[Federal Register: November 15, 2004 (Volume 69, Number 219)]
[Notices]
[Page 65633-65654]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15no04-105]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Cingular Wireless Corporation, SBC
Communications Inc., BellSouth Corporation, and AT&T Wireless Services,
Inc.; Competitive Impact Statement, Proposed Final Judgment, Complaint,
Preservation of Assets Stipulation and Order
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a Complaint, proposed Final
Judgment, Preservation of Assets Stipulation and Order, and Competitive
Impact Statement have been filed with the U.S. District Court for the
District of Columbia in United States v. Cingular Wireless Corps.,
Civil Case No. 1:04CV01850 (RBW). On October 25, 2004, the United
States, along with the Attorneys General from the states of Connecticut
and Texas, filed a complaint alleging that the proposed acquisition of
AT&T Wireless Services, Inc. (``AT&T Wireless'') by Cingular Wireless
Corp. (``Cingular''), which is jointly owned by BellSouth Corporation
(``BellSouth'') and SBC Communications, Inc. (``SBC''), would violate
Section 7 of the Clayton Act, 15 U.S.C. 18, by substantially lessening
competition in the provision of mobile wireless telecommunications
services and mobile wireless broadband services. The proposed Final
Judgment, filed at the same time as the Complaint and Preservation of
Assets Stipulation and Order, requires Cingular to divest assets in
eleven states--Connecticut, Georgia, Kansas, Kentucky, Louisiana,
Massachusetts, Missouri, Michigan, Oklahoma, Tennessee, and Texas--in
order to proceed with Cingular Wireless's $41 billion cash acquisition
of AT&T Wireless. A Competitive Impact Statement filed by the United
States on October 29, 2004 describes the Complaint, the proposed Final
Judgment, the industry, and the remedies available to private litigants
who may have been injured by the alleged violation.
Copies of the Complaint, proposed Final Judgment, Preservation of
Assets Stipulation and Order, the Competitive Impact Statement, and all
further papers filed with the Court in connection with the Complaint
will be available for inspection at the Antitrust Documents Group,
Antitrust Division, Liberty Place Building, Room 215, 325 7th Street,
NW., Washington, DC 20530 (202-514-2481), and at the Office of the
Clerk of the U.S. District Court for the District of Columbia. Copies
of these materials may be obtained from the Antitrust Division upon
request and payment of the copying fee set by Department of Justice
regulations.
Interested persons may submit comments in writing regarding the
proposed consent decree to the United States. Such comments must be
received by the Antitrust Division within sixty (60) days and will be
filed with the Court by the United States. Comments should be addressed
to Nancy Goodman, Chief, Telecommunications & Media Enforcement
Section, Antitrust Division, U.S. Department of Justice, 1401 H Street,
NW., Suite 8000, Washington, DC 20530 (202-514-5621). At the conclusion
of the sixty (60) day comment period. The U.S. District Court for the
District of Columbia may enter the proposed consent decree upon finding
that it serves the public interest.
J. Robert Kramer II,
Director of Operations, Antitrust Division.
In the United States District Court for the District of Columbia
United State of America, State of Connecticut and State of Texas,
Plaintiffs, v. Cingular Wireless Corporation, SBC Communications Inc.,
Bellsouth Corporation and AT&T Wireless Services, Inc., Defendants;
Competitive Impact Statement
Civil No. 1:04CV01850 (RBW).
Filed: October 29, 2004.
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. Sec. 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 Cingular Wireless Corporation (``Cingular''), SBC
Communications Inc. (``SBC''), BellSouth Corporation (``BellSouth''),
and AT&T Wireless Services, Inc. (``AT&T Wireless Services'') entered
into an Agreement and Plan of Merger dated February 17, 2004, pursuant
to which Cingular will acquire AT&T Wireless. Plaintiff United States
and the states of Connecticut and Texas (``plaintiff states'') filed a
civil antitrust Complaint on October 25, 2004, seeking to enjoin the
proposed acquisition. The
[[Page 65634]]
Compliant alleges that the likely effect of this acquisition would be
to lessen competition substantially for mobile wireless
telecommunications services and mobile wireless broadband services
(collectively, ``Mobile wireless services'') in violation of Section 7
of the Clayton Act, 15 U.S.C. 18. This loss of competition would result
in consumers facing higher prices, lower quality or quantity of mobile
wireless services, or delayed launch of new mobile wireless services.
At the same time the Complaint was filed, plaintiff United States
also filed a Preservation of Assets Stipulation and Order 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 (1) AT&T
Wireless's mobile wireless services business and related assets in five
markets (``Wireless Business Divesture Assets''); (2) Cingular's or
AT&T Wireless's minority interests in other mobile wireless services
providers in five markets (``Minority Interests''); and (3) 10 MHz of
contiguous PCS wireless spectrum in three markets (``Spectrum Divesture
Assets''). Under the terms of the Preservation of Assets Stipulation
and Order, defendants will take certain steps to ensure (a) that these
assets are preserved and that the Wireless Business Divestiture Assets
are operated as competitively independent, economically viable and
ongoing businesses; (b) that they will remain independent and
uninfluenced by defendants or the consummation of the transaction; and
(c) that competition is maintained during the pendency of the ordered
divestiture.
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. Plaintiffs and defendants have also stipulation that
defendants will comply with the terms of the Preservation of Assets
Stipulation and Order and the proposed Final Judgment from the date of
signing of the Preservation of Assets Stipulation and Order, pending
entry of the proposed Final Judgment by the Court and the required
divestitures. Should the Court decline to enter the proposed Final
Judgment, defendants have also committed to continue to abide by its
requirements and those of the Preservation of Assets Stipulation and
Order until the expiration of time for appeal.
II. Description of the Events Giving Rise to the Alleged Violation
A. The Defendants and the Proposed Transaction
Cingular, with headquarters in Atlanta, Georgia, is a company
organized and existing under the laws of the State of Delaware.
Cingular was formed in 2000 by SBC and BellSouth, who own equity
interests in it of 60 and 40 percent, respectively. SBC and BellSouth
evenly share management control of Cingular. Cingular is the second-
largest provider of mobile wireless voice and data services in the
United States by number of subscribers; it serves more than 24 million
customers. Cingular provides mobile wireless services in areas
throughout the United States and is one of only six providers with a
national presence. In 2003, Cingular earned revenues of approximately
$15.5 billion.
SBC, with headquarters in San Antonio, Texas, is a corporation
organized and existing under the laws of the state of Delaware. SBC is
one of several regional Bell operating companies (``RBOCs'') formed in
1984 as a result of the breakup of AT&T Corporation's local telephone
business. SBC's wireline telecommunications businesses serve 54.7
million access lines in 13 states: Arkansas, California, Connecticut,
Illinois, Indiana, Kansas, Michigan, Missouri, Nevada, Ohio, Oklahoma,
Texas, and Wisconsin. In 2003, SBC earned approximately $40.8 billion
in revenues.
BellSouth, an RBOC with headquarters in Atlanta, Georgia, is a
corporation organized and existing under the laws of the state of
Georgia. BellSouth's wireline telecommunications businesses serve 23.7
million access lines in nine states: Alabama, Florida, Georgia,
Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, and
Tennessee. Its total operating revenues for 2003 were approximately
$22.6 billion.
AT&T Wireless, with headquarters in Redmond, Washington, is a
corporation organized and existing under the laws of the state of
Delaware. Spun off from AT&T Corporation in 2001, it had more than 22
million subscribers as of August 2004 and earned revenues of
approximately $16.6 billion in 2003. AT&T Wireless is the third-largest
U.S. mobile wireless services provider by number of subscribers, and,
like Cingular, it provides mobile wireless services in areas throughout
the United States and has a national presence.
Pursuant to an Agreement and Plan of Merger dated February 17,
2004, Cingular will pay AT&T Wireless shareholders $15 in cash per
common share and thereby plans to acquire AT&T Wireless for
approximately $41 billion. If this transaction is consummated, Cingular
and AT&T Wireless combined would have more than 46 million subscribers,
with over $32 billion in revenues, making it the largest mobile
wireless services provider in the United States, with operations in 49
states covering 97 of the top 100 marketing areas.
The proposed transaction, as initially agreed to by defendants,
would lessen competition substantially for mobile wireless
telecommunications service in 10 markets and for mobile wireless
broadband services in three markets. This acquisition is the subject of
the Complaint and proposed Final Judgment filed by plaintiffs.
B. Mobile Wireless Services Industry
Mobile wireless services allow customers to make and receive
telephone calls and use data services using radio transmissions without
being confined to a small area during the call or data session, and
without the need for unobstructed line-of-sight to the radio tower.
This mobility is highly prized by customers, as demonstrated by the
more than 160 million people in the United States who own mobile
wireless telephones. In 2003, revenues for the sale of mobile wireless
services in the United States were nearly $90 billion. To provide these
services, mobile wireless services providers must acquire adequate and
appropriate spectrum, deploy an extensive network of switches, radio
transmitters, and receivers, and interconnect this network with those
of local and long-distance wireline telecommunications providers and
other mobile wireless services providers.
The first wireless voice systems were based on analog technology,
now referred to as first-generation or ``1G'' technology. These analog
systems were launched after the FCC issued the first licenses for
mobile wireless telephone service: two cellular licenses (A-block and
B-block) in each geographic area in the early to mid-1980s. The
licenses are in the 800 MHz range of the radio spectrum, each license
consists of 25 MHz of spectrum, and they are issued for each
Metropolitan Statistical Area (``MSA'') and Rural Service Area
(``RSA'') (collectively, ``Cellular Marketing Areas'' or ``CMAs''),
with a total of 734 CMAs covering the entire
[[Page 65635]]
United States. In 1982, one of the licenses was issued to the incumbent
local exchange carrier in the market, and the other was issued by
lottery to someone other than the incumbent. Cellular licensees must
support analog service until February 2008.
In 1995, the FCC allocated and subsequently issued licenses for
additional spectrum for the provision of Personal Communications
Services (``PCS''), a category of services that includes mobile
wireless telephone services comparable to those offered by cellular
licensees. These licenses are in the 1.8 GHz range of the radio
spectrum and are divided into six blocks. A, B, and C, which consist of
30 MHz each; and D, E, and F, which consist of 10 MHz each.
Geographically, the A and B-block 30 MHz licenses are issued by Major
Trading Areas (``MTAs''), and C, D, E, and F-block licenses are issued
by Basic Trading Areas (``BTAs''), several of which comprise each MTA.
MTAs and BTAs do not generally correspond to MSAs and RSAs. With the
introduction of the PCS license, both cellular and PCS licensees began
offering digital services, thereby increasing capacity, shrinking
handsets, and extending battery life. Unlike the cellular licensees,
PCS licensees are not required to provide support for analog or any
other technology standard. In 1996, one provider, a specialized mobile
radio (``SMR'' or ``dispatch'') spectrum licensee, began to use its SMR
spectrum of offer mobile wireless telephone services comparable to
those offered by other mobile wireless services providers, in
conjunction with its dispatch, or ``push-to-talk,'' service.
Today, more than 90 percent of all mobile wireless services
customers have digital service, and nearly all mobile wireless voice
service has migrated to second-generation or ``2G'' digital
technologies: TDMA (time division multiple access), GSM (Global
Standard for Mobile, a type of TDMA standard used by all carriers in
Europe), and CDMA (code division multiple access). Mobile wireless
services providers have chosen to build their networks on these
incompatible technologies and most have chosen CDMA or GSM, with TDMA
having been orphaned by equipment vendors. (The SMR providers use a
fourth incompatible technological standard better suited to the
spectrum they own, and, as SMR licensees, they have no obligation to
support a specific technology standard.) Even more advanced
technologies (``2.5G'') have begun to be deployed for voice and data
(e.g., IxRIT (a/k/a CDMA 2000), GPRS (General Packet Radio Service),
and EDGE (Enhanced Data for GSM Evolution)). The data transmission
speeds of these technologies vary. For example, 1xRTT provides average
user speeds of 70 kilobits per second (``kbps''), and GPRS and EDGE
provide average user speeds of 20 to 40 kbps and 80 to 110 kbps,
respectively.
Currently, the U.S. mobile wireless services industry is taking the
next evolutionary step in wireless technology to third-generation or
``3G'' technologies (e.g., for GSM, UMTS (Universal Mobile
Telecommunications System) and for CDMA, Ev-DO/DV (Evolution Data Only/
Date Voice)) that provide for more capacity and higher data throughout.
All of the national mobile wireless services providers and some of the
regional providers are considering how and where they will deploy 3G
services across their networks. Some providers have already deployed
this service in some areas of the country.
C. The Competitive Effects of the Transaction on Mobile Wireless
Telecommunications Services and Mobile Wireless Broadband Services
Cingular's proposed acquisition of AT&T Wireless will substantially
lessen competition in mobile wireless telecommunications services and
mobile wireless broadband services in the relevant geographic areas.
Mobile wireless telecommunications services include both voice and data
services provided over a radio network and allow customers to maintain
their telephone calls or data sessions without wires, such as when
traveling. Mobile wireless broadband services offer data speeds four to
six times faster than the 2G and 2.5G data offerings currently provided
by the mobile wireless services providers. Mobile wireless broadband
services, which are now being launched using various 3G technologies,
offer average data speeds of 200 to 300 kbps, peaking at 2 megabits per
second or higher. These speeds rival wireline broadband services at
peak speeds. At average speeds, they are comparable to low-end wireline
high-speed data offerings and can support bandwidth-intensive services
including video conferencing, video streaming, downloading of music and
video files, and voice over Internet protocol (``VoIP'') calling, none
of which can be used reliably at slower speeds. Fixed wireless services
and other wireless services that have a limited range (e.g., Wi-Fi) do
not offer a viable alternative to either mobile wireless
telecommunications services or mobile wireless broadband services
primarily because customers using these services cannot maintain a call
or data session while moving from one location to another.
Most customers use mobile wireless services in close proximity to
their workplaces and homes. Thus, customers purchasing mobile wireless
telecommunications services and mobile wireless broadband services
choose among mobile wireless services providers that offer services
where they are located and travel on a regular basis: home, work, other
areas they commonly visit, and areas in between. The number and
identity of mobile wireless services providers varies from geographic
area to geographic area, along with the quality of their services and
the breadth of their geographic coverage, all of which are significant
factors in customers' purchasing decisions. Mobile wireless services
providers can and do offer different promotions, discounts, calling
plans, and equipment subsidies in different geographic areas,
effectively varying the actual price for customers by geographic area.
