JURIST - Paper Chase: DOJ reaches settlement allowing telecom merger

[JURIST] AT&T [corporate website] and the US Department of Justice [official website] reached a consent decree [press release] Tuesday under which the telecommunications giant agreed to sell assets in seven rural US markets in exchange for DOJ approval of AT&T's acquisition of Dobson Communications Corp. [corporate website] and the withdrawal of the DOJ's lawsuit seeking to block the merger. The DOJ required the sale of AT&T assets in seven markets in five states to prevent harm to competition because Dobson also dominated those cellular markets. The acquisition of Dobson for $13 per share was announced last June, and will increase AT&T's customer base by 1.7 million subscribers. It would, however, have opened the door for AT&T to increase prices and decrease the quality of customer service in the identified markets. According to DOJ Antitrust Division Chief Thomas O. Barnett [official profile]: "The required divestitures will preserve competition for residents in rural areas in Kentucky, Oklahoma, Missouri, Pennsylvania and Texas and ensure that these consumers continue to enjoy the benefits of competition, such as lower prices, and higher quality."

Although the DOJ has tentatively approved the merger contingent upon AT&T's divestiture of the seven rural markets, the transaction still requires the approval of the Federal Communications Commission (FCC) [official website]. The DOJ has said that its investigators and the FCC have cooperated in scrutinizing the AT&T-Dobson deal. To garner FCC approval, AT&T will be required to limit the amount of subsidization it receives from the Universal Service Fund [FCC backgrounder], which provides funding for increased access to telecommunications across the US, especially in low income, rural, insular, and high cost areas. In addition, the DOJ on Tuesday filed a complaint challenging the merger in the US District Court for the District of DC, which will be withdrawn if and when AT&T sells the assets, which includes divestiture of the rights to the Cellular One brand owned by Dobson. Dow Jones has more.

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