United States v. Bell Atlantic Corporation et al.; Proposed Final Judgment and Competitive Impact Statement

DEPARTMENT OF JUSTICE

Antitrust Division

United States v. Bell Atlantic Corporation et al.; Proposed Final

Judgment and Competitive Impact Statement

Notice is hereby given pursuant to the Antitrust Procedures and

Penalties Act, 15 U.S.C. Section 16(b) through (h), that a proposed

Final Judgment and Competitive Impact Statement has been filed with the

United States District Court for the District of Columbia in United

States of America v. Bell Atlantic Corporation et al., Civil Action 99-

1119 (LFO). On December 9, 1999, the United States filed a Supplemental

Complaint alleging that the proposed merger of GTE Corporation and Bell

Atlantic Corporation and the proposed partnership between Vodafone

AirTouch Plc and Bell Atlantic Corporation would lessen competition in

the markets for wireless mobile telephone services in 13 major trading

areas, and 96 metropolitan statistical areas and rural service areas in

violation of Section 7 of the Clayton Act, 15 U.S.C. 18. The proposed

Final Judgment, filed at the same time as the Supplemental Complaint,

requires defendants to divest one of their two wireless telephone

businesses in each market where these businesses overlap

geographically. The proposed Final Judgment supersedes the proposed

decree filed in May 1999 which predated Bell Atlantic Corporation's

September 1999 partnership agreement with Vodafone AirTouch Plc and

therefore related solely to the merger of Bell Atlantic Corporation and

GTE Corporation. Copies of the Complaint, proposed Final Judgment and

Competitive Impact Statement are available for inspection at the

Department of Justice in Washington, DC in Room 200, 325 Seventh

Street, NW, and at the Office of the Clerk of the United States

District Court for the District of Columbia. These materials are also

located on the Antitrust Division's web site (www.usdoj.gov/atr/

cases.html).

Public comment is invited within 60 days of the date of this

notice. Such comments, and responses thereto, will be published in the

Federal Register and filed with the Court. Comments should be directed

to Donald J. Russell, Chief, Telecommunications Task Force, Antitrust

Division, Department of Justice, 1401 H Street, NW, Room 8000,

Washington, DC 20530 (telephone: (202) 514-5621).

Constance K. Robinson,

Director of Operations.

Stipulation

It is stipulated by and between the undersigned parties, by their

respective attorneys, as follows:

(1) The Court has jurisdiction over the subject matter of this

action and over each of the parties hereto, and venue of this action is

proper in this Court.

(2) The parties stipulate that a Final Judgment in the form hereto

attached may be filed and entered by the Court, upon the motion of any

party or upon the Court's own motion, at any time after compliance with

the requirements of the Antitrust Procedures and Penalties Act, 15

U.S.C. 16, and without further notice to any party or other

proceedings, provided that plaintiff has not withdrawn its consent,

which it may do at any time before entry of the proposed Final Judgment

by serving notice thereof on defendants and by filing that notice with

the Court.

(3) Defendants shall abide by and comply with the provisions of the

proposed Final Judgment pending entry of the Final Judgment by the

Court, or until expiration of time for all appeals of any Court ruling

declining entry of the proposed Final Judgment, and shall, from the

date of the signing of this Stipulation, comply with all the terms and

provisions of the proposed Final Judgment as though the same were in

full force and effect as an order of the Court.

(4) This Stipulation shall apply with equal force and effect to any

amended proposed Final Judgment agreed upon in writing by the parties

and submitted to the Court.

[[Page 506]]

(5) In the event plaintiff withdraws its consent, as provided in

paragraph (2) above, or in the event that the Court declines to enter

the proposed Final Judgment pursuant to this Stipulation, the time has

expired for all appeals of any Court ruling declining entry of the

proposed Final Judgment, and the Court has not otherwise ordered

continued compliance with the terms and provisions of the proposed

Final Judgment, then the parties are released from all further

obligations under this Stipulation, and the making of this Stipulation

shall be without prejudice to any party in this or any other

proceeding.

(6) Defendants represent that the divestiture ordered in the

proposed Final Judgment can and will be made, and that defendants will

later raise no claims of hardship or difficulty as grounds for asking

the Court to modify any of the divestiture provisions contained

therein.

Dated: December 6, 1999.

For Plaintiff United States of America:

Joel I. Klein,

Assistant Attorney General.

A. Douglas Melamed,

Principal Deputy Assistant Attorney General.

Constance K. Robinson,

Director of Operations and Merger Enforcement.

Donald J. Russell,

Chief, Telecommunications Task Force.

Laury Bobbish,

Assistant Chief, Telecommunications Task Force.

