[Federal Register Volume 73, Number 50 (Thursday, March 13, 2008)]
[Notices]
[Pages 13570-13575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-4817]


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

DEPARTMENT OF JUSTICE

Antitrust Division


Public Comment and Response on Proposed Final Judgment

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
Sec.  16(b)-(h), the United States hereby publishes below the comment 
received on the proposed Final Judgment in United States v. AT&T, Inc. 
and Dobson Communications Corporation, No. 1:07-CY-01952-ESH, which was 
filed in the United States District Court for the District of Columbia 
on March 4, 2008, together with the response of the United States to 
the comment.
    Copies of the comment and the response are available for inspection 
at the Department of Justice Antitrust Division, 325 Seventh Street, 
NW., Room 200, Washington, DC 20530, (telephone (202) 514-2481), and at 
the Office of the Clerk of the United States District Court for the 
District of Columbia, 333 Constitution Avenue, NW., Washington, DC 
20001. Copies of any of these materials may be obtained upon request 
and payment of a copying fee.

J. Robert Kramer, II,
Director of Operations, Antitrust Division.

In the United States District Court for the District of Columbia

Case No. 1:07-cv-1952 (ESH); United States of America, Plaintiff, v. 
AT&T Inc. and Dobson Communications Corporation, Defendants; Plaintiff 
United States's Response to Public Comments

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h) (``APPA'' or ``Tunney Act''), the 
United States hereby responds to the public comment received regarding 
the proposed Final Judgment in this case. After careful consideration 
of the comment, the United States continues to believe that the 
proposed Final Judgment will provide an effective and appropriate 
remedy for the antitrust violation alleged in the Complaint. The United 
States will move the Court for entry of the proposed Final Judgment 
after the public comments and this Response has been published in the 
Federal Register, pursuant to 15 U.S.C. 16(d).
    On October 30, 2007, the United States filed the Complaint in this 
matter alleging that the proposed merger of two mobile wireless 
telecommunications service providers, AT&T Inc. (``AT&T'') and Dobson 
Communications Corporation (``Dobson''), would violate Section 7 of the 
Clayton Act, 15 U.S.C. Sec.  18. Simultaneously with the filing of the 
Complaint, the plaintiff filed a proposed Final Judgment and a 
Preservation of Assets Stipulation and Order signed by the United 
States and defendants consenting to the entry of the proposed Final 
Judgment after compliance with the requirements of the Tunney Act. 
Pursuant to those requirements, the United States filed a Competitive 
Impact Statement (``CIS'') in this Court on October 30, 2007; published 
the proposed Final Judgment and CIS in the Federal Register on November 
19, 2007, see 72 FR 65,060 (2007); and published a summary of the terms 
of the proposed Final Judgment and CIS, together with directions for 
the submission of written comments relating to the proposed Final 
Judgment, in the Washington Post for seven days beginning on November 
18, 2007 and ending on November 24, 2007. The 60-day period for public 
comments ended on January 22, 2008, and one comment was received as 
described below and attached hereto.

I. Background

    As explained more fully in the Complaint and CIS, the likely effect 
of this acquisition would be to lessen competition substantially for 
mobile wireless telecommunications services in seven (7) geographic 
areas in the states of Kentucky, Missouri, Oklahoma, Pennsylvania and 
Texas. To restore competition in these markets, the proposed Final 
Judgment, if entered, would require defendants to divest (a) Dobson's 
mobile wireless telecommunications services businesses and related 
assets in three markets; (b) AT&T minority interests in other mobile 
wireless telecommunications services providers in two markets, and (c) 
Dobson's Cellular One Assets, which include the Cellular One service 
mark and related assets. 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 punish violations thereof.

II. Legal Standard Governing the Court's Public Interest Determination

    Upon publication of the public comments and this Response, the 
United States will have fully complied with the Tunney Act. It will 
then ask the Court to determine that entry of the proposed Final 
Judgment would be ``in the public interest,'' and to enter it. 15 
U.S.C. Sec.  16(e)(1). In making that determination, the court, in 
accordance with the statute as amended in 2004,\1\ is required to 
consider:
---------------------------------------------------------------------------

    \1\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for court to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also United States 
v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1, 11 (D.D.C. 2007) 
(concluding that the 2004 amendments ``effected minimal changes'' to 
Tunney Act review).

