[Federal Register: December 15, 2005 (Volume 70, Number 240)]
[Notices]
[Page 74350-74366]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15de05-86]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Verizon Communications Inc. and MCI, Inc.;
Competitive Impact Statement, Proposed Final Judgment, Complaint,
Stipulation
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a Complaint, proposed Final
Judgment, Stipulation, and Competitive Impact Statement have been filed
with the U.S. District Court for the District of Columbia in United
States v. Verizon Communications Inc., Civil Case No. 1:05CV02103
(HHK). On October 27, 2005, the United States filed a complaint
alleging that the proposed acquisition of MCI, Inc. (``MCI'') by
Verizon Communications Inc. (``Verizon'') would violate Section 7 of
the Clayton Act, 15 U.S.C. Sec. 18, by substantially lessening
competition in the provision of locally private lines (also called
``special access'') and other
[[Page 74351]]
telecommunications services that rely on local private lines in eight
metropolitan areas: Baltimore; Boston; New York; Philadelphia; Tampa;
Richmond, Virginia; Providence, Rhode Island; and Portland, Maine. The
proposed Final Judgment requires the defendants to divest assets in
those eight metropolitan areas in order to proceed with Verizon's $8.54
billion acquisition of MCI. A Competitive Impact Statement filed by the
United States on November 16, 2005 describes the Complaint, the
proposed Final Judgment, the industry, and the remedies available to
private litigants who may have been injured by the alleged violation.
Copies of the Complaint, proposed Final Judgment, Stipulation,
Competitive Impact Statement, and all further papers filed with the
Court in connection with this Complaint will be available for
inspection at the Antitrust Documents Group, Antitrust Division,
Liberty Place Building, Room 215, 325 7th Street, NW., Washington, DC
20530 (202-514-4281), and at the Office of the Clerk of the U.S.
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 set by Department of Justice regulations.
Interested persons may submit comments in writing regarding the
proposed consent decree to the United States. Such comments must be
received by the Antitrust Division within sixty (60) days and will be
filed with the Court by the United States. Comments should be addressed
to Nancy Goodman, Chief, Telecommunications & Media Enforcement
Section, Antitrust Division, U.S. Department of Justice, 1401 H Street,
NW., Suite 8000, Washington, DC 20530 (202-514-5621). At the conclusion
of the sixty (60) day comment period, the U.S. District Court for the
District of Columbia may enter the proposed consent decree upon finding
that it serves the public interest.
J. Robert Kramer II,
Director of Operations, Antitrust Division.
In the United States District Court for the District of Columbia
United States of America, United States Department of Justice,
Antitrust Division, 1401 H Street, NW., Suite 8000, Washington, DC
20530, Plaintiff, v. Verizon Communications Inc., 1095 Avenue of the
Americas, New York, NY 10036; and MCI, Inc., 22001 Loudoun County
Parkway, Ashburn, VA 20147, Defendants
Civil Action No. ------
CASE NUMBER 1:05CV02103
JUDGE: Henry H. Kennedy
DECK TYPE: Antitrust
DATE STAMP: 10/27/2005
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, brings this civil action to
enjoin the merger of two of the largest providers of telecommunications
services in the United States, Verizon Communications, Inc.
(``Verizon'') and MCI, Inc. (``MCI''), and alleges as follows:
1. On February 14, 2005, Verizon entered into an agreement to
acquire MCI. If approved, the transaction would create one of the
nation's largest providers of telecommunications services. Plaintiff
seeks to enjoin this transaction because it will substantially lessen
competition for (a) Local Private Lines that connect hundreds of
commercial buildings in Verizon's franchised territory to a carrier's
network or other local destination, and (b) other telecommunications
services that rely on Local Private Lines.
2. Verizon and MCI compete in the sale of wireline
telecommunications services to retail and wholesale customers in the
United States.
3. For hundreds of commercial buildings in the metropolitan areas
of Baltimore-Washington, DC; Boston, Massachusetts; New York, New York;
Richmond, Virginia; Providence, Rhode Island; Tampa, Florida;
Philadelphia, Pennsylvania; and Portland, Maine, Verizon and MCI are
the only two firms that own or control a direct wireline connection to
the building. These building connections are used to supply voice and
data telecommunications services to business customers. As described in
this Complaint, the proposed merger is likely to substantially reduce
competition for Local Private Lines and telecommunications services
that rely on Local Private Lines to those buildings.
I. Jurisdiction and Venue
4. This action is filed by the United States under Section 15 of
the Clayton Act, 15 U.S.C. 25, to prevent and restrain the Defendants
from violating Section 7 of the Clayton Act, 15 U.S.C. 18.
5. Verizon and MCI are engaged in interstate commerce and in
activities substantially affecting interstate commerce. The Court has
jurisdiction over this action pursuant to Sections 15 and 16 of the
Clayton Act, 15 U.S.C. 25, 26, and 28 U.S.C. 1331, 1337.
6. Verizon and MCI transact business and are found in the District
of Columbia. Venue is proper under Section 12 of the Clayton Act, 15
U.S.C. 22, and 28 U.S.C. 1391(c).
II. The Defendants and the Transaction
7. Verizon is a corporation organized and existing under the laws
of the State of Delaware, with its headquarters in New York, New York.
Verizon, formerly Bell Atlantic Corporation (``Bell Atlantic''), is the
nation's largest regional Bell operating company (``RBOC''). Bell
Atlantic was one of the seven regional holding companies to result from
the breakup of AT&T's local telephone business in 1984. In 1996 Bell
Atlantic acquired another of the seven original holding companies,
NYNEX Corporation. In 2000 Bell Atlantic acquired GTE Corporation, an
incumbent local exchange carrier (``ILEC'') that provided local
exchange and other serivces in 28 states, and formed Verizon. Today,
Verizon's wireline telecommunications operations serve about 51 million
total switched access lines, including 32.4 million residential and
17.8 million business lines, in 29 states plus the District of
Columbia. In 2004, Verizon earned approximately $38.6 billion in
revenues from its domestic wireline services, including at least $8.8
billion in revenue from business customers. Verizon has fiber optic or
copper connections to virtually all of the commercial buildings in its
franchised territory.
8. MCI is a corporation organized and existing under the laws of
the State of Delaware, with its headquarters in Ashburn, Virginia, MCI
is one of the nation's largest interexchange carriers (``IXC''),
offering traditional long distance telephone service, as well as one of
the largest competitive local exchange carriers (``CLEC''), offering
local network exchange and access for voice and data services. MCI
serves consumers and businesses across the United States and around the
globe, and owns significant local network assets within Verizon's 29-
state operating territory including direct fiber optic connections to
numerous commercial buildings. In 2004, MCI earned approximately $20.7
billion in revenues, including almost $4 billion from domestic business
customers.
9. Pursuant to an Agreement and Plan of Merger dated February 14,
2005, as amended on March 4, March 29, and May 2, 2005, Verizon agreed
to acquire MCI for approximately $8.54 billion.
[[Page 74352]]
III. Trade and Commerce
A. Nature of Trade and Commerce
10. Verizon owns and operates local telecommunications networks
throughout its territory and provides local and long distance voice and
data services to, inter alia, business customers and other
telecommunications carriers.
11. MCI owns and operates local networks in dozens of metropolitan
areas in the United States, a substantial number of which are in
Verizon territory. Like Verizon, MCI also provides local and long
distance voice and data services to business customers and other
telecommunications carriers. Significant numbers of MCI's customers
have locations in Verizon's franchised territory, and the two firms
compete to serve those wholesale and retail customers.
12. One element of the parties' local networks are local loops,
sometimes referred to as ``last-mile'' connections, which are typically
either copper or fiber-optic transmission facilities that connect
commercial buildings to a carrier's network. These last-mile
connections are a critically important asset for providing service to
business customers.
13. A Local Private Line is a dedicated, point-to-point circuit
offered over copper and/or fiber-optic transmission facilities that
originates and terminates within a single metropolitan area and
typically includes at least one local loop. Local Private Lines are
sold at both retail (to business customers) and wholesale (to other
carriers). Verizon refers to Local Private Line circuits as ``special
access,'' and MCI refers to its own such circuits as ``metro private
lines.''
14. Depending on how they are configured, Local Private Lines can
be used to carry voice traffic, data, or a combination of the two.
Local Private Lines may be purchased as stand-alone products but are
also an important input to value-added voice and data
telecommunications services that are offered to business customers.
15. For the vast majority of commercial buildings in its territory,
Verizon is the only carrier that owns a last-mile connection to the
building. Thus, in order to provide voice or data telecommunications
services to customers in those Verizon-only buildings, competing
carriers typically must lease the connection from Verizon as Local
Private Line service (special access).
16. For a small percentage of commercial buildings (though one that
accounts for a substantial percentage of customer demand and revenue),
Verizon's CLEC competitors have built or acquired their own last-mile
fiber-optic connections, separate from Verizon's, to connect their
networks to the buildings. The CLECs typically refer to buildings with
these connections as their ``lit buildings'' or ``on-net buildings.''
Once a CLEC has incurred the high fixed cost to construct a last-mile
connection to a building, the CLEC can usually provide service to
business customers in the building at a lower marginal cost than it
would otherwise be able to do if it had to lease the connection from
the RBOC. It can also provide alternative access to other CLECs seeking
to serve business customers in the building.
17. MCI is among the leading CLECs in Verizon's territory in the
number of buildings it has connected with its own last-mile fiber
facilities. For hundreds of buildings in Verizon's territory, the only
two carriers that own or control the direct building connection are MCI
and Verizon.
18. In the hundreds of buildings where MCI is the only CLEC with a
last-mile connection, the merge of MCI and Verizon would reduce the
number of carriers with an owned or controlled last-mile connection
from two to one.
B. Relevant Product Markets
19. The relevant product markets affected by this transaction are
the markets for: (a) Local Private Lines, and (b) voice and data
telecommunications services that rely on Local Private Lines.
20. Verizon is the dominant provider of Local Private Lines
(special access) in its franchised territory with $3.5 billion in
special access sales in 2004. MCI is one of Verizon's largest
competitors with $532 million in metro private line sales in 2004, of
which more than $198 million were in Verizon territory.
21. Local Private Lines are a recognized service category among
telecommunications carriers and end-user business customers. Customers
typically purchase Local Private Lines in standard bandwidth increments
such as DS1 (``T1,'' 1.54 megabits per second), DS3 (44.74 megabits per
second), OC3 (155.52 megabits per second), and higher. Local Private
Lines can interconnect with industry-standard data networking and
telephone equipment, and can be ``channelized'' to carry various
amounts of voice and/or data traffic.
