCS/Cellular 
Overlap Area only, BellSouth's interests in Wireless System Assets that 
are not a part of the SBC/BellSouth Wireless Joint Venture are subject 
to all provisions of this Section IX, and SBC is subject only to the 
provisions of Section IX.D as it relates to Section VII.
    D. Each defendant 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, 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, or of determining whether the 
Final Judgment should be modified or vacated, and subject to any 
legally recognized privilege, from time to time duly authorized 
representatives of the United States Department of Justice, including 
consultants and other persons retained by plaintiff, upon written 
request of a duly authorized representative of the Assistant Attorney 
General in charge of the Antitrust Division, and on reasonable notice 
to the relevant defendant, shall be permitted:
    1. access during office hours of defendants to inspect and copy, or 
at plaintiff's option, demand defendants provide copies of, all books, 
ledgers, accounts, correspondence, memoranda, and other records and 
documents in the possession or 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, defendants' 
officers, directors, employees, or agents, who may have their 
individual counsel present, regarding such matters. The interviews 
shall be subject to the interviewee's reasonable convenience and 
without restraint or interference by defendants.
    A. Upon the written request of the Assistant Attorney General in 
charge of the Antitrust Division, defendants shall submit written 
reports, under oath if requested, relating to any of the matters 
contained in this Final Judgment as may be requested.
    B. No information or documents obtained by the means provided in 
this section 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 grand jury 
proceedings), or for the purpose of securing compliance with this Final 
Judgment, or as otherwise required by law.
    C. 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 
or 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 plaintiff shall give defendants ten 
(10) calendar days' notice prior to divulging such material in any 
legal proceeding (other than a grand jury proceeding) to which 
defendants are not a party.

XI

No Reacquisition

    Defendants may not reacquire any part of the spectrum licenses 
issued by the Federal Communications Commission (``FCC'') and all other 
licenses, permits and authorizations divested pursuant to this Final 
Judgment during the term of this Final Judgment.

XII

Retention of Jurisdiction

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

XIII

Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire on the tenth anniversary of the date of its entry.

XIV

Public Interest Determination

    The entry of this judgment is in the public interest.
----------------------------------------------------------------------
    United States District Judge

Competitive Impact Statement

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

I. Nature and Purpose of the Proceeding

    The United States filed a civil antitrust Complaint on August 30, 
2000, alleging that the proposed joint venture between SBC 
Communications Inc. (``SBC'') and BellSouth Corporation (``BellSouth'') 
would violate Section 7 of the Clayton Act, 15 U.S.C. 18, by lessening 
competition in the markets for wireless mobile telephone services in 11 
metropolitan statistical areas (``MSAs'') and rural service areas 
(``RSAs'') in California, Indian and Louisiana. In addition, this 
combination affects five additional MSAs and RSAs where competing 
cellular mobile wireless telephone businesses are owned in whole or 
part by SBC and BellSouth. 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 SBC and BellSouth 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. 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

[[Page 56933]]

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

    SBC and BellSouth are two of the remaining four Regional Bell 
Operating Companies (``RBOCs'') created in 1984 by the consent decree 
settling the United States' antitrust case against American Telephone & 
Telegraph Co. SBC and BellSouth each provide local exchange services in 
distinct regions, and they also provide wireless mobile telephone 
services, including cellular mobile telephone services and personal 
communications services (``PCS''), both within and outside of their 
local exchange service regions.
    SBC, with headquarters in San Antonio, Texas, is one of the largest 
RBOCs in the United States, with approximately 60 million total local 
telephone access lines. In 1999, SBC had revenues in excess of $49 
billion. SBC provides local telephone services to retail customers in 
Arkansas, California, Connecticut, Illinois, Indiana, Kansas, Michigan, 
Missouri, Nevada, Ohio, Oklahoma, Texas and Wisconsin. With the 
exception of Nevada, SBC also provides cellular mobile telephone 
services or other wireless mobile telephone services in those states as 
well as in some areas outside its local exchange service region, 
including the District of Columbia and areas within the States of 
Delaware, Hawaii, Kentucky, Louisiana, Maryland, Massachusetts, New 
Jersey, New York, Pennsylvania, Rhode Island, Virginia, and West 
Virginia. SBC is the nation's third largest wireless mobile telephone 
provider, with approximately 11.2 million subscribers nationwide.
    BellSouth, with headquarters in Atlanta, Georgia, is the third 
largest RBOC in the United States, with approximately 24 million total 
local telephone access lines. In 1999, BellSouth had revenues in excess 
of $25 billion. BellSouth provides local telephone service to retail 
customers in Alabama, Florida, Georgia, Kentucky, Louisiana, 
Mississippi, North Carolina, South Carolina and Tennessee, and also 
provides cellular mobile telephone service in these states, as well as 
in some states outside its local exchange service region, including 
Arkansas, California, Indiana, Pennsylvania, Texas and Virginia. 
BellSouth is a major wireless mobile telephone service provider, with 
approximately 5.6 million subscribers nationwide.
    On April 4, 2000, SBC and BellSouth entered into a Contribution and 
Formation Agreement under which the two companies agreed to combine 
their wireless telecommunications service businesses into a business 
with approximate annual revenues of $10.2 billion. If this transaction 
is consummated, the combined total of SBC's and BellSouth's cellular 
and other wireless mobile telephone service subscribers will be 16.2 
million.