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

[[Page 13571]]

    (A) The competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative remedies 
actually considered, whether its terms are ambiguous, and any other 
competitive considerations bearing upon the adequacy of such judgment 
that the court deems necessary to a determination of whether the 
consent judgment is in the public interest; and
    (B) The impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and individuals 
alleging specific injury from the violations set forth in the complaint 
including consideration of the public benefit, if any, to be derived 
from a determination of the issues at trial.

15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, 
the court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448,1461 (D.C. Cir. 1995); see generally United States v. SBC 
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public 
interest standard under the Tunney Act).
    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA a court considers, among other things, 
the relationship between the remedy secured and the specific 
allegations set forth in the government's complaint, whether the decree 
is sufficiently clear, whether enforcement mechanisms are sufficient, 
and whether the decree may positively harm third parties. See 
Microsoft, 56 F.3d at 1458-62. 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. 1981)); see 
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 
F. Supp. 2d 37, 40 (D.D.C. 2001). Courts have held that:

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

    Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\ 
In determining whether a proposed settlement is in the public interest, 
a district court ``must accord deference to the government's 
predictions about the efficacy of its remedies, and may not require 
that the remedies perfectly match the alleged violations.'' SEC 
Commc'ns, 489 F. Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461 
(noting the need for courts to be ``deferential to the government's 
predictions as to the effect of the proposed remedies''); United States 
v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) 
(noting that the court should grant due respect to the United States' 
prediction as to the effect of proposed remedies, its perception of the 
market structure, and its views of the nature of the case).
---------------------------------------------------------------------------

    \2\ Cf BNS, 858 F.2d at 464 (holding that the court's ``ultimate 
authority under the [APPA] is limited to approving or disapproving 
the consent decree''); United States v. Gillette Co., 406 F. Supp. 
713, 716 (D. Mass. 1975) (noting that, in this way, the court is 
constrained to ``look at the overall picture not hypercritically, 
nor with a microscope, but with an artist's reducing glass''). See 
generally Microsoft, 56 F.3d at 1461 (discussing 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' '').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[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. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also 
United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 
1985) (approving the consent decree even though the court would have 
imposed a greater remedy). To meet this standard, the United States 
``need only provide a factual basis for concluding that the settlements 
are reasonably adequate remedies for the alleged harms.'' SEC Commc'ns, 
489 F. Supp. 2d at 17.
    Moreover, the court's role under the APPA 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. Because the ``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 did not pursue. Id. 
at 1459-60. As this Court recently confirmed in SBC Communications, 
courts ``cannot look beyond the complaint in making the public interest 
determination unless the complaint is drafted so narrowly as to make a 
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of utilizing consent decrees in antitrust 
enforcement, adding the unambiguous instruction that ``[n]othing in 
this section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. Sec.  16(e)(2). The language codified what the 
Congress that enacted the Tunney Act in 1974 intended, as Senator 
Tunney explained: ``[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.'' 119 Congo Rec. 24,598 (1973) (statement of 
Senator Tunney). Rather, the procedure for the public interest 
determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11.\3\
---------------------------------------------------------------------------

    \3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); S. 
Rep. No. 93-298, 93d Cong., 1st Sess., at 6 (1973) (``Where the 
public interest can be meaningfully evaluated simply on the basis of 
briefs and oral arguments, that is the approach that should be 
utilized.''); United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade 
Cas. (CCH) ] 61,508, at 71,980 (W.D. Mo. 1977) (``Absent 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.'').

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

[[Page 13572]]

III. Summary of Public Comment and the United States's Response

    During the 60-day public comment period, the United States received 
one comment--from Mid-Tex Cellular, Ltd. (``Mid-Tex''), a wireless 
competitor to the merging firms in certain geographic areas--which is 
attached hereto and summarized below. Upon review, the United States 
believes that nothing in the comment warrants a change in the proposed 
Final Judgment or is sufficient to suggest that the proposed Final 
Judgment is not in the public interest. The comment, in essence, argues 
that the United States should have identified, alleged, and remedied a 
different competitive concern than the one explained in the United 
States's Complaint. Copies of this Response and its attachment have 
been mailed to Mid-Tex.

