Public Comment and Response on Proposed Final Judgment, 13570-13575 [E8-4817]
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Federal Register / Vol. 73, No. 50 / Thursday, March 13, 2008 / Notices
Decree also requires defendants to pay
response costs incurred since August 1,
2006 in accordance with the terms of
the Supplemental Consent Decree.
The Department of Justice will receive
comments relating to the proposed
Supplemental Consent Decree for a
period of thirty (30) days from the date
of this publication. Please address
comments to the Assistant Attorney
General, Environment and Natural
Resources Division, by e-mail to
pubcomment-ees.enrd@usdoj.gov or
regular mail to P.O. Box 7611, U.S.
Department of Justice, Washington, D.C.
20044–7611, and refer to United States
v. NCR Corp. and Allfirst Financial
Center, National Association, D.J. Ref.
90–11–2–749/1.
The Supplemental Consent Decree
may be examined at the Office of the
United States Attorney for the District of
Delaware, Nemours Building,
Wilmington, DE 19801 and at U.S. EPA
Region III, 1650 Arch Street,
Philadelphia, PA 19103. During the
public comment period, the
Supplemental Consent Decree may also
be examined on the following
Department of Justice Web site, https://
www.usdoj.gov/enrd/
consent_decrees.html. A copy of the
Supplemental Consent Decree may also
be obtained by mail from the Consent
Decree Library, P.O. Box 7611, U.S.
Department of Justice, Washington, DC
20044–7611 or by faxing or e-mailing a
request to Tonia Fleetwood
(tonia.fleetwood@usdoj.gov), fax no.
(202) 514–0097, phone confirmation
number (202) 514–1547. When
requesting a copy from the Consent
Decree Library, please enclose a check
in the amount of $6.50 for the
Supplemental Consent Decree only, or
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Decree and appendices (25 cents per
page reproduction cost) payable to the
U.S. Treasury or, if by e-mail or fax,
forward a check in that amount to the
Consent Decree Library at the address
above.
Robert Brook,
Assistant Chief, Environmental Enforcement
Section, Environment and Natural Resources,
Division.
[FR Doc. E8–4975 Filed 3–12–08; 8:45 am]
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DEPARTMENT OF JUSTICE
Antitrust Division
Public Comment and Response on
Proposed Final Judgment
Pursuant to the Antitrust Procedures
and Penalties Act, 15 U.S.C. § 16(b)-(h),
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the United States hereby publishes
below the comment received on the
proposed Final Judgment in United
States v. AT&T, Inc. and Dobson
Communications Corporation, No. 1:07–
CY–01952–ESH, which was filed in the
United States District Court for the
District of Columbia on March 4, 2008,
together with the response of the United
States to the comment.
Copies of the comment and the
response are available for inspection at
the Department of Justice Antitrust
Division, 325 Seventh Street, NW.,
Room 200, Washington, DC 20530,
(telephone (202) 514–2481), and at the
Office of the Clerk of the United States
District Court for the District of
Columbia, 333 Constitution Avenue,
NW., Washington, DC 20001. Copies of
any of these materials may be obtained
upon request and payment of a copying
fee.
J. Robert Kramer, II,
Director of Operations, Antitrust Division.
In the United States District Court for
the District of Columbia
Case No. 1:07–cv–1952 (ESH); United
States of America, Plaintiff, v. AT&T
Inc. and Dobson Communications
Corporation, Defendants; Plaintiff
United States’s Response to Public
Comments
Pursuant to the requirements of the
Antitrust Procedures and Penalties Act,
15 U.S.C. 16(b)–(h) (‘‘APPA’’ or
‘‘Tunney Act’’), the United States
hereby responds to the public comment
received regarding the proposed Final
Judgment in this case. After careful
consideration of the comment, the
United States continues to believe that
the proposed Final Judgment will
provide an effective and appropriate
remedy for the antitrust violation
alleged in the Complaint. The United
States will move the Court for entry of
the proposed Final Judgment after the
public comments and this Response has
been published in the Federal Register,
pursuant to 15 U.S.C. 16(d).
On October 30, 2007, the United
States filed the Complaint in this matter
alleging that the proposed merger of two
mobile wireless telecommunications
service providers, AT&T Inc. (‘‘AT&T’’)
and Dobson Communications
Corporation (‘‘Dobson’’), would violate
Section 7 of the Clayton Act, 15 U.S.C.
§ 18. Simultaneously with the filing of
the Complaint, the plaintiff filed a
proposed Final Judgment and a
Preservation of Assets Stipulation and
Order signed by the United States and
defendants consenting to the entry of
the proposed Final Judgment after
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compliance with the requirements of the
Tunney Act. Pursuant to those
requirements, the United States filed a
Competitive Impact Statement (‘‘CIS’’)
in this Court on October 30, 2007;
published the proposed Final Judgment
and CIS in the Federal Register on
November 19, 2007, see 72 FR 65,060
(2007); and published a summary of the
terms of the proposed Final Judgment
and CIS, together with directions for the
submission of written comments
relating to the proposed Final Judgment,
in the Washington Post for seven days
beginning on November 18, 2007 and
ending on November 24, 2007. The 60day period for public comments ended
on January 22, 2008, and one comment
was received as described below and
attached hereto.
I. Background
As explained more fully in the
Complaint and CIS, the likely effect of
this acquisition would be to lessen
competition substantially for mobile
wireless telecommunications services in
seven (7) geographic areas in the states
of Kentucky, Missouri, Oklahoma,
Pennsylvania and Texas. To restore
competition in these markets, the
proposed Final Judgment, if entered,
would require defendants to divest (a)
Dobson’s mobile wireless
telecommunications services businesses
and related assets in three markets; (b)
AT&T minority interests in other mobile
wireless telecommunications services
providers in two markets, and (c)
Dobson’s Cellular One Assets, which
include the Cellular One service mark
and related assets. 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 punish
violations thereof.
II. Legal Standard Governing the
Court’s Public Interest Determination
Upon publication of the public
comments and this Response, the
United States will have fully complied
with the Tunney Act. It will then ask
the Court to determine that entry of the
proposed Final Judgment would be ‘‘in
the public interest,’’ and to enter it. 15
U.S.C. § 16(e)(1). In making that
determination, the court, in accordance
with the statute as amended in 2004,1 is
required to consider:
1 The 2004 amendments substituted ‘‘shall’’ for
‘‘may’’ in directing relevant factors for court to
consider and amended the list of factors to focus on
competitive considerations and to address
potentially ambiguous judgment terms. Compare 15
U.S.C. 16(e) (2004), with 15 U.S.C. 16(e)(1) (2006);
see also United States v. SBC Commc’ns, Inc., 489
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(A) The competitive impact of such
judgment, including termination of
alleged violations, provisions for
enforcement and modification, duration
of relief sought, anticipated effects of
alternative remedies actually
considered, whether its terms are
ambiguous, and any other competitive
considerations bearing upon the
adequacy of such judgment that the
court deems necessary to a
determination of whether the consent
judgment is in the public interest; and
(B) The impact of entry of such
judgment upon competition in the
relevant market or markets, upon the
public generally and individuals
alleging specific injury from the
violations set forth in the complaint
including consideration of the public
benefit, if any, to be derived from a
determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). In
considering these statutory factors, the
court’s inquiry is necessarily a limited
one as the government is entitled to
‘‘broad discretion to settle with the
defendant within the reaches of the
public interest.’’ United States v.
Microsoft Corp., 56 F.3d 1448,1461 (D.C.
Cir. 1995); see generally United States v.
SBC Commc’ns, Inc., 489 F. Supp. 2d 1
(D.D.C. 2007) (assessing public interest
standard under the Tunney Act).
As the United States Court of Appeals
for the District of Columbia Circuit has
held, under the APPA a court considers,
among other things, the relationship
between the remedy secured and the
specific allegations set forth in the
government’s complaint, whether the
decree is sufficiently clear, whether
enforcement mechanisms are sufficient,
and whether the decree may positively
harm third parties. See Microsoft, 56
F.3d at 1458–62. With respect to the
adequacy of the relief secured by the
decree, a court may not ‘‘engage in an
unrestricted evaluation of what relief
would best serve the public.’’ United
States v. BNS, Inc., 858 F.2d 456, 462
(9th Cir. 1988) (citing United States v.
Bechtel Corp., 648 F.2d 660, 666 (9th
Cir. 1981)); see also Microsoft, 56 F.3d
at 1460–62; United States v. Alcoa, Inc.,
152 F. Supp. 2d 37, 40 (D.D.C. 2001).
Courts have held that:
[t]he balancing of competing social and
political interests affected by a proposed
antitrust consent decree must be left, in the
first instance, to the discretion of the
Attorney General. The court’s role in
protecting the public interest is one of
insuring that the government has not
breached its duty to the public in consenting
F. Supp. 2d 1, 11 (D.D.C. 2007) (concluding that the
2004 amendments ‘‘effected minimal changes’’ to
Tunney Act review).
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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 In
determining whether a proposed
settlement is in the public interest, a
district court ‘‘must accord deference to
the government’s predictions about the
efficacy of its remedies, and may not
require that the remedies perfectly
match the alleged violations.’’ SEC
Commc’ns, 489 F. Supp. 2d at 17; see
also Microsoft, 56 F.3d at 1461 (noting
the need for courts to be ‘‘deferential to
the government’s predictions as to the
effect of the proposed remedies’’);
United States v. Archer-DanielsMidland Co., 272 F. Supp. 2d 1, 6
(D.D.C. 2003) (noting that the court
should grant due respect to the United
States’ prediction as to the effect of
proposed remedies, its perception of the
market structure, and its views of the
nature of the case).