22. Local Private Lines are distinct from switched local exchange
telephone services. Switched local exchange lines route calls through a
voice switch in the local carrier's central office and do not
necessarily use a dedicated circuit. These switched circuits do not
offer the guaranteed bandwidth, high service levels, and security that
Local Private Lines provide.
23. Competing carriers often rely on Local Private Line (special
access) circuits to connect an end-user customer's location to their
networks, enabling the competitor to supply value-added data
networking, Internet access, local voice and long distance services to
the customer. Although carriers can provide some types of voice and
data services over switched local exchange lines (e.g., when an access
line is pre-subscribed to a long distance carrier), most large business
customers do not find those services to be a viable or cost-effective
substitute for voice and data telecommunications services provided via
Local Private Lines. In the event of a small, but significant,
nontransitory increase in price for either Local Private Lines or voice
and data telecommunications services provided via Local Private Lines,
insufficient customers would switch to switched circuits to render the
increase unprofitable.
C. Relevant Geographic Markets
24. The relevant geographic markets for both Local Private Lines,
as well as voice and data telecommunications services that rely on
Local Private Lines, are no broader than each metropolitan area and no
more narrow than each individual building.
IV. Anticompetitive Effects
25. Verizon and MCI are the only two carriers that own or control a
Local Private Line connection to many buildings in each region. The
merger would, therefore, effectively eliminate competition for
facilities-based Local Private Line service to those buildings, and
many retail and wholesale customers would no longer have MCI as a
competitive alternative to Verizon. Although other competitors might
resell Local Private Lines from Verizon, those competitors would not be
as effective a competitive constraint because Verizon would control the
price of the resold circuits. The merged firm would, therefore, have
the ability to raise price to retail and wholesale customers of Local
Private Lines.
26. In addition, because the cost of dedicated local access via
Local Private Line represents an important cost component of many
value-added voice and data telecommunications services provided over
such access, by (a) eliminating MCI as the only competitive alternative
to Verizon for such services with its own Local Private Line connection
to hundreds of buildings,
[[Page 74353]]
and (b) depriving other carriers seeking to provide such value-added
services of the only fully-facilities based wholesale competitive
alternative to Verizon in those buildings, the merger would tend to
lessen competition for retail voice and data telecommunications
services provided over dedicated access.
V. Entry
27. Although other CLECs can, theoretically, build their own fiber
connection to each building in response to a price increase by the
merged firm, such entry is a difficult, time-consuming, and expensive
process. Whether a CLEC builds a last mile connection to a given
building depends upon many factors, including:
a. The proximity of the building to the CLEC's existing network
interconnection points;
b. The capacity required at the customer's location (and thus the
revenue opportunity);
c. The availability of capital;
d. The existence of physical barriers, such as rivers and railbeds,
between the CLEC's network and the customer's location; and
e. The ease or difficulty of securing the necessary consent from
building owners and municipal officials.
28. The costs of building a last-mile connection vary substantially
for each location. Even if all the above criteria favor the
construction of a last-mile connection in a particular case, a single
such connection typically costs tens, sometimes hundreds, of thousands
of dollars to build and activate. Thus, CLECs will typically only build
in to a particular building after they have secured a customer contract
of sufficient size to justify the anticipated construction costs for
that building.
29. Although entry may occur in response to a post-merger price
increase in some of the buildings where MCI is the only connected CLEC,
the conditions for entry are unlikely to be met in hundreds of those
buildings. Thus, entry is unlikely to eliminate the competitive harm
that would likely result from the proposed merger.
VI. Violation Alleged
30. The United States hereby incorporates paragraphs 1 through 29.
31. Pursuant to an Agreement and Plan of Merger dated February 14,
2005, as amended on March 4, March 29, and May 2, 2005 Verizon and MCI
intend to merge their businesses.
32. The effect of the proposed acquisition of MCI by Verizon would
be to lessen competition substantially in interstate trade and commerce
in numerous geographic markets for (a) Local Private Lines and (b)
voice and data telecommunications services that rely on Local Private
Lines, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
33. The transaction would likely have the following effects, among
others:
a. Competition in the provision and sale of Local Private Lines in
numerous Geographic markets would be eliminated or substantially
lessened;
b. Competition in the provision and sale of voice and data
telecommunications services that rely on Local Private Lines in
numerous geographic markets would be substantially lessened; and
c. Prices for Local Private Lines, as well as voice and data
telecommunications services provided via Local Private Lines, would
likely increase to levels above those that would prevail absent the
merger.
VII. Prayer for Relief
The United States requests:
34. That Verizon's proposed acquisition of MCI be adjudged to
violate Section 7 of the Clayton Act, 15 U.S.C. 18;
35. That Defendants be permanently enjoined and restrained from
carrying out the Agreement and Plan of Merger, dated February 14, 2005,
as amended on March 4, March 29, and May 2, 2005 or from entering into
or carrying out any agreement, understanding, or plan by which Verizon
would merge with or acquire MCI, its capital stock or any of its
assets;
36. That the United States be awarded costs of this action; and
37. That the United States have such other relief as the Court may
deem just and proper.
Dated: October 27, 2005.
Respectfully submitted,
For Plaintiff United States:
Thomas O. Barnett,
Acting Assistant Attorney General.
J. Bruce McDonald,
Deputy Assistant Attorney General.
J. Robert Kramer II,
Director of Operations.
Nancy M. Goodman,
Chief, Telecommunications and Media Enforcement Section (D.C. Bar
No. 251694).
Laury E. Bobbish,
Assistant Chief, Telecommunications and Media Enforcement Section.
Lawrence M. Frankel
(D.C. Bar No. 441532).
Claude F. Scott, Jr. (D.C. Bar No. 414906)
Mary N. Strimel (D.C. Bar No. 455303)
Matthew C. Hammond
Lauren J. Fishbein (D.C. Bar No. 451889)
Conrad J. Smucker (D.C. Bar No. 434590)
Jeremiah M. Luongo
Jared A. Hughes
David T. Blonder
William Lindsey Wilson
William B. Michael
Trial Attorneys, U.S. Department of Justice, Antitrust Division,
Telecommunications and Media Enforcement Section,
1401 H Street, NW., Suite 8000, Washington, DC 20530.
Telephone: (202) 514-5621.
Facsimile: (202) 514-6381.
In the United States District Court for the District of Columbia
United States of America, Plaintiff; v. Verizon Communications Inc. and
MCI, Inc., Defendants
Civil Action No. 1:05CV02103 (HHK)
Final Judgment
Whereas, plaintiff, United States of America, filed its Complaint
on October 27, 2005, plaintiff and defendants, Verizon Communications
Inc. (``Verizon'') and MCI, Inc. (``MCI''), 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 the defendants to
assure that competition is not substantially lessened;
And Whereas, plaintiff requires defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
And Whereas, defendants have represented to the United States that
the divestitures required below can and will be made and the 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;
New Therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon cosnet 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:
[[Page 74354]]
A. ``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.
B. ``MCI'' means defendants MCI, Inc., a Delaware corporation with
its headquarters in Ashburn, Virginia, its successors and assigns, and
its subsidiaries, divisions, groups, affiliates, partnership and joint
ventures, and their directors, officers, managers, agents, and
employees.
C. ``Acquirer'' or ``Acquirers'' means the entity or entities to
whom defendants divest the Divestiture Assets.
D. ``Divestiture Assets'' means IRUs for Lateral Connections to the
locations listed in Appendix A and sufficient transport as described
below and all additional rights necessary to enable those asets to be
used by the Acquirer to provide telecommunications services. The
Divestiture Assets shall include IRUs for transport facilities
sufficient to connect the Lateral Connections to locations mutually
agreed upon by defendants and the Acquirer, subject to the approval of
the United States in its sole judgment. the term ``Divestiture Assets''
shall be construed broadly to accomplish the complete divestiture of
assets and the purposes of this Final Judgment. With the approval of
the United States, in its sole discretion, and at the Acquirer's
option, the Divestiture Assets may be modified to exlude assets and
rights that are not necessary to meet the competitive aims of this
Final Judgment.
E. ``IRU'' means indefeasible right of use, a long-term leasehold
interest that gives the holder the right to use specified strands of
fiber in a telecommunications facility. An IRU granted by defendants
under this Final Judgment shall (1) be for a minimum of 10 years; (2)
not require the Acquirer to pay a monthly or other recurring fee to
preserve or make use of its rights; (3) include all additional rights
and interests necessary to enable the IRU to be used by the Acquirer to
provide telecommunications services; and (4) contain other commercially
reasonable and customary terms, including terms for payment to the
grantor for ancillary services, such as maintenance fees on a per
occurrence basis; and (5) not unreasonably limit the right of the
Acquirer to use the asset as it wishes (e.g., the Acquirer shall be
permitted to splice into the IRU fiber, though such splice points must
be mutually agreed upon by defendants and Acquirer).
F. ``Lateral Connection'' means fiber strands from the point of
entry of the building to the splice point with fiber used to serve
different buildings and shall consist of the greater of (1) eight (8)
fiber strands or (2) one-half of the currently unused fiber strands in
MCI's facilities serving the building measured at the time of the
filing of the Complaint. The fiber strands may be provided from those
owned or controlled by either Verizon or MCI, as mutually agreed by
defendants and Acquirer.
III. Applicability
A. This Final Judgment applies to Verizon and MCI, as defined
above, and all other person in active concern or participation with any
of them who receive actual notice of this Final Judgment by personal
service or otherwise.
B. Defendants shall require, as a condition of the sale or other
disposition of all or substantially all of their assets or of lesser
business units that include the Divestiture Assets, that the purchasers
agree to be bound by the provisions of this Final Judgment, provided
however, that defendants need not obtain such an agreement from the
Acquirers.
IV. Divestitures
A. Defendants are ordered and directed, within 120 calendar days
after the closing of Verizon's acquisition of MCI, or five (5) 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 and on terms
acceptable to the United States in its sole discretion. The United
States, in its sole discretion, may agree to one or more extensions of
this time period not to exceed sixty (60) days in total, and shall
notify the Court in such circumstances. If approval or consent from any
government unit is necessary with respect to divestiture of the
Divestiture Assets by defendants or the Divestiture Trustee and if
applications or requests for approval or consent have been filed with
the appropriate governmental unit within 120 calendar days after the
closing of Verizon's acquisition of MCI, but an order or other
dispositive action 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 governmental approval or consent has not been issued until five
(5) days after such approval or consent is received. Defendants agree
to use their best efforts to divest the Divestiture Assets and to seek
all necessary regulatory or other approvals or consents necessary for
such divestitures as expeditiously as possible. This Final Judgment
odes not limit the Federal Communications Commission's exercise of its
regulatory powers and process with respect to the Divestiture Assets.