The relevant geographic markets for mobile wireless services are,
therefore, local in nature and are generally centered around a
metropolitan area or a population center and its environs. The FCC has
licensed a limited number of mobile wireless services providers in
these and other geographical areas based upon the availability of radio
spectrum. These FCC spectrum licensing areas often represent the core
of the business and social sphere where customers face the same
competitive choices for mobile wireless services. Although not all FCC
spectrum licensing areas are relevant geographic areas for the purpose
of analyzing the antitrust impact of this transaction, the FCC spectrum
licensing areas that encompass the 13 geographic areas of concern in
this transaction are where consumers in these communities principally
use their mobile wireless services. As described in the Complaint, the
relevant geographic markets where the transactions will substantially
lessen competition for mobile wireless telecommunications services are
represented by the following FCC spectrum licensing areas: Oklahoma
City, Oklahoma (CMA 045), Topeka, Kansas (CMA 179), Pittsfield,
Massachusetts (CMA 213), Athens, Georgia (CMA 234), St. Joseph,
Missouri (CMA 275), Connecticut RSA-1 (CMA 357), Kentucky RSA-1 (CMA
443), Oklahoma RSA-3 (CMA 598), Texas RSA-11 (CMA 662), and Shreveport,
Louisiana (BTA 419). The relevant geographic markets where the
transaction will substantially lessen competition for mobile wireless
broadband services are represented by the following FCC spectrum
licensing
[[Page 65636]]
areas: Dallas-Fort Worth, Texas (CMA 009), Detroit, Michigan (BTA 112),
and Knoxville, Tennessee (BTA 232).
The 10 geographic markets of concern for mobile wireless
telecommunications services were identified by a fact-specific, market-
by-market analysis that included consideration of, but was not limited
to, the following factors: the number of mobile wireless services
providers and their competitive strengths and weaknesses, Cingular's
and AT&T Wireless'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 or launch
additional services, the population of a market as it affects the need
for spectrum to serve the population, the concentration of the market,
and the breadth and depth of coverage by different providers in each
market.
Cingular and AT&T Wireless both own all or part of businesses that
offer mobile wireless telecommunications services in the 10 relevant
geographic areas. In five of these areas (Athens, Georgia; Topeka,
Kansas; Pittsfield, Massachusetts; St. Joseph, Missouri; and
Shreveport, Louisiana), Cingular or AT&T Wireless also owns minority
equity interests in another mobile wireless telecommunications services
provider that would be a significant competitor to the merged firm for
these services. The minority equity interests range from approximately
9 to 24 percent. Based upon these significant minority equity interests
and the specific facts of the relationships, it was appropriate to
attribute the shares and assets of the mobile wireless services
businesses partially owned by Cingular or AT&T Wireless in these
markets to either Cingular or AT&T Wireless, thus increasing the
percentage of customers served by the merged firm.
The individual market shares of Cingular's and AT&T Wireless's
mobile wireless telecommunications services businesses in the 10
relevant geographic markets as measures in terms of subscribers range
from 9 to more than 71 percent, and their combined market shares range
from 61 to nearly 90 percent. In each relevant geographic market,
Cingular or AT&T Wireless has the largest market share, and, in all but
one, the other is the second-largest mobile wireless telecommunications
services provider. In all but one of the relevant geographic markets,
Cingular and AT&T Wireless are the original cellular licensees and, as
a result, have the network infrastructures with the greatest depth and
breadth of coverage. Cingular and AT&T Wireless are likely closer
substitutes for each other than the other mobile wireless
telecommunications services providers in the relevant geographic
markets. Additionally in these markets, there will be insufficient
remaining competitors post-merger with the ability to compete
effectively to defeat a small, but significant price increase by the
merged firm.
The relevant geographic markets for mobile wireless
telecommunications 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
Compliant, concentration in these markets ranges from approximately
2600 to more than 5300, which is well above the 1800 threshold at which
the Department considers a market to be highly concentrated. After
Cingular's proposed acquisition of AT&T Wireless is consummated, the
HHIs in the relevant geographic markets will range from approximately
4400 to more than 8000, with increases in the HHI as a result of the
merger ranging from approximately 1100 to more than 3500.
Competition between Cingular and AT&T Wireless in the relevant
geographic markets has resulted in lower prices and higher quality in
mobile wireless telecommunications services than would otherwise have
existed in these geographic markets. If Cingular's proposed acquisition
of AT&T Wireless is consummated, the relevant geographic markets for
mobile wireless telecommunications services will become substantially
more concentrated, and the competition between Cingular and AT&T
Wireless in mobile wireless telecommunications services will be
eliminated in these markets. As a result, the loss of competition
between Cingular and AT&T Wireless increases the likelihood of
unilateral actions by the merged firm in the relevant geographic
markets to increase prices, diminish the quality or quantity of
services provided, refrain from or delay making investments in network
improvements, and refrain from or delay launching new services.
In the relevant geographic markets for mobile wireless broadband
services, Cingular and AT&T Wireless have either launched or are likely
soon to launch mobile wireless broadband services. Each has the
spectrum necessary to offer mobile wireless broadband services and has
business plans to offer these services in these markets. Not all mobile
wireless services providers have sufficient spectrum to launch mobile
wireless broadband services in these markets, nor do they all have
business plans to do so in the near future. In the relevant geographic
markets, the current number of mobile wireless services providers that
are likely to launch mobile wireless broadband services in the
foreseeable future is limited. Because mobile wireless broadband
services are nascent, however, HHIs are uninformative.
The competition between Cingular and AT&T Wireless has motivated
their efforts to develop and launch mobile wireless broadband services
in the relevant geographic markets. If Cingular's proposed acquisition
of AT&T Wireless is consummated, the relevant geographic markets will
lose one of only a few existing and likely mobile wireless broadband
services providers. As a result, the loss of competition between
Cingular and AT&T Wireless increases the likelihood of unilateral
actions by the merged firm in these relevant geographic markets to
increase prices, diminish the quality or quantity of services provided,
and refrain from or delay the launch of mobile wireless broadband
services.
Entry by a new mobile wireless services provider in the relevant
geographic markets would be difficult, time-consuming, and expensive,
requiring the acquisition of spectrum licenses and the build-out of a
network. Therefore, new entry in response to a small but significant
price increase for mobile wireless telecommunications services or
mobile wireless broadband services by the merged firm in the relevant
geographic markets would not be timely, likely, or sufficient to thwart
the competitive harm that would result from Cingular's proposed
acquisition of AT&T Wireless.
For these reasons, plaintiffs concluded that Cingular's proposed
acquisition of AT&T Wireless will likely substantially lessen
competition, in violation of Section 7 of the Clayton Act, in the
provision of mobile wireless telecommunications services and mobile
wireless broadband services in the relevant geographic markets.
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 and mobile wireless broadband
services in the 13 geographic markets of concern. The proposed Final
Judgment requires defendants, within 120 days after the filing of the
Complaint, or five days after notice of the entry of the Final Judgment
by the Court, whichever is later, to
[[Page 65637]]
divest the Wireless Business Divestiture Assets, the Minority
Interests, and Spectrum Divestiture Assets (collectively, ``Divestiture
Assets''). The Wireless Business Divestiture Assets are essentially
AT&T Wireless's entire mobile wireless business in the five markets
where Cingular and AT&T Wireless both currently own and control
providers of mobile wireless telecommunications services. These assets
must be divested in such a way as to satisfy plaintiff United States in
its sole discretion upon consultation with any relevant plaintiff state
that they will be operated by the purchaser as a viable, ongoing
business that can compete effectively in the relevant market.
Defendants must take all reasonable steps necessary to accomplish the
divestitures quickly and shall cooperate with prospective purchasers.
With respect to the Wireless Business Divestiture Assets, in some
markets the merged firm may retain some of AT&T Wireless's wireless
spectrum (Connecticut RSA-1, Kentucky RSA-1, and Texas RSA-11). The
spectrum that must be divested is adequate to support the operation and
expansion of the mobile wireless services business being divested, and
allowing the merged firm to retain some of AT&T Wireless's spectrum may
benefit consumers by allowing the merged firm to provide improved or
new services.
In the five markets where either Cingular or AT&T Wireless owns a
minority interest in another mobile wireless services provider, the
proposed Final Judgment requires defendants to divest these Minority
Interests. The proposed Final Judgment allows defendants to retain the
Minority Interests in the Missouri, Kansas, and Louisiana areas with
the approval of plaintiff United States in its sole discretion if they
demonstrate that the retained minority interest will become irrevocably
and entirely passive so long as the merged firm owns the interest and
will not significantly diminish competition. The size of the minority
interests and market concentrations in the Georgia and Massachusetts
markets created concerns that allowing the merged firm to continue to
hold even a passive interest would diminish competition, and defendants
are required to divest fully their interests in those markets.
The Spectrum Divestiture Assets consist of 10 MHz of contiguous PCS
spectrum in three markets and must be divested in such a way as to
remedy the competitive harm from the transaction in the relevant mobile
wireless broadband services markets. The availability of this spectrum
will make it more likely that another mobile wireless services provider
could offer high-speed data services in these areas. In Knoxville,
Tennessee, the merged firm can alternatively restructure its
relationship with another spectrum licensee in the market so that the
merged firm no longer has an effective controlling interest in the
licensee and that the licensee's spectrum will be used by it in a
manner that resolves the competitive concerns identified in the
Complaint, which is effectively the same as if the merged firm were to
divest the required amount of spectrum.
A. Timing of Divestitures
In antitrust cases involving mergers or joint ventures in which
plaintiff United States seeks a divestiture remedy, it requires
completion of the divestitures within the shortest time period
reasonable under the circumstances. The proposed Final Judgment in this
case requires, in Section IV.A, divestiture of the Divestiture Assets,
within 120 days after the filing of the Complaint, 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 any relevant plaintiff state 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 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 Preservation of Assets Stipulation and Order.
B. Use of a Management Trustee
The Preservation of Assets Stipulation and Order, entered by the
Court on October 26, 2004, ensures, prior to divestiture, that the
Divestiture Assets are maintained and the Wireless Business Divestiture
Assets remain an ongoing business concern and that the other
Divestiture Assets remain economically viable. The Divestiture Assets
will remain preserved, independent and uninfluenced by defendants, so
that competition is maintained during the pendency of the ordered
divestiture.
The Preservation of Assets Stipulation and Order appoints a
management trustee selected by plaintiff United States upon
consultation with plaintiff states to oversee the Divestiture Assets in
the relevant geographic markets. The appointment of a management
trustee in this unique situation is required because the Divestiture
Assets are not independent facilities that can be held separate and
operated as standalone units by the merged firm. Rather, the Wireless
Business Divestiture Assets are an integral part of a nationwide
network, and to maintain their competitive viability and economic
value, they should remain part of that network during the divestiture
period. To ensure that these assets are preserved and supported by
defendants during this period, yet run independently, a management
trustee is necessary to oversee the continuing relationship between
defendants and these assets. The management trustee will have the power
to operate the Wireless Business Divestiture Assets in the ordinary
course of business, so that they will remain preserved, independent,
and uninfluenced by defendants, and an ongoing and economically viable
competitor to defendants and to other mobile wireless services
providers. The management trustee will preserve the confidentiality of
competitively sensitive marketing, pricing, and sales information;
insure defendants' compliance with the Preservation of Assets
Stipulation and Order 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 Preservation of Assets Stipulation and Order provides that
defendants will pay all costs and expenses of the management trustee,
including the cost of consultants, accountants, attorneys, and other
representatives and assistants hired by the management trustee as are
reasonably necessary to carry out his or her duties and
responsibilities. After his
[[Page 65638]]
or her appointment becomes effective, the management trustee will file
monthly reports with plaintiffs setting forth the efforts to accomplish
the goals of the Preservation of Assets Stipulation and Order and the
proposed Final Judgment and the extent to which defendants are
fulfilling their responsibilities. Finally, the management trustee may
become the divestiture trustee, pursuant to the provisions of Section 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 upon consultation with any relevant plaintiff
state to effect the divestitures. As part of this divestiture,
defendants must relinquish any direct or indirect financial ownership
interests and any direct or indirect role in management or
participation in control. Pursuant to Section V of the proposed Final
Judgment, the divestiture trustee will own and control the systems
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 the best price then obtainable upon a reasonable
effort by the trustee.'' In addition, to insure that the divestiture
trustee can promptly locate and divest to an acceptable purchaser,
plaintiff United States, in its sole discretion upon consultation with
any relevant plaintiff state, may require defendants to include
additional assets, or allow defendants to substitute substantially
similar assets, which substantially relate to the Wireless Business
Divestiture Assets to be divested by the divestiture trustee.
The divestiture trustee will not only have responsibility for sale
of the Divestiture Assets, but will also be the authorized holder of
the wireless licenses, with full responsibility for the operations,
marketing, and sales of the wireless businesses to be divested, and
will not be subject to any control or direction by defendants.
Defendants will no longer have any role in the ownership, operation, or
management of the Divestiture Assets following consummation of the
transaction, as provided by Section V, other than the right to receive
the proceeds of the sale, and certain obligations to provide support to
the Divestiture Assets, and cooperate with the divestiture trustee in
order to complete the divestiture, as indicated in Section VI.L and in
the Preservation of Assets Stipulation and Order.
The proposed Final Judgment provides that defendants will pay all
costs and expenses of the divestiture trustee. The divestiture
trustee's commission will be structured, under Section V.G of the
proposed Final Judgment, so as to provide an incentive for the
divestiture trustee based on the price obtained and the speed with
which the divestitures are accomplished. After his or her appointment
becomes effective, the divestiture trustee will file monthly reports
with the Court and 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, plaintiff United States, and
any relevant plaintiff state will make recommendations to the Court,
which shall enter such orders as appropriate in order to carry out the
purpose of the trust, including extending the trust or term of the
trustee's appointment.
The divestiture provisions of the proposed Final Judgment will
eliminate the anticompetitive effects of the transaction in the
provision of mobile wireless telecommunications services and mobile
wireless broadband services. The divestitures of the Wireless Business
Divestiture Assets and the Minority Interests will preserve competition
in mobile wireless telecommunications services by maintaining an
independent and economically viable competitor in the relevant
geographic markets. The divestiture of the Spectrum Divestiture Assets
will preserve competition in mobile wireless broadband services by
making assets available to establish a new, independent, and
economically viable competitor.
