[Federal Register Volume 74, Number 211 (Tuesday, November 3, 2009)]
[Notices]
[Pages 56869-56881]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-26351]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States et al. V. AT&T Inc. et al.; Proposed Final Judgment
and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America et al. v. AT&T et al., Civil Action No. 09-1932
(HHK). On October 13, 2009, the United States filed a Complaint
alleging that the proposed acquisition by AT&T of the mobile wireless
telecommunications business assets of Centennial Communications Corp.
would violate Section 7 of the Clayton Act, 15 U.S.C. 18. The proposed
Final Judgment, filed the same time as the Complaint, requires the
divestiture of mobile wireless telecommunications
[[Page 56870]]
services businesses for certain areas in the states of Louisiana and
Mississippi.
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, 450 Fifth
Street, NW., Suite 1010, 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 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, Department of Justice, 450 Fifth Street,
NW., Suite 7000, Washington, DC 20530, (telephone: 202-514-5621).
Patricia A. Brink,
Deputy Director of Operations.
In the United States District Court for the District of Columbia
United States of America, Department of Justice, Antitrust
Division, 450 5th Street, NW., Suite 7000, Washington, DC 20530; and
State of Louisiana, Office of the Attorney General 1885 North Third
Street Baton Rouge, Louisiana 70802; Plaintiffs, v. AT&T Inc., One
AT&T Plaza, 208 South Akard Street, Dallas, Texas 75202; and
Centennial Communications Corp., 3349 Route 138, Wall, New Jersey
07719; Defendants.
Civil No. 1:09-cv-01932-JDB
Filed: October 13, 2009
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, and the State of Louisiana,
by its Attorney General James D. ``Buddy'' Caldwell, bring this
civil action to enjoin the merger of two telecommunications services
providers, AT&T Inc. (``AT&T'') and Centennial Communications Corp.
(``Centennial''), and to obtain equitable and other relief as
appropriate. Plaintiffs allege as follows:
I. Nature of the Action
1. AT&T entered into an agreement to acquire Centennial, dated
November 7, 2008, under which the two companies would combine their
telecommunications services businesses (``Transaction Agreement'').
Plaintiffs seek to enjoin this transaction because it will
substantially lessen competition in mobile wireless
telecommunications services in the following eight geographic
markets: the Lafayette LA MSA (CMA 174); Alexandria LA MSA (CMA
205); LA RSA 3 (CMA 456); LA RSA 5 (CMA 458); LA RSA 6 (CMA 459); LA
RSA 7 (CMA 460); MS RSA 8 (CMA 500); and MS RSA 9 (CMA 501).
2. AT&T provides mobile wireless telecommunications services in
50 states and serves in excess of 79.6 million subscribers.
Centennial provides mobile wireless telecommunications services in
six states, Puerto Rico, and the United States Virgin Islands, and
serves approximately 1.1 million wireless customers. AT&T and
Centennial are two of only a few providers of mobile wireless
telecommunications services in the eight geographic markets in
Louisiana and Mississippi identified above. Unless this acquisition
is enjoined, consumers of mobile wireless telecommunications
services residing in these areas likely will face increased prices,
diminished quality or quantity of services, and less investment in
network improvements for mobile wireless telecommunications
services. Accordingly, AT&T's acquisition of Centennial would
violate Section 7 of the Clayton Act, 15 U.S.C. 18.
II. 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. Plaintiff Louisiana, by and through its Attorney General, brings
this action in its respective sovereign capacity and as parens
patriae on behalf of the citizens, general welfare, and economy of
Louisiana under Section 16 of the Clayton Act, 15 U.S.C. 26, to
prevent defendants from violating Section 7 of the Clayton Act, 15
U.S.C. 18.
4. AT&T and Centennial 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 and 26, and 28 U.S.C. 1331 and 1337.
5. The defendants have consented to personal jurisdiction and
venue in this judicial district.
III. The Defendants and the Transaction
6. AT&T, with headquarters in Dallas, Texas, is a corporation
organized and existing under the laws of the State of Delaware. AT&T
is one of the world's largest providers of communications services.
AT&T is the second largest mobile wireless telecommunications
services provider in the United States as measured by subscribers,
provides mobile wireless telecommunications services in 50 states,
and serves in excess of 79 million wireless subscribers. In 2008,
AT&T earned mobile wireless telecommunications services revenues in
excess of $44 billion, and its total revenues were in excess of $124
billion.
7. Centennial, with headquarters in Wall, New Jersey, is a
corporation organized and existing under the laws of the State of
Delaware. Centennial is the eighth-largest mobile wireless
telecommunications services provider in the United States as
measured by subscribers, and provides mobile wireless
telecommunications services in six states, Puerto Rico, and the
United States Virgin Islands. In Puerto Rico, Centennial is also a
competitive local exchange carrier, providing voice, data and
connectivity solutions to residential, telecommunications carrier,
and enterprise customers. For the fiscal year ending May 31, 2009,
Centennial had approximately 1.1 million wireless subscribers and
approximately 694,900 access line equivalents in Puerto Rico, and
earned approximately $1 billion in revenues.
8. Pursuant to the Transaction Agreement, AT&T will acquire
Centennial for approximately $944 million. If this transaction is
consummated, AT&T and Centennial combined would have approximately
80 million wireless subscribers in the United States, with
approximately $45 billion in mobile wireless telecommunications
services revenues.
IV. 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 270 million people in
the United States who own mobile wireless telephones. In 2008,
revenues from the sale of mobile wireless telecommunications
services in the United States were over $148 billion. To provide
service, mobile wireless telecommunications services providers must
deploy extensive networks of switches, radio transmitters, and
receivers and interconnect their networks with the networks of
wireline carriers and other mobile wireless telecommunications
services providers.
10. In the early to mid-1980s, the FCC issued two cellular
licenses in the 800 MHz band for each Metropolitan Statistical Area
(``MSA'') and Rural Service Area (``RSA'') (collectively, ``Cellular
Market Areas'' or ``CMAs''), totaling 734 CMAs covering the entire
United States. The first mobile wireless voice systems using this
cellular spectrum were based on analog technology, now referred to
as first-generation or ``1G'' technology.
11. In 1995, the FCC licensed additional spectrum for the
provision of Personal Communications Services (``PCS''), a category
of services that includes mobile wireless telecommunications
services comparable to those offered by cellular licensees. These
licenses are in the 1,900 MHz band and are divided into six blocks
which are divided among Major Trading Areas (``MTAs'') and Basic
Trading Areas (``BTAs''). MTAs and BTAs do not generally correspond
to MSAs and RSAs.
12. With the introduction of the PCS licenses, both cellular and
PCS licensees began offering digital services, thereby increasing
network capacity, shrinking the size of handsets, and extending
handset battery life. Although there are a number of providers
holding spectrum licenses in each
[[Page 56871]]
area of the country, not all providers have fully built out their
networks throughout each license area. In particular, because of the
characteristics of PCS spectrum, providers holding this type of
spectrum generally have found it less attractive to build out in
rural areas.
13. Today, more than 95 percent of the total U.S. population
lives in counties where three or more mobile wireless
telecommunications services operators offer service. Nearly all
mobile wireless voice services have migrated from analog to digital-
based second-generation or ``2G'' technologies, using GSM (global
standard for mobility) or CDMA (code division multiple access). More
advanced technologies (``2.5G'' and ``3G'') have also been widely
deployed for mobile wireless data services. Wireless carriers are in
the process of evaluating, testing, and deploying even more advanced
wireless data technologies, such as WiMAX and Long Term Evolution,
which will offer higher data transmission rates.
B. Relevant Product Market
14. Mobile wireless telecommunications services is a relevant
product market. Mobile wireless telecommunications services include
both voice and data services provided over a radio network and allow
customers to maintain their telephone calls or data sessions without
wires when traveling. There are no cost-effective alternatives to
mobile wireless telecommunications services. Because fixed wireless
services are not mobile, they are not regarded by consumers of
mobile wireless telecommunications services to be a reasonable
substitute for those services. It is unlikely that a sufficient
number of customers would switch away from mobile wireless
telecommunications services to make a small but significant price
increase in those services unprofitable. Mobile wireless
telecommunications services accordingly is a relevant product market
under Section 7 of the Clayton Act, 15 U.S.C. 18.
C. Relevant Geographic Markets
15. The United States comprises numerous local geographic
markets for mobile wireless telecommunications services. A large
majority of customers use mobile wireless telecommunications
services in close proximity to their workplaces and homes. Thus,
customers purchasing mobile wireless telecommunications services
choose among mobile wireless telecommunications services providers
that offer services where they live, work, and travel on a regular
basis. The geographic areas in which the FCC has licensed mobile
wireless telecommunications services providers often represent the
core of the business and social spheres within which a group of
customers has the same competitive choices for mobile wireless
telephone services. The number of and identity of mobile wireless
telecommunications services providers varies among geographic areas,
as does the quality of services and breadth of geographic coverage
offered by providers. Some mobile wireless telecommunications
services providers can and do offer different promotions, discounts,
calling plans, and equipment subsidies in different geographic
areas, varying their prices by geographic area.