Authorization by the Federal Communications Commission to conduct the
divestiture of a Divestiture Asset in a particularly manner will not
modify any of the requirements of this decree.
B. In accomplishing the divestitures ordered by this Final
Judgment, defendants promptly shall make known, 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 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 the United States at the same time that
such information is made available to any other person.
C. Defendants shall permit prospective Acquirers of the Divestiture
Assets to have reasonable access to personnel and to make inspections
of the physical facilities 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, or other documents
and information customarily provided as part of a due diligence
process.
D. Defendants shall warrant to all Acquirers of the Divestiture
Assets that each asset will be operational on the date of sale.
E. Defendants shall not take any action that will impede in any way
the permitting, operation, or divestiture of the Divestiture Assets.
F. At the option of the Acquirers, defendants shall enter into a
contract for a period of up to one (1) year for transition services
customarily necessary to maintain, operate, provision, monitor, or
otherwise support the Divestiture Assets. The terms and conditions of
any contractual arrangement meant to satisfy this provision must be
reasonably related to market conditions.
[[Page 74355]]
G. Defendants shall warrant to the Acquirer of the Divestiture
Assets that there are no material defects in the environmental, zoning,
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, or other permits relating to the operation of the Divestiture
Assets.
H. Unless the United States otherwise consents in writing, the
divestitures pursuant to Section IV, or by 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 the United States, in its sole discretion, that Divestiture
Assets can and will be used by the Acquirer as part of a viable,
ongoing telecommunications business. Divestiture of the Divestiture
Assets may be made to more than one Acquirer, provided that (i) all
Divestiture Assets in a given metropolitan area are divested to a
single Acquirer unless otherwise approved by the United States, in its
sole discretion, and (ii) in each instance it is demonstrated to the
sole satisfaction of the United States that the Divestiture Assets will
remain viable and the divestiture of such assets will remedy the
competitive harm alleged in the Complaint. The divestitures, whether
pursuant to Section IV or Section V of this Final Judgment,
(1) shall be made to an Acquirer (or Acquirers) that, in the United
States's role judgment, has the intent and capability (including the
necessary managerial, operational, technical, and financial capability)
of competing effectively in the provision of telecommunications
services; and
(2) shall be accomplished so as to satisfy the United States, in
its sole discretion, that none of the terms of any agreement between
the Acquirer (or Acquirers) and defendants gives defendants the ability
unreasonably to raise the Acquirer's cost, to lower the Acquirer's
efficiency, or otherwise to interfere in the ability of the Acquirer to
complete effectively.
I. To the extent leases, contracts, agreements, intellectual
property rights, licenses or other commitments with third-parties are
not assignable or transferable without the consent of the licensor or
other third parties, defendants shall use their best efforts to obtain
those consents.
V. Appointment of Trustee
A. If defendants have not divested the Divestiture Assets within
the time period specified in Section IV(A), defendants shall notify the
United States of that fact in writing, specifically identifying the
Divestiture Assets that have not been divested. Upon application of the
United States, the Court shall appoint a trustee selected by the United
States and approved by the Court to effect the divestiture of the
Divestiture Assets.
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the Divestiture Assets. The
trustee shall have the power and authority to accomplish the
divestiture to Acquirers acceptable to the United States, in its sole
judgment, at such price and on such terms as are then obtainable upon
reasonable effort by the trustee, subject to the provisions of Sections
IV, V, and VI of this Final Judgment, and shall have such other powers
as this Court deems appropriate. Subject to Section V(D) of this Final
Judgment, the trustee may hire at the cost and expense of defendants
any investment bankers, attorneys, technical experts, or other agents,
who shall be solely accountable to the trustee, reasonably necessary in
the trustee's judgment to assist in the divestiture.
C. Defendants shall not object to a sale by the trustee on any
ground other than the trustee's malfeasance. Any such objections by
defendants must be conveyed in writing to the United States and the
trustee within ten (10) calendar days after the trustee has provided
the notice required under Section VI.
D. The trustee shall serve at the cost and expense of defendants,
on such terms and conditions as the plaintiff approves, and shall
account for all monies derived from the sale of the assets sold by the
trustee and all costs and expenses so incurred. After approval by the
Court of the trustee's accounting, including fees for its services and
those of any professionals and agents retained by the trustee, all
remaining money shall be paid to defendants and the trust shall then be
terminated. The compensation of the trustee and any professionals and
agents retained by the trustee shall be reasonable in light of the
value of the Divestiture Assets and based on a fee arrangement
providing the trustee with an incentive based on the price and terms of
the divestiture and the speed with which it is accomplished, but
timeliness is paramount.
E. Defendants shall use their best efforts to assist the trustee in
accomplishing the required divestitures, including their best efforts
to effect all necessary regulatory or other approvals or consents and
will provide necessary representations or warranties as appropriate,
related to the sale of the Divestiture Assets. The trustee and any
consultants, accountants, attorneys, technical experts, and other
persons retained by the trustee shall have full and complete access to
the personnel, books, records, and facilities related to the
Divestiture Assets, and defendants shall develop financial and other
information relevant to the Divestiture Assets as the 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
trustee's accomplishment of the divestiture.
F. After its appointment, the trustee shall file monthly reports
with the United States and the Court setting forth the trustee's
efforts to accomplish the divestiture ordered under this Final
Judgment. To the extent such reports contain information that the
trustee deems confidential, such reports shall not be filed in the
public docket of the Court. Such reports shall include the name,
address, and telephone number of each person who, during the preceding
month, made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, any interest in the Divestiture Assets, and
shall describe in detail each contact with any such person. The trustee
shall maintain full records of all efforts made to divest the
Divestiture Assets.
G. If the trustee has not accomplished such divestiture within six
months after its appointment, the trustee shall promptly file with the
Court a report setting forth (1) the trustee's efforts to accomplish
the required divestiture, (2) the reasons, in the trustee's judgment,
why the required divestiture has not been accomplished, and (3) the
trustee's recommendations. To the extent such reports contain
information that the trustee deems confidential, such reports shall not
be filed in the public docket of the Court. The trustee shall at the
same time furnish such report to the plaintiff 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 trustee's
appointment by a period requested by the United States.
H. In addition, notwithstanding any provision to the contrary, the
United States, in its sole discretion, may require defendants to
include additional assets, or allow, with the written approval of
[[Page 74356]]
the United States, defendants to substitute substantially similar
assets, which substantially relate to the Divestiture Assets to be
divested by the trustee to facilitate prompt divestiture to an
acceptable Acquirer or Acquirers.
VI. Notice of Proposed Divestiture
A. Within two (2) business days following execution of a definitive
divestiture agreement, defendants or the trustee, whichever is then
responsible for effecting the divestiture required herein, shall notify
the United States of any proposed divestiture required by Section IV or
V of this Final Judgment. If the 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 full details of the same.
B. Within fifteen (15) calendar days of receipt by the United
States of such notice, the United States may request from defendants,
the proposed Acquirer or Acquirers, any other third party, or the
trustee, if applicable, additional information concerning the proposed
divestiture, the proposed Acquirer or Acquirers, and any other
potential Acquirer. Defendants and the 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 the United States has been
provided the additional information requested from defendants, the
proposed Acquirer or Acquirers, any third party, and the trustee,
whichever is later, the United States shall provide written notice to
defendants and the trustee, if there is one, stating whether or not it
objects to the proposed divestiture. If the 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(C) of this Final Judgment. Absent written notice
that the United States does not object to the proposed Acquirer or upon
objection by the United States, a divestiture under Section IV or
Section V shall not be consummated. Upon objection by defendants under
Section V(C), 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 purchase made
pursuant to Section IV or V of this Final Judgment.
VIII. Preservation of Assets
Until the divestiture required by this Final Judgment has been
accomplished, defendants shall take all steps necessary to comply with
the Stipulation signed by defendants and the United States. Defendants
shall take no action that would jeopardize the divestiture 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 divestiture has been completed under Section IV or V, defendants
shall deliver to the United States an affidavit as to the fact and
manner of its compliance with Section IV or V of this Final Judgment.
Each such affidavit shall include the name, address, and telephone
number of each person who, during the preceding thirty (30) days, made
an offer to acquire, expressed an interest in acquiring, entered into
negotiations to acquire, or was contacted or made an inquiry about
acquiring, any interest in the 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 the
United States to information provided by defendants, including
limitation on information, shall be made within fourteen (14) calendar
days of the receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, defendants shall deliver to the United States an
affidavit that describes in reasonable detail all action 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 the United States 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
divestiture has been completed.
X. Compliance Inspection
A. For the purposes of determining or securing compliance with this
Final Judgment, or of determining whether the Final Judgment should be
modified or vacated, and subject to any legally recognized privilege,
from time to time duly authorized representatives of the United States
Department of Justice, including consultants and other persons retained
by the United States, shall, upon written request of a duly 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's option, to require that defendants provide copies of,
all books, ledgers, accounts, records 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 a duly authorized representative of
the Assistant Attorney General in charge of the Antitrust Division,
defendants shall submit written reports, under oath if requested,
relating to any of the matters contained in this Final Judgment as may
be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States, except in the course of legal proceedings to which the United
States is a party (including grand jury proceedings), or for the
purpose of securing compliance with this Final Judgment, or as
otherwise required by law.
D. If at the time information or documents are furnished by
defendants to the 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)(7) of the Federal
Rules of Civil Procedure, and defendants mark each pertinent page of
such material,
[[Page 74357]]
``Subject to claim of protection under Rule 26(c)(7) of the Federal
Rules of Civil Procedure,'' then the United States shall given
defendants ten (10) calendar days notice prior to divulging such
material in any legal proceeding (other than grand jury proceedings).
XI. No Reacquisition
Defendants may not reacquire (or lease back without the approval of
the United States, in its sole discretion) 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
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 the United States' response 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
Appendix A
----------------------------------------------------------------------------------------------------------------
Address City State Zip Metropolitan area
----------------------------------------------------------------------------------------------------------------
City Hall Plz....................... Boston................. MA.............. 02201 Boston-Worcester.
10 Tara Blvd........................ Nashua................. NH.............. 03062 Boston-Worcester.
100 Nagog Park...................... Acton.................. MA.............. 01720 Boston-Worcester.
1000 Technology Park Dr............. Billerica.............. MA.............. 01821 Boston-Worcester.
109 State St........................ Boston................. MA.............. 02109 Boston-Worcester.
Hunting Ave......................... Boston................. MA.............. 02116 Boston-Worcester.