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
Plaintiffs and defendants have stipulated that the proposed Final
Judgment may be entered by a Court after compliance with the provisions
of the APPA, provided that plaintiffs have not withdrawn their consent.
The APPA conditions entry upon the Court's determination that the
proposed Final Judgment is in the public interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to plaintiff United States written comments regarding
the proposed Final Judgment. Any person who wishes to comment should do
so within sixty (60) days of the date of publication of this
Competitive Impact Statement in the Federal Register. All comments
received during this period will be considered by the Department of
Justice, which remains free to withdraw its consent to the proposed
Final Judgment at any time prior to the Court's entry of judgment. The
comments and the response of 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, 1401 H Street, NW., Suite 8000, Washington,
DC 20530. The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
Plaintiff United States considered, as an alternative to the
proposed Final
[[Page 65639]]
Judgment, a full trail on the merits against defendants. Plaintiff
United States could have continued the litigation and sought
preliminary and permanent injunctions against Cingular's acquisition of
AT&T Wireless. Plaintiff United States is satisfied, however, that the
divestiture of assets and other relief described in the proposed Final
Judgment will preserve competition for the provision of mobile wireless
telecommunications services and mobile wireless broadband services in
the relevant markets identified in the Complaint.
VII. Standard of Review Under the APPA for the Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a sixty-day comment
period, after which the Court shall determine whether entry of the
proposed Final Judgment ``is in the public interest.'' 15 U.S.C.
16(e)(1). In making that determination, the Court shall consider:
(A) The competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration or relief sought, anticipated effects of
alternative remedies actually considered, whether its terms are
ambiguous, 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). As the United States Court of Appeals for
the District of Columbia Circuit has held, the APPA permits a court to
consider, among other things, the relationship between the remedy
secured and the specific allegations set forth in the government's
compliant, whether the consent judgment is sufficiently clear, whether
enforcement mechanisms are sufficient, and whether the consent judgment
may positively harm third parties. See United States v. Microsoft
Corp., 56 F.3d 1448, 1458-62 (D.C. Cir. 1995).
``Nothing in this section shall be construed to require the court
to conduct an evidentiary hearing or to require the court to permit
anyone to intervene.'' 15 U.S.C. 16(e)(2). Thus, in conducting this
inquiry, ``[t]he court is nowhere compelled to go to trial or to engage
in extended proceedings which might have the effect of vitiating the
benefits of prompt and less costly settlement through the consent
decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of Senator
Tunney).\1\ Rather:
\1\ See United States v. Gillette Co., 406 F. Supp. 713, 716 (D.
Mass. 1975) (recognizing it was not the court's duty to settle;
rather, the court must only answer ``whether the settlement achieved
[was] within the reaches of the public interest''). A ``public
interest'' determination can be made properly on the basis of the
Competitive Impact Statement and Response to Comments field by the
Department of Justice pursuant to the APPA. Although the APPA
authorizes the use of additional procedures, 15 U.S.C. 16(f), those
procedures are discretionary. A court need not invoke any of them
unless it believes that the comments have raised significant issues
and that further proceedings would aid the court in resolving those
issues. See H.R. Rep. No. 93-1463, 93d Cong., 2d Sess. 8-9 (1974),
reprinted in 1974 U.S.C.C.A.N. 6535, 6538-39.
---------------------------------------------------------------------------
[a]bsent 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.
United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. (CCH)
]61,508, at 71,980 (W.D. Mo. 1977).
Accordingly, with respect to the adequacy of the relief secured by
the proposed Final Judgment, a court may not ``engage in an
unrestricted evaluation of what relief would best serve the public.''
United States v. BNS Inc., 858 F.2d 456, 462 (9th Cir. 1988) (citing
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see
also Microsoft, 56 F.3d at 1460-62. Courts have held that:
[t]he balancing of competing social and political interest affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\
---------------------------------------------------------------------------
\2\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); Gillette, 406 F. Supp. at 716
(noting that, in this way, the court is constrained to ``look at the
overall picture not hypercritically, nor with a microscope, but with
an artist's reducing glass''); see generally Microsoft, 56 F.3d at
1461 (discussing whether ``the remedies [obtained in the decree are]
so inconsonant with the allegations charged as to fall outside of
the `reaches of the public interest' '').
---------------------------------------------------------------------------
The proposed Final Judgment, therefore, should not be reviewed
under a standard of whether it is certain to eliminate every
anticompetitive effect of a particular practice or whether it mandates
certainty of free competition in the future. Court approval of a final
judgment requires a standard more flexible and less strict than the
standard required for a finding of liability. ``[A] proposed decree
must be approved even if it falls short of the remedy the court would
impose on its own, as long as it falls within the range of
acceptability or is `within the reaches of public interest.' '' United
States v. AT&T Corp., 552 F. Supp. 131, 151 (D.D.C. 1982) (citations
omitted) (quoting Gillette, 406 F. Supp. at 716), aff'd sub nom.
Maryland v. United States, 460 U.S. 1001 (1983); see also United States
v. Alcan Aluminum Ltd., 605 F. supp. 619, 622 (W.D. Ky. 1985)
(approving the consent judgment even though the court would have
imposed a greater remedy).
Moreover, the Court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint, and does not authorize the Court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459. Because the ``court's
authority to review the decree depends entirely on the government's
exercising its prosecutorial discretion by bringing a case in the first
place,'' it follows that ``the court is only authorized to review the
decree itself,'' and not to ``effectively redraft the complaint'' to
inquire into other matters that the United States did not pursue. Id.
at 1459-60.
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by plaintiff United States in
formulating the proposed Final Judgment.
Dated: October 29, 2004.
Respectfully submitted,
/s/-------------------------------------------------------------------
Hillary B. Burchuk, (D.C. Bar # 366755)
Matthew C. Hammond
David T. Blonder
Benjamin Brown
Michael D. Chaleff
Benjamin Giliberti
Jeremiah M. Luongo
Lorenzo McRae (D.C. Bar # 473660)
Attorneys, Telecommunications & Media, Enforcement Section,
Antitrust Division, U.S. Department of Justice, City Center
Building, 1401 H Street, NW., Suite 8000, Washington, DC 20530,
(202) 514-5621, Facsimile: (202) 514-6381.
[[Page 65640]]
Certificate of Service
I hereby certify that copies of the Competitive Impact Statement
have been mailed, by U.S. mail, postage preparid, to the attorneys
listed below, the 29th day of October 2004.
Richard L. Rosen, Esq., Arnold & Porter LLP, 555 Twelfth St., NW,
Washington, DC 20004.
Counsel For Defendants Cingular Wireless Corporation and SBC
Communications, Inc.
Stephen M. Axinn, Esq., Axinn, Veltrop & Harkrider LLP, 1801 K St.,
NW, Washington, DC 2006.
Counsel For Defendants Cingular Wireless Corporation and BellSouth
Corporation.
Ilene Knable Gotts, Esq., Wachtell, Lipton, Rosen & Katz51 West 52nd
Street, New York, NY 10019.
Counsel for Defendant AT&T Wireless Services, Inc.
John T. Prud'homme, Jr., Esq, Assistant Attorney General, Antitrust
and Civil Medicare Fraud Department, Office of the Attorney General,
300 West 15th Street, 9th Floor, Austin, Texas 78701.
Counsel for Plaintiff State of Texas.
Rachel O. Davis, Esq., Assistant Attorney General, Antitrust
Department, 55 Elm Street, Hartford, Connecticut 06106.
Counsel for Plaintiff State of Connecticut.
/s/-------------------------------------------------------------------
Hillary B. Burchuk (D.C. Bar # 366755)
Matthew C. Hammond
Attorneys, Telecommunications & Media, Enforcement Section,
Antitrust Division, U.S. Department of Justice, City Center
Building, 1401 H Street, NW., Suite 8000, Washington, DC 20530,
(202) 514-5621, Facsimile: (202) 514-6381.
In the United States District Court for the District of Columbia
United States of America, State of Connecticut and State of Texas,
Plaintiffs, v. Cingular Wireless Corporation, SBC Communications Inc.,
BellSouth Corporation and AT&T Wireless Services, Inc., Defendants;
Final Judgment
Civil No.: 1:04CV01850 (RBW)
Filed: November 3, 2004
Whereas, plaintiffs, United States of America, and the states of
Connecticut and Texas (``plaintiff states''), filed their Complaint on
October 25, 2004, plaintiffs and defendants, Cingular Wireless
Corporation, SBC Communications Inc., BellSouth Corporation and AT&T
Wireless Services, Inc. (``AT&T Wireless''), by their respective
attorneys, have consented to the entry of this Final Judgment without
trial or adjudication of any issue of fact or law, and without this
Final Judgment constituting any evidence against or admission by any
party regarding any issue of fact or law;
And Whereas, defendants agree to be bound by the provisions of this
Final Judgment pending its approval by the Court;
And Whereas, the essence of this Final Judgment is the prompt and
certain divestiture of certain rights or assets by the defendants to
assure that competition is not substantially lessened;
And Whereas, 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, 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 Wireless'' means defendant AT&T Wireless Services, Inc.,
a Delaware corporation with headquarters in Redmond, Washington, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
C. ``BellSouth'' means defendant BellSouth Corporation, a Georgia
corporation with headquarters in Atlanta, Georgia, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and their directors, officers,
managers, agents, and employees.
D. ``Cingular'' means defendant Cingular Wireless Corporation, a
Delaware corporation with headquarters in Atlanta, Georgia, and
Cingular Wireless LLC, a Delaware limited liability company formed as a
joint venture between SBC and BellSouth, with headquarters in Atlanta,
Georgia, their successors and assigns, and their subsidiaries,
divisions, groups, affiliates, partnerships and joint ventures, and
their directors, officers, managers, agents, and employees.
E. ``Divestiture Assets'' means Wireless Business Divestiture
Assets, Spectrum License Divestiture Assets, and Minority Interests,
including any direct or indirect financial ownership or leasehold
interests and any direct or indirect role in management or
participation in control therein.
F. ``Minority Interests'' means the equity interests owned by any
defendant in the following entities that are the licensees or operators
of mobile wireless services businesses in the specified Metropolitan
Statistical Areas (``MSAs'') and Rural Statistical Areas (``RSAs'')
(collectively, Cellular Marketing Areas (``CMAs'')) used to define
cellular license areas by the Federal Communications Commission
(``FCC''):
(1) Alltel Communications of North Louisiana Cellular Limited
Partnership, covering the Shreveport, Louisiana MSA (CMA 100), Monroe,
Louisiana MSA (CMA 219), Louisiana RSA-1 (CMA 454), Louisiana RSA-2
(CMA 455) and Louisnana RSA-3 (CMA 456);
(2) Athens Cellular Inc., covering the Athens, Georgia MSA (CMA
234);
(3) CellTelCo, covering the St. Joseph, Missouri MSA (CMA 275);
(4) Pittsfield Cellular Telephone Co., covering the Pittsfield,
Massachusetts MSA (CMA 213); and
(5) Topeka Cellular Telephone Co., Inc., covering the Topeka,
Kansas MSA (CMA 179).
As an alternative to the divestiture of the Alltel Communications
of North Louisiana Cellular Limited Partnership, CellTelCo, and Topeka
Cellular Telephone Co., Inc. Minority Interests as required by Section
IV of this Final Judgment, defendants may request, at least 20 days
prior to consummation of the Transaction, approval from plaintiff
United States to retain such interests. Plaintiff United States in its
sole discretion may approve this request if it is demonstrated that the
retained minority interest will become irrevocably and entirely
passive, so long as defendants own the minority interests, and will not
significantly diminish competition.
G. ``Multi-line Business Customer'' means a corporate or business
customer that contracts with AT&T Wireless for mobile wireless services
to provide multiple telephones to its employees or members whose
services are provided pursuant to a contract with a corporate or
business customer.
H. ``SBC'' means defendant SBC Communications Inc., a Delaware
corporation with headquarters in San
[[Page 65641]]
Antonio, Texas, its successors and assigns, and its subsidiaries,
divisions, groups, affiliates, partnerships and joint ventures, and
their directors, officers, managers, agents, and employees.
I. ``Skagit'' means Skagit Wireless LLC, an Oregon corporation with
headquarters in Portland, Oregon, its successors and assigns, and its
subsidiaries, divisions, groups, affiliates, partnerships and joint
ventures, and their directors, officers, managers, agents, and
employees.
J. ``Spectrum License Divestiture Assets'' means a license for 10
MHz of contiguous PCS spectrum in the specified MSAs and Basic Trading
Areas (``BTAs'') used to define cellular and PCS license areas by the
FCC:
(1) The Dallas-Fort Worth, Texas MSA (CMA 009);
(2) The Detroit, Michigan BTA (BTA 112), provided that the license
to be transferred does not have to include any PCS spectrum in Monroe
and Sanilac counties; and
(3) The Knoxville, Tennessee BTA (BTA 232), provided that as an
alternative to the divestiture of a license for 10 MHz of contiguous
PCS spectrum as required by Section IV of this Final Judgment,
defendants, with the approval of plaintiff United States in its sole
discretion, can restructure AT&T Wireless's existing relationship with
Skagit such that (i) defendants have no equity or leasehold interest
in, hold no debt of, and have no managerial or operational interest in
Skagit's PCS license in the Knoxville Tennessee BTA, and (ii) Skagit's
PCS license in the Knoxville Tennessee BTA is contractually committed
to be used in a manner that resolve the competitive concerns alleged by
plaintiffs in the Complaint.
K. ``Transaction'' means the Agreement and Plan of Merger By and
Among AT&T Wireless Services, Inc., Cingular Wireless Corporation,
Cingular Wireless LLC, Links I Corporation, SBC Communications Inc.,
and BellSouth Corporation, dated February 17, 2004.