Hillary B. Burchuk, D.C. Bar No. 366755;

Lawrence M. Frankel; D.C. Bar No. 441532.

Susan Wittenberg; D.C. Bar No. 453692;

Attorneys, Telecommunications Task Force.

U.S. Department of Justice, Antitrust Division, 1401 H Street, N.W.,

Suite 8000, Washington, D.C. 20530, (202) 514-5621.

Date Signed: December 6, 1999.

For Bell Atlantic Corporation:

John Thorne,

D.C. Bar No. 421351, Bell Atlantic Corporation, 1320 North Courthouse

Road, Eighth Floor, Arlington, Virginia 22201, (703) 974-1600.

Date Signed: December 6, 1999.

For GTE Corporation:

Steven G. Bradbury,

D.C. Bar No. 416430, Kirkland & Ellis, 655 15th Street, N.W.,

Washington, DC 20005, (202) 879-5000.

Date Signed: December 6, 1999.

For Vodafone Airtouch PLC

Megan Pierson,

AirTouch Communications, Inc., One California Street, San Francisco, CA

94111, (415) 658-2157.

Date Signed: December 3, 1999.

Stipulation Approved for Filing.

Done this ______ day of December, 1999.

----------------------------------------------------------------------

United States District Judge

Final Judgment

Whereas, plaintiff, United States of America, filed its Motion for

Leave to File Supplemental Complaint on December 6, 1999.

And whereas, plaintiff and defendants, by their respective

attorneys, have consented to the entry of this Final Judgment without

trial or adjudication on any issue of fact or law;

And whereas, entry of this Final Judgment does not constitute any

evidence against or an admission by any party with respect to any issue

of law or fact;

And whereas, defendants have further consented to be bound by the

provisions of the Final Judgment pending its approval by the Court;

And whereas, plaintiff the United States believes that entry of

this Final Judgment is necessary to protect competition in markets for

mobile wireless telecommunications services in Alabama, Arizona,

California, Florida, Idaho, Illinois, Indiana, Montana, New Mexico,

Ohio, South Carolina, Texas, Virginia, Washington and Wisconsin.

And whereas, the essence of this Final Judgment is prompt and

certain divestiture of certain wireless businesses that would otherwise

be commonly owned and in many cases controlled, including their

licenses and all relevant assets of the wireless businesses, and the

imposition of related injunctive relief to ensure that competition is

not substantially lessened;

And whereas, plaintiff the United States requires that defendants

make certain divestitures of such licenses and assets for the purpose

of ensuring that competition is not substantially lessened in any

relevant market for mobile wireless telecommunications services in

Alabama, Arizona, California, Florida, Idaho, Illinois, Indiana,

Montana, New Mexico, Ohio, South Carolina, Texas, Virginia, Washington

and Wisconsin.

And whereas, defendants have represented to plaintiff that the

divestitures ordered herein can and will be made and that defendants

will not raise any claims of hardship or difficulty as grounds for

asking the Court to modify any of the divestiture provisions contained

herein below;

Therefore, before the taking of any testimony, and without trial or

adjudication of any issue of fact or law herein, and upon consent of

the parties hereto, it is hereby ordered, adjudged and decreed:

I. Jurisdiction

This Court has jurisdiction of the subject matter of this action

and of each of the parties consenting to this Final Judgment. The

Supplemental Complaint states a claim upon which relief may be granted

against defendants under Section 7 of the Clayton Act, 15 U.S.C. 18, as

amended.

II. Definitions

A. ``Bell Atlantic'' means Bell Atlantic Corporation, a corporation

with its headquarters in New York City, New York and includes its

successors and assigns, its subsidiaries and affiliates, and the

directors, officers, managers, agents and employees acting for or on

behalf of any of the foregoing entities.

B. ``Bell Atlantic/GTE Merger'' means the merger of Bell Atlantic

and GTE, as detailed in the Agreement and Plan of Merger entered into

Bell Atlantic and GTE on July 28, 1998.

C. ``Bell Atlantic/Vodafone Partnership'' means the partnership

between Bell Atlantic and Vodafone as detailed in the U.S. Wireless

Alliance Agreement among Bell Atlantic Corporation and Vodafone

AirTouch Plc dated September 21, 1999.

D. ``GTE'' means GTE Corporation, a corporation with its

headquarters in Irving, Texas and includes its successors and assigns,

its subsidiaries and affiliates, and the directors, officers, managers,

agents and employees acting for or on behalf of any of the foregoing

entities.