16. The relevant geographic markets, under Section 7 of the
Clayton Act, 15 U.S.C. 18, where the transaction would substantially
lessen competition for mobile wireless telecommunications services
are effectively represented by the following FCC spectrum licensing
areas: Lafayette LA MSA (CMA 174); Alexandria LA MSA (CMA 205); LA
RSA 3 (CMA 456); LA RSA 5 (CMA 458); LA RSA 6 (CMA 459); LA RSA 7
(CMA 460); MS RSA 8 (CMA 500); and MS RSA 9 (CMA 501). It is
unlikely that a sufficient number of customers would switch to
mobile wireless telecommunications services providers who do not
offer services in these geographic areas to make a small but
significant price increase in the relevant geographic markets
unprofitable.
D. Anticompetitive Effects
1. Mobile Wireless Telecommunications Services
17. In seven of the eight cellular license areas described
above, AT&T and Centennial are significant providers of mobile
wireless telecommunications services (based on subscribers), and
together their combined share in each area ranges from 51% to 89%.
The eighth area, MS RSA 9, is rural. In MS RSA 9, AT&T and
Centennial hold a large portion of the cellular licenses covering
the CMA and have fairly extensive networks. Providers have found
that cellular spectrum, given its characteristics, is more efficient
in serving rural areas. Consequently, the holders of PCS licenses in
MS RSA 9 have not fully constructed their networks throughout the
CMA, opting instead to serve only a few areas where the population
density is higher or there are major highways. The PCS spectrum
holders are weak competitors and will remain so in the portions of
MS RSA 9 where the merging parties will hold all the cellular
spectrum post-merger. Thus, in each of the eight relevant geographic
markets, AT&T and Centennial are the other's closest competitor for
a significant set of customers.
18. The relevant geographic markets for mobile wireless services
are highly concentrated. As measured by the Herfindahl-Hirschman
Index (``HHI''), which is commonly employed in merger analysis and
is defined and explained in Appendix A to this Complaint,
concentration in these geographic areas today ranges from over 2,900
to more than 6,576, which is well above the 1,800 threshold at which
plaintiffs consider a market to be highly concentrated. After AT&T's
proposed acquisition of Centennial is consummated, the HHIs in the
relevant geographic areas will range from over 4,500 to more than
8,100, with increases in the HHI as a result of the merger ranging
from over 200 to over 3,350, significantly beyond the thresholds at
which plaintiffs consider a transaction likely to cause competitive
harm.
19. Competition between AT&T and Centennial in the relevant
geographic markets has resulted in lower prices and higher quality
in mobile wireless telecommunications services than otherwise would
have existed in these geographic markets. In these areas, consumers
consider AT&T and Centennial to be particularly attractive
competitors because other providers' networks often lack coverage or
provide lower-quality service. If the proposed acquisition is
consummated, competition between AT&T and Centennial in mobile
wireless telecommunications services will be eliminated in these
markets and the relevant markets for mobile wireless
telecommunications services will become substantially more
concentrated. As a result, the loss of competition between AT&T and
Centennial increases the merged firm's incentive and ability in the
relevant geographic markets to increase prices, diminish the quality
or quantity of services provided, and refrain from or delay making
investments in network improvements.
2. Entry
20. Entry by a new mobile wireless services provider in the
relevant geographic markets would be difficult, time-consuming, and
expensive, requiring spectrum licenses and the build out of a
network. Therefore, any entry in response to a small but significant
price increase for mobile wireless telecommunications services by
the merged firm in the relevant geographic markets would not be
timely, likely, or sufficient to thwart the competitive harm
resulting from AT&T's proposed acquisition of Centennial, if it were
consummated. Although the FCC recently auctioned more spectrum that
can be used for mobile wireless telecommunications services, it is
unlikely that networks will be constructed using this spectrum to
support entry in the relevant geographic markets in the next two to
three years due to the largely rural nature of the areas and build
out costs.
V. Violation Alleged
21. The effect of AT&T's proposed acquisition of Centennial, if
it were to be consummated, may be substantially to lessen
competition in interstate trade and commerce in the relevant
geographic markets for mobile wireless telecommunications services
in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
22. Unless restrained, the transaction will likely have the
following effects in mobile wireless telecommunications services in
the relevant geographic markets, among others:
a. Actual and potential competition between AT&T and Centennial
will be eliminated;
b. Competition in general will be lessened substantially;
c. Prices are likely to increase;
d. The quality and quantity of services are likely to decrease;
and
e. Incentives to improve wireless networks will be reduced.
VI. Requested Relief
The plaintiffs request:
23. That AT&T's proposed acquisition of Centennial be adjudged
to violate Section 7 of the Clayton Act, 15 U.S.C. 18;
24. That defendants be permanently enjoined from and restrained
from carrying out the Agreement and Plan of Merger dated November 7,
2008, or from entering into or carrying out any agreement,
understanding, or plan, the effect of which would be to bring the
telecommunications businesses of
[[Page 56872]]
Centennial under common ownership or control;
25. That plaintiffs be awarded their costs of this action; and
26. That plaintiffs have such other relief as the Court may deem
just and proper.
Dated: October 13, 2009.
Respectfully submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA
----------\s\----------
Christine A. Varney
Assistant Attorney General Antitrust Division
----------\s\----------
Molly S. Boast
Deputy Assistant Attorney General Antitrust Division
----------\s\----------
William F. Cavanaugh
Deputy Assistant Attorney General Antitrust Division
----------\s\----------
Patricia A. Brink
Deputy 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 (D.C. Bar No. 366755)
Lauren Fishbein (D.C. Bar No. 451889)
Lawrence Frankel (D.C. Bar No. 441532)
Peter Gray
Justin Hurwitz
Lorenzo McRae (D.C. Bar No. 473660)
Attorneys, Telecommunications & Media Enforcement Section Antitrust
Division, U.S. Department of Justice Liberty Square Building, 450
Fifth Street, NW., Suite 7000, Washington, DC 20530 Phone: (202)
514-5621, Facsimile: (202) 514-6381
FOR PLAINTIFF STATE OF LOUISIANA
STATE OF LOUISIANA
JAMES D. ``BUDDY'' CALDWELL
Attorney General
----------\s\----------
Stacie Lambert deBlieux
Assistant Attorney General, Louisiana Department of Justice Public
Protection Division, Antitrust, P.O. Box 94005, Baton Rouge, LA
70804, Phone: (225) 326-6449, Facsimile: (225) 326-6498
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 2,600 (30\2\ + 30\2\ + 20\2\ + 20\2\ = 2,600). (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 1,000 and 1,800 points are
considered to be moderately concentrated, and those in which the HHI
is in excess of 1,800 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, and State of Louisiana, Plaintiffs, v.
AT&T Inc., and Centennial Communications Corp., Defendants. Filed:
10/13/09 No. 09 1932
[Proposed] Final Judgment
Whereas, plaintiffs, United States of America and State of
Louisiana, filed their Complaint on October 13, 2009, plaintiffs and
defendants, AT&T Inc. (``AT&T'') and Centennial Communications Corp.
(``Centennial''), by their respective attorneys, have consented to
the entry of this Final Judgment without trial or adjudication of
any issue of fact or law, and without this Final Judgment
constituting any evidence against or admission by any party
regarding any issue of fact or law;
And whereas, defendants agree to be bound by the provisions of
this Final Judgment pending its approval by the Court;
And whereas, the essence of this Final Judgment is the prompt
and certain divestiture of certain rights or assets by defendants to
assure that competition is not substantially lessened;
And whereas, plaintiffs require defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
And whereas, defendants have represented to plaintiffs that the
divestitures required below can and will be made, and that
defendants will later raise no claim of hardship or difficulty as
grounds for asking the Court to modify any of the divestiture
provisions contained below;
Now therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ordered, adjudged and decreed:
I. Jurisdiction
This Court has jurisdiction over the subject matter of and each
of the parties to this action. The Complaint states a claim upon
which relief may be granted against defendants under Section 7 of
the Clayton Act, as amended (15 U.S.C. 18).
II. Definitions
As used in this Final Judgment:
A. ``Acquirer'' or ``Acquirers'' means the entity or entities to
whom defendants divest the Divestiture Assets.
B. ``AT&T'' means AT&T Inc., a Delaware corporation, with
headquarters in Dallas, Texas, its successors and assigns, and its
subsidiaries, divisions, groups, affiliates, partnerships and joint
ventures, and their directors, officers, managers, agents, and
employees.