110 Spit Brook Rd................... Nashua................. NH.............. 03062 Boston-Worcester.
12 Hartwell Ave..................... Lexington.............. MA.............. 02421 Boston-Worcester.
12 New England Executive Park....... Burlington............. MA.............. 01803 Boston-Worcester.
125 Cambridgepark Dr................ Cambridge.............. MA.............. 02140 Boston-Worcester.
125 Middlesex Tpke.................. Bedford................ MA.............. 01730 Boston-Worcester.
1255 Boylston St.................... Boston................. MA.............. 02215 Boston-Worcester.
1295 Boylston St.................... Boston................. MA.............. 02215 Boston-Worcester.
132 Brookline Ave................... Boston................. MA.............. 02215 Boston-Worcester.
135 Santilli Hwy.................... Everett................ MA.............. 02149 Boston-Worcester.
141 Ledge St........................ Nashua................. NH.............. 03060 Boston-Worcester.
1550 Soldiers Field Rd.............. Boston................. MA.............. 02135 Boston-Worcester.
161 Devonshire St................... Boston................. MA.............. 02110 Boston-Worcester.
165 Dascomb Rd...................... Andover................ MA.............. 01810 Boston-Worcester.
175 Great Rd........................ Bedford................ MA.............. 01730 Boston-Worcester.
180 Hartwell Rd..................... Bedford................ MA.............. 01730 Boston-Worcester.
2 Charlesgate W..................... Boston................. MA.............. 02215 Boston-Worcester.
2 Fenway Plz........................ Boston................. MA.............. 02215 Boston-Worcester.
2 Heritage Dr....................... Quincy................. MA.............. 02171 Boston-Worcester.
211 Congress........................ Boston................. MA.............. 02110 Boston-Worcester.
220 Bear Hill Rd.................... Waltham................ MA.............. 02451 Boston-Worcester.
235 Wyman St........................ Waltham................ MA.............. 02451 Boston-Worcester.
25 Linnell Cir...................... Billerica.............. MA.............. 01821 Boston-Worcester.
25 Mall Rd.......................... Burlington............. MA.............. 01803 Boston-Worcester.
262 Washington St................... Boston................. MA.............. 02108 Boston-Worcester.
275 Wyman St........................ Waltham................ MA.............. 02451 Boston-Worcester.
28 Crosby Dr........................ Bedford................ MA.............. 01730 Boston-Worcester.
29 Randolph Rd...................... Bedford................ MA.............. 01731 Boston-Worcester.
3 Clock Tower Pl.................... Maynard................ MA.............. 01754 Boston-Worcester.
30 Hamilton Rd...................... Lexington.............. MA.............. 02420 Boston-Worcester.
300 Longwood Ave.................... Boston................. MA.............. 02115 Boston-Worcester.
31 Nagog Park....................... Acton.................. MA.............. 01720 Boston-Worcester.
33 Arch St.......................... Boston................. MA.............. 02110 Boston-Worcester.
330 Brookline Ave................... Boston................. MA.............. 02215 Boston-Worcester.
35 Dunham Rd........................ Billerica.............. MA.............. 01821 Boston-Worcester.
35 Northeastern Blvd................ Nashua................. NH.............. 03062 Boston-Worcester.
4 Crosby Dr......................... Bedford................ MA.............. 01730 Boston-Worcester.
40 Old Bolton....................... Stow................... MA.............. 01775 Boston-Worcester.
4040 Mystic Valley Pkwy............. Medford................ MA.............. 02155 Boston-Worcester.
419 Boylston........................ Boston................. MA.............. 02116 Boston-Worcester.
420 Bedford St...................... Lexington.............. MA.............. 02420 Boston-Worcester.
426 Washington St................... Boston................. MA.............. 02108 Boston-Worcester.
44 Binney St........................ Boston................. MA.............. 02115 Boston-Worcester.
465 Hunting Ave..................... Boston................. MA.............. 02115 Boston-Worcester.
5 Clock Tower Pl.................... Maynard................ MA.............. 01754 Boston-Worcester.
55 North Rd......................... Bedford................ MA.............. 01730 Boston-Worcester.
550 King St......................... Littleton.............. MA.............. 01460 Boston-Worcester.
[[Page 74358]]
561 Virginia Rd..................... Concord................ MA.............. 01742 Boston-Worcester.
565 Memorial Dr..................... Cambridge.............. MA.............. 02139 Boston-Worcester.
60 1st Ave.......................... Waltham................ MA.............. 02451 Boston-Worcester.
600 Technology Park Dr.............. Billerica.............. MA.............. 01821 Boston-Worcester.
61 Hancock St....................... Quincy................. MA.............. 02171 Boston-Worcester.
63 3rd Ave.......................... Burlington............. MA.............. 01803 Boston-Worcester.
65 Boston Post Rd W................. Marlborough............ MA.............. 01752 Boston-Worcester.
650 Elm St.......................... Manchester............. NH.............. 03101 Boston-Worcester.
67 S Bedford St..................... Burlington............. MA.............. 01803 Boston-Worcester.
7 Shattuck Rd....................... Andover................ MA.............. 01810 Boston-Worcester.
7 Van De Graaff Dr.................. Burlington............. MA.............. 01803 Boston-Worcester.
700 Boylston St..................... Boston................. MA.............. 02116 Boston-Worcester.
745 Boylston St..................... Boston................. MA.............. 02116 Boston-Worcester.
77 S Bedford St..................... Burlington............. MA.............. 01803 Boston-Worcester.
8 Commerce Dr....................... Bedford................ NH.............. 03110 Boston-Worcester.
8 Cotton Rd......................... Nashua................. NH.............. 03063 Boston-Worcester.
80 Central St....................... Boxborough............. MA.............. 01719 Boston-Worcester.
81 Grenier St....................... Bedford................ MA.............. 01731 Boston-Worcester.
90 Central.......................... Boxborough............. MA.............. 01719 Boston-Worcester.
900 Technology Park Dr.............. Billerica.............. MA.............. 01821 Boston-Worcester.
91 Hartwell Ave..................... Lexington.............. MA.............. 02421 Boston-Worcester.
1 International Blvd................ Mahwah................. NJ.............. 07495 New York.
1 Malcolm Ave....................... Teterboro.............. NJ.............. 07608 New York.
1 Rockwood Rd....................... Sleepy Hollow.......... NY.............. 10591 New York.
1 Sharp Plz......................... Mahwah................. NJ.............. 07430 New York.
10 Union Sq E....................... New York............... NY.............. 10003 New York.
100 Route 206 North................. Peapack................ NJ.............. 07977 New York.
100 Wood Ave S...................... Iselin................. NJ.............. 08830 New York.
1000 Harbor Blvd.................... Weehawken.............. NJ.............. 07086 New York.
106 Corporate Park Dr............... White Plains........... NY.............. 10604 New York.
1101 Westchester Ave................ White Plains........... NY.............. 10604 New York.
1111 Westchester Ave................ White Plains........... NY.............. 10604 New York.
112 Mulberry St..................... Newark................. NJ.............. 07102 New York.
1212 Avenue of the Americas......... New York............... NY.............. 10036 New York.
125 Kingsland Ave................... Clifton................ NJ.............. 07014 New York.
1441 Chestnut Ave................... Hillside............... NJ.............. 07205 New York.
15 Columbus Cir..................... New York............... NY.............. 10019 New York.
1639 State Rt 10.................... Parsippany............. NJ.............. 07054 New York.
173 Belmont Dr...................... Somerset............... NJ.............. 08873 New York.
180 Water St........................ New York............... NY.............. 10038 New York.
1865 Broadway....................... New York............... NY.............. 10023 New York.
199 Chambers St..................... New York............... NY.............. 10007 New York.
2 Campus Dr......................... Parsippany............. NJ.............. 07054 New York.
200 Metroplex Dr.................... Edison................. NJ.............. 08817 New York.
221 W 26th St....................... New York............... NY.............. 10001 New York.
226 E 54th St....................... New York............... NY.............. 10022 New York.
226 Westchester Ave................. White Plains........... NY.............. 10604 New York.
230 US Highway 206.................. Flanders............... NJ.............. 07836 New York.
242 W 36th St....................... New York............... NY.............. 10018 New York.
25 W 39th St........................ New York............... NY.............. 10018 New York.
253 Broadway........................ New York............... NY.............. 10007 New York.
27 Randolph St...................... Carteret............... NJ.............. 07008 New York.
27 W 23rd St........................ New York............... NY.............. 10010 New York.
286 Eldridge Rd..................... Fairfield.............. NJ.............. 07004 New York.
2975 Westchester Ave................ Purchase............... NY.............. 10577 New York.
30 Dunnigan Dr...................... Suffern................ NY.............. 10901 New York.
30 Freneau Ave...................... Matawan................ NJ.............. 07747 New York.
346 Broadway........................ New York............... NY.............. 10013 New York.
346 Madison Ave..................... New York............... NY.............. 10017 New York.
360 Park Ave S...................... New York............... NY.............. 10010 New York.
380 Route 59........................ Airmont................ NY.............. 10901 New York.
4 Manhattanville Rd................. Purchase............... NY.............. 10577 New York.
460 W 54th St....................... New York............... NY.............. 10019 New York.
465 Endo Blvd....................... Garden City............ NY.............. 11530 New York.
485 US Highway 1.................... Edison................. NJ.............. 08817 New York.
501 Franklin Ave.................... Garden City............ NY.............. 11530 New York.
511 Benedict Ave.................... Tarrytown.............. NY.............. 10591 New York.
55 Carter Dr........................ Edison................. NJ.............. 08817 New York.
580 White Plains Rd................. Tarrytown.............. NY.............. 10591 New York.
63 Madison Ave...................... New York............... NY.............. 10016 New York.
7 Amherst Pl........................ White Plains........... NY.............. 10601 New York.
7 Campus Dr......................... Parsippany............. NJ.............. 07054 New York.
[[Page 74359]]
70 W Red Oak Ln..................... West Harrison.......... NY.............. 10604 New York.
707 Broad St........................ Newark................. NJ.............. 07102 New York.
75 Virginia Rd...................... White Plains........... NY.............. 10603 New York.
80 Grasslands Rd.................... Elmsford............... NY.............. 10523 New York.
800 Westchester Ave................. Rye Brook.............. NY.............. 10573 New York.
845 N Broadway...................... White Plains........... NY.............. 10603 New York.
875 Merrick Ave..................... Westbury............... NY.............. 11590 New York.
Davis Ave........................... White Plains........... NY.............. 10601 New York.
