[Federal Register Volume 73, Number 219 (Wednesday, November 12, 2008)]
[Notices]
[Pages 66922-66938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-26564]
[[Page 66922]]
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Verizon Communications Inc.; Proposed Final
Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation, and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America v. Verizon Communications Inc., Civil Action No. 08-
cv-1878 (EGS). On October 30, 2008, the United States filed a Complaint
alleging that the proposed acquisition by Verizon Communications Inc.
of the wireless telecommunications services businesses of Alltel
Corporation would violate Section 7 of the Clayton Act, 15 U.S.C. 18 by
substantially lessening competition in the provision of mobile wireless
telecommunications services in 94 cellular market areas (``CMAs''). The
proposed Final Judgment, filed the same time as the Complaint, requires
the divestiture of mobile wireless telecommunications services
businesses for CMAs in the states of Alabama, Arizona, California,
Colorado, Georgia, Idaho, Illinois, Iowa, Kansas, Minnesota, Montana,
Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, South
Carolina, South Dakota, Utah, Virginia, and Wyoming.
Copies of the Complaint, proposed Final Judgment, and Competitive
Impact Statement are available for inspection at the Department of
Justice, Antitrust Division, Antitrust Documents Group, 1st Floor,
Liberty Square Building, 450 5th Street, Washington, DC 20530 (202-514-
2481), on the Department of Justice's Web site (http://www.usdoj.gov/atr) and at the Office of the Clerk of the United States District Court
for the District of Columbia. Copies of these materials may be obtained
from the Antitrust Division upon request and payment of the copying fee
is set by the Department of Justice regulations.
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 Nancy Goodman, Chief, Telecommunications and Media Enforcement
Section, Antitrust Division, U.S. Department of Justice, 1401 H Street,
NW., Suite 8000, Washington, DC 20530 (202-514-5621).
J. Robert Kramer II,
Director of Operations, Antitrust Division.
In the United States District Court for the District of Columbia
United States of America, Department of Justice, Antitrust Division,
1401 H Street, NW., Suite 8000, Washington, DC 20530;
State of Alabama, Attorney General, 500 Dexter Avenue, Montgomery,
Alabama 36130;
State of California, California Office of the Attorney General, 300
So. Spring Street, Suite 1702, Los Angeles, California 90013;
State of Iowa, Iowa Department of Justice, Hoover Office Building-
Second Floor, 1305 East Walnut Street, Des Moines, Iowa 50319;
State of Kansas, Kansas Office of the Attorney General, Consumer
Protection/Antitrust, 120 SW 10th Avenue, 2nd Floor, Topeka, Kansas
66212;
State of Minnesota, Minnesota Attorney General's Office, 445
Minnesota Street, Suite 1200, St. Paul, Minnesota 55101;
State of North Dakota, Antitrust Division, Office of Attorney
General, 4205 State Street, P.O. Box 1054, Bismarck, North Dakota
58502-1054;
and
State of South Dakota, Office of the Attorney General, 1302 E.
Highway 14, Suite I, Pierre, South Dakota 57501-8501m
Plaintiffs,
v.
Verizon Communications Inc., 140 West Street, New York, New York
10007;
and
Alltel Corporation, One Allied Drive, Little Rock, Arkansas 72202,
Defendants.
Civil No. Case: 1:08-cv-01878. Assigned To: Sullivan, Emmet G. Assign.
Date: 10/30/2008. Description: Antitrust.
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, the State of Alabama, by its
Attorney General Troy King, the State of California, by its Attorney
General Edmund G. Brown Jr., the State of Iowa, by its Attorney General
Thomas J. Miller, the State of Kansas, by its Attorney General Steve
Six, the State of Minnesota, by its Attorney General Lori Swanson, the
State of North Dakota, by its Attorney General Wayne Stenehjem, and the
State of South Dakota, by its Attorney General Lawrence E. Long, bring
this civil action to enjoin the merger of two mobile wireless
telecommunications services providers, Verizon Communications Inc.
(``Verizon'') and Alltel Corporation (``Alltel''), and to obtain other
relief as appropriate. Plaintiffs allege as follows:
1. Verizon entered into an agreement to acquire Alltel, dated June
5, 2008, under which the two companies would combine their mobile
wireless telecommunications services businesses (``Transaction
Agreement''). Plaintiffs seek to enjoin this transaction because it
likely will substantially lessen competition to provide mobile wireless
telecommunications services in 94 geographic markets where Verizon and
Alltel are among the most significant competitors.
2. Verizon's mobile wireless telecommunications services network
covers 263 million people in 49 states and serves in excess of 70
million subscribers. Alltel provides mobile wireless telecommunications
services in 35 states and serves approximately 13 million subscribers.
The combination of Verizon and Alltel likely will substantially lessen
competition for mobile wireless telecommunications services throughout
North and South Dakota, and geographic areas in Alabama, Arizona,
California, Colorado, Georgia, Idaho, Illinois, Iowa, Kansas,
Minnesota, Montana, Nebraska, Nevada, New Mexico, North Carolina, Ohio,
South Carolina, Utah, Virginia and Wyoming, where both Verizon and
Alltel currently operate. As a result of the proposed acquisition,
residents of these areas will likely face increased prices, diminished
quality or quantity of services, and less investment in network
improvements for these services.
I. Jurisdiction and Venue
3. This Complaint is filed by the United States under Section 15 of
the Clayton Act, 15 U.S.C. 25, to prevent and restrain defendants from
violating Section 7 of the Clayton Act, as amended, 15 U.S.C. 18.
Plaintiffs Alabama, California, Iowa, Kansas, Minnesota, North Dakota,
South Dakota by and through their respective Attorneys General, bring
this action in their respective sovereign capacity and as parens
patriae on behalf of the citizens, general welfare, and economy of
their respective States under Section 16 of the Clayton Act, 15 U.S.C.
26, to prevent defendants from violating Section 7 of the Clayton Act,
15 U.S.C. 18.
4. Verizon and Alltel are engaged in interstate commerce and in
activities substantially affecting interstate commerce. The Court has
jurisdiction over this action pursuant to Sections 15
[[Page 66923]]
and 16 of the Clayton Act, 15 U.S.C. 25 and 26, and 28 U.S.C. 1331 and
1337.
5. The defendants have consented to personal jurisdiction and venue
in this judicial district.
II. The Defendants and the Transaction
6. Verizon, with headquarters in New York, is a corporation
organized and existing under the laws of the State of Delaware. Verizon
is one of the world's largest providers of communications services.
Verizon is the second largest mobile wireless telecommunications
services provider in the United States as measured by subscribers,
provides mobile wireless telecommunications services in 49 states, and
serves in excess of 70 million subscribers. In 2007, Verizon earned
mobile wireless telecommunications services revenues of approximately
$43 billion.
7. Alltel, a subsidiary of Atlantis Holdings LLC, is a corporation
organized and existing under the laws of the State of Delaware, with
headquarters in Little Rock, Arkansas. Alltel is the fifth largest
mobile wireless telecommunications services provider in the United
States as measured by subscribers, and provides mobile wireless
telecommunications services in 13 states. Alltel has approximately 13
million subscribers and in 2007, it earned approximately $8.8 billion
in revenues.
8. Pursuant to the Transaction Agreement, Verizon will acquire
Alltel for approximately $28 billion. If this transaction is
consummated, Verizon and Alltel combined would have approximately 83
million subscribers in the United States, with over $51 billion in
mobile wireless telecommunications services revenues.
III. Trade and Commerce
A. Nature of Trade and Commerce
9. Mobile wireless telecommunications services allow customers to
make and receive telephone calls and obtain data services using radio
transmissions without being confined to a small area during the call or
data session, and without the need for unobstructed line-of-sight to
the radio tower. Mobility is highly valued by customers, as
demonstrated by the more than 262 million people in the United States
who own mobile wireless telephones. In 2007, revenues from the sale of
mobile wireless telecommunications services in the United States were
over $138 billion. To meet this desire for mobility, mobile wireless
telecommunications services providers must deploy extensive networks of
switches, radio transmitters, and receivers and interconnect their
networks with the networks of wireline carriers and other mobile
wireless telecommunications services providers.
10. In the early to mid-1980s, the FCC issued two cellular licenses
(A-block and B-block) in each Metropolitan Statistical Area (``MSA'')
and Rural Service Area (``RSA'') (collectively, ``Cellular Market
Areas'' or ``CMAs''), for a total of 734 CMAs covering the entire
United States. Each license consists of 25 MHz of spectrum in the 800
MHz band. The first mobile wireless voice systems using this cellular
spectrum were based on analog technology, now referred to as first-
generation or ``IG'' technology.
11. In 1995, the FCC licensed additional spectrum for the provision
of Personal Communications Services (``PCS''), a category of services
that includes mobile wireless telecommunications services comparable to
those offered by cellular licensees. These licenses are in the 1900 MHz
band and are divided into six blocks: A, B, and C, which consist of 30
MHz each; and D, F, and F, which consist of 10 MHz each.
Geographically, the A- and B-block 30 MHz licenses are issued by Major
Trading Areas (``MTAs''). C-, D-, E-, and F-block licenses are issued
by Basic Trading Areas (``BTAs''), several of which comprise each MTA.
MTAs and BTAs do not generally correspond to MSAs and RSAs.
12. With the introduction of the PCS licenses, both cellular and
PCS licensees began offering digital services, thereby increasing
network capacity, shrinking the size of handsets, and extending handset
battery life, in addition, in 1996, a specialized mobile radio (``SMR''
or ``dispatch'') spectrum licensee began using SMR spectrum to offer
mobile wireless telecommunications services comparable to those offered
by other mobile wireless telecommunications services providers, in
conjunction with its dispatch, or ``push-to-talk,'' service. Although
there are a number of providers holding spectrum licenses in each area
of the country, not all providers have fully built out their networks
throughout each license area. In particular, because of the
characteristics of PCS spectrum, providers holding this type of
spectrum generally have found it less attractive to build out in rural
areas.
13. Today, more than 95 percent of the total U.S. population lives
in counties where three or more mobile wireless telecommunications
services operators offer service. Nearly all mobile wireless voice
services have migrated to the second-generation, or ``2G'' digital
technologies, using 3SM (global standard for mobility) or CDMA (code
division multiple access). Even more advanced technologies (``2.5G''
and ``3G''), based on the earlier 2G technologies, have been deployed
for mobile wireless data services.
B. Relevant Product Market
14. Mobile wireless telecommunications services is a relevant
product market. Mobile wireless telecommunications services include
both voice and data services provided over a radio network and allow
customers to maintain their telephone calls or data sessions without
wires when traveling. There are no cost-effective alternatives to
mobile wireless telecommunications services. Because fixed wireless
services are not mobile, they are not regarded by consumers of mobile
wireless telecommunications services to be a reasonable substitute for
those services. It is unlikely that a sufficient number of customers
would switch away from mobile wireless telecommunications services to
make a small but significant price increase in those services
unprofitable. Mobile wireless telecommunications services accordingly
is a relevant product market under Section 7 of the Clayton Act, 15
U.S.C. 18.
C. Relevant Geographic Markets
15. The United States comprises numerous local geographic markets
for mobile wireless telecommunications services. A large majority of
customers use mobile wireless telecommunications services in close
proximity to their workplaces and homes. Thus, customers purchasing
mobile wireless telecommunications services choose among mobile
wireless telecommunications services providers that offer services
where they live, work, and travel on a regular basis. The geographic
areas in which the FCC has licensed mobile wireless telecommunications
services providers often represent the core of the business and social
sphere within which customers have the same competitive choices for
mobile wireless telephone services. The number and identity of mobile
wireless telecommunications services providers varies among geographic
areas, as does the quality of services and breadth of geographic
coverage offered by providers. Some mobile wireless telecommunications
services providers can and do offer different promotions, discounts,
calling plans, and equipment subsidies in different geographic areas,
varying the price for customers by geographic area.
[[Page 66924]]
16. The relevant geographic markets, under Section 7 of the Clayton
Act, 15 U.S.C. 18, where the transaction would substantially lessen
competition for mobile wireless telecommunications services are
effectively represented by the 94 FCC spectrum licensing areas
specified in Appendix A. It is unlikely that a sufficient number of
customers would switch to mobile wireless telecommunications services
providers who do not offer services in these geographic areas to make a
small but significant price increase in the relevant geographic markets
unprofitable.
D. Anticompetitive Effects
1. Mobile Wireless Telecommunications Services
17. In each of the cellular license areas described in Appendix A,
Verizon and Alltel are significant providers of mobile wireless
telecommunications services (based on subscribers), and together their
combined share in each area ranges from over 55% to 100%. In addition,
each is the other's closest competitor for a significant set of
customers.