C. ``Centennial'' means Centennial Communications Corp., a
Delaware corporation, with its headquarters in Wall, New Jersey, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
D. ``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'').
E. ``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 Centennial in the operation of its mobile wireless
telecommunications services businesses in each of the following CMA
license areas:
1. Lafayette LA MSA (CMA 174);
2. Alexandria LA MSA (CMA 205);
3. LA RSA 3 (CMA 456);
4. LA RSA 5 (CMA 458);
5. LA RSA 6 (CMA 459);
6. LA RSA 7 (CMA 460);
7. MS RSA 8 (CMA 500); and
8. MS RSA 9 (CMA 501).
The term ``Divestiture Assets'' shall also include all types of
assets, tangible and intangible, used by Centennial in the operation
of its mobile wireless telecommunications services business in the
Lake Charles MSA (CMA 197), if plaintiff United States in its sole
discretion, after consultation with plaintiff State of Louisiana,
determines that defendants must divest Centennial's mobile wireless
telecommunications services businesses in the Lake Charles MSA (CMA
197) to ensure a successful divestiture of the Divestiture Assets in
the Lafayette LA MSA (CMA 174), LA RSA 5 (CMA 458), LA RSA 6 (CMA
459), and LA RSA 7 (CMA 460). To ensure that the divested mobile
wireless telecommunications services businesses remain viable,
ongoing businesses, the term ``Divestiture Assets'' shall be
construed broadly to accomplish the complete divestiture of the
entire mobile wireless telecommunications services business of
Centennial in each of the CMA license areas being divested.
The 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,
[[Page 56873]]
accounts, and historic and current business plans that relate
primarily to the mobile wireless telecommunications services
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 defendants supply to their own employees, customers,
suppliers, agents, or licensees, and trademarks, trade names and
service marks or other intellectual property that relate primarily
to the mobile wireless telecommunications services businesses being
divested, including: (i) Any intellectual property created during
the time period that the Divestiture Assets are operated by a
Management Trustee or Divestiture Trustee; and (ii) all intellectual
property rights under third-party licenses that are capable of being
transferred to the Acquirer(s) either in their entirety, for assets
described in (a) below, or through a license obtained through or
from defendants, for assets described in (b) below. The Divestiture
Assets shall also include 1) Multi-line Consumer Customer contracts
if the account billing address is located within any of the CMAs
where assets are required to be divested, and 2) Multi-line Business
Customer contracts if the primary business address for that customer
is located within any of the license areas where assets are required
to be divested, and further, any subscriber who obtains mobile
wireless telecommunications services through any Multi-line Business
Customer contract retained by defendants and who is located within
the license areas identified above, shall be given the option to
terminate its 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 Multi-line Business
Customers within 45 days after the closing of the Transaction of the
option to terminate.
The divestiture of the Divestiture Assets shall be accomplished
by:
a. Transferring to the Acquirer(s) the complete ownership and/or
other rights to the assets (other than those assets used
substantially in the operations of defendants' overall mobile
wireless telecommunications services business that must be retained
to continue the existing operations of the wireless properties that
defendants are not required to divest, and that either are not
capable of being divided between the divested mobile wireless
telecommunications services businesses and those not divested, or
are assets that the defendants and the Acquirer(s) agree, subject to
the approval of plaintiff United States, shall not be divided); and
b. Granting to the Acquirer(s) an option to obtain a non-
exclusive, transferable license from defendants for a reasonable
period, subject to the approval of plaintiff United States, and at
the election of the Acquirer(s), to use any of defendants' retained
assets under paragraph (a) above used in operating the mobile
wireless telecommunications services businesses being divested, so
as to enable the Acquirer(s) to continue to operate the divested
mobile wireless telecommunications services businesses without
impairment. Defendants shall identify in a schedule submitted to
plaintiff United States and filed with the Court as expeditiously as
possible following the filing of the Complaint, and in any event
prior to any divestiture and before the approval by the Court of
this Final Judgment, any and all intellectual property rights under
third-party licenses that are used by the mobile wireless
telecommunications services businesses being divested that
defendants could not transfer to the Acquirer(s) entirely or by
license without third-party consent, the specific reasons why such
consent is necessary, and how such consent would be obtained for
each asset.
F. ``Multi-line Business Customer'' means a corporate or
business customer that contracts with a defendant for the provision
of mobile wireless telecommunications services to the corporate or
business customers' employees or members over multiple devices.
G. ``Multi-line Consumer Customer'' means a consumer that
contracts with a defendant for the provision of mobile wireless
telecommunications services to the consumer and the consumer's
family or group members over multiple devices.
H. ``Transaction'' means the Agreement and Plan of Merger among
AT&T Inc., Independence Merger Sub Inc., and Centennial
Communications Corp., dated November 7, 2008.
III. Applicability
A. This Final Judgment applies to defendants AT&T and
Centennial, as defined above, and all other persons in active
concert or participation with any of them who receive actual notice
of this Final Judgment by personal service or otherwise.
B. If, prior to complying with Section IV and V of this Final
Judgment, defendants sell or otherwise dispose of all or
substantially all of their assets or of lesser business units that
include the Divestiture Assets, they shall require the purchaser to
be bound by the provisions of this Final Judgment. Defendants need
not obtain such an agreement from the acquirer(s) of the assets
divested pursuant to this Final Judgment.
IV. Divestitures
A. Defendants are ordered and directed, within 120 days after
consummation of the Transaction, or five calendar days after notice
of the entry of this Final Judgment by the Court, whichever is
later, to divest the Divestiture Assets in a manner consistent with
this Final Judgment to an Acquirer or Acquirers acceptable to
plaintiff United States in its sole discretion, after consultation
with plaintiff State of Louisiana with respect to Divestiture Assets
located in Louisiana, or, if applicable, to a Divestiture Trustee
designated pursuant to Section V of this Final Judgment. Plaintiff
United States, in its sole discretion, after consultation with
plaintiff State of Louisiana with respect to Divestiture Assets
located in Louisiana, may agree to one or more extensions of this
time period not to exceed 60 calendar days in total, and shall
notify the Court in such circumstances. With respect to divestiture
of the Divestiture Assets by defendants or the Divestiture Trustee,
if applications have been filed or are on file with the FCC within
the period permitted for divestiture seeking approval to assign or
transfer licenses to the Acquirer(s) of the Divestiture Assets, but
an order or other dispositive action by the FCC on such applications
has not been issued before the end of the period permitted for
divestiture, the period shall be extended with respect to
divestiture of those Divestiture Assets for which FCC approval has
not been issued until five days after such approval is received.
Defendants agree to use their best efforts to accomplish the
divestitures set forth in this Final Judgment and to seek all
necessary regulatory approvals as expeditiously as possible. This
Final Judgment does not limit the FCC's exercise of its regulatory
powers and process with respect to the Divestiture Assets.
Authorization by the FCC to conduct the divestiture of a Divestiture
Asset in a particular manner will not modify any of the requirements
of this Final Judgment.
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 plaintiffs at the same time that such
information is made available to any other person. Notwithstanding
the provisions of this paragraph, with the consent of plaintiff
United States in its sole discretion, after consultation with
plaintiff State of Louisiana with respect to Divestiture Assets
located in Louisiana, the defendants may enter into exclusive
negotiations to sell all or any part of 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 Acquirer(s) and plaintiffs
information relating to the personnel involved in the operation,
development, and sale or license of the Divestiture Assets to enable
the Acquirer(s) to make offers of employment. Defendants will not
interfere with any negotiations by the Acquirer(s) to employ any
defendant employee whose primary responsibility is the operation,
development, or sale or license of the Divestiture Assets.
D. Defendants shall permit prospective Acquirers of the
Divestiture Assets to have reasonable access to personnel and to
make inspections of the Divestiture Assets; access to any and all
environmental, zoning, and other permit documents and information;
and access to any and all financial,
[[Page 56874]]
operational, and other documents and information customarily
provided as part of a due diligence process.
E. Defendants shall warrant to the Acquirer(s) that (1) the
Divestiture Assets will be operational on the date of sale, and (2)
every wireless spectrum license that relates to the mobile wireless
telecommunications services business being divested is in full force
and effect on the date of sale.
F. Defendants shall not take any action that will impede in any
way the permitting, licensing, operation, or divestiture of the
Divestiture Assets.
G. Defendants shall warrant to the Acquirer(s) of the
Divestiture Assets that there are no material defects in the
environmental, zoning, licensing or other permits pertaining to the
operation of each asset and that following the sale of the
Divestiture Assets, defendants will not undertake, directly or
indirectly, any challenges to the environmental, zoning, licensing
or other permits relating to the operation of the Divestiture
Assets.
H. Unless plaintiff United States, in its sole discretion, after
consultation with plaintiff State of Louisiana with respect to
Divestiture Assets located in Louisiana, otherwise consents in
writing, the divestitures pursuant to Section IV, or by a
Divestiture Trustee appointed pursuant to Section V, of this Final
Judgment, shall include the entire Divestiture Assets, and shall be
accomplished in such a way as to satisfy plaintiff United States in
its sole discretion that these assets can and will be used by the
Acquirer(s) as part of a viable, ongoing business engaged in the
provision of mobile wireless telecommunications services. The
divestiture of the Divestiture Assets, whether pursuant to Section
IV or Section V of this Final Judgment:
1. Shall be made to an Acquirer or Acquirers that, in plaintiff
United States' sole judgment, after consultation with plaintiff
State of Louisiana with respect to Divestiture Assets located in
Louisiana, has the intent and capability (including the necessary
managerial, operational, technical, and financial capability) of
competing effectively in the provision of mobile wireless
telecommunications services; and
2. Shall be accomplished so as to satisfy plaintiff United
States in its sole discretion, after consultation with plaintiff
State of Louisiana with respect to Divestiture Assets located in
Louisiana, that none of the terms of any agreement between an
Acquirer(s) and defendants shall give defendants the ability
unreasonably to raise the Acquirer's costs, to lower the Acquirer's
efficiency, or otherwise to interfere with the ability of the
Acquirer to compete effectively.