100 S Broad St...................... Philadelphia........... PA.............. 19110 Philadelphia.
1100 N Market St.................... Wilmington............. DE.............. 19801 Philadelphia.
1400 Liberty Ridge Dr............... Chesterbrook........... PA.............. 19087 Philadelphia.
2 Walnut Grove Dr................... Horsham................ PA.............. 19044 Philadelphia.
301 W 11th St....................... Wilmington............. DE.............. 19801 Philadelphia.
400 Chesterfield Pkwy............... Malvern................ PA.............. 19355 Philadelphia.
400 Market St....................... Philadelphia........... PA.............. 19106 Philadelphia.
460 E Swedesford Rd................. Wayne.................. PA.............. 19087 Philadelphia.
620 Lee Rd.......................... Chesterbrook........... PA.............. 19087 Philadelphia.
735 Chesterbrook Blvd............... Chesterbrook........... PA.............. 19087 Philadelphia.
750 East Swedesford Road............ Valley Forge........... PA.............. 19482 Philadelphia.
900 W Valley Rd..................... Wayne.................. PA.............. 19087 Philadelphia.
1 Mcalister Farm Rd................. Portland............... ME.............. 04103 Portland.
10 Free St.......................... Portland............... ME.............. 04101 Portland.
111 Wescott Rd...................... South Portland......... ME.............. 04106 Portland.
121 Free St......................... Portland............... ME.............. 04101 Portland.
137 Kennebec St..................... Portland............... ME.............. 04101 Portland.
144 State St........................ Portland............... ME.............. 04101 Portland.
145 Newbury St...................... Portland............... ME.............. 04101 Portland.
148 Middle St....................... Portland............... ME.............. 04101 Portland.
162 Canco Rd........................ Portland............... ME.............. 04103 Portland.
164 Middle St....................... Portland............... ME.............. 04101 Portland.
2 Ledgeview Dr...................... Westbrook.............. ME.............. 04092 Portland.
20 Milk St.......................... Portland............... ME.............. 04101 Portland.
25 Bradley Dr....................... Westbrook.............. ME.............. 04092 Portland.
25 Preble St........................ Portland............... ME.............. 04101 Portland.
261 Commercial St................... Portland............... ME.............. 04101 Portland.
3 Canal Plz......................... Portland............... ME.............. 04101 Portland.
33 Sewall St........................ Portland............... ME.............. 04102 Portland.
4 Westbrook Cmn..................... Westbrook.............. ME.............. 04092 Portland.
400 Congress St..................... Portland............... ME.............. 04101 Portland.
400 Southborough Dr................. South Portland......... ME.............. 04106 Portland.
45 Bradley Dr....................... Westbrook.............. ME.............. 04092 Portland.
500 Southborough Dr................. South Portland......... ME.............. 04106 Portland.
51 Nonesuch Cove Rd................. Scarborough............ ME.............. 04074 Portland.
510 Congress St..................... Portland............... ME.............. 04101 Portland.
565 Congress St..................... Portland............... ME.............. 04101 Portland.
636 Riverside St.................... Portland............... ME.............. 04103 Portland.
65 Bradley St....................... Portland............... ME.............. 04102 Portland.
696 Congress St..................... Portland............... ME.............. 04102 Portland.
1 R I H T Way....................... Riverside.............. RI.............. 02915 Providence.
10 Admiral St....................... Providence............. RI.............. 02908 Providence.
10 Dorrance St...................... Providence............. RI.............. 02903 Providence.
111 Brewster St..................... Pawtucket.............. RI.............. 02860 Providence.
111 Dorrance St..................... Providence............. RI.............. 02903 Providence.
120 Corliss St...................... Providence............. RI.............. 02904 Providence.
125 Dupont Dr....................... Providence............. RI.............. 02907 Providence.
127 Dorrance St..................... Providence............. RI.............. 02903 Providence.
146 Westminster St.................. Providence............. RI.............. 02903 Providence.
155 S Main St....................... Providence............. RI.............. 02903 Providence.
196 Richmond St..................... Providence............. RI.............. 02903 Providence.
2 Richmond Sq....................... Providence............. RI.............. 02906 Providence.
20 Washington Pl.................... Providence............. RI.............. 02903 Providence.
21 Peace St......................... Providence............. RI.............. 02907 Providence.
259 Pine St......................... Providence............. RI.............. 02903 Providence.
291 Westminster St.................. Providence............. RI.............. 02903 Providence.
30 Chestnut St...................... Providence............. RI.............. 02903 Providence.
4 Richmond Sq....................... Providence............. RI.............. 02906 Providence.
40 Catamore Blvd.................... East Providence........ RI.............. 02914 Providence.
400 Westminster St.................. Providence............. RI.............. 02903 Providence.
444 Westminster St.................. Providence............. RI.............. 02903 Providence.
50 Kennedy Plz...................... Providence............. RI.............. 02903 Providence.
56 Pine St.......................... Providence............. RI.............. 02903 Providence.
75 Fountain St...................... Providence............. RI.............. 02902 Providence.
[[Page 74360]]
76 Dorrance St...................... Providence............. RI.............. 02903 Providence.
86 Weybosset St..................... Providence............. RI.............. 02903 Providence.
89 Ship St.......................... Providence............. RI.............. 02903 Providence.
1000 Semmes Ave..................... Richmond............... VA.............. 23224 Richmond.
11100 W Broad St.................... Glen Allen............. VA.............. 23060 Richmond.
1200 E Main St...................... Richmond............... VA.............. 23219 Richmond.
1313 E Main St...................... Richmond............... VA.............. 23219 Richmond.
1450 E Parham Rd.................... Richmond............... VA.............. 23280 Richmond.
2040 Thalbro St..................... Richmond............... VA.............. 23230 Richmond.
22150 Tomlyn St..................... Richmond............... VA.............. 23230 Richmond.
2235 Staples Mill Rd................ Richmond............... VA.............. 23230 Richmond.
4120 Cox Rd......................... Glen Allen............. VA.............. 23060 Richmond.
4461 Cox Rd......................... Glen Allen............. VA.............. 23060 Richmond.
4600 Cox Rd......................... Glen Allen............. VA.............. 23060 Richmond.
4851 Lake Brook Dr.................. Glen Allen............. VA.............. 23060 Richmond.
7814 Carousel Ln.................... Richmond............... VA.............. 23294 Richmond.
9950 Mayland Dr..................... Richmond............... VA.............. 23233 Richmond.
9960 Mayland Dr..................... Richmond............... VA.............. 23233 Richmond.
100 S Ashley Dr..................... Tampa.................. FL.............. 33602 Tampa.
10410 Highland Manor Dr............. Tampa.................. FL.............. 33610 Tampa.
10420 Highland Manor Dr............. Tampa.................. FL.............. 33610 Tampa.
10430 Highland Manor Dr............. Tampa.................. FL.............. 33610 Tampa.
10500 University Center Dr.......... Tampa.................. FL.............. 33612 Tampa.
110 Douglas Rd E.................... Oldsmar................ FL.............. 34677 Tampa.
1410 N Westshore Blvd............... Tampa.................. FL.............. 33607 Tampa.
1511 N Westshore Blvd............... Tampa.................. FL.............. 33607 Tampa.
18301 Crane Nest Drive.............. Tampa.................. FL.............. 33647 Tampa.
18335 Digital Dr.................... Tampa.................. FL.............. 33647 Tampa.
1915 N Dale Mabry Hwy............... Tampa.................. FL.............. 33607 Tampa.
2002 N Lois Ave..................... Tampa.................. FL.............. 33607 Tampa.
2502 N Rocky Point Dr............... Tampa.................. FL.............. 33607 Tampa.
2701 N Rocky Point Dr............... Tampa.................. FL.............. 33607 Tampa.
3505 E Frontage Rd.................. Tampa.................. FL.............. 33607 Tampa.
3608 Queen Plam Dr.................. Tampa.................. FL.............. 33619 Tampa.
3800 Citibank Center Tampa.......... Tampa.................. FL.............. 33610 Tampa.
3802 Coconut Palm Dr................ Tampa.................. FL.............. 33619 Tampa.
4343 Anchor Plaza Pkwy.............. Tampa.................. FL.............. 33634 Tampa.
501 Brooker Creek Blvd.............. Oldsmar................ FL.............. 34677 Tampa.
5050 W Lemon St..................... Tampa.................. FL.............. 33609 Tampa.
5120 W Clifton St................... Tampa.................. FL.............. 33634 Tampa.
5201 W Kennedy Blvd................. Tampa.................. FL.............. 33609 Tampa.
5300 W Knox St...................... Tampa.................. FL.............. 33634 Tampa.
5401 Hangar Ct...................... Tampa.................. FL.............. 33634 Tampa.
550 N Reo St........................ Tampa.................. FL.............. 33609 Tampa.
5755 Hoover Blvd.................... Tampa.................. FL.............. 33634 Tampa.
8800 Grand Oak Cir.................. Tampa.................. FL.............. 33637 Tampa.
8875 Hidden River Pkwy.............. Tampa.................. FL.............. 33637 Tampa.
1 Curie Ct.......................... Rockville.............. MD.............. 20850 Washington-Baltimore.
1000 Wilson Blvd.................... Arlington.............. VA.............. 22209 Washington-Baltimore.
10000 Derekwood Ln.................. Lanham................. MD.............. 20706 Washington-Baltimore.
1001 G St NW........................ Washington............. DC.............. 20001 Washington-Baltimore.
107 Carpenter Dr.................... Sterling............... VA.............. 20164 Washington-Baltimore.
10802 Parkridge Blvd................ Reston................. VA.............. 20191 Washington-Baltimore.
10942 Beaver Dam Rd................. Cockeysville........... MD.............. 21030 Washington-Baltimore.
10955 Golden West Dr................ Hunt Valley............ MD.............. 21031 Washington-Baltimore.
111 S Calvert St.................... Baltimore.............. MD.............. 21202 Washington-Baltimore.
1111 Constitution Ave NW............ Washington............. DC.............. 20002 Washington-Baltimore.
11200 Pepper Rd..................... Hunt Valley............ MD.............. 21031 Washington-Baltimore.
120 E Baltimore St.................. Baltimore.............. MD.............. 21202 Washington-Baltimore.
1200 1st St SE...................... Washington............. DC.............. 20303 Washington-Baltimore.