L. ``Wireless Business Divestiture Assets'' means, for each mobile
wireless business to be divested under this Final Judgment, all types
of assets, tangible and intangible, used by defendants in the operation
of the mobile wireless businesses to be divested (including the
provision of long distance telecommunications services for wireless
calls). ``Wireless Business Divestiture Assets'' shall be construed
broadly to accomplish the complete divestitures of the entire business
of AT&T Wireless in each of the following MSA and RSA license areas as
required by this Final Judgment and to ensure that the divested mobile
wireless businesses remain viable, ongoing businesses:
(a) Oklahoma City, Oklahoma MSA (CMA 045);
(b) Connecticut RSA-1 (CMA 357), provided that defendants may
retain 10 MHz of AT&T Wireless's PCS spectrum, provided that 10 MHz of
contiguous PCS spectrum throughout the RSA is divested to an Acquirer;
(c) Kentucky RSA-1 (CMA 443), provided that defendants may retain
15 MHz of AT&T Wireless's PCS spectrum in Fulton county and 10 MHz of
AT&T Wireless's PCS spectrum in the other counties contained within the
RSA, provided that 30 MHz of contiguous PCS spectrum in Fulton county
and 20 MHz of contiguous PCS spectrum in the other counties contained
in the RSA is divested to an Acquirer;
(d) Oklahoma RSA-3 (CMA 598); and
(e) Texas RSA-11 (CMA 662), provided that defendants may retain 25
MHz of AT&T Wireless's PCS spectrum in Sabine county, and 20 MHz of
AT&T Wireless's PCS spectrum in Angelina, Nacogdoches, and San
Augustine counties, provided that 10 MHz of contiguous PCS spectrum
throughout the RSA is divested to an Acquirer.
Wireless Business Divestiture Assets shall include, without
limitation, all types of real and personal property, monies and
financial instruments, equipment, inventory, office furniture, fixed
assets and furnishings, supplies and materials, contracts, agreements,
leases, commitments, spectrum licenses issued by the FCC and all other
licenses, permits and authorizations, operational support systems, cell
sites, network infrastructure, switches, customer support and billing
systems, interfaces with other service providers, business and customer
records and information, customer contracts, customer lists, credit
records, accounts, and historic and current business plans which relate
primarily to the wireless business 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, including all
intellectual property rights under third-party licenses that are
capable of being transferred to an Acquirer either in their entirety,
for assets described in (1) below, or through a license obtained
through or from the divesting defendant, for assets described in (2)
below; provided that defendants shall only be required to divest Multi-
line business Customer contracts, if 50 percent or more of the Multi-
line Business Customer's subscribers reside or work within any of the
five (5) license areas described herein, and further, any subscribers
who obtain mobile wireless services through any such contract retained
by defendants and who are located within the five (5) geographic areas
identified above, shall be given the option to terminate their
relationship with defendants, without financial cost, within one year
of the closing of the Transaction. Defendants shall provide written
notice to these subscribers within 45 days after the closing of the
Transaction.
These divestitures of the Wireless Business Divestiture Assets
shall be accomplished by:
(1) Transferring to the Acquirers the complete ownership and/or
other rights to the assets (other than those assets used substantially
in the operations of AT&T Wireless's overall wireless business which
must be retained to continue the existing operations of the wireless
properties that defendants are not required to divest, and that either
are not capable of being divided between the divested wireless
businesses and those not divested, or are assets that the defendants
and the Acquirer(s) agree, subject to approval of plaintiff United
States upon consultation with any relevant plaintiff state, shall not
be divided); and
(2) Granting to the Acquirer(s) an option to obtain a non-
exclusive, transferable license from defendants for a reasonable
period, subject to approval of plaintiff United States upon
consultation with any relevant plaintiff state, at the election of an
Acquirer to use any of AT&T Wireless's retained assets under paragraph
(1) above, used in the operation of the wireless business being
divested, so as to enable the Acquirer to continue to operate the
divested wireless business without impairment. Defendants shall
identify in a schedule submitted to plaintiffs and filed with the
Court, as expeditiously as possible following the filing of the
Complaint and in any event prior to any divestitures and before the
approval by the Court of this Final Judgment, any intellectual property
rights under third-party licenses that are used by the wireless
businesses being divested but that defendants could not transfer to an
Acquirer entirely or by license without third-party consent, and the
specific reasons why such consent is necessary and how such consent
would be obtained for each asset.
[[Page 65642]]
III. Applicability
A. This Final Judgment applies to defendants Cingular, SBC,
BellSouth and AT&T Wireless, 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. Defendants shall require, as a condition of the sale or other
disposition of all or substantially all of their assets or of lesser
business units that include the Divestiture Assets, that the purchaser
agrees to be bound by the provisions of this Final Judgment, provided
that defendants need not obtain such an agreement from the Acquirer(s).
IV. Divestitures
A. Defendants are ordered and directed, within 120 days after
consummation of the Transaction, or five (5) days after notice of entry
of this Final Judgment, whichever is later, to divest the Divestiture
Assets to an Acquirer or Acquirers acceptable to plaintiff United
States in its sole discretion upon consultation with any relevant
plaintiff state, and, if applicable, to a Divestiture Trustee
designated pursuant to Section V of this Final Judgment. Plaintiff
United States, in its sole discretion upon consultation with any
relevant plaintiff state, may agree to one or more extensions of this
time period not to exceed 60 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 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 (5) days after such approval is
received. Defendants agree to use their best efforts to accomplish the
divestitures set forth in this Final Judgment and to seek all necessary
regulatory approvals as expeditiously as possible. This Final Judgment
does not limit the FCC's exercise of its regulatory powers and process
with respect to the Divestiture Assets. Authorization by the FCC to
conduct the divestiture of a Divestiture Asset in a particular manner
will not modify any of the requirements of this decree.
B. In accomplishing the divestitures ordered by this Final
Judgment, defendants shall promptly make known, if they have not
already done so, by usual and customary means, the availability of the
Divestiture Assets. Defendants shall inform any person making inquiry
regarding a possible purchase of the Divestiture Assets that they are
being divested pursuant to this Final Judgment and provide that person
with a copy of this Final Judgment. Defendants shall offer to furnish
to all prospective Acquirers, subject to customary confidentiality
assurances, all information and documents relating to the Divestiture
Assets customarily provided in a due diligence process except such
information or documents subject to the attorney-client or work
productive privileges. Defendants shall make available such information
to plaintiffs at the same time that such information is made available
to any other person.
C. Defendants shall provide to the Acquirer(s) and plaintiffs
information relating to the personnel involved in the operation,
development, and sale of the Wireless Business 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, and sale of the Wireless Business 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, operational, and other documents and information customarily
provided as part of a due diligence process.
E. Defendants shall warrant to all Acquirer(s) that (1) each asset
of the Wireless Business Divestiture Assets will be operational on the
date of sale, and (2) every wireless spectrum license 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 assets,
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 otherwise consents in writing,
upon consultation with any relevant plaintiff state, the divestitures
pursuant to Section IV, or by a Divestiture Trustee appointed pursuant
to Section V of this Final Judgment, shall include the entire
Divestiture Assets and with respect to the Wireless Business
Divestiture Assets and Spectrum License Divestiture Assets, shall be
accomplished in such a way as to satisfy plaintiff United States, in
its sole discretion upon consultation with any relevant plaintiff
state, 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 services. Divestiture of the Divestiture Assets may be made to
one or more Acquirers, provided that in each instance it is
demonstrated to the sole satisfaction of plaintiff United States upon
consultation with any relevant plaintiff state, that the Divestiture
Assets will remain viable and the divestiture of such assets will
remedy the competitive harm alleged in the Complaint. The divestitures
of the Wireless Business Divestiture Assets and Spectrum License
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 State's sole judgment upon consultation with any relevant
plaintiff state, has the intent and capability (including the necessary
managerial, operational, technical, and financial capability) of
competing effectively in the provision of mobile wireless services; and
(2) Shall be accomplished so as to satisfy plaintiff United States
in its sole discretion upon consultation with any relevant plaintiff
state, that none of the terms of any agreement between the Acquirer (or
Acquirers) and any defendant shall give defendants the ability
unreasonably to raise the Acquirer's costs, to lower the Acquirer's
efficiency, or otherwise to interfere with the ability of the Acquirer
to compete effectively.
I. At the option of the Acquirer(s), defendants shall enter into a
contract for transition services customarily provided in connection
with the sale of a business providing mobile wireless services
sufficient to meet all or part of the needs of the Acquirer'(s) needs
for a period of up to one year. The terms and conditions of any
contractual arrangement meant to satisfy this provision must be
reasonably related to market conditions.
[[Page 65643]]
J. To the extent that the mobile wireless businesses to be divested
use intellectual property, as required to be identified by Section
II.L, that cannot be transferred or assigned without the consent of the
licensor or other third parties, defendants shall use their best
efforts to obtain those consents.
K. In the event plaintiff United States approves retention of any
Minority Interests, defendants shall not obtain any additional equity
interest in such entity.
V. Appointment of Divestiture Trustee
A. If defendants have not divested the Divestiture Assets within
the time period specified in Section IV.A, defendants shall notify
plaintiff United States and any relevant plaintiff state of that fact
in writing, specifically identifying the Divestiture Assets that have
not been divested. Then, upon application of plaintiff United States,
upon consultation with any plaintiff state, 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 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 or Acquirers approved by
plaintiff United States, upon consultation with any relevant plaintiff
state, under Sections IV.A and IV.C of this Final Judgment, and
(2) Exercising the responsibilities of the licensee of any
transferred Divestiture Assets and controlling and operating any
transferred Wireless Business Divestiture Assets, to ensure that the
businesses remain ongoing, economically viable competitors in the
provision of mobile wireless services in the five (5) license areas
specified in the Wireless Business Divestiture Assets, until they are
divested to an Acquirer or Acquirers, 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 and any relevant plaintiff
state, which must be consistent with the terms of this Final Judgment
and which must receive approval by plaintiff United States in its sole
discretion, upon consultation with any relevant plaintiff state, who
shall communicate to defendants within ten (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
(5) business days after approval by plaintiff United States; and
C. After obtaining any necessary approvals from the FCC for the
assignment of the licenses of the remaining Divestiture Assets to the
Divestiture Trustee, defendants shall irrevocably divest the remaining
Divestiture Assets to the Divestiture Trustee, who will own such assets
(or own the stock of the entity owning such assets, if divestiture is
to be effected by the creation of such an entity for sale to
Acquirer(s)) and control such assets, subject to the terms of the
approved Trust Agreement.
D. After the appointment of a Divestiture Trustee becomes
effective, only the Divestiture Trustee shall have the right to sell
the Divestiture Assets. The Divestiture Trustee shall have the power
and authority to accomplish the divestiture to an Acquirer(s)
acceptable to plaintiff United States, in its sole judgment upon
consultation with any relevant plaintiff state, at such price and on
such terms as are then obtainable upon reasonable effort by the
Divestiture Trustee, subject to the provisions of Sections IV, V, and
VI of this Final Judgment, and shall have such other powers as this
Court deems appropriate. Subject to Section V.G of this Final Judgment,
the Divestiture Trustee may hire at the cost and expense of defendants
the Management Trustee appointed pursuant to the Preservation of Assets
Stipulation and Order, and any investment bankers, attorneys or other
agents, who shall he 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 upon consultation with
any relevant plaintiff state, may require defendants to include
additional assets, or allow, with the written approval of plaintiff
United States, defendants to substitute substantially similar assets,
which substantially relate to the Wireless Business Divestiture Assets
to be divested by the Divestiture Trustee to facilitate prompt
divestiture to an acceptable Acquirer.
F. Defendants shall not object to a sale by the Divestiture Trustee
on any ground other than the Divestiture Trustee's malfeasance. Any
such objections by defendants must be conveyed in writing to plaintiff
United States, any relevant plaintiff state, and the Divestiture
Trustee within ten (10) calendar days after the Divestiture Trustee has
provided the notice required under Section VI.
G. The Divestiture Trustee shall serve at the cost and expense of
defendants, on such terms and conditions as plaintiff United States
approves, and shall account for all monies derived from the sale of the
assets sold 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 and will provide any necessary representations or warranties
as appropriate related to sale of the Divestiture Assets. 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
business 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 its appointment, the Divestiture Trustee shall file
monthly reports with plaintiff United states, any relevant plaintiff
state, 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
[[Page 65644]]
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 such
divestitures within six months after its appointment, the Divestiture
Trustee shall promptly file with the Court a report setting forth (1)
the Divestiture Trustee's efforts to accomplish the required
divestitures, (2) the reasons, in the Divestiture Trustee's judgment,
why the required divestitures have not been accomplished, and (3) the
Divestiture Trustee's recommendations. To the extent such reports
contain information that the Divestiture Trustee deems confidential,
such reports shall not be filed in the public docket of the Court. The
Divestiture Trustee shall at the same time furnish such report to the
plaintiff United States and any relevant plaintiff state 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 upon consultation with any relevant plaintiff
state.
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 Section 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 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 Wireless Business
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 Wireless business 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 businesses under the Divestiture Trustee's control any
non-public or competitively sensitive marketing, sales, or pricing
information relating to their respective mobile wireless businesses.
VI. Notice of Proposed Divestitures
A. Within two (2) business days following execution of a definitive
divestiture agreement, defendants or the Divestiture Trustee, whichever
is then responsible for effecting the divestitures required herein,
shall notify plaintiff United States and any relevant plaintiff state
in writing of any proposed divestiture required by Section IV or V of
this Final Judgment. If the Divestiture Trustee is responsible, it
shall similarly notify defendants. The notice shall set forth the
details of the proposed divestiture and list the name, address, and
telephone number of each person not previously identified who offered
or expressed an interest in or desire to acquire any ownership interest
in the Divestiture Assets, together with full details of the same.
B. Within fifteen (15) calendar days of receipt by plaintiff United
States and any relevant plaintiff state of such notice, plaintiff
United States and any relevant plaintiff state may request from
defendants, the proposed Acquirer or Acquirers, any other third party,
or the Divestiture Trustee if applicable additional information
concerning the proposed divestiture, the proposed Acquirer or
Acquirers, and any other potential Acquirer. Defendants and the
Divestiture Trustee shall furnish any additional information requested
within fifteen (15) calendar days of the receipt of the request, unless
the parties shall otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after plaintiff United States and any
relevant plaintiff state have been provided the additional information
requested from defendants, the proposed Acquirer or Acquirers, any
third party, and the Divestiture Trustee, whichever is later, plaintiff
United States, upon consultation with any relevant plaintiff state,
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 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.
Defendants shall take no action that would jeopardize the divestitures
ordered by this Court.