I. The Divestiture Assets listed in each numbered subsection
below shall be divested together to a single Acquirer, provided that
it is demonstrated to the sole satisfaction of plaintiff United
States, after consultation with plaintiff State of Louisiana with
respect to Divestiture Assets located in Louisiana, that the
Divestiture Assets will remain viable and the divestiture of such
assets will remedy the competitive harm alleged in the Complaint:
1. Northern Louisiana
a. Alexandria MSA (CMA 205);
b. LA RSA 3 (CMA 456);
2. Southern Louisiana
a. Lafayette MSA (CMA 174);
b. LA RSA 5 (CMA 458);
c. LA RSA 6 (CMA 459);
d. LA RSA 7 (CMA 460); and
3. Mississippi
a. MS RSA 8 (CMA 500);
b. MS RSA 9 (CMA 501).
Further, if defendants are required to divest Centennial's
mobile wireless telecommunications services business in Lake Charles
MSA (CMA 197) as part of the Divestiture Assets, these assets must
be divested to the Acquirer of the Southern Louisiana Divestiture
Assets as defined in the second numbered subsection above. In
addition to the foregoing, nothing in this section shall be
construed as limiting the ability of an Acquirer to purchase the
assets in more than one numbered subsection, and defendants shall be
required to consider bids from potential acquirers that are
contingent on the acquisition of all of the assets in more than one
of the numbered subsections. With the written approval of plaintiff
United States, in its sole discretion, after consultation with
plaintiff State of Louisiana with respect to Divestiture Assets
located in Louisiana, defendants or the Divestiture Trustee may
sell, to a single acquirer, fewer than all of the assets contained
in the numbered subsections above, to facilitate prompt divestiture
to an acceptable Acquirer(s).
J. At the option of the Acquirer(s) of the Divestiture Assets,
defendants shall enter into a contract for transition services
customarily provided in connection with the sale of a business
providing mobile wireless telecommunications services or
intellectual property licensing sufficient to meet all or part of
the needs of the Acquirer(s) for a period of up to one year.
Plaintiff United States, in its sole discretion, may agree to one or
more three- to six-month extensions of this one-year time period
upon providing notice to the Court. The terms and conditions of any
contractual arrangement meant to satisfy this provision must be
reasonably related to market conditions.
K. To the extent that the Divestiture Assets use intellectual
property, as required to be identified by Section II.D, that cannot
be transferred or assigned without the consent of the licensor or
other third parties, defendants shall use their best efforts to
obtain those consents.
V. Appointment of Divestiture Trustee
A. If defendants have not divested the Divestiture Assets within
the time period specified in Section IV.A, defendants shall notify
plaintiff United States, and with respect to the Divestiture Assets
in Louisiana plaintiff State of Louisiana, of that fact in writing,
specifically identifying the Divestiture Assets that have not been
divested. Upon application of plaintiff United States, and after
consultation with plaintiff State of Louisiana with respect to
Divestiture Assets located in Louisiana, the Court shall appoint a
Divestiture Trustee selected by plaintiff United States and approved
by the Court to effect the divestiture of the Divestiture Assets.
The Divestiture Trustee will have all the rights and
responsibilities of the Management Trustee who may be appointed
pursuant to the Preservation of Assets Stipulation and Order, and
will be responsible for:
1. Accomplishing divestiture of all Divestiture Assets
transferred to the Divestiture Trustee from defendants, in
accordance with the terms of this Final Judgment, to an Acquirer(s)
approved by plaintiff United States, in its sole discretion, after
consultation with plaintiff State of Louisiana with respect to
Divestiture Assets located in Louisiana, under Section IV.A of this
Final Judgment; and
2. Exercising the responsibilities of the licensee of any
transferred Divestiture Assets, and controlling and operating any
transferred Divestiture Assets, to ensure that the businesses remain
ongoing, economically viable competitors in the provision of mobile
wireless telecommunications services, until they are divested to an
Acquirer(s), and the Divestiture Trustee shall agree to be bound by
this Final Judgment.
B. Defendants shall submit a proposed trust agreement (``Trust
Agreement'') to plaintiff United States, which must be consistent
with the terms of this Final Judgment and which must receive
approval by plaintiff United States in its sole discretion, after
consultation with plaintiff State of Louisiana with respect to
Divestiture Assets located in Louisiana, who shall communicate to
defendants within 10 business days its approval or disapproval of
the proposed Trust Agreement, and which must be executed by the
defendants and the Divestiture Trustee within five business days
after approval by plaintiff United States.
C. After obtaining any necessary approvals from the FCC for the
assignment of the licenses of the Divestiture Assets to the
Divestiture Trustee, defendants shall irrevocably divest the
remaining Divestiture Assets to the Divestiture Trustee, who will
own such assets (or own the stock of the entity owning such assets,
if divestiture is to be effected by the creation of such an entity
for sale to Acquirer) and control such assets, subject to the terms
of the approved Trust Agreement.
D. After the appointment of a Divestiture Trustee becomes
effective, only the Divestiture Trustee shall have the right to sell
the Divestiture Assets. The Divestiture Trustee shall have the power
and authority to accomplish the divestiture to an Acquirer(s)
acceptable to plaintiff United States, in its sole judgment, after
consultation with plaintiff State of Louisiana with respect to
Divestiture Assets located in Louisiana, 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
[[Page 56875]]
other agents, who shall be solely accountable to the Divestiture
Trustee, reasonably necessary in the Divestiture Trustee's judgment
to assist in the divestiture.
E. In addition, notwithstanding any provision to the contrary,
plaintiff United States, in its sole discretion, after consultation
with plaintiff State of Louisiana with respect to Divestiture Assets
located in Louisiana, may (1) require defendants to include
additional assets, and (2) with the written approval of plaintiff
United States, allow defendants to substitute substantially similar
assets, which substantially relate to the Divestiture Assets to be
divested by the Divestiture Trustee.
F. Defendants shall not object to a sale by the Divestiture
Trustee on any ground other than the Divestiture Trustee's
malfeasance. Any such objections by defendants must be conveyed in
writing to plaintiff United States and the Divestiture Trustee
within ten calendar days after the Divestiture Trustee has provided
the notice required under Section VI.
G. The Divestiture Trustee shall serve at the cost and expense
of defendants, on such terms and conditions as plaintiff United
States approves, and shall account for all monies derived from the
sale of the assets sold by the Divestiture Trustee and all costs and
expenses so incurred. After approval by the Court of the Divestiture
Trustee's accounting, including fees for its services and those of
any professionals and agents retained by the Divestiture Trustee,
all remaining money shall be paid to defendants and the trust shall
then be terminated. The compensation of the Divestiture Trustee and
any professionals and agents retained by the Divestiture Trustee
shall be reasonable in light of the value of the Divestiture Assets
and based on a fee arrangement providing the Divestiture Trustee
with an incentive based on the price and terms of the divestiture,
and the speed with which it is accomplished, but timeliness is
paramount.
H. Defendants shall use their best efforts to assist the
Divestiture Trustee in accomplishing the required divestitures,
including their best efforts to effect all necessary regulatory
approvals. The Divestiture Trustee and any consultants, accountants,
attorneys, and other persons retained by the Divestiture Trustee
shall have full and complete access to the personnel, books,
records, and facilities of the businesses to be divested, and
defendants shall develop financial and other information relevant to
the assets to be divested as the Divestiture Trustee may reasonably
request, subject to reasonable protection for trade secret or other
confidential research, development, or commercial information.
Defendants shall take no action to interfere with or to impede the
Divestiture Trustee's accomplishment of the divestitures.
I. After a Divestiture Trustee is appointed, the Divestiture
Trustee shall file monthly reports with plaintiff United States,
after consultation with plaintiff State of Louisiana with respect to
Divestiture Assets located in Louisiana, 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 plaintiff United
States, after consultation with plaintiff State of Louisiana with
respect to Divestiture Assets located in Louisiana, who shall have
the right to make additional recommendations consistent with the
purpose of the trust. The Court thereafter shall enter such orders
as it shall deem appropriate to carry out the purpose of the Final
Judgment, which may, if necessary, include extending the trust and
the term of the Divestiture Trustee's appointment by a period
requested by plaintiff United States, after consultation with
plaintiff State of Louisiana with respect to Divestiture Assets
located in Louisiana.
K. After defendants transfer the Divestiture Assets to the
Divestiture Trustee, and until those Divestiture Assets have been
divested to an Acquirer or Acquirers approved by plaintiff United
States pursuant to Sections IV.A and 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, and
sales. Defendants shall not attempt to influence the business
decisions of the Divestiture Trustee concerning the operation and
management of the Divestiture Assets, and shall not communicate with
the Divestiture Trustee concerning divestiture of the Divestiture
Assets or take any action to influence, interfere with, or impede
the Divestiture Trustee's accomplishment of the divestitures
required by this Final Judgment, except that defendants may
communicate with the Divestiture Trustee to the extent necessary for
defendants to comply with this Final Judgment and to provide the
Divestiture Trustee, if requested to do so, with whatever resources
or cooperation may be required to complete divestiture of the
Divestiture Assets and to carry out the requirements of the
Preservation of Assets Stipulation and Order and this Final
Judgment. Except as provided in this Final Judgment and the
Preservation of Assets Stipulation and Order, in no event shall
defendants provide to, or receive from, the Divestiture Trustee or
the mobile wireless telecommunications services businesses any non-
public or competitively sensitive marketing, sales, pricing or other
information relating to their respective telecommunications
businesses.