E. ``Overlapping Wireless Markets'' means the following

Metropolitan Statistical Areas (``MSA''), Major Trading Areas

(``MTA''), and Rural Service Areas (``RSA'') used to define cellular

and PCS license areas by the Federal Communications Commission

(``FCC''), in which, as of the date of the filing of the Motion for

Leave to File Supplemental Complaint in this case, Bell Atlantic and

GTE held an interest in cellular and PCS businesses, and Vodafone held,

or has plans to acquire,\1\ an ownership interest in cellular and PCS

businesses which serve the following MTAs, MSAs and RSAs that

geographically overlap with the cellular and/or PCS business of another

defendant, as indicated:

---------------------------------------------------------------------------

\1\ Pursuant to a July 18, 1999 purchase agreement, Vodafone

plans to acquire interests in cellular businesses from CommNet

Cellular Inc. (``CommNet'') that overlap with GTE's PCS business in

the following RSAs: Idaho 2-Idaho RSA; Montana 1-Lincoln RSA.

---------------------------------------------------------------------------

I. Cellular/Cellular Overlap Areas

A. Bell Atlantic Cellular/Vodafone Cellular Overlap Areas

1. Arizona

[[Page 507]]

a. Phoenix MSA

b. Tucson MSA

c. Arizona 2-Coconino RSA

2. New Mexico

a. Albuquerque MSA

B. Bell Atlantic Cellular/GTE Cellular Overlap Areas

1. Mew Mexico

a. Las Cruces MSA

2. South Carolina

a. Greenville MSA

b. Anderson MSA

3. Texas

a. El Paso MSA

C. GTE Cellular/Vodafone Cellular Overlap Areas

1. California

a. Salinas-Monterey-Seaside MSA

b. San Diego MSA

c. San Francisco MSA

d. San Jose MSA

e. Santa Rosa-Petaluma MSA

f. Vallejo-Napa-Fairfield MSA

2. Ohio

a. Akron MSA

b. Canton MSA

c. Cleveland MSA

d. Lorain-Elyria MSA

e. Ohio 3-Ashtabula RSA

II. PCS/Cellular Overlap Areas

A. PrimeCo PCS/GTE Cellular Overlap Areas \2\

---------------------------------------------------------------------------

\2\ Bell Atlantic and Vodafone, as of the date of the filing of

the Motion for Leave to File Supplemental Complaint, are partners in

PCS Prime-Co, L.P. (``PrimeCo''). PrimeCo currently operates PCS

businesses in ten MTAs, which geographically overlap with GET's

cellular businesses.

