[Federal Register: November 19, 2007 (Volume 72, Number 222)]
[Notices]
[Page 65060-65076]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19no07-87]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. AT&T Inc. and Dobson Communications Corporation;
Proposed Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec. 16(b)-(h), that a proposed Final
Judgment, Stipulation, and Competitive Impact Statement have been filed
with the United States District Court for the District of Columbia in
United States of America v. AT&T Inc. and Dobson Communications
Corporation, Civil Action No. 1:07-cv-01952. On October 30, 2001, the
United States filed a Complaint alleging that the proposed acquisition
by AT&T Inc. (``AT&T'') of Dobson Communications Corporation
(``Dobson'') would violate Section 7 of the Clayton Act, 15 U.S.C. 18,
by substantially lessening competition in the provision of mobile
wireless telecommunications services in seven (7) markets. The proposed
Final Judgment, filed at the same time as the Complaint, requires the
divestiture of: (1) Dobson's mobile wireless telecommunications
services businesses in certain markets in Kentucky and Oklahoma; (2)
AT&T's minority interests in entities operating mobile wireless
telecommunications services businesses in certain markets in Texas and
Missouri; and (3) all of Dobson's right, title and interest in Cellular
One Properties, LLC, in order for AT&T to proceed with its $2.8 billion
aquisition of Dobson. The Competitive Impact Statement filed by the
United States 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, and Competitive
Impact Statement are available for inspection at the Department of
Justice, Antitrust Division, Antitrust Documents Group, 325 7th Street,
NW., Room 215, Washington, DC 20530 (telephone: 202-514-2481), on the
Department of Justice's Web site at http://www.usdoj.gov/atr, and at
the Office of the Clerk of the United States District Court for the
District of Columbia. Copies of these materials may be obtained from
the Antitrust Division upon request and payment of the copying fee set
by the Department of Justice regulations.
Public comment is invited within 60 days of the date of this
notice. Such comments, and responses thereto, will be published in the
Federal Register and filed with the Court. Comments should be directed
to Nancy Goodman, Chief, Telecommunications and Media Enforcement
Section, Antitrust Division, U.S. Department of Justice, 1401 H Street,
NW., Suite 8000,
[[Page 65061]]
Washington, DC 20530 (telephone: 202-514-5621).
J. Robert Kramer II,
Director of Operations, Antitrust Division.
In the United States District Court for the District of Columbia
United States of America Department of Justice, Antitrust Division,
1401 H Street, NW., Suite 8000, Washington, DC 20530, Plaintiff, v.
AT&T Inc., 175 East Houston, San Antonio, Texas 78205; and Dobson
Communications Corporation, 14201 Wireless Way, Oklahoma City, Oklahoma
73134, Defendants.
Civil No. 1:07-CV-01952, Assigned: Rosemary M. Collyer, Filed: October
30, 2007
Complaint
The United States of America, acting under the direction of the
Acting Attorney General of the United States, brings this civil action
to enjoin the merger of two mobile wireless telecommunications service
providers, AT&T Inc. (``AT&T'') and Dobson Communications Corporation
(``Dobson''), and to obtain other relief as appropriate. Plaintiff
United States alleges as follows:
1. AT&T entered into an agreement to acquire Dobson, dated June 29,
2007, under which the two companies would combine their mobile wireless
telecommunications services businesses (``Transaction Agreement'') and
AT&T would acquire the Cellular One brand name and associated rights.
The United States seeks to enjoin this transaction because it likely
will substantially lessen competition to provide mobile wireless
telecommunications services in several geographic markets where AT&T
and Dobson are each other's most significant competitor or where AT&T
competes against mobile wireless telecommunications services providers
that sell services under the Cellular One brand name.
2. AT&T provides mobile wireless telecommunications services in 50
states and serves in excess of 63 million subscribers. Dobson provides
mobile wireless telecommunications services in seventeen states and
serves approximately 1.6 million subscribers. The combination of AT&T
and Dobson likely will substantially lessen competition for mobile
wireless telecommunications services in five geographic areas in
Kentucky, Missouri, Oklahoma and Texas where businesses owned in whole
or part by AT&T and Dobson currently operate. As a result of the
proposed acquisition, residents of these mostly rural areas will likely
face increased prices, diminished quality or quantity of services, and
less investment in network improvements for these services.
Additionally, in two relevant geographic areas in Pennsylvania and
Texas, competition likely will be substantially lessened to the
detriment of consumers because AT&T will have the incentive and ability
to limit, or eliminate, a primary competitor's right to use the
Cellular One brand name effectively.
I. Jurisdiction and Venue
3. This Complaint is filed by the United States under Section 15 of
the Clayton Act, 15 U.S.C. 25, to prevent and restrain defendants from
violating Section 7 of the Clayton Act, as amended, 15 U.S.C. 18.
4. AT&T and Dobson 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.
5. The defendants have consented to personal jurisdiction and venue
in this judicial district.
II. The Defendants and the Transaction
6. AT&T, with headquarters in San Antonio, Texas, is a corporation
organized and existing under the laws of the state of Delaware. AT&T is
the largest communications holding company in the United States and
worldwide, measured by revenue. AT&T is the largest mobile wireless
telecommunications services provider in the United States, measured by
subscribers, provides mobile wireless telecommunications services in 50
states, and serves in excess of 63 million subscribers. In 2006, AT&T
earned mobile wireless telecommunications services revenues of
approximately $37.53 billion.
7. Dobson, with headquarters in Oklahoma City, Oklahoma, is a
corporation organized and existing under the laws of the state of
Oklahoma. Dobson is the ninth largest mobile wireless
telecommunications services provider in the United States, measured by
subscribers and provides mobile wireless telecommunications services in
17 states. It has approximately 1.7 million subscribers. Dobson also
owns Cellular One Properties, LLC, an Oklahoma limited liability
company, engaged in the business of licensing the Cellular One brand
and promoting the Cellular One service mark and certain related
trademarks, service marks and designs. In 2006, Dobson earned
approximately $1.3 billion in revenues.
8. Pursuant to an Agreement and Plan of Merger dated June 29, 2007,
AT&T will acquire Dobson for approximately $2.8 billion. If this
transaction is consummated, AT&T and Dobson combined would have
approximately 65 million subscribers in the United States, with $37.54
billion in moble wireless telecommunications services revenues.
III. Trade and Commerce
A. Nature of Trade and Commerce
9. Mobile wireless telecommunications services allow customers to
make and receive telephone calls and obtain data services using radio
transmissions without being confined to a small area during the call or
data session, and without the need for unobstructed line-of-sight to
the radio tower. Mobility is highly valued by customers, as
demonstrated by the more than 233 million people in the United States
who own mobile wireless telephones. In 2006, revenues from the sale of
mobile wireless telecommunications services in the United States were
over $125 billion. To meet this desire for mobility, mobile wireless
telecommunications services providers must deploy extensive networks of
switches and radio transmitters and receivers and interconnect their
networks with the networks of wireline carriers and other mobile
wireless telecommunications services providers.
10. The first mobile wireless voice systems were based on analog
technology, now referred to as first-generation or ``1G'' technology.
These analog systems were launched after the Federal Communications
Commission (``FCC'') issued the first spectrum licenses for mobile
wireless telecommunications services. In the early to mid-1980s, the
FCC issued two cellular licenses (A-block and B-block) in each
Metropolitan Statistical Area (``MSA'') and Rural Service Area (``RSA
``) (collectively, ``Cellular Marketing Areas'' or CMAs''), with a
total of 734 CMAs covering the entire United States. Each license
consists of 25 MHz of spectrum in the 800 MHz band.
11. In 1995, the FCC licensed additional spectrum for the provision
of Personal Communications Services (``PCS''), a category of services
that includes mobile wireless telecommunications services comparable to
those offered by cellular licensees. These licenses are in the 1900 MHz
and are divided into six blocks: A, B, and C, which consist of 30 MHz
each; and D, E, and F, which consist of 10 MHz each. Geographically,
the A and B-
[[Page 65062]]
block 30 MHz licenses are issued by Major Trading Areas (``MTAs''). C,
D, E, and F-block licenses are issued by Basic Trading Areas
(``BTAs''), several of which comprise each MTA. MTAs and BTAs do not
generally correspond to MSAs and RSAs.
12. With the introduction of the PCS licenses, both cellular and
PCS licensees began offering digital services, thereby increasing
network capacity, shrinking handsets, and extending battery life. In
addition, in 1996, one provider, a specialized mobile radio (``SMR'' or
``dispatch'') spectrum licensee, began to use its SMR spectrum to offer
mobile wireless telecommunications services comparable to those offered
by other mobile wireless telecommunications services providers, in
conjunction with its dispatch, or ``push-to-talk,'' service. Although
there are a number of providers holding spectrum licenses in each area
of the country, not all providers have fully built out their networks
throughout each license area. In particular, because of the
characteristics of PCS spectrum, providers holding this type of
spectrum have found it less attractive to build out in rural areas.
13. Today, more than 98 percent of the total U.S. population lives
in counties where three or more mobile wireless telecommunications
services operators offer digital service. Nearly all mobile wireless
voice service has migrated to second-generation or ``2G'' digital
technologies, GSM (global standard for mobility, a standard used by all
carriers in Europe), and CDMA (code division multiple access). Even
more advanced technologies (``2.5G'' and ``3G''), based on the earlier
2G technologies, have been deployed for mobile wireless data services.
B. Relevant Product Market
14. Mobile wireless telecommunications services is a relevant
product market. Mobile wireless telecommunications services include
both voice and data services provided over a radio network and allow
customers to maintain their telephone calls or data sessions without
wires, such as when traveling. There are no cost-effective alternatives
to mobile wireless telecommunications services. Because fixed wireless
services are not mobile, they are not regarded by consumers of mobile
wireless telecommunications services to be a reasonable substitute for
those services. It is unlikely that a sufficient number of customers
would switch away from mobile wireless telecommunications services to
make a small but significant price increase in those services
unprofitable. Mobile wireless telecommunications services accordingly
is a relevant product market under Section 7 of the Clayton Act, 15
U.S.C. 18.
C. Relevant Geographic Markets
15. A large majority of customers use mobile wireless
telecommunications services in close proximity to their workplaces and
homes. Thus, customers purchasing mobile wireless telecommunications
services choose among mobile wireless telecommunications services
providers that offer services where they live, work, and travel on a
regular basis. The number and identity of mobile wireless
telecommunications services providers varies among geographic areas, as
does the quality of services and breadth of geographic coverage offered
by providers. Mobile wireless telecommunications services providers can
and do offer different promotions, discounts, calling plan, and
equipment subsidies in different geographic areas, varying the price
for customers by geographic area.
16. The United States comprises numerous local geographic markets
for mobile wireless telecommunications services. The geographic areas
in which the FCC has licensed mobile wireless telecommunications
services providers often represent the core geographic areas in which
an individual consumer would use mobile wireless telecommunications
services, those being the areas in which an individual customer
resides, works and plays. The relevant geographic markets in which this
transaction will substantially lessen competition in mobile wireless
telecommunications services are effectively represented, but not
defined, by FCC spectrum licensing ares.
