Judge OKs Telecom Merger

A judge has approved U.S. Department of Justice conditions attached to two major telecommunication mergers that closed in late 2005 and early 2006.

Judge Emmet Sullivan of the U.S. District Court for the District of Columbia had questioned the DOJ conditions in SBC Communication Inc.'s acquisition of AT&T Corp. and Verizon Communication Inc.'s acquisition of MCI Inc. during a hearing in July, but he ruled in favor of the merger settlements in an opinion released Thursday. The merger conditions are in the public interest, Sullivan ruled.

Sullivan wrote that he recognized significant concerns about the impact of the mergers to several industries, including Internet and mobile phone service. But Sullivan's review under the law is limited to the merger conditions negotiated by the DOJ and the telecom carriers, he said.

"This court ... is not tasked with deciding whether these mergers as a whole run afoul of the antitrust laws, nor whether they are altogether in the public interest," Sullivan wrote. "This court's role is much more limited."

The merger conditions required SBC and Verizon to divest some fiber-optic lines in areas where there was little competition for telephone service. The SBC/AT&T merger closed in November 2005, with the new company renamed AT&T Inc., while the Verizon/MCI merger closed in January 2006.

The DOJ's settlement focused partly on commercial buildings that had two providers and now have only one after the mergers. In some of those cases, the DOJ required the new AT&T or Verizon to lease out the second fiber lines into those buildings.

AT&T's acquisition of BellSouth, which closed in December, was not part of Sullivan's review.

The DOJ and AT&T both applauded Sullivan's decision. "We were always confident that after the court's review of the record that it would conclude that the consent decree is in the public interest," said AT&T spokesman Michael Balmoris. "We appreciate Judge Sullivan's considered decision."

The Alliance for Competition in Telecommunications, a group representing competing telecom carriers and IT vendors, had asked Sullivan to rule against the merger settlements. The group had hoped to force changes in the DOJ settlements. The group's lawyer wasn't immediately available for comment Friday.