18. The relevant geographic markets for mobile wireless services
are highly concentrated. As measured by the Herfindahl-Hirschman Index
(``HHI''), which is commonly employed in merger analysis and is defined
and explained in Appendix B to this Complaint, concentration in these
geographic areas ranges from over 2100 to more than 9100, which is well
above the 1800 threshold at which plaintiffs consider a market to be
highly concentrated. After Verizon's proposed acquisition of Alltel is
consummated, the HHIs in the relevant geographic areas will range from
over 4000 to 10,000, with increases in the HHI as a result of the
merger ranging from over 300 to over 4900, significantly beyond the
thresholds at which plaintiffs consider a transaction likely to cause
competitive harm.
19. Competition between Verizon and Alltel in the relevant
geographic markets has resulted in lower prices and higher quality in
mobile wireless telecommunications services than otherwise would have
existed in these geographic markets. In these areas, consumers consider
Verizon and Alltel to be particularly attractive competitors because
other providers' networks often lack coverage or provide lower-quality
service, in all but two of these CMAs, Verizon and Alltel each hold
cellular spectrum licenses. If Verizon's proposed acquisition of Alltel
is consummated, competition between Verizon and Alltel in mobile
wireless telecommunications services will be eliminated in these
markets and the relevant markets for mobile wireless telecommunications
services will become substantially more concentrated. As a result, the
loss of competition between Verizon and Alltel increases the merged
firm's incentive and ability in the relevant geographic markets to
increase prices, diminish the quality or quantity of services provided,
and refrain from or delay making investments in network improvements.
2. Entry
20. Entry by a new mobile wireless services provider in the
relevant geographic markets would be difficult, time-consuming, and
expensive, requiring spectrum licenses and the build out of a network.
Therefore, any entry in response to a small but significant price
increase for mobile wireless telecommunications services by the merged
firm in the relevant geographic markets would not be timely, likely, or
sufficient to thwart the competitive harm resulting from Verizon's
proposed acquisition of Alltel, if it were consummated.
IV. Violation Alleged
21. The effect of Verizon's proposed acquisition of Alltel, if it
were to be consummated, may be substantially to lessen competition in
interstate trade and commerce in the relevant geographic markets for
mobile wireless telecommunications services, in violation of Section 7
of the Clayton Act, 15 U.S.C. 18.
22. Unless restrained, the transaction will likely have the
following effects in mobile wireless telecommunications services in the
relevant geographic markets, among others:
a. Actual and potential competition between Verizon and Alltel will
be eliminated;
b. Competition in general will be lessened substantially;
c. Prices are likely to increase;
d. The quality and quantity of services are likely to decrease; and
e. Incentives to improve wireless networks will be reduced.
V. Requested Relief
The plaintiffs request:
23. That Verizon's proposed acquisition of Alltel be adjudged to
violate Section 7 of the Clayton Act, 15 U.S.C. 18;
24. That defendants be permanently enjoined from and restrained
from carrying out the Agreement and Plan of Merger dated June 5, 2008,
or from entering into or carrying out any agreement, understanding, or
plan, the effect of which would be to bring the wireless services
businesses of Verizon and Alltel under common ownership or control;
25. That plaintiffs be awarded their costs of this action; and
26. That plaintiffs have such other relief as the Court may deem
just and proper.
Dated: October 30, 2008
Respectfully Submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA:
Thomas O. Barnett
Assistant Attorney General
Antitrust Division
Nancy Goodman
Chief, Telecommunications & Media
Enforcement Section
Antitrust Division
Deborah A. Garza
Deputy Assistant Attorney General
Antitrust Division
Laury Bobbish
Assistant Chief, Telecommunications & Media Enforcement Section
Antitrust Division
J. Robert Kramer II
Deputy Director of Operations
Antitrust Division
Hillary B. Burchuk (DC Bar No. 366755)
Lauren Fishbein (DC Bar No. 451889)
Lawrence M. Frankel (DC Bar No. 441532)
Peter Gray
Jared A. Hughes
Justin Hurwitz
Lorenzo McRae (DC Bar No. 473660)
Attorneys, Telecommunications & Media Enforcement Section
Antitrust Division
U.S. Department of Justice
City Center Building
1401 H Street, N.W., Suite 8000
Washington, D.C. 20530
Phone: (202) 514-5621
Facsimile: (202) 514-6381
FOR PLAINTIFF STATE OF ALABAMA
STATE OF ALABAMA
TROY KING
Attorney General
State of Alabama
500 Dexter Avenue
Montgomery, Alabama 36130
(334) 242-7300
(334) 242-2433
FOR PLAINTIFF STATE OF CALIFORNIA:
EDMUND O. BROWN JR.,
Attorney General of the State of California
KATHLEEN FOOTE,
Sr. Assistant Attorney General
BARBARA M. MOTZ,
Supervising Deputy Attorney General
PAULA LAUREN GIBSON,
State Bar No. 100780
Deputy Attorney General
California Office of the Attorney General
300 So. Spring Street, Suite 1702
Los Angeles, CA 90013
Telephone: (213) 897-0014
Facsimile: (213) 897-2801
FOR PLAINTIFF STATE OF IOWA:
STATE OF IOWA
THOMAS J. MILLER
[[Page 66925]]
Attorney General
LAYNE M. LINDEBAK
Assistant Attorney General
Special Litigation Division
Iowa Department of Justice
Hoover Office Building--Second Floor
1305 East Walnut Street
Des Moines, Iowa 50319
Phone: (515) 281-7054
Facsimile: (515) 281-4902
FOR PLAINTIFF STATE OF KANSAS:
STEVE SIX
Attorney General of Kansas
LYNETTE R. BAKKER
Assistant Attorney General
Kansas Office of the Attorney General
Consumer Protection/Antitrust
120 SW 10th Avenue, 2nd Floor
Topeka, KS 66212
Phone: (785) 368-8451
Facsimile: (785) 291-3699
FOR PLAINTIFF STATE OF MINNESOTA:
LORI SWANSON
Attorney General
State of Minnesota
KRISTEN M. OLSEN
Assistant Attorney General
Atty. Reg. No. 30489X
445 Minnesota Street, Suite 1200
St. Paul, Minnesota 55101-2130
Phone: (651) 296-2921
Facsimile: (651) 282-5437
FOR PLAINTIFF STATE OF NORTH DAKOTA:
WAYNE STENEHJEM
Attorney General
Parrell D. Grossman
Assistant Attorney General
ND Bar ID No. 04684
Director, Consumer Protection & Antitrust Div.
Office of Attorney General
4205 State Street
PO Box 1054
Bismarck, ND 58502-1054
Phone: (701) 328-5570
Facsimile: (701) 328-5568
FOR PLAINTIFF STATE OF SOUTH DAKOTA
LAWRENCE E. LONG
Attorney General
State of South Dakota
JEFFREY P. HAHEM
Assistant Attorney General
State of South Dakota
1302 E. Highway 14, Suite I
Pierre, SD 57501-8501
Phone: (605) 773-3215
Facsimile: (605) 773-4106
Appendix A
(1) Lima OH MSA (CMA 158);
(2) Hickory NC MSA (CMA 166);
(3) Fargo-Moorhead ND-MN MSA (CMA 221);
(4) Mansfield OH MSA (CMA 231);
(5) Dothan AL MSA (CMA 246);
(6) Sioux City IA-NE MSA (CMA 253);
(7) Albany GA MSA (CMA 261);
(8) Danville VA MSA (CMA 262);
(9) Sioux Falls SD MSA (CMA 267);
(10) Billings MT MSA (CMA 268);
(11) Grand Forks ND-MN MSA (CMA 276);
(12) Rapid City SD MSA (CMA 289);
(13) Great Falls MT MSA (CMA 297);
(14) Bismarck ND MSA (CMA 298);
(15) Casper WY MSA (CMA 299);
(16) AL RSA 7 (CMA 313);
(17) AZ RSA 5 (CMA 322);
(18) CA RSA 6 (CMA 341);
(19) CO RSA 4 (CMA 351);
(20) CO RSA 5 (CMA 352);
(21) CO RSA 6 (CMA 353);
(22) CO RSA 7 (CMA 354);
(23) CO RSA 8 (CMA 355);
(24) CO RSA 9 (CMA 356);
(25) GA RSA 6 (CMA 376);
(26) GA RSA 7 (CMA 377);
(27) GA RSA 8 (CMA 378);
(28) GA RSA 9 (CMA 379);
(29) GA RSA 10 (CMA 380);
(30) GA RSA 12 (CMA 382);
(31) GA RSA 13 (CMA 383);
(32) ID RSA 2 (CMA 389);
(33) ID RSA 3 (CMA 390);
(34) IL RSA 8 (CMA 401);
(35) IL RSA 9 (CMA 402);
(36) IA RSA 8 (CMA 419);
(37) KS RSA 1 (CMA 428);
(38) KS RSA 2 (CMA 429);
(39) KS RSA 6 (CMA 433);
(40) KS RSA 7 (CMA 434);
(41) KS RSA 11 (CMA 438);
(42) KS RSA 12 (CMA 439);
(43) KS RSA 13 (CMA 440);
(44) MN RSA 1 (CMA 482);
(45) MN RSA 2 (CMA 483);
(46) MN RSA 7 (CMA 488);
(47) MT RSA 1 (CMA 523);
(48) MT RSA 2 (CMA 524);
(49) MT RSA 4 (CMA 526);
(50) MT RSA 5 (CMA 527);
(51) MT RSA 6 (CMA 528);
(52) MT RSA 7 (CMA 529);
(53) MT RSA 8 (CMA 530);
(54) MT RSA 9 (CMA 531);
(55) MT RSA 10 (CMA 532);
(56) NE RSA 5 (CMA 537);
(57) NV RSA 2 (CMA 544);
(58) NV RSA 5 (CMA 547);
(59) NM RSA 1 (CMA 553);
(60) NM RSA 5 (CMA 557);
(61) NM RSA 6 (CMA 558);
(62) NC RSA 2 (CMA 566);
(63) NC RSA 5 (CMA 569);
(64) NT RSA 1 (CMA 580);
(65) ND RSA 2 (CMA 581);
(66) ND RSA 3 (CMA 582);
(67) ND RSA 4 (CMA 583);
(68) ND RSA 5 (CMA 584);
(69) OH RSA 2 (CMA 586);
(70) OH RSA 5 (CMA 589);
(71) OH RSA 6 (CMA 590);
(72) SC RSA 1 (CMA 625);
(73) SC RSA 2 (CMA 626);
(74) SC RSA 3 (CMA 627);
(75) SC RSA 7 (CMA 631);
(76) SD RSA 1 (CMA 634);
(77) SD RSA 2 (CMA 635);
(78) SD RSA 3 (CMA 636);
(79) SD RSA 4 (CMA 637);
(80) SD RSA 5 (CMA 638);
(81) SD RSA 6 (CMA 639);
(82) SD RSA 7 (CMA 640);
(83) SD RSA 8 (CMA 641);
(84) SD RSA 9 (CMA 642);
(85) UT RSA 3 (CMA 675);
(86) UT RSA 4 (CMA 676);
(87) UT RSA 5 (CMA 677);
(88) UT RSA 6 (CMA 678);
(89) VA RSA 1 (CMA 681);
(90) VA RSA 8 (CMA 688);
(91) WY RSA 1 (CMA 718);
(92) WY RSA 2 (CMA 719);
(93) WY RSA 4 (CMA 721);
(94) WY RSA 5 (CMA 722).
Appendix B
Herfindahl-Hirschman Index
``HHI'' means the Herfindahl-Hirschman Index, a commonly accepted
measure of market concentration. It is calculated by squaring the
market share of each firm competing in the market and then summing the
resulting numbers. For example, for a market consisting of four firms
with shares of 30, 30, 20, and 20 percent, the HHI is 2600 (30\2\ +
30\2\ + 20\2\ + 20\2\ = 2600). (Note: Throughout the Complaint, market
share percentages have been rounded to the nearest whole number, but
HHIs have been estimated using unrounded percentages in order to
accurately reflect the concentration of the various markets.) The HHI
takes into account the relative size distribution of the firms in a
market and approaches zero when a market consists of a large number of
small firms. The HHI increases both as the number of firms in the
market decreases and as the disparity in size between those firms
increases.
Markets in which the HHI is between 1000 and 1800 points are
considered to be moderately concentrated, and those in which the HHI is
in excess of 1800 points are considered to be highly concentrated. See
Horizontal Merger Guidelines ] 1.51 (revised Apr. 8, 1997).