17. The relevant geographic markets, under Section 7 of the Clayton
Act, 15 U.S.C. 18, where the transaction will substantially lessen
competition for mobile wireless telecommunications services are
represented by the following FCC spectrum licensing areas: Kentucky
RSA-6 (CMA 448); Kentucky RSA-8 (CMA 450); Missouri RSA-1 (CMA 504);
Oklahoma RSA-5 (CMA 600); Pennsylvania RSA-5 (CMA 616); Texas RSA-9
(CMA 660); and Texas RSA-11 (CMA 662). It is unlikely that a sufficient
number of customers would switch to mobile wireless telecommunications
services providers in a different geographic market to make a small but
significant price increase in the relevant geographic markets
unprofitable.
D. Anticompetitive Effects
1. Overlap Areas
a. AT&T/Dobson Overlap Markets
17. Currently, AT&T and Dobson each own a business that offers
mobile wireless telecommunications services in three relevant
geographic areas: Kentucky RSA-6 (CMA 448); Kentucky RSA-8 (CMA 450);
and Oklahoma RSA-5 (CMA 600).
18. In each of these three relevant geographic areas, either AT&T
or Dobson has the largest share of subscribers and the other defendant
is a particularly strong and important competitor: the companies
controlled by AT&T and Dobson collectively account for between 63
percent and 97 percent of subscribers in these areas. As measured by
the Herfindahl-Hirschman Index (``HHI''), which is commonly employed in
merger analysis and is defined and explained in Appendix A to this
Complaint, concentration in these markets ranges from over 3100 to more
than 7900, which is well above the 1800 threshold at which the
Department considers a market to be highly concentrated. After AT&T's
proposed acquisition of Dobson is consummated, the HHIs in the relevant
geographic markets will range from over 5200 to over 9400, with
increases in the HHI as a result of the merger ranging from over 1400
to over 2300, significantly beyond the thresholds at which the
Department considers a transaction likely to cause competitive harm.
b. AT&T Minority Interest Markets
20. In two relevant geographic areas, Missouri RSA-1 (CMA 504) and
Texas RSA-9 (CMA 660), Dobson owns a business that offers mobile
wireless telecommunications services and AT&T has a minority interest
in a competing business. In Missouri RSA-1, AT&T's minority equity
interest is in Northwest Missouri Cellular Limited Partnership's
business and in Texas RSA-9, AT&T's minority equity interest is in Mid-
Tex Cellular, Ltd.
21. In these two relevant geographic areas, either Dobson or the
business in which AT&T has a minority interest has the largest share
and the other defendant is a particularly strong and important
competitor in all, or a large part, of the RSA. In each area, the
businesses in which AT&T and Dobson have an interest collectively
account for in excess of 70 percent of subscribers.
22. Although the minority equity interest in each situation is
small, AT&T has significant rights under the relevant partnership
agreements to control core business decisions, obtain critical
[[Page 65063]]
confidential competitive information, and share in profits at a rate
significantly greater than the equity ownership share upon a sale of
the partnership. Post-merger, the merged finn would likely have the
ability and incentive to coordinate the activities of the wholly-owned
Dobson wireless business and the business in which it has a minority
stake, and/or undermine the ability of the latter to compete against
the former. Such activity would likely result in a significant
lessening of competition.
c. AT&T/Cellular One Overlap Markets
23. In two relevant geographic areas, Pennsylvania RSA-5 (CMA 616)
and Texas RSA-11 (CMA 662), AT&T owns a business that offers mobile
wireless telecommunications services, and a competing mobile wireless
telecommunications business operates under the Cellular One brand name
that AT&T would acquire from Dobson pursuant to the proposed
transaction.
24. In these two relevant geographic areas, AT&T has the largest
share of subscribers and the mobile wireless telecommunications
business operating under the Cellular One brand name is a particularly
strong and important competitor. In each area, AT&T and the Cellular
One licensee collectively account for in excess of 65 percent of
subscribers.
25. The Cellular One brand name was first used in 1984. In 1989,
the Cellular One Group partnership was formed to maintain and promote
the Cellular One brand, a licensed trade name. In 1995, the partnership
offered to license the brand to all A block cellular providers.
Presently, approximately nine mobile wireless telecommunications
services providers in addition to Dobson license the Cellular One brand
and offer services to their customers under that brand. Through its
planned purchase of Dobson, AT&T will acquire the rights to the
Cellular One trademarks, trade names, service marks, service names, and
designs for the Cellular One brand name, as well as the agreements to
license the Cellular One brand to other mobile wireless
telecommunications services providers.
26. The providers that continue to license and use the Cellular One
brand have invested considerable resources in developing and building
the brand. The Cellular One brand is thus an important input to these
firms' provision of mobile wireless telecommunications services. If
their ability to use the brand were to be impaired or eliminated, they
would suffer considerable costs and effective competition in these
markets would be harmed.
27. Because AT&T offers and markets wireless services under its own
AT&T brand, it has little or no incentive to use or maintain the
Cellular One brand. In the two relevant geographic areas where a
Cellular One licensee is a primary competitor to AT&T in the mobile
wireless telecommunications services market, AT&T would have the
incentive and ability to impair the effectiveness of the Cellular One
brand, or even deny a license to the current licensee entirely, since
by doing so, it could reduce competition by significantly increasing
costs to a primary competitor at little or no cost to itself.
2. Competitive Impact
28. In all seven relevant geographic markets, the mobile wireless
telecommunications businesses wholly or partially owned by AT&T and
Dobson, and/or the Cellular One licensee, own all or most of thel800
MHz band cellular spectrum licenses, which are more efficient in
serving rural areas than 1900 MHz band PCS spectrum. As a result of
holding the cellular spectrum licenses and being early entrants into
these markets, the networks wholly or partly owned by AT&T, Dobson, or
the Cellular One licensee provide greater depth and breadth of coverage
than their competitors, which are operating on PCS spectrum in these
relevant geographic markets, and thus are more attractive to consumers.
A mobile wireless telecommunications services provider with limited
coverage in a geographic area typically does not aggressively market
its services in that area because it can service customers only through
a roaming arrangement with a more built-out competitor under which it
must pay roaming charges to, and rely on, its competitor to maintain
the quality of the network. The mobile wireless businesses wholly or
partly owned by AT&T or Dobson in five of the relevant areas, and by AT
&T and the Cellular One licensee in the other two relevant areas,
accordingly, are, for a large set of customers, likely closer
substitutes for each other than the other mobile wireless
telecommunications services in these markets provided by firms who own
only PCS spectrum.
29. Competition between the businesses wholly or partly owned by
AT&T and Dobson, or between AT&T and the Cellular One licensee, in the
relevant geographic markets has resulted in lower prices and higher
quality in mobile wireless telecommunications services, than would
otherwise have existed in these geographic markets. In these areas,
many consumers consider businesses wholly or partly owned by AT&T,
Dobson, or the Cellular One licensee to be the most attractive
competitors because other providers' networks lack coverage or provide
lower-quality service.
30. If AT&T's proposed acquisition of Dobson is consummated, (a)
the relevant market for mobile wireless telecommunications services
will become substantially more concentrated in the three AT&T/Dobson
overlap geographic markets, and competition between AT &T and Dobson in
mobile wireless telecommunications services will be eliminated in these
markets; (b) competition in mobile wireless telecommunications services
between Dobson and the businesses partly owned by AT&T will be
substantially curtailed in the two AT&T minority ownership geographic
markets, and (c) AT&T's acquisition of the rights to the Cellular One
brand is likely to diminish the Cellular One licensees' ability to
competitively constrain AT&T in the two AT&T/Cellular One overlap
geographic markets thereby lessening competition substantially to the
detriment of consumers. In all seven relevant geographic areas, the
merged firm will have the incentive and ability to increase prices,
diminish the quality or quantity of services provided, and refrain ITom
or delay making investments in network improvements.
3. Entry
31. Entry by a new mobile wireless telecommunications services
provider in the relevant geographic markets would be difficult, time-
consuming, and expensive, requiring the acquisition of spectrum
licenses and the build-out of a network. Although a number of other
firms own 1900 MHz PCS spectrum in the relevant geographic markets, the
propagation characteristics of 1900 MHz PCS spectrum are such that
signals using those frequencies extend to a significantly smaller area
than 800 MHz cellular signals. The relatively higher cost of building
out 1900 MHz spectrum, combined with the relatively low population
density of the areas in question, suggest that competitors with 1900
MHz spectrum are unlikely to build out their networks to reach the
entire area served by AT&T and Dobson. Although additional spectrum has
been and will be made available through FCC auctions, it is unlikely
that additional mobile wireless telecommunications services based on
this spectrum will be deployed in the near future in the relevant
geographic areas. Therefore, new entry in response to a small but
significant price increase for mobile wireless telecommunications
services
[[Page 65064]]
by the merged firm in the relevant geographic markets would not be
timely, likely, or sufficient to thwart the competitive harm resulting
from AT&T's proposed acquisition of Dobson, if it were to be
consummated.
IV. Violation Alleged
32. The effect of AT&T's proposed acquisition of Dobson, if it were
to be consummated, may be substantially to lessen competition in
interstate trade and commerce in the relevant geographic markets for
mobile wireless telecommunications services, in violation of Section 7
of the Clayton Act, 15 U.S.C. 18.
33. Unless restrained, the transaction will likely have the
following effects in mobile wireless telecommunications services in the
relevant geographic markets, among others:
a. Actual and potential competition between AT&T and Dobson will be
eliminated;
b. Actual and potential competition between Dobson and businesses
in which AT &T holds a minority interest will be lessened;
c. Actual and potential competition between AT&T and Cellular One
brand licensees will be lessened;
d. Competition in general will be lessened substantially;
e. Prices are likely to increase;
f. The quality and quantity of services are likely to decrease; and
g. Incentives to improve wireless networks will be reduced.
V. Requested Relief
The United States requests:
34. That AT&T's proposed acquisition of Dobson be adjudged to
violate Section 7 of the Clayton Act, 15 U.S.C. 18;
35. That defendants be permanently enjoined from and restrained
from carrying out the Agreement and Plan of Merger dated June 29, 2007,
or from entering into or carrying out any agreement, understanding, or
plan, the effect of which would be to bring the wireless services
businesses of AT&T and Dobson under common ownership or control;
36. That the United States be awarded its costs of this action; and
37. That the United States have such other relief as the Court may
deem just and proper.
Dated: October 30, 2007.
Respectfully Submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA:
-- /s/ ------
Thomas O. Barnett,
Assistant Attorney General, Antitrust Division.
-- /s/ ------
Deborah A. Garza,
Deputy Assistant Attorney General, Antitrust Division.
-- /s/ ------
J. Robert Kramer II,
Director of Operations, Antitrust Division.
-- /s/ ------
Nancy Goodman,
Chief, Telecommunications & Media Enforcement Section, Antitrust
Division.
-- /s/ ------
Laury Bobbish,
Assistant Chief, Telecommunications & Media Enforcement Section,
Antitrust Division.