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 1999, revenues from the sale of wireless mobile 
telephone services totaled approximately $40 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 1980's, within any given MSA or 
RSA.\1\ Providers of Specialized Mobil 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 (major trading areas (``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 SBC and BellSouth, 
still typically have substantially larger market shares than the new 
entrants.

C. Anticompetitive Consequences of the Proposed Acquisition

    SBC and BellSouth, or firms in which they have an interest, are 
competing providers of wireless mobile telephone services in 16 
cellular license areas in three states. These areas are referred to in 
the Complaint as follows:

I. Cellular Overlap Areas
    A. Baton Rouge MSA
    B. New Orleans MSA
    C. Louisiana 6 RSA--Iberville
    D. Louisiana 8 RSA--St. James
    E. Louisiana 9 RSA--Plaquemines
II. PSC/Cellular Overlap Areas
    A. Los Angeles--San Diego MTA
    1. Los Angeles MSA
    B. Indianapolis MTA
    1. Anderson MSA
    2. Bloomington MSA
    3. Indianapolis MSA
    4. Lafayette MSA
    5. Muncie MSA
    6. Terre Haute MSA
    7. Indiana 5 RSA--Warren
    8. Indiana 7 RSA--Owen
    9. Indiana 8 RSA--Brown
    10. Indiana 9 RSA--Decatur

In the Overlapping Wireless Markets, the population potentially 
addressable by wireless mobile telephone systems exceeds 20 million.
    SBC and BellSouth are direct competitors in wireless mobile 
telephone services in the Cellular

[[Page 56934]]

Overlap Areas. The cellular businesses owned in whole or part by SBC 
and BellSouth are the only two providers of cellular mobile telephone 
services, and the two primary providers of all wireless mobile 
telephone services, in the Cellular Overlap Areas. In addition, SBC and 
BellSouth 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 in whole or part by SBC and 
BellSouth 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 owned 
in whole or part by BellSouth and the PCS business owned by SBC are two 
of a small number of providers of wireless mobile telephone services.
    Therefore, the SBC/BellSouth joint venture 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 Overlap Areas, SBC and BellSouth individual 
market shares, measured on the basis of the number of subscribers, 
ranges from 20 to 70%. The combined market share of SBC and BellSouth 
in the provision of wireless mobile telephone services, measured by the 
number of subscribers, is in the range of 65 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 2600, well above the 1800 threshold at which 
the Department normally considers a market to be highly concentrated. 
After the contribution of the wireless businesses to the joint venture, 
the HHI in these markets will be in excess of 4800.
    In each of the PCS/Cellular Overlap Areas, the BellSouth's cellular 
business has one of the two largest market shares in the provision of 
wireless mobile telephone services, and SBC is one of a small number of 
new PCS entrants into these markets. In one of these markets, such as 
the Los Angeles-San Diego MTA, SBC 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 SBC and 
BellSouth, created by SBC'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 owned in whole or part by 
BellSouth--are in the range of 30 to 50% and the HHI exceeds 2000. In 
the PCS/Cellular Overlap Areas, the combined market share of SBC and 
the cellular business in question is generally in the 45 to 65% range.
    If BellSouth and SBC combine their wireless telecommunications 
service businesses, the PCS/Cellular Overlap Areas will become 
significantly more concentrated, and the competition between SBC and 
BellSouth in wireless mobile telephone services in these markets will 
be eliminated. As a result of the loss in competition between SBC and 
BellSouth wireless mobile telephone services, 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 joint venture between SBC 
and BellSouth 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 new entry in response to a small but 
significant price increase by the combined company for wireless mobile 
telephone services in the Overlapping Wireless Markets would be timely 
and sufficient to mitigate the competitive harm resulting form this 
joint venture, if it were to be consummated.
    For these reasons, the United States concluded that the joint 
venture 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 joint venture.
    The divestiture requirements of the proposed Final Judgment, as 
stated in Sections IV.A and II.C, 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 system in each of the Overlapping Wireless 
Markets,'' as Section II.C states. Section II.C 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 businesses to be 
divested, including the provision of long distance telecommunications 
service for wireless calls. Section II.C 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 joint venture will retain a number 
of other wireless businesses in areas that do not overlap, and prior to 
the joint venture 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