A. Factual Background: Texas RSA 9

    The United States's Complaint alleges that the merger of AT&T and 
Dobson would tend to lessen competition substantially, in violation of 
Section 7 of the Clayton Act, in the provision of mobile wireless 
telecommunications services in seven geographic areas, including Texas 
RSA 9--the subject of Mid-Tex's comments. The competitive landscape in 
Texas RSA 9 is somewhat complicated, and thus, this description is 
provided to assist in understanding the comments of Mid-Tex, the nature 
of the competitive concerns reflected in the United States's Complaint, 
and how the proposed Final Judgment adequately redresses the concerns.
    Throughout the United States, in each local geographic area the 
Federal Communications Commission issues two cellular licenses, an ``A 
side'' and a ``B side,'' in the 800 MHz spectrum band for the provision 
of wireless service, as well as a number of PCS licenses in the 1900 
MHz spectrum band. In rural areas, the cellular licenses are more 
attractive to carriers than PCS licenses because the propagation 
characteristics of this spectrum band allow sparsely populated areas to 
be served more efficiently. Frequently in rural areas, holders of PCS 
licenses do not fully build out their networks, except in areas where 
the population density is higher or there are major highways.
    In Texas RSA 9, Dobson controls one of the two cellular licenses--
the ``A-side'' license--throughout the entire RSA, and operates RSA-
wide using that license. The situation for the ``B-side'' cellular 
license is much more complicated, as the license is split, 
geographically, between three different carriers. Mid-Tex, an entity in 
which AT&T had a minority interest,\4\ controls the ``B-side'' license 
in five of the eleven counties that comprise the RSA, and a portion of 
a sixth. AT&T controls the ``B-side'' license in two counties in the 
RSA, and portions of three others.\5\ And, a third company, Alltel 
Corporation, controls the ``B-side'' license in one county and a 
portion of two others.
---------------------------------------------------------------------------

    \4\ AT&T withdrew from the Mid-Tex Cellular, Ltd. partnership on 
December 15, 2007, and thus, no longer has a minority interest in 
Mid-Tex. This withdrawal was accomplished pursuant to Sections II.H 
and Section IV of the proposed Final Judgment in this matter and 
Section IV.B of the Preservation of Assets Stipulation and Order 
signed by this Court on November 12, 2007, which requires the 
defendants to comply with the proposed Final Judgment pending the 
Judgment's entry.
    \5\ It is these counties, where AT&T owns the cellular licenses, 
that constitute the Texas RSA 9B1 and 9B4 partition areas that Mid-
Tex refers to in its comment. Texas RSA 9B1 includes Eastland County 
and a portion of Erath County, and Texas RSA 9B4 includes Somervell 
County and portions of Bosque County and Hill County. AT&T also 
controls some PCS licenses throughout the RSA.
---------------------------------------------------------------------------

    In conducting an investigation of the merger of two mobile wireless 
providers, the United States does a fact-specific market-by-market 
analysis that examines a number of factors, including, but not limited 
to, the number of mobile wireless providers and their competitive 
strengths and weaknesses, market shares of the merging companies and 
other providers, the depth and breadth of coverage of providers and 
whether providers could expand their existing coverage.\6\ In 
investigating the proposed merger of AT&T and Dobson, the United States 
considered the competitive effects of the combination of the Dobson and 
AT&T wholly-owned wireless business in Texas RSA 9, as well as the 
effect of AT&T retaining a minority interest in the Mid-Tex business 
subsequent to acquiring the Dobson business. However, the United States 
concluded that only the retention of the minority interest in Mid-Tex 
raised competitive concerns in the RSA and alleged only that harm in 
its Complaint.\7\
---------------------------------------------------------------------------