---------------------------------------------------------------------------

1. Jacksonville MSA

a. Jacksonville MSA

b. Florida 5-Putnam RSA

2. Miami-Fort Lauderdale MTA

a. Fort Myers MSA

b. Florida 1-Collier (B1) RSA

c. Florida 2-Glades (B1) RSA

d. Florida 3-Hardee RSA

e. Florida 11-Monroe (B2) RSA

3. Tampa-St. Petersburg-Orlando MTA

a. Tampa-St. Petersburg MSA

b. Lakeland-Winter Haven MSA

c. Sarasota MSA

d. Bradenton MSA

e. Florida 2-Glades (B1) RSA

f. Florida 3-Hardee RSA

g. Florida 4-Citrus (B1) RSA

4. New Orleans-Baton Rouge MTA

a. Mobile, AL MSA

b. Pensacola, FL MSA

5. Chicago MTA

a. Auroa-Elgin, IL MSA

b. Bloomington-Normal, IL MSA

c. Champaign-Urbana-Rantoul, IL MSA

d. Chicago, IL MSA

e. Decatur, IL MSA

f. Fort Wayne, IN MSA

g. Gary-Hammond-East Chicago, IN MSA

h. Joliet, IL MSA

i. Kankakee, IL MSA

J. Rockford, IL MSA

k. Springfield, IL MSA

l. Illinois 1-Jo Daviess RSA

m. Illinois 2-Bureau (B1) RSA

n. Illinois 2-Bureau (B3) RSA

o. Illinois 4-Adams (B1) RSA

p. Illinois 5-Mason (B2) RSA

q. Illinois 6-Montgomery RSA

r. Illinois 7-Vermilion RSA

s. Indiana 1-Newton (B1) RSA

t. Indiana 1-Newton (B2) RSA

u. Indiana 3-Huntington RSA

6. Dallas-Fort Worth MTA

a. Dallas-Fort Worth MSA

b. Austin MSA

c. Sherman-Denison MSA

d. Texas 10-Navarro (B3) RSA

e. Texas 11-Cherokee (B1) RSA

f. Texas 16-Burleson RSA

7. Houston MTA

a. Houston MSA

b. Beaumont-Port Arthur MSA

c. Galveston MSA

d. Bryan-College Station MSA

e. Victoria MSA

f. Texas 10-Navarro (B3) RSA

g. Texas 11-Cherokee (B1) RSA

h. Texas 16-Burleson RSA

i. Texas 17-Newton RSA

j. Texas 20-Wilson (B2) RSA

k. Texas 21-Chambers RSA

8. San Antonio MTA

a. San Antonio MSA

b. Texas 16-Burleson RSA

c. Texas 20-Wilson (B2) RSA

9. Richmond-Norfolk MTA

a. Norfolk-Virginia Beach-Portsmouth MSA

b. Richmond MSA

c. Newport News--Hampton MSA

d. Petersburg--Colonial Heights MSA

e. Virginia 7--Buckingham (B1) RSA

f. Virginia 8--Amelia RSA

g. Virginia 9--Greensville RSA

h. Virginia 11--Madison (B1) RSA

i. Virginia 12--Caroline (B1) RSA

j. Virginia 12--Caroline (B2) RSA

10. Milwaukee MTA

a. Wisconsin 8--Vernon RSA

B. GTE PCS/Vodafone Cellular Overlap Areas

1. Cincinnati--Dayton MTA

a. Cincinnati MSA

b. Dayton MSA

c. Hamilton/Middleton MSA

d. Springfield MSA

e. Ohio 4--Mercer RSA

f. Ohio 8--Clinton RSA

2. Seattle MTA

a. Bellingham MSA

b. Bremerton MSA

c. Olympia MSA

d. Seattle--Everett MSA

e. Tacoma MSA

f. Washington 1--Clallam RSA

g. Washington 2--Okanagan RSA

h. Washington 4--Gray's Harbor RSA

3. Spokane--Billings MTA

a. Spokane MSA

b. Idaho 1--Boundary RSA

c. Idaho 2--Idaho RSA

d. Montana 1--Lincoln RSA

e. Washington 3--Ferry RSA

F. ``Vodafone'' means Vodafone AirTouch Plc, an English public

limited company with its headquarters in Newbury, Berkshire, England,

and includes its successors and assigns, its subsidiaries and

affiliates, and the directors, officers, managers, agents and employees

acting for or on behalf of any of the foregoing entities.

G. ``Wireless System Assets'' means, for each wireless business to

be divested under this Final Judgment, all types of assets, tangible

and intangible, used by defendants in the operation of the wireless

businesses to be divested (including the provision of long distance

telecommunications services for wireless calls). ``Wireless System

Assets'' shall be construed broadly to accomplish the complete

divestitures of the entire business of one of the two wireless systems

in each of the Overlapping Wireless Markets required by this Final

Judgment and to ensure that the divested wireless businesses remain

viable, ongoing businesses. With respect to each overlap in the

Overlapping Wireless Markets created by the consummation of a

transaction between any of the defendants, the Wireless System Assets

to be divested shall be either those in which one party to the

transaction has an interest or those in which the other party to the

transaction has or will acquire an interest, but not both. These

divestitures of the Wireless System Assets in the Overlapping Wireless

Markets as defined in Section II.E shall be accomplished by: (1)

transferring to the purchaser the complete ownership and/or other

rights to the assets (other than those assets used substantially in the

operations of either defendant's overall wireless business that must be

retained to continue the existing operations of the wireless properties

defendants are not required to divest, and that either are not capable

of being divided between the divested wireless businesses and those

that are not divested or are assets that the divesting defendant and

the purchaser(s) agree shall not be divided); and (ii) granting to the

purchaser(s) an option to obtain a non-exclusive, transferable license

from defendants for a reasonable period at the election of the

purchaser to use any of the divesting defendant's assets used in the

operation of the wireless business being divested, so as to enable the

purchaser to continue to operate the divested wireless businesses

without impairment, where those assets are not subject to complete

transfer to the purchaser under (i). Assets shall include, without

limitation, all types of real and personal property, monies and

financial instruments, equipment, inventory, office furniture, fixed

assets and furnishings, supplies and materials, contracts, agreements,

leases, commitments, spectrum licenses issued by the FCC and all other

licenses, permits and authorizations, operational support systems,

customer support and billing systems, interfaces with other service

providers, business and customer records and information,

[[Page 508]]

customer lists, credit records, accounts, and historic and current

business plans, as well as any patents, licenses, sub-licenses, trade

secrets, know-how, drawings, blueprints, designs, technical and quality

specifications and protocols, quality assurance and control procedures,

manuals and other technical information defendants supply to their own

employees, customers, suppliers, agents, or licensees, and trademarks,

trade names and service marks (except for trademarks, trade names and

service marks containing ``1-800-BUY-TIME,'' ``Airbridge,''