12001 Indian Creek Ct............... Beltsville............. MD.............. 20705 Washington-Baltimore.
12007 Sunrise Valley Dr............. Reston................. VA.............. 20191 Washington-Baltimore.
1201 Seven Locks Rd................. Rockville.............. MD.............. 20854 Washington-Baltimore.
12012 Sunset Hills Rd............... Reston................. VA.............. 20190 Washington-Baltimore.
12355 Sunrise Valley Dr............. Reston................. VA.............. 20191 Washington-Baltimore.
12600 Fair Lakes Cir................ Fairfax................ VA.............. 22033 Washington-Baltimore.
12701 Fair Lakes Cir................ Fairfax................ VA.............. 22033 Washington-Baltimore.
1301 Pennsylvania Ave NW............ Washington............. DC.............. 20004 Washington-Baltimore.
13461 Sunrise Valley Dr............. Herndon................ VA.............. 20171 Washington-Baltimore.
1350 I St NW........................ Washington............. DC.............. 20005 Washington-Baltimore.
1375 Piccard Dr..................... Rockville.............. MD.............. 20850 Washington-Baltimore.
1390 Piccard Dr..................... Rockville.............. MD.............. 20850 Washington-Baltimore.
[[Page 74361]]
1401 H St NW........................ Washington............. DC.............. 20005 Washington-Baltimore.
16050 Industrial Dr................. Gaithersburg........... MD.............. 20877 Washington-Baltimore
16060 Industrial Dr................. Gaithersburg........... MD.............. 20877 Washington-Baltimore.
1709 New York of Ave NW............. Washington............. DC.............. 20006 Washington-Baltimore.
1722 I St NW........................ Washington............. DC.............. 20006 Washington-Baltimore.
1759 Business Center Dr............. Reston................. VA.............. 20190 Washington-Baltimore.
1760 Business Center Dr............. Reston................. VA.............. 20190 Washington-Baltimore.
1800 G St NW........................ Washington............. DC.............. 20006 Washington-Baltimore.
1800 Robert Fulton Dr............... Reston................. VA.............. 20191 Washington-Baltimore.
1820 Fort Myer Dr................... Arlington.............. VA.............. 22209 Washington-Baltimore.
1861 International Dr............... McLean................. VA.............. 22102 Washington-Baltimore.
1900 Campus Commons Dr.............. Reston................. VA.............. 20191 Washington-Baltimore.
1916 Isaac Newton SQ W.............. Reston................. VA.............. 20190 Washington-Baltimore.
2 E Chase St........................ Baltimore.............. MD.............. 21202 Washington-Baltimore.
200 Fairbrook Dr.................... Herndon................ VA.............. 20170 Washington-Baltimore.
200 International Cir............... Cockeysville........... MD.............. 21030 Washington-Baltimore.
2010 Corporate RDG.................. McLean................. VA.............. 22102 Washington-Baltimore.
2021 L St NW........................ Washington............. DC.............. 20036 Washington-Baltimore.
20300 Century Blvd.................. Germantown............. MD.............. 20874 Washington-Baltimore.
20400 Century Blvd.................. Germantown............. MD.............. 20874 Washington-Baltimore.
210 N Charles St.................... Baltimore.............. MD.............. 21201 Washington-Baltimore.
21355 Ridgetop Cir.................. Dulles................. VA.............. 20166 Washington-Baltimore.
21545 Ridgetop Cir.................. Sterling............... VA.............. 20166 Washington-Baltimore.
2216 Gallows Rd..................... Dunn Loring............ VA.............. 22027 Washington-Baltimore.
2240 Broadbirch Dr.................. Silver Spring.......... MD.............. 20904 Washington-Baltimore.
22461 Shaw Rd....................... Sterling............... VA.............. 20166 Washington-Baltimore.
22800 Davis Dr...................... Sterling............... VA.............. 20164 Washington-Baltimore.
2401 E St NW........................ Washington............. DC.............. 20241 Washington-Baltimore.
250 E St SW......................... Washington............. DC.............. 20024 Washington-Baltimore.
2650 Park Tower Dr.................. Vienna................. VA.............. 22180 Washington-Baltimore.
2707 Wilson Blvd.................... Arlington.............. VA.............. 22201 Washington-Baltimore.
2811 Lord Baltimore Dr.............. Baltimore.............. MD.............. 21244 Washington-Baltimore.
300 14th St SW...................... Washington............. DC.............. 20228 Washington-Baltimore.
301 W Preston St.................... Baltimore.............. MD.............. 21201 Washington-Baltimore.
307 International Cir............... Cockeysville........... MD.............. 21030 Washington-Baltimore.
35 Market Pl........................ Baltimore.............. MD.............. 21202 Washington-Baltimore.
3910 Keswick Rd..................... Baltimore.............. MD.............. 21211 Washington-Baltimore.
4 Choke Cherry Rd................... Rockville.............. MD.............. 20850 Washington-Baltimore.
401 14th St SW...................... Washington............. DC.............. 20024 Washington-Baltimore.
401 M St SW......................... Washington............. DC.............. 20024 Washington-Baltimore.
403 Glenn Dr........................ Sterling............... VA.............. 20164 Washington-Baltimore.
4201 Wilson Blvd.................... Arlington.............. VA.............. 22203 Washington-Baltimore.
4330 E West Hwy..................... Bethesda............... MD.............. 20814 Washington-Baltimore.
4350 Fairfax Dr..................... Arlington.............. VA.............. 22203 Washington-Baltimore.
450 Springpark Pl................... Herndon................ VA.............. 20170 Washington-Baltimore.
5 Choke Cherry Rd................... Rockville.............. MD.............. 20850 Washington-Baltimore.
500 N Capitol St NW................. Washington............. DC.............. 20001 Washington-Baltimore.
5161 River Rd....................... Bethesda............... MD.............. 20816 Washington-Baltimore.
523 E Monument St................... Baltimore.............. MD.............. 21202 Washington-Baltimore.
5260 Western Ave.................... Chevy Chase............ MD.............. 20815 Washington-Baltimore.
540 Huntmar Park Dr................. Herndon................ VA.............. 20170 Washington-Baltimore.
5515 Security Ln.................... Rockville.............. MD.............. 20852 Washington-Baltimore.
5600 Fishers Ln..................... Rockville.............. MD.............. 20852 Washington-Baltimore.
575 Herndon Pkwy.................... Herndon................ VA.............. 20170 Washington-Baltimore.
6000 McDill Blvd.................... Washington............. DC.............. 20340 Washington-Baltimore.
6009 Oxon Hill Rd................... Oxon Hill.............. MD.............. 20745 Washington-Baltimore.
601 12th St S....................... Arlington.............. VA.............. 22202 Washington-Baltimore.
601 D St NW......................... Washington............. DC.............. 20004 Washington-Baltimore.
601 F St NW......................... Washington............. DC.............. 20004 Washington-Baltimore.
6495 New Hampshire Ave.............. Hyattsville............ MD.............. 20783 Washington-Baltimore.
656 Quince Orchard Rd............... Gaithersburg........... MD.............. 20878 Washington-Baltimore.
6610 Rockledge Dr................... Bethesda............... MD.............. 20817 Washington-Baltimore.
666 11th St NW...................... Washington............. DC.............. 20001 Washington-Baltimore.
6710 Oxon Hill Rd................... Oxon Hill.............. MD.............. 20745 Washington-Baltimore.
6801 Rockledge Dr................... Bethesda............... MD.............. 20817 Washington-Baltimore.
6903 Rockledge Dr................... Bethesda............... MD.............. 20817 Washington-Baltimore.
7020 Virginia Manor Rd.............. Beltsville............. MD.............. 20705 Washington-Baltimore.
7067 Columbia Gateway Dr............ Columbia............... MD.............. 21046 Washington-Baltimore.
7129 Ambassador Rd.................. Baltimore.............. MD.............. 21244 Washington-Baltimore.
7500 Boston Blvd.................... Springfield............ VA.............. 22153 Washington-Baltimore.
7811 Montrose Rd.................... Rockville.............. MD.............. 20854 Washington-Baltimore.
7925 Westpark Dr.................... McLean................. VA.............. 22102 Washington-Baltimore.
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8230 Leesburg Pike.................. Vienna................. VA.............. 22182 Washington-Baltimore.
8230 Old Courthouse Rd.............. Vienna................. VA.............. 22182 Washington-Baltimore.
8400 Baltimore Ave.................. College Park........... MD.............. 20740 Washington-Baltimore.
8521 Leesburg Pike.................. Vienna................. VA.............. 22182 Washington-Baltimore.
8620 Westwood Center Dr............. Vienna................. VA.............. 22182 Washington-Baltimore.
8930 Stanford Blvd.................. Columbia............... MD.............. 21045 Washington-Baltimore.
9201 Corporate Blvd................. Rockville.............. MD.............. 20850 Washington-Baltimore.
9210 Corporate Blvd................. Rockville.............. MD.............. 20850 Washington-Baltimore.
9211 Corporate Blvd................. Rockville.............. MD.............. 20850 Washington-Baltimore.
9270 Gaither Rd..................... Gaithersburg........... MD.............. 20877 Washington-Baltimore.
9307 Gerwig Ln...................... Columbia............... MD.............. 21046 Washington-Baltimore.
9704 Medical Center Dr.............. Rockville.............. MD.............. 20850 Washington-Baltimore.
9840 O'Brian Road................... Fort Meade............. MD.............. 20755 Washington-Baltimore.
Langley Hqtrs....................... Langley................ VA.............. 22101 Washington-Baltimore.
NASA Goddard SFC Bldg 1............. Greenbelt.............. MD.............. 20771 Washington-Baltimore.
Rte 198 Racetrack Road.............. Laurel................. MD.............. 20725 Washington-Baltimore.
----------------------------------------------------------------------------------------------------------------
In the United States District Court for the District of Columbia
United States of America, Plaintiff, v. Verizon Communications, Inc.
and MCI, Inc., Defendants
Civil Action No.: 1:05CV02103 (HHK)
Filed: November 16, 2005
Competitive Impact Statement
Plaintiff United States of America (``United States''), pursuant to
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or
``Tunney 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
February 14, 2005--subsequently amended on March 4, March 29, and May
2--pursuant to which Verizon Communications, Inc. (``Verizon'') will
acquire MCI, Inc. (``MCI''). The United States filed a civil antitrust
Complaint on October 27, 2005 seeking to enjoin the proposed
acquisition. The Complaint alleges that the likely effect of this
acquisition would be to lessen competition substantially for Local
Private Lines and other telecommunications services that rely on Local
Private Lines in eight metropolitan areas in violation of Section 7 of
the Clayton Act, 15 U.S.C. 18. This loss of competition would result in
customers facing higher prices for Local Private Lines and other
telecommunications services that rely on Local Private Lines than they
would absent the merger.
