Judge Ponders Scope of Merger Reviews


The Verizon/MCI and AT&T/SBC mergers got the once over from the U.S. District Court this week under a new judicial review for contested melds.

Telecom association COMPTEL--FCC Commissioner Robert McDowell's former digs--was one of two  parties that petitioned the court for the judicial review of the already-closed mergers, arguing they were not in the public interest and the government had essentially rubber-stamped them

At issue are the consent decrees between the companies and parties that allowed the mergers to take place. Essentially DOJ sues the companies, then they settle on conditions that address antitrust concerns. In this case a single condition that the merged companies lease some commercial lines to a third party.

This is the first judicial review of a contested merger under revised antitrust law. Though the review is unlikely to unwind the mergers, if the court asks for more conditions--like extended net neutrality (separately, the FCC imposed a 30-month "net neutrality" condition)--or better justification for the narrow scope of Justice's antitrust remedy, it could impact Justice's current review of AT&T's latest acquisition, Bell South, as it brings some Baby Bells back under its wing.

John Thorne, Deputy General Counsel of Verizon, said he thought the hearing went well and that the judge on at least three occasions indicated he wanted to keep the review narrowly focused rather than expand it to a referendum on the Bush administration's merger-review policy in general. "The judge showed no interest in expanding on the government's complaint," said Thorne.

On the other side, a telcom lawyer representing competitive carriers, saw it differently. While he said ascribing the "narrow focus" comments to the judge was "semantically correct," he thought they missed the point.

"The judge did say he was reviewing only the decision to impose [Justice's original conditions], but also said that what he was deciding is whether to impose only those decisions was correct." He also said he might need more evidence, and a further hearing, to make that determination.

The judge declined AT&T and Verizon requests to rule by July 31 and told the lawyers to come back July 25 for a status conference when he would let them know whether he would call for a further hearing.