[[Page 56935]]

operations of the wireless businesses not being divested. Section II.C 
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 to 
the purchaser to continue to operate the divested wireless businesses 
without impairment.
    The definition of Wireless System Assets in Section II.C 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.H 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.C, 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 business, 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.C provides that if defendants elect 
to divest SBC'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. 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 joint venture and that the divested 
business will be able to compete as effectively under new ownership as 
under its current ownership.
    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 warranting that the 
Wireless System Assets (except for the Wireless System Assets in the 
Los Angeles-San Diego PCS/Cellular Overlap) will be operational on the 
date of sale in Section IV.I. In addition, to ensure that a purchaser 
will be able to operate the divested wireless businesses without 
impairment, Section IV.G prohibits defendants from interfering with a 
purchaser's negotiations to retain any employees who work or have 
worked with the Wireless System Asset since the date of the 
announcement of the joint venture, or whose principal responsibility 
relates to the Wireless System Assets.

B. Timing of Divestiture

    In antitrust cases involving mergers or joint ventures 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 timing 
issues involved in a divestiture of this size and complexity.
    Under Section IV.A, defendants must divest the Wireless System 
Assets of one of the two wireless businesses in the Cellular Overlap 
Area and the Indianapolis MTA PCS/Cellular Overlap Area on or before 
consummation of the transaction that gives rise to the overlap. The 
divestitures of the Wireless System Assets for the Los Angeles-San 
Diego MTA PCS/Cellular Overlap Area shall occur prior to or at the same 
time as consummation of the transaction that gives rise to the overlap, 
or January 27, 2001, whichever is later. BellSouth's Wireless System 
Assets in Los Angeles-San Diego MTA PCS/Cellular Overlap Area are held 
in partnership with AT&T Wireless Services, Inc. Various provisions of 
Section IV and IX allow defendants to accomplish the objectives of the 
Final Judgment consistent with BellSouth's partnership obligations. 
Section IV.A.2, which allows a longer time frame for defendants to 
complete the divestiture in the Los Angeles-San Diego MTA PCS/Cellular 
Overlap Area, is one such provision. Plaintiff may, in its sole 
discretion, extend this date for divestitures in the PCS/Cellular 
Overlap Areas by up to two thirty-day periods. If one or more 
divestitures have not been completed as of the date of the consummation 
of the transaction that gives rise to the overlap, defendants will 
submit to plaintiff a definitive Divestiture List identifying the 
specific Wireless System Assets in each of the Overlapping Wireless 
Markets that will be divested.
    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 will permit the parties an adequate opportunity to 
accomplish the divestitures through a fair and orderly process. Even if 
all Wireless System Assets have not been divested upon consummation of 
the transaction that gives rise to the overlap, there will be no 
adverse impact on competition given the short duration of the period of 
common ownership and the detailed requirements of the Hold Separate 
Order contained in Section IX of the Final Judgment.
    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 C.F.R. 20.6 
(spectrum aggregation) and 47 C.F.R. 22.942

[[Page 56936]]

(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 to avoid any conflict with the FCC's rules.
---------------------------------------------------------------------------

    \2\ The FCC's spectrum aggregation rules, in 47 C.F.R. 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 equit7y, outstanding stock or voting stock of the 
licensee. The FCC's cellular cross-ownership rules, in 47 C.F.R. 
22.942, also prohibit a licensee or any person controlling a 
licensee from having a direct or indirect ownership interest of more 
than 5% in both cellular systems in an overlapping cellular 
geographic service area, unless such interests pose ``no substantial 
threat to competition.''
---------------------------------------------------------------------------

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

    The proposed Final Judgment provides in Section IV.A that SBC and 
BellSouth must divest the Wireless System 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, SBC and BellSouth 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 SBC and BellSouth 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 United States to select a trustee and apply to 
the Court for appointment of a trustee; (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 in the Wireless System Assets to be 
divested additional PCS spectrum it proposes to retain under Section 
II.C if it would facilitate a prompt divestiture to an acceptable 
purchaser. This provision allows plaintiff, in its discretion, to 
require defendants to divest additional PCS spectrum 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.D, 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.D, 
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 context, 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 joint venture, as provided by Section 
V.I, other than the right to receive the proceeds of the sale, and 
certain obligations to provide cooperation of the trustee in order to 
complete the divestiture, as indicated in Section V.E. Defendants are 
precluded under Section V.I 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.
    Section V.G requires the trustee to divest the Wireless System 
Assets to a purchaser or purchasers acceptable to the plaintiff no 
later than 180 days after the assets are transferred to the trustee. 
However, since the FCC's approval is required for the transfer of the 
wireless licenses to a purchaser, Section V.G. provides that 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 defendants to delay the divestiture of 
any other Wireless System Assets for which license transfer approval 
has been granted.