-- /s/ ------
Hillary B. Burchuk (DC Bar No. 366755),
Lawrence M. Frankel (DC Bar No. 441532),
Rebekah P. Goodheart (DC Bar No. 472673),
Attorneys, Telecommunications & Media Enforcement Section, Antitrust
Division, U.S. Department of Justice, City Center Building, 1401 H
Street, NW., Suite 8000, Washington, DC 20530. Phone: (202) 514-5621
Facsimile: (202) 514-6381.
Appendix A
Herfindahl-Hirschman Index
``HHI'' means the Herfindahl-Hirschman Index, a commonly accepted
measure of market concentration. It is calculated by squaring the
market share of each firm competing in the market and then summing the
resulting numbers. For example, for a market consisting of four firms
with shares of 30, 30, 20, and 20 percent, the HHI is 2600 (30\2\ +
30\2\ +20\2\ + 20\2\ = 2600). (Note: Throughout the Complaint, market
share percentages have been rounded to the nearest whole number, but
HHIs have been estimated using unrounded percentages in order to
accurately reflect the concentration of the various markets.) The HHI
takes into account the relative size distribution of the firms in a
market and approaches zero when a market consists of a large number of
small firms. The HHI increases both as the number of firms in the
market decreases and as the disparity in size between those firms
increases.
Markets in which the HHI is between 1000 and 1800 points are
considered to be moderately concentrated, and those in which the HHI is
in excess of 1800 points are considered to be highly concentrated. See
Horizontal Merger Guidelines ] 1.51 (revised Apr. 8, 1997).
Transactions that increase the HHI by more than 100 points in
concentrated markets presumptively raise antitrust concerns under the
guidelines issued by the U.S. Department of Justice and Federal Trade
Commission. See id.
In the United States District Court for the District of Columbia
United States of America, Plaintiff, v. AT&T Inc. and Dobson
Communications Corporation, Defendants.
Case No.------
Filed:------
Final Judgment
Whereas, plaintiff, United States of America, filed its Complaint
on October 30,2007, United States and defendants, AT&T Inc. (``AT&T'')
and Dobson Communications Corporation (``Dobson''), by their respective
attorneys, have consented to the entry of this Final Judgment without
trial or adjudication of any issue of fact or law, and without this
Final Judgment constituting any evidence against or admission by any
party regarding any issue of fact or law;
And whereas, defendants agree to be bound by the provisions of this
Final Judgment pending its approval by the Court;
And whereas, the essence of this Final Judgment is the prompt and
certain divestiture of certain rights or assets by defendants to assure
that competition is not substantially lessened;
And whereas, the United States 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 that
defendants will later raise no claim of hardship or difficulty as
grounds for asking the Court to modify any of the divestiture
provisions contained below;
Now therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, .and upon consent of the
parties, it is ordered, adjudged and decreed:
I. Jurisdiction
This Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against defendants under Section 7 of the Clayton
Act, as amended (15 U.S.C. 18).
II. Definitions
As used in this Final Judgment:
A. ``Acquirer'' or ``Acquirers'' means the entity or entities to
whom defendants divest the Divestiture Assets.
B. ``AT&T'' means defendant AT&T Inc., a Delaware corporation with
its headquarters in San Antonio, Texas, its
[[Page 65065]]
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
C. ``Cellular One'' means Cellular One Properties, LLC, an Oklahoma
limited liability company, with its headquarters in Oklahoma City,
Oklahoma, engaged in the business of licensing the Cellular One brand
and promoting the Cellular One service mark and certain related
trademarks, service marks and designs.
D. ``Cellular One Assets'' means all legal and economic interests
Dobson holds in Cellular One. Cellular One Assets shall include all
right, title and interest in trademarks, trade names, service marks,
service names, designs, and intellectual property, all license
agreements for use of the Cellular One mark, technical information,
computer software and related documentation, and all records relating
to the divestiture assets. If the acquirer of the Cellular One Assets
is not the acquirer(s) of the Wireless Business Divestiture Assets,
defendants will grant the acquirer(s) of the Wireless Business
Divestiture Assets a license to use the Cellular One service marks on
terms generally available at the time the merger agreement was entered
and make the transfer of the Cellular One Assets subject to
continuation of these licenses.
E. ``CMA'' means cellular market area which is used by the Federal
Communications Commission (``FCC'') to define cellular license areas
and which consists of Metropolitan Statistical Areas (``MSAs'') and
Rural Service Areas (``RSAs'').
F. ``Divestiture Assets'' means the Wireless Business Divestiture
Assets, Minority Interests and the Cellular One Assets, including any
direct or indirect financial ownership or leasehold interests and any
direct or indirect role in management or participation in control
therein.
G. ``Dobson'' means defendant Dobson Communications Corporation, an
Oklahoma corporation, with its headquarters in Oklahoma City, Oklahoma,
its successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
H. ``Minority Interests'' means the equity interests and any
management or control interests owned by AT&T in the following entities
that are the licensees or operators of the mobile wireless
telecommunications services businesses in the specified RSAs:
(1) Mid-Tex Cellular, Ltd., covering Texas RSA-9 (CMA 660); and
(2) Northwest Missouri Cellular Limited Partnership, covering
Missouri RSA-1 (CMA 504).
As an alternative to the divestiture of the Minority Interests as
required by Section IV of this Final Judgment, upon approval of the
United States, defendants may withdraw, from the Minority Interest
partnerships pursuant to the applicable provisions in the governing
partnership agreement.
I. ``Multi-line Business Customer'' means a corporate or business
customer that contracts with Dobson for mobile wireless
telecommunications services to provide multiple telephones to its
employees or members whose services are provided pursuant to a contract
with the corporate or business customer.
J. ``Transaction'' means the Agreement and Plan of Merger among
Dobson, AT&T and Alpine Merger Sub, Inc., dated June 29, 2007.
K. ``Wireless Business Divestiture Assets'' means each mobile
wireless telecommunications services business to be divested under this
Final Judgment, including all types of assets, tangible and intangible,
used by defendants in the operation of the mobile wireless
telecommunications services businesses to be divested. ``Wireless
Business Divestiture Assets'' shall be construed broadly to accomplish
the complete divestiture of the entire business of Dobson in each of
the following RSA license areas as required by this Final Judgment and
to ensure that the divested mobile wireless telecommunications services
businesses remain viable, ongoing businesses:
(1) Kentucky RSA-6 (CMA 448);
(2) Kentucky RSA-8 (CMA 450); and
(3) Oklahoma RSA-5 (CMA 600)
provided that Dobson may retain all of the PCS spectrum it currently
holds in each of these RSAs and equipment that is used only for
wireless transmissions over this PCS spectrum.
The Wireless Business Divestiture Assets shall include, without
limitation, all types of real and personal property, monies and
financial instruments, equipment, inventory, office furniture, fixed
assets and furnishings, supplies and materials, contracts, agreements,
leases, commitments, spectrum licenses issued by the FCC and all other
licenses, permits and authorizations, operational support systems, cell
sites, network infrastructure, switches, customer support and billing
systems, interfaces with other service providers, business and customer
records and information, customer contracts, customer lists, credit
records, accounts, and historic and current business plans which relate
primarily to the wireless businesses being divested, as well as any
patents, licenses, sub-licenses, trade secrets, know-how, drawings,
blueprints, designs, technical and quality specifications and
protocols, quality assurance and control procedures, manuals and other
technical information defendant Dobson supplies to its own employees,
customers, suppliers, agents, or licensees, and trademarks, trade names
and service marks or other intellectual property, including all
intellectual property rights under third-party licenses that are
capable of being transferred to an Acquirer either in their entirety,
for assets described in (a) below, or through a license obtained
through or from Dobson, for assets described in (b) below; provided
that defendants shall only be required to divest Multi-line Business
Customer contracts if the primary business address for that customer is
located within any of the three license areas described herein, and
further, any subscriber who obtains mobile wireless telecommunications
services through any such contract retained by defendants and who are
located within the three geographic areas identified above, shall be
given the option to terminate their relationship with defendants,
without financial cost, at any time within one year of the closing of
the Transaction. Defendants shall provide written notice to these
subscribers within 45 days after the closing of the Transaction of the
option to terminate.
The divestiture of the Wireless Business Divestiture Assets shall
be accomplished by:
(a) Transferring to the Acquirers the complete ownership and/or
other rights to the assets (other than those assets used
substantially in the operations of Dobson's overall wireless
telecommunications services business which must be retained to
continue the existing operations of the wireless properties that
defendants are not required to divest, and that either are not
capable of being divided between the divested wireless
telecommunications services businesses and those not divested, or
are assets that the defendants and the Acquirer(s) agree, subject to
the approval of the United States, shall not be divided); and
(b) Granting to the Acquirer(s) an option to obtain a
nonexclusive, transferable license from defendants for a reasonable
period, subject to the approval of the United States and at the
election of an Acquirer, to use any of Dobson's retained assets
under paragraph (a) above used in operating the mobile wireless
telecommunications services businesses being divested, so as to
enable the Acquirer to continue to operate the divested mobile
wireless telecommunications services businesses without impairment.
Defendants shall identify in a schedule submitted to the United
States and filed with the Court as
[[Page 65066]]
expeditiously as possible following the filing of the Complaint, and
in any event prior to any divestiture and before the approval by the
Court of this Final Judgment, any and all intellectual property
rights under third-party licenses that are used by the mobile
wireless telecommunications services businesses being divested that
defendants could not transfer to an Acquirer entirely or by license
without third-party consent, the specific reasons why such consent
is necessary, and how such consent would be obtained for each asset.
III. Applicability
A. This Final Judgment applies to defendants AT&T and Dobson, as
defined above, and all other persons in active concert or participation
with any of them who receive actual notice of this Final Judgment by
personal service or otherwise.
B. If, prior to complying with Section IV and V of this Final
Judgment, Defendants sell or otherwise dispose of all or substantially
all of their assets or of lesser business units that include the
Divestiture Assets, they shall require the purchaser to be bound by the
provisions of this Final Judgment. Defendants need not obtain such an
agreement from the acquirers of the assets divested pursuant to this
Final Judgment.
IV. Divestitures
A. Defendants are ordered and directed, within 120 days after
consummation of the Transaction, or five (5) calendar days after notice
of the entry of this Final Judgment by the Court, whichever is later,
to divest the Divestiture Assets in a manner consistent with this Final
Judgment to an Acquirer or Acquirers acceptable to the United States in
its sole discretion, or, if applicable, to a Divestiture Trustee
designated pursuant to Section V of this Final Judgment. The United
States, in its sole discretion, may agree to one or more extensions of
this time period not to exceed 60 calendar days in total, and shall
notify the Court in such circumstances. With respect to divestiture of
the Wireless Business Divestiture Assets by defendants or the
Divestiture Trustee, if applications have been filed with the FCC
within the period permitted for divestiture seeking approval to assign
or transfer licenses to the Acquirer(s) of the Wireless Business
Divestiture Assets, but an order or other dispositive action by the FCC
on such applications has not been issued before the end of the period
permitted for divestiture, the period shall be extended with respect to
divestiture of those Wireless Business Divestiture Assets for which FCC
approval has not been issued until five (5) days after such approval is
received. Defendants agree to use their best efforts to accomplish the
divestitures set forth in this Final Judgment and to seek all necessary
regulatory approvals as expeditiously as possible. This Final Judgment
does not limit the FCC's exercise of its regulatory powers and process
with respect to the Divestiture Assets. Authorization by the FCC to
conduct the divestiture of a Divestiture Asset in a particular manner
will not modify any of the requirements of this decree.