Transactions that increase the HHI by more than 100 points in
concentrated markets presumptively raise antitrust concerns under the
guidelines issued by the U.S. Department of Justice and Federal Trade
Commission. See id.
In the United States District Court for the District of Columbia United
States of America, State of Alabama, State of California, State of
Iowa, State of Kansas, State of Minnesota, State of North Dakota, and
State of South Dakota:
Plaintiffs,
[[Page 66926]]
v.
Verizon Communications Inc., and Alltel Corporation,
Defendants.
Civil No.: 08 1878.
Final Judgment
Whereas, plaintiffs, United States of America, State of Alabama,
State of California, State of Iowa, State of Kansas, State of
Minnesota, State of North Dakota, and State of South Dakota, filed
their Complaint on October, 2008, plaintiffs and defendants, Verizon
Communications Inc. (``Verizon'') and Alltel Corporation (``Alltel''),
by their respective attorneys, have consented to the entry of this
Final Judgment without trial or adjudication of any issue of fact or
law, and without this Final Judgment constituting any evidence against
or admission by any party regarding any issue of fact or law;
And whereas, defendants agree to be bound by the provisions of this
Final Judgment pending its approval by the Court;
And whereas, the essence of this Final Judgment is the prompt and
certain divestiture of certain rights or assets by defendants to assure
that competition is not substantially lessened;
And whereas, plaintiffs require defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
And whereas, defendants have represented to plaintiffs that the
divestitures required below can and will be made and that defendants
will later raise no claim of hardship or difficulty as grounds for
asking the Court to modify any of the divestiture provisions contained
below;
Now therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ordered, adjudged and decreed:
I. Jurisdiction
This Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against defendants under Section 7 of the Clayton
Act, as amended (15 U.S.C. 18).
II. Definitions
As used in this Final Judgment:
A. ``Acquirer'' or ``Acquirers'' means the entity or entities to
whom defendants divest the Divestiture Assets.
B. ``Alltel'' means Alltel Corporation, a subsidiary of Atlantis
Holdings LLC, a corporation organized and existing under the laws of
the State of Delaware, with headquarters in Little Rock, Arkansas, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
C. ``CMA'' means cellular market area which is used by the Federal
Communications Commission (``FCC'') to define cellular license areas
and which consists of Metropolitan Statistical Areas (``MSAs'') and
Rural Service Areas (``RSAs'').
D. ``Divestiture Assets'' means each mobile wireless
telecommunications services business to be divested under this Final
Judgment, including all types of assets, tangible and intangible, used
by defendants in the operation of the mobile wireless
telecommunications services businesses to be divested. To ensure that
the divested mobile wireless telecommunications services businesses
remain viable, ongoing businesses, the term ``Divestiture Assets''
shall be construed broadly to accomplish the complete divestiture, as
required by this Final Judgment, of the entire business of
(1) Alltel in each of the following CMA license areas:
(a) Lima OH MSA (CMA 158);
(b) Hickory NC MSA (CMA 166);
(c) Fargo-Moorhead ND-MN MSA (CMA 221);
(d) Mansfield OH MSA (CMA 231);
(e) Dothan AL MSA (CMA 246);
(f) Sioux City IA-NE MSA (CMA 253);
(g) Albany GA MSA (CMA 261);
(h) Danville VA MSA (CMA 262);
(i) Sioux Falls SD MSA (CMA 267);
(j) Billings MT MSA (CMA 268);
(k) Grand Forks ND-MN MSA (CMA 276);
(l) Rapid City SD MSA (CMA 289);
(m) Great Falls MT MSA (CMA 297);
(n) Bismarck ND MSA (CMA 298);
(o) Casper WY MSA (CMA 299);
(p) AL RSA 7 (CMA 313);
(q) AZ RSA 5 (CMA 322);
(r) CA RSA 6 (CMA 341);
(s) CO RSA 4 (CMA 351);
(t) CO RSA 5 (CMA 352);
(u) CO RSA 6 (CMA 353);
(v) CO RSA 7 (CMA 354);
(w) CO RSA 8 (CMA 355);
(x) CO RSA 9 (CMA 356);
(y) GA RSA 6 (CMA 376);
(z) GA RSA 7 (CMA 377);
(aa) GA RSA 8 (CMA 378);
(bb) GA RSA 9 (CMA 379);
(cc) GA RSA 10 (CMA 380);
(dd) GA RSA 12 (CMA 382);
(ee) GA RSA 13 (CMA 383);
(ff) ID RSA 2 (CMA 389);
(gg) ID RSA 3 (CMA 390);
(hh) IL RSA 8 (CMA 401);
(ii) IL RSA 9 (CMA 402);
(jj) IA RSA 8 (CMA 419);
(kk) MN RSA 1 (CMA 482);
(ll) MN RSA 2 (CMA 483);
(mm) MT RSA 1 (CMA 523);
(nn) MT RSA 2 (CMA 524);
(oo) MT RSA 4 (CMA 526);
(pp) MT RSA 5 (CMA 527);
(qq) MT RSA 6 (CMA 528);
(rr) MT RSA 7 (CMA 529);
(ss) MT RSA 8 (CMA 530);
(tt) MT RSA 9 (CMA 531);
(uu) MT RSA 10 (CMA 532);
(vv) NV RSA 2 (CMA 544);
(ww) NV RSA 5 (CMA 547);
(xx) NM RSA 1 (CMA 553);
(yy) NM RSA 5 (CMA 557);
(zz) NM RSA 6 (CMA 558);
(aaa) NC RSA 2 (CMA 566);
(bbb) NC RSA 5 (CMA 569);
(ccc) ND RSA 1 (CMA 580);
(ddd) ND RSA 2 (CMA 581);
(eee) ND RSA 3 (CMA 582);
(fff) ND RSA 4 (CMA 583);
(ggg) ND RSA 5 (CMA 584);
(hhh) OH RSA 2 (CMA 586);
(iii) OH RSA 5 (CMA 589);
(jjj) OH RSA 6 (CMA 590);
(kkk) SC RSA 1 (CMA 625);
(lll) SC RSA 2 (CMA 626);
(mmm) SC RSA 3 (CMA 627);
(nnn) SC RSA 7 (CMA 631);
(ooo) SD RSA 1 (CMA 634);
(ppp) SD RSA 2 (CMA 635);
(qqq) SD RSA 3 (CMA 636);
(rrr) SD RSA 4 (CMA 637);
(sss) SD RSA 5 (CMA 638);
(ttt) SD RSA 6 (CMA 639);
(uuu) SD RSA 7 (CMA 640);
(vvv) SD RSA 8 (CMA 641);
(www) SD RSA 9 (CMA 642);
(xxx) UT RSA 3 (CMA 675);
(yyy) UT RSA 4 (CMA 676);
(zzz) UT RSA 5 (CMA 677);
(aaaa) UT RSA 6 (CMA 678);
(bbbb) VA RSA 1 (CMA 681);
(cccc) VA RSA 8 (CMA 688);
(dddd) WY RSA 1 (CMA 718);
(eeee) WY RSA 2 (CMA 719);
(ffff) WY RSA 4 (CMA 721);
(gggg) WY RSA 5 (CMA 722).
(2) Verizon, that was acquired from Rural Cellular Corporation in
August 2008, in each of the following CMA license areas:
(a) KS RSA 1 (CMA 428);
(b) KS RSA 2 (CMA 429);
(c) KS RSA 6 (CMA 433);
(d) KS RSA 7 (CMA 434);
(e) KS RSA 11 (CMA 438);
(f) KS RSA 12 (CMA 439);
(g) KS RSA 13 (CMA 440); and
(3) Verizon (but not including any assets acquired from Rural
Cellular Corporation) in each of the following CMA license areas:
(a) MN RSA 7 (CMA 488); and
(b) NE RSA 5 (CMA 537).
The Divestiture Assets shall include, without limitation, all types
of real and personal property, monies and financial instruments,
equipment, inventory,
[[Page 66927]]
office furniture, fixed assets and furnishings, supplies and materials,
contracts, agreements, leases, commitments, spectrum licenses issued by
the FCC and all other licenses, permits and authorizations, operational
support systems, cell sites, network infrastructure, switches, customer
support and billing systems, interfaces with other service providers,
business and customer records and information, customer contracts,
customer lists, credit records, accounts, and historic and current
business plans that relate primarily to the wireless businesses being
divested, as well as any patents, licenses, sublicenses, 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 or other intellectual property, including
all intellectual property rights under third-party licenses that are
capable of being transferred to the Acquirer(s) either in their
entirety, for assets described in (a) below, or through a license
obtained through or from defendants, for assets described in (b) below;
provided that defendants shall only be required to divest Multi-line
Business Customer contracts if the primary business address for that
customer is located within any of the license areas described herein,
and further, any subscriber who obtains mobile wireless
telecommunications services through any such contract retained by
defendants and who are located within the license areas identified
above, shall be given the option to terminate their relationship with
defendants, without financial cost, at any time within one year of the
closing of the Transaction. Defendants shall provide written notice to
these subscribers within 45 days after the closing of the Transaction
of the option to terminate.
The divestiture of the Divestiture Assets shall be accomplished by:
(a) transferring to the Acquirer(s) the complete ownership and/or
other rights to the assets (other than those assets used substantially
in the operations of defendants' overall wireless telecommunications
services business that must be retained to continue the existing
operations of the wireless properties that defendants are not required
to divest, and that either are not capable of being divided between the
divested wireless telecommunications services businesses and those not
divested, or are assets that the defendants and the Acquirer(s) agree,
subject to the approval of plaintiff United States, shall not be
divided); and
(b) granting to the Acquirer(s) an option to obtain a nonexclusive,
transferable license from defendants for a reasonable period, subject
to the approval of plaintiff United States, and at the election of the
Acquirer(s), to use any of defendants' retained assets under paragraph
(a) above used in operating the mobile wireless telecommunications
services businesses being divested, so as to enable the Acquirer(s) to
continue to operate the divested mobile wireless telecommunications
services businesses without impairment. Defendants shall identify in a
schedule submitted to plaintiff United States and filed with the Court
as expeditiously as possible following the filing of the Complaint, and
in any event prior to any divestiture and before the approval by the
Court of this Final Judgment, any and all intellectual property rights
under third-party licenses that are used by the mobile wireless
telecommunications services businesses being divested that defendants
could not transfer to the Acquirer(s) entirely or by license without
third-party consent, the specific reasons why such consent is
necessary, and how such consent would be obtained for each asset.
E. ``Multi-line Business Customer'' means a corporate or business
customer that contracts with a divesting defendant for mobile wireless
telecommunications services to provide multiple telephones to its
employees or members whose services are provided pursuant to a contract
with the corporate or business customer.
F. ``Transaction'' means the Agreement and Plan of Merger among
Ceilco Partnership, Airtouch Cellular, Abraham Merger Corporation,
Alltel Corporation and Atlantis Holdings LLC, dated June 5, 2008.
G. ``Verizon'' means defendant Verizon Communications Inc., a
Delaware corporation, with its headquarters in New York, New York, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
III. Applicability
A. This Final Judgment applies to defendants Verizon and Alltel, as
defined above, and all other persons in active concert or participation
with any of them who receive actual notice of this Final Judgment by
personal service or otherwise.
B. If, prior to complying with Section IV and V of this Final
Judgment, defendants sell or otherwise dispose of all or substantially
all of their assets or of lesser business units that include the
Divestiture Assets, they shall require the purchaser to be bound by the
provisions of this Final Judgment. Defendants need not obtain such an
agreement from the acquirer(s) of the assets divested pursuant to this
Final Judgment.
IV. Divestitures
A. Defendants are ordered and directed, within 120 days after
consummation of the Transaction, or five calendar days after notice of
the entry of this Final Judgment by the Court, whichever is later, to
divest the Divestiture Assets in a manner consistent with this Final
Judgment to an Acquirer or Acquirers acceptable to plaintiff United
States in its sole discretion, upon consultation with the relevant
plaintiff State, or, if applicable, to a Divestiture Trustee designated
pursuant to Section V of this Final Judgment. Plaintiff United States,
in its sole discretion, upon consultation with the relevant plaintiff
State, may agree to one or more extensions of this time period not to
exceed 60 calendar days in total, and shall notify the Court in such
circumstances. With respect to divestiture of the Divestiture Assets by
defendants or the Divestiture Trustee, if applications have been filed
or are on file with the FCC within the period permitted for divestiture
seeking approval to assign or transfer licenses to the Acquirer(s) of
the Divestiture Assets, but an order or other dispositive action by the
FCC on such applications has not been issued before the end of the
period permitted for divestiture, the period shall be extended with
respect to divestiture of those Divestiture Assets for which FCC
approval has not been issued until five days after such approval is
received. Defendants agree to use their best efforts to accomplish the
divestitures set forth in this Final Judgment and to seek all necessary
regulatory approvals as expeditiously as possible. This Final Judgment
does not limit the FCC's exercise of its regulatory powers and process
with respect to the Divestiture Assets. Authorization by the FCC to
conduct the divestiture of a Divestiture Asset in a particular manner
will not modify any of the requirements of this decree.