    \6\ Competitive Impact Statement at 7-8.
    \7\ In the Complaint, Texas RSA 9 is not alleged as an ``AT&T/
Dobson Overlap Market'' in which the combination of the two 
businesses is the source of the competitive concern; instead, it is 
listed in the portion of the Complaint which discusses ``AT&T 
Minority Interest Markets'' and the competitive problem is described 
as follows: ``[E]ither Dobson or the business in which AT&T has a 
minority interest has the largest share and the other defendant is a 
particularly strong and important competitor in all, or a large 
part, of the RSA. * * * Post-merger, the merged firm would likely 
have the ability and incentive to coordinate the activities of the 
wholly-owned Dobson wireless business and the business in which it 
has a minority stake, and/or undermine the ability of the latter to 
compete against the former. Such activity would likely result in a 
significant lessening of competition.'' Complaint ]] 21-22. Thus, 
the competitive problem alleged by the United States in Texas RSA 9 
is the combination of Dobson and Mid-Tex (minority owned by AT&T); 
it is that problem--and only that problem--that the proposed decree 
properly seeks to remedy.
---------------------------------------------------------------------------

    With regard to the wholly-owned businesses, the United States did 
not have sufficient reason to allege that the combination of the Dobson 
and AT&T businesses would present a competitive concern. AT&T's 
cellular license ownership is limited to a small minority of the 
geographic area of the RSA--essentially a strip of two counties, and 
portions of three others, along the northern border of the RSA. 
Although it competes to a limited extent elsewhere in the RSA via its 
PCS licenses,\8\ AT&T appears to be a strong competitor primarily only 
in the areas where it is the cellular licensee. However, in that small 
portion of the RSA, there are three other competitors offering wireless 
service via a network built out utilizing their PCS spectrum: Sprint, 
Verizon, and T-Mobile. Based on these facts, the United States did not 
believe it could successfully allege and prove that the combination of 
the Dobson and AT&T wholly-owned wireless businesses would be likely to 
reduce competition substantially in the RSA, and thus, it made no such 
allegation.
---------------------------------------------------------------------------

    \8\ In the counties in this RSA where AT&T only has PCS 
spectrum, its network is built out to a very limited extent, 
covering less than 15% of the population.
---------------------------------------------------------------------------

    On the other hand, Mid-Tex controls the cellular licenses for a 
much larger portion of the RSA--five counties, and a portion of a 
sixth. Moreover, the PCS carriers appear to have much less of a 
competitive presence in that portion of the RSA (including very limited 
networks) than in the area where AT&T controls the ``B side'' license. 
It thus appears that Dobson and Mid-Tex are the two strongest 
competitors in five-and-a-half counties which comprise a large portion 
of the RSA, facing little effective competition there from the PCS 
providers. Therefore, any significant diminution of either company's 
ability to function as an independent, aggressive competitive 
constraint likely would tend to lessen competition substantially. As 
alleged in the Complaint, AT&T had important management and control 
interests in Mid-Tex and thus, ``[p]ost-merger, the merged firm would 
likely have the ability and incentive to coordinate the activities of 
the wholly-owned Dobson wireless business and [Mid-Tex], and/or 
undermine the ability of the latter to compete against the former.'' 
The United States sought to remedy the identified competitive problem 
by including in the proposed Final

[[Page 13573]]

Judgment a requirement that the merged firm divest itself of the 
minority interest in Mid-Tex.

B. Summary of Comment

    Mid-Tex raises two concerns regarding Texas RSA 9. First, it 
contends that the merged firm should be required to divest not only its 
minority interest in Mid-Tex, but also either the Dobson ``A side'' 
cellular license throughout the entire RSA, or AT&T's other ``B side'' 
interests in the RSA.\9\ According to Mid-Tex, such a divestiture is 
necessary ``for the same reasons'' that the United States concluded 
that it was necessary for the merged firm to divest its interest in 
Mid-Tex: It argues that in certain subdivisions of Texas RSA 9, the 
merged firm would have ``well in excess of 70 percent of subscribers.'' 
Second, Mid-Tex argues that AT&T should not be prohibited from 
reacquiring a non-controlling interest in Mid-Tex during the ten-year 
term of the proposed Final Judgment. It contends that the proposed 
decree's prohibition on reacquisition is unnecessarily broad in that a 
reacquisition might not be harmful to competition if either (a) it was 
completely passive, or (b) competitive conditions had changed by the 
time of the proposed reacquisition.
---------------------------------------------------------------------------

    \9\ Although Mid-Tex operates in Texas RSA 9, it appears from 
its Web site that Mid-Tex does not compete in the Texas RSA 9B1 or 
9B4 partition areas, the subdivisions that are the primary focus of 
its comment.
---------------------------------------------------------------------------