B. In accomplishing the divestitures ordered by this Final
Judgment, defendants shall promptly make known, if they have not
already done so, by usual and customary means, the availability of the
Divestiture Assets. Defendants shall inform any person making inquiry
regarding a possible purchase of the Divestiture Assets that 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. Notwithstanding the provisions of this paragraph,
with the consent of the United States in its sole discretion, the
defendants may enter into exclusive negotiations to sell the
divestiture assets and may limit their obligations under this paragraph
to the provision of information to a single potential buyer for the
duration of those negotiations.
C. Defendants shall provide the Acquirers and the United States
information relating to the personnel involved in the operation,
development, and sale or license of the Wireless Business Divestiture
Assets and Cellular One Assets to enable the Acquirer(s) to make offers
of employment. Defendants will not interfere with any negotiations by
the Acquirer(s) to employ any defendant employee whose primary
responsibility is the operation, development, or sale or license of the
Wireless Business Divestiture Assets or the Cellular One Assets.
D. Defendants shall permit prospective Acquirers of the Divestiture
Assets to have reasonable access to personnel and to make inspections
of the Divestiture Assets; access to any and all environmental, zoning,
and other permit documents and information; and access to any and all
financial, operational, and other documents and information customarily
provided as part of a due diligence process.
E. Defendants shall warrant to the Acquirer(s) that (1) the
Wireless Business Divestiture Assets will be operational on the date of
sale, (2) every wireless spectrum license is in full force and effect
on the date of sale, and (3) the Cellular One Assets will be
unencumbered and not judged invalid or unenforceable by any court or
similar authority on the date of sale.
F. Defendants shall not take any action that will impede in any way
the permitting, licensing, operation, or divestiture of the Divestiture
Assets.
G. Defendants shall warrant to the Acquirer(s) of the Divestiture
Assets that there are no material defects in the environmental, zoning,
licensing or other permits pertaining to the operation of each asset
and that following the sale of the Divestiture Assets, defendants will
not undertake, directly or indirectly, any challenges to the
environmental, zoning, licensing or other permits relating to the
operation of the Divestiture Assets.
H. Unless the United States otherwise consents in writing, the
divestitures pursuant to Section IV, or by a Divestiture Trustee
appointed pursuant to Section V, of this Final Judgment, shall include
the entire Divestiture Assets, and with respect to the Wireless
Business Divestiture Assets shall be accomplished in such a way as to
satisfy the United States in its sole discretion that these assets can
and will be used by the Acquirer(s) as part of a viable, ongoing
business engaged in the provision of mobile wireless telecommunications
services. Divestiture of the Divestiture Assets may be made to one or
more Acquirers, provided that 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 divestiture of the
Divestiture Assets, whether pursuant to Section IV or Section V of this
Final Judgment,
(1) Shall be made to an Acquirer or Acquirers that, in the United
States's sole judgment,
(a) With respect to the Wireless Business Divestiture Assets, has
the intent and capability (including the necessary managerial,
operational, technical, and financial capability) of competing
effectively in the provision of mobile wireless telecommunications
services; and
(b) With respect to the Cellular One Assets, has the intent and
capability
[[Page 65067]]
(including the necessary managerial, operational, technical, and
financial capability) of maintaining and promoting the intellectual
property, including trademarks and service marks.
(2) Shall be accomplished so as to satisfy the United States, in
its sole discretion, that none of the terms of any agreement between an
Acquirer(s) and defendants shall give defendants the ability
unreasonably to raise the Acquirer's costs, to lower the Acquirer's
efficiency, or otherwise to interfere with the ability of the Acquirer
to compete effectively.
I. At the option of the Acquirer(s) of the Wireless Business
Divestiture Assets, defendants shall enter into a contract for
transition services customarily provided in connection with the sale of
a business providing mobile wireless telecommunications services or
intellectual property licensing sufficient to meet all or part of the
needs of the Acquirer for a period of up to one year. The terms and
conditions of any contractual arrangement meant to satisfy this
provision must be reasonably related to market conditions.
J. To the extent that the Divestiture Assets use intellectual
property, as required to be identified by Section II.K, that cannot be
transferred or assigned without the consent of the licensor or other
third parties, defendants shall use their best efforts to obtain those
consents.
K. Defendants shall not obtain any additional equity interest in
any Minority Interest entity.
V. Appointment of Divestiture Trustee
A. If defendants have not divested the Divestiture Assets within
the time period specified in Section IV.A, defendants shall notify 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 Divestiture Trustee selected
by the United States and approved by the Court to effect the
divestiture of the Divestiture Assets. The Divestiture Trustee will
have all the rights and responsibilities of the Management Trustee
appointed pursuant to the Preservation of Assets Stipulation and Order,
and will be responsible for:
(1) Accomplishing divestiture of all Divestiture Assets
transferred to the Divestiture Trustee from defendants, in
accordance with the terms of this Final Judgment, to an Acquirer(s)
approved by the United States, under Section IV.A of this Final
Judgment;
(2) Exercising the responsibilities of the licensee of any
transferred Wireless Business Divestiture Assets and controlling and
operating any transferred Wireless Business Divestiture Assets, to
ensure that the businesses remain ongoing, economically viable
competitors in the provision of mobile wireless telecommunications
services in the three license areas specified in Section II.K, until
they are divested to an Acquirer(s), and the Divestiture Trustee
shall agree to be bound by this Final Judgment; and
(3) Exercising the responsibilities of the licensee of any
transferred Cellular One Assets and controlling and operating any
transferred Cellular One Assets, to ensure that the business remains
ongoing and that the obligations of Cellular One under the Cellular
One license agreements are fulfilled, until they are divested to an
Acquirer(s), and the Divestiture Trustee shall agree to be bound by
this Final Judgment.
B. Defendants shall submit a proposed trust agreement (``Trust
Agreement'') to the United States, which must be consistent with the
terms of this Final Judgment and which must receive approval by the
United States in its sole discretion, who shall communicate to
defendants within 10 business days its approval or disapproval of the
proposed Trust Agreement, and which must be executed by the defendants
and the Divestiture Trustee within five business days after approval by
the United States.
C. After obtaining any necessary approvals from the FCC for the
assignment of the licenses of the Divestiture Assets to the Divestiture
Trustee, defendants shall irrevocably divest the remaining Divestiture
Assets to the Divestiture Trustee, who will own such assets (or own the
stock of the entity owning such assets, if divestiture is to be
effected by the creation of such an entity for sale to Acquirer(s)) and
control such assets, subject to the terms of the approved Trust
Agreement.
D. After the appointment of a Divestiture Trustee becomes
effective, only the Divestiture Trustee shall have the right to sell
the Divestiture Assets. The Divestiture Trustee shall have the power
and authority to accomplish the divestiture to an Acquirer(s)
acceptable to the United States, in its sole judgment, at such price
and on such terms as are then obtainable upon reasonable effort by the
Divestiture Trustee, subject to the provisions of Sections IV, V, and
VI of this Final Judgment, and shall have such other powers as this
Court deems appropriate. Subject to Section V.G of this Final Judgment,
the Divestiture Trustee may hire at the cost and expense of defendants
the Management Trustee appointed pursuant to the Preservation of Assets
Stipulation and Order and any investment bankers, attorneys or other
agents, who shall be solely accountable to the Divestiture Trustee,
reasonably necessary in the Divestiture Trustee's judgment to assist in
the divestiture.
E. In addition, notwithstanding any provision to the contrary, the
United States, in its sole discretion, may require defendants to
include additional assets, or with the written approval of the United
States, allow defendants to substitute substantially similar assets,
which substantially relate to the Divestiture Assets to be divested by
the Divestiture Trustee to facilitate prompt divestiture to an
acceptable Acquirer.
F. Defendants shall not object to a sale by the Divestiture Trustee
on any ground other than the Divestiture Trustee's malfeasance. Any
such objections by defendants must be conveyed in writing to the United
States and the Divestiture Trustee within 10 calendar days after the
Divestiture Trustee has provided the notice required under Section VI.
G. The Divestiture Trustee shall serve at the cost and expense of
defendants, on such terms and conditions as the United States approves,
and shall account for an monies derived from the sale of the assets
sold by the Divestiture Trustee and all costs and expenses so incurred.
After approval by the Court of the Divestiture Trustee's accounting,
including fees for its services and those of any professionals and
agents retained by the Divestiture Trustee, an remaining money shall be
paid to defendants and the trust shall then be terminated. The
compensation of the Divestiture Trustee and any professionals and
agents retained by the Divestiture Trustee shall be reasonable in light
of the value of the Divestiture Assets and based on a fee arrangement
providing the Divestiture Trustee with an incentive based on the price
and terms of the divestiture, and the speed with which it is
accomplished, but timeliness is paramount.
H. Defendants shall use their best efforts to assist the
Divestiture Trustee in accomplishing the required divestitures,
including their best efforts to effect all necessary regulatory
approvals. The Divestiture Trustee and any consultants, accountants,
attorneys, and other persons retained by the Divestiture Trustee shall
have full and complete access to the personnel, books, records, and
facilities of the businesses to be divested, and defendants shall
develop financial and other information relevant to the assets to be
divested as the Divestiture Trustee may reasonably request, subject to
reasonable protection for trade secret or other confidential research,
development, or commercial information. Defendants shall take no
[[Page 65068]]
action to interfere with or to impede the Divestiture Trustee's
accomplishment of the divestitures.
I. After its appointment, the Divestiture Trustee shall file
monthly reports with the United States and the Court setting forth the
Divestiture Trustee's efforts to accomplish the divestitures ordered
under this Final Judgment. To the extent such reports contain
information that the Divestiture Trustee deems confidential, such
reports shall not be filed in the public docket of the Court. Such
reports shall include the name, address, and telephone number of each
person who, during the preceding month, made an offer to acquire,
expressed an interest in acquiring, entered into negotiations to
acquire, or was contacted or made an inquiry about acquiring, any
interest in the Divestiture Assets, and shall describe in detail each
contact with any such person. The Divestiture Trustee shall maintain
full records of all efforts made to divest the Divestiture Assets.
J. If the Divestiture Trustee has not accomplished the divestitures
ordered under the Final Judgment within six months after its
appointment, the Divestiture Trustee shall promptly file with the Court
a report setting forth (1) the Divestiture Trustee's efforts to
accomplish the required divestitures, (2) the reasons, in the
Divestiture Trustee's judgment, why the required divestitures have not
been accomplished, and (3) the Divestiture Trustee's recommendations.