At the same time the Complaint was filed, the United States also
filed a Stipulation and proposed Final Judgment that 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 indefeasible rights of use (``IRUs'')
for lateral connections to certain buildings located in a number of
metropolitan areas as listed in Appendix A of the proposed Final
Judgment (collectively the ``Divestiture Assets''). Under the terms of
the Stipulation, Defendants will take certain steps to ensure that
these assets are preserved and maintained.
The United States 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 the
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 is a corporation organized and existing under the laws of
the State of Delaware, with its headquarters in New York, New York.
Verizon, formerly Bell Atlantic Corporation (``Bell Atlantic''), is the
nation's largest regional Bell operating company (``RBOC''). Bell
Atlantic was one of the seven regional holding companies created as a
result of the breakup of AT&T's telephone business into local and long
distance components initially in 1984. Since then, Bell Atlantic formed
Verizon, including its acquisitions of another RBOC, NYNEX Corporation,
and GET Corporation, an incumbent local exchange carrier (``ILEC'')
that provided local exchange and other services in 28 states. Verizon
owns and operates local telecommunications networks throughout its
territory and provides local and long distance voice and data services
to, inter alia, business customers and other telecommunications
carriers. Today, Verizon's wireline telecommunications operations serve
about 51 million total switched access lines, including 32.4 million
residential and 17.8 million business lines, in 29 states plus the
District of Columbia. In 2004, Verizon earned approximately $38.6
billion in revenues from its domestic wireline services, including at
least $8.8 billion in revenue from business customers. Verizon has
fiber-optic or copper connections to virtually all of the commercial
buildings in its franchised territory.
MCI is a corporation organized and existing under the laws of the
State of Delaware, with its headquarters in Ashburn, Virginia. MCI is
one of the nation's largest interexchange carriers (``IXC''), offering
traditional long distance telephone service, as well as one of the
largest competitive local exchange carriers (``CLEC''), offering local
network access for voice and data services. MCI serves consumers and
businesses across the United States and around the globe, and owns
significant
[[Page 74363]]
local network assets within Verizon's 29-state operating territory
including direct fiber-optic connections to numerous commercial
buildings. In 2004, MCI earned approximately $20.7 billion in revenues,
including almost $4 billion from domestic business customers.
Pursuant to an Agreement and Plan of Merger dated February 14,
2005, as amended on March 4, March 29, and May 2, 2005, Verizon agreed
to acquire MCI for approximately $8.54 billion. The proposed
transaction, as agreed to by Defendants, would lessen competition
substantially for Local Private Lines and other telecommunication
services that rely on Local Private Lines in eight metropolitan areas.
This acquisition is the subject of the Complaint and proposed Final
Judgment filed by the United States.
B. Local Private Lines
A Local Private Line is a dedicated, point-to-point circuit offered
over copper and/or fiber-optic transmission facilities that originates
and terminates within a single metropolitan area and typically includes
at least one local loop. A local loop, sometimes referred to as a
``last-mile'' connection, is typically either a copper or fiber-optic
transmission facility that connects commercial buildings to a carriers'
network, making the local loop a critically important asset for
providing telecommunications services to business customers.
Local Private Lines are a recognized service category among
telecommunications carriers and end-user business customers and are
sold at both retail (to business customers) and wholesale (to other
carriers). Depending on how they are configured, Local Private Lines
can be used to carry voice traffic, data, or a combination of the two.
Local Private Lines may be purchased as stand-alone products but are
also an important input to value-added voice and data
telecommunications services for business customers and represent a
significant portion of the costs incurred in providing those services.
Customers typically purchase Local Private Lines in standard bandwidth
increments such as DS1 (``T1,'' 1.54 megabits per second), DS3 (44.74
megabits per second), OC3 (155.52 megabits per second), and higher.
Local Private Lines can interconnect with industry-standard data
networking and telephone equipment, and can be ``channelized'' to carry
various amounts of voice and/or data traffic. Local Private Lines are
distinct from switched local exchange telephone services, which route
calls through a voice switch in the local carrier's central office and
do not necessarily use a dedicated circuit. Customers do not consider
switched local exchange services to be a substitute because they do not
offer the guaranteed bandwidth, high service levels, and security that
Local Private Lines provide.
Competing carriers often rely on Local Private Line circuits to
connect an end-user customer's location to their networks, enabling the
competitor to supply value-added data networking, Internet access,
local voice and long distance services to the customer. Although
carriers can provide some types of voice and data services over
switched local exchange lines (e.g., when an access line is pre-
subscribed to a long distance carrier), most large business customers
do not find those services to be a viable or cost-effective substitute
for voice and data telecommunications services provided via Local
Private Lines. In the event of a small, but significant, nontransitory
increase in price for either Local Private Lines or voice and data
telecommunications services provided via Local Private Lines,
insufficient customers would switch to switched circuits to render the
increase unprofitable.
For the vast majority of commercial buildings in its territory,
Verizon is the only carrier that owns a last-mile connection to the
building. Thus, in order to provide Local Private Line circuits or
voice or data telecommunications services to customers in those
Verizon-only buildings, competing carriers typically must lease the
connection from Verizon as Local Private Line service, which Verizon
refers to as ``special access'' and MCI refers to as ``metro private
line.'' For a small percentage of commercial buildings (though these
buildings account for a significant amount of customer demand and
revenue), Verizon's CLEC competitors have built or acquired their own
last-mile fiber-optic connections, separate from Verizon's, to connect
their networks to the buildings. The CLECs typically refer to buildings
with these connections as their ``lit buildings'' or ``on-net
buildings.'' Once a CLEC has incurred the high fixed cost to construct
a last-mile connection to a building, the CLEC can usually provide
service to business customers in the building at a lower marginal cost
than it would otherwise be able to do if it had to lease the connection
from the RBOC. It can also provide alternative access to other CLECs
seeking to serve business customers in the building.
The relevant geographic market for both Local Private Lines, as
well as voice and data telecommunications services that rely on Local
Private Lines, is no broader than each metropolitan area and no more
narrow than each individual building.
C. The Competitive Effects of the Transaction on Local Private Lines
Verizon's acquisition of MCI will substantially lessen competition
in the markets for (a) Local Private Lines and (b) voice and data
telecommunications services that rely on Local Private Lines. Verizon
is the dominant provider of Local Private Lines in its franchised
territory, and MCI is one of its largest competitors. MCI is among the
leading CLECs in Verizon's territory in the number of buildings it has
connected with its own last-mile fiber facilities. For hundreds of
commercial buildings located in the metropolitan areas of Baltimore-
Washington, DC; Boston, Massachusetts; New York, New York; Richmond,
Virginia; Providence, Rhode Island; Tampa, Florida; Philadelphia,
Pennsylvania; and Portland, Maine, Verizon and MCI are the only two
firms that own or control a direct wireline connection to the building.
In these buildings, the merger of Verizon and MCI would reduce the
number of carriers with an owned or controlled last-mile connection
from two to one.
The merger would, therefore, effectively eliminate competition for
facilities-based Local Private Line service to those buildings, and
many retail and wholesale customers would no longer have MCI as a
competitive alternative to Verizon. Although other competitors might
resell Local Private Lines from Verizon, those competitors would not be
as effective a competitive constraint because Verizon would control the
price of the resold circuits. The merged firm would, therefore, have
the ability to raise price to retail and wholesale customers of Local
Private Lines. In addition, because the cost of dedicated local access
via Local Private Line represents an important cost component of many
value-added voice and data telecommunications services provided over
such access, the merger would tend to lessen competition for retail
voice and data telecommunications services provided over dedicated
access by (a) eliminating MCI as the only competitive alternative to
Verizon for such services with its own Local Private Line connection to
hundreds of buildings and (b) depriving other carriers seeking to
provide such value-added network services of the
[[Page 74364]]
only fully-facilities based wholesale competitive alternative to
Verizon in those buildings.
Although other CLECs can, theoretically, build their own fiber
connection to each building in response to a price increase by the
merged firm, such entry is a difficult, time-consuming, and expensive
process. Whether a CLEC builds a last-mile connection to a given
building depends upon many factors, as noted in the Complaint, and the
costs of building a last-mile fiber-optic connection vary substantially
for each location. Because a single such connection may cost hundreds
of thousands of dollars to build and light, CLECs will typically only
build in to a particular building after they have secured a customer
contract of sufficient size and length to justify the anticipated
construction costs for that building. While entry may occur in some
buildings where MCI is the only CLEC present in response to a post-
merger price increase, the conditions for entry are unlikely to be met
in the hundreds of buildings that are the subject of the Complaint. For
these buildings, the expected customer demand and proximity of other
CLEC fiber to the building (two important factors in the decision to
build in) indicate that such entry, even in the face of a price
increase, is unlikely to be profitable for any CLEC. Thus, entry would
not be timely, likely, or sufficient to eliminate the competitive harm
that would likely result from Verizon's proposed acquisition of MCI.
For these reasons, the United States concluded that Verizon's
proposed acquisition of MCI will likely substantially lessen
competition, in violation of Section 7 of the Clayton Act, in the
provision of Local Private Lines an other telecommunication services
that rely on Local Private Lines in the eight metropolitan areas listed
above.
III. Explanation of the Proposed Final Judgment
The divestiture requirements of the proposed final Judgment will
eliminate the anticompetitive effects of the acquisition in Local
Private Lines and other telecommunications services that rely on Local
Private Lines in the relevant areas. The proposed Final Judgment
requires Defendants, within 120 days after the closing of Verizon's
acquisition of MCI, or five (5) days after notice of the entry of the
Final Judgment by the Court, whichever is later, to divest the
Divestiture Assets. The Divestiture Assets consist of IRUs for lateral
connections (or last-mile connection) to hundreds of buildings in the
identified metropolitan areas along with transport facilities
sufficient to enable the IRUs to be used by the purchaser to provide
telecommunications services. Defendants must take all reasonable steps
necessary to accomplish the divestitures quickly and shall cooperate
with prospective purchasers.
These assets must be divested in such a way as to satisfy the
United States in its sole discretion that they will be used by the
purchaser to compete effectively and remedy the harm alleged in the
Complaint in the markets for Local Private Lines and other
telecommunications services that rely on Local Private Lines. In
reviewing the purchaser or purchasers of the Divestiture Assets, the
United States will be particularly focused on the purchaser's ability
to be a viable competitor in offering Local Private Lines on both a
retail and/or wholesale basis. Purchasers that are already offering
similar services in or near the metropolitan area are more likely to be
viable competitors than other potential purchasers.