C. Response

    Mid-Tex does not take issue with the divestiture remedy embodied in 
the Final Judgment as far as it goes (except for the reacquisition 
provision), but instead contends that it does not go far enough: 
Essentially, it argues that the United States should have identified, 
and alleged, a different, additional competitive problem in its 
Complaint and remedied that problem. Mid-Tex contends that the overlap 
between the Dobson business, and the business controlled directly by 
AT&T in the ``Texas 9B1 market'' and ``Texas 9B4 market'' \10\ pose a 
competitive problem and that, therefore, the merged firm should be 
required to divest either the Dobson or AT&T interests in those areas. 
But as described above, the United States was unable to conclude that 
the combination of the Dobson business and the wholly-owned AT&T 
business was likely to reduce competition substantially in the alleged 
geographic market, Texas RSA 9, due to the relatively small portion of 
the RSA covered by AT&T's cellular licenses and the presence of 
multiple other competitors in that portion.\11\ Accordingly, the United 
States did not allege that the combination of the Dobson and wholly-
owned AT&T businesses posed a competitive concern in this RSA, nor did 
it seek to remedy any such concern.
---------------------------------------------------------------------------

    \10\ The geographic market as alleged in the United States' 
Complaint is represented by all of Texas RSA 9; the United States 
did not allege a ``partitioned Texas 9B1 market'' or ``Texas 9B4 
market'' as referred to by Mid-Tex. See Mid-Tex Comment at 2-3.
    \11\ Mid-Tex claims that, according to its estimates, in the 
Texas RSA 9B1 and 9B4 portions of the RSA, the combined Dobson and 
AT&T businesses ``serve 90-95% of wireless subscribers.'' It, 
however, provides no source for those estimates and, indeed, those 
estimates are not supported by the information reviewed by the 
United States.
---------------------------------------------------------------------------

    With regard to Mid-Tex's second concern, regarding the 
reacquisition clause, it is typical for antitrust consent decrees 
containing a divestiture remedy to bar the merged firm from reacquiring 
the divested assets during the ten-year term of the decree. Such a 
provision is typically included because, except in unusual 
circumstances, it would defeat the purposes of a divestiture to allow 
the merged firm to simply reacquire the divested assets. Mid-Tex 
contends that if AT&T were to reacquire a ``truly passive'' non-
controlling interest in Mid-Tex, it would not pose a competitive 
concern. But this is not necessarily the case: In some circumstances, 
even a passive interest can have anticompetitive consequences, e.g., 
reducing the incentives of the merged firm to use its wholly-owned 
business in the market in question to compete aggressively. A bright 
line prohibition on reacquisition--similar to that contained in 
numerous prior consent decrees entered by this Court \12\--ensures easy 
administrability as well as the ultimate success of the proposed 
divestiture, and it does so in a way that causes no undue harm to 
consumers or other third parties.\13\
---------------------------------------------------------------------------

    \12\ See, e.g., United States v. Amsted Industries, Inc., ] XII, 
No. 1:07-cv-00710 (JDB) (D.D.C. July 16, 2007) (Final Judgment), 
available at http://www.usdoj.gov/atr/cases/f224900/224931.htm; 
United States v. Cal Dive Int'l, Inc., ] XII, No. 1:05CY02041 (EGS) 
(D.D.C. Jan. 12, 2006) (Final Judgment), available at http://www.usdoj.gov/atr/cases/f213100/213177.htm; United States v. 
Cingular Wireless Corp., ] XI, No. 1:04CY01850 (RBW) (D.D.C. Mar. 
14, 2005) (Final Judgment), available at http://www.usdoj.gov/atr/cases/f208000/208093.htm.
    \13\ Mid-Tex briefly suggests that the no reacquisition 
prohibition could harm Mid-Tex. But, it is difficult to see why 
barring one out of an almost infinite number of possible investors 
from purchasing an interest in a company is, in itself, likely to 
cause undue harm to that company. Indeed, if the only entity willing 
to invest in a firm were one of its most important direct 
competitors, that in itself might warrant at least some reason for 
competitive concern.
---------------------------------------------------------------------------