B. In accomplishing the divestitures ordered by this Final
Judgment, defendants shall promptly make known, if they have not
already done so, by usual and customary means, the availability of the
Divestiture Assets. Defendants shall inform any person making inquiry
regarding a possible purchase of the Divestiture Assets that
[[Page 66928]]
they are being divested pursuant to this Final Judgment and provide
that person with a copy of this Final Judgment. Defendants shall offer
to furnish to all prospective Acquirers, subject to customary
confidentiality assurances, all information and documents relating to
the Divestiture Assets customarily provided in a due diligence process
except such information or documents subject to the attorney-client or
work product privileges. Defendants shall make available such
information to plaintiffs at the same time that such information is
made available to any other person.
C. Defendants shall provide the Acquirer(s) and plaintiffs
information relating to the personnel involved in the operation,
development, and sale or license of the Divestiture Assets to enable
the Acquirer(s) to make offers of employment. Defendants will not
interfere with any negotiations by the Acquirer(s) to employ any
defendant employee whose primary responsibility is the operation,
development, or sale or license of the Divestiture Assets.
D. Defendants shall permit prospective Acquirers of the Divestiture
Assets to have reasonable access to personnel and to make inspections
of the Divestiture Assets; access to any and all environmental, zoning,
and other permit documents and information; and access to any and all
financial, operational, and other documents and information customarily
provided as part of a due diligence process.
E. Defendants shall warrant to the Acquirer(s) that (1) the
Divestiture Assets will be operational on the date of sale, and (2)
every wireless spectrum license is in full force and effect on the date
of sale.
F. Defendants shall not take any action that will impede in any way
the permitting, licensing, operation, or divestiture of the Divestiture
Assets.
G. Defendants shall warrant to the Acquirer(s) of the Divestiture
Assets that there are no material defects in the environmental, zoning,
licensing or other permits pertaining to the operation of each asset
and that following the sale of the Divestiture Assets, defendants will
not undertake, directly or indirectly, any challenges to the
environmental, zoning, licensing or other permits relating to the
operation of the Divestiture Assets.
H. Unless plaintiff United States, in its sole discretion upon
consultation with the relevant plaintiff State, otherwise consents in
writing, the divestitures pursuant to Section IV, or by a Divestiture
Trustee appointed pursuant to Section V, of this Final Judgment, shall
include the entire Divestiture Assets, and shall be accomplished in
such a way as to satisfy plaintiff United States in its sole discretion
that these assets can and will be used by the Acquirer(s) as part of a
viable, ongoing business engaged in the provision of mobile wireless
telecommunications services. The divestiture of the Divestiture Assets,
whether pursuant to Section IV or Section V of this Final Judgment:
(1) shall be made to an Acquirer or Acquirers that, in plaintiff
United States's sole judgment, upon consultation with the relevant
plaintiff State, has the intent and capability (including the necessary
managerial, operational, technical, and financial capability) of
competing effectively in the provision of mobile wireless
telecommunications services; and
(2) shall be accomplished so as to satisfy plaintiff United States
in its sole discretion, upon consultation with the relevant plaintiff
State, that none of the terms of any agreement between an Acquirer(s)
and defendants shall give defendants the ability unreasonably to raise
the Acquirer's costs, to lower the Acquirer's efficiency, or otherwise
to interfere with the ability of the Acquirer to compete effectively.
I. The Divestiture Assets listed in each numbered subsection below
shall be divested together to a single Acquirer, provided that it is
demonstrated to the sole satisfaction of plaintiff United States, upon
consultation with the relevant plaintiff State, that the Divestiture
Assets will remain viable and the divestiture of such assets will
remedy the competitive harm alleged in the Complaint:
(1) Alabama
(a) Dothan MSA (CMA 246);
(b) ALRSA7 (CMA 313);
(2) Colorado
(a) CO RSA 4 (CMA 351);
(b) CO RSA 5 (CMA 352);
(c) CO RSA 6 (CMA 353);
(d) CO RSA 7 (CMA 354);
(e) CO RSA 8 (CMA 355);
(f) CO RSA 9 (CMA 356);
(3) Georgia
(a) Albany MSA (CMA 261);
(b) GA RSA 6 (CMA 376);
(c) GA RSA 7 (CMA 377);
(d) GA RSA 8 (CMA 378);
(e) GA RSA 9 (CMA 379);
(f) GA RSA 10 (CMA 380);
(g) GA RSA 12 (CMA 382);
(h) GA RSA 13 (CMA 383);
(4) Idaho
(a) ID RSA2 (CMA 389);
(b) ID RSA 3 (CMA 390);
(5) Illinois
(a) IL RSA 8 (CMA 401);
(b) IL RSA 9 (CMA 402);
(6) Iowa/Nebraska
(a) Sioux City MSA (CMA 253);
(b) IA RSA 8 (CMA 419);
(c) NE RSA 5 (CMA 537);
(7) Kansas
(a) KS RSA 1 (CMA 428);
(b) KS RSA 2 (CMA 429);
(c) KS RSA 6 (CMA 433);
(d) KS RSA 7 (CMA 434);
(e) KS RSA 11 (CMA 438);
(f) KS RSA 12 (CMA 439);
(g) KS RSA 13 (CMA 440);
(8) Southern Minnesota
(a) MN RSA 7 (CMA 488);
(9) Montana
(a) Billings MSA (CMA 268);
(b) Great Falls MSA (CMA 297);
(c) MT RSA 1 (CMA 523);
(d) MT RSA 2 (CMA 524);
(e) MT RSA 4 (CMA 526);
(f) MT RSA 5 (CMA 527);
(g) MT RSA 6 (CMA 528);
(h) MT RSA 7 (CMA 529);
(i) MT RSA 8 (CMA 530);
(j) MT RSA 9 (CMA 531);
(k) MT RSA 10 (CMA 532);
(10) Nevada
(a) NV RSA 2 (CMA 544);
(b) NV RSA 5 (CMA 547);
(11) New Mexico
(a) NM RSA 5 (CMA 557);
(b) NM RSA 6 (CMA 558);
(12) North Carolina
(a) Hickory MSA (CMA 166);
(b) NC RSA 2 (CMA 566);
(c) NC RSA 5 (CMA 569);
(13) North Dakota/Northern Minnesota
(a) Fargo-Moorhead ND-MN MSA (CMA 221);
(b) Grand Forks ND-MN MSA (CMA 276);
(c) Bismarck MSA (CMA 298);
(d) MN RSA 1 (CMA 482);
(e) MN RSA 2 (CMA 483);
(f) ND RSA 1 (CMA 580);
(g) ND RSA 2 (CMA 581);
(h) ND RSA 3 (CMA 582);
(i) ND RSA 4 (CMA 583);
(j) ND RSA 5 (CMA 584);
(14) Ohio
(a) Lima MSA (CMA 158);
(b) Mansfield MSA (CMA 231);
(c) OH RSA 2 (CMA 586);
(d) OH RSA 5 (CMA 589);
(e) OH RSA 6 (CMA 590);
(15) South Carolina
(a) SC RSA 1 (CMA 625);
(b) SC RSA 2 (CMA 626);
(c) SC RSA 3 (CMA 627);
(d) SC RSA 7 (CMA 631);
(16) South Dakota
(a) Sioux Falls MSA (CMA 267);
(b) Rapid City MSA (CMA 289);
(c) SD RSA 1 (CMA 634);
(d) SD RSA 2 (CMA 635);
(e) SD RSA 3 (CMA 636);
[[Page 66929]]
(f) SD RSA 4 (CMA 637);
(g) SD RSA 5 (CMA 638);
(h) SD RSA 6 (CMA 639);
(i) SD RSA 7 (CMA 640);
(j) SD RSA 8 (CMA 641);
(k) SD RSA 9 (CMA 642);
(17) Utah
(a) UT RSA 3 (CMA 675);
(b) UT RSA 4 (CMA 676);
(c) UT RSA 5 (CMA 677);
(d) UT RSA 6 (CMA 678);
(18) Wyoming
(a) Casper MSA (CMA 299);
(b) WY RSA 1 (CMA 718);
(c) WY RSA 2 (CMA 7I9);
(d) WY RSA 4 (CMA 721);
(e) WY RSA 5 (CMA 722);
provided however: (i) The Divestiture Assets in Minnesota RSA 7 must be
divested to the same acquirer as the wireless business assets in
Minnesota RSA 7 (CMA 488), Minnesota RSA 8 (CMA 489), Minnesota RSA 9
(CMA 490) and Minnesota RSA 10 (CMA 491), recently purchased by
defendant Verizon from Rural Cellular Corporation, that must be
divested pursuant to the proposed Modified Final Judgment in United
Slates et al. v. ALLTEL Corp. et al., Civ. No. 06-363 1 (RHKJAJB) (D.
MN filed Sept. 7, 2006); (ii) the Divestiture Assets in New Mexico RSAs
5 and 6 must be divested to the same acquirer as the wireless business
assets in the Las Cruces NM MSA (CMA 285), currently owned by defendant
Alltel, that must be divested pursuant to the proposed Modified Final
Judgment in United States v. Bell Atlantic Corp. et al, Civ. No. 1 :99C
Vol 119 (EGS) (D.D.C. filed May 7, 1999); (iii) the Divestiture Assets
in the Lima and Mansfield OH MSAs and OH RSAs 2, 5 and 6 must be
divested to the same acquirer as the wireless business assets in the OH
RSA 3 (CMA 587), currently owned by defendant Alltel, that must be
divested pursuant to the proposed Modified Final Judgment in United
States v. Bell Atlantic Corp. et al., Civ. No. 1:99C Vol 119 (EGS)
(D.D.C. May 7, 1999); and (iv) the Divestiture Assets in SC RSAs 1, 2,
3 and 7 must be divested to the same acquirer as the wireless business
assets in the Anderson SC MSA (CMA 227), currently owned by defendant
Alltel, that must be divested pursuant to the proposed Modified Final
Judgment in United States v. Bell Atlantic Corp. et al., Civ. No. I
:99CV01 119 (EGS) (D.D.C. May 7, 1999). In addition to the foregoing,
nothing in this section shall be construed as limiting the ability of
an Acquirer to purchase the assets in more than one numbered
subsection, and defendants shall be required to consider bids from
potential acquirers that are contingent on the acquisition of all of
the assets in more than one of the numbered subsections. The assets in
each CMA license area listed in Subsection II.D of this Final Judgment
but not listed in any of the above subsections (Danville VA MSA (CMA
262); AZ RSA 5 (CMA 322); CA RSA 6 (CMA 341); NM RSA 1 (CMA 553); VA
RSA 1 (CMA 681); and VA RSA 8 (CMA 688)) can be sold to a single
Acquirer or acquired together with other Divestiture Assets. With the
written approval of plaintiff United States, in its sole discretion,
upon consultation with the relevant plaintiff State, defendants or the
Divestiture Trustee may sell, to a single acquirer, fewer than all of
the assets contained in the numbered subsections above, to facilitate
prompt divestiture to an acceptable Acquirer(s).
J. At the option of the Acquirer(s) of the Divestiture Assets,
defendants shall enter into a contract for transition services
customarily provided in connection with the sale of a business
providing mobile wireless telecommunications services or intellectual
property licensing sufficient to meet all or part of the needs of the
Acquirer(s) for a period of up to one year, provided that defendants
shall only be required to license the Verizon brand to the acquirer(s)
of the Divestiture Assets in the CMAs listed in Section ILD.3 for a
period of nine (9) months. The terms and conditions of any contractual
arrangement meant to satisl3 this provision must be reasonably related
to market conditions.
K. To the extent that the Divestiture Assets use intellectual
property, as required to be identified by Section HD, that cannot be
transferred or assigned without the consent of the licensor or other
third parties, defendants shall use their best efforts to obtain those
consents.