IX. Affidavits
A. Within twenty (20) calendar days of the filing of the Complaint
in this matter, and every thirty (30) calendar days thereafter until
the divestitures have been completed under Section IV or V of this
Final Judgment, defendants shall deliver to plaintiff United States and
any relevant plaintiff state and affidavit as to the fact and manner of
its compliance with Section IV or V of this Final Judgment. Each such
affidavit shall include the name, address, and telephone number of each
person who during the preceding thirty (30) days, made an offer to
acquire, expressed an interest in acquiring, entered into negotiations
to acquire, or was contacted or made an inquiry about acquiring, any
interest in the Divestiture
[[Page 65645]]
Assets, and shall describe in detail each contact with any such person
during that period. Each such affidavit shall also include a
description of the efforts defendants have taken to solicit buyers for
the Divestiture Assets, and to provide required information to
prospective Acquirers, including the limitations, if any, on such
information. Assuming the information set forth in the affidavit is
true and complete, any objection by plaintiff United States, after
consultation with any relevant state, to information provided by
defendants, including limitation on information, shall be made within
fourteen (14) calendar days of receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, defendants shall deliver to plaintiff United States and
any relevant plaintiff state 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 plaintiff United States and
any relevant plaintiff state an affidavit describing any changes to the
efforts and actions outlined in defendants' earlier affidavits provided
pursuant to this section within fifteen (15) calendar days after the
change is implemented.
C. Defendants shall keep all records of all efforts made to
preserve and divest the Divestiture Assets until one year after such
divestitures have been completed.
X. Compliance Inspection
A. For the purposes of determining or securing compliance with this
Final Judgment, or of determining whether the Final Judgment should be
modified or vacated, and subject to any legally recognized privilege,
from time to time duly authorized representatives of the United States
Department of Justice, including consultants and other persons retained
by the United States, shall, upon written request of a duly authorized
representative of the Assistant Attorney General in charge of the
Antitrust Division, and on reasonable notice to defendants, be
permitted:
(1) Access during defendants' office hours to inspect and copy, or
at plaintiff United States' option, to require defendants provide
copies of, all books, ledgers, accounts, records and documents in the
possession, custody, or control of defendants, relating to any matters
contained in this Final Judgment; and
(2) To interview, either informally or on the record, defendants'
officers, employees, or agents, who may have their individual counsel
present, regarding such matters. The interviews shall be subject to the
reasonable convenience of the interviewee and without restraint or
interference by defendants.
B. Upon the written request of a duly authorized representative of
the Assistant Attorney General in charge of the Antitrust Division,
defendants shall submit written reports, under oath if requested,
relating to any of the matters contained in this Final Judgment as may
be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by plaintiff United States to any person
other than an authorized representative of the executive branch of the
United States or, pursuant to a customary protective Order or waiver of
confidentiality by defendants, the FCC, except in the course of legal
proceedings to which the United States is a party (including grand jury
proceedings), or for the purpose of securing compliance with this Final
Judgment, or as otherwise required by law.
D. If at the time information or documents are furnished by
defendants to 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)(7) of
the Federal Rules of Civil Procedure, and defendants mark each
pertinent page of such material, ``Subject to claim of protection under
Rule 26(c)(7) of the Federal Rules of Civil Procedure,'' then plaintiff
United States shall give defendants ten (10) calendar days notice prior
to divulging such material in any legal proceeding (other than a grand
jury proceeding).
XI. No Reacquisition
Defendants may not reacquire or lease any part of the Divestiture
Assets during the term of this Final Judgment.
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.
Date:-----------------------------------------------------------------
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United States District Judge
In the United States District Court for the District of Columbia
United States of America, Department of Justice, Antitrust Division,
1401 H Street, NW., Suite 8000, Washington, DC 20530, State of
Connecticut, Office of the Attorney General, 55 Elm Street, Hartford,
CT 06106, and State of Texas, Office of the Attorney General, P.O. Box
12548, Austin, TX 78711, Plaintiffs, v. Cingular Wireless Corporation,
5565 Glenridge Connector, Atlanta, GA 30349, SBC Communications Inc.,
174 East Houston, San Antonio, TX 78205, Bellsouth Corporation, 1155
Peachtree Street, NE., Atlanta, GA 30309, and AT&T Wireless Services,
Inc., 7277 164th Avenue, NE., Building 1, Redmond, WA 98052,
Defendants; Complaint
Civil No.: 1:04CV01850 (RBW)
Filed: 10/25/04
The United States of America, acting under the direction of the
Attorney General of the United States, and the states of Connecticut
and Texas (``plaintiff states''), acting under the direction of their
respective Attorneys General, or other authorized officials, bring this
civil action to enjoin the merger of two of the largest mobile wireless
telecommunications services providers in the United States, Cingular
Wireless Corporation (``Cingular'') and AT&T Wireless Services, Inc.
(``AT&T Wireless''), and to obtain other relief as appropriate.
Plaintiffs allege as follows:
1. On February 17, 2004, Cingular, a joint venture between SBC
Communications Inc. (``SBC'') and BellSouth Corporation
(``BellSouth''), entered into an agreement to acquire AT&T Wireless
under which the two companies would combine their mobile wireless
services businesses. Plaintiffs seek to enjoin this transaction because
it will substantially lessen competition in several geographic markets
for mobile wireless telecommunications services and mobile wireless
broadband services (collectively, ``mobile wireless services'').
2. Cingular and AT&T Wireless are the second and third-largest
mobile wireless services providers in the
[[Page 65646]]
United States, with approximately 24 and 22 million subscribers,
respectively. They both provide mobile wireless services in areas
throughout the United States and are two of only six providers with a
national presence. As a result, Cingular and AT&T Wireless both provide
mobile wireless services in hundreds of overlapping geographic areas,
and in 13 of these areas the combination of Cingular's and AT&T
Wireless's assets and business will likely result in substantially less
competition for mobile wireless services. In 10 of these overlapping
geographic areas located in the states of Connecticut, Georgia, Kansas,
Kentucky, Louisiana, Massachusetts, Missouri, Oklahoma, and Texas, the
combination of Cingular and AT&T Wireless will substantially lessen
competition for mobile wireless telecommunications services, increasing
the likelihood of unilateral actions by the merged firm to increase
prices, diminish the quality or quantity of services provided, refrain
from or delay making investments in network improvements, and refrain
from or delay launching new services, substantially lessening
competition for these services. In three of these overlapping
geographic areas located in the states of Michigan, Tennessee, and
Texas, both Cingular and AT&T Wireless have launched or will likely
soon launch mobile wireless broadband services, and the transaction
will result in the loss of one of only a few existing and likely mobile
wireless broadband services providers, substantially lessening
competition for these services.
I. Jurisdiction and Venue
3. 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, 15 U.S.C. 18.
4. Plaintiff states bring this action under Section 16 of the
Clayton Act, 15 U.S.C. 26, to prevent and restrain the violation by
defendants of Section 7 of the Clayton Act, 15 U.S.C. 18. Plaintiff
states, by and through their respective Attorneys General, or other
authorized officials, bring this action in their sovereign capacities
and as parens patriae on behalf of the citizens, general welfare, and
economy of each of their states.
5. Cingular, AT&T Wireless, SBC, and BellSouth are engaged in
interstate commerce and in activities substantially affecting
interstate commerce. The Court has jurisdiction over this action
pursuant to Sections 15 and 16 of the Clayton Act, 15 U.S.C. 25, 26,
and 28 U.S.C. 1331, 1337.
6. Cingular, AT&T Wireless, SBC, and BellSouth transact business or
are found in the District of Columbia. Venue is proper in this Court
pursuant to Section 12 of the Clayton Act, 15 U.S.C. 22 and 28 U.S.C.
1391(b) and (c).
II. The Defendants and the Transaction
7. Cingular, which headquarters in Atlanta, Georgia, is a company
organized and existing under the laws of the state of Delaware.
Cingular was formed in 2000 by SBC and BellSouth, who own equity
interests in it of 60 and 40 percent, respectively, SBC and BellSouth
evenly share management control of Cingular. Cingular is the second-
largest provider of mobile wireless voice and data services in the
United States by number of subscribers; it serves more than 24 million
customers. In 2003, Cingular earned revenues of approximately $15.5
billion.
8. SBC, with headquarters in San Antonio, Texas, is a corporation
organized and existing under the laws of the state of Delaware. SBC is
a regional bell operating company (``RBOC''), one of several regional
holding companies formed in 1984 as a result of the breakup of AT&T
Corporation's local telephone business. SBC's wireless
telecommunications businesses serve 54.7 million access lines in 13
states; Arkansas, California, Connecticut, Illinois, Indiana, Kansas,
Michigan, Missouri, Nevada, Ohio, Oklahoma, Texas, and Wisconsin. In
2003, SBC earned approximately $40.8 billion in revenues.
9. BellSouth, an RBOC with headquarters in Atlanta, Georgia, is a
corporation organized and existing under the laws of the state of
Georgia. BellSouth's wireline telecommunications businesses serves 23.7
million access lines in 9 states: Alabama, Florida, Georgia, Kentucky,
Louisiana, Mississippi, North Caroline, South Carolina, and Tennessee.
Its total operating revenues for 2003 were approximately $22.6 billion.
10. AT&T Wireless, with headquarters in Redmond, Washington, is a
corporation organized and existing under the laws of the state of
Delaware. spun off from AT&T Corporation in 2001, it had more than 22
million subscribers as of August 2004 an earned revenues of
approximately $16.6 billion in 2003. AT&T Wireless is the third-largest
U.S. mobile wireless services provider by number of subscribers.
11. Pursuant to an Agreement and Plan of Merger dated February 17,
2004, Cingular will pay AT&T Wireless shareholders $15 per common share
and thereby plans to acquire AT&T Wireless for approximately $41
billion in cash. If this transaction is consummated, Cingular and AT&T
Wireless combined would have more than 46 million subscribers, with
over $32 billion in revenues, making it the largest mobile wireless
sevices provider in the United States, with operations in 49 states
covering 97 of the top 100 marketing areas.
III. Trade and Commerce
A. Nature of Trade and Commerce
12. Mobile wireless services allow customers to make and receive
telephone calls and use data services using radio transmissions without
being confined to a small area during the call or data session, and
without the need for unobstructed line-of-sight to the radio tower.
This mobility is highly prized by customers, as demonstrated by the
more than 160 million people in the United States who own mobile
wireless telephones. In 2003, revenues from the sale of mobile wireless
services in the United States were nearly $90 billion.
13. The first wireless voice systems were based on analog
technology, now referred to as first-generation or ``IG'' technology.
These analog systems were launched after the FCC issued the first
licenses for mobile wireless telephone service: two cellular licenses
(A-block and B-block) in each geographic area in the early to mid-
1980s. The licenses are in the 800 MHz range of the radio spectrum,
each license consists of 25 MHz of spectrum, and they are issued for
each Metropolitan Statistical Area (``MSA'') and Rural Service Area
(``RSA'') (collectively, ``Cellular Marketing Areas'' or ``CMAs''),
with a total of 734 CMAs covering the entire United States. In 1982,
one of the licenses was issued to the incumbent local exchange carrier
in the market, and the other was issued by lottery to someone other
than the incumbent. Cellular licensees must support analog service
until February 2008.
14. In 1995, the FCC allocated and subsequently issued licenses for
additional spectrum for the provision of Personal Communications
Services (``PCS''), a category of services that includes mobile
wireless telephone services comparable to those offered by cellular
licensees. These licenses are in the 1.8 GHz range of the radio
spectrum and are divided into six blocks: A, B, and C, which consist of
30 MHz each; and D, E, and F, which consist of 10 MHz each.
Geographically, the A- and B-block 30 MHz licenses are issued by Major
Trading Areas (``MTAs''), and C-, D-, E-, and F-block licenses are
issued by Basic Trading Areas
[[Page 65647]]
(``BTAs''), several of which comprise each MTA. MTAs and BTAs do not
generally correspond to MSAs and RSAs. With the introduction of the PCS
licenses, both cellular and PCS licensees began offering digital
services, thereby increasing capacity, shrinking handsets, and
extending battery life. Unlike the cellular licenses, PCS licensees are
not required to provide support for analog or any other technology
standard. In 1996, one provider, a specialized mobile radio (``SMR'' or
``dispatch'') spectrum licensee, began to use its SMR spectrum to offer
mobile wireless telephone services comparable to those offered by other
mobile wireless services providers, in conjunction with its dispatch,
or ``push-to-talk,'' service.
15. Today, more than 90 percent of all mobile wireless services
customers have digital service, and nearly all mobile wireless voice
service has migrated to second-generation or ``2G'' digital
technologies: TDMA (time division multiple access), GSM (Global
Standard for Mobile, a type of TDMA standard used by all carriers in
Europe), and CDMA (code division multiple access). Mobile wireless
services providers have chosen to build their networks on these
incompatible technologies and most have chosen CDMA or GSM, with TDMA
having been orphaned by equipment vendors. (The SMR providers use a
fourth incompatible technological standard better suited to the
spectrum they own, and, as SMR licensees, they have no obligation to
support a specific technology standard.) Even more advanced
technologies (``2.5G'') have begun to be deployed for voice and data
(e.g., 1xRTT (a/k/a CDMA 2000), GPRS (General Packet Radio Service),
and EDGE (Enhanced Data for GSM Evolution)). The data transmission
speeds of these technologies vary. For example, 1xRTT provides average
user speeds of 70 kilobits per second (``kbps''), and GRPS and EDGE
provide average user speeds of 20 to 40 kbps and 80 to 110 kbps,
respectively.
16. The U.S. mobile wireless services industry is taking the next
evolutionary step in wireless technology to third-generation or ``3G''
technologies (e.g., for GSM, UMTS (Universal Mobile Telecommunications
System) and for CDMA, Ev-DO/DV (Evolution Data Only/Data Voice)) that
provide for more capacity and higher data throughout. All of the
national mobile wireless services providers and some of the regional
providers are considering how and where they will deploy 3G services
across their networks. The data transmission speeds of these
technologies vary. UMTS provides average user speeds of 200 to 300
kbps, whereas Ev-DO provides average user speeds of 300 to 500 kbps.
B. Relevant Product Markets
17. Mobile wireless telecommunications services and mobile wireless
broadband services are relevant product markets (collectively, ``mobile
wireless services'').
1. Mobile Wireless Telecommunications Services
18. Mobile wireless telecommunications services include both voice
and data services provided over a radio network and allow customers to
maintain their telephone calls or data sessions without wires, such as
when traveling. There are no cost-effective alternatives to mobile
wireless telecommunications services. Fixed wireless services are not
mobile, and other wireless services have a limited range (e.g., Wi-Fi);
neither offers a viable alternative to mobile wireless
telecommunications services. It is unlikely that a sufficient number of
customers would switch away from mobile telecommunications services to
make a small but significant price increase in those services
unprofitable. Mobile wireless telecommunications services is a relevant
product market under Section 7 of the Clayton Act, 15 U.S.C. 18.