To the extent such reports contain information that the Divestiture
Trustee deems confidential, such reports shall not be filed in the
public docket of the Court. The Divestiture Trustee shall at the same
time furnish such report to the United States, who shall have the right
to make additional recommendations consistent with the purpose of the
trust. The Court thereafter shall enter such orders as it shall deem
appropriate to carry out the purpose of the Final Judgment, which may,
if necessary, include extending the trust and the term of the
Divestiture Trustee's appointment by a period requested by the United
States.
K. After defendants transfer the Divestiture Assets to the
Divestiture Trustee, and until those Divestiture Assets have been
divested to an Acquirer or Acquirers approved by the United States
pursuant to Sections IV.A and IV.H, the Divestiture Trustee shall have
sole and complete authority to manage and operate the Divestiture
Assets and to exercise the responsibilities of the licensee and shall
not be subject to any control or direction by defendants. Defendants
shall not use, or retain any economic interest in, the Divestiture
Assets transferred to the Divestiture Trustee, apart from the right to
receive the proceeds of the sale or other disposition of the
Divestiture Assets.
L. The Divestiture Trustee shall operate the Divestiture Assets
consistent with the Preservation of Assets Stipulation and Order and
this Final Judgment, with control over operations, marketing, sales and
Cellular One licensing. Defendants shall not attempt to influence the
business decisions of the Divestiture Trustee concerning the operation
and management of the Divestiture Assets, and shall not communicate
with the Divestiture Trustee concerning divestiture of the Divestiture
Assets or take any action to influence, interfere with, or impede the
Divestiture Trustee's accomplishment of the divestitures required by
this Final Judgment, except that defendants may communicate with the
Divestiture Trustee to the extent necessary for defendants to comply
with this Final Judgment and to provide the Divestiture Trustee, if
requested to do so, with whatever resources or cooperation may be
required to complete divestiture of the Divestiture Assets and to carry
out the requirements of the Preservation of Assets Stipulation and
Order and this Final Judgment. Except as provided in this Final
Judgment and the Preservation of Assets Stipulation and Order, in no
event shall defendants provide to, or receive from, the Divestiture
Trustee, the mobile wireless telecommunications services businesses,
Minority Interests or the Cellular One business under the Divestiture
Trustee's control, any non-public or competitively sensitive marketing,
sales, pricing or other information relating to their respective mobile
wireless telecommunications services businesses.
VI. Notice of Proposed Divestitures
A. Within two (2) business days following execution of a definitive
divestiture agreement, defendants or the Divestiture Trustee, whichever
is then responsible for effecting the divestitures required herein,
shall notify the United States in writing of any proposed divestiture
required by Section IV or V of this Final Judgment. If the Divestiture
Trustee is responsible, it shall similarly notify defendants. The
notice shall set forth the details of the proposed divestiture and list
the name, address, and telephone number of each person not previously
identified who offered or expressed an interest in or desire to acquire
any ownership interest in the Divestiture Assets, together with 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(s), any other third party, or the Divestiture
Trustee, if applicable, additional information concerning the proposed
divestiture, the proposed Acquirer(s), and any other potential
Acquirer. Defendants and the Divestiture Trustee shall furnish any
additional information requested within fifteen (15) calendar days of
the receipt of the request, unless the parties shall otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after the United States has been
provided the additional information requested from defendants, the
proposed Acquirer(s), any third party, and the Divestiture Trustee,
whichever is later, the United States shall provide written notice to
defendants and the Divestiture Trustee, if there is one, stating
whether or not it objects to the proposed divestiture. If 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.F of this Final Judgment. Absent written
notice that the United States does not object to the proposed
Acquirer(s) or upon objection by the United States, a divestiture
proposed under Section IV or Section V shall not be consummated. Upon
objection by defendants under Section V.F, a divestiture proposed under
Section V shall not be consummated unless approved by the Court.
VII. Financing
Defendants shall not finance all or any part of any divestiture
made pursuant to Section IV or V of this Final Judgment.
VIII. Preservation of Assets
Until the divestitures required by this Final Judgment have been
accomplished, defendants shall take all steps necessary to comply with
the Preservation of Assets Stipulation and Order entered by this Court
and cease use of the Divestiture Assets during the period that the
Divestiture Assets are managed by the Management Trustee. Defendants
shall take no action that would jeopardize the divestitures ordered by
this Court.
IX. Affidavits
A. Within twenty (20) calendar days of the filing of the Complaint
in this matter, and every thirty (30) calendar days thereafter until
the divestitures
[[Page 65069]]
have 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) calendar days, made an
offer to acquire, expressed an interest in acquiring, entered into
negotiations to acquire, or was contacted or made an inquiry about
acquiring, any interest in the Divestiture Assets, and shall describe
in detail each contact with any such person during that period. Each
such affidavit shall also include a description of the efforts
defendants have taken to solicit buyers for the Divestiture Assets, and
to provide required information to prospective Acquirers, including the
limitations, if any, on such information. Assuming the information set
forth in the affidavit is true and complete, any objection by the
United States to information provided by defendants, including
limitation on information, shall be made within fourteen (14) calendar
days of receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, defendants shall deliver to the United States an
affidavit that describes in reasonable detail all actions defendants
have taken and all steps defendants have implemented on an ongoing
basis to comply with Section VIII of this Final Judgment. Defendants
shall deliver to 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
divestitures have been completed.
X. Compliance Inspection
A. For the purposes of determining or securing compliance with this
Final Judgment or whether the Final Judgment should be modified or
vacated, and subject to any legally recognized privilege, authorized
representatives of the United States Department of Justice (including
consultants and other persons retained by the United States) shall,
upon written request of an authorized representative of the Assistant
Attorney General in charge of the Antitrust Division, and on reasonable
notice to defendants, be permitted:
(1) Access during defendants' office hours to inspect and copy,
or at the United States' option, to require defendants to provide
hard copy or electronic copies of, all books, ledgers, accounts,
records, data and documents in the possession, custody, or control
of defendants, relating to any matters contained in this Final
Judgment; and
(2) To interview, either informally or on the record,
defendants' officers, employees, or agents, who may have their
individual counsel present, regarding such matters. The interviews
shall be subject to the reasonable convenience of the interviewee
and without restraint or interference by defendants.
B. Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division,
defendants shall submit written reports or response to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States or, pursuant to a customary protective order or waiver of
confidentiality by defendants, the FCC, 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, ``Subject to claim of protection under Rule 26(c)(7) of
the Federal Rules of Civil Procedure,'' then the United States shall
give defendants ten (10) calendar days notice prior to divulging such
material in any legal proceeding (other than a grand jury proceeding).
XI. No Reacquisition
Defendants may not reacquire or lease any part of the Divestiture
Assets during the term of this Final Judgment, provided however that
defendants shall not be precluded from entering into agreements with
the Acquirer of the Cellular One Assets to license those assets for use
for a period not to exceed one (1) year from the date of the closing of
the Transaction.
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 Judgement
Unless this Court grants an extension, this Final Judgment shall
expire ten years from the date of its entry.
XIV. Public Interest Determination
Entry of this Final Judgment is in the public interest. The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16, including making copies available to the
public of this Final Judgment, the Competitive Impact Statement, and
any comments thereon and the United States's responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and response to comments filed with
the Court, entry of this Final Judgment is in the public interest.
Date:------------------------------------------------------------------
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16.
-----------------------------------------------------------------------
United States District Judge.
In the United States District Court for The District of Columbia
United States of America, Plaintiff, v. AT&T Inc. and Dobson
Communications Corporation, Defendants.
Case Number 1:07-CV-01952, Assigned to: Rosemary M. Collyer, FILED:
October 30, 2007.
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. l6(b)-(h), files this Competitive Impact
Statement relating to the proposed Final Judgment submitted for entry
in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
Defendants entered into an Agreement and Plan of Merger dated June
29, 2007, pursuant to which AT&T Inc. (``AT&T'') will acquire Dobson
Communications Corporation (``Dobson'').
Plaintiff filed a civil antitrust Complaint on October 30, 2007
seeking
[[Page 65070]]
to enjoin the proposed acquisition. The Complaint alleges that the
likely effect of this acquisition would be to lessen competition
substantially for mobile wireless telecommunications services in seven
(7) geographic areas in the states of Kentucky, Missouri, Oklahoma,
Pennsylvania and Texas, in violation of Section 7 of the Clayton Act,
15 U.S.C. 18. This loss of competition would result in consumers facing
higher prices, lower quality service and fewer choices of mobile
wireless telecommunications services.
At the same time the Complaint was filed, plaintiff also filed a
Preservation of Assets Stipulation and Order and proposed Final
Judgment, which are designed to eliminate the anti-competitive effects
of the acquisition. Under the proposed Final Judgment, which is
explained more fully below, defendants are required to divest (a)
Dobson's mobile wireless telecommunications services businesses and
related assets in three (3) markets (``Wireless Business Divestiture
Assets''); (b) AT&T minority interests in other mobile wireless
telecommunications services providers in two (2) markets (``Minority
Interests''), and (c) Dobson's Cellular One Assets, which include the
Cellular One service mark and related assets, (``Cellular One Assets'')
(collectively the ``Divestiture Assets''). Under the terms of the
Preservation of Assets Stipulation and Order, competition will be
maintained, and defendants will take certain steps to ensure that,
while the ordered divestiture is pending the Wireless Business
Divestiture Assets and Cellular One Assets are preserved as
competitively independent, economically viable and ongoing businesses.
In addition, AT&T will not exercise any rights associated with its
Minority Interests to control or influence the operations of the
competing mobile wireless telecommunications services provider.
Plaintiff 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 Preservation of Assets Stipulation and Order and the
proposed Final Judgment from the date of signing of the Preservation of
Assets Stipulation and Order, 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
Preservation of Assets Stipulation and Order 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
AT&T, with headquarters in San Antonio, Texas, is a corporation
organized and existing under the laws of the state of Delaware. AT&T is
the largest communications holding company in the United States and
worldwide, measured by revenue. It also is the largest mobile wireless
telecommunications services provider in the United States, measured by
subscribers, providing mobile wireless telecommunications services in
50 states and serving in excess of 63 million subscribers. In 2006,
AT&T earned approximately $37.53 billion in mobile wireless
telecommunications services revenues.
Dobson, with headquarters in Oklahoma City, Oklahoma, is a
corporation organized and existing under the laws of the state of
Oklahoma. Dobson is the ninth largest mobile wireless
telecommunications services provider in the United States, measured by
subscribers, and provides mobile wireless telecommunications services
in 17 states. It has approximately 1.7 million subscribers. Dobson also
owns Cellular One Properties, LLC, an Oklahoma limited liability
company, engaged in the business of licensing the Cellular One brand
and promoting the Cellular One service mark and certain related
trademarks, service marks and designs. In 2006, Dobson earned
approximately $1.3 billion in revenues.