V. Appointment of Divestiture Trustee
A. If defendants have not divested the Divestiture Assets within
the time period specified in Section IV.A, defendants shall notify
plaintiff United States, and the relevant plaintiff State of that fact
in writing, specifically identifying the Divestiture Assets that have
not been divested. Upon application of plaintiff United States, upon
consultation with the relevant plaintiff State, the Court shall appoint
a Divestiture Trustee selected by plaintiff United States and approved
by the Court to effect the divestiture of the Divestiture Assets. The
Divestiture Trustee will have all the rights and responsibilities of
the Management Trustee who may be appointed pursuant to the
Preservation of Assets Stipulation and Order, and will be responsible
for:
(1) Accomplishing divestiture of all Divestiture Assets transferred
to the Divestiture Trustee from defendants, in accordance with the
terms of this Final Judgment, to an Acquirer(s) approved by plaintiff
United States, in its sole discretion upon consultation with the
relevant plaintiff State, under Section IV.A of this Final Judgment;
and
(2) Exercising the responsibilities of the licensee of any
transferred Divestiture Assets and controlling and operating any
transferred Divestiture Assets, to ensure that the businesses remain
ongoing, economically viable competitors in the provision of mobile
wireless telecommunications services in the license areas specified in
Section II.D, until they are divested to an Acquirer(s), and the
Divestiture Trustee shall agree to be bound by this Final Judgment.
B. Defendants shall submit a proposed trust agreement (``Trust
Agreement'') to plaintiff United States, which must be consistent with
the terms of this Final Judgment and which must receive approval by
plaintiff United States in its sole discretion, upon consultation with
the relevant plaintiff State, who shall communicate to defendants
within 10 business days its approval or disapproval of the proposed
Trust Agreement, and which must be executed by the defendants and the
Divestiture Trustee within five business days after approval by
plaintiff United States.
C. After obtaining any necessary approvals from the FCC for the
assignment of the licenses of the Divestiture Assets to the Divestiture
Trustee, defendants shall irrevocably divest the remaining Divestiture
Assets to the Divestiture Trustee, who will own such assets (or own the
stock of the entity owning such assets, if divestiture is to be
effected by the creation of such an entity for sale to Acquirer) and
control such assets, subject to the terms of the approved Trust
Agreement.
D. After the appointment of a Divestiture Trustee becomes
effective, only the Divestiture Trustee shall have the right to sell
the Divestiture Assets. The Divestiture Trustee shall have the power
and authority to accomplish the divestiture to an Acquirer(s)
acceptable to plaintiff United States, in its sole judgment, upon
consultation with the relevant plaintiff State, at such price and on
such terms as are then obtainable upon reasonable effort by the
Divestiture 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
[[Page 66930]]
appropriate. Subject to Section V.G of this Final Judgment, the
Divestiture Trustee may hire at the cost and expense of defendants the
Management Trustee appointed pursuant to the Preservation of Assets
Stipulation and Order and any investment bankers, attorneys or other
agents, who shall be solely accountable to the Divestiture Trustee,
reasonably necessary in the Divestiture Trustee's judgment to assist in
the divestiture.
E. In addition, notwithstanding any provision to the contrary,
plaintiff United States, in its sole discretion, upon consultation with
the relevant plaintiff State, may (1) require defendants to include
additional assets, and (2) with the written approval of plaintiff
United States, allow defendants to substitute substantially similar
assets, which substantially relate to the Divestiture Assets to be
divested by the Divestiture Trustee.
F. Defendants shall not object to a sale by the Divestiture Trustee
on any ground other than the Divestiture Trustee's malfeasance. Any
such objections by defendants must be conveyed in writing to plaintiff
United States and the Divestiture Trustee within 10 calendar days after
the Divestiture Trustee has provided the notice required under Section
VI.
G. The Divestiture Trustee shall serve at the cost and expense of
defendants, on such terms and conditions as plaintiff United States
approves, and shall account for all monies derived from the sale of the
assets sold by the Divestiture Trustee and all costs and expenses so
incurred. After approval by the Court of the Divestiture Trustee's
accounting, including fees for its services and those of any
professionals and agents retained by the Divestiture Trustee, all
remaining money shall be paid to defendants and the trust shall then be
terminated. The compensation of the Divestiture Trustee and any
professionals and agents retained by the Divestiture Trustee shall be
reasonable in light of the value of the Divestiture Assets and based on
a fee arrangement providing the Divestiture 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.
H. Defendants shall use their best efforts to assist the
Divestiture Trustee in accomplishing the required divestitures,
including their best efforts to effect all necessary regulatory
approvals. The Divestiture Trustee and any consultants, accountants,
attorneys, and other persons retained by the Divestiture Trustee shall
have full and complete access to the personnel, books, records, and
facilities of the businesses to be divested, and defendants shall
develop financial and other information relevant to the assets to be
divested as the Divestiture Trustee may reasonably request, subject to
reasonable protection for trade secret or other confidential research,
development, or commercial information. Defendants shall take no action
to interfere with or to impede the Divestiture Trustee's accomplishment
of the divestitures.
I. After its appointment, the Divestiture Trustee shall file
monthly reports with plaintiff United States, and the relevant
plaintiff States, and the Court setting forth the Divestiture Trustee's
efforts to accomplish the divestitures ordered under this Final
Judgment. To the extent such reports contain information that the
Divestiture Trustee deems confidential, such reports shall not be filed
in the public docket of the Court. Such reports shall include the name,
address, and telephone number of each person who, during the preceding
month, made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, any interest in the Divestiture Assets, and
shall describe in detail each contact with any such person. The
Divestiture Trustee shall maintain full records of all efforts made to
divest the (1) investiture Assets.
J. If the Divestiture Trustee has not accomplished the divestitures
ordered under the Final Judgment within six months after its
appointment, the Divestiture Trustee shall promptly file with the Court
a report setting forth (1) The Divestiture Trustee's efforts to
accomplish the required divestitures, (2) the reasons, in the
Divestiture Trustee's judgment, why the required divestitures have not
been accomplished, and (3) the Divestiture Trustee's recommendations.
To the extent such reports contain information that the Divestiture
Trustee deems confidential, such reports shall not be filed in the
public docket of the Court. The Divestiture Trustee shall at the same
time furnish such report to plaintiff United States, and the relevant
plaintiff States, who shall have the right to make additional
recommendations consistent with the purpose of the trust. The Court
thereafter shall enter such orders as it shall deem appropriate to
carry out the purpose of the Final Judgment, which may, if necessary,
include extending the trust and the term of the Divestiture Trustee's
appointment by a period requested by plaintiff United States, upon
consultation with the relevant plaintiff States.
K. After defendants transfer the Divestiture Assets to the
Divestiture Trustee, and until those Divestiture Assets have been
divested to an Acquirer or Acquirers approved by plaintiff United
States pursuant to Sections IV.A and IVU, the Divestiture Trustee shall
have sole and complete authority to manage and operate the Divestiture
Assets and to exercise the responsibilities of the licensee and shall
not be subject to any control or direction by defendants. Defendants
shall not use, or retain any economic interest in, the Divestiture
Assets transferred to the Divestiture Trustee, apart from the right to
receive the proceeds of the sale or other disposition of the
Divestiture Assets.
L. The Divestiture Trustee shall operate the Divestiture Assets
consistent with the Preservation of Assets Stipulation and Order and
this Final Judgment, with control over operations, marketing, and
sales. Defendants shall not attempt to influence the business decisions
of the Divestiture Trustee concerning the operation and management of
the Divestiture Assets, and shall not communicate with the Divestiture
Trustee concerning divestiture of the Divestiture Assets or take any
action to influence, interfere with, or impede the Divestiture
Trustee's accomplishment of the divestitures required by this Final
Judgment, except that defendants may communicate with the Divestiture
Trustee to the extent necessary for defendants to comply with this
Final Judgment and to provide the Divestiture Trustee, if requested to
do so, with whatever resources or cooperation may be required to
complete divestiture of the Divestiture Assets and to carry out the
requirements of the Preservation of Assets Stipulation and Order and
this Final Judgment. Except as provided in this Final Judgment and the
Preservation of Assets Stipulation and Order, in no event shall
defendants provide to, or receive from, the Divestiture Trustee or the
mobile wireless telecommunications services businesses any non public
or competitively sensitive marketing, sales, pricing or other
information relating to their respective mobile wireless
telecommunications services businesses.
VI. Notice of Proposed Divestitures
A. Within the later of two (2) business days following (i) the
execution of a definitive divestiture agreement, or (ii) the filing of
the Complaint in this action, defendants or the Divestiture Trustee,
whichever is then responsible for effecting the divestitures required
herein, shall notify plaintiff United States, and the relevant
plaintiff State,
[[Page 66931]]
in writing of any proposed divestiture required by Section IV or V of
this Final Judgment. If the Divestiture Trustee is responsible, it
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
or expressed an interest in or desire to acquire any ownership interest
in the Divestiture Assets, together with fill details of the same.
B. Within fifteen (15) calendar days of receipt of notice by
plaintiff United States and the relevant plaintiff State, plaintiff
United States and any plaintiff State receiving such notice, may
request from defendants, the proposed Acquirer, any other third party,
or the Divestiture Trustee, if applicable, additional information
concerning the proposed divestiture, the proposed Acquirer, and any
other potential Acquirer. Defendants and the Divestiture Trustee shall
furnish any additional information requested within fifteen (15)
calendar days of the receipt of the request, unless the parties shall
otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after plaintiff United States and the
relevant plaintiff State have been provided the additional information
requested from defendants, the proposed Acquirer, any third party, and
the Divestiture Trustee, whichever is later, plaintiff United Slates,
upon consultation with the relevant plaintiff State, shall provide
written notice to defendants and the Divestiture Trustee, if there is
one, stating whether or not it objects to the proposed divestiture. If
plaintiff United States provides written notice that it does not
object, the divestiture may be consummated, subject only to defendants'
limited right to object to the sale under Section V.F of this Final
Judgment. Absent written notice that plaintiff United States does not
object to the proposed Acquirer or upon objection by plaintiff United
States, a divestiture proposed under Section IV or Section V shall not
be consummated. Upon objection by defendants under Section V.F, a
divestiture proposed under Section V shall not be consummated unless
approved by the Court.
VII. Financing
Defendants shall not finance all or any part of any divestiture
made pursuant to Section IV or V of this Final Judgment.
VIII. Preservation of Assets
Until the divestitures required by this Final Judgment have been
accomplished, defendants shall take all steps necessary to comply with
the Preservation of Assets Stipulation and Order entered by this Court
and cease use of the Divestiture Assets during the period that the
Divestiture Assets arc managed by the Management Trustee. Defendants
shall take no action that would jeopardize the divestitures ordered by
this Court.
IX. 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 under Section IV or V, defendants
shall deliver to plaintiffs 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) calendar 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 Divestiture Assets, and shall describe
in detail each contact with any such person during that period. Each
such affidavit shall also include a description of the efforts
defendants have taken to solicit buyers for the Divestiture Assets, and
to provide required information to prospective Acquirers, including the
limitations, if any, on such information. Assuming the information set
forth in the affidavit is true and complete, any objection by plaintiff
United States upon consultation with the relevant plaintiff State, to
information provided by defendants, including limitation on
information, shall be made within fourteen (14) calendar days of
receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, defendants shall deliver to plaintiffs an affidavit
that describes in reasonable detail all actions defendants have taken
and all steps defendants have implemented on an ongoing basis to comply
with Section VIII of this Final Judgment. Defendants shall deliver to
plaintiffs 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 keep all records of all efforts made to
preserve and divest the Divestiture Assets until one year after such
divestitures have been completed.
X. Compliance Inspection
A. For the purposes of determining or securing compliance with this
Final Judgment or whether the Final Judgment should be modified or
vacated, and subject to any legally recognized privilege, authorized
representatives of the United States Department of Justice (including
consultants and other persons retained by plaintiff United States)
shall, upon written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division, and on
reasonable notice to defendants, be permitted:
(1) access during defendants' office hours to inspect and copy, or
at plaintiff United States's option, to require defendants to provide
hard copy or electronic copies of, all books, ledgers, accounts,
records, data and documents in the possession, custody, or control of
defendants, relating to any matters contained in this Final Judgment;
and
(2) to interview, either informally or on the record, defendants'
officers, employees, or agents, who may have their individual counsel
present, regarding such matters. The interviews shall be subject to the
reasonable convenience of the interviewee and without restraint or
interference by defendants.
B. Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division,
defendants shall submit written reports or response to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by plaintiff United States to any person
other than an authorized representative of the executive branch of
plaintiff United States, any relevant plaintiff state, or, pursuant to
a customary protective order or waiver of confidentiality by
defendants, the FCC, except in the course of legal proceedings to which
plaintiff United States is a party (including grand jury proceedings),
or for the purpose of securing compliance with this Final Judgment, or
as otherwise required by law.