VI. Notice of Proposed Divestitures
A. Within the later of two (2) business days following (i) the
execution of a definitive divestiture agreement, or (ii) the filing
of the Complaint in this action, defendants or the Divestiture
Trustee, whichever is then responsible for effecting the
divestitures required herein, shall notify plaintiff United States,
and with respect to the Divestiture Assets in Louisiana, defendants
shall notify plaintiff State of Louisiana, 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 15 calendar days of receipt of notice by plaintiff
United States and plaintiff State of Louisiana if notice was given
to plaintiff State of Louisiana, plaintiff United States and
plaintiff State of Louisiana, if it received notice, may request
from defendants, the proposed Acquirer, any other third party, or
the Divestiture Trustee, if applicable, additional information
concerning the proposed divestiture, the proposed Acquirer, and any
other potential Acquirer. Defendants and the Divestiture Trustee
shall furnish any additional information requested within 15
calendar days of the receipt of the request, unless the parties
shall otherwise agree.
C. Within 30 calendar days after receipt of notice or within 20
calendar days after plaintiff United States and plaintiff State of
Louisiana, if it received notice, have been provided the additional
information requested from defendants, the proposed Acquirer, any
third party, and the Divestiture Trustee, whichever is later,
plaintiff United States, after consultation with plaintiff State of
Louisiana with respect to Divestiture Assets located in Louisiana,
shall provide written notice to defendants and the Divestiture
Trustee, if there is one, stating whether or not it objects to the
proposed divestiture. If plaintiff United States provides written
notice that it does not object, the divestiture may be consummated,
subject
[[Page 56876]]
only to defendants' limited right to object to the sale under
Section V.F of this Final Judgment. Absent written notice that
plaintiff United States does not object to the proposed Acquirer or
upon objection by plaintiff United States, a divestiture proposed
under Section IV or Section V shall not be consummated. Upon
objection by defendants under Section V.F, a divestiture proposed
under Section V shall not be consummated unless approved by the
Court.
VII. Financing
Defendants shall not finance all or any part of any divestiture
made pursuant to Section IV or V of this Final Judgment.
VIII. Preservation of Assets
Until the divestitures required by this Final Judgment have been
accomplished, defendants shall take all steps necessary to comply
with the Preservation of Assets Stipulation and Order entered by
this Court and cease use of the Divestiture Assets during the period
that the Divestiture Assets are managed by the Management Trustee.
Defendants shall take no action that would jeopardize the
divestitures ordered by this Court.
IX. Affidavits
A. Within 20 calendar days of the filing of the Complaint in
this matter, and every 30 calendar days thereafter until the
divestitures have been completed under Section IV or V, defendants
shall deliver to plaintiffs an affidavit as to the fact and manner
of its compliance with Section IV or V of this Final Judgment. Each
such affidavit shall include the name, address, and telephone number
of each person who during the preceding 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 also shall include a description of the
efforts defendants have taken to solicit buyers for the Divestiture
Assets, and to provide required information to prospective
Acquirers, including the limitations, if any, on such information.
Assuming the information set forth in the affidavit is true and
complete, any objection by plaintiff United States, after
consultation with plaintiff State of Louisiana with respect to
Divestiture Assets located in Louisiana, to information provided by
defendants, including limitation on information, shall be made
within 14 calendar days of receipt of such affidavit.
B. Within 20 calendar days of the filing of the Complaint in
this matter, defendants shall deliver to plaintiffs an affidavit
that describes in reasonable detail all actions defendants have
taken and all steps defendants have implemented on an ongoing basis
to comply with Section VIII of this Final Judgment. Defendants shall
deliver to plaintiffs an affidavit describing any changes to the
efforts and actions outlined in defendants' earlier affidavits filed
pursuant to this section within 15 calendar days after the change is
implemented.
C. Defendants shall keep all records of all efforts made to
preserve and divest the Divestiture Assets until one year after such
divestitures have been completed.
X. Compliance Inspection
A. For the purposes of determining or securing compliance with
this Final Judgment or whether the Final Judgment should be modified
or vacated, and subject to any legally recognized privilege,
authorized representatives of the United States Department of
Justice (including consultants and other persons retained by
plaintiff United States) shall, upon written request of an
authorized representative of the Assistant Attorney General in
charge of the Antitrust Division, and on reasonable notice to
defendants, be permitted:
1. Access during defendants' office hours to inspect and copy,
or at plaintiff United States's option, to require defendants to
provide hard copy or electronic copies of, all books, ledgers,
accounts, records, data and documents in the possession, custody, or
control of defendants, relating to any matters contained in this
Final Judgment; and
2. To interview, either informally or on the record, defendants'
officers, employees, or agents, who may have their individual
counsel present, regarding such matters. The interviews shall be
subject to the reasonable convenience of the interviewee and without
restraint or interference by defendants.
B. Upon the written request of an authorized representative of
the Assistant Attorney General in charge of the Antitrust Division,
defendants shall submit written reports or response to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by plaintiff United States to any
person other than an authorized representative of the executive
branch of plaintiff United States, plaintiff State of Louisiana, or,
pursuant to a customary protective order or waiver of
confidentiality by defendants, the FCC, except in the course of
legal proceedings to which plaintiff United States is a party
(including grand jury proceedings), or for the purpose of securing
compliance with this Final Judgment, or as otherwise required by
law.
D. If at the time information or documents are furnished by
defendants to plaintiff United States, defendants represent and
identify in writing the material in any such information or
documents to which a claim of protection may be asserted under Rule
26(c)(1)(G) 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)(1)(G) of the Federal Rules of Civil
Procedure,'' then plaintiff United States shall give defendants ten
calendar days notice prior to divulging such material in any legal
proceeding (other than a grand jury proceeding).
XI. No Reacquisition
Defendants may not reacquire or lease any part of the
Divestiture Assets during the term of this Final Judgment.
XII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this
Final Judgment to apply to this Court at any time for further orders
and directions as may be necessary or appropriate to carry out or
construe this Final Judgment, to modify any of its provisions, to
enforce compliance, and to punish violations of its provisions.
XIII. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten years from the date of its entry.
XIV. Public Interest Determination
Entry of this Final Judgment is in the public interest. The
parties have complied with the requirements of the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16, including making copies
available to the public of this Final Judgment, the Competitive
Impact Statement, any comments thereon, and plaintiff United
States's response to comments. Based upon the record before the
Court, which includes the Competitive Impact Statement and any
comments and response to comments filed with the Court, entry of
this Final Judgment is in the public interest.
Date:------------------------------------------------------------------
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16.
-----------------------------------------------------------------------
United States District Judge.
In the United States District Court for the District Of Columbia
United States of America, and State of Louisiana, Plaintiff, v.
AT&T Inc., and Centennial Communications Corp., Defendants. No.
1:09-cv-01932 Assigned To: Filed: 10/13/2009.
Competitive Impact Statement
Plaintiff United States of America (``United States''), pursuant
to Section 2(b) of the Antitrust Procedures and Penalties Act
(``APPA'' or ``Tunney Act''), 15 U.S.C. 16(b)-(h), files this
Competitive Impact Statement relating to the proposed Final Judgment
submitted for entry in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
Defendants entered into an Agreement and Plan of Merger dated
November 7, 2008, pursuant to which AT&T Inc. (``AT&T'') will
acquire Centennial Communications Corp. (``Centennial''). Plaintiffs
United States and the State of Louisiana filed a civil antitrust
Complaint on October 13, 2009, seeking to enjoin the proposed
acquisition. The Complaint alleges that the effect of this
acquisition would be to lessen competition substantially for mobile
wireless telecommunications services in eight Cellular Market Areas
(``CMAs'') in Louisiana and Mississippi, in violation of Section 7
of the Clayton Act, 15 U.S.C. 18. This loss of competition likely
would result in higher prices, lower quality service, and fewer
choices of mobile wireless telecommunications services providers for
consumers residing in these areas.
[[Page 56877]]
At the same time the Complaint was filed, plaintiffs also filed
a Preservation of Assets Stipulation and Order (``Stipulation'') and
proposed Final Judgment, which are designed to eliminate the
anticompetitive effects of the acquisition. Under the proposed Final
Judgment, which is explained more fully below, defendants are
required to divest mobile wireless telecommunications services
businesses and related assets in the eight CMAs (the ``Divestiture
Assets''). Under the terms of the Stipulation, defendants will take
certain steps to ensure that, during the pendency of the ordered
divestitures, the Divestiture Assets are preserved and operated as
competitively independent, economically viable ongoing businesses
without influence by defendants.