Courts have greater flexibility in
approving proposed consent decrees
than in crafting their own decrees
following a finding of liability in a
litigated matter. ‘‘[A] proposed decree
must be approved even if it falls short
of the remedy the court would impose
on its own, as long as it falls within the
range of acceptability or is ’within the
reaches of public interest.’ ’’ United
States v. Am. Tel. & Tel. Co., 552 F.
Supp. 131, 151 (D.D.C. 1982) (citations
omitted) (quoting United States v.
Gillette Co., 406 F. Supp. 713, 716 (D.
Mass. 1975)), aff’d sub nom. Maryland
v. United States, 460 U.S. 1001 (1983);
see also United States v. Alcan
Aluminum Ltd., 605 F. Supp. 619, 622
(W.D. Ky. 1985) (approving the consent
decree even though the court would
have imposed a greater remedy). To
meet this standard, the United States
‘‘need only provide a factual basis for
concluding that the settlements are
reasonably adequate remedies for the
alleged harms.’’ SEC Commc’ns, 489 F.
Supp. 2d at 17.
Moreover, the court’s role under the
APPA is limited to reviewing the
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’’);
United States v. Gillette Co., 406 F. Supp. 713, 716
(D. Mass. 1975) (noting that, in this way, the court
is constrained to ‘‘look at the overall picture not
hypercritically, nor with a microscope, but with an
artist’s reducing glass’’). See generally Microsoft, 56
F.3d at 1461 (discussing whether ‘‘the remedies
[obtained in the decree are] so inconsonant with the
allegations charged as to fall outside of the ‘reaches
of the public interest’ ’’).
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remedy in relationship to the violations
that the United States has alleged in its
Complaint, and does not authorize the
court to ‘‘construct [its] own
hypothetical case and then evaluate the
decree against that case.’’ Microsoft, 56
F.3d at 1459. Because the ‘‘court’s
authority to review the decree depends
entirely on the government’s exercising
its prosecutorial discretion by bringing
a case in the first place,’’ it follows that
‘‘the court is only authorized to review
the decree itself,’’ and not to ‘‘effectively
redraft the complaint’’ to inquire into
other matters that the United States did
not pursue. Id. at 1459–60. As this Court
recently confirmed in SBC
Communications, courts ‘‘cannot look
beyond the complaint in making the
public interest determination unless the
complaint is drafted so narrowly as to
make a mockery of judicial power.’’ SBC
Commc’ns, 489 F. Supp. 2d at 15.
In its 2004 amendments, Congress
made clear its intent to preserve the
practical benefits of utilizing consent
decrees in antitrust enforcement, adding
the unambiguous instruction that
‘‘[n]othing in this section shall be
construed to require the court to
conduct an evidentiary hearing or to
require the court to permit anyone to
intervene.’’ 15 U.S.C. § 16(e)(2). The
language codified what the Congress
that enacted the Tunney Act in 1974
intended, as Senator Tunney explained:
‘‘[t]he court is nowhere compelled to go
to trial or to engage in extended
proceedings which might have the effect
of vitiating the benefits of prompt and
less costly settlement through the
consent decree process.’’ 119 Congo
Rec. 24,598 (1973) (statement of Senator
Tunney). Rather, the procedure for the
public interest determination is left to
the discretion of the court, with the
recognition that the court’s ‘‘scope of
review remains sharply proscribed by
precedent and the nature of Tunney Act
proceedings.’’ SBC Commc’ns, 489 F.
Supp. 2d at 11.3
3 See United States v. Enova Corp., 107 F. Supp.
2d 10, 17 (D.D.C. 2000) (noting that the ‘‘Tunney
Act expressly allows the court to make its public
interest determination on the basis of the
competitive impact statement and response to
comments alone’’); S. Rep. No. 93–298, 93d Cong.,
1st Sess., at 6 (1973) (‘‘Where the public interest can
be meaningfully evaluated simply on the basis of
briefs and oral arguments, that is the approach that
should be utilized.’’); United States v. Mid-Am.
Dairymen, Inc., 1977–1 Trade Cas. (CCH) ¶ 61,508,
at 71,980 (W.D. Mo. 1977) (‘‘Absent a showing of
corrupt failure of the government to discharge its
duty, the Court, in making its public interest
finding, should* * * carefully consider the
explanations of the government in the competitive
impact statement and its responses to comments in
order to determine whether those explanations are
reasonable under the circumstances.’’).
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Federal Register / Vol. 73, No. 50 / Thursday, March 13, 2008 / Notices
III. Summary of Public Comment and
the United States’s Response
During the 60-day public comment
period, the United States received one
comment—from Mid-Tex Cellular, Ltd.
(‘‘Mid-Tex’’), a wireless competitor to
the merging firms in certain geographic
areas—which is attached hereto and
summarized below. Upon review, the
United States believes that nothing in
the comment warrants a change in the
proposed Final Judgment or is sufficient
to suggest that the proposed Final
Judgment is not in the public interest.
The comment, in essence, argues that
the United States should have
identified, alleged, and remedied a
different competitive concern than the
one explained in the United States’s
Complaint. Copies of this Response and
its attachment have been mailed to MidTex.
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A. Factual Background: Texas RSA 9
The United States’s Complaint alleges
that the merger of AT&T and Dobson
would tend to lessen competition
substantially, in violation of Section 7 of
the Clayton Act, in the provision of
mobile wireless telecommunications
services in seven geographic areas,
including Texas RSA 9—the subject of
Mid-Tex’s comments. The competitive
landscape in Texas RSA 9 is somewhat
complicated, and thus, this description
is provided to assist in understanding
the comments of Mid-Tex, the nature of
the competitive concerns reflected in
the United States’s Complaint, and how
the proposed Final Judgment adequately
redresses the concerns.
Throughout the United States, in each
local geographic area the Federal
Communications Commission issues
two cellular licenses, an ‘‘A side’’ and
a ‘‘B side,’’ in the 800 MHz spectrum
band for the provision of wireless
service, as well as a number of PCS
licenses in the 1900 MHz spectrum
band. In rural areas, the cellular licenses
are more attractive to carriers than PCS
licenses because the propagation
characteristics of this spectrum band
allow sparsely populated areas to be
served more efficiently. Frequently in
rural areas, holders of PCS licenses do
not fully build out their networks,
except in areas where the population
density is higher or there are major
highways.
In Texas RSA 9, Dobson controls one
of the two cellular licenses—the ‘‘Aside’’ license—throughout the entire
RSA, and operates RSA-wide using that
license. The situation for the ‘‘B-side’’
cellular license is much more
complicated, as the license is split,
geographically, between three different
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carriers. Mid-Tex, an entity in which
AT&T had a minority interest,4 controls
the ‘‘B-side’’ license in five of the eleven
counties that comprise the RSA, and a
portion of a sixth. AT&T controls the
‘‘B-side’’ license in two counties in the
RSA, and portions of three others.5 And,
a third company, Alltel Corporation,
controls the ‘‘B-side’’ license in one
county and a portion of two others.
In conducting an investigation of the
merger of two mobile wireless
providers, the United States does a factspecific market-by-market analysis that
examines a number of factors,
including, but not limited to, the
number of mobile wireless providers
and their competitive strengths and
weaknesses, market shares of the
merging companies and other providers,
the depth and breadth of coverage of
providers and whether providers could
expand their existing coverage.6 In
investigating the proposed merger of
AT&T and Dobson, the United States
considered the competitive effects of the
combination of the Dobson and AT&T
wholly-owned wireless business in
Texas RSA 9, as well as the effect of
AT&T retaining a minority interest in
the Mid-Tex business subsequent to
acquiring the Dobson business.
However, the United States concluded
that only the retention of the minority
interest in Mid-Tex raised competitive
concerns in the RSA and alleged only
that harm in its Complaint.7
4 AT&T withdrew from the Mid-Tex Cellular, Ltd.
partnership on December 15, 2007, and thus, no
longer has a minority interest in Mid-Tex. This
withdrawal was accomplished pursuant to Sections
II.H and Section IV of the proposed Final Judgment
in this matter and Section IV.B of the Preservation
of Assets Stipulation and Order signed by this Court
on November 12, 2007, which requires the
defendants to comply with the proposed Final
Judgment pending the Judgment’s entry.
5 It is these counties, where AT&T owns the
cellular licenses, that constitute the Texas RSA 9B1
and 9B4 partition areas that Mid-Tex refers to in its
comment. Texas RSA 9B1 includes Eastland County
and a portion of Erath County, and Texas RSA 9B4
includes Somervell County and portions of Bosque
County and Hill County. AT&T also controls some
PCS licenses throughout the RSA.
6 Competitive Impact Statement at 7–8.
7 In the Complaint, Texas RSA 9 is not alleged as
an ‘‘AT&T/Dobson Overlap Market’’ in which the
combination of the two businesses is the source of
the competitive concern; instead, it is listed in the
portion of the Complaint which discusses ‘‘AT&T
Minority Interest Markets’’ and the competitive
problem is described as follows: ‘‘[E]ither Dobson
or the business in which AT&T has a minority
interest has the largest share and the other
defendant is a particularly strong and important
competitor in all, or a large part, of the RSA. * * *
Post-merger, the merged firm would likely have the
ability and incentive to coordinate the activities of
the wholly-owned Dobson wireless business and
the business in which it has a minority stake, and/
or undermine the ability of the latter to compete
against the former. Such activity would likely result
in a significant lessening of competition.’’