D. If at the time information or documents are furnished by
defendants to plaintiff United States, defendants represent and
identify in writing the material in any such information or documents
to which a claim of protection may be asserted under Rule 26(c)(l)(G)
of the Federal Rules of Civil Procedure, and defendants mark each
[[Page 66932]]
pertinent page of such material, ``Subject to claim of protection under
Rule 26(c)(l)(G) of the Federal Rules of Civil Procedure,'' then
plaintiff United States shall give defendants ten (10) calendar days
notice prior to divulging such material in any legal proceeding (other
than a grand jury proceeding).
XI. No Reacquisition
Defendants may not reacquire or lease any part of the Divestiture
Assets during the term of this Final Judgment.
XII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XIII. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten years from the date of its entry.
XIV. Public Interest Determination
Entry of this Final Judgment is in the public interest The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16, including making copies available to the
public of this Final Judgment, the Competitive Impact Statement, and
any comments thereon and plaintiff United States's responses to
comments. Based upon the record before the Court, which includes the
Competitive Impact Statement and any comments and response to comments
filed with the Court, entry of this Final Judgment is in the public
interest.
Date:
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C 16
United States District Judge
In the United States District Court for the District of Columbia
United States of America, State of Alabama, State of California, State
of Iowa, State of Kansas, State of Minnesota, State of North Dakota,
and State of South Dakota, Plaintiffs, v. Verizon Communications Inc.
and Alltel Corporation, Defendants
Case: 1:08-cv-01878. Assigned To: Sullivan, Emmet G. Assign Date: 10/
30/2008. Description: Antitrust.
Competitive Impact Statement
Plaintiff United States of America (``United States''), pursuant to
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or
``Turmey Act''), 15 U.S.C. 16(b)-(h), 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
Defendants entered into an Agreement and Plan of Merger dated June
5, 2008, pursuant to which Verizon Communications Inc. (``Verizon'')
will acquire Alltel Corporation (``Alltel''). Plaintiffs United States
and the States of Alabama, California, Iowa, Kansas, Minnesota, North
Dakota, and South Dakota filed a civil antitrust Complaint on October
30, 2008, seeking to enjoin the proposed acquisition. The Complaint
alleges that the likely effect of this acquisition would be to lessen
competition substantially for mobile wireless telecommunications
services in 94 Cellular Market Areas (``CMAs'') in Alabama, Arizona,
California, Colorado, Georgia, Idaho, Illinois, Iowa, Kansas,
Minnesota, Montana, Nebraska, Nevada, New Mexico, North Carolina, North
Dakota, Ohio, South Carolina, South Dakota, Utah, Virginia, and Wyoming
where Verizon and Alltel are among the most significant competitors, in
violation of Section 7 of the Clayton Act, 15 U.S.C. 18.\1\ This loss
of competition would result in consumers facing higher prices, lower
quality service and fewer choices of mobile wireless telecommunications
services providers.
---------------------------------------------------------------------------
\1\ In order to alleviate competitive concerns associated with
the proposed acquisition, defendants also have agreed to divest
wireless businesses in six additional CMAs, covered by the final
judgments in United States et al. v. Alltel Corp. et al., Civ. No.
06-3631 (RHKIAJB) (D. MN filed Sept. 7, 2006), and United States v.
Bell Atlantic Corp. et al., Civ. No. 1:99CV01119 (EGS) (D.D.C. filed
May 7, 1999), which prohibit defendants from reacquiring the
wireless businesses in those CMAs. The wireless businesses in those
CMAs will be divested pursuant to proposed modifications of those
Final Judgments.
---------------------------------------------------------------------------
At the same time the Complaint was filed, plaintiffs also filed a
Preservation of Assets Stipulation and Order (``Stipulation'') and
proposed Final Judgment, which are designed to eliminate the
anticompetitive effects of the acquisition. Under the proposed Final
Judgment, which is explained more fully below, defendants are required
to divest mobile wireless telecommunications services businesses and
related assets in the 94 CMAs (the ``Divestiture Assets''). Under the
terms of the Stipulation, defendants will take certain steps to ensure
that, during the pendency of the ordered divestitures, the Divestiture
Assets are preserved and operated as competitively independent,
economically viable ongoing businesses without influence by defendants.
Plaintiffs and defendants have stipulated that the proposed Final
Judgment may be entered after compliance with the APPA. Entry of the
proposed Final Judgment would terminate this action, except that the
Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof. Defendants have also stipulated that they will comply with the
terms of the Stipulation and the proposed Final Judgment from the date
of signing of the Stipulation, pending entry of the proposed Final
Judgment by the Court and the required divestitures. Should the Court
decline to enter the proposed Final Judgment, defendants have also
committed to continue to abide by its requirements and those of
Stipulation until the expiration of time for appeal.
II. Description of the Events Giving Rise to the Alleged Violation
A. The Defendants and the Proposed Transaction
Verizon, with headquarters in New York, is a corporation organized
and existing under the laws of the state of Delaware. Verizon is one of
the world's largest providers of communications services. It is the
second largest mobile wireless telecommunications services provider in
the United States measured by subscribers, providing mobile wireless
telecommunications services in 49 states to more than 70 million
subscribers. In 2007, Verizon earned mobile wireless telecommunications
services revenues of approximately $43 billion.
Alltel, a subsidiary of Atlantis Holdings LLC, is a corporation
organized and existing under the laws of the State of Delaware, with
headquarters in Little Rock, Arkansas. Alltel is the fifth largest
mobile wireless telecommunications services provider in the United
States measured by subscribers providing mobile wireless
telecommunications services in 13 states to approximately 13 million
subscribers. In 2007, Alltel earned approximately $8.8 billion in
mobile wireless telecommunications services revenues.
Pursuant to an Agreement and Plan of Merger dated June 5, 2008,
Verizon will acquire Alltel for approximately $28 billion. If this
transaction is consummated, Verizon and Alltel combined would have
approximately 83 million subscribers in the United States, with over
$51 billion in mobile wireless telecommunications services revenues.
[[Page 66933]]
The proposed transaction, as initially agreed to by defendants, would
lessen competition substantially for mobile wireless telecommunications
services in a large number of CMAs in Alabama, Arizona, California,
Colorado, Georgia, Idaho, Illinois, Iowa, Kansas, Minnesota, Montana,
Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, South
Carolina, South Dakota, Utah, Virginia, and Wyoming. This acquisition
is the subject of the Complaint and proposed Final Judgment filed by
plaintiffs.
B. Mobile Wireless Telecommunications Services Industry
Mobile wireless telecommunications services allow customers to make
and receive telephone calls and obtain data services using radio
transmissions without being confined to a small area during the call or
data session, and without the need for unobstructed line-of-sight to
the radio tower. Mobility is highly valued by customers, as
demonstrated by the more than 262 million people in the United States
who own mobile wireless telephones. In 2007, revenues from the sale of
mobile wireless telecommunications services in the United States were
over $138 billion. To meet this desire for mobility, mobile wireless
telecommunications services providers must deploy extensive networks of
switches, radio transmitters, and receivers and interconnect their
networks with the networks of wireline carriers and other mobile
wireless telecommunications services providers.
In the early to mid-1980s, the FCC issued two cellular licenses (A-
block and B-block) in each Metropolitan Statistical Area (``MSA'') and
Rural Service Area (``RSA'') (collectively, CMAs), for a total of 734
CMAs covering the entire United States. Each license consists of 25 MHz
of spectrum in the 800 MHz band. The first mobile wireless voice
systems using this cellular spectrum were based on analog technology,
now referred to as first-generation or ``1G'' technology.
In 1995, the FCC licensed additional spectrum for the provision of
Personal Communications Services (``PCS''), a category of services that
includes mobile wireless telecommunications services comparable to
those offered by cellular licensees. These licenses are in the 1900 MHz
band and are divided into six blocks: A, B, and C, which consist of 30
MHz each; and D, E, and F, which consist of 10 MHz each.
Geographically, the A- and B-block 30 MHz licenses are issued by Major
Trading Areas (``MTAs''). C-, D-, E-, and F-block licenses are issued
by Basic Trading Areas (``BTAs''), several of which comprise each MTA.
MTAs and BTAs do not generally correspond to MSAs and RSAs. With the
introduction of the PCS licenses, both cellular and PCS licensees began
offering digital services, thereby increasing network capacity,
shrinking the size of handsets, and extending handset battery life. In
addition, in 1996, a specialized mobile radio (``SMR'' or ``dispatch'')
spectrum licensee, began using SMR spectrum to offer mobile wireless
telecommunications services comparable to those offered by other mobile
wireless telecommunications services providers, in conjunction with its
dispatch, or ``push-to-talk,'' service.
Although there are a number of providers holding spectrum licenses
in each area of the country, not all providers have fully built out
their networks throughout each license area. In particular, because of
the characteristics of PCS spectrum, providers holding this type of
spectrum generally have found it less attractive to build out in rural
areas.
Today, more than 95 percent of the total U.S. population lives in
counties where three or more mobile wireless telecommunications
services operators offer service. Nearly all mobile wireless voice
services have migrated to the second-generation, or ``2G'' digital
technologies, using GSM (global standard for mobility) or CDMA (code
division multiple access). Even more advanced technologies (``2.5G''
and ``3G''), based on the earlier 2G technologies, have now been
deployed for mobile wireless data services. Additionally, during the
past two years, the FCC has auctioned off additional spectrum that can
be used to support mobile wireless telecommunications services,
including Advanced Wireless Spectrum (1710-1755 MHz and 2110-2155 MHz
bands) and 700 MHz band spectrum, although it will be several years
before mobile wireless telecommunications services utilizing this
spectrum are widely deployed.
C. The Competitive Effects of the Transaction on Mobile Wireless
Telecommunications Services
Mobile wireless telecommunications services include both voice and
data services provided over a radio network and allow customers to
maintain their telephone calls or data sessions without wires when
traveling. There are no cost-effective alternatives to mobile wireless
telecommunications services. Because fixed wireless services are not
mobile, they are not regarded by consumers of mobile wireless
telecommunications services to be a reasonable substitute for those
services. It is unlikely that a sufficient number of customers would
switch away from mobile wireless telecommunications services to make a
small but significant price increase in those services unprofitable.
The United States comprises numerous local geographic markets for
mobile wireless telecommunications services.\2\ A large majority of
customers use mobile wireless telecommunications services in close
proximity to their workplaces and homes. Thus, customers purchasing
mobile wireless telecommunications services choose among mobile
wireless telecommunications services providers that offer services
where they live, work, and travel on a regular basis. The geographic
areas in which the FCC has licensed mobile wireless telecommunications
services providers often represent the core of the business and social
sphere within which customers have the same competitive choices for
mobile wireless telephone services. The number and identity of mobile
wireless telecommunications services providers varies among geographic
areas, as does the quality of services and breadth of geographic
coverage offered by providers. Some mobile wireless telecommunications
services providers can and do offer different promotions, discounts,
calling plans, and equipment subsidies in different geographic areas,
varying the price for customers by geographic area.
---------------------------------------------------------------------------
\2\ The existence of local markets does not preclude the
possibility of competitive effects in a broader geographic area,
such as a regional or national area, though plaintiff United States
does not allege such effects in this transaction.