    Moreover, Mid-Tex contends that ``if market conditions change'' 
during the term of the proposed Final Judgment, a reacquisition by AT&T 
would not necessarily threaten competition. But this is the case in 
every antitrust consent decree: Market conditions can always change in 
a way that moot the need for a decree, or any specific provisions 
thereof. If market conditions change, the appropriate solution is a 
motion to modify the decree. The United States has supported a motion 
to modify, and the Court has modified, the reacquisition clause in 
appropriate circumstances.\14\ The fact that market conditions might 
change in the future is not a reason to modify or delete otherwise 
important provisions from a decree before it has even been entered.
---------------------------------------------------------------------------

    \14\ See, e.g., U.S. v. SBC Commc'ns, Inc., 339 F. Supp.2d 116 
(D.D.C. 2004) (modifying reacquisition clause of Final Judgment).
---------------------------------------------------------------------------

IV. Conclusion

    After careful consideration of this public comment, the United 
States still concludes that entry of the proposed Final Judgment will 
provide an effective and appropriate remedy for the antitrust violation 
alleged in the Complaint and is, therefore, in the public interest. 
Pursuant to Section 16(d) of the Tunney Act, the United States is 
submitting the public comment and its Response to the Federal Register 
for publication. After the comments and its Response are published in 
the Federal Register, the United States will move this Court to enter 
the proposed Final Judgment.

Respectfully submitted,

Hillary B. Burchuk (DC Bar No. 366755)

Lawrence M. Frankel (DC Bar No. 441532)
Attorney, Telecommunications & Media, Enforcement Section, Antitrust 
Division. U.S. Department of Justice, City Center Building, 1401 H 
Street, NW., Suite 8000, Washington, DC 20530, (202) 514-5621, 
Facsimile: (202) 514-6381.

Certificate of Service

    I hereby certify that on March 4, 2008, a copy of the foregoing 
Plaintiff United States' Response to Public Comments was mailed via 
first class mail, postage prepaid, upon counsel for Mid-Tex Cellular, 
Ltd., addressed as follows: Michael R. Bennet, Bennet & Bennet, PLLC, 
4350 East West Highway, Suite 201, Bethesda, MD 20814.

Hillary B. Burchuk (DC Bar No. 366755),
Telecommunications & Media Enforcement Section, Antitrust Division. 
U.S. Department of Justice, City Center Building, 1401 H Street, NW., 
Suite 8000, Washington, DC 20530, (202) 514-5621, Facsimile: (202) 514-
6381.

[[Page 13574]]

Before the United States Department of Justice

In the Matter of

United States of America v. AT&T Inc. and Dobson Communications 
Corporation, U.S. District Court for the District of Columbia Case No. 
1:07-cv-01952; Proposed Final Judgment and Competitive Impact Statement

Comments of Mid-Tex Cellular. Ltd.

    Mid-Tex Cellular, Ltd. (``Mid-Tex''), by its attorneys, and 
pursuant to the Notice published November 19, 2007 in the Federal 
Register (Vol. 72, No. 222), hereby submits its comments on the 
proposed settlement in the above-captioned U.S. District Court 
proceeding. In its Competitive Impact Statement (``CIS'') filed by the 
Antitrust Division of the U.S. Department of Justice (``Department'') 
in that proceeding, the Department concluded that AT&T Inc.'s 
(``AT&T'') proposed acquisition of Dobson Communications Corporation 
(``Dobson'') will likely substantially lessen competition, in violation 
of Section 7 of the Clayton Act, in the provision of mobile wireless 
telecommunications services in the Texas RSA-9 (CMA 660) market 
(``Texas RSA-9''), among other markets.\1\ The Department filed a 
proposed Final Judgment which requires AT&T to divest its interest in 
Mid-Tex. For the reasons stated in its petition opposing the transfer 
of control of Dobson's wireless radio licenses to AT&T, filed with the 
Federal Communications Commission on August 27, 2007 (``Petition'') 
\2\, Mid-Tex, with one exception, supports the proposed Final Judgment 
as it relates to the proposed divestiture of AT&T's interest in Mid-
Tex.\3\ For the same reasons as well as those stated below, Mid-Tex 
urges the Department to require the divestiture of a portion of AT&T's 
remaining interests in Texas RSA-9.\4\
---------------------------------------------------------------------------