2. Mobile Wireless Broadband Services
19. Mobile wireless broadband services offer data speeds four to
six times faster than the current data offerings fully deployed in any
mobile wireless services provider's network. Mobile wireless broadband
services, which are now being launched using various 3G technologies,
offer average data speeds of 200 to 300 kbps, peaking at 2 megabits per
second or higher. These speeds rival wireline broadband services at
peak speeds. At average speeds, they are comparable to low-end wireline
high-speed data offerings and can support bandwidth-intensive services
including video conferencing, video streaming, downloading of music and
video files, and voice over Internet protocol (``VoIP'') calling, none
of which can be used reliably at slower speeds. There are no cost-
effective alternatives to mobile wireless broadband services. As with
mobile wireless telecommunications services, fixed wireless services
and other wireless services that have a limited range (e.g., Wi-Fi) do
not offer a viable alternative to mobile wireless broadband services.
It is unlikely that a sufficient number of customers would switch away
from mobile wireless broadband services to make a small but significant
price increase in those services unprofitable. Mobile wireless
broadband services is a relevant product market under Section 7 or the
Clayton Act, 15 U.S.C. 18.
C. Relevant Geographic Markets
20. The large majority of customers use mobile wireless services in
close proximity to their workplaces and homes. Thus, customers
purchasing mobile wireless telecommunications services and mobile
wireless broadband services choose among mobile wireless services
providers that offer services where they are located and travel on a
regular basis: home, work, other areas they commonly visit, and areas
in between. The number and identity of mobile wireless services
providers varies from geographic area to geographic area, along with
the quality of their services and the breadth of their geographic
coverage, all of which are significant factors in customers' purchasing
decisions. Mobile wireless services providers can and do offer
different promotions, discounts, calling plans, and equipment subsidies
in different geographic areas, effectively varying the actual price for
customers by geographic area.
21. The United States comprises numerous local geographic markets
for mobile wireless services. These local geographic markets are
generally centered around a metropolitan area or a population center
and its environs. The FCC has licensed a limited number of mobile
wireless services providers in these and other geographic areas based
upon the availability of radio spectrum. These FCC spectrum licensing
areas therefore often represent the core of the business and social
sphere where customers face the same competitive choices for mobile
wireless services. The relevant geographic markets in which this
transaction will substantially lessen competition in mobile wireless
telecommunications services and mobile wireless broadband services are
effectively represented, but not defined, by FCC spectrum licensing
areas.
22. The relevant geographic markets, under Section 7 of the Clayton
Act, 15 U.S.C. 18, where the transaction will substantially lessen
competition for mobile wireless telecommunications services are
represented by the following FCC spectrum licensing areas: Oklahoma
City, Oklahoma (CMA 045), Topeka, Kansas (CMA 179), Pittsfield,
Massachusetts (CMA 213), Athens, Georgia (CMS 234), St. Joseph,
Missouri (CMA 275), Connecticut RSA-1 (CMA 357), Kentucky RSA-1 (CMA
443), Oklahoma RSA-3 (CMA 598), Texas
[[Page 65648]]
RSA-11 (CMA 662), and Shreveport, Louisiana (BTA 419).
23. The relevant geographic markets, under Section 7 of the Clayton
Act, 15 U.S.C. 18, where the transaction will substantially lessen
competition for mobile wireless broadband services are represented by
the following FCC spectrum licensing areas: Dallas-Fort Worth, Texas
(CMA 009), Detroit, Michigan (BTA 112), and Knoxville, Tennessee (BTA
232).
24. It is unlikely that a sufficient number of customers would
switch to mobile wireless services providers in a different geographic
market to make a small but significant price increase in the relevant
geographic markets unprofitable for mobile wireless telecommunications
services or mobile wireless broadband services.
D. Anticompetitive Effects
1. Mobile Wireless Telecommunications Services
25. Currently, Cingular and AT&T Wireless both own all or part of
businesses that offer mobile wireless telecommunications services in
the 10 relevant geographic areas. In Athens, Georgia; Topeka, Kansas;
Pittsfield, Massachusetts; and St. Joseph, Missouri, AT&T Wireless owns
a minority equity interest in Verizon Wireless's business providing
mobile wireless telecommunications services. In Shreveport, Louisiana,
Cingular owns a minority equity interest in AllTel Corporations'
business providing mobile wireless telecommunications services. The
minority equity interest range from approximately 9 to 24 percent.
Based upon these significant minority equity interests and the specific
facts of the relationships, the shares and assets of the mobile
wireless services business partially owned by Cingular or AT&T Wireless
in these markets should be attributed to either Cingular or AT&T
Wireless.
26. The individual market shares of Cingular's and AT&T Wireless's
mobile wireless telecommunications services businesses in the relevant
geographic markets as measured in terms of subscribers range from 9 to
more than 71 percent, and their combined market shares range from 61 to
nearly 90 percent. In each relevant geographic market, Cingular or AT&T
Wireless has the largest market share, and in all but one, the other is
the second-largest mobile wireless telecommunications services
provider. In all but one of the relevant geographic markets, Cingular
and AT&T Wireless are the original cellular licensees and, as a result,
have the network infrastructures with the greatest depth and breadth of
coverage. Therefore, Cingular and AT&T Wireless are likely closer
substitutes for each other than the other mobile wireless
telecommunications services providers in the relevant geographic
markets.
27. The relevant geographic markets for mobile wireless
telecommunications 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 markets ranges from approximately
2600 to more than 5300, which is well above the 1800 threshold at which
the Department considers a market to be highly concentrated. After
Cingular's proposed acquisition of AT&T Wireless is consummated, the
HHIs in the relevant geographic markets will range from approximately
4400 to more than 8000, with increases in the HHI as a result of the
merger ranging from approximately 1100 to more than 3500, much higher
than the thresholds below which the Department considers a transaction
unlikely to cause competitive harm.
28. Competition between Cingular and AT&T Wireless in the relevant
geographic markets has resulted in lower prices and higher quality in
mobile wireless telecommunications services, than would otherwise have
existed in these geographic markets. If Cingular's proposed acquisition
of AT&T Wireless is consummated, the relevant geographic markets for
mobile wireless telecommunications services will become substantially
more concentrated, and the competition between Cingular and AT&T
Wireless in mobile wireless telecommunications services will be
eliminated in these markets. As a result, the loss of competition
between Cingular and AT&T Wireless increases the likelihood of
unilateral actions by the merged firm in the relevant geographic
markets to increase prices, diminish the quality of services provided,
refrain from or delay making investments in network improvements, and
refrain from or delay launching new services. Therefore, Cingular's
proposed acquisition of AT&T Wireless will likely result in
substantially less competition in mobile wireless telecommunications
services in the relevant geographic markets.
2. Mobile Wireless Broadband Services
29. In the relevant geographic markets for mobile wireless
broadband services, Cingular and AT&T Wireless have either launched or
are likely soon to launch mobile wireless broadband services. Each has
the available spectrum necessary to offer mobile wireless broadband
services and has business plans to offer these services in these
markets. Not all mobile wireless services providers have sufficient
spectrum to launch mobile wireless broadband services in these markets,
nor do they all have business plans to do so. In the relevant
geographic markets, the current number of mobile wireless services
providers that are likely to launch mobile wireless broadband services
in the foreseeable future is limited. Because mobile wireless broadband
services are nascent, however, HHIs are uninformative.
30. The competition between Cingular and AT&T Wireless has
motivated their efforts to develop and launch mobile wireless broadband
services in the relevant geographic markets. If Cingular's proposed
acquisition of AT&T Wireless is consummated, the relevant geographic
markets will lose one of only a few existing and likely mobile wireless
broadband services providers. As a result, the loss of competition
between Cingular and AT&T Wireless increases the likelihood of
unilateral actions by the merged firm in these relevant geographic
markets to increase prices, diminish the quality or quantity of
services provided, refrain from or delay making investments in network
improvements, and refrain from or delay launching mobile wireless
broadband services. Therefore, Cingular's proposed acquisition of AT&T
Wireless will likely result in substantially less competition in mobile
wireless broadband services in the relevant geographic markets.
3. Entry
31. Entry by a new mobile wireless services provider in the
relevant geographic markets would be difficult, time-consuming, and
expensive, requiring the acquisition of spectrum licenses and the
build-out of a network. Therefore, new entry in response to a small but
significant price increase for mobile wireless telecommunications
services or mobile wireless broadband services by the merged firm in
the relevant geographic markets would not be timely, likely, or
sufficient to thwart the competitive harm resulting from Cingular's
proposed acquisition of AT&T Wireless, if it were to be consummated.
IV. Violation Alleged
32. The effect of Cingular's proposed acquisition of AT&T Wireless,
if it were to be consummated, may be substantially to lessen
competition in interstate trade and commerce in the relevant geographic
markets for mobile
[[Page 65649]]
wireless telecommunications services and mobile wireless broadband
services, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
33. Unless restrained, the transaction will likely have the
following effects in mobile wireless telecommunications services and
mobile wireless broadband services in the relevant geographic markets,
among others:
a. Actual and potential competition between Cingular and AT&T
Wireless 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;
e. Incentives to improve wireless networks will be reduced; and
f. Incentives to innovate or launch new services will be reduced.
V. Requested Relief
34. That Cingular's proposed acquisition of AT&T Wireless be
adjudged to violate Section 7 of the Clayton Act, 15 U.S.C. 18;
35. That defendants be permanently enjoined from and restrained
from carrying out the Agreement and Plan of merger, dated February 17,
2004, or from entering into or carrying out any agreement,
understanding, or plan, the effect of which would be to bring the
wireless telecommunications services businesses of Cingular and AT&T
Wireless under common ownership or control;
36. That plaintiffs be awarded their costs of this action; and
37. That plaintiffs have such other relief as the Court may deem
just and proper.
Dated: October 25, 2004.
Respectfully Submitted,
For Plaintiff United States of America:
/s/-------------------------------------------------------------------
R. Hewitt Pate
Assistant Attorney General, Antitrust Division.
/s/-------------------------------------------------------------------
J. Bruce McDonald
Deputy Assistant Attorney General Antitrust Division.
J. Robert Kramer II,
Director of Operations, Antitrust Division.
/s/-------------------------------------------------------------------
Nancy Goodman (D.C. Bar 251694),
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 366755),
Matthew C. Hammond,
David T. Blonder,
Benjamin Brown,
Michael D. Chaleff,
Benjamin Giliberti,
Lorenzo McRae (D.C. Bar 473660),
Jeremiah M. Luongo,
Attorneys, Telecommunications & Media, Enforcement Section,
Antitrust Division, U.S. Department of Justice, City Center
Building, 1401 H Street, NW., Suite 8000, Washington, DC 20530,
(202) 514-5621, Facsimile: (202) 514-6381.
State of Connecticut
Richard Blumenthal,
Attorney General.
Michael E. Cole,
Assistant Attorney General, Department Head/Antitrust Department,
Federal bar No. ct20115.
/s/-------------------------------------------------------------------
Rachel O. Davis,
Assistant Attorney General, Antitrust Department, Federal bar No.
ct07411, DC Bar No. 413157 (inactive), 55 Elm Street, Hartford,
Connecticut 06106, Tel: (860) 808-5041, Fax: (860) 808-5033.
For Plaintiff State of Texas
Greg Abbott,
Attorney General of Texas.
Barry R. McBee,
First Assistant Attorney General.
Edward D. Burbach,
Deputy Attorney General for Litigation.
Mark Tobey,
Assistant Attorney General, Chief, Antitrust & Civil Medicaid Fraud
Division.
Rebecca Fisher,
Assistant Attorney General, Chief, Antitrust Section.
/s/-------------------------------------------------------------------
John T. Prud'homme, Jr.,
Assistant Attorney General, TX Bar No. 24000322, Office of the
Attorney General, P.O. Box 12548, Austin, Texas 78711-2548, 512/936-
1697, 512/320-0975 (Facsimile).
Signature by the State of Texas on Complaint in United States of
America, State of Connecticut and State of Texas v. Cingular
Wireless Corporation, SBC Communications Inc., BellSouth Corporation
and AT&T Wireless Services, Inc.
Appendix A--Herfindahl-Hirschman Index
``HHI'' means the Herfindahl-Hirschman Index, a commonly
accepted measure of market concentration. It is calculated by
squaring the market share of each firm competing in the market and
then summing the resulting numbers. For example, for a market
consisting of four firms with shares of 30, 30, 20, and 20 percent,
the HHI is 2600 (30\2\ + 30\2\ + 20\2\ + 20\2\ = 2600). (Note:
Throughout the Complaint, market share percentages have been rounded
to the nearest whole number, but HHIs have been estimated using
unrounded percentages in order to accurately reflect the
concentration of the various markets.) The HHI takes into account
the relative size distribution of the firms in a market and
approaches zero when a market consists of a large number of small
firms. The HHI increases both as the number of firms in the market
decreases and as the disparity in size between those firms
increases.
Markets in which the HHI is between 1000 and 1800 points are
considered to be moderately concentrated, and those in which the HHI
is in excess of 1800 points are considered to be highly
concentrated. See Horizontal Merger Guidelines ]1.51 (revised Apr.
8, 1997). Transactions that increase the HHI by more than 100 points
in concentrated markets presumptively raise antitrust concerns under
the guidelines issued by the U.S. Department of Justice and Federal
Trade Commission. See id.
In the United States District Court for the District of Columbia
United States of America, State of Connecticut and State of Texas,
Plaintiffs, v. Cingular Wireless Corporation, SBC Communications Inc.,
Bellsouth Corporation and AT&T Wireless Services, Inc., Defendants;
Preservation of Assets Stipulation and Order
Civil No.: 1:04CV01850 (RBW)
Filed: 10/25/04
It is hereby stipulated and agreed by and between the undersigned
parties, subject to approval and entry by the Court, that:
I. Definitions
As used in this Preservation of Assets Stipulation and Order:
A. ``Acquirer'' or ``Acquirers'' means the entity or entities to
whom defendants divest the Divestiture Assets.
B. ``AT&T Wireless'' means defendant AT&T Wireless Services, Inc.,
a Delaware corporation with headquarters in Redmond, Washington, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and their directors,
officers, managers, agents, and employees.