---------------------------------------------------------------------------
The relevant geographic markets, under Section 7 of the Clayton
Act, 15 U.S.C. Sec. 18, where the transaction would substantially
lessen competition for mobile wireless telecommunications services are
effectively represented by the following FCC spectrum licensing areas:
(1) Lima OH MSA (CMA 158);
(2) Hickory NC MSA (CMA 166);
(3) Fargo-Moorhead ND-MN MSA (CMA 523);
(4) Mansfield OH MSA (CMA 231);
(5) Dothan AL MSA (CMA 246);
(6) Sioux City IA-NE MSA (CMA 253);
(7) Albany GA MSA (CMA 261);
(8) Danville VA MSA (CMA 262);
(9) Sioux Falls SD MSA (CMA 267);
(10) Billings MT MSA (CMA 268);
(11) Grand Forks ND-MN MSA (CMA 276);
(12) Rapid City SD MSA (CMA 289);
(13) Great Falls MT MSA (CMA 297);
(14) Bismarck ND MSA (CMA 298);
(15) Casper WY MSA (CMA 299);
(16) AL RSA 7 (CMA313);
[[Page 66934]]
(17) AZ RSA 5 (CMA 322);
(18) CA RSA 6 (CMA 341);
(19) CO RSA 4 (CMA 351);
(20) CO RSA 5 (CMA 352);
(21) CO RSA 6 (CMA 353);
(22) CO RSA 7 (CMA 354);
(23) CO RSA 8 (CMA 355);
(24) CO RSA 9 (CMA 356);
(25) GA RSA 6 (CMA 376);
(26) GA RSA 7 (CMA 377);
(27) GA RSA 8 (CMA 378);
(28) GA RSA 9 (CMA 379);
(29) GA RSA 10 (CMA 380);
(30) GA RSA 12 (CMA 382);
(31) GA RSA 13 (CMA 383);
(32) ID RSA 2 (CMA 389);
(33) ID RSA 3 (CMA 390);
(34) IL RSA 8 (CMA 401);
(35) IL RSA 9 (CMA 402);
(36) IA RSA 8 (CMA 419);
(37) KS RSA 1 (CMA 428);
(38) KS RSA 2 (CMA 429);
(39) KS RSA 6 (CMA 433);
(40) KS RSA 7 (CMA 434);
(41) KS RSA 11 (CMA438);
(42) KS RSA 12 (CMA 439);
(43) KS RSA 13 (CMA 440);
(44) MN RSA 1 (CMA 482);
(45) MN RSA 2 (CMA 483);
(46) MN RSA 7 (CMA 488);
(47) MT RSA 1 (CMA 523);
(48) MT RSA 2 (CMA 524);
(49) MT RSA 4 (CMA 526);
(50) MT RSA 5 (CMA 527);
(51) MT RSA 6 (CMA 528);
(52) MT RSA 7 (CMA 529);
(53) MT RSA 8 (CMA 530);
(54) MT RSA 9 (CMA 531);
(55) MT RSA 10 (CMA 532);
(56) NE RSA 5 (CMA 537);
(57) NV RSA 2 (CMA 544);
(58) NV RSA 5 (CMA 547);
(59) NM RSA 1 (CMA 553);
(60) NM RSA 5 (CMA 557);
(61) NM RSA 6 (CMA 558);
(62) NC RSA 2 (CMA 566);
(63) NC RSA 5 (CMA 569);
(64) ND RSA 1 (CMA 580);
(65) ND RSA 2 (CMA 581);
(66) ND RSA 3 (CMA 582);
(67) ND RSA 4 (CMA 583);
(68) ND RSA 5 (CMA 584);
(69) OH RSA 2 (CMA 586);
(70) OH RSA 5 (CMA 589);
(71) OH RSA 6 (CMA 590);
(72) SC RSA 1 (CMA 625);
(73) SC RSA 2 (CMA 626);
(74) SC RSA 3 (CMA 627);
(75) SC RSA 7 (CMA 631);
(76) SD RSA 1 (CMA 634);
(77) SD RSA 2 (CMA 635);
(78) SD RSA 3 (CMA 636);
(79) SD RSA 4 (CMA 637);
(80) SD RSA 5 (CMA 638);
(81) SD RSA 6 (CMA 639);
(82) SD RSA 7 (CMA 640);
(83) SD RSA 8 (CMA 641);
(84) SD RSA 9 (CMA 642);
(85) UT RSA 3 (CMA 675);
(86) UT RSA 4 (CMA 676);
(87) UT RSA 5 (CMA 677);
(88) UT RSA 6 (CMA 678);
(89) VA RSA 1 (CMA 681);
(90) VA RSA 8 (CMA 688);
(91) WY RSA 1 (CMA 718);
(92) WY RSA 2 (CMA 719);
(93) WY RSA 4 (CMA 721); and
(94) WY RSA 5 (CMA 722).
It is unlikely that a sufficient number of customers would switch
to mobile wireless telecommunications services providers who do not
offer services in these geographic areas to make a small but
significant price increase in the relevant geographic markets
unprofitable.
These geographic areas of concern for mobile wireless
telecommunications services were identified via a fact-specific,
market-by-market analysis that included consideration of, but was not
limited to, the following factors: the number of mobile wireless
telecommunications services providers and their competitive strengths
and weaknesses; Verizon's and Alltel's market shares, along with those
of the other providers; whether additional spectrum is, or is likely
soon to be, available; whether any providers are limited by
insufficient spectrum or other factors in their ability to add new
customers; concentration in the market, and the breadth and depth of
coverage by different providers in each area and in the surrounding
area; each carrier's network coverage in relationship to the population
density of the license area; each provider's retail presence; local
wireless number portability data; and the likelihood that any provider
would expand its existing coverage or that new providers would enter.
Verizon and Alltel are significant providers of mobile wireless
telecommunications services in each of the CMAs listed above. Their
combined share of subscribers in each area ranges from over 55 percent
to 100 percent. In addition, each is the other's closest competitor for
a significant set of customers.
Verizon and Alltel each hold cellular spectrum licenses in all but
two of these CMAs Verizon does not own cellular spectrum in the other
two CMAs--NE RSA 5 and MN RSA 7--but is a strong competitor because,
unlike many other providers with PCS spectrum in rural areas, it has
constructed a PCS network that covers a significant portion of the
population. Considering these factors, defendants Verizon and Alltel
are also strong and close competitors considering their brand
recognition, service quality and reputation, coverage, handset
selection, and service features.
The relevant geographic markets for mobile wireless services are
highly concentrated. As measured by the Herfindahl-Hirschman Index
(``HHI''), which is commonly employed in merger analysis and is defined
and explained in Appendix B to the Complaint, concentration in these
geographic areas ranges from over 2100 to more than 9100, which is well
above the 1800 threshold at which plaintiffs consider a market to be
highly concentrated. After Verizon's proposed acquisition of Alltel is
consummated, the HHIs in the relevant geographic areas will range from
over 4000 to 10,000, with increases in the HHI as a result of the
merger ranging from over 300 to over 4900, significantly beyond the
thresholds at which plaintiffs consider a transaction likely to cause
competitive harm.
Competition between Verizon and Alltel in the relevant geographic
areas has resulted in lower prices and higher quality in mobile
wireless telecommunications services than otherwise would have existed
in these geographic areas. If Verizon's proposed acquisition of Alltel
is consummated, competition between Verizon and Alltel in mobile
wireless telecommunications services will be eliminated in these areas.
As a result, the loss of competition between Verizon and Alltel
increases the merged firm's incentive and ability in the relevant
geographic markets to increase prices, diminish the quality or quantity
of services provided, and refrain from or delay making investments in
network improvements.
Entry by a new mobile wireless services provider in the relevant
geographic areas would be difficult, time-consuming, and expensive,
requiring spectrum licenses and the build out of a network. Therefore,
any entry in response to a small but significant price increase for
mobile wireless telecommunications services by the merged firm in these
relevant geographic areas would not be timely, likely, or sufficient to
thwart the competitive harm resulting from Verizon's proposed
acquisition of Alltel, if it were consummated without the divestitures
provided for in the proposed Final Judgment.
For these reasons, plaintiffs concluded that Verizon's proposed
acquisition of Alltel likely would substantially lessen competition, in
violation of Section 7 of the Clayton Act, in the provision of mobile
wireless telecommunications services in the relevant geographic areas
alleged in the Complaint.
[[Page 66935]]
III. Explanation of the Proposed Final Judgment
The divestiture requirements of the proposed Final Judgment will
eliminate the anticompetitive effects of the acquisition in mobile
wireless telecommunications services in the geographic areas of
concern. The proposed Final Judgment requires defendants to divest the
Divestiture Assets within one hundred twenty days after the
consummation of the Transaction, or five days after notice of the entry
of the Final Judgment by the Court, whichever is later. The Divestiture
Assets are essentially the entire mobile wireless telecommunications
services businesses of one of the merging companies in the geographic
areas described herein where Verizon and Alltel are each other's close
competitors for mobile wireless telecommunications services. These
assets must be divested in such a way as to satisfy plaintiff United
States in its sole discretion upon consultation with the relevant
plaintiff state that the assets will be operated by the purchaser as a
viable, ongoing business that can compete effectively in each relevant
area. Defendants must take all reasonable steps necessary to accomplish
the divestitures quickly and shall cooperate with prospective
purchasers.
The proposed Final Judgment requires that a single purchaser
acquire all of the Divestiture Assets in each of the following numbered
subsections:
(1) Alabama (a) Dothan MSA (CMA 246); (b) ALRSA7 (CMA313);
(2) Colorado (a) CO RSA 4 (CMA 351); (b) CO RSA 5 (CMA 352); (c) CO RSA
6 (CMA 353); (d) CO RSA 7 (CMA 354); (e) CO RSA 8 (CMA 355); (f) CO RSA
9 (CMA 356);
(3) Georgia (a) Albany MSA (CMA 261); (b) GA RSA 6 (CMA 376); (c) GA
RSA 7 (CMA 377); (d) GA RSA 8 (CMA 378); (e) GA RSA 9 (CMA 379); (f) GA
RSA 10 (CMA 380); (g) GA RSA 12 (CMA 382); (h) GA RSA 13 (CMA 383);
(4) Idaho (a) ID RSA 2 (CMA 389); (b) ID RSA 3 (CMA 390);
(5) Illinois (a) IL RSA 8 (CMA 401); (b) IL RSA 9 (CMA 402);
(6) Iowa/Nebraska (a) Sioux City MSA (CMA 253); (b) IA RSA 8 (CMA 419);
(c) NE RSA 5 (CMA 537);
(7) Kansas (a) KS RSA 1 (CMA 428); (b) KS RSA 2 (CMA 429); (c) KS RSA 6
(CMA 433); (d) KS RSA 7 (CMA 434); (e) KS RSA 11 (CMA 438); (f) KS RSA
12 (CMA 439); (g) KS RSA 13 (CMA 440);
(8) Southern Minnesota\3\ (a) MN RSA 7 (CMA 488);
\3\ In addition, defendants will divest the wireless businesses
in MN RSAs 7 through 10, recently acquired by Verizon from Rural
Cellular Corporation, pursuant to the proposed Modified Final
Judgment in United States et al. v. Alltel Corp. et al., Civ. No.
06-3631 (RHKJAJB) (D. MN filed Sept. 7, 2006), to the same acquirer
as the acquirer of the Divestiture Assets in the CMA specified in
this subsection.
(9) Montana (a) Billings (CMA 268); (b) Great Falls (CMA 297); (c) MT
RSA 1 (CMA 523); (d) MT RSA 2 (CMA 524); (e) MT RSA 4 (CMA 526); (f) MT
RSA 5 (CMA 527); (g) MT RSA 6 (CMA 528); (h) MT RSA 7 (CMA 529); (i) MT
---------------------------------------------------------------------------
RSA 8 (CMA 530); (j) MT RSA 9 (CMA 531); (k) MT RSA 10 (CMA 532);
(10) Nevada (a) NV RSA 2 (CMA 544); (b) NV RSA 5 (CMA 547);
(11) New Mexico\4\ (a) NM RSA 5 (CMA 557); (b) NM RSA 6 (CMA 558);
---------------------------------------------------------------------------
\4\ In addition, defendants will divest the wireless business in
the Las Cruces MSA (CMA 285), currently owned by Alltel, pursuant to
the proposed Modified Final Judgment in United States v. Bell
Atlantic Corp. et al., Civ. No. 1 :99CV01 119 (EGS) (D.D.C. filed
May 7, 1999), to the same acquirer as the acquirer of the
Divestiture Assets in the CMAs specified in this subsection.
(12) North Carolina (a) Hickory MSA (CMA 166); (b) NC RSA 2 (CMA 566);
---------------------------------------------------------------------------
(c) NC RSA 5 (CMA 569);
(13) North Dakota/Northern Minnesota (a) Fargo-Moorhead ND-MN (CMA
523); (b) Grand Forks ND-MN (CMA 276); (c) Bismarck MSA (CMA 298); (d)
MN RSA 1 (CMA 482); (e) MN RSA 2 (CMA 483); (f) ND RSA 1 (CMA 580); (g)
ND RSA2 (CMA 581); (h) ND RSA 3 (CMA 582); (i) NI RSA 4 (CMA 583); (j)
ND RSA 5 (CMA 584);
(14) Ohio\5\ (a) Lima MSA (CMA 158); (b) Mansfield MSA (CMA 231); (c)
OH RSA 2 (CMA 586); (d) OH RSA 5 (CMA 589); (e) OH RSA 6 (CMA 590);
---------------------------------------------------------------------------
\5\ In addition, defendants will divest the wireless business in
OH RSA 3 (CMA 587), currently owned by Alltel, pursuant to the
proposed Modified Final Judgment in United States v. Bell Atlantic
Corp. et al., Civ. No. I :99CV01 19 (EGS) (DD.C. filed May 7, 1999),
to the same acquirer as the acquirer of the Divestiture Assets in
the CMAs specified in this subsection.