``AirTouch,'' ``AmericaChoice,'' ``Bell Atlantic Mobile,'' ``Cellular

One,'' ``Conversation Card,'' ``DitigalChoice,'' ``EasternChoice,''

``GTE,'' ``HomeChoice,'' ``International Traveler,'' ``Megaphone,''

``MetroMobile,'' ``Mobilnet,'' ``No Regrets,'' ``Now You Can,'' ``PCS

Now,'' ``PCS Home,'' ``PCS Ultra,'' ``Portal Phone,'' ``PrimeCo,''

``Vodafone,'' ``Welcome to the United States of America,'' and

``WesternChoice'') or other intellectual property, including all

intellectual property rights under third party licenses that are

capable of being transferred to a purchaser either in their entirety,

for assets described above under (i), or through a license obtained

through or from the divesting defendant, for assets described above

under (ii). Defendants shall identify in a schedule submitted to

plaintiff and filed with the Court, as expeditiously as possible

following the filing of the Supplemental Complaint in this case and in

any event prior to any divestitures and before the approval by the

Court of this Final Judgment, any intellectual property rights under

third party licenses that are used by the wireless businesses being

divested but that defendants could not transfer to a purchaser entirely

or by license without third party consent, and the specific reasons why

such consent is necessary and how such consent would be obtained for

each asset.

1. In the event that defendants elect to divest an interest in a

PCS business in one of the PCS/Cellular Overlap Areas, defendants may

retain up to 10 MHz of broadband PCS spectrum within that PCS/Cellular

Overlap Area upon completion of the divestiture of the Wireless System

Assets.

2. In the event that defendants elect to divest an interest in a

PCS business in one of the PCS/Cellular Overlap Areas, defendants, at

least 90 calendar days prior to the consummation of the transaction

which gives rise to the overlap, may request approval from plaintiff to

partition the PCS license along Basic Trading Area (``BTA'') geographic

boundaries, or in the case of Kenosha County, Wisconsin, county

boundaries, and to retain assets in one or more specified non-

overlapping BTAs or in Kenosha County, Wisconsin. Plaintiff's approval

of the request shall be subject to a determination by plaintiff in its

sole discretion that the assets to be retained in the non-overlapping

BTAs or Kenosha County, Wisconsin, are not needed to ensure the

competitive effectiveness of the divested business in the remainder of

the MTA, and that the purchaser of the Wireless System Assets in the

remainder of the MTA will be able to operate the divested PCS business

as a fully competitive entity.

3. In a PCS/Cellular Overlap Area where a defendant holds a non-

controlling minority interest in an overlapping cellular business,

defendants, at least 90 calendar days prior to the consummation of the

transaction which gives rise to the overlap, may request approval from

plaintiff to retain both the PCS business and the non-controlling

minority interest in such overlapping cellular business. Plaintiff's

approval of the request shall be subject to a determination by

plaintiff in its sole discretion that the retention of a non-

controlling minority interest will be entirely passive and will not

significantly diminish competition.

III. Applicability and Effect

A. The provisions of this Final Judgment shall be applicable to

Bell Atlantic, GTE, and Vodafone, as defined above, the attorneys of

each of the above, and shall also be applicable to all other persons in

active concert or participation with any of the above who shall have

received actual notice of this Final Judgment by personal service or

otherwise.

B. Defendants shall require, as a condition of the sale or other

disposition to an Interim Party, which shall be defined to mean any

person other than a purchaser approved by plaintiff pursuant to Section

IV.C, of all or substantially all of their assets, or of a lesser

business unit containing the Wireless System Assets required to be

divested by this Final Judgment, that the Interim Party agrees to be

bound by the provisions of this Final Judgment, and shall also require

that any purchaser of the Wireless System Assets agree to be bound by

Section X of this Final Judgment.

IV. Divestiture of Wireless Interests

A. Defendants Bell Atlantic, Vodafone and GTE shall divest

themselves of the Wireless System Assets of one of the two wireless

businesses in each of the Overlapping Wireless Markets, including both

any direct or indirect financial ownership interests and any direct or

indirect role in management or participation in control, to a purchaser

or purchasers acceptable to plaintiff in its sole discretion, or to a

trustee designated pursuant to Section V of this Final Judgment in

accordance with the following schedule:

1. The divestiture of the Wireless System Assets for each Cellular/

Cellular Overlap Area shall occur prior to or at the same time as

consummation of the transaction that gives rise to the overlap.

2. The divestitures of the Wireless System Assets for each PCS/

Cellular Overlap Area shall occur prior to or at the same time as

consummation of the transaction that gives rise to the overlap, or June

30, 2000, whichever is later. Plaintiff may, in its sole discretion,

extend this date by up to two thirty-day periods. If one or more

divestitures have not been completed as of the date of the consummation

of the transaction that gives rise to the overlap, defendants will

submit to plaintiff a definitive Divestiture List identifying the

specific Wireless System Assets in each of the PCS/Cellular Overlap

Areas that will be divested.