Plaintiffs and defendants have stipulated that the proposed
Final Judgment may be entered after compliance with the APPA. Entry
of the proposed Final Judgment would terminate this action, except
that the Court would retain jurisdiction to construe, modify, or
enforce the provisions of the proposed Final Judgment and to punish
violations thereof. Defendants also have stipulated that they will
comply with the terms of the Stipulation and the proposed Final
Judgment from the date of signing of the Stipulation, pending entry
of the proposed Final Judgment by the Court and the required
divestitures. Should the Court decline to enter the proposed Final
Judgment, defendants also have committed to continue to abide by its
requirements and those of the Stipulation until the expiration of
time for appeal.
II. Description of the Events Giving Rise to the Alleged Violation
A. The Defendants and the Proposed Transaction
AT&T, with headquarters in Dallas, Texas, is a corporation
organized and existing under the laws of the State of Delaware. AT&T
is one of the world's largest providers of communications services.
AT&T is the second largest mobile wireless telecommunications
services provider in the United States as measured by subscribers,
provides mobile wireless telecommunications services in 50 states,
and serves in excess of 79 million wireless subscribers. In 2008,
AT&T earned mobile wireless telecommunications services revenues in
excess of $44 billion, and its total revenues were in excess of $124
billion.
Centennial, with headquarters in Wall, New Jersey, is a
corporation organized and existing under the laws of the State of
Delaware. Centennial is the eighth-largest mobile wireless
telecommunications services provider in the United States as
measured by subscribers, and provides mobile wireless
telecommunications services in six states, Puerto Rico, and the
United States Virgin Islands. In Puerto Rico, Centennial is also a
competitive local exchange provider. For the fiscal year ending May
31, 2009, Centennial had approximately 1.1 million wireless
subscribers and approximately 694,900 access line equivalents in
Puerto Rico, and earned approximately $1 billion in total revenues,
of which approximately 85% percent were generated by Centennial's
wireless businesses.
Pursuant to the Agreement and Plan of Merger, AT&T will acquire
Centennial for approximately $944 million. If this transaction is
consummated, AT&T and Centennial combined would have approximately
80 million wireless subscribers in the United States, with
approximately $45 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 six CMAs covering
southwestern and central Louisiana and two CMAs in the southwestern
corner of Mississippi. This acquisition is the subject of the
Complaint and proposed Final Judgment filed by plaintiffs.
B. Mobile Wireless Telecommunications Services Industry
Mobile wireless telecommunications services allow customers to
make and receive telephone calls and obtain data services using
radio transmissions without being confined to a small area during
the call or data session, and without the need for unobstructed
line-of-sight to the radio tower. Mobility is highly valued by
customers more than 270 million people in the United States own
mobile wireless telephones. In 2008, revenues from the sale of
mobile wireless telecommunications services in the United States
were over $148 billion. To provide service, mobile wireless
telecommunications services providers must deploy extensive networks
of switches, radio transmitters, and receivers and interconnect
their networks with the networks of wireline carriers and other
mobile wireless telecommunications services providers.
In the early to mid-1980s, the FCC issued two cellular licenses
in the 800 MHz band, for each Metropolitan Statistical Area
(``MSA'') and Rural Service Area (``RSA'') (collectively, ``Cellular
Market Areas'' or ``CMAs''), totaling 734 CMAs covering the entire
United States. The first mobile wireless voice systems deployed
using this cellular spectrum were based on analog technology, now
referred to as first-generation or ``1G'' technology.
In 1995, the FCC licensed additional spectrum for the provision
of Personal Communications Services (``PCS''), a category of
services that includes mobile wireless telecommunications services
comparable to those offered by cellular licensees. These licenses
are in the 1900 MHz band and are divided into six blocks which are
divided among Major Trading Areas (``MTAs'') and Basic Trading Areas
(``BTAs''). MTAs and BTAs do not generally correspond to MSAs and
RSAs. With the introduction of the PCS licenses, both cellular and
PCS licensees began offering digital services, thereby increasing
network capacity, shrinking the size of handsets, and extending
handset battery life. Although there are a number of providers
holding spectrum licenses in each area of the country, not all
providers have fully built out their networks throughout each
license area. In particular, because of the characteristics of PCS
spectrum, providers holding this type of spectrum generally have
found it less attractive to build out in rural areas.(1)
Today, more than 95 percent of the total U.S. population lives
in counties where three or more mobile wireless telecommunications
services operators offer service. Nearly all mobile wireless voice
services have migrated from analog to digital-based second-
generation or ``2G'' technologies, using GSM (global standard for
mobility) or CDMA (code division multiple access). More advanced
technologies (``2.5G'' and ``3G'') have also been widely deployed
supporting the provision of mobile wireless data services. Wireless
carriers are in the process of evaluating, testing and deploying
even more advanced wireless data technologies, such as WiMAX and
Long Term Evolution, which will offer higher data transmission
rates.
C. The Competitive Effects of the Transaction on Mobile Wireless
Telecommunications Services
Mobile wireless telecommunications services is a relevant
product market. Mobile wireless telecommunications services include
both voice and data services provided over a radio network and allow
customers to maintain their telephone calls or data sessions without
wires when traveling. There are no cost-effective alternatives to
mobile wireless telecommunications services. Because fixed wireless
services are not mobile, they are not regarded by consumers of
mobile wireless telecommunications services to be a reasonable
substitute for those services. It is unlikely that a sufficient
number of customers would switch away from mobile wireless
telecommunications services to make a small but significant price
increase in those services unprofitable.
The United States comprises numerous local geographic markets
for mobile wireless telecommunications services.\(2)\ A large
majority of customers use mobile wireless telecommunications
services in close proximity to their workplaces and homes. Thus,
customers purchasing mobile wireless telecommunications services
choose among mobile wireless telecommunications services providers
that offer services where they live, work, and travel on a regular
basis. The geographic areas in which the FCC has licensed mobile
wireless telecommunications services providers often represent the
core of the business and social spheres within which a group of
customers has the same competitive choices for mobile wireless
telephone services. The number of and identity of mobile wireless
telecommunications services providers varies among geographic areas,
as does the quality of services and breadth of geographic coverage
offered by providers. Some mobile wireless telecommunications
services providers can and do offer different promotions, discounts,
calling plans, and equipment subsidies in different geographic
areas, varying their prices by geographic area.
The relevant geographic markets, under Section 7 of the Clayton
Act, 15 U.S.C. Sec. 18, where the transaction would substantially
lessen competition for mobile wireless telecommunications services
are effectively
[[Page 56878]]
represented by the following FCC spectrum licensing areas: Lafayette
LA MSA (CMA 174); Alexandria LA MSA (CMA 205); LA RSA 3 (CMA 456);
LA RSA 5 (CMA 458); LA RSA 6 (CMA 459); LA RSA 7 (CMA 460); MS RSA 8
(CMA 500); and MS RSA 9 (CMA 501). It is unlikely that a sufficient
number of customers would switch to mobile wireless
telecommunications services providers that do not offer services in
these geographic areas to make a small but significant price
increase in the relevant geographic markets unprofitable.
These geographic areas of concern for mobile wireless
telecommunications services were identified through 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 Centennial's market shares,
along with those of the other providers; whether additional spectrum
is, or is likely soon to be, available; whether any providers are
limited by insufficient spectrum or other factors in their ability
to add new customers; concentration in the market, and the breadth
and depth of coverage by different providers in each area and in the
surrounding area; each carrier's network coverage in relationship to
the population density of the license area; each provider's retail
presence; local wireless number portability data; and the likelihood
that any provider would expand its existing coverage or that new
providers would enter.
In seven of the eight cellular license areas described above,
AT&T and Centennial are significant providers of mobile wireless
telecommunications services (based on subscribers), and together
their combined share in each area ranges from 51% to 89%. In the
eighth area, MS RSA 9, AT&T and Centennial hold a large portion of
the cellular licenses covering the CMA and have fairly extensive
networks. As is true of several of the other relevant geographic
areas, MS RSA 9 is mostly rural. Providers have found that cellular
spectrum, given its characteristics, is more efficient in serving
rural areas. Consequently, the holders of PCS licenses in MS RSA 9
have not fully constructed their networks throughout the CMA, opting
instead to serve only a few areas where the population density is
higher or there are major highways. The PCS spectrum holders are
weak competitors and will remain so in the portions of MS RSA 9
where the merging parties will hold all the cellular spectrum post-
merger. Thus, in each of the eight relevant geographic markets, AT&T
and Centennial are the other's closest competitor for a significant
set of customers.
The relevant geographic markets for mobile wireless services are
highly concentrated. As measured by the Herfindahl-Hirschman Index
(``HHI''), which is commonly employed in merger analysis and is
defined and explained in Appendix A to the Complaint, concentration
in these geographic areas today ranges from over 2900 to more than
6576, which is well above the 1800 threshold at which plaintiffs
consider a market to be highly concentrated. After AT&T's proposed
acquisition of Centennial is consummated, the HHIs in the relevant
geographic areas will range from over 4500 to more than 8100, with
increases in the HHI as a result of the merger ranging from over 200
to over 3350, significantly beyond the thresholds at which
plaintiffs consider a transaction likely to cause competitive harm.