    \1\ United States v. AT&T Inc. and Dobson Communications 
Corporation; Proposed Final Judgment and Competitive Impact 
Statement, 72 FR 65060 (Department of Justice Antitrust Division 
Nov. 19, 2007).
    \2\ A copy of the Petition was submitted to the Department by 
letter dated August 29, 2007.
    \3\ As discussed in Section II infra, Mid-Tex opposes a ten year 
restriction on AT&T reacquiring any ownership interest in Mid-Tex.
    \4\ Mid-Tex's position herein is not intended to address and 
should not be construed as its concurrence that the actions taken or 
proposed herein resolve all anti-competitive issues resulting from 
AT&T's actions in Texas RSA-9.
---------------------------------------------------------------------------

I. The Department Should Require AT&T To Divest a Portion of Its 
Wireless Interests Throughout Texas RSA-9

    Specifically, Mid-Tex requests that the Department require AT&T to 
divest either: (1) The A band license for the Texas RSA-9 market held 
by Dobson Cellular Systems, Inc., a wholly owned subsidiary of Dobson; 
or (2) its ownership interests in Texas 9B1 Limited Partnership, the 
Cellular B Block licensee in the partitioned Texas 9B1 market, and the 
license for the partitioned Texas 9B4 market held by AT&T Mobility 
Texas, LLC, a wholly owned subsidiary of AT&T. As discussed below, for 
the same reasons the Department has found divestiture of AT&T's 
interests in Mid-Tex to be necessary, the further divestiture of AT&T's 
interests in the Texas 9 RSA is also necessary.
    The proposed Final Judgment requires the divestiture of AT&T's 
minority interest in Mid-Tex. The Department found that, without such 
divestiture, the merged AT&T ``would likely have the ability and 
incentive to coordinate the activities of the wholly-owned Dobson 
wireless business and the business in which it has a minority stake, 
and/or undermine the ability of the latter to compete against the 
former'' and that ``[s]uch activity would likely result in a 
significant lessening of competition'' in violation of Section 7 of the 
Clayton Act.\5\ The Department reached this conclusion based on its 
finding that in Texas RSA-9 the businesses in which AT&T and Dobson 
have an interest collectively account for in excess of 70 percent of 
subscribers and that AT&T has significant rights under the Mid-Tex 
partnership agreement to control core business decisions, obtain 
critical confidential competitive information, and share in profits at 
a rate significantly greater than the equity ownership share upon a 
sale of the partnership.\6\
---------------------------------------------------------------------------

    \5\ Department of Justice Complaint in the above-captioned 
proceeding (``Complaint'') at par. 22; Competitive Impact Statement 
(``CIS''), 72 FR at 65072. The Department found that in Texas RSA-9 
``the merged firm will have the incentive and ability to increase 
prices, diminish the quality or quantity of services provided, and 
refrain from or delay making investments in network improvements.'' 
72 FR at 65072.
    \6\ Id. at pars. 21-22.
---------------------------------------------------------------------------

    In the partitioned Texas 9B1 market, the businesses in which AT&T 
and Dobson have an interest collectively account for well in excess of 
70 percent of subscribers,\7\ and, as the sole general partner in Texas 
RSA 9B1 Limited Partnership, AT&T has a controlling interest in that 
entity.\8\ In the partitioned Texas 9B4 market, AT&T and Dobson 
collectively account for well in excess of 70 percent of 
subscribers.\9\
---------------------------------------------------------------------------

    \7\ By Mid-Tex's estimation, Dobson and the AT&T controlled 
Texas RSA 9B1 Limited Partnership serve 90-95% of wireless 
subscribers in the partitioned Texas RSA 9B1 market.
    \8\ See FCC Ownership Disclosure Information for the Wireless 
Telecommunications Services (FCC Form 602) filed by Texas RSA 9B1 
Limited Partnership on February 26, 2007. New Cingular Wireless PCS 
(``NCW PCS'') holds a one percent general partnership interest in 
Texas RSA 9B1 Limited Partnership. Id. at Exhibit 1. NCW PCS is a 
wholly owned subsidiary of Cingular Wireless II, LLC, which has two 
members: AT&T Mobility LLC f/k/a Cingular Wireless LLC (``AT&T 
Mobility) (57%) and New Cingular Wireless Services, Inc. (``NCWS'') 
(43%). Id. NCWS is a direct wholly owned subsidiary of AT&T 
Mobility, which, in turn, is an indirect wholly owned subsidiary of 
AT&T. SWBW B-Band Development LLC (``SWBW''), a wholly owned 
subsidiary of NCW PCS, holds a 43.1449% limited partnership interest 
in Texas RSA 9B1 Limited Partnership. Id.
    \9\ As discussed above, the B Block cellular license is held by 
AT&T Mobility Texas, LLC, a wholly owned subsidiary of AT&T. By Mid-
Tex's estimation, Dobson and AT&T serve 90-95% of wireless 
subscribers in the partitioned Texas RSA 9B4 market.
---------------------------------------------------------------------------