C. ``BellSouth'' means defendant BellSouth Corporation, a Georgia
corporation with headquarters in Atlanta, Georgia, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and their directors, officers,
managers, agents, and employees.
D. ``Cingular'' means defendant Cingular Wireless Corporation, a
Delaware corporation with headquarters in Atlanta, Georgia, and
Cingular Wireless LLC, a Delaware limited liability company formed as a
joint venture between SBC and BellSouth, with headquarters in Atlanta,
Georgia, their successors and assigns, and their subsidiaries,
divisions, groups, affiliates, partnerships and joint
[[Page 65650]]
ventures, and their directors, officers, managers, agents, and
employees.
E. ``Divestiture Assets'' means Wireless Business Divestiture
Assets, Spectrum License Divestiture Assets, and Minority Interests,
including any direct or indirect financial ownership or leasehold
interests and any direct or indirect role in management or
participation in control therein.
F. ``Minority Interests'' means the equity interests owned by any
defendant in the following entities that are the licensees or operators
of wireless mobile telephone businesses in the specified Metropolitan
Statistical Areas (``MSAs'') and Rural Statistical Areas (``RSAs'')
(collectively, Cellular Marketing Areas (``CMAs'')) used to define
cellular license areas by the Federal Communications Commission
(``FCC''):
(1) Alltel Communications of North Louisiana Cellular Limited
Partnership, covering the Shreveport, Louisiana MSA (CMA 100), Monroe,
Louisiana MSA (CMA 219), Louisiana RSA-1 (CMA 454), Louisiana RSA-2
(CMA 455) and Louisiana RSA-3 (CMA 456);
Athens Cellular Inc., covering the Athens, Georgia MSA (CMA 234);
(3) CellTelCo, covering the St. Joseph, Missouri MSA (CMA 275);
(4) Pittsfield Cellular Telephone Co., covering the Pittsfield,
Massachusetts MSA (CMA 213); and
(5) Topeka Cellular Telephone Co., Inc., covering the Topeka,
Kansas MSA (CMA 179).
As an alternative to the divestiture of the Alltel Communications of
North Louisiana Cellular Limited Partnership, CellTelCo, and Topeka
Cellular Telephone Co., Inc. Minority Interests as required by Section
IV of the proposed Final Judgment, defendants may request, at least 20
days prior to consummation of the Transaction, approval from plaintiff
United States to retain such interests. Plaintiff United States in its
sole discretion may approve this request if it is demonstrated that the
retained minority interest will become irrevocably and entirely
passive, so long as defendants own the minority interests, and will not
significantly diminish competition.
G. ``Multi-line Business Customer'' means a corporate or business
customer that contracts with AT&T Wireless for mobile wireless services
to provide multiple telephones to its employees or members whose
services are provided pursuant to the contract with the corporate or
business customer.
H. ``SBC'' means defendant SBC Communications, Inc., a Delaware
corporation with its headquarters in San Antonio, Texas, its successors
and assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and their directors, officers,
managers, agents, and employees.
I. ``Skagit'' means Skagit Wireless LLC, an Oregon corporation with
headquarters in Portland, Oregon, its successors and assigns, and its
subsidiaries, divisions, groups, affiliates, partnerships and joint
ventures, and their directors, officers, managers, agents, and
employees.
J. ``Spectrum License Divestiture Assets'' means a license for 10
MHz of contiguous PCS spectrum in the specified MSAs and Basic Trading
Areas (``BTA'') used to define cellular and PCS license areas by the
FCC:
(1) The Dallas-Fort Worth, Texas MSA (CMA 009);
(2) The Detroit, Michigan BTA (BTA 112), provided that the license
to be transferred does not include any PCS spectrum in Monroe and
Sanilac counties; and
(3) The Knoxville, Tennessee BTA (BTA 232), provided that as an
alternative to the divestiture of a license for 10 MHz of contiguous
PCS spectrum as required by Section IV of the proposed Final Judgment,
defendants, with the approval of plaintiff United States in its sole
discretion, can restructure AT&T Wireless's existing relationship with
Skagit such that (i) defendants have no equity or leasehold interest
in, hold no debt of, and have no managerial or operational interest in
Skagit's PCS license in the Knoxville Tennessee BTA, and (ii) Skagit's
PCS license in the Knoxville Tennessee BTA is contractually committed
to be used in a manner that resolves the competitive concerns alleged
by plaintiffs in the Complaint.
K. ``Transaction'' means the Agreement and Plan of Merger By and
Among AT&T Wireless Services, Inc., Cingular Wireless Corporation,
Cingular Wireless LLC, Links I Corporation, SBC Communications Inc.,
and Bell South Corporation, dated February 17, 2004.
L. ``Wireless Business Divestiture Assets'' means, for each mobile
wireless business to be divested under the proposed Final Judgment, all
types of assets, tangible and intangible, used by defendants in the
operation of the mobile wireless businesses to be divested (including
the provision of long distance telecommunications services for wireless
calls). ``Wireless Business Divestiture Assets'' shall be construed
broadly to accomplish the complete divestitures of the entire business
of AT&T Wireless in each of the following MSA and RSA license areas as
required by the proposed Final Judgment and to ensure that the divested
mobile wireless businesses remain viable, ongoing businesses:
(a) Oklahoma City, Oklahoma MSA (CMA 045);
(b) Connecticut RSA-1 (CMA 357), provided that defendants may
retain 10 MHz of AT&T Wireless's PCS spectrum, provided that 10 MHz of
contiguous PCS spectrum throughout the RSA is divested to the Acquirer;
(c) Kentucky RSA-1 (CMA 443), provided that defendants may retain
15 MHz of AT&T Wireless's PCS spectrum in Fulton country and 10 MHz of
AT&T Wireless's PCS spectrum in the other counties contained within the
RSA, provided that 30 MHz of contiguous PCS spectrum in Fulton county
and 20 MHz of contiguous PCS spectrum in the other counties contained
in the RSA is divested to an Acquirer;
(d) Oklahoma RSA-3 (CMA 598); and
(e) Texas RSA-11 (CMA 662), provided that defendants may retain in
Sabine County, 25 MHz of AT&T Wireless's PCS spectrum, and in Angelina,
Nacogdoches, and San Augustine counties, defendants may retain 20 MHz
of AT&T Wireless's PCS spectrum, provided that 10 MHz of contiguous PCS
spectrum throughout the RSA is divested to an Acquirer.
Wireless Business Divestiture Assets shall include, without
limitation, all types of real and personal property, monies and
financial instruments, equipment, inventory, office furniture, fixed
assets and furnishings, supplies and materials, contracts, agreements,
leases, commitments, spectrum licenses issued by the FCC and all other
licenses, permits and authorizations, operational support systems, cell
sites, network infrastructure, switches, customer support and billing
systems, interfaces with other service providers, business and customer
records and information, customer contracts, customer lists, credit
records, accounts, and historic and current business plans which relate
primarily to the wireless business 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 licenses, and trademarks, trade names
and service marks or other intellectual property, including all
intellectual property rights under third-party licenses that are
capable of being transferred to an Acquirer either in their entirety,
for assets described in (1) below, or through a license obtained
through or from the divesting defendant,
[[Page 65651]]
for assets described in (2) below; provided that defendants shall only
be required to divest Multi-line Business Customer contracts, if 50
percent or more of the Multi-line Business Customer's subscribers
reside or work within any of the five (5) license areas described
herein, and further, any subscribers who obtain mobile wireless
services through any such contract retained by defendants and who are
located within the five (5) geographic areas identified above, shall be
given the option to terminate their relationship with defendants,
without financial cost, within one year of the closing of the
Transaction. Defendants shall provide written notice to these
subscribers within 45 days after the closing of the Transaction.
These divestitures of the Wireless Business Divestiture Assets as
defined in Section II.L shall be accomplished by:
(1) 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 AT&T Wireless's overall wireless business which
must be retained to continue the existing operations of the wireless
properties that defendants are not required to divest, and that either
are not capable of being divided between the divested wireless
businesses and those not divested, or are assets that the defendants
and the Acquirer(s) agree, subject to approval of plaintiff United
States upon consultation with any relevant plaintiff state, shall not
be divided); and
(2) Granting to the Acquirer(s) an option to obtain a non-
exclusive, transferable license from defendants for a reasonable
period, subject to approval of plaintiff United States upon
consultation with any relevant plaintiff state, at the election of an
Acquirer to use any of AT&T Wireless's retained assets under paragraph
(1) above, used in the operation of the wireless business being
divested, so as to enable the Acquirer to continue to operate the
divested wireless business without impairment. Defendants shall
identify in a schedule submitted to plaintiffs and filed with the
Court, as expeditiously as possible following the filing of the
Complaint and in any event prior to any divestitures and before the
approval by the Court of the proposed Final Judgment, any intellectual
property rights under third-party licenses that are used by the
wireless businesses being divested but that defendants could not
transfer to an Acquirer entirely or by license without third-party
consent, and the specific reasons why such consent is necessary and how
such consent would be obtained for each asset.
II. Objectives
The Final Judgment filed in this case is meant to ensure
defendants' prompt divestiture of the Divestiture Assets for the
purpose of preserving viable competitors in the provision of mobile
wireless services in order to remedy the effects that plaintiffs allege
would otherwise result from Cingular's acquisition of AT&T Wireless.
This Preservation of Assets Stipulation and Order ensures, prior to
such divestitures, that competition is maintained during the pendency
of the ordered divestitures, and that the Wireless Business Divestiture
Assets remain an ongoing business concern and the Divestiture Assets
remain economically viable. The Divestiture Assets will remain, as
provided herein, preserved, independent and uninfluenced by defendants.
III. Jurisdiction and Venue
This Court has jurisdiction over the subject matter of this action
and each of the parties hereto, and venue of this action is proper in
the United States District Court for the District of Columbia. The
Complaint states a claim upon which relief may be granted against
defendants under Section 7 of the Clayton Act, 15 U.S.C. 18.
IV. Compliance With and Entry of Final Judgment
A. The parties stipulate that a proposed Final Judgment in the form
attached hereto as Exhibit A may be filed with and entered by the
Court, upon the motion of any party or upon the Court's own motion, at
any time after compliance with the requirements of the Antitrust
Procedures and Penalties Act, 15 U.S.C. 16, and without further notice
to any party or other proceedings, provided that no plaintiff has
withdrawn its consent, which it may do at any time before the entry of
the proposed Final Judgment by serving notice thereof on defendants and
other plaintiffs and by filing that notice with the Court.
B. Defendants shall abide by and comply with the provisions of the
proposed Final Judgment, pending the Judgment's entry by the Court, or
until expiration of time for all appeals of any Court ruling declining
entry of the proposed Final Judgment, and shall, from the date of the
signing of this Stipulation by the parties, comply with all the terms
and provisions of the proposed Final Judgment as though the same were
in full force and effect as an order of the Court.
C. Defendants shall not consummate the transaction sought to be
enjoined by the Complaint herein before the Court has signed this
Preservation of Assets Stipulation and Order.
D. This Stipulation shall apply with equal force and effect to any
amended proposed Final Judgment agreed upon in writing by the parties
and submitted to the Court.
E. In the event (1) any plaintiff has withdrawn its consent, as
provided in Section IV.A above, or (2) the proposed Final Judgment is
not entered pursuant to this Stipulation, the time has expired for all
appeals of any Court declining entry of the proposed Final Judgment,
and the Court has not otherwise ordered continued compliance with the
terms and provisions of the proposed Final Judgment, then the parties
are released from all further obligations under this Stipulation, and
the making of this Stipulation shall be without prejudice to any party
in this or any other proceeding.
F. Defendants represent that the divestitures ordered in the
proposed Final Judgment can and will be made, and that defendants will
later raise no claim of mistake, hardship or difficulty of compliance
as grounds for asking the Court to modify any of the provisions
contained therein.
V. Management Trustee
A. Plaintiff United States nominates Joseph J. Simons as Management
Trustee in this case. The plaintiff states consent to, and defendants
have no objection to, his immediate appointment by this Court.
Accordingly, this Court appoints Joseph J. Simons as Management Trustee
to serve as manager of the Divestiture Assets until the Divestiture
Assets are sold or transferred to a Divestiture Trustee pursuant to
Section V of the proposed Final Judgment. Nothing in this Stipulation
shall be interpreted to prevent the Management Trustee from becoming
the Divestiture Trustee pursuant to Section V of the proposed Final
Judgment.
B. Within five (5) business days of the entry of this Stipulation
by the Court, defendants shall enter into a trust agreement with Mr.
Simons subject to the approval of plaintiff United States in its sole
discretion upon consultation with plaintiff states, that will grant the
rights, powers, and authorities necessary to permit him to perform the
duties and responsibilities of the Management Trustee pursuant to this
Stipulation. The trust agreement shall enable him to assume all rights,
powers, and authorities necessary to perform his duties and
responsibilities, pursuant to this Stipulation and the proposed Final
Judgment and consistent with their
[[Page 65652]]
purposes. Mr. Simons or any other subsequently appointed Management
Trustee shall serve at the cost and expense of defendants, on such
terms and conditions as plaintiff United States approves upon
consultation with plaintiff states, with a fee arrangement that is
reasonable in light of the person's experience and responsibilities.
C. The Management Trustee will have the following powers and
responsibilities with respect to the Divestiture Assets:
(1) The Management Trustee will have the power to manage the
Divestiture Assets in the ordinary course of business consistent with
this Stipulation. Only with the prior written approval of plaintiff
United States upon consultation with plaintiff states, may the
Management Trustee make any decision, take any action, or enter any
transaction that is outside the ordinary course of business;
(2) The Management Trustee shall have a duty to, consistent with
the terms of this Stipulation and the proposed Final Judgment, monitor
the organization of the Divestiture Assets; manage the Divestiture
Assets in order to maximize their value so as to permit expeditious
divestitures in a manner consistent with the proposed Final Judgment;
maintain the independence of the Divestiture Assets from defendants;
control and operate the Wireless Business Divestiture Assets to ensure
that the Wireless Business Divestiture Assets remain an independent,
ongoing, economically viable competitor to the other mobile wireless
services providers; and assure defendants' compliance with their
obligations pursuant to this Stipulation and the proposed Final
Judgment;
(3) The Management Trustee shall have the authority to employ, at
the cost and expense of defendants, such consultants, accountants,
attorneys, and other representatives and assistants as are reasonably
necessary to carry out the Management Trustee's duties and
responsibilities;
(4) The Management Trustee and any consultants, accountants,
attorneys, and any other persons retained by the Management Trustee,
shall have full and complete access to all personnel, books, records,
documents, and facilities of the Divestiture Assets or to any other
relevant information as the Management Trustee may reasonably request,
including, but not limited to, all documents and records kept in the
normal course of business that relate to the Divestiture Assets.