B. Defendants agree to use their best efforts to accomplish the

divestitures set forth in this Final Judgment and to seek all necessary

regulatory approvals as expeditiously as possible. The divestitures

carried out under the terms of this decree shall also be conducted in

compliance with the applicable rules of the FCC, including 47 CFR 20.6

(spectrum aggregation) and 47 CFR 22.942 (cellular cross-ownership), or

any waiver of such rules or other authorization granted by the FCC.

Authorization by the FCC to conduct divestiture of a cellular business

in a particular manner will not modify any of the requirements of this

decree.

C. Unless plaintiff otherwise consents in writing, the divestitures

pursuant to Section IV, or by trustee appointed pursuant to Section V

of the Final Judgment, shall be accomplished by (1) divesting all of

the Wireless System Assets in any individual Overlapping Wireless

Market entirely to a single purchaser (but Wireless System Assets used

by any defendant in the operation of its cellular business in different

Overlapping Wireless Markets may be divested to different purchasers),

and (2) selling or otherwise conveying the Wireless System Assets to

the purchaser(s) in such a way as to satisfy plaintiff, in its sole

discretion, that each wireless business can and will be used by the

purchaser(s) as part of a viable,

[[Page 509]]

ongoing business engaged in the provision of wireless mobile telephone

service. The divestitures pursuant to this Final Judgment shall be made

to one or more purchasers for whom it is demonstrated to plaintiff's

sole satisfaction that (1) the purchaser has the capability and intent

of competing effectively in the provision of wireless mobile telephone

service using the Wireless System Assets, (2) the purchaser has the

managerial, operational and financial capability to compete effectively

in the provision of wireless mobile telephone service using the

Wireless System Assets, and (3) none of the terms of any agreement

between the purchaser and any of the defendants shall give defendants

the ability unreasonably (i) to raise the purchaser's costs, (ii) to

lower the purchaser's efficiency, (iii) to limit any line of business

which a purchaser may choose to pursue using the Wireless System Assets

(including, but not limited to, entry into local telecommunications

services on a resale or facilities basis or long distance

telecommunications services on a resale or facilities basis), or

otherwise to interfere with the ability of the purchaser to compete

effectively.

D. If they have not already done so, defendants shall make known

the availability of the Wireless System Assets in each of the

Overlapping Wireless Markets by usual and customary means, sufficiently

in advance of the time of consummation of any transaction which gives

rise to an overlap in an Overlapping Wireless Market, reasonably to

enable the required divestitures to be accomplished according to the

schedule outlined herein. Defendants shall inform any person making an

inquiry regarding a possible purchase of the Wireless System Assets

that the sale is being made pursuant to the requirements of this Final

Judgment, as well as the rules of the FCC, and shall provide such

person with a copy of the Final Judgment.

E. Defendants shall offer to furnish to all prospective purchasers,

subject to customary confidentiality assurances, access to personnel,

the ability to inspect the Wireless System Assets, and all information

and any financial, operational, or other documents customarily provided

as part of a due diligence process, including all information relevant

to the sale and to the areas of business in which the cellular business

has been engaged or has considered entering, except documents subject

to attorney-client or work product privileges, or third party

intellectual property that defendants are precluded by contract from

disclosing and that has been identified in a schedule pursuant to

Section II.G. Defendants shall make such information available to the

plaintiff at the same time that such information is made available to

any other person.

F. Defendants shall not interfere with any negotiations by any

purchaser to retain any employees, for Bell Atlantic and GTE who work

or have worked since July 29, 1998, and for Vodafone who work or have

worked since September 21, 1999 (other than solely on a temporary

assignment basis from another part of Bell Atlantic, Vodafone or GTE)

with, or whose principal responsibility relates to, the divested

Wireless System Assets.

G. To the extent that the wireless businesses to be divested use

intellectual property, as required to be identified by Section II.G,

that cannot be transferred or assigned without the consent of the

licensor or other third parties, defendants shall cooperate with the

purchaser(s) and trustee to seek to obtain those consents.

H. Defendants shall preserve all records of all efforts made to

preserve and divest any or all of the Wireless System Assets required

to be divested until the termination of this Final Judgment.