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

[[Page 56937]]

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, 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 joint venture, and their actions to 
preserve the Wireless System Assets to be divested. Under V.F, 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 IX.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 joint venture, 
notwithstanding their expectations that the joint venture will take 
place, and reinforce the provisions of Section VI concerning the 
separation of defendants and the trustee after the joint venture 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 include 
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.C reinforces the other 
provisions of the Hold Separate Order by requiring defendants to 
appoint a specific manager for the Wireless System Assets, who will not 
participate in the management of any of defendants' other businesses. 
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 that 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 XII, and Section XIII 
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 spectrum licenses and all other licenses, 
permits and authorization's within the term of the decree, pursuant to 
Section XI.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages that the person has suffered, as well as costs and 
reasonable attorneys' fees. Entry of the proposed Final Judgment will 
neither impair nor assist the bringing of any private antitrust damage 
action. Under

[[Page 56938]]

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 XII, that the 
Court retains jurisdiction over this action, and the parties may apply 
to the Court for any order necessary or appropriate to carry out or 
construe the Final Judgment, to modify any of its provisions, to 
enforce compliance, and to punish any violations of its provisions.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, seeking an injunction to block consummation of the 
joint venture 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 void 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 compliant including consideration of the 
public benefit, if any, to be derived from a determination of the 
issues at trial.

15 U.S.C. 16(e) (emphasis added). As the United States Court of Appeals 
for the D.C. Circuit 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 compliant, whether 
the decree is sufficiently clear, whether enforcement mechanisms are 
sufficient, and whether the decree may positively harm third parties. 
See United States v. Microsoft, 56 F.3d 1448, 1461-62 (D.C. Cir. 1995).
    In conducting this inquiry, ``[t]he Court is nowhere compelled to 
go to trial or to engage in extended proceedings which might have the 
effect of vitiating the benefits of prompt and less costly settlement 
through the consent decree process.'' \3\ Rather,
---------------------------------------------------------------------------

    \3\ 119 Cong. Rec. 24598 (1973). See United States v. Gilette 
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest'' 
determination can be made properly on the basis of the Competitive 
Impact Statement and Response to Comments filed pursuant to the 
APPA. Although the APPA authorizes the use of additional procedures, 
15 U.S.C. 16(f), those procedures are discretionary. A court need 
not invoke any of them unless it believes that the comments have 
raised significant issues and that further proceedings would aid the 
court in resolving those issues. See H.R. Rep. 93-1463, 93d Cong. 2d 
Sess. 8-9 (1974), reprinted in U.S.C.C.A.N. 6535, 6538.

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

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas (CCH) 
para. 61,508, at 71,980 (W.D. Mo. 1977).
    Accordingly, with respect to the adequacy of the relief secured by 
the decree, a court may not ``engage in an unrestricted evaluation of 
what relief would best serve the public.'' United States v. BNS, Inc., 
858 F.2d 456, 462 (9th Cir. 1988) (citing United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083 
(1981)); see also Microsoft, 56 F.3d at 1460-62. Precedent requires 
that

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

    The proposed Final Judgment, therefore, should not be reviewed 
under a standard of whether it is certain to eliminate every 
anticompetitive effect of a particular practice or whether it mandates 
certainty of free competition in the future. Court approval of a final 
judgment requires a standard more flexible and less strict than the 
standard required for a finding of liability. ``[A] proposed decree 
must be approved even if it falls short of the remedy the court would 
impose on its own, as long as it falls within the range of 
acceptability or is `within the reaches of public interest.' '' United 
States v. American Tel. & Tel Co., 552 F. Supp. 131, 151 (D.D.C. 1982), 
aff'd sub nom., Maryland v. United States, 460 U.S. 1001 (1983)

[[Page 56939]]

(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.

    Respectfully submitted,
Joel I. Klein,
Assistant Attorney General.
A. Douglas Melamed,
Principal Deputy Assistant Attorney General.
Constance K. Robinson,
Director of Operations and Merger Enforcement.
Donald J. Russell,
Chief, Telecommunications Task Force.
Laury E. Bobbish,
Assistant Chief, Telecommunications Task Force.
Hillary B. Burchuk,
D.C. Bar #366755.
Lawrence M. Frankel,
D.C. Bar #441532
Cynthia R. Lewis,
Trial Attorneys, U.S. Department of Justice, Antitrust Division, 
Telecommunications Task Force, 1401 H Street, N.W., Suite 8000, 
Washington, D.C. 20530, (202) 514-5621.

Dated: August 30, 2000.

[FR Doc. 00-24085 Filed 9-19-00; 8:45 am]
BILLING CODE 4410-11-M