    The Department recognizes that in Texas RSA-9, ``either Dobson or 
the business in which AT&T has a minority interest has the largest 
share and the other firm is a particularly strong and important 
competitor in all, or a large part, of the RSA.'' Due to the combined 
market share throughout the RSA, the Department should treat the 
remainder of Texas RSA-9 as it has already decided to treat Texas RSA-
9B2, and require AT&T to divest a portion of its remaining interests in 
the market. To allow AT&T to retain wireless interests it holds 
outright or through a controlling general partnership interest, while 
requiring it to divest minority, yet controlling, limited partnership 
interests is inconsistent and without justifiable basis.\10\
---------------------------------------------------------------------------

    \10\ Conversely, if divestiture is not required in the remainder 
of Texas RSA-9, it should not be required in Texas RSA 9B2. The 
entire market should be treated consistently.
---------------------------------------------------------------------------

II. AT&T Should Not Be Prohibited From Reacquiring a Non-Controlling 
Interest in Mid-Tex

    Although Mid-Tex supports the Department's decision to condition 
merger approval on AT&T's divestiture of its interest in Mid-Tex in 
Texas 9B2, Mid-Tex opposes the proposed condition that AT&T be barred 
from reacquiring any part of its interest in Mid-Tex during the 
proposed ten year term of the Final Judgment. The Department's 
rationale for the divestiture requirement in Texas 9B2 is AT&T's 
ability to control Mid-Tex through rights granted to it under the 
partnership agreement. If AT&T wishes

[[Page 13575]]

to reinvest in Mid-Tex as a truly passive investor within the ten year 
effective period of the Final Judgment, it should not be prohibited 
from doing so. Such a prohibition will harm only Mid-Tex and not 
competition in Texas 9B2. Such reacquisition of divestiture assets 
should not be permitted, however, absent Department review of the 
amended limited partnership agreement, to enable the Department to 
ensure that AT&T has not regained rights to control core business 
decisions, obtain critical confidential competitive information, and 
share in profits at a rate significantly greater than the equity 
ownership share upon a sale of the partnership.\11\
---------------------------------------------------------------------------

    \11\ In addition, if market conditions change during the ten 
year effective period such that the Department is able to determine 
that AT&T control of Mid-Tex would no longer threaten competition, 
AT&T should then be permitted to acquire a controlling interest in 
Mid-Tex.
---------------------------------------------------------------------------

III. Conclusion

    For the foregoing reasons, Mid-Tex respectfully requests that the 
Department require the additional divestitures discussed herein, and 
permit AT&T to reacquire a limited interest in Mid-Tex as discussed 
herein. Should the Department have any questions regarding the matters 
addressed herein, please communicate directly with the undersigned.

    Dated: January 18, 2008.

Respectfully submitted,

MID-TEX CELLULAR, LTD.,

Michael R. Bennet,
Bennet & Bennet, PLLC, 4350 East West Highway, Suite 201, Bethesda, MD 
20814, 202-371-1500.

cc: Hillary Burchuk

Declaration of Toney Prather

    I, Toney Prather, do hereby declare under penalty of perjury the 
following:
    1. I am the Manager of, and President of the sole member of the 
managing general partner of, Mid-Tex Cellular, Ltd.
    2. I have read the foregoing Comments of Mid-Tex Cellular Ltd. I 
have personal knowledge of the facts set forth therein, and believe 
them to be true and correct.

Dated: January 11, 2008.

Toney Prather.

[FR Doc. E8-4817 Filed 3-12-08; 8:45 am]
BILLING CODE 4410-11-M