Divesting the last-mile connections to the hundreds of buildings in
Verizon's territory will remedy the harm alleged in the Complaint.
Although other CLECs have local fiber networks in each of the
metropolitan areas at issue, they cover only a small percentage of
buildings, and the buildings covered vary from CLEC to CLEC. As a
result, there are numerous buildings where MCI is the only CLEC with a
last-mile connection. It is the decreased competition in the provision
of these last-mile connections to buildings where MCI is the only CLEC
that creates the harm alleged in the Complaint. Whether the geographic
market for the sale of Local Private Line or other telecommunications
services that rely on Local Private Lines is as broad as the
metropolitan area or as narrow as individual locations or buildings,
divesting these last-mile connections will restore the lost facilities-
based competition. The proposed Final Judgment also strengthens
metropolitan area competition by divesting to a single purchaser in
each area all of the buildings that were unique to MCI.
To ensure that the purchaser has adequate capacity to serve
customers in a given location, the lateral or last-mile connection to
be divested will consist of an IRU for the greater of (1) eight (8)
fiber strands or (2) one-half of the currently unused fiber strands in
MCI's facilities serving the building measured at the time of the
filing of the Complaint, from the point of entry of the building to the
splice point with fiber used to serve different buildings. This should
be sufficient capacity for the purchaser to serve current demand and
allow for future growth and changes in the local service area while
allowing Verizon to retain the MCI circuits being used to serve current
customers without disruption to their service. In addition, to
accommodate network engineering and design requirements, the
divestiture IRUs can be granted for fiber strands owned or controlled
by either Verizon or MCI, as mutually agreed by Defendants and the
purchaser.
Last-mile connections, however, are of little use if they are not
connected to a network. Therefore, the proposed Final Judgment also
requires the divestiture of IRUs for transport facilities sufficient to
connect the divested last-mile connections to locations mutually agreed
upon by Defendants and the purchaser. This will ensure that the
purchaser can connect the last-mile connections to its network
facilities and provide both Local Private Lines and any other
telecommunications services that rely on Local Private Lines that a
customer in the building may require.
An IRU (or indefeasible right of use) is a long-term leasehold
interest commonly used in the telecommunications industry that gives
the holder the right to use specified strands of fiber in the
telecommunications facility. The proposed Final Judgment contemplates
that the purchaser and Defendants will negotiate commercially
reasonable IRUs, that must meet minimum requirements, including: (1) To
ensure that the purchaser has the asset for a long enough time period
to serve customers while taking into account the dynamic nature of the
telecommunications industry and the useful life of the existing fiber,
the IRU must be for a minimum of 10 years; (2) to minimize ongoing
carrying costs for the IRU, the IRU cannot contain a monthly or other
recurring fee; and (3) to ensure that Defendants cannot limit the
purchasers' use of the last-mile connection, the IRU cannot
unreasonably limit the right of the purchaser to use the asset as it
wishes (e.g., the purchaser shall be permitted to splice into the IRU
fiber, though such splice points must be mutually agreed upon by
Defendants and purchaser). This last requirement, allows the purchaser
to splice into the IRUs to serve locations other than those listed in
Appendix A of the proposed Final Judgment, at mutually agreed upon
splice points.
The requirements of the proposed Final Judgment ensure that the
purchasers can use the Divested Assets
[[Page 74365]]
to begin competing immediately for customers in these buildings and
will have the rights and cost structure necessary to be effective by
(1) minimizing carrying costs so that viability is not threatened if
customers are not immediately procured and (2) giving the purchaser
flexibility in use of the last-mile connections by allowing splicing
into the fiber.
Lastly, with the approval of the United States, in its sole
discretion, and at the purchaser's option, the Divestiture Assets may
be modified to exclude assets and rights that are not necessary to meet
the aims of this Final Judgment. This will allow for minor
modifications of the Divestiture Assets to exclude assets that may not
be necessary in order to remedy the competitive harm.
A. Timing of Divestitures
To rapidly restore lost competition, the United States requires
divestitures to be completed within the shortest time period reasonable
under the circumstances. In this case, the proposed Final Judgment
requires, in Section IV.A, divestiture of the Divestiture Assets,
within 120 days after the closing of Verizon's acquisition of MCI, or
five (5) days after notice of the entry of the Final Judgment by the
Court, whichever is later. The United States in its sole discretion may
extend the date for divestiture of the Divestiture Assets by up to
sixty (60) days. 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.
B. 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 the
United States to effect the divestitures. To ensure that the
divestiture trustee can promptly locate and divest to an acceptable
purchaser, the United States, in its sole discretion, may require
Defendants to include additional assets, or allow Defendants to
substitute substantially similar assets, which substantially relate the
Divestiture Assets to be divested by the divestiture trustee.
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.D 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 the United States setting forth his or her efforts
to accomplish the divestitures. Section V.G of the proposed Final
Judgment requires the divestiture trustee to divest the Divestiture
Assets to an acceptable purchaser or purchasers no later than six (6)
months after his or her appointment. At the end of six (6) months, if
all divestitures have not been accomplished, the trustee and the United
States will make recommendations to the Court, which shall enter such
orders as appropriate in order to carry out the purpose of the trust,
including extending the trust or term of the trustee's appointment.
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, 15 U.S.C.
16(a), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against Defendants.
V. Procedures Available for Modification of the Proposed Final Judgment
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 pubic
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the United States written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the Federal Register. 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 the 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 Judgment
The United States considered, as an alternative to the proposed
Final Judgment, a full trial on the merits against Defendants. The
United States could have continued the litigation and sought
preliminary and permanent injunctions against Verizon's acquisition of
MCI. The United States is satisfied, however, that the divestiture of
assets and other relief described in the proposed Final Judgment will
preserve competition for Local Private Lines and other
telecommunications services that rely on Local Private Lines in the
metropolitan areas identified in the Compliant.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a sixty (60) day
comment period, after which the Court shall determine whether entry of
the proposed Final Judgment ``is in the public interest.'' 15 U.S.C.
16(e)(1). In making that determination, the Court shall consider:
(A) The competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration or relief sought, anticipated effects of
alternative remedies actually considered, 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
[[Page 74366]]
including consideration of the public benefit, if any, to be derived
from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). As the United States Court of Appeals for
the District of Columbia Circuit had held, the APPA permits a court to
consider, among other things, the relationship between the remedy
secured and the specific allegations set forth in the government's
complaint, whether the consent judgment is sufficiently clear, whether
enforcement mechanisms are sufficient, and whether the consent judgment
may positively harm third parties. See United States v. Microsoft
Corp., 56 F.3d 1448, 1458-62 (D.C. Cir. 1995).
``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). Thus, in conducting this
inquiry, ``[t]he court is nowhere compelled to go to trial or to engage
in extended proceedings which might have the effect of vitiating the
benefits of prompt and less costly settlement through the consent
decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of Senator
Tunney).\1\
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\1\ See United States v. Gillette Co., 406 F. Supp. 713, 716 (D.
Mass. 1975) (recognizing it was not the court's duty to settle;
rather, the court must only answer ``whether the settlement achieved
[was] within the reaches of the public interest''). A ``public
interest'' determination can be made properly on the basis of the
Competitive Impact Statement and Response to Comments filed by the
Department of Justice pursuant to the APPA. Although the APPA
authorizes the use of additional procedures, 15 U.S.C. 16(f), those
procedures are discretionary. A court need not invoke any of them
unless it believes that the comments have raised significant issues
and that further proceedings would aid the court in resolving those
issues. See H.R. Rep. No. 93-1463, 93d Cong., 2d Sess. 8-9 (1974),
reprinted in 1974 U.S.C.C.A.N. 6535, 6538-39.
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Rather:
[a]bsent a showing of corrupt failure of the government to discharge
its duty, the Court, in making its public finding, should * * *
carefully consider the explanations of the government in the
competitive impact statement and its responses to comments in order
to determine whether those explanations are reasonable under the
circumstances.
United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. (CCH) ]
61,508, at 71,980 (W.D. Mo. 1977).
Accordingly, with respect to the adequacy of the relief secured by
the proposed Final Judgment, 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. Courts have held that:
[t]he balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\
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\2\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving to
disapproving the consent decree''); Gillette, 406 F. Supp. at 716
(noting that, in this way, the court is constrained to ``look at the
overall picture not hypercritically, nor with a microscope, but with
an artist's reducing glass''); see generally Microsoft, 56 F.3d at
1461 (discussing whether ``the remedies [obtained in the decree are]
so inconsonant with the allegations charged as to fall outside of
the `reaches of the public interest''').
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The proposed Final Judgment, therefore, should not be reviewed
under a standard of whether it is certain to eliminate every
anticompetitive effect of a particular practice or whether it mandates
certainty of free competition in the future. Court approval of a final
judgment requires a standard more flexible and less strict than the
standard required for a finding of liability. ``[A] proposed decree
must be approved even if it falls short of the remedy the court would
impose on its own, as long as it falls within the range of
acceptability or is `within the reaches of public interest.''' United
States v. AT&T Corp., 552 F. Supp. 131, 151 (D.D.C. 1982) (citations
omitted) (quoting Gillette, 406 F. Supp. at 716), 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 judgment even though the court would have
imposed a greater remedy).
Moreover, the Court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint, and does not authorize the Court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459. Because the ``court's
authority to review the decree depends entirely on the government's
exercising its prosecutorial discretion by bringing a case in the first
place,'' it follows that ``the court is only authorized to review the
decree itself,'' and not to ``effectively redraft the complaint'' to
inquire into other matters that the United States did not pursue. Id.
at 1459-60.
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Dated: November 16, 2005.
Respectfully submitted,
/s/-------------------------------------------------------------------
Laury E. Bobbish,
Assistant Chief.
/s/-------------------------------------------------------------------
Lawrence M. Frankel (D.C. Bar No. 441532)
Claude F. Scott, Jr. (D.C. Bar No. 414906)
Mary N. Strimel (D.C. Bar No. 455303)
Matthew C. Hammond
Lauren J. Fishbein (D.C. Bar No. 451889)
Conrad J. Smucker (D.C. Bar No. 434590)
Jeremiah M. Luongo
Jared A. Hughes
David T. Blonder
William Lindsey Wilson
William B. Michael
Trial Attorneys, U.S. Department of Justice, Antitrust Division,
Telecommunications and Media Enforcement Section,
1401 H Street, NW., Suite 8000, Washington, DC 20530.
Telephone: (202) 514-5621.
Facsimile: (202) 514-6381.
[FR Doc. 05-23815 Filed 12-14-05; 8:45 am]
BILLING CODE 4410-11-M