Pursuant to an Agreement and Plan of Merger dated June 29, 2007,
AT&T will acquire Dobson for approximately $2.8 billion. If this
transaction is consummated, AT&T and Dobson combined would have
approximately 65 million subscribers in the United States, with $37.54
billion in mobile wireless telecommunications services revenues. The
proposed transaction, as initially agreed to by defendants, would
lessen competition substantially for mobile wireless telecommunications
services in seven (7) relevant geographic markets. This acquisition is
the subject of the Complaint and proposed Final Judgment filed by
plaintiff.
B. Mobile Wireless Telecommunications Services Industry
Mobile wireless telecommunications services allow customers to make
and receive telephone calls and use data services using radio
transmissions without being confined to a small area during the call or
data session and without the need for unobstructed line-of-sight to the
radio tower. More than 233 million people in the United States own
mobile wireless telephones and annual revenues from the sale of mobile
wireless telecommunications services in the United States were over
$125 billion in 2006. To meet this strong demand for mobility, mobile
wireless telecommunications services providers must deploy extensive
networks of switches and radio transmitters and receivers and
interconnect their networks with the networks of wireline carriers and
other mobile wireless telecommunications services providers.
First-generation mobile wireless voice systems based on analog
technology, now referred to as ``1 G'' technology, were initially
launched after the Federal Communications Commission (``FCC'') issued
the first spectrum licenses for mobile wireless telecommunications
services in the early to mid-1980s. The FCC issued two cellular
licenses (A-block and B-block) in each Metropolitan Statistical Area
(``MSA'') and Rural Service Area (``RSA'') (collectively, ``Cellular
Marketing Areas'' or ``CMAs''), with a total of 734 CMAs covering the
entire United States. Each license consists of 25 MHz of spectrum in
the 800 MHz band.
In 1995, the FCC licensed additional spectrum for the provision of
Personal Communications Services (``PCS ``), a category of services
that includes mobile wireless telecommunications services comparable to
those offered by cellular licensees. These licenses are in the 1900 MHz
band and are divided into six blocks: A, B, and C, which consist of 30
MHz each; and D, E, and F, which consist of 10 MHz each.
Geographically, the A and B-block 30 MHz licenses are issued by Major
Trading Areas (``MTAs''), and C, D, E, and F-block licenses are issued
by Basic Trading Areas (``BTAs''), several of which comprise each MTA.
MTAs and BTAs do not generally correspond to MSAs and RSAs.
With the introduction of the PCS licenses, both cellular and PCS
licensees began offering digital services. The use of digital
technology enabled providers to increase network capacity, develop
smaller handsets, and extend handset battery life. In addition, in
1996, one provider, a specialized mobile radio
[[Page 65071]]
(``SMR'' or ``dispatch'') spectrum licensee, began to use its SMR
spectrum to offer mobile wireless telecommunications services
comparable to those offered by other mobile wireless telecommunications
services providers, in conjunction with its dispatch, or ``push-to-
talk,'' service. Although there are a number of providers holding
spectrum licenses in each area of the country, not all providers have
fully built out their networks throughout each license area. In
particular, because of the characteristics of PCS spectrum, providers
holding this type of spectrum have found it less attractive to build
out in rural areas.
The vast majority of U.S. consumers have multiple choices for
mobile wireless telecommunications service, with more than 98 percent
of the total population residing in counties where three or more mobile
wireless telecommunications services operators offer digital service.
Nearly all mobile wireless voice service has migrated to second-
generation or ``2G'' digital technologies, GSM (global standard for
mobility, a standard used by all carriers in Europe), and CDMA (code
division multiple access). Even more advanced technologies (``2.5G''
and ``3G''), based on the earlier 2G technologies, have been deployed
for mobile wireless data services.
C. The Competitive Effects of the Transaction on Mobile Wireless
Telecommunications Services
Mobile wireless telecommunications services allow customers to
maintain their telephone calls or data sessions without wires when they
are moving from place to place and include both voice and data services
provided over a radio network. There are no cost-effective alternatives
to mobile wireless telecommunications services. Because fixed wireless
services do not allow customers to maintain their calls or data
sessions while moving and do not permit the placement and receipt of
calls from different locations, they are not regarded by consumers as a
reasonable substitute for mobile wireless telecommunications services.
It is unlikely that a sufficient number of customers would switch from
mobile wireless telecommunications services so as to make a small but
significant increase in the price of those services unprofitable.
A large majority of customers use mobile wireless
telecommunications services in close proximity to their workplaces and
homes. Thus, customers purchasing mobile wireless telecommunications
services choose among mobile wireless telecommunications services
providers that offer services where they live, work, and travel on a
regular basis. The number and identity of mobile wireless
telecommunications services providers varies among geographic areas, as
does the quality of services and breadth of geographic coverage offered
by providers. Mobile wireless telecommunications services providers can
and do offer different promotions, discounts, calling plans, and
equipment subsidies in different geographic areas, thereby varying the
price charged by geographic area.
The United States comprises numerous local geographic markets for
mobile wireless telecommunications services. The geographic areas in
which the FCC has licensed mobile wireless telecommunications services
providers often represent the core areas in which an individual
consumer would use mobile wireless telecommunications services, those
being the areas in which an individual customer resides, works, and
travels. The relevant geographic markets in which this transaction will
substantially lessen competition in mobile wireless telecommunications
services are effectively represented, but not defined, by the following
FCC spectrum licensing areas: Kentucky RSA-6 (CMA 448); Kentucky RSA-8
(CMA 450); Missouri RSA-1 (CMA 504); Oklahoma RSA-5 (CMA 600);
Pennsylvania RSA-5 (CMA 616); Texas RSA-9 (CMA 660); and Texas RSA-11
(CMA 662). It is unlikely that a sufficient number of customers would
switch to mobile wireless telecommunications services providers in a
different geographic market to make a small but significant price
increase in the relevant geographic markets unprofitable.
The seven (7) geographic markets of concern for mobile wireless
telecommunications services were identified by plaintiff via a fact-
specific, market-by-market analysis that included consideration of, but
was not limited to, the following factors: the number of mobile
wireless telecommunications services providers and their competitive
strengths and weaknesses; AT&T's and Dobson's market shares, along with
those of the other providers; whether additional spectrum is, or is
likely soon to be, available; whether any providers are limited by
insufficient spectrum or other factors in their ability to add new
customers; the concentration of the market, and the breadth and depth
of coverage by different providers in each market; the likelihood that
any provider would expand its existing coverage or that new providers
would enter; whether AT&T or Dobson own rights to control or influence
the competitive operations of another provider in the market; and the
particular rights associated with any such minority interests.
1. Overlap Areas
a. AT&T/Dobson Overlap Markets
AT&T and Dobson each own a business that offers mobile wireless
telecommunications services in three relevant geographic areas:
Kentucky RSA-6 (CMA 448); Kentucky RSA-8 (CMA 450); and Oklahoma RSA-5
(CMA 600). In each of these areas, either AT&T or Dobson has the
largest share of subscribers and the other defendant is a particularly
strong and important competitor. The companies controlled by AT&T and
Dobson collectively account for between 63 percent and 97 percent of
subscribers in these areas. As measured by the Herfindahl-Hirschman
Index (``HHI''), which is commonly employed in merger analysis and is
defined and explained in Appendix A to the Complaint, concentration in
these markets ranges from over 3100 to more than 7900, which is well
above the 1800 threshold at which the Department considers a market to
be highly concentrated. After AT&T's proposed acquisition of Dobson is
consummated, the HHls in the relevant geographic markets will range
from over 5200 to over 9400, with increases in the HHI as a result of
the merger ranging from over 1400 to over 2300, significantly beyond
the thresholds at which the Department considers a transaction likely
to cause competitive harm.
b. AT&T Minority Interest Markets
In two relevant geographic areas, Missouri RSA-1 (CMA 504) and
Texas RSA-9 (CMA 660), Dobson owns a business that offers mobile
wireless telecommunications services and AT&T has a minority interest
in a competing business. In Missouri RSA-1 , AT&T's minority equity
interest is in Northwest Missouri Cellular Limited Partnership's
business. In Texas RSA-9, AT&T's minority equity interest is in Mid-Tex
Cellular, Ltd. In these areas, either Dobson or the business in which
AT&T has a minority interest has the largest share and the other firm
is a particularly strong and important competitor in all, or a large
part, of the RSA. In both areas, the businesses in which AT&T and
Dobson have an interest collectively account for in excess of 70
percent of mobile wireless subscribers.
Although AT&T's minority equity interests in Northwest Missouri
Cellular LP and Mid-Tex Cellular, Ltd. are small,
[[Page 65072]]
AT&T has significant rights under each relevant partnership agreement
to control core business decisions, obtain critical confidential
competitive information, and share in profits at a rate significantly
greater than the equity ownership share upon a sale of the partnership.
Post-merger, AT&T would likely have the ability and incentive to
coordinate the activities of the wholly-owned Dobson wireless business
and the business in which it has a minority stake, and/or undermine the
ability of the latter to compete against the former. Such activity
would likely result in a significant lessening of competition.
c. AT&T/Cellular One Overlap Markets
In two relevant geographic areas, Pennsylvania RSA-5 (CMA 616) and
Texas RSA-11 (CMA 662), AT&T owns a business that offers mobile
wireless telecommunications services, and a competing mobile wireless
telecommunications business operates under the Cellular One brand name
that AT&T would acquire from Dobson pursuant to the proposed
transaction. In these areas, AT&T has the largest share of subscribers
and the mobile wireless telecommunications business operating under the
Cellular One brand name is a particularly strong and important
competitor. In each area, AT&T and the Cellular One licensee
collectively account for in excess of 65 percent subscribers.
The Cellular One brand name was first used in 1984. In 1989, the
Cellular One Group partnership was formed to maintain and promote the
Cellular One brand, a licensed trade name. In 1995, the partnership
offered to license the brand to all A block cellular providers.
Presently, approximately nine mobile wireless telecommunications
services providers in addition to Dobson license the Cellular One brand
and offer services to their customers under that brand. Under the terms
of the Cellular One licensing agreements it has entered into with other
mobile wireless telecommunications services providers, it is required
to promote and maintain the value of the mark. Through its planned
purchase of Dobson, AT&T will acquire the rights to the Cellular One
trademarks, trade names, service marks, service names, and designs for
the Cellular One brand name, as well as the agreements to license the
Cellular One brand to other mobile wireless telecommunications services
providers.
The providers that continue to license and use the Cellular One
brand have invested considerable resources in developing and building
the brand. The Cellular One brand is thus an important input to these
firms' provision of mobile wireless telecommunications services. If
their ability to use the brand were to be impaired or eliminated, they
would suffer considerable costs and effective competition in these
markets would be harmed. Because AT&T offers and markets wireless
services under its own AT&T brand, it has little or no incentive to use
or maintain the Cellular One brand. In the two relevant geographic
areas where a Cellular One licensee is a primary competitor to AT&T in
the mobile wireless telecommunications services market, AT&T would have
the incentive and ability to impair the effectiveness of the Cellular
One brand, or even deny a license to the current licensee entirely,
since by doing so, it could reduce competition by significantly
increasing costs to a primary competitor at little or no cost to
itself. Although current Cellular One licensees could, in theory, re-
brand their mobile wireless service in response to such conduct, not
only would such a process be difficult, expensive, and disruptive, but
it is unlikely that another brand could be obtained that would be as
widely-recognized or as effective in promoting mobile wireless
telecommunications services as the Cellular One brand.