Defendants shall develop such financial or other information as the
Management Trustee may request and shall cooperate with the Management
Trustee. Defendants shall take no action to interfere with or impede
the Management Trustee's ability to monitor defendants' compliance with
this Stipulation and the proposed Final Judgment or otherwise to
perform his duties and responsibilities consistent with the terms of
this Stipulation and the proposed Final Judgment;
(5) The Management Trustee will ensure that the Divestiture Assets
shall be staffed with sufficient employees to maintain their viability
and competitiveness. To the extent that any employees whose principal
responsibilities related to the Divestiture Assets leave or have left
the Divestiture Assets prior to divestiture of the Divestiture Assets,
the Management Trustee may replace departing or departed employees with
persons who have similar experience and expertise or determine not to
replace such departing or departed employees; and
(6) Thirty (30) days after the Management Trustee has been
appointed by the Court, and every thirty (30) days thereafter until the
Divestiture Assets are either transferred to an Acquirer or to the
Divestiture Trustee, the Management Trustee shall report in writing to
the plaintiffs concerning the efforts to accomplish the purposes of
this Stipulation and the proposed Final Judgment. Included within that
report shall be the Management Trustee's assessment of the extent to
which the Divestiture Assets are meeing (or exceeding) their projected
goals as are reflected in existing or revised operating plans, budgets,
projections or any other regularly prepared financial statements and
the extent to which defendants are fulfilling their responsibilities
under this Stipulation and the proposed Final Judgment.
D. The following limitations shall apply to the Management Trustee:
(1) The Management Trustee shall not be involved, in any way, in
the operations of the other businesses of defendants;
(2) The Management Trustee shall have no financial interests
affected by defendants' revenues, profits or profit margins, except
that the Management Trustee's compensation for managing the Divestiture
Assets may include economic incentives dependent on the financial
performance of the Divestiture Assets provided that those incentives
are consistent with the objectives of this Stipulation and the proposed
Final Judgment and are approved by plaintiff United States upon
consultation with plaintiffs states; and
(3) The Management Trustee shall be prohibited from performing any
further work for defendants for two (2) years after the close of the
divestiture transactions.
E. Defendants and the Management Trustee will take all reasonable
efforts to preserve the confidentiality of information that is material
to the operation of either the Divestiture Assets or defendants'
businesses. Defendants' personnel supplying services to the Divestiture
Assets pursuant to this Stipulation must retain and maintain the
confidentiality of any and all confidential information material to the
Divestiture Assets. Except as permitted by this Stipulation and the
proposed Final Judgment, such persons shall be prohibited from
providing, discussing, exchanging, circulating or otherwise furnishing
the confidential information of the Divestiture Assets to or with any
person whose employment involves any of defendants' businesses, except
as necessary to fulfill the purposes of this Stipulation and the
proposed Final Judgment.
F. If in the judgment of the Management Trustee, defendants fail to
provide the services listed in Section VI of this Stipulation to the
satisfaction of the Management Trustee, upon notification to defendants
and approval by plaintiff United States upon consultation with
plaintiff states, the Management Trustee may engage third parties
unaffiliated with the defendants to provide those services for the
Divestiture Assets, at the cost and expense of defendants, provided
that defendants may have reasonable access to information to satisfy
themselves that after the services have been provided, the Divestiture
Assets are in compliance with all applicable laws, rules, and
regulations.
G. At the option of the Management Trustee, defendants may also
provide other products and services, on an arms-length basis provided
that the Management Trustee is not obligated to obtain any other
product or service from defendants and may acquire any such products or
services from third parties unaffiliated with defendants.
H. If the Management Trustee ceases to act or fails to act
diligently and consistently with the purposes of this Stipulation and
the proposed Final Judgment, if the Management Trustee proposed by
plaintiff United States is not approved by this Court or resigns, or if
for any other reason the Management Trustee ceases to serve in his or
her capacity as Management Trustee, the United States may select upon
consultation with any relevant plaintiff state, a substitute Management
Trustee. In this event, plaintiff United States will
[[Page 65653]]
identify to defendants the individual or entity it proposes to select
as Management Trustee. Defendants must make any such objection to this
selection within five (5) business days after plaintiff United States
notifies defendants of the Management Trustee's selection. Upon
application of the United States, the Court shall approve and appoint a
substitute Management Trustee. Within five (5) business days of such
appointment, defendants shall enter into a trust agreement with the
Management Trustee subject to the approval of plaintiff United States
in its sole discretion upon consultation with plaintiff states, as
described in Section V.B of this Stipulation.
VI. Preservation of Assets
Until the divestitures required by the proposed Final Judgment have
been accomplished, except as otherwise approved in advance in writing
by plaintiff United States upon consultation with plaintiff states:
A. Defendants and the Management Trustee shall preserve, maintain,
and continue to support the Divestiture Assets, take all steps
necessary to manage the Divestiture Assets in order to maximize their
revenue, profitability and viability so to permit expeditious
divestitures in a manner consistent with this Stipulation and the
proposed Final Judgment.
B. The Wireless Business Divestiture Assets shall be operated by
the Management Trustee as part of an independent, ongoing, economically
viable competitive business to other mobile wireless services providers
operating in the same license area. Defendants and the Management
Trustee shall take all steps necessary to ensure that:
(1) The management, sales, and operations of the Wireless Business
Divestiture Assets are independent from defendants' other operations;
provided at the request of the Management Trustee, defendants shall
include the marketing, pricing and sales of the mobile wireless
services generated by the Wireless Business Divestiture Assets in the
license areas served by the Wireless Business Divestiture Assets within
its marketing, promotional, and service offerings, in the ordinary
course of business, in any national, regional, and local marketing
programs. Nothing in this Section shall prohibit the Management Trustee
from developing his own reasonable marketing, sales, pricing or
promotional offers, which shall be funded and supported by defendants;
(2) The Wireless Business Divestiture Assets are maintained by
adhering to normal and planned repair, capital improvement, upgrade and
maintenance schedules;
(3) The management of the Wireless Business Divestiture Assets will
not be influenced by defendants;
(4) The books, records, competitively sensitive sales, marketing
and pricing information, and decision-making concerning marketing,
pricing or sales of mobile wireless services generated by the Wireless
Business Divestiture Assets will be kept separate and apart from
defendants' other operations; and
(5) The management of the Wireless Business Divestiture Assets acts
to maintain and increase the sales and revenues of the mobile wireless
services generated by the Wireless Business Divestiture Assets, and
maintain at previously approved levels for 2004 and 2005, whichever are
higher, all promotional, advertising, sales, marketing, and technical
support for the Wireless Business Divestiture Assets.
C. The management of the Spectrum License Divestiture Assets and
the Minority Interests shall be held entirely separate, distinct, and
apart from those of defendants' other operations.
D. Defendants shall provide sufficient working capital and lines
and sources of credit as deemed necessary by the Management Trustee to
continue to maintain the Divestiture Assets consistent with this
Stipulation.
E. Except (1) as recommended by the Management Trustee and approved
by plaintiff United States upon consultation with plaintiff states, or
(2) as part of a divestiture approved by plaintiff United States upon
consultation with any relevant plaintiff state, in accordance with the
terms of the proposed Final Judgment, defendants shall not remove,
sell, lease, assign, transfer, pledge or otherwise dispose of any of
the Divestiture Assets outside the ordinary course of business.
F. The Management Trustee, with defendants' cooperation consistent
with this Stipulation and the proposed Final Judgment, shall maintain,
in accordance with sound accounting principles, separate, accurate, and
complete financial ledgers, books and records that report on a periodic
basis, such as the last business day of every month, consistent with
past practices, the assets, liabilities, expenses, revenues, and income
of the Divestiture Assets.
G. Defendants shall take no action that would jeopardize, delay, or
impede the sale of the Divestiture Assets nor shall defendants take any
action that would interfere with the ability of any Divestiture Trustee
appointed pursuant to the proposed Final Judgment to operate and manage
the Divestiture Assets or to complete the divestitures pursuant to the
proposed Final Judgment to an Acquirer(s) acceptable to plaintiff
United States.
H. Upon the filing of the Complaint in the action, defendants shall
appoint sufficient employees for each of the Wireless Business
Divestiture Assets, who are familiar with and have had responsibility
for the management, operation, marketing, and sales of the Divestiture
Assets, to assist the Management Trustee with his duties and
responsibilities hereunder.
I. Except for employees (1) whose primary employment
responsibilities relate to the Divestiture Assets, or (2) who are
involved in providing support services to the Divestiture Assets
pursuant to Sections V and VI of this Stipulation and Section V of the
proposed Final Judgment, defendants shall not permit any other of their
employees, officers, or directors to be involved in the operations of
the Divestiture Assets.
J. Except as required by law in the course of (1) complying with
this Stipulation and the proposed Final Judgment; (2) overseeing
compliance with policies and standards concerning the safety, health,
and environmental aspects of the operations of the Divestiture Assets
and the integrity of their financial controls; (3) defending legal
claims, investigations or enforcement actions threatened or brought
against the Divestiture Assets; or (4) obtaining legal advice,
defendants' employees (excluding employees (a) whose primary employment
responsibilities relate to the Divestiture Assets, or (b) who are
involved in providing support services to the Divestiture Assets
pursuant to Sections V and VI of this Stipulation and Sections V of the
proposed Final Judgment) shall not receive, or have access to, or use
any material confidential information, not in the public domain, of the
Divestiture Assets. Defendants may receive aggregate financial
information relating to the Divestiture Assets to the extent necessary
to allow defendants to prepare the defendants' consolidated financial
reports, tax returns, reports required by securities laws, and
personnel reports. Any such information that is obtained pursuant to
this subparagraph shall be used only for the purposes set forth in this
subparagraph.
K. Defendants may offer a bonus or severance to employees whose
primary employment responsibilities relate to the Divestiture Assets,
that continue their employment until divestiture (in addition to any
other bonus or
[[Page 65654]]
severance to which the employees would otherwise be entitled).
L. Until the Divestiture Assets are divested to an Acquirer(s)
acceptable to plaintiff United States upon consultation with any
relevant plaintiff state, defendants shall provide to the Divestiture
Assets, at no cost, support services needed to maintain the Divestiture
Assets in the ordinary course of business, including but not limited
to:
(1) Federal and state regulatory policy development and compliance;
(2) Human resources administrative services;
(3) Environmental, health and safety services, and developing
corporate policies and ensuring compliance with federal and state
regulations and corporate policies;
(4) Preparation of tax returns;
(5) Financial accounting and reporting services;
(6) Audit services;
(7) Legal services;
(8) Routine network maintenance, repair, improvements, and
upgrades;
(9) Switching, call completion, and other services necessary to
allow subscribers to use mobile wireless services and complete calls;
and
(10) Billing, customer care and customer service related functions
necessary to maintain the subscriber account and relationship.
M. Within twenty (20) days after the filing of the Complaint,
defendants will notify plaintiff United States and plaintiff states in
writing of the steps defendants have taken to comply with this Section.
N. This Preservation of Assets Stipulation and Order shall remain
in effect until consummation of the divestitures required by the
proposed Final Judgment or until further order of the Court.
Dated: October 25, 2004
Respectfully submitted,
For Plaintiff United States
/s/-------------------------------------------------------------------
Hillary B. Burchuk (D.C. Bar 366755),
Matthew C. Hammond,
Attorneys, Telecommunications & Media, Enforcement Section,
Antitrust Division, U.S. Department of Justice, City Center
Building, 1401 H Street, NW., Suite 8000, Washington, DC 20530,
(202) 514-5621, Facsimile: (202) 514-6381.
State of Connecticut
Richard Blumenthal,
Attorney General.
Michael E. Cole,
Assistant Attorney General, Department Head/Antitrust Department,
Federal bar No. ct20115.
/s/-------------------------------------------------------------------
Rachel O. Davis,
Assistant Attorney General, Antitrust Department, Federal bar No.
ct07411, DC Bar No. 413157 (inactive), 55 Elm Street, Hartford,
Connecticut 06106, Tel: (860) 808-5041, Fax: (860) 808-5033.
For Plaintiff State of Texas
Greg Abbott,
Attorney General of Texas.
Barry R. McBee,
First Assistant Attorney General
Edward D. Burbach,
Deputy Attorney General for Litigation.
Mark Tobey,
/s/-------------------------------------------------------------------
Assistant Attorney General, Chief, Antitrust & Civil Medicaid Fraud
Division.
Rebecca Fisher,
/s/-------------------------------------------------------------------
Assistant Attorney General, Chief, Antitrust Section.
/s/-------------------------------------------------------------------
John T. Prud'Homme, Jr.,
Assistant Attorney General, TX Bar No. 24000322, Office of the
Attorney General, P.O. Box 12548, Austin, Texas 78711-2548, 512/936-
1697 512/320-0975 (Facsimile).
Signature by the State of Texas on Preservation of Assets
Stipulation and Order in United States of America, State of
Connecticut and State of Texas v. Cingular Wireless Corporation, SBC
Communications Inc., BellSouth Corporation and AT&T Wireless
Services Inc.
For Defendants Cingular Wireless Corporation and SBC Communications
Inc.
/s/-------------------------------------------------------------------
Richard L. Rosen (D.C. Bar 307231),
Arnold & Porter LLP, 555 12th Street, NW., Washington, DC 20004,
(202) 942-5000.
For Defendants Cingular Wireless Corporation and BellSouth Corporation
/s/-------------------------------------------------------------------
Stephen M. Axinn, Esq. (D.C. Bar 478335),
Axinn, Veltrop & Harkrider LLP, 1801 K Street, NW., Washington, DC
20006, (202) 912-4700.
For Defendant AT&T Wireless Services, Inc.
/s/-------------------------------------------------------------------
Ilene Knable Gotts (D.C. Bar 384740),
Wachtell, Lipton, Rosen & Katz, 51 W. 52nd Street, New York, NY
10019, (212) 403-1247.
Order
It is so ordered by the Court, this ---- day of ----------,
2004.
/s/-------------------------------------------------------------------
United States District Judge
[FR Doc. 04-25323 Filed 11-12-04; 8:45 am]
BILLING CODE 4410-11-M