FOR IMMEDIATE RELEASE AT
THURSDAY, JULY 13, 1995 (202) 616-2771
TDD (202) 514-1888
JUSTICE DEPARTMENT PRESERVES COMPETITION IN INTERNATIONAL
TELEPHONE SERVICE;REQUIRES SPRINT, FRANCE TELECOM, DEUTSCHE TELEKOM
TO CHANGE BUSINESS DEAL
WASHINGTON, D.C. -- The Justice Department acted today to
keep international telephone service competitive by requiring
three of the world's major telecommunications firms to change
their more than $4.5 billion joint business deal to provide
global telecommunications services. The Department said the deal
as originally proposed--a combination of foreign monopoly firms
with a U.S. long distance firm--could reduce competition in
international telecommunications by placing other U.S.
telecommunications firms at a competitive disadvantage.
The Department's Antitrust Division filed a suit and
proposed settlement involving a plan by France T‚l‚com and
Deutsche Telekom A.G., to purchase $4 billion of stock in Sprint
Corporation and form a joint venture with Sprint to provide
global telecommunications services. This includes services such
as the transmission of data, voice and other enhanced
telecommunications services.
Anne K. Bingaman, Assistant Attorney General in charge of
the Antitrust Division, said, "The original deal posed a threat
to competition because of the incentive it created to
discriminate against competitors in terms and conditions of
access to France T‚l‚com's and Deutsche Telekom's monopoly
networks and services. The proposed settlement will ensure that
U.S. competitors will be able to compete for important forms of
international telecommunications by ensuring a level playing
field for all competitors."
Sprint, of Westwood, Kansas, is a major provider of long
distance telecommunications services, with $12.6 billion in
annual revenues. Deutsche Telekom, headquartered in Bonn,
Germany, is the monopoly provider in Germany and the second
largest provider of telecommunications in the world, with 1994
revenues of $44 billion. France T‚l‚com, headquartered in Paris,
France, is the monopoly provider in France and the fourth largest
provider of telecommunications in the world, with $28 billion in
1994 revenues.
The Department's antitrust suit and proposed consent decree
were filed today in U.S. District Court in Washington, D.C. The
consent decree, if approved by the court, would settle the suit.
Under the proposed settlement, Sprint and the joint venture
are subject to various restrictions that will operate in two
phases, changing over time as competition develops in France and
Germany.
The first phase, during which the parties are subject to a
number of behavioral restrictions, will end when competition is
legally permitted in France and Germany and when licenses for
such competition are issued. Second phase conditions are similar
to those imposed by the Department in connection with the British
Telecom/MCI joint venture and investment. Those conditions
required the reporting of all transactions between British
Telecom, MCI and the joint venture and restrictions on the
provisions of new services.
Under the consent decree, Sprint and the joint venture:
Cannot own, control or provide certain services until
competitors have the opportunity to provide similar services in
France and Germany.
Must publish rates, terms and conditions under which they
gain access to France T‚l‚com's and Deutsche Telekom's networks
and other information that is not normally public.
Are prohibited from, among other things, obtaining
anticompetitive advantages from their affiliation with France
T‚l‚com and Deutsche Telekom, such as more favorable access to
France T‚l‚com's and Deutsche Telekom's telecommunications
networks in France and Germany.
Are prohibited from gaining proprietary information or
pricing data about their U.S. competitors that France T‚l‚com or
Deutsche Telekom may have gained through their relationships as
suppliers of critical services to Sprint's and the joint
venture's competitors.
In addition, the French and German public telephone networks
and public data networks could not limit access to those networks
in such a way as to exclude competitors of Sprint and the joint
venture.
The provisions of the consent decree would remain in effect
for five years beyond the end of the decree's first phase.
In its complaint, the Department alleged that the investment
and joint venture could substantially reduce competition in
international telecommunications. The Department stated that
France T‚l‚com's and Deutsche Telekom's legal monopoly rights and
market power in France and Germany could be used by them to place
other U.S. telecommunications providers at a competitive
disadvantage to Sprint and the joint venture in international
telecommunications services between the U.S. and France and
Germany, as well as in the emerging market for international
network services.
Bingaman said that this potential for abuse of monopoly
power could cause the price of international telephone calls and
other telecommunications services to increase.
According to the Department, France T‚l‚com and Deutsche
Telekom will continue to hold legal monopolies over most
telecommunications activity in their home countries until at
least 1998.
While the Department's proposed consent decree would resolve
U.S. antitrust issues involving the transactions between Sprint,
France T‚l‚com and Deutsche Telekom, the investigation of the
alliance between France T‚l‚com and Deutsche Telekom remains
pending before the Directorate General IV of the Commission of
the European Union.
This is the second challenge of a transaction involving a
U.S. telecommunications company and foreign telecommunications
corporations. In June 1994, the Antitrust Division filed a suit
and consent decree with British Telecom and MCI involving a joint
venture to provide global telecommunications services. The
settlement was approved by the court in September 1994.
As required by the Tunney Act, the proposed consent decree
will be published in the Federal Register, together with the
Department's competitive impact statement. Any person may
comment on the proposed decree by submitting comments to the
Department. After a 60-day comment period, the United States
will reply to any public comments and seek entry of the decree by
the court.
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95-391