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BellSouth buyout gets Justice's OK



Published: Thu, October 12, 2006 @ 12:00 a.m.



FCC approval is the last hurdle needed for the large phone merger.

WASHINGTON (AP) -- AT & amp;T's 78.5 billion buyout of BellSouth Corp. won Justice Department approval Wednesday, a decision that sets the stage for further reuniting modernized parts of the old Ma Bell phone monopoly broken up by the government in 1984.

The Justice Department approved the deal without conditions, which leaves the Federal Communications Commission as the final hurdle to the merger creating the nation's biggest provider of phone, wireless and broadband Internet services.

The decision was immediately criticized by the FCC's two Democratic members -- Jonathan S. Adelstein and Michael Copps, who characterized it as "a reckless abandonment of DoJ's responsibility" to protect consumers and smaller businesses.

Copps called it a "lights-off" decision.

Said Adelstein: "By failing to issue a complaint, consent decree, or condition, it appears DoJ took a dive on one of the largest mergers in history just to avoid further court scrutiny."

The FCC is scheduled to vote on the matter today, though there's been speculation the agency may hold off because of a possible deadlock. In addition, members of Congress have raised questions about the deal's possible impact on market competition.

Consequences of approval

If the deal wins final government approval, the merger would give San Antonio-based AT & amp;T Inc. total control over the nation's largest cellular provider, Cingular Wireless, a joint venture of the two phone companies that serves 57.3 million customers.

"After thoroughly investigating AT & amp;T's proposed acquisition of BellSouth, the Antitrust Division determined that the proposed transaction is not likely to reduce competition substantially," said Assistant Attorney General Thomas O. Barnett, who heads the division.

The department's unconditional approval "underscores the competitive nature of our industry and the pro-competitive benefits of this merger," AT & amp;T General Counsel James D. Ellis said in a statement.

Critics claim the government is well on its way to reconstituting the old Ma Bell monopoly, which was broken up after a lengthy court battle.

The House Judiciary Committee's chairman, Rep. James Sensenbrenner, R-Wis., and other members of Congress had asked that the deal be held up until details related to two previous telecommunications mergers are settled and other concerns are addressed.

Criticism

A coalition of consumer groups issued a statement condemning the Justice Department, saying the merger is "likely to leave consumers with fewer choices and inflated prices for a host of services."

The deal will further the reunification of the Baby Bells, the seven regional telephone operators and one long-distance provider that were spun off from the national AT & amp;T monopoly under a federal court order designed to introduce competition.

Including BellSouth, the new AT & amp;T would consist of four Baby Bells and the long-distance business, which was acquired by the company late last year. The other two Bells are Verizon Communications Inc., which dominates the eastern United States, and Qwest Communications International Inc., the phone company for most of the Rocky Mountain and Northwest regions.




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