2. Competitive Impact
In all seven relevant geographic markets, the mobile wireless
telecommunications businesses wholly or partially owned by AT&T and
Dobson, and/or the Cellular One licensee, own all or most of the 800
MHz band cellular spectrum licenses, which are more efficient in
serving rural areas than 1900 MHz band PCS spectrum. As a result of
holding the cellular spectrum licenses and being early entrants into
these markets, the networks wholly or partly owned by AT&T, Dobson, or
the Cellular One licensee provide greater depth and breadth of coverage
than their PCS-based competitors. A mobile wireless telecommunications
services provider with limited coverage in a geographic area typically
does not aggressively market its services in that area because it can
service customers only through a roaming arrangement with a more built-
out competitor under which it must pay roaming charges to, and rely on,
its competitor to maintain the quality of the network and to support
new features. The mobile wireless businesses wholly or partly owned by
AT&T or Dobson in five of the relevant areas, and by AT&T and the
Cellular One licensee in the other two relevant areas, accordingly,
are, for a large set of customers, likely closer substitutes for each
other than the other mobile wireless telecommunications services in
these markets provided by firms who own only PCS spectrum.
Competition between the businesses wholly or partly owned by AT&T
and Dobson, or between AT&T and the Cellular One licensee, in the
relevant geographic markets has resulted in lower prices and higher
quality in mobile wireless telecommunications services, than would
otherwise have existed in these geographic markets. In these areas,
many consumers consider businesses wholly or partly owned by AT&T,
Dobson, or the Cellular One licensee to be the most attractive
competitors because other providers' networks lack coverage or provide
lower-quality service.
Competition will be substantially lessened to the detriment of
consumers if AT&T's proposed acquisition of Dobson is consummated
without the required divestitures: (a) Competition between AT&T and
Dobson in mobile wireless telecommunications services will be
eliminated in the three AT&T/Dobson overlap geographic markets and the
relevant markets for mobile wireless telecommunications services will
become substantially more concentrated; (b) AT &T would have the
incentive and ability to diminish competition in mobile wireless
telecommunications services between Dobson and the businesses partly
owned by AT&T in the two AT&T minority ownership geographic markets;
and (c) AT&T's acquisition of the rights to the Cellular One brand
would give AT&T the incentive and ability to diminish the Cellular One
licensee's ability to compete effectively in the two AT&T/Cellular One
overlap geographic markets. In all seven relevant geographic areas, the
merged firm will have the incentive and ability to increase prices,
diminish the quality or quantity of services provided, and refrain from
or delay making investments in network improvements.
3. Entry
Entry by a new mobile wireless telecommunications services provider
in the relevant geographic markets would require the acquisition of
spectrum licenses and the build-out of a network, and thus would be
difficult, time-consuming, and expensive. Although a number of other
firms in the relevant geographic areas own 1900 MHz PCS spectrum, the
propagation characteristics of that spectrum are such that signals
extend to a significantly smaller area than do 800 MHz cellular
signals. The relatively higher cost of building out 1900 MHz spectrum,
combined with the relatively low
[[Page 65073]]
population density of the areas in question, make it unlikely that
competitors with 1900 MHz spectrum will build out their networks to
reach the entire area served by AT&T and Dobson. Although additional
spectrum has been and will be made available through FCC auctions, it
is unlikely that additional mobile wireless telecommunications services
based on this spectrum will be deployed in the near future in the
relevant geographic areas. Therefore, new entry in response to a small
but significant price increase for mobile wireless telecommunications
services by the merged firm in the relevant geographic markets would
not be timely, likely, or sufficient to thwart the competitive harm
resulting from AT&T's proposed acquisition of Dobson, if it were to be
consummated.
For these reasons, the United States concluded that AT&T's proposed
acquisition of Dobson will likely substantially lessen competition, in
violation of Section 7 of the Clayton Act, in the provision of mobile
wireless telecommunications services in the seven relevant geographic
markets alleged in the Complaint.
III. Explanation of the Proposed Final Judgment
The divestiture requirements of the proposed Final Judgment will
eliminate the anticompetitive effects of the acquisition in mobile
wireless telecommunications services in the seven (7) geographic
markets of concern. The proposed Final Judgment requires defendants,
within one hundred twenty (120) days after the consummation of the
Transaction, or five (5) days after notice of the entry of the Final
Judgment by the Court, whichever is later, to divest the Wireless
Business Divestiture Assets, the Minority Interests and the Cellular
One Assets. The Wireless Business Divestiture Assets are essentially
Dobson's entire mobile wireless telecommunications services businesses
in the three (3) markets where AT&T and Dobson are each other's closest
competitors for mobile wireless telecommunications services. These
assets must be divested in such a way as to satisfy plaintiff in its
sole discretion that they will be operated by the purchaser as a
viable, ongoing business that can compete effectively in each relevant
market. Defendants must take all reasonable steps necessary to
accomplish the divestitures quickly and shall cooperate with
prospective purchasers.
In requiring the divestitures, plaintiff seeks to make certain that
the potential buyer acquires all the assets it may need to be a viable
competitor and replace the competition lost by the merger. The 25 MHz
of cellular spectrum that must be divested is sufficient to support the
operation and expansion of the mobile wireless telecommunications
services businesses being divested, enabling the buyer to be a viable
competitor to the merged entity. Plaintiff is not requiring the
divestiture of the 10 MHz of PCS spectrum held by Dobson in the three
(3) divestiture markets because that spectrum is not essential to the
viability of the business to be divested. Moreover, in none of the
three markets does Dobson's PCS spectrum holdings cover all counties in
the RSA.
In the two relevant geographic markets where AT&T owns a minority
interest in another mobile wireless services provider, the proposed
Final Judgment requires defendants to divest or withdraw from these
Minority Interests. The informational and control rights associated
with the minority interests created concerns that allowing the merged
firm to continue to hold its existing interest and rights would
diminish competition in markets where Dobson and the firm in which AT&T
holds an interest were particularly strong, close competitors.
Requiring AT&T to relinquish its ownership and control rights in these
entities, through divestiture or withdrawal, would eliminate the
combined company's ability and incentive to limit competition between
itself and the entities in which it owns minority interests.
The Cellular One Assets consist of all right, title and interest in
trademarks, trade names, service marks, service names, designs, and
intellectual property, all license agreements for use of the Cellular
One mark, technical information, computer software and related
documentation, and all records relating to the Cellular One Assets. The
proposed acquisition raised concerns that in two (2) markets, AT&T
would have the incentive and ability to substantially impair the
ability of its primary competitor, a Cellular One licensee, to compete
effectively. Under the proposed Final Judgment, the defendants are
required to divest the Cellular One Assets to a buyer with the intent
and capability to maintain and promote the Cellular One brand such that
the current Cellular One licensees can continue to effectively use the
brand to compete.
A. Timing of Divestitures
In antitrust cases involving mergers or joint ventures in which the
United States seeks a divestiture remedy, it requires completion of the
divestitures within the shortest time period reasonable under the
circumstances. Section IV.A.g of the proposed Final Judgment in this
case requires divestiture of the Divestiture Assets, within one hundred
twenty (120) days after the consummation of the Transaction, or five
(5) days after notice of the entry of the Final Judgment by the Court,
whichever is later. Plaintiff in its sole discretion may extend the
date for divestiture of the Divestiture Assets by up to sixty (60)
days. Because the FCC's approval is required for the transfer of the
wireless licenses to a purchaser, Section IV.A provides that if
applications for transfer of a wireless license have been filed with
the FCC, but the FCC has not acted dispositively before the end of the
required divestiture period, the period for divestiture of those assets
shall be extended until five (5) days after the FCC has acted. This
extension is to be applied only to the individual Wireless Business
Divestiture Assets affected by the delay in approval of the license
transfer and does not entitle defendants to delay the divestiture of
any other Divestiture Assets for which license transfer approval is not
required or has been granted.
The divestiture timing provisions of the proposed Final Judgment
win ensure that the divestitures are carried out in a timely manner,
and at the same time will permit defendants an adequate opportunity to
accomplish the divestitures through a fair and orderly process. Even if
all Divestiture Assets have not been divested upon consummation of the
transaction, there should be no adverse impact on competition given the
limited duration of the period of common ownership and the detailed
requirements of the Preservation of Assets Stipulation and Order.
B. Use of a Management Trustee
The Preservation of Assets Stipulation and Order, filed
simultaneously with this Competitive Impact Statement, ensures that,
prior to divestiture, the Divestiture Assets are maintained, the
Wireless Business Divestiture Assets remain an ongoing business
concern, the Cellular One Assets remain economically viable, and
defendants will not exercise any legal or equitable rights it may have
in the Minority Interest entities. The Preservation of Assets
Stipulation and Order is designed to ensure that the Divestiture Assets
will be preserved and remain independent of defendants, so that
competition is maintained during the pendency of the ordered
divestiture.
The Preservation of Assets Stipulation and Order appoints a
management
[[Page 65074]]
trustee selected by plaintiff to oversee the Wireless Business
Divestiture Assets and the Cellular One Assets in the relevant
geographic markets. The appointment of a management trustee in this
situation is required because the Wireless Business Divestiture Assets
are not independent facilities that can be held separate and operated
as stand-alone units by the merged firm. Rather, the Wireless Business
Divestiture Assets are an integral part of a larger network and, to
maintain their competitive viability and economic value, they should
remain part of that network during the divestiture period. A management
trustee is necessary to oversee the continuing relationship between
defendants and these assets, to ensure that these assets are preserved
and supported by defendants during this period, yet run independently.
The management trustee will also preserve and ensure the viability of
the Cellular One Assets. The management trustee will have the power to
operate the Wireless Business Divestiture Assets and the Cellular One
Assets in the ordinary course of business, so that they will remain
independent and uninfluenced by defendants, and so that the Wireless
Business Divestiture Assets remain an ongoing and economically viable
competitor to defendants and to other mobile wireless
telecommunications services providers. The management trustee will
preserve the confidentiality of competitively sensitive marketing,
pricing, and sales information; ensure defendants' compliance with the
Preservation of Assets Stipulation and Order and the proposed Final
Judgment; and maximize the value of the Wireless Business Divestiture
Assets and the Cellular One Assets so as to permit expeditious
divestiture in a manner consistent with the proposed Final Judgment.
Because defendants have agreed in the Preservation of Assets
Stipulation and Order to forego exercising any rights they may have
with respect to the Minority Interests pending disposal of those
interests, and defendants do not have an active day-to-day role in
managing the businesses of the Minority Interest Entities, it is
unnecessary for the Minority Interests to be operated by the Management
Trustee.
