AT&T, BellSouth Merger Passes Antitrust Test

AT&T, BELLSOUTH MERGER PASSES ANTITRUST TEST
[SOURCE: C-Net|News.com, AUTHOR: Marguerite Reardon]
AT&T and BellSouth got the green light from U.S. antitrust authorities on Wednesday to move forward with their proposed $67 billion merger, which will create the largest phone company in the United States. The Department of Justice's antitrust division issued a statement approving the merger unconditionally. The merger still needs approval from the Federal Communications Commission, which is scheduled to vote on the matter Thursday. The unconditional approval also drew harsh words from Sen. Daniel Inouye, the Democratic co-chairman of the Senate Commerce Committee, which counts communications laws among its responsibilities. The Hawaii politician accused the Justice Department of ignoring potential negative effects from the reduced competition wrought by the merger, saying in a statement that the decision "not only flies in the face of the department's own merger guidelines, but also rests on the hope of potential facilities-based competition that may never materialize." Sen Inouye said it's now up to the FCC "to stand up for consumers and to insist upon strong conditions to protect competition."
http://news.com.com/AT38T,+BellSouth+merger+passes+antitrust+test/2100-1036_3-6124785.html?tag=html.alert

* Statement by Assistant Attorney General Thomas O. Barnett Regarding the Closing of the Investigation of AT&T’s Acquisition of Bellsouth
"After thoroughly investigating AT&T’s proposed acquisition of BellSouth, the Antitrust Division determined that the proposed transaction is not likely to reduce competition substantially. The Division investigated all areas in which the two companies currently compete ­ including residential local and long distance service, telecommunications services provided to business customers, and Internet services ­ and the merger’s impact on future competition for wireless broadband services. The presence of other competitors, changing regulatory requirements and the emergence of new technologies in markets for residential local and long distance service indicate that this transaction is not likely to harm consumer welfare. The proposed acquisition does not raise competition concerns with respect to Internet services markets or ‘net neutrality’. The merged firm would continue to face competition from other facilities-based rivals in the provision of telecommunications services to business customers including local private line services. The combination would not significantly increase concentration in the ownership of spectrum in any geographic area or give AT&T control over a large enough share of all spectrum suitable for wireless broadband services to raise competitive concerns. Finally, the merger would likely result in cost savings and other efficiencies that should benefit consumers."
http://www.usdoj.gov/opa/pr/2006/October/06_at_692.html

Criticism of DoJ Decision
* Justice OK's AT&T/BellSouth Merger
Media consolidation critic Jeff Chester, of the Center For Digital Democracy, was neither surprised nor pleased with the decision: "The Bush Administration's DOJ has surrendered the rights of the public to have a competitive and democratic broadband media system." Big computer companies like Google, Microsoft, Yahoo Intel and others are also concerned with the merger, suggesting it constitutes one of the final pieces in the effective reconstitution of the old Ma Bell. Gigi Sohn, President of Public Knowledge, said she was concerned that the FCC will vote on the merger tomorrow as it also considers a Notice of Inquiry (NOI) on Net Neutrality: "coupling" the merger vote with the NOI was a "bait and switch," that will allow the FCC to attach few or no conditions on the merger while saying they are "taking care of Net Neutrality through the notice of inquiry."
http://www.broadcastingcable.com/article/CA6379848.html?display=Breaking+News

* Copps, Adelstein Criticize Justice's Approval Of Merger
The FCC's two Democratic regulators harshly criticized the Justice Department for approving the $78 billion AT&T, BellSouth merger without conditions. The department, however, said "the presence of other competitors, changing regulatory requirements and the emergence of new technologies" prompted its decision. "The Justice Department has packed its bags and walked out on consumers and small businesses by refusing to impose even a single condition in the largest telecom merger the nation has ever seen," Commissioner Michael Copps complained in a statement. Because Justice did not issue a consent decree, or a settlement with the parties, a combined AT&T, BellSouth would not be subject to an automatic judicial review. "This abdication looks suspiciously like an end-run around the public-interest review" required under antitrust law, Commissioner Copps added. His views were echoed by the Commissioner Jonathan Adelstein, who issued a statement characterizing Justice's conclusions as "a reckless abandonment of [Justice's] responsibility to protect competition and consumers." Several observers said Justice's ruling would motivate the two Democratic FCC commissioners to fight harder for consumer protections. But if the Democrats push too far, Republican FCC Chairman Kevin Martin might include GOP Commissioner Robert McDowell in the negotiations, giving the Republicans a 3-2 advantage. Without McDowell, the parties are split 2-2. Commissioner McDowell may be recused due to his background at CompTel, which represents Bell competitors. But sources note that Chairman Martin has the authority to involve McDowell if the talks with Democrats reach an impasse.
http://www.njtelecomupdate.com/lenya/telco/live/tb-RONK1160597560735.html

* DOJ Defends AT&T/BellSouth Investigation
Charged by FCC Democrats with taking a dive and "reckless abandonment" of consumers, the Justice Department Wednesday defended its decision that the $67 billion merger of AT&T and BellSouth did not raise anitcompetitive issues sufficient to attach conditions.
http://www.broadcastingcable.com/article/CA6380223.html?display=Breaking+News

Press Releases
* Justice Department Rubber Stamps AT&T Mega-Merger
Free Press: "The merger of AT&T and Bell South would take a big step toward the resurrection of Ma Bell, and its magnitude demands thorough scrutiny and careful review. Instead, the officials charged with protecting the public interest are rubber-stamping the deal in the most irresponsible manner imaginable. The consent decree and subsequent judicial review have been tossed out the window. It appears the fix is in. The public interest is not served by handing out favors to large corporations without any safeguards. We are witnessing a wave of concentration in the telecommunications market that threatens to sweep away the free and open Internet. Yet the watchdogs in Washington can't be bothered to require even the most basic consumer protections. The new AT&T wants all the market power of its old monopoly without any consumer protections. The FCC must not sign off on this deal without applying serious conditions that prevent discrimination and foster broadband competition. First and foremost, this merger should not be allowed to proceed without permanent, binding protections for Net Neutrality."
http://www.freepress.net/press/release.php?id=173

* DOJ Rubberstamp on AT&T/BellSouth Merger Recreates the MA Bell Dynasty, Sells Out Consumers
"DOJ's rubberstamp on this merger suggests the Justice Department has thrown in the towel on competition between the Bell phone companies," said Gene Kimmelman, senior vice president for Consumers Union. "The Justice Department has abdicated responsibility to promote the competition it promised when it broke up AT&T 20 years ago," he added. "In the end, the majority of consumers will end up paying inflated prices that result when Bell companies merge and dominate local, long distance, wireless and Internet services in their territories."
http://www.hearusnow.org/other/newsroom/phoneservices/dojrubberstamponattbellsouthmerger/

Additional Coverage
* Justice Dept. Approves AT&T-BellSouth Deal
http://www.nytimes.com/2006/10/12/business/12att.html
* Justice Department Criticized For Approving Big AT&T Deal
http://online.wsj.com/article/SB116058124083289458.html?mod=todays_us_marketplace
* AT& T Deal Wins A Key Go-Ahead
http://www.washingtonpost.com/wp-dyn/content/article/2006/10/11/AR2006101100915.html
* BellSouth deal faces FCC fight
http://www.usatoday.com/printedition/money/20061012/3b_fcc12.art.htm
* AT&T Gets Closer to Purchase of BellSouth
http://www.latimes.com/business/printedition/la-fi-att12oct12,1,3589829.story?coll=la-headlines-pe-business