Complaint ¶¶ 21–22. Thus, the competitive
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With regard to the wholly-owned
businesses, the United States did not
have sufficient reason to allege that the
combination of the Dobson and AT&T
businesses would present a competitive
concern. AT&T’s cellular license
ownership is limited to a small minority
of the geographic area of the RSA—
essentially a strip of two counties, and
portions of three others, along the
northern border of the RSA. Although it
competes to a limited extent elsewhere
in the RSA via its PCS licenses,8 AT&T
appears to be a strong competitor
primarily only in the areas where it is
the cellular licensee. However, in that
small portion of the RSA, there are three
other competitors offering wireless
service via a network built out utilizing
their PCS spectrum: Sprint, Verizon,
and T-Mobile. Based on these facts, the
United States did not believe it could
successfully allege and prove that the
combination of the Dobson and AT&T
wholly-owned wireless businesses
would be likely to reduce competition
substantially in the RSA, and thus, it
made no such allegation.
On the other hand, Mid-Tex controls
the cellular licenses for a much larger
portion of the RSA—five counties, and
a portion of a sixth. Moreover, the PCS
carriers appear to have much less of a
competitive presence in that portion of
the RSA (including very limited
networks) than in the area where AT&T
controls the ‘‘B side’’ license. It thus
appears that Dobson and Mid-Tex are
the two strongest competitors in fiveand-a-half counties which comprise a
large portion of the RSA, facing little
effective competition there from the PCS
providers. Therefore, any significant
diminution of either company’s ability
to function as an independent,
aggressive competitive constraint likely
would tend to lessen competition
substantially. As alleged in the
Complaint, AT&T had important
management and control interests in
Mid-Tex and thus, ‘‘[p]ost-merger, the
merged firm would likely have the
ability and incentive to coordinate the
activities of the wholly-owned Dobson
wireless business and [Mid-Tex], and/or
undermine the ability of the latter to
compete against the former.’’ The
United States sought to remedy the
identified competitive problem by
including in the proposed Final
problem alleged by the United States in Texas RSA
9 is the combination of Dobson and Mid-Tex
(minority owned by AT&T); it is that problem—and
only that problem—that the proposed decree
properly seeks to remedy.
8 In the counties in this RSA where AT&T only
has PCS spectrum, its network is built out to a very
limited extent, covering less than 15% of the
population.
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Judgment a requirement that the merged
firm divest itself of the minority interest
in Mid-Tex.
B. Summary of Comment
Mid-Tex raises two concerns
regarding Texas RSA 9. First, it
contends that the merged firm should be
required to divest not only its minority
interest in Mid-Tex, but also either the
Dobson ‘‘A side’’ cellular license
throughout the entire RSA, or AT&T’s
other ‘‘B side’’ interests in the RSA.9
According to Mid-Tex, such a
divestiture is necessary ‘‘for the same
reasons’’ that the United States
concluded that it was necessary for the
merged firm to divest its interest in MidTex: It argues that in certain
subdivisions of Texas RSA 9, the
merged firm would have ‘‘well in excess
of 70 percent of subscribers.’’ Second,
Mid-Tex argues that AT&T should not
be prohibited from reacquiring a noncontrolling interest in Mid-Tex during
the ten-year term of the proposed Final
Judgment. It contends that the proposed
decree’s prohibition on reacquisition is
unnecessarily broad in that a
reacquisition might not be harmful to
competition if either (a) it was
completely passive, or (b) competitive
conditions had changed by the time of
the proposed reacquisition.
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C. Response
Mid-Tex does not take issue with the
divestiture remedy embodied in the
Final Judgment as far as it goes (except
for the reacquisition provision), but
instead contends that it does not go far
enough: Essentially, it argues that the
United States should have identified,
and alleged, a different, additional
competitive problem in its Complaint
and remedied that problem. Mid-Tex
contends that the overlap between the
Dobson business, and the business
controlled directly by AT&T in the
‘‘Texas 9B1 market’’ and ‘‘Texas 9B4
market’’ 10 pose a competitive problem
and that, therefore, the merged firm
should be required to divest either the
Dobson or AT&T interests in those
areas. But as described above, the
United States was unable to conclude
that the combination of the Dobson
business and the wholly-owned AT&T
business was likely to reduce
9 Although Mid-Tex operates in Texas RSA 9, it
appears from its Web site that Mid-Tex does not
compete in the Texas RSA 9B1 or 9B4 partition
areas, the subdivisions that are the primary focus
of its comment.
10 The geographic market as alleged in the United
States’ Complaint is represented by all of Texas
RSA 9; the United States did not allege a
‘‘partitioned Texas 9B1 market’’ or ‘‘Texas 9B4
market’’ as referred to by Mid-Tex. See Mid-Tex
Comment at 2–3.
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competition substantially in the alleged
geographic market, Texas RSA 9, due to
the relatively small portion of the RSA
covered by AT&T’s cellular licenses and
the presence of multiple other
competitors in that portion.11
Accordingly, the United States did not
allege that the combination of the
Dobson and wholly-owned AT&T
businesses posed a competitive concern
in this RSA, nor did it seek to remedy
any such concern.
With regard to Mid-Tex’s second
concern, regarding the reacquisition
clause, it is typical for antitrust consent
decrees containing a divestiture remedy
to bar the merged firm from reacquiring
the divested assets during the ten-year
term of the decree. Such a provision is
typically included because, except in
unusual circumstances, it would defeat
the purposes of a divestiture to allow
the merged firm to simply reacquire the
divested assets. Mid-Tex contends that
if AT&T were to reacquire a ‘‘truly
passive’’ non-controlling interest in
Mid-Tex, it would not pose a
competitive concern. But this is not
necessarily the case: In some
circumstances, even a passive interest
can have anticompetitive consequences,
e.g., reducing the incentives of the
merged firm to use its wholly-owned
business in the market in question to
compete aggressively. A bright line
prohibition on reacquisition—similar to
that contained in numerous prior
consent decrees entered by this
Court 12—ensures easy administrability
as well as the ultimate success of the
proposed divestiture, and it does so in
a way that causes no undue harm to
consumers or other third parties.13
11 Mid-Tex claims that, according to its estimates,
in the Texas RSA 9B1 and 9B4 portions of the RSA,
the combined Dobson and AT&T businesses ‘‘serve
90–95% of wireless subscribers.’’ It, however,
provides no source for those estimates and, indeed,
those estimates are not supported by the
information reviewed by the United States.
12 See, e.g., United States v. Amsted Industries,
Inc., ¶ XII, No. 1:07–cv–00710 (JDB) (D.D.C. July 16,
2007) (Final Judgment), available at https://
www.usdoj.gov/atr/cases/f224900/224931.htm;
United States v. Cal Dive Int’l, Inc., ¶ XII, No.
1:05CY02041 (EGS) (D.D.C. Jan. 12, 2006) (Final
Judgment), available at https://www.usdoj.gov/atr/
cases/f213100/213177.htm; United States v.
Cingular Wireless Corp., ¶ XI, No. 1:04CY01850
(RBW) (D.D.C. Mar. 14, 2005) (Final Judgment),
available at https://www.usdoj.gov/atr/cases/
f208000/208093.htm.
13 Mid-Tex briefly suggests that the no
reacquisition prohibition could harm Mid-Tex. But,
it is difficult to see why barring one out of an
almost infinite number of possible investors from
purchasing an interest in a company is, in itself,
likely to cause undue harm to that company.
Indeed, if the only entity willing to invest in a firm
were one of its most important direct competitors,
that in itself might warrant at least some reason for
competitive concern.
PO 00000
Frm 00050
Fmt 4703
Sfmt 4703
13573
Moreover, Mid-Tex contends that ‘‘if
market conditions change’’ during the
term of the proposed Final Judgment, a
reacquisition by AT&T would not
necessarily threaten competition. But
this is the case in every antitrust
consent decree: Market conditions can
always change in a way that moot the
need for a decree, or any specific
provisions thereof. If market conditions
change, the appropriate solution is a
motion to modify the decree. The
United States has supported a motion to
modify, and the Court has modified, the
reacquisition clause in appropriate
circumstances.14 The fact that market
conditions might change in the future is
not a reason to modify or delete
otherwise important provisions from a
decree before it has even been entered.
IV. Conclusion
After careful consideration of this
public comment, the United States still
concludes that entry of the proposed
Final Judgment will provide an effective
and appropriate remedy for the antitrust
violation alleged in the Complaint and
is, therefore, in the public interest.
Pursuant to Section 16(d) of the Tunney
Act, the United States is submitting the
public comment and its Response to the
Federal Register for publication. After
the comments and its Response are
published in the Federal Register, the
United States will move this Court to
enter the proposed Final Judgment.
Respectfully submitted,
Hillary B. Burchuk (DC Bar No. 366755)
Lawrence M. Frankel (DC Bar No. 441532)
Attorney, 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.
Certificate of Service
I hereby certify that on March 4, 2008,
a copy of the foregoing Plaintiff United
States’ Response to Public Comments
was mailed via first class mail, postage
prepaid, upon counsel for Mid-Tex
Cellular, Ltd., addressed as follows:
Michael R. Bennet, Bennet & Bennet,
PLLC, 4350 East West Highway, Suite
201, Bethesda, MD 20814.
Hillary B. Burchuk (DC Bar No. 366755),
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.