The Preservation of Assets Stipulation and Order provides that
defendants will pay all costs and expenses of the management trustee,
including the cost of consultants, accountants, attorneys, and other
representatives and assistants hired by the management trustee as are
reasonably necessary to carry out his or her duties and
responsibilities. After his or her appointment becomes effective, the
management trustee will file monthly reports with plaintiffs setting
forth efforts taken to accomplish the goals of the Preservation of
Assets Stipulation and Order and the proposed Final Judgment and the
extent to which defendants are fulfilling their responsibilities.
Finally, the management trustee may become the divestiture trustee,
pursuant to the provisions of Section Y of the proposed Final Judgment.
c. Use of a Divestiture Trustee
In the event that defendants do not accomplish the divestiture
within the periods prescribed in the proposed Final Judgment, the Final
Judgment provides that the Court will appoint a trustee selected by
plaintiff to effect the divestitures. As part of this divestiture,
defendants must relinquish any direct or indirect financial ownership
interests and any direct or indirect role in management or
participation in control. Pursuant to Section V of the proposed Final
Judgment, the divestiture trustee will own and control the Divestiture
Assets until they are sold to a final purchaser, subject to safeguards
to prevent defendants from influencing their operation.
Section V details the requirements for the establishment of the
divestiture trust, the selection and compensation of the divestiture
trustee, the responsibilities of the divestiture trustee in connection
with the divestiture and operation of the Divestiture Assets, and the
termination of the divestiture trust. The divestiture trustee will have
the obligation and the sole responsibility, under Section V.D, for the
divestiture of any transferred Divestiture Assets. The divestiture
trustee has the authority to accomplish divestitures at the earliest
possible time and ``at such price and on such terms as are then
obtainable upon reasonable effort by the Divestiture Trustee.'' In
addition, to ensure that the divestiture trustee can promptly locate
and divest to an acceptable purchaser, plaintiff, in its sole
discretion, may require defendants to include additional assets, or
allow defendants to substitute substantially similar assets, which
substantially relate to the Divestiture Assets to be divested by the
divestiture trustee.
The divestiture trustee will not only have responsibility for sale
of the Divestiture Assets, but will also be the authorized holder of
the wireless licenses, with full responsibility for the operations,
marketing, and sales of the wireless businesses to be divested, and
will not be subject to any control or direction by defendants.
Defendants will no longer have any role in the ownership, operation, or
management of the Divestiture Assets other than the right to receive
the proceeds of the sale. Defendants will also retain certain
obligations to support to the Divestiture Assets and cooperate with the
divestiture trustee in order to complete the divestiture.
The proposed Final Judgment provides that defendants will pay all
costs and expenses of the divestiture trustee. The divestiture
trustee's commission will be structured, under Section V.G of the
proposed Final Judgment, so as to provide an incentive for the
divestiture trustee based on the price obtained and the speed with
which the divestitures are accomplished. After his or her appointment
becomes effective, the divestiture trustee will file monthly reports
with the Court and plaintiff setting forth his or her efforts to
accomplish the divestitures. Section V.J requires the divestiture
trustee to divest the Divestiture Assets to an acceptable purchaser or
purchasers no later than six (6) months after the assets are
transferred to the divestiture trustee. At the end of six (6) months,
if all divestitures have not been accomplished, the trustee and
plaintiff will make recommendations to the Court, which shall enter
such orders as appropriate in order to carry out the purpose of the
Final Judgment, including extending the trust or term of the trustee's
appointment.
The divestiture provisions of the proposed Final Judgment will
eliminate the anticompetitive effects of the transaction in the
provision of mobile wireless telecommunications services. The
divestitures of the Wireless Business Divestiture Assets and Minority
Interests will preserve competition in mobile wireless
telecommunications services by maintaining an independent and
economically viable competitor in the relevant geographic markets. The
divestiture of the Cellular One Assets will ensure that the Cellular
One brand will be preserved and maintained so that the current Cellular
One licensees can continue to compete effectively.
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
[[Page 65075]]
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 public
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the United States written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the Federal Register or the last date of
publication in a newspaper of the summary of this Competitive Impact
Statement, whichever is later. All comments received during this period
will be considered by the Department of Justice, which remains free to
withdraw its consent to the proposed Final Judgment at any time prior
to the Court's entry of judgment. The comments and the response of 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
Plaintiff considered, as an alternative to the proposed Final
Judgment, a full trial on the merits against defendants. Plaintiff
could have continued the litigation and sought preliminary and
permanent injunctions against AT&T's acquisition of Dobson. Plaintiff
is satisfied, however, that the divestiture of assets and other relief
described in the proposed Final Judgment will preserve competition for
the provision of mobile wireless telecommunications services in the
relevant markets identified in the Complaint.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
The Clayton Act, as amended by the APPA, requires that proposed
consent judgments in antitrust cases brought by the United States be
subject to a sixty-day comment period, after which the Court shall
determine whether entry of the proposed Final Judgment ``is in the
public interest.'' 15 U.S.C. 16(e)(l). In making that determination,
the court, in accordance with the statute as amended in 2004, is
required to consider:
(A) The competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration of relief sought, anticipated effects of
alternative remedies actually considered, whether its terms are
ambiguous, and any other competitive considerations bearing upon the
adequacy of such judgment that the court deems necessary to a
determination of whether the consent judgment is in the public
interest; and
(B) The impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and
individuals alleging specific injury from the violations set forth
in the complaint including consideration of the public benefit, if
any, to be derived from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B); see generally United States v. SBC
Commuc'ns, Inc., 489 F. Supp. 2d 1, 11 (D.D.C. 2007) (concluding that
the 2004 amendments ``effected minimal changes'' to scope of review
under Tunney Act, leaving review ``sharply proscribed by precedent and
the nature of Tunney Act proceedings'').\1\
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\1\ The 2204 amendments substituted ``shall'' for ``may'' in
directing relevant factors for court to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
16(e)(2004), with 15 U.S.C. 16(e)(1) (2006).
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As the United States Court of Appeals for the District of Columbia
Circuit has held, under the APPA a court considers, among other things,
the relationship between the remedy secured and the specific
allegations set forth in the government's complaint, whether the decree
is sufficiently clear, whether enforcement mechanisms are sufficient,
and whether the decree may positively harm third parties. See United
States v. Microsoft Corp., 56 F.3d 1448, 1458-62 (D.C. Cir. 1995). With
respect to the adequacy of the relief secured by the decree, a court
may not ``engage in an unrestricted evaluation of what relief would
best serve the public.'' United States v. BNS, Inc., 858 F.2d 456, 462
(9th Cir. 1988) (citing United States v. Bechtel Corp., 648 F.2d
660,666 (9th Cir. 1981)); see also Microsoft, 56 F.3d at 1460-62.
Courts have held that:
[t]he balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\ In
making its public interest determination, a district court ``must
accord deference to the government's predictions about the efficacy of
its remedies, and may not require that the remedies perfectly match the
alleged violations because this may only reflect underlying weakness in
the government's case or concessions made during negotiation.'' SBC
Commc'ns, 489 F. Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461
(noting the need for courts to be ``deferential to the government's
predictions as to the effect of the proposed remedies''); United States
v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1,6 (D.D.C. 2003)
(noting that the court should grant due respect to the United States'
prediction as to the effect of proposed remedies, its perception of the
market structure, and its views of the nature of the case).
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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 or disapproving
the consent decree''); United States v. Gillette Co., 406 F. Supp.
713, 716 (D. Mass. 1975) (noting that, in this way, the court is
constrained to ``look at the overall picture not hypercritically,
nor with a microscope, but with an artist's reducing glass''). See
generally Microsoft, 56 F.3d at 1461 (discussing whether ``the
remedies [obtained in the decree are] so inconsonant with the
allegations charged as to fall outside of the ` reaches of the
public interest' '').
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Court approval of a consent decree requires a standard more
flexible and less strict than that appropriate to court adoption of a
litigated decree following 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. Am. Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 1982)
[[Page 65076]]
(citations omitted) (quoting United States v. Gillette Co., 406 F.
Supp. 713,716 (D. Mass. 1975)), affd sub nom. Maryland v. United
States, 460 U.S. 1001 (1983); see also United States v. Alcan Aluminum
Ltd., 605 F. Supp. 619,622 (W.D. Ky. 1985) (approving the consent
decree even though the court would have imposed a greater remedy). To
meet this standard, the United States ``need only provide a factual
basis for concluding that the settlements are reasonably adequate
remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp. 2d at 17.
Moreover, the Court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint, and does not authorize the Court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459. Because the ``court's
authority to review the decree depends entirely on the government's
exercising its prosecutorial discretion by bringing a case in the first
place,'' it follows that ``the court is only authorized to review the
decree itself,'' and not to ``effectively redraft the complaint'' to
inquire into other matters that the United States did not pursue. Id.
at 1459-60. As this Court recently confirmed in SBC Communications,
courts ``cannot look beyond the complaint in making the public interest
determination unless the complaint is drafted so narrowly as to make a
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
In its 2004 amendments, Congress made clear its intent to preserve
the practical benefits of utilizing consent decrees in antitrust
enforcement, adding the unambiguous instruction ``[n]othing in this
section shall be construed to require the court to conduct an
evidentiary hearing or to require the court to permit anyone to
intervene.'' 15 U.S.C. 16(e)(2). The language wrote into the statute
what the Congress that enacted the Tunney Act in 1974 intended, as
Senator Tunney then explained: ``[t]he court is nowhere compelled to go
to trial or to engage in extended proceedings which might have the
effect of vitiating the benefits of prompt and less costly settlement
through the consent decree process.'' 119 Cong. Rec. 24,598 (1973)
(statement of Senator Tunney). Rather, the procedure for the public
interest determination is left to the discretion of the court, with the
recognition that the court's ``scope of review remains sharply
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC
Commc'ns, 489 F. Supp. 2d at 11.\3\
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\3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the
court to make its public interest determination on the basis of the
competitive impact statement and response to comments alone''); S.
Rep. No. 93-298, 93d Cong., 1st Sess., at 6 (1973) (``Where the
public interest can be meaningfully evaluated simply on the basis of
briefs and oral arguments, that is the approach that should be
utilized.''); United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade
Cas. (CCH) ] 61,508, at 71,980 (W.D. Mo. 1977) (``Absent a showing
of corrupt failure of the government to discharge its duty, the
Court, in making its public interest finding, should * * * carefully
consider the explanations of the government in the competitive
impact statement and its responses to comments in order to determine
whether those explanations are reasonable under the
circumstances.'').
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VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by plaintiff United States in
formulating the proposed Final Judgment.
Dated: October 30, 2007.
Respectfully submitted,
------/s/ ----------------Hillary B. Burchuk (D.C. Bar No.
366755),
Lawrence M. Frankel (DC Bar No. 441532),
Rebekah P. Goodheart (DC Bar No. 472673),
Attorneys, Telecommunications & Media Enforcement Section, Antitrust
Division, U.S. Department of Justice, City Center Building, 1401 H
Street, NW., Suite 8000, Washington, DC 20530. (202) 514-5621,
Facsimile: (202) 514-6381.
[FR Doc. 07-5719 Filed 11-16-07; 8:45 am]
BILLING CODE 4410-11-M