(15) South Carolina\6\ (a) SC RSA 1 (CMA 625); (b) SC RSA 2 (CMA 626);
(c) SC RSA 3 (CMA 627); (d) SC RSA 7 (CMA 631);
---------------------------------------------------------------------------
\6\ In addition, defendants will divest the wireless business in
the Anderson MSA (CMA 227), currently owned by Alltel, pursuant to
the proposed Modified Final Judgment in United States v. Bell
Atlantic Corp. et al., Civ. No. 1 :99C VOl 19 (EGS) (D.D.C. May 7,
1999), to the same acquirer as the acquirer of the Divestiture
Assets in the CMA specified in this subsection.
(16) South Dakota (a) Sioux Falls MSA (CMA 267); (b) Rapid City MSA
(CMA 289); (c) SD RSA 1 (CMA 634); (d) SD RSA 2 (CMA 635); (e) SD RSA 3
(CMA 636); (f) SD RSA 4 (CMA 637); (g) SD RSA 5 (CMA 638); (h) SD RSA 6
(CMA 639); (i) SD RSA 7 (CMA 640); (j) SD RSA 8 (CMA 641); (k) SD RSA 9
---------------------------------------------------------------------------
(CMA 642);
(17) Utah (a) UT RSA 3 (CMA 675); (b) UT RSA 4 (CMA 676); (c) UT RSA 5
(CMA 677); (d) UT RSA 6 (CMA 678);
(18) Wyoming (a) Casper MSA (CMA 299); (b) WY RSA 1 (CMA 718); (c) WY
RSA 2 (CMA 719); (d) WY RSA 4 (CMA 721); (e) WY RSA 5 (CMA 722).
The CMAs have been grouped to reflect the fact that carriers
frequently are more competitive where they serve contiguous areas. Some
customers often travel across FCC licensing areas, so operating a
larger contiguous service area can be an important feature for selling
the product in each affected market. Moreover, there may be significant
efficiencies associated with serving a broader geographic area. In
deciding on the particular packages to require, plaintiff United States
recognized that selling areas with significant linkages across these
areas provides greater assurance that the buyer will be an effective
competitor. Plaintiff United States also recognized, however, that
larger packages might discourage potential buyers who might otherwise
have the strongest incentives to replace the lost competition in any
one particular area. The proposed Final Judgment strikes a balance
between these potential issues by creating bundles that are
geographically linked but allowing potential buyers to effectively
suggest larger packages by bidding conditionally on multiple packages.
The proposed Final Judgment also gives plaintiff United States in its
sole discretion upon consultation with the relevant plaintiff State the
flexibility to allow even smaller packages of assets as appropriate to
ensure a successful divestiture.
A. Timing of Divestitures
In antitrust cases involving mergers or joint ventures in which the
United States seeks a divestiture remedy, it requires completion of the
divestitures within the shortest time period reasonable under the
circumstances. Section IV.A of the proposed Final Judgment in this case
requires divestiture of the Divestiture Assets, within 120 days after
the consummation of the Transaction, or five days after notice of the
entry of the Final Judgment by the Court, whichever is later. Plaintiff
United States in its sole discretion, upon consultation with the
relevant plaintiff State, may extend the date for divestiture of the
Divestiture
[[Page 66936]]
Assets by up to 60 days. Because the FCC's approval is required for the
transfer of the wireless licenses to a purchaser, Section IV.A provides
that if applications for transfer of a wireless license have been filed
with the FCC, but the FCC has not acted dispositively before the end of
the required divestiture period, the period for divestiture of those
assets shall be extended until five days after the FCC has acted. This
extension is to be applied only to the individual Divestiture Assets
affected by the delay in approval of the license transfer and does not
entitle defendants to delay the divestiture of any other Divestiture
Assets for which license transfer approval is not required or has been
granted.
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 defendants an adequate opportunity to
accomplish the divestitures through a fair and orderly process. Even if
all Divestiture Assets have not been divested upon consummation of the
transaction, there should be no adverse impact on competition given the
limited duration of the period of common ownership and the detailed
requirements of the Stipulation.
B. Use of a Management Trustee
The Stipulation filed simultaneously with this Competitive Impact
Statement ensures that the Divestiture Assets remain an ongoing
business concern prior to divestiture. To accomplish this objective,
the Stipulation provides for the appointment of a management trustee
selected by plaintiff United States upon consultation with the
plaintiff States, to oversee the operations of the Divestiture Assets.
The appointment of a management trustee is appropriate because the
Divestiture Assets are not independent facilities that can be held
separate and operated as stand alone units, but are an integral part of
a larger network which, to maintain their competitive viability and
economic value, should remain part of that network during the
divestiture period. A management trustee will oversee the continuing
relationship between defendants and these assets to ensure that these
assets are preserved and supported by defendants during this period,
yet run independently. The management trustee will have the power to
operate the Divestiture Assets in the ordinary course of business, so
that they will remain independent and uninfluenced by defendants and so
that the Divestiture Assets are preserved and operated as an ongoing
and economically viable competitor to defendants and to other mobile
wireless telecommunications services providers. The management trustee
will preserve the confidentiality of competitively sensitive marketing,
pricing, and sales information; ensure defendants' compliance with the
Stipulation and the proposed Final Judgment; and maximize the value of
the Divestiture Assets so as to permit expeditious divestiture in a
manner consistent with the proposed Final Judgment.
The Stipulation provides that defendants will pay all costs and
expenses of the management trustee, including the cost of consultants,
accountants, attorneys, and other representatives and assistants hired
by the management trustee as are reasonably necessary to carry out his
or her duties and responsibilities. After his or her appointment
becomes effective, the management trustee will file monthly reports
with plaintiffs setting forth efforts taken to accomplish the goals of
the Stipulation and the proposed Final Judgment and the extent to which
defendants are fulfilling their responsibilities. Finally, the
management trustee may become the divestiture trustee, pursuant to the
provisions of Section V of the proposed Final Judgment.
C. Use of a Divestiture Trustee
In the event that defendants do not accomplish the divestiture
within the periods prescribed in the proposed Final Judgment, the Final
Judgment provides that the Court will appoint a trustee selected by
plaintiff United States upon consultation with the relevant plaintiff
State, to effect the divestitures. As part of this divestiture,
defendants must continue, as has been the practice while the businesses
have been managed by the Management Trustee, to relinquish any direct
or indirect financial control and any direct or indirect role in
management. Pursuant to Section V of the proposed Final Judgment, the
divestiture trustee will have the legal right to control the
Divestiture Assets until they are sold to a final purchaser, subject to
safeguards to prevent defendants from influencing their operation.
Section V details the requirements for the establishment of the
divestiture trust, the selection and compensation of the divestiture
trustee, the responsibilities of the divestiture trustee in connection
with the divestiture and operation of the Divestiture Assets, and the
termination of the divestiture trust. The divestiture trustee will have
the obligation and the sole responsibility, under Section V.D, for the
divestiture of any transferred Divestiture Assets. The divestiture
trustee has the authority to accomplish divestitures at the earliest
possible time and ``at such price and on such terms as are then
obtainable upon reasonable effort by the Divestiture Trustee.'' In
addition, to ensure that the divestiture trustee can promptly locate
and divest to an acceptable purchaser, plaintiff United States, in its
sole discretion upon consultation with the relevant plaintiff State,
may require defendants to include additional assets, or allow
defendants to substitute substantially similar assets, which
substantially relate to the Divestiture Assets to be divested by the
divestiture trustee.
The divestiture trustee will not only have responsibility for sale
of the Divestiture Assets, but will also be the authorized holder of
the wireless licenses, with full responsibility for the operations,
marketing, and sales of the wireless businesses to be divested, and
will not be subject to any control or direction by defendants.
Defendants will continue to have no role in the operation, or
management of the Divestiture Assets other than the right to receive
the proceeds of the sale. Defendants will also retain certain
obligations to support the Divestiture Assets and cooperate with the
divestiture trustee in order to complete the divestiture.
The proposed Final Judgment provides that defendants will pay all
costs and expenses of the divestiture trustee. The divestiture
trustee's commission will be structured, under Section V.G of the
proposed Final Judgment, so as to provide an incentive for the
divestiture trustee based on the price obtained and the speed with
which the divestitures are accomplished. After his or her appointment
becomes effective, the divestiture trustee will file monthly reports
with the Court and plaintiffs setting forth his or her efforts to
accomplish the divestitures. Section V.J requires the divestiture
trustee to divest the Divestiture Assets to an acceptable purchaser or
purchasers no later than six months after the assets are transferred to
the divestiture trustee. At the end of six months, if all divestitures
have not been accomplished, the trustee and plaintiffs will make
recommendations to the Court, which shall enter such orders as
appropriate in order to carry out the purpose of the Final Judgment,
including extending the trust or term of the trustee's appointment
The divestiture provisions of the proposed Final Judgment will
eliminate
[[Page 66937]]
the anticompetitive effects of the transaction in the provision of
mobile wireless telecommunications services. The divestitures of the
Divestiture Assets will preserve competition in mobile wireless
telecommunications services by maintaining an independent and
economically viable competitor in the relevant geographic areas.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, IS 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 Judgment
The United States 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 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 days of the date of publication of this Competitive Impact
Statement in the Federal Register or the last date of publication in a
newspaper of the summary of this Competitive Impact Statement, which
ever is later. All comments received during this period will be
considered by the Department of Justice, which remains free to withdraw
its consent to the proposed Final Judgment at any time prior to the
Court's entry of judgment. The comments and the response of plaintiff
United States will be filed with the Court and published in the Federal
Register.
Written comments should be submitted to:
Nancy M. Goodman, Chief, Telecommunications and Media Enforcement
Section, Antitrust Division, U.S. Department of Justice, 1401 H Street,
NW., Suite 8000, Washington, DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgement
Plaintiffs considered, as an alternative to the proposed Final
Judgment, a full trial on the merits against defendants. Plaintiffs
could have continued the litigation and sought preliminary and
permanent injunctions against Verizon's acquisition of Alltel.
Plaintiffs are satisfied, however, that the divestiture of assets and
other relief described in the proposed Final Judgment will preserve
competition for the provision of mobile wireless telecommunications
services in the relevant areas identified in the Complaint.
VII. Standard of Review Under the Proposed Final Judgment
The Clayton Act, as amended by the APPA, requires that proposed
consent judgments in antitrust cases brought by the United States be
subject to a sixty-day comment period, after which the Court shall
determine whether entry of the proposed Final Judgment ``is in the
public interest.'' 15 U.S.C. 16(e)(l). In making that determination,
the court, in accordance with the statute as amended in 2004, is
required to consider:
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. l6(e)(l)(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 reach of the public interest.'' United States v.
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cii. 1995); see generally
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1, 11 (D.D.C.
2007) (assessing the public interest standard under the Tunney Act).\7\
---------------------------------------------------------------------------
\7\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for a 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. I 6(e)(1) (2006); see also SBC
Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004 amendments
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------
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).\8\
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.'' SBC
[[Page 66938]]
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).
---------------------------------------------------------------------------
\8\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the {APPAJ 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{time} so inconsonant with the allegations charged as to fall
outside of the `reaches of the public interest' '').
---------------------------------------------------------------------------
Courts have great 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.'' SBC 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 145 9-60. 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 ``[nothing 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. 16(e)(2). The language wrote into the statute
what the Congress that enacted the Tunney Act in 1974 intended, as
Senator Tunney then 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 Cong. 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.\9\
---------------------------------------------------------------------------
\9\ 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'');
United States v. Mid-Am Dairymen, Inc., 1977-1 Trade Cas. (CCII) ]
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.''); 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.'').
---------------------------------------------------------------------------
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by plaintiff United States in
formulating the proposed Final Judgment.
Dated: October 30, 2008
Respectfully submitted,
Hillary B. Burchuk (D.C. Bar No. 366755)
Lawrence M. Frankel (D.C. Bar No. 441532)
Jared A. Hughes
Attorneys, Telecommunications & Media, Enforcement Section,
Antitrust Division, U.S. Department of Justice, City Center
Building, 1401 H Street, N.W., Suite 8000, Washington, D.C. 20530,
(202) 514-5621, Facsimile: (202) 514-6381.
[FR Doc. E8-26564 Filed 11-10-08; 8:45 am]
BILLING CODE 4410-11-M