14 See, e.g., U.S. v. SBC Commc’ns, Inc., 339 F.
Supp.2d 116 (D.D.C. 2004) (modifying reacquisition
clause of Final Judgment).
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Federal Register / Vol. 73, No. 50 / Thursday, March 13, 2008 / Notices
Before the United States Department of
Justice
In the Matter of
United States of America v. AT&T Inc.
and Dobson Communications
Corporation, U.S. District Court for
the District of Columbia Case No.
1:07–cv–01952; Proposed Final
Judgment and Competitive Impact
Statement
Comments of Mid-Tex Cellular. Ltd.
mstockstill on PROD1PC66 with NOTICES
Mid-Tex Cellular, Ltd. (‘‘Mid-Tex’’),
by its attorneys, and pursuant to the
Notice published November 19, 2007 in
the Federal Register (Vol. 72, No. 222),
hereby submits its comments on the
proposed settlement in the abovecaptioned U.S. District Court
proceeding. In its Competitive Impact
Statement (‘‘CIS’’) filed by the Antitrust
Division of the U.S. Department of
Justice (‘‘Department’’) in that
proceeding, the Department concluded
that AT&T Inc.’s (‘‘AT&T’’) proposed
acquisition of Dobson Communications
Corporation (‘‘Dobson’’) will likely
substantially lessen competition, in
violation of Section 7 of the Clayton
Act, in the provision of mobile wireless
telecommunications services in the
Texas RSA–9 (CMA 660) market (‘‘Texas
RSA–9’’), among other markets.1 The
Department filed a proposed Final
Judgment which requires AT&T to
divest its interest in Mid-Tex. For the
reasons stated in its petition opposing
the transfer of control of Dobson’s
wireless radio licenses to AT&T, filed
with the Federal Communications
Commission on August 27, 2007
(‘‘Petition’’) 2, Mid-Tex, with one
exception, supports the proposed Final
Judgment as it relates to the proposed
divestiture of AT&T’s interest in MidTex.3 For the same reasons as well as
those stated below, Mid-Tex urges the
Department to require the divestiture of
a portion of AT&T’s remaining interests
in Texas RSA–9.4
1 United States v. AT&T Inc. and Dobson
Communications Corporation; Proposed Final
Judgment and Competitive Impact Statement, 72 FR
65060 (Department of Justice Antitrust Division
Nov. 19, 2007).
2 A copy of the Petition was submitted to the
Department by letter dated August 29, 2007.
3 As discussed in Section II infra, Mid-Tex
opposes a ten year restriction on AT&T reacquiring
any ownership interest in Mid-Tex.
4 Mid-Tex’s position herein is not intended to
address and should not be construed as its
concurrence that the actions taken or proposed
herein resolve all anti-competitive issues resulting
from AT&T’s actions in Texas RSA–9.
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16:19 Mar 12, 2008
Jkt 214001
I. The Department Should Require
AT&T To Divest a Portion of Its
Wireless Interests Throughout Texas
RSA–9
Specifically, Mid-Tex requests that
the Department require AT&T to divest
either: (1) The A band license for the
Texas RSA–9 market held by Dobson
Cellular Systems, Inc., a wholly owned
subsidiary of Dobson; or (2) its
ownership interests in Texas 9B1
Limited Partnership, the Cellular B
Block licensee in the partitioned Texas
9B1 market, and the license for the
partitioned Texas 9B4 market held by
AT&T Mobility Texas, LLC, a wholly
owned subsidiary of AT&T. As
discussed below, for the same reasons
the Department has found divestiture of
AT&T’s interests in Mid-Tex to be
necessary, the further divestiture of
AT&T’s interests in the Texas 9 RSA is
also necessary.
The proposed Final Judgment requires
the divestiture of AT&T’s minority
interest in Mid-Tex. The Department
found that, without such divestiture, the
merged AT&T ‘‘would likely have the
ability and incentive to coordinate the
activities of the wholly-owned Dobson
wireless business and the business in
which it has a minority stake, and/or
undermine the ability of the latter to
compete against the former’’ and that
‘‘[s]uch activity would likely result in a
significant lessening of competition’’ in
violation of Section 7 of the Clayton
Act.5 The Department reached this
conclusion based on its finding that in
Texas RSA–9 the businesses in which
AT&T and Dobson have an interest
collectively account for in excess of 70
percent of subscribers and that AT&T
has significant rights under the Mid-Tex
partnership agreement to control core
business decisions, obtain critical
confidential competitive information,
and share in profits at a rate
significantly greater than the equity
ownership share upon a sale of the
partnership.6
In the partitioned Texas 9B1 market,
the businesses in which AT&T and
Dobson have an interest collectively
account for well in excess of 70 percent
of subscribers,7 and, as the sole general
5 Department of Justice Complaint in the abovecaptioned proceeding (‘‘Complaint’’) at par. 22;
Competitive Impact Statement (‘‘CIS’’), 72 FR at
65072. The Department found that in Texas RSA–
9 ‘‘the merged firm will have the incentive and
ability to increase prices, diminish the quality or
quantity of services provided, and refrain from or
delay making investments in network
improvements.’’ 72 FR at 65072.
6 Id. at pars. 21–22.
7 By Mid-Tex’s estimation, Dobson and the AT&T
controlled Texas RSA 9B1 Limited Partnership
serve 90–95% of wireless subscribers in the
partitioned Texas RSA 9B1 market.
PO 00000
Frm 00051
Fmt 4703
Sfmt 4703
partner in Texas RSA 9B1 Limited
Partnership, AT&T has a controlling
interest in that entity.8 In the
partitioned Texas 9B4 market, AT&T
and Dobson collectively account for
well in excess of 70 percent of
subscribers.9
The Department recognizes that in
Texas RSA–9, ‘‘either Dobson or the
business in which AT&T has a minority
interest has the largest share and the
other firm is a particularly strong and
important competitor in all, or a large
part, of the RSA.’’ Due to the combined
market share throughout the RSA, the
Department should treat the remainder
of Texas RSA–9 as it has already
decided to treat Texas RSA–9B2, and
require AT&T to divest a portion of its
remaining interests in the market. To
allow AT&T to retain wireless interests
it holds outright or through a controlling
general partnership interest, while
requiring it to divest minority, yet
controlling, limited partnership
interests is inconsistent and without
justifiable basis.10
II. AT&T Should Not Be Prohibited
From Reacquiring a Non-Controlling
Interest in Mid-Tex
Although Mid-Tex supports the
Department’s decision to condition
merger approval on AT&T’s divestiture
of its interest in Mid-Tex in Texas 9B2,
Mid-Tex opposes the proposed
condition that AT&T be barred from
reacquiring any part of its interest in
Mid-Tex during the proposed ten year
term of the Final Judgment. The
Department’s rationale for the
divestiture requirement in Texas 9B2 is
AT&T’s ability to control Mid-Tex
through rights granted to it under the
partnership agreement. If AT&T wishes
8 See FCC Ownership Disclosure Information for
the Wireless Telecommunications Services (FCC
Form 602) filed by Texas RSA 9B1 Limited
Partnership on February 26, 2007. New Cingular
Wireless PCS (‘‘NCW PCS’’) holds a one percent
general partnership interest in Texas RSA 9B1
Limited Partnership. Id. at Exhibit 1. NCW PCS is
a wholly owned subsidiary of Cingular Wireless II,
LLC, which has two members: AT&T Mobility LLC
f/k/a Cingular Wireless LLC (‘‘AT&T Mobility)
(57%) and New Cingular Wireless Services, Inc.
(‘‘NCWS’’) (43%). Id. NCWS is a direct wholly
owned subsidiary of AT&T Mobility, which, in
turn, is an indirect wholly owned subsidiary of
AT&T. SWBW B-Band Development LLC
(‘‘SWBW’’), a wholly owned subsidiary of NCW
PCS, holds a 43.1449% limited partnership interest
in Texas RSA 9B1 Limited Partnership. Id.
9 As discussed above, the B Block cellular license
is held by AT&T Mobility Texas, LLC, a wholly
owned subsidiary of AT&T. By Mid-Tex’s
estimation, Dobson and AT&T serve 90–95% of
wireless subscribers in the partitioned Texas RSA
9B4 market.
10 Conversely, if divestiture is not required in the
remainder of Texas RSA–9, it should not be
required in Texas RSA 9B2. The entire market
should be treated consistently.
E:\FR\FM\13MRN1.SGM
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13575
Federal Register / Vol. 73, No. 50 / Thursday, March 13, 2008 / Notices
to reinvest in Mid-Tex as a truly passive
investor within the ten year effective
period of the Final Judgment, it should
not be prohibited from doing so. Such
a prohibition will harm only Mid-Tex
and not competition in Texas 9B2. Such
reacquisition of divestiture assets
should not be permitted, however,
absent Department review of the
amended limited partnership
agreement, to enable the Department to
ensure that AT&T has not regained
rights to control core business decisions,
obtain critical confidential competitive
information, and share in profits at a
rate significantly greater than the equity
ownership share upon a sale of the
partnership.11
III. Conclusion
For the foregoing reasons, Mid-Tex
respectfully requests that the
Department require the additional
divestitures discussed herein, and
permit AT&T to reacquire a limited
interest in Mid-Tex as discussed herein.
Should the Department have any
questions regarding the matters
addressed herein, please communicate
directly with the undersigned.
Dated: January 18, 2008.
Respectfully submitted,
MID-TEX CELLULAR, LTD.,
Michael R. Bennet,
Bennet & Bennet, PLLC, 4350 East West
Highway, Suite 201, Bethesda, MD
20814, 202–371–1500.
cc: Hillary Burchuk
Declaration of Toney Prather
I, Toney Prather, do hereby declare
under penalty of perjury the following:
1. I am the Manager of, and President
of the sole member of the managing
general partner of, Mid-Tex Cellular,
Ltd.
2. I have read the foregoing Comments
of Mid-Tex Cellular Ltd. I have personal
knowledge of the facts set forth therein,
and believe them to be true and correct.
Dated: January 11, 2008.
Toney Prather.
[FR Doc. E8–4817 Filed 3–12–08; 8:45 am]
BILLING CODE 4410–11–M
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[OMB Number 1117–0031]
Agency Information Collection
Activities: Proposed Collection;
Comments Requested
30-Day Notice of Information
Collection Under Review. Application
for Registration Under Domestic
Chemical Diversion Control Act of 1993
and Renewal Application for
Registration Under Domestic Chemical
Diversion Control Act of 1993 DEA
Forms 510 & 510A.
ACTION:
The Department of Justice (DOJ), Drug
Enforcement Administration (DEA) will
be submitting the following information
collection request to the Office of
Management and Budget (OMB) for
review and approval in accordance with
the Paperwork Reduction Act of 1995.
The proposed information collection is
published to obtain comments from the
public and affected agencies. This
proposed information collection was
previously published in the Federal
Register Volume 73, Number 004, page
1232 on January 7, 2008, allowing for a
60-day comment period.
The purpose of this notice is to allow
for an additional 30 days for public
comment until April 14, 2008. This
process is conducted in accordance with
5 CFR 1320.10.
Written comments and/or suggestions
regarding the items contained in this
notice, especially the estimated public
burden and associated response time,
should be directed to the Office of
Management and Budget, Office of
Information and Regulatory Affairs,
Attention Department of Justice Desk
Officer, Washington, DC 20503.
Additionally, comments may be
submitted to OMB via facsimile to (202)
395–5806.
Written comments and suggestions
from the public and affected agencies
concerning the proposed collection of
information are encouraged. Your
comments should address one or more
of the following four points:
—Evaluate whether the proposed
collection of information is necessary
for the proper performance of the
mstockstill on PROD1PC66 with NOTICES
11 In addition, if market conditions change during
the ten year effective period such that the
VerDate Aug<31>2005
16:19 Mar 12, 2008
Jkt 214001
60
125
580
Frm 00052
Fmt 4703
Sfmt 4703
(1) Type of Information Collection:
Extension of a Currently Approved
Collection.
(2) Title of the Form/Collection:
Application for Registration under
Domestic Chemical Diversion Control
Act of 1993 and Renewal Application
for Registration under Domestic
Chemical Diversion Control Act of 1993
DEA Forms 510 & 510A.
(3) Agency form number, if any, and
the applicable component of the
Department sponsoring the collection:
Form number: DEA Forms 510 and
510A.
Component: Office of Diversion
Control, Drug Enforcement
Administration, U.S. Department of
Justice.
(4) Affected public who will be asked
or required to respond, as well as a brief
abstract:
Primary: Business or other for-profit.
Other: None.
Abstract: The Domestic Chemical
Diversion Control Act requires that
manufacturers, distributors, importers,
and exporters of List I chemicals which
may be diverted in the United States for
the production of illicit drugs must
register with DEA. Registration provides
a system to aid in the tracking of the
distribution of List I chemicals.
(5) An estimate of the total number of
respondents and the amount of time
estimated for an average respondent to
respond:
Total hour
burden
0.5 hours .......
0.25 hours .....
0.5 hours .......
Department is able to determine that AT&T control
of Mid-Tex would no longer threaten competition,
PO 00000
Overview of This Information Collection
Burden
(minutes)
Respondents
DEA–510 (paper) .........................................................................................
DEA–510 (electronic) ...................................................................................
DEA–510A (paper) .......................................................................................
functions of the agency, including
whether the information will have
practical utility;
—Evaluate the accuracy of the agency’s
estimate of the burden of the
proposed collection of information,
including the validity of the
methodology and assumptions used;
—Enhance the quality, utility, and
clarity of the information to be
collected; and
—Minimize the burden of the collection
of information on those who are to
respond, including through the use of
appropriate automated, electronic,
mechanical, or other technological
collection techniques or other forms
of information technology, e.g.,
permitting electronic submission of
responses.
30
31.25
290
@ $10/hour =
$300
312.50
2,900
AT&T should then be permitted to acquire a
controlling interest in Mid-Tex.
E:\FR\FM\13MRN1.SGM
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]]>Agencies
[Federal Register Volume 73, Number 50 (Thursday, March 13, 2008)]
[Notices]
[Pages 13570-13575]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-4817]
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Antitrust Division
Public Comment and Response on Proposed Final Judgment
Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C.
Sec. 16(b)-(h), the United States hereby publishes below the comment
received on the proposed Final Judgment in United States v. AT&T, Inc.
and Dobson Communications Corporation, No. 1:07-CY-01952-ESH, which was
filed in the United States District Court for the District of Columbia
on March 4, 2008, together with the response of the United States to
the comment.
Copies of the comment and the response are available for inspection
at the Department of Justice Antitrust Division, 325 Seventh Street,
NW., Room 200, Washington, DC 20530, (telephone (202) 514-2481), and at
the Office of the Clerk of the United States District Court for the
District of Columbia, 333 Constitution Avenue, NW., Washington, DC
20001. Copies of any of these materials may be obtained upon request
and payment of a copying fee.
J. Robert Kramer, II,
Director of Operations, Antitrust Division.
In the United States District Court for the District of Columbia
Case No. 1:07-cv-1952 (ESH); United States of America, Plaintiff, v.
AT&T Inc. and Dobson Communications Corporation, Defendants; Plaintiff
United States's Response to Public Comments
Pursuant to the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h) (``APPA'' or ``Tunney Act''), the
United States hereby responds to the public comment received regarding
the proposed Final Judgment in this case. After careful consideration
of the comment, the United States continues to believe that the
proposed Final Judgment will provide an effective and appropriate
remedy for the antitrust violation alleged in the Complaint. The United
States will move the Court for entry of the proposed Final Judgment
after the public comments and this Response has been published in the
Federal Register, pursuant to 15 U.S.C. 16(d).
On October 30, 2007, the United States filed the Complaint in this
matter alleging that the proposed merger of two mobile wireless
telecommunications service providers, AT&T Inc. (``AT&T'') and Dobson
Communications Corporation (``Dobson''), would violate Section 7 of the
Clayton Act, 15 U.S.C. Sec. 18. Simultaneously with the filing of the
Complaint, the plaintiff filed a proposed Final Judgment and a
Preservation of Assets Stipulation and Order signed by the United
States and defendants consenting to the entry of the proposed Final
Judgment after compliance with the requirements of the Tunney Act.
Pursuant to those requirements, the United States filed a Competitive
Impact Statement (``CIS'') in this Court on October 30, 2007; published
the proposed Final Judgment and CIS in the Federal Register on November
19, 2007, see 72 FR 65,060 (2007); and published a summary of the terms
of the proposed Final Judgment and CIS, together with directions for
the submission of written comments relating to the proposed Final
Judgment, in the Washington Post for seven days beginning on November
18, 2007 and ending on November 24, 2007. The 60-day period for public
comments ended on January 22, 2008, and one comment was received as
described below and attached hereto.
I. Background
As explained more fully in the Complaint and CIS, the likely effect
of this acquisition would be to lessen competition substantially for
mobile wireless telecommunications services in seven (7) geographic
areas in the states of Kentucky, Missouri, Oklahoma, Pennsylvania and
Texas. To restore competition in these markets, the proposed Final
Judgment, if entered, would require defendants to divest (a) Dobson's
mobile wireless telecommunications services businesses and related
assets in three markets; (b) AT&T minority interests in other mobile
wireless telecommunications services providers in two markets, and (c)
Dobson's Cellular One Assets, which include the Cellular One service
mark and related assets. 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 punish violations thereof.
II. Legal Standard Governing the Court's Public Interest Determination
Upon publication of the public comments and this Response, the
United States will have fully complied with the Tunney Act. It will
then ask the Court to determine that entry of the proposed Final
Judgment would be ``in the public interest,'' and to enter it. 15
U.S.C. Sec. 16(e)(1). In making that determination, the court, in
accordance with the statute as amended in 2004,\1\ is required to
consider:
---------------------------------------------------------------------------
\1\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for court to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also United States
v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1, 11 (D.D.C. 2007)
(concluding that the 2004 amendments ``effected minimal changes'' to
Tunney Act review).
---------------------------------------------------------------------------
[[Page 13571]]
(A) The competitive impact of such judgment, including termination
of alleged violations, provisions for enforcement and modification,
duration of relief sought, anticipated effects of alternative remedies
actually considered, whether its terms are ambiguous, and any other
competitive considerations bearing upon the adequacy of such judgment
that the court deems necessary to a determination of whether the
consent judgment is in the public interest; and
(B) The impact of entry of such judgment upon competition in the
relevant market or markets, upon the public generally and individuals
alleging specific injury from the violations set forth in the complaint
including consideration of the public benefit, if any, to be derived
from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors,
the court's inquiry is necessarily a limited one as the government is
entitled to ``broad discretion to settle with the defendant within the
reaches of the public interest.'' United States v. Microsoft Corp., 56
F.3d 1448,1461 (D.C. Cir. 1995); see generally United States v. SBC
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public
interest standard under the Tunney Act).
As the United States Court of Appeals for the District of Columbia
Circuit has held, under the APPA a court considers, among other things,
the relationship between the remedy secured and the specific
allegations set forth in the government's complaint, whether the decree
is sufficiently clear, whether enforcement mechanisms are sufficient,
and whether the decree may positively harm third parties. See
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the
relief secured by the decree, a court may not ``engage in an
unrestricted evaluation of what relief would best serve the public.''
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (citing
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152
F. Supp. 2d 37, 40 (D.D.C. 2001). Courts have held that:
[t]he balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\
In determining whether a proposed settlement is in the public interest,
a district court ``must accord deference to the government's
predictions about the efficacy of its remedies, and may not require
that the remedies perfectly match the alleged violations.'' SEC
Commc'ns, 489 F. Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461
(noting the need for courts to be ``deferential to the government's
predictions as to the effect of the proposed remedies''); United States
v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003)
(noting that the court should grant due respect to the United States'
prediction as to the effect of proposed remedies, its perception of the
market structure, and its views of the nature of the case).
---------------------------------------------------------------------------
\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''); United States v. Gillette Co., 406 F. Supp.
713, 716 (D. Mass. 1975) (noting that, in this way, the court is
constrained to ``look at the overall picture not hypercritically,
nor with a microscope, but with an artist's reducing glass''). See
generally Microsoft, 56 F.3d at 1461 (discussing whether ``the
remedies [obtained in the decree are] so inconsonant with the
allegations charged as to fall outside of the `reaches of the public
interest' '').
---------------------------------------------------------------------------
Courts have greater flexibility in approving proposed consent
decrees than in crafting their own decrees following a finding of
liability in a litigated matter. ``[A] proposed decree must be approved
even if it falls short of the remedy the court would impose on its own,
as long as it falls within the range of acceptability or is 'within the
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co.,
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also
United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky.
1985) (approving the consent decree even though the court would have
imposed a greater remedy). To meet this standard, the United States
``need only provide a factual basis for concluding that the settlements
are reasonably adequate remedies for the alleged harms.'' SEC Commc'ns,
489 F. Supp. 2d at 17.
Moreover, the court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint, and does not authorize the court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459. Because the ``court's
authority to review the decree depends entirely on the government's
exercising its prosecutorial discretion by bringing a case in the first
place,'' it follows that ``the court is only authorized to review the
decree itself,'' and not to ``effectively redraft the complaint'' to
inquire into other matters that the United States did not pursue. Id.
at 1459-60. As this Court recently confirmed in SBC Communications,
courts ``cannot look beyond the complaint in making the public interest
determination unless the complaint is drafted so narrowly as to make a
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
In its 2004 amendments, Congress made clear its intent to preserve
the practical benefits of utilizing consent decrees in antitrust
enforcement, adding the unambiguous instruction that ``[n]othing in
this section shall be construed to require the court to conduct an
evidentiary hearing or to require the court to permit anyone to
intervene.'' 15 U.S.C. Sec. 16(e)(2). The language codified what the
Congress that enacted the Tunney Act in 1974 intended, as Senator
Tunney explained: ``[t]he court is nowhere compelled to go to trial or
to engage in extended proceedings which might have the effect of
vitiating the benefits of prompt and less costly settlement through the
consent decree process.'' 119 Congo Rec. 24,598 (1973) (statement of
Senator Tunney). Rather, the procedure for the public interest
determination is left to the discretion of the court, with the
recognition that the court's ``scope of review remains sharply
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC
Commc'ns, 489 F. Supp. 2d at 11.\3\
---------------------------------------------------------------------------
\3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the
court to make its public interest determination on the basis of the
competitive impact statement and response to comments alone''); S.
Rep. No. 93-298, 93d Cong., 1st Sess., at 6 (1973) (``Where the
public interest can be meaningfully evaluated simply on the basis of
briefs and oral arguments, that is the approach that should be
utilized.''); United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade
Cas. (CCH) ] 61,508, at 71,980 (W.D. Mo. 1977) (``Absent a showing
of corrupt failure of the government to discharge its duty, the
Court, in making its public interest finding, should* * * carefully
consider the explanations of the government in the competitive
impact statement and its responses to comments in order to determine
whether those explanations are reasonable under the
circumstances.'').
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[[Page 13572]]
III. Summary of Public Comment and the United States's Response
During the 60-day public comment period, the United States received
one comment--from Mid-Tex Cellular, Ltd. (``Mid-Tex''), a wireless
competitor to the merging firms in certain geographic areas--which is
attached hereto and summarized below. Upon review, the United States
believes that nothing in the comment warrants a change in the proposed
Final Judgment or is sufficient to suggest that the proposed Final
Judgment is not in the public interest. The comment, in essence, argues
that the United States should have identified, alleged, and remedied a
different competitive concern than the one explained in the United
States's Complaint. Copies of this Response and its attachment have
been mailed to Mid-Tex.
A. Factual Background: Texas RSA 9
The United States's Complaint alleges that the merger of AT&T and
Dobson would tend to lessen competition substantially, in violation of
Section 7 of the Clayton Act, in the provision of mobile wireless
telecommunications services in seven geographic areas, including Texas
RSA 9--the subject of Mid-Tex's comments. The competitive landscape in
Texas RSA 9 is somewhat complicated, and thus, this description is
provided to assist in understanding the comments of Mid-Tex, the nature
of the competitive concerns reflected in the United States's Complaint,
and how the proposed Final Judgment adequately redresses the concerns.
Throughout the United States, in each local geographic area the
Federal Communications Commission issues two cellular licenses, an ``A
side'' and a ``B side,'' in the 800 MHz spectrum band for the provision
of wireless service, as well as a number of PCS licenses in the 1900
MHz spectrum band. In rural areas, the cellular licenses are more
attractive to carriers than PCS licenses because the propagation
characteristics of this spectrum band allow sparsely populated areas to
be served more efficiently. Frequently in rural areas, holders of PCS
licenses do not fully build out their networks, except in areas where
the population density is higher or there are major highways.
In Texas RSA 9, Dobson controls one of the two cellular licenses--
the ``A-side'' license--throughout the entire RSA, and operates RSA-
wide using that license. The situation for the ``B-side'' cellular
license is much more complicated, as the license is split,
geographically, between three different carriers. Mid-Tex, an entity in
which AT&T had a minority interest,\4\ controls the ``B-side'' license
in five of the eleven counties that comprise the RSA, and a portion of
a sixth. AT&T controls the ``B-side'' license in two counties in the
RSA, and portions of three others.\5\ And, a third company, Alltel
Corporation, controls the ``B-side'' license in one county and a
portion of two others.
---------------------------------------------------------------------------
\4\ AT&T withdrew from the Mid-Tex Cellular, Ltd. partnership on
December 15, 2007, and thus, no longer has a minority interest in
Mid-Tex. This withdrawal was accomplished pursuant to Sections II.H
and Section IV of the proposed Final Judgment in this matter and
Section IV.B of the Preservation of Assets Stipulation and Order
signed by this Court on November 12, 2007, which requires the
defendants to comply with the proposed Final Judgment pending the
Judgment's entry.
\5\ It is these counties, where AT&T owns the cellular licenses,
that constitute the Texas RSA 9B1 and 9B4 partition areas that Mid-
Tex refers to in its comment. Texas RSA 9B1 includes Eastland County
and a portion of Erath County, and Texas RSA 9B4 includes Somervell
County and portions of Bosque County and Hill County. AT&T also
controls some PCS licenses throughout the RSA.
---------------------------------------------------------------------------
In conducting an investigation of the merger of two mobile wireless
providers, the United States does a fact-specific market-by-market
analysis that examines a number of factors, including, but not limited
to, the number of mobile wireless providers and their competitive
strengths and weaknesses, market shares of the merging companies and
other providers, the depth and breadth of coverage of providers and
whether providers could expand their existing coverage.\6\ In
investigating the proposed merger of AT&T and Dobson, the United States
considered the competitive effects of the combination of the Dobson and
AT&T wholly-owned wireless business in Texas RSA 9, as well as the
effect of AT&T retaining a minority interest in the Mid-Tex business
subsequent to acquiring the Dobson business. However, the United States
concluded that only the retention of the minority interest in Mid-Tex
raised competitive concerns in the RSA and alleged only that harm in
its Complaint.\7\
---------------------------------------------------------------------------
\6\ Competitive Impact Statement at 7-8.
\7\ In the Complaint, Texas RSA 9 is not alleged as an ``AT&T/
Dobson Overlap Market'' in which the combination of the two
businesses is the source of the competitive concern; instead, it is
listed in the portion of the Complaint which discusses ``AT&T
Minority Interest Markets'' and the competitive problem is described
as follows: ``[E]ither Dobson or the business in which AT&T has a
minority interest has the largest share and the other defendant is a
particularly strong and important competitor in all, or a large
part, of the RSA. * * * Post-merger, the merged firm would likely
have the ability and incentive to coordinate the activities of the
wholly-owned Dobson wireless business and the business in which it
has a minority stake, and/or undermine the ability of the latter to
compete against the former. Such activity would likely result in a
significant lessening of competition.'' Complaint ]] 21-22. Thus,
the competitive problem alleged by the United States in Texas RSA 9
is the combination of Dobson and Mid-Tex (minority owned by AT&T);
it is that problem--and only that problem--that the proposed decree
properly seeks to remedy.
---------------------------------------------------------------------------
With regard to the wholly-owned businesses, the United States did
not have sufficient reason to allege that the combination of the Dobson
and AT&T businesses would present a competitive concern. AT&T's
cellular license ownership is limited to a small minority of the
geographic area of the RSA--essentially a strip of two counties, and
portions of three others, along the northern border of the RSA.
Although it competes to a limited extent elsewhere in the RSA via its
PCS licenses,\8\ AT&T appears to be a strong competitor primarily only
in the areas where it is the cellular licensee. However, in that small
portion of the RSA, there are three other competitors offering wireless
service via a network built out utilizing their PCS spectrum: Sprint,
Verizon, and T-Mobile. Based on these facts, the United States did not
believe it could successfully allege and prove that the combination of
the Dobson and AT&T wholly-owned wireless businesses would be likely to
reduce competition substantially in the RSA, and thus, it made no such
allegation.
---------------------------------------------------------------------------
\8\ In the counties in this RSA where AT&T only has PCS
spectrum, its network is built out to a very limited extent,
covering less than 15% of the population.
---------------------------------------------------------------------------
On the other hand, Mid-Tex controls the cellular licenses for a
much larger portion of the RSA--five counties, and a portion of a
sixth. Moreover, the PCS carriers appear to have much less of a
competitive presence in that portion of the RSA (including very limited
networks) than in the area where AT&T controls the ``B side'' license.
It thus appears that Dobson and Mid-Tex are the two strongest
competitors in five-and-a-half counties which comprise a large portion
of the RSA, facing little effective competition there from the PCS
providers. Therefore, any significant diminution of either company's
ability to function as an independent, aggressive competitive
constraint likely would tend to lessen competition substantially. As
alleged in the Complaint, AT&T had important management and control
interests in Mid-Tex and thus, ``[p]ost-merger, the merged firm would
likely have the ability and incentive to coordinate the activities of
the wholly-owned Dobson wireless business and [Mid-Tex], and/or
undermine the ability of the latter to compete against the former.''
The United States sought to remedy the identified competitive problem
by including in the proposed Final
[[Page 13573]]
Judgment a requirement that the merged firm divest itself of the
minority interest in Mid-Tex.
B. Summary of Comment
Mid-Tex raises two concerns regarding Texas RSA 9. First, it
contends that the merged firm should be required to divest not only its
minority interest in Mid-Tex, but also either the Dobson ``A side''
cellular license throughout the entire RSA, or AT&T's other ``B side''
interests in the RSA.\9\ According to Mid-Tex, such a divestiture is
necessary ``for the same reasons'' that the United States concluded
that it was necessary for the merged firm to divest its interest in
Mid-Tex: It argues that in certain subdivisions of Texas RSA 9, the
merged firm would have ``well in excess of 70 percent of subscribers.''
Second, Mid-Tex argues that AT&T should not be prohibited from
reacquiring a non-controlling interest in Mid-Tex during the ten-year
term of the proposed Final Judgment. It contends that the proposed
decree's prohibition on reacquisition is unnecessarily broad in that a
reacquisition might not be harmful to competition if either (a) it was
completely passive, or (b) competitive conditions had changed by the
time of the proposed reacquisition.
---------------------------------------------------------------------------
\9\ Although Mid-Tex operates in Texas RSA 9, it appears from
its Web site that Mid-Tex does not compete in the Texas RSA 9B1 or
9B4 partition areas, the subdivisions that are the primary focus of
its comment.
---------------------------------------------------------------------------
C. Response
Mid-Tex does not take issue with the divestiture remedy embodied in
the Final Judgment as far as it goes (except for the reacquisition
provision), but instead contends that it does not go far enough:
Essentially, it argues that the United States should have identified,
and alleged, a different, additional competitive problem in its
Complaint and remedied that problem. Mid-Tex contends that the overlap
between the Dobson business, and the business controlled directly by
AT&T in the ``Texas 9B1 market'' and ``Texas 9B4 market'' \10\ pose a
competitive problem and that, therefore, the merged firm should be
required to divest either the Dobson or AT&T interests in those areas.
But as described above, the United States was unable to conclude that
the combination of the Dobson business and the wholly-owned AT&T
business was likely to reduce competition substantially in the alleged
geographic market, Texas RSA 9, due to the relatively small portion of
the RSA covered by AT&T's cellular licenses and the presence of
multiple other competitors in that portion.\11\ Accordingly, the United
States did not allege that the combination of the Dobson and wholly-
owned AT&T businesses posed a competitive concern in this RSA, nor did
it seek to remedy any such concern.
---------------------------------------------------------------------------
\10\ The geographic market as alleged in the United States'
Complaint is represented by all of Texas RSA 9; the United States
did not allege a ``partitioned Texas 9B1 market'' or ``Texas 9B4
market'' as referred to by Mid-Tex. See Mid-Tex Comment at 2-3.
\11\ Mid-Tex claims that, according to its estimates, in the
Texas RSA 9B1 and 9B4 portions of the RSA, the combined Dobson and
AT&T businesses ``serve 90-95% of wireless subscribers.'' It,
however, provides no source for those estimates and, indeed, those
estimates are not supported by the information reviewed by the
United States.
---------------------------------------------------------------------------
With regard to Mid-Tex's second concern, regarding the
reacquisition clause, it is typical for antitrust consent decrees
containing a divestiture remedy to bar the merged firm from reacquiring
the divested assets during the ten-year term of the decree. Such a
provision is typically included because, except in unusual
circumstances, it would defeat the purposes of a divestiture to allow
the merged firm to simply reacquire the divested assets. Mid-Tex
contends that if AT&T were to reacquire a ``truly passive'' non-
controlling interest in Mid-Tex, it would not pose a competitive
concern. But this is not necessarily the case: In some circumstances,
even a passive interest can have anticompetitive consequences, e.g.,
reducing the incentives of the merged firm to use its wholly-owned
business in the market in question to compete aggressively. A bright
line prohibition on reacquisition--similar to that contained in
numerous prior consent decrees entered by this Court \12\--ensures easy
administrability as well as the ultimate success of the proposed
divestiture, and it does so in a way that causes no undue harm to
consumers or other third parties.\13\
---------------------------------------------------------------------------
\12\ See, e.g., United States v. Amsted Industries, Inc., ] XII,
No. 1:07-cv-00710 (JDB) (D.D.C. July 16, 2007) (Final Judgment),
available at https://www.usdoj.gov/atr/cases/f224900/224931.htm;
United States v. Cal Dive Int'l, Inc., ] XII, No. 1:05CY02041 (EGS)
(D.D.C. Jan. 12, 2006) (Final Judgment), available at https://
www.usdoj.gov/atr/cases/f213100/213177.htm; United States v.
Cingular Wireless Corp., ] XI, No. 1:04CY01850 (RBW) (D.D.C. Mar.
14, 2005) (Final Judgment), available at https://www.usdoj.gov/atr/
cases/f208000/208093.htm.
\13\ Mid-Tex briefly suggests that the no reacquisition
prohibition could harm Mid-Tex. But, it is difficult to see why
barring one out of an almost infinite number of possible investors
from purchasing an interest in a company is, in itself, likely to
cause undue harm to that company. Indeed, if the only entity willing
to invest in a firm were one of its most important direct
competitors, that in itself might warrant at least some reason for
competitive concern.
---------------------------------------------------------------------------
Moreover, Mid-Tex contends that ``if market conditions change''
during the term of the proposed Final Judgment, a reacquisition by AT&T
would not necessarily threaten competition. But this is the case in
every antitrust consent decree: Market conditions can always change in
a way that moot the need for a decree, or any specific provisions
thereof. If market conditions change, the appropriate solution is a
motion to modify the decree. The United States has supported a motion
to modify, and the Court has modified, the reacquisition clause in
appropriate circumstances.\14\ The fact that market conditions might
change in the future is not a reason to modify or delete otherwise
important provisions from a decree before it has even been entered.
---------------------------------------------------------------------------
\14\ See, e.g., U.S. v. SBC Commc'ns, Inc., 339 F. Supp.2d 116
(D.D.C. 2004) (modifying reacquisition clause of Final Judgment).
---------------------------------------------------------------------------
IV. Conclusion
After careful consideration of this public comment, the United
States still concludes that entry of the proposed Final Judgment will
provide an effective and appropriate remedy for the antitrust violation
alleged in the Complaint and is, therefore, in the public interest.
Pursuant to Section 16(d) of the Tunney Act, the United States is
submitting the public comment and its Response to the Federal Register
for publication. After the comments and its Response are published in
the Federal Register, the United States will move this Court to enter
the proposed Final Judgment.
Respectfully submitted,
Hillary B. Burchuk (DC Bar No. 366755)
Lawrence M. Frankel (DC Bar No. 441532)
Attorney, 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.
Certificate of Service
I hereby certify that on March 4, 2008, a copy of the foregoing
Plaintiff United States' Response to Public Comments was mailed via
first class mail, postage prepaid, upon counsel for Mid-Tex Cellular,
Ltd., addressed as follows: Michael R. Bennet, Bennet & Bennet, PLLC,
4350 East West Highway, Suite 201, Bethesda, MD 20814.
Hillary B. Burchuk (DC Bar No. 366755),
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 13574]]
Before the United States Department of Justice
In the Matter of
United States of America v. AT&T Inc. and Dobson Communications
Corporation, U.S. District Court for the District of Columbia Case No.
1:07-cv-01952; Proposed Final Judgment and Competitive Impact Statement
Comments of Mid-Tex Cellular. Ltd.
Mid-Tex Cellular, Ltd. (``Mid-Tex''), by its attorneys, and
pursuant to the Notice published November 19, 2007 in the Federal
Register (Vol. 72, No. 222), hereby submits its comments on the
proposed settlement in the above-captioned U.S. District Court
proceeding. In its Competitive Impact Statement (``CIS'') filed by the
Antitrust Division of the U.S. Department of Justice (``Department'')
in that proceeding, the Department concluded that AT&T Inc.'s
(``AT&T'') proposed acquisition of Dobson Communications Corporation
(``Dobson'') will likely substantially lessen competition, in violation
of Section 7 of the Clayton Act, in the provision of mobile wireless
telecommunications services in the Texas RSA-9 (CMA 660) market
(``Texas RSA-9''), among other markets.\1\ The Department filed a
proposed Final Judgment which requires AT&T to divest its interest in
Mid-Tex. For the reasons stated in its petition opposing the transfer
of control of Dobson's wireless radio licenses to AT&T, filed with the
Federal Communications Commission on August 27, 2007 (``Petition'')
\2\, Mid-Tex, with one exception, supports the proposed Final Judgment
as it relates to the proposed divestiture of AT&T's interest in Mid-
Tex.\3\ For the same reasons as well as those stated below, Mid-Tex
urges the Department to require the divestiture of a portion of AT&T's
remaining interests in Texas RSA-9.\4\
---------------------------------------------------------------------------
\1\ United States v. AT&T Inc. and Dobson Communications
Corporation; Proposed Final Judgment and Competitive Impact
Statement, 72 FR 65060 (Department of Justice Antitrust Division
Nov. 19, 2007).
\2\ A copy of the Petition was submitted to the Department by
letter dated August 29, 2007.
\3\ As discussed in Section II infra, Mid-Tex opposes a ten year
restriction on AT&T reacquiring any ownership interest in Mid-Tex.
\4\ Mid-Tex's position herein is not intended to address and
should not be construed as its concurrence that the actions taken or
proposed herein resolve all anti-competitive issues resulting from
AT&T's actions in Texas RSA-9.
---------------------------------------------------------------------------
I. The Department Should Require AT&T To Divest a Portion of Its
Wireless Interests Throughout Texas RSA-9
Specifically, Mid-Tex requests that the Department require AT&T to
divest either: (1) The A band license for the Texas RSA-9 market held
by Dobson Cellular Systems, Inc., a wholly owned subsidiary of Dobson;
or (2) its ownership interests in Texas 9B1 Limited Partnership, the
Cellular B Block licensee in the partitioned Texas 9B1 market, and the
license for the partitioned Texas 9B4 market held by AT&T Mobility
Texas, LLC, a wholly owned subsidiary of AT&T. As discussed below, for
the same reasons the Department has found divestiture of AT&T's
interests in Mid-Tex to be necessary, the further divestiture of AT&T's
interests in the Texas 9 RSA is also necessary.
The proposed Final Judgment requires the divestiture of AT&T's
minority interest in Mid-Tex. The Department found that, without such
divestiture, the merged AT&T ``would likely have the ability and
incentive to coordinate the activities of the wholly-owned Dobson
wireless business and the business in which it has a minority stake,
and/or undermine the ability of the latter to compete against the
former'' and that ``[s]uch activity would likely result in a
significant lessening of competition'' in violation of Section 7 of the
Clayton Act.\5\ The Department reached this conclusion based on its
finding that in Texas RSA-9 the businesses in which AT&T and Dobson
have an interest collectively account for in excess of 70 percent of
subscribers and that AT&T has significant rights under the Mid-Tex
partnership agreement to control core business decisions, obtain
critical confidential competitive information, and share in profits at
a rate significantly greater than the equity ownership share upon a
sale of the partnership.\6\
---------------------------------------------------------------------------
\5\ Department of Justice Complaint in the above-captioned
proceeding (``Complaint'') at par. 22; Competitive Impact Statement
(``CIS''), 72 FR at 65072. The Department found that in Texas RSA-9
``the merged firm will have the incentive and ability to increase
prices, diminish the quality or quantity of services provided, and
refrain from or delay making investments in network improvements.''
72 FR at 65072.
\6\ Id. at pars. 21-22.
---------------------------------------------------------------------------
In the partitioned Texas 9B1 market, the businesses in which AT&T
and Dobson have an interest collectively account for well in excess of
70 percent of subscribers,\7\ and, as the sole general partner in Texas
RSA 9B1 Limited Partnership, AT&T has a controlling interest in that
entity.\8\ In the partitioned Texas 9B4 market, AT&T and Dobson
collectively account for well in excess of 70 percent of
subscribers.\9\
---------------------------------------------------------------------------
\7\ By Mid-Tex's estimation, Dobson and the AT&T controlled
Texas RSA 9B1 Limited Partnership serve 90-95% of wireless
subscribers in the partitioned Texas RSA 9B1 market.
\8\ See FCC Ownership Disclosure Information for the Wireless
Telecommunications Services (FCC Form 602) filed by Texas RSA 9B1
Limited Partnership on February 26, 2007. New Cingular Wireless PCS
(``NCW PCS'') holds a one percent general partnership interest in
Texas RSA 9B1 Limited Partnership. Id. at Exhibit 1. NCW PCS is a
wholly owned subsidiary of Cingular Wireless II, LLC, which has two
members: AT&T Mobility LLC f/k/a Cingular Wireless LLC (``AT&T
Mobility) (57%) and New Cingular Wireless Services, Inc. (``NCWS'')
(43%). Id. NCWS is a direct wholly owned subsidiary of AT&T
Mobility, which, in turn, is an indirect wholly owned subsidiary of
AT&T. SWBW B-Band Development LLC (``SWBW''), a wholly owned
subsidiary of NCW PCS, holds a 43.1449% limited partnership interest
in Texas RSA 9B1 Limited Partnership. Id.
\9\ As discussed above, the B Block cellular license is held by
AT&T Mobility Texas, LLC, a wholly owned subsidiary of AT&T. By Mid-
Tex's estimation, Dobson and AT&T serve 90-95% of wireless
subscribers in the partitioned Texas RSA 9B4 market.
---------------------------------------------------------------------------
The Department recognizes that in Texas RSA-9, ``either Dobson or
the business in which AT&T has a minority interest has the largest
share and the other firm is a particularly strong and important
competitor in all, or a large part, of the RSA.'' Due to the combined
market share throughout the RSA, the Department should treat the
remainder of Texas RSA-9 as it has already decided to treat Texas RSA-
9B2, and require AT&T to divest a portion of its remaining interests in
the market. To allow AT&T to retain wireless interests it holds
outright or through a controlling general partnership interest, while
requiring it to divest minority, yet controlling, limited partnership
interests is inconsistent and without justifiable basis.\10\
---------------------------------------------------------------------------
\10\ Conversely, if divestiture is not required in the remainder
of Texas RSA-9, it should not be required in Texas RSA 9B2. The
entire market should be treated consistently.
---------------------------------------------------------------------------
II. AT&T Should Not Be Prohibited From Reacquiring a Non-Controlling
Interest in Mid-Tex
Although Mid-Tex supports the Department's decision to condition
merger approval on AT&T's divestiture of its interest in Mid-Tex in
Texas 9B2, Mid-Tex opposes the proposed condition that AT&T be barred
from reacquiring any part of its interest in Mid-Tex during the
proposed ten year term of the Final Judgment. The Department's
rationale for the divestiture requirement in Texas 9B2 is AT&T's
ability to control Mid-Tex through rights granted to it under the
partnership agreement. If AT&T wishes
[[Page 13575]]
to reinvest in Mid-Tex as a truly passive investor within the ten year
effective period of the Final Judgment, it should not be prohibited
from doing so. Such a prohibition will harm only Mid-Tex and not
competition in Texas 9B2. Such reacquisition of divestiture assets
should not be permitted, however, absent Department review of the
amended limited partnership agreement, to enable the Department to
ensure that AT&T has not regained rights to control core business
decisions, obtain critical confidential competitive information, and
share in profits at a rate significantly greater than the equity
ownership share upon a sale of the partnership.\11\
---------------------------------------------------------------------------
\11\ In addition, if market conditions change during the ten
year effective period such that the Department is able to determine
that AT&T control of Mid-Tex would no longer threaten competition,
AT&T should then be permitted to acquire a controlling interest in
Mid-Tex.
---------------------------------------------------------------------------
III. Conclusion
For the foregoing reasons, Mid-Tex respectfully requests that the
Department require the additional divestitures discussed herein, and
permit AT&T to reacquire a limited interest in Mid-Tex as discussed
herein. Should the Department have any questions regarding the matters
addressed herein, please communicate directly with the undersigned.
Dated: January 18, 2008.
Respectfully submitted,
MID-TEX CELLULAR, LTD.,
Michael R. Bennet,
Bennet & Bennet, PLLC, 4350 East West Highway, Suite 201, Bethesda, MD
20814, 202-371-1500.
cc: Hillary Burchuk
Declaration of Toney Prather
I, Toney Prather, do hereby declare under penalty of perjury the
following:
1. I am the Manager of, and President of the sole member of the
managing general partner of, Mid-Tex Cellular, Ltd.
2. I have read the foregoing Comments of Mid-Tex Cellular Ltd. I
have personal knowledge of the facts set forth therein, and believe
them to be true and correct.
Dated: January 11, 2008.
Toney Prather.
[FR Doc. E8-4817 Filed 3-12-08; 8:45 am]
BILLING CODE 4410-11-M