Competition between AT&T and Centennial in the relevant
geographic markets has resulted in lower prices and higher quality
in mobile wireless telecommunications services than otherwise would
have existed in these geographic markets. In these areas, consumers
consider AT&T and Centennial to be particularly attractive
competitors because other providers' networks often lack coverage or
provide lower-quality service. If the proposed acquisition is
consummated, competition between AT&T and Centennial in mobile
wireless telecommunications services will be eliminated in these
markets and the relevant markets for mobile wireless
telecommunications services will become substantially more
concentrated. As a result, the loss of competition between AT&T and
Centennial will increase the merged firm's incentive and ability in
the relevant geographic markets to increase prices, diminish the
quality or quantity of services provided, and refrain from or delay
making investments in network improvements.
Entry by a new mobile wireless services provider in the relevant
geographic markets would be difficult, time-consuming, and
expensive, requiring spectrum licenses and the build out of a
network. Therefore, any entry in response to a small but significant
price increase for mobile wireless telecommunications services by
the merged firm in the relevant geographic markets would not be
timely, likely, or sufficient to thwart the competitive harm
resulting from AT&T's proposed acquisition of Centennial, if it were
consummated. Although the FCC recently auctioned more spectrum that
can be used for mobile wireless telecommunications services, it is
unlikely that networks will be constructed using this spectrum to
support entry in the relevant geographic markets in the next two to
three years as providers will find it more attractive to deploy
services initially in areas with larger populations and greater
demand.
For these reasons, plaintiffs concluded that AT&T's proposed
acquisition of Centennial likely would substantially lessen
competition, in violation of Section 7 of the Clayton Act, in the
provision of mobile wireless telecommunications services in the
relevant geographic areas alleged in the Complaint.
III. Explanation of the Proposed Final Judgment
The divestiture requirements of the proposed Final Judgment will
eliminate the anticompetitive effects of the acquisition in mobile
wireless telecommunications services in the geographic areas of
concern. The proposed Final Judgment requires defendants to divest
the Divestiture Assets within 120 days after the consummation of the
Transaction, or five days after notice of the entry of the Final
Judgment by the Court, whichever is later. The Divestiture Assets
are essentially the entire mobile wireless telecommunications
services businesses of Centennial in the eight relevant geographic
areas where AT&T and Centennial are among the most significant
competitors for mobile wireless telecommunications services. These
assets must be divested in such a way as to satisfy plaintiff United
States in its sole discretion, after consultation with plaintiff
State of Louisiana with respect to Divestiture Assets located in
Louisiana, that the assets will be operated by the purchaser as a
viable, ongoing business that can compete effectively in each
relevant area. Defendants must take all reasonable steps necessary
to accomplish the divestitures quickly and shall cooperate with
prospective purchasers.
If plaintiff United States in its sole discretion, after
consultation with plaintiff State of Louisiana, determines that
defendants must also divest Centennial's mobile wireless
telecommunications services businesses in the Lake Charles MSA (CMA
197) to ensure a successful divestiture of the Divestiture Assets in
the Lafayette LA MSA (CMA 174), LA RSA 5 (CMA 458), LA RSA 6 (CMA
459), and LA RSA 7 (CMA 460), defendants shall also divest all types
of assets, tangible and intangible, used by Centennial in the
operation of its mobile wireless telecommunications services
business in the Lake Charles MSA (CMA 197).
The proposed Final Judgment requires that a single purchaser
acquire all of the Divestiture Assets in each of the following
numbered subsections:
1. Northern Louisiana
a. Alexandria MSA (CMA 205);
b. LA RSA 3 (CMA 456);
2. Southern Louisiana
a. Lafayette MSA (CMA 174);
b. LA RSA 5 (CMA 458);
c. LA RSA 6 (CMA 459);
d. LA RSA 7 (CMA 460); and
3. Mississippi
a. MS RSA 8 (CMA 500);
b. MS RSA 9 (CMA 501).
Further, if defendants are required to divest Centennial's
mobile wireless telecommunications services business in Lake Charles
MSA (CMA 197) as part of the Divestiture Assets, these assets must
be divested to the Acquirer of the Southern Louisiana Divestiture
Assets as defined in the second numbered subsection above.
The CMAs have been grouped to reflect the fact that carriers
frequently are more competitive where they serve contiguous areas.
Some customers often travel across FCC licensing areas, so the
ability to serve a larger contiguous area can be an important
feature for selling the product in each affected market. Moreover,
there may be significant efficiencies associated with serving a
broader geographic area. In deciding on the particular packages to
require, plaintiff United States recognized that combining areas
that share a significant community of interest provides greater
assurance that the buyer will be an effective competitor. Plaintiff
United States also recognized, however, that larger packages might
discourage potential buyers who might otherwise have the strongest
incentives to replace the lost competition in any one
[[Page 56879]]
particular area. The proposed Final Judgment strikes a balance
between these potential issues by creating bundles that are
geographically linked but allowing potential buyers to effectively
suggest larger packages by bidding conditionally on multiple
packages. The proposed Final Judgment also gives plaintiff United
States in its sole discretion, after consultation with plaintiff
State of Louisiana with respect to the Divestiture Assets in
Louisiana, the flexibility to allow even smaller packages of assets
as appropriate to ensure a successful divestiture.
Additionally, Section IV.J of the proposed Final Judgment
permits defendants to enter into a contract with the Acquirer(s) for
transition services that are customarily provided in connection with
the sale of a business providing mobile wireless telecommunications
services or intellectual property licensing for a period of up to
one year. Transition services agreements allow acquirers to quickly
begin operating the newly-acquired wireless businesses and prevent
customers from experiencing service disruptions. This section also
allows plaintiff United States, in its sole discretion, to approve
one or more three- to six-month extensions of this one-year period,
after providing notice to the Court. This provision allows plaintiff
United States the flexibility to extend the agreement only in those
instances where, despite the best efforts of defendants and the
Acquirer(s), complete transition of the acquired mobile wireless
telecommunications services business could not be completed within
the one-year period, due to complexities inherent in a transition of
the systems and network used in those business operations. While
plaintiff United States recognizes the importance of the buyer's
quick transition to operating without the support of defendants,
there are circumstances where a limited extension should be granted,
when it is demonstrated to the satisfaction of plaintiff United
States that an extension of the one-year period is in the interest
of consumers.
A. Timing of Divestitures
In antitrust cases involving mergers or joint ventures in which
the United States seeks a divestiture remedy, it requires completion
of the divestitures within the shortest time period reasonable under
the circumstances. Section IV.A of the proposed Final Judgment in
this case requires divestiture of the Divestiture Assets, within 120
days after the consummation of the Transaction, or five days after
notice of the entry of the Final Judgment by the Court, whichever is
later. Plaintiff United States in its sole discretion, upon
consultation with the plaintiff State of Louisiana with respect to
Divestiture Assets located in Louisiana, may extend the date for
divestiture of the Divestiture Assets by up to 60 days. Because the
FCC's approval is required for the transfer of the wireless licenses
to a purchaser, Section IV.A provides that if applications for
transfer of a wireless license have been filed with the FCC, but the
FCC has not acted dispositively before the end of the required
divestiture period, the period for divestiture of those assets shall
be extended until five days after the FCC has acted. This extension
is to be applied only to the individual Divestiture Assets affected
by the delay in approval of the license transfer and does not
entitle defendants to delay the divestiture of any other Divestiture
Assets for which license transfer approval is not required or has
been granted.
The divestiture timing provisions of the proposed Final Judgment
will ensure that the divestitures are carried out in a timely
manner, and at the same time will permit defendants an adequate
opportunity to accomplish the divestitures through a fair and
orderly process. Even if all Divestiture Assets have not been
divested upon consummation of the transaction, there should be no
adverse impact on competition given the limited duration of the
period of common ownership and the detailed requirements of the
Stipulation.
B. Use of a Management Trustee
The Stipulation filed simultaneously with this Competitive
Impact Statement ensures that the Divestiture Assets remain an
ongoing business concern prior to divestiture. To accomplish this
objective, the Stipulation provides for the appointment of a
management trustee selected by plaintiff United States, after
consultation with the plaintiff State of Louisiana with respect to
Divestiture Assets located in Louisiana, to oversee the operations
of the Divestiture Assets. The appointment of a management trustee
is appropriate because the Divestiture Assets are not independent
facilities that can be held separate and operated as stand-alone
units, but are an integral part of a larger network which, to
maintain their competitive viability and economic value, should
remain part of that network during the divestiture period. A
management trustee will oversee the continuing relationship between
defendants and these assets to ensure that these assets are
preserved and supported by defendants during this period, yet run
independently. The management trustee will have the power to operate
the Divestiture Assets in the ordinary course of business, so that
they will remain independent and uninfluenced by defendants and so
that the Divestiture Assets are preserved and operated as an ongoing
and economically viable competitor to defendants and to other mobile
wireless telecommunications services providers. The management
trustee will preserve the confidentiality of competitively sensitive
marketing, pricing, and sales information; ensure defendants'
compliance with the Stipulation and the proposed Final Judgment; and
maximize the value of the Divestiture Assets so as to permit
expeditious divestiture in a manner consistent with the proposed
Final Judgment.
The Stipulation provides that defendants will pay all costs and
expenses of the management trustee, including the cost of
consultants, accountants, attorneys, and other representatives and
assistants hired by the management trustee as are reasonably
necessary to carry out his or her duties and responsibilities. After
his or her appointment becomes effective, the management trustee
will file monthly reports with plaintiffs setting forth efforts
taken to accomplish the goals of the Stipulation and the proposed
Final Judgment and the extent to which defendants are fulfilling
their responsibilities. Finally, the management trustee may become
the divestiture trustee, pursuant to the provisions of Section V of
the proposed Final Judgment.
C. Use of a Divestiture Trustee
In the event that defendants do not accomplish the divestiture
within the periods prescribed in the proposed Final Judgment, the
Final Judgment provides that the Court will appoint a trustee
selected by plaintiff United States, after consultation with the
plaintiff State of Louisiana with respect to Divestiture Assets
located in Louisiana, to effect the divestitures. As part of this
divestiture, defendants must continue, as has been the practice
while the businesses have been managed by the Management Trustee, to
relinquish any direct or indirect financial control and any direct
or indirect role in management. Pursuant to Section V of the
proposed Final Judgment, the divestiture trustee will have the legal
right to control the Divestiture Assets until they are sold to a
final purchaser, subject to safeguards to prevent defendants from
influencing their operation.
Section V details the requirements for the establishment of the
divestiture trust, the selection and compensation of the divestiture
trustee, the responsibilities of the divestiture trustee in
connection with the divestiture and operation of the Divestiture
Assets, and the termination of the divestiture trust. The
divestiture trustee will have the obligation and the sole
responsibility, under Section V.D, for the divestiture of any
transferred Divestiture Assets. The divestiture trustee has the
authority to accomplish divestitures at the earliest possible time
and ``at such price and on such terms as are then obtainable upon
reasonable effort by the Divestiture Trustee.'' In addition, to
ensure that the divestiture trustee can promptly locate and divest
to an acceptable purchaser, plaintiff United States, in its sole
discretion after consultation with the plaintiff State of Louisiana
with respect to Divestiture Assets located in Louisiana, 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 also will 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 have no role in the operation, or
management of the Divestiture Assets other than the right to receive
the proceeds of the sale.
Defendants also will 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
[[Page 56880]]
trustee's commission will be structured, under Section V.G of the
proposed Final Judgment, to provide an incentive for the divestiture
trustee based on the price obtained and the speed with which the
divestitures are accomplished. After his or her appointment becomes
effective, the divestiture trustee will file monthly reports with
the Court and plaintiffs setting forth his or her efforts to
accomplish the divestitures. Section V.J requires the divestiture
trustee to divest the Divestiture Assets to an acceptable purchaser
or purchasers no later than six months after the assets are
transferred to the divestiture trustee. At the end of six months, if
all divestitures have not been accomplished, the trustee and
plaintiffs will make recommendations to the Court, which shall enter
such orders as appropriate in order to carry out the purpose of the
Final Judgment, including extending the trust or term of the
trustee's appointment.
The divestiture provisions of the proposed Final Judgment will
eliminate the anticompetitive effects of the transaction in the
provision of mobile wireless telecommunications services. The
divestitures of the Divestiture Assets will preserve competition in
mobile wireless telecommunications services by maintaining an
independent and economically viable competitor in the relevant
geographic areas.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three
times the damages the person has suffered, as well as costs and
reasonable attorneys' fees. Entry of the proposed Final Judgment
will neither impair nor assist the bringing of any private antitrust
damage action. Under the provisions of Section 5(a) of the Clayton
Act, 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 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 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 plaintiff United States will be filed with the Court
and published in the Federal Register.
Written comments should be submitted to: Nancy M. Goodman,
Chief, Telecommunications and Media Enforcement Section, Antitrust
Division, U.S. Department of Justice, 405 Fifth Street, NW., Suite
7000, 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
Plaintiffs considered, as an alternative to the proposed Final
Judgment, a full trial on the merits against defendants. Plaintiffs
could have continued the litigation and sought preliminary and
permanent injunctions against AT&T's acquisition of Centennial.
Plaintiffs are satisfied, however, that the divestiture of assets
and other relief described in the proposed Final Judgment will
preserve competition for the provision of mobile wireless
telecommunications services in the relevant areas identified in the
Complaint.
VII. Standard of Review Under the 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 60 day comment period, after which the court shall
determine whether entry of the proposed Final Judgment ``is in the
public interest.'' 15 U.S.C. 16(e)(1). In making that determination,
the court, 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). In considering these statutory factors,
the court's inquiry is necessarily a limited one as the government
is entitled to ``broad discretion to settle with the defendant
within the reaches of the public interest.'' United States v.
Microsoft Corp., 56 F.3d 1448, 1461 (DC Cir. 1995). See generally
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007)
(assessing public interest standard under the Tunney Act).(3)
Under the APPA a court considers, among other things, the
relationship between the remedy secured and the specific allegations
set forth in the government's complaint, whether the decree is
sufficiently clear, whether enforcement mechanisms are sufficient,
and whether the decree may positively harm third parties. See
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the
relief secured by the decree, a court may not ``engage in an
unrestricted evaluation of what relief would best serve the
public.'' United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir.
1988) (citing United States v. Bechtel Corp., 648 F.2d 660, 666 (9th
Cir. 1981)); see also Microsoft, 56 F.3d at 1460-62; United States
v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001). Courts have
held that:
[t]he balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations
omitted).(4) In determining whether a proposed settlement is in the
public interest, a district court ``must accord deference to the
government's predictions about the efficacy of its remedies, and may
not require that the remedies perfectly match the alleged
violations.'' SBC 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).
Courts have greater flexibility in approving proposed consent
decrees than in crafting their own decrees following a finding of
liability in a litigated matter. ``[A] proposed decree must be
approved even if it falls short of the remedy the court would impose
on its own, as long as it falls within the range of acceptability or
is `within the reaches of public interest.' '' United States v. Am.
Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 1982) (citations
omitted) (quoting United States v. Gillette Co., 406 F. Supp. 713,
716 (D. Mass. 1975)), aff'd sub nom. Maryland v. United States, 460
U.S. 1001 (1983); see also United States v. Alcan Aluminum Ltd., 605
F. Supp. 619, 622 (W.D. Ky. 1985) (approving the consent decree even
though the court would have imposed a greater remedy). To meet this
standard, the United States ``need only provide a factual basis for
concluding that the settlements are reasonably adequate remedies for
the alleged harms.'' SBC Commc'ns, 489 F. Supp. 2d at 17.
[[Page 56881]]
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 the United
States District Court for the District of Columbia recently
confirmed in SBC Communications, courts ``cannot look beyond the
complaint in making the public interest determination unless the
complaint is drafted so narrowly as to make a mockery of judicial
power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
In its 2004 amendments, Congress made clear its intent to
preserve the practical benefits of utilizing consent decrees in
antitrust enforcement, adding the unambiguous instruction that
``[n]othing in this section shall be construed to require the court
to conduct an evidentiary hearing or to require the court to permit
anyone to intervene.'' 15 U.S.C. 16(e)(2). The language wrote into
the statute what Congress intended when it enacted the Tunney Act in
1974, as Senator Tunney explained: ``[t]he court is nowhere
compelled to go to trial or to engage in extended proceedings which
might have the effect of vitiating the benefits of prompt and less
costly settlement through the consent decree process.'' 119 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.(5)
VIII. Determinative Documents
There are no determinative materials of documents within the
meaning of the APPA that were considered by plaintiff United States
in formulating the proposed Final Judgment.
Dated: October 13, 2008.
Respectfully submitted,
------/s/------
Hillary B. Burchuk (D.C. Bar No. 366755).
Lawrence M. Frankel (D.C. Bar No. 441532).
Attorneys, Telecommunications & Media Enforcement Section, Antitrust
Division, U.S. Department of Justice, Liberty Square Building, 450
Fifth Street, NW., Suite 7000, Washington, DC 20530, (202) 514-5621,
Facsimile: (202) 514-6381.
Footnotes
1. During the past two years, the FCC has auctioned off
additional spectrum that can be used to support mobile wireless
telecommunications services, including Advanced Wireless Spectrum
(1710-1755 MHz and 2110-2155 MHz bands) and 700 MHz band spectrum.
However, it will be several years before mobile wireless
telecommunications services utilizing this spectrum are widely
deployed, especially in rural areas.
2. The existence of local markets does not preclude the
possibility of competitive effects in a broader geographic area,
such as a regional or national area, though plaintiff United States
does not allege such effects in this transaction.
3. The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for the court to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006). See also SBC Commc'ns,
489 F. Supp. 2d at 11 (concluding that the 2004 amendments
``effected minimal changes'' to Tunney Act review).
4. 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' '').
5. See United States v. Enova Corp., 107 F. Supp. 2d 10, 17
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the
court to make its public interest determination on the basis of the
competitive impact statement and response to comments alone'');
United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (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.''); 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.'').
[FR Doc. E9-26351 Filed 11-2-09; 8:45 am]
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