V. Appointment of Trustee

A. If defendants have not divested all of the Wireless System

Assets required to be divested in accordance with Section IV to a

purchaser or purchasers that have been approved by plaintiff pursuant

to Section IV.C, then:

1. Defendants that are party to a transaction that gives rise to an

overlap shall identify to plaintiff in writing the remaining Wireless

System Assets to be divested in the Overlapping Wireless Markets, and

this written notification shall also be provided to the trustee

promptly upon his or her appointment by the Court;

2. The Court shall, on application of plaintiff, appoint a trustee

selected by plaintiff, who will be responsible for (a) accomplishing a

divestiture of all Wireless System Assets transferred to the trustee

from defendants, in accordance with the terms of this Final Judgment,

to a purchaser or purchasers approved by plaintiff under Section IV.C,

and (b) exercising the responsibilities of the licensee and controlling

and operating the transferred Wireless System Assets, to ensure that

the wireless businesses remain ongoing, economically viable competitors

in the provision of mobile wireless telecommunications services in the

Overlapping Wireless Markets, until they are divested to a purchaser or

purchasers, and the trustee shall agree to be bound by this Final

Judgment.

3. Defendants shall submit a form of trust agreement (``Trust

Agreement'') to plaintiff, which must be consistent with the terms of

this Final Judgment and which must have received approval by plaintiff,

who shall communicate to defendants within ten (10) business days

approval or disapproval of that form; and

4. After obtaining any necessary approvals from the FCC for the

transfer of control of the licenses of the remaining Wireless System

Assets to the trustee, defendants shall irrevocably divest the

remaining Wireless System Assets to the trustee, who will own such

assets (or own the stock of the entity owning such assets, if

divestiture is to be effected by the creation of such an entity for

sale to purchaser(s)) and control such assets, subject to the terms of

the approved Trust Agreement.

B. After the appointment of a trustee becomes effective, only the

trustee shall have the right to sell the wireless business(es) to be

divested, which shall be done within the time periods set forth in this

Final Judgment. Those assets shall be the Wireless System Assets as

designated by defendants as set forth in Section V.A.1 for the

Overlapping Wireless Markets. In addition, notwithstanding any

provision to the contrary, plaintiff may, in its sole discretion,

require defendants to include additional assets that substantially

relate to the wireless mobile telephone business in the Wireless System

Assets to be divested if it would facilitate a prompt divestiture to an

acceptable purchaser. The trustee shall have the power and authority to

accomplish the divestiture at the best price then obtainable upon a

reasonable effort by the trustee, subject to the provisions of Sections

IV, V, and VI of this Final Judgment. Subject to Section V.C of this

Final Judgment, the trustee shall have the power and authority to hire

at the cost and expense of defendants any investment bankers,

attorneys, or other agents reasonably necessary in the judgment of the

trustee to assist in the divestiture and in the management of the

Wireless System Assets transferred to the trustee, and such

professionals and agents shall be accountable solely to the trustee.

The trustee shall have the power and authority to accomplish the

divestiture at the earliest possible time to a purchaser acceptable to

plaintiff in its sole discretion, and shall have such other powers as

this Court shall deem appropriate. Defendants shall not object to a

sale by the trustee on any grounds

[[Page 510]]

other than the trustee's malfeasance. Any such objections by the

defendants must be conveyed in writing to plaintiff and the trustee

within ten (10) days after the trustee has provided the notice required

under Section VI of this Final Judgment.

C. The trustee shall serve at the cost and expense of defendants,

on such terms and conditions as the Court may prescribe, and shall

account for all monies derived from the sale of the wireless

business(es) sold by the trustee and all costs and expenses so

incurred. After approval by the Court of the trustee's accounting,

including fees for its services and those of any professionals and

agents retained by the trustee, all remaining money shall be paid to

defendants and the trust shall then be terminated. The compensation of

such trustee and of professionals and agents retained by the trustee

shall be reasonable in light of the value of the divested wireless

business(es) and based on a fee arrangement providing the trustee with

an incentive based on the price and terms of the divestiture and the

speed with which it is accomplished.

D. Defendants shall use their best efforts to assist the trustee in

accomplishing the required divestiture, including their best efforts to

effect all necessary regulatory approvals. The trustee and any

consultants, accountants, attorneys, and other persons retained by the

trustee shall have full and complete access to the personnel, books,

records, and facilities of the wireless business(es) to be divested,

and defendants shall develop financial or other information relevant to

the business to be divested customarily provided in a due diligence

process as the trustee may reasonably request, subject to customary

confidentiality assurances. As required and limited by Sections IV.E

and F of this Final Judgment, defendants shall permit prospective

purchaser(s) of the Wireless System Assets to have reasonable access to

personnel and to make such inspection of the Wireless System Assets to

be sold and any and all financial, operational, or other documents and

other information as may be relevant to the divestiture required by

this Final Judgment.

E. After being appointed and until the divestiture of the Wireless

System Assets is complete, the trustee shall file monthly reports with

the parties and the Court setting forth the trustee's efforts to

accomplish the divestiture ordered under this Final Judgment; provided,

however, that, to the extent such reports contain information that the

trustee deems confidential, such reports shall not be filed in the

public docket of the Court. Such reports shall include the name,

address, and telephone number of each person who, during the preceding

month, made an offer to acquire, expressed an interest in acquiring,

entered into negotiations to acquire, or was contacted or made an

inquiry about acquiring the Wireless System Assets to be sold, and

shall describe in detail each contact with any such person during that

period. The trustee shall maintain full records of all efforts made to

divest the Wireless System Assets.

F. The Trustee shall divest the Wireless System Assets in each of

the Overlapping Wireless Markets to a purchaser or purchasers

acceptable to plaintiff in its sole discretion, as required in Section

IV.C of this Final Judgment, no later than one hundred and eighty (180)

calendar days after the Wireless System Assets are transferred to a

trustee in accordance with the schedule outlined in Section IV,

provided however, that if applications have been filed with the FCC

within the one hundred eighty day period seeking approval to assign or

transfer licenses to the purchaser(s) of the Wireless System Assets but

approval of such applications has not been granted before the end of

the one hundred eighty day period, the period shall be extended with

respect to the divestiture of those Wireless System Assets for which

final FCC approval has not been granted until five (5) days after such

approval is received.

G. If the trustee has not accomplished the divestiture of all of

the Wireless System Assets within the time specified for completion of

divestiture to a purchaser or purchasers under Section V.F of this

Final Judgment, the trustee thereupon shall file promptly with this

Court a report setting forth: (1) The trustee's efforts to accomplish

the required divestiture; (2) the reasons, in the trustee's judgment,

why the required divestiture has not been accomplished; and (3) the

trustee's recommendations; provided, however, that, to the extent such

reports contain information that the trustee deems confidential, such

reports shall not be filed in the public docket of the Court. The

trustee shall at the same time furnish such report to the parties, who

shall each have the right to be heard and to make additional

recommendations consistent with the purpose of the trust. The Court

shall enter thereafter such orders as it deems appropriate in order to

carry out the purpose of the trust, which may, if necessary, include

extending the trust and the term of the trustee's appointment by a

period agreed to by plaintiff.

H. After defendants transfer the Wireless System Assets to the

trustee, and until those Wireless System Assets have been divested to a

purchaser or purchasers approved by plaintiff pursuant to Section IV.C,

the trustee shall have sole and complete authority to manage and

operate the Wireless System Assets and to exercise the responsibilities

of the licensee, and shall not be subject to any control or direction

by defendants. Defendants shall not retain any economic interest in the

Wireless System Assets transferred to the trustee, apart from the right

to receive the proceeds of the sale or other disposition of the

Wireless System Assets. The trustee shall operate the wireless

business(es) as a separate and independent business entity from each of

the defendants, with sole control over operations, marketing and sales.

Defendants shall not communicate with, or attempt to influence the

business decisions of, the trustee concerning the operation and

management of the wireless businesses, and shall not communicate with

the trustee concerning the divestiture of the Wireless System Assets or

take any action to influence, interfere with, or impede the trustee's

accomplishment of the divestitures required by this Final Judgment,

except that defendants may communicate with the trustee to the extent

necessary for defendants to comply with this Final Judgment and to

provide the trustee, if requested to do so, with whatever resources or

cooperation may be required to complete the divestitures of the

Wireless System Assets and to carry out the requirements of this Final

Judgment. In no event shall defendants provide to, or receive from, the

trustee or the wireless businesses under the trustee's control any non-

public or competitively sensitive marketing, sales, or pricing

information relating to their respective mobile wireless

telecommunications service businesses.

VI. Notification

A. Within two (2) business days following execution of a binding

agreement to effect, in whole or in part, any proposed divestiture

required by this Final Judgment, whichever defendant is divesting the

Wireless System Assets, or the trustee if the trustee is divesting the

Wireless System Assets, shall notify plaintiff of the proposed

divestiture. If the trustee is responsible for the divestiture, the

trustee shall similarly notify defendants. The notice shall set forth

the details of the proposed transaction and list the name, address, and

telephone number of each person not previously identified

[[Page 511]]

who theretofore offered to, or expressed an interest in or a desire to,

acquire any ownership interest in the Wireless System Assets that are

the subject of the binding agreement, together will full details of

same.

B. Within fifteen (15) calendar days of receipt by plaintiff of

such notice, plaintiff may request from defendants, the proposed

purchaser(s), any other third party, or the trustee (if applicable),

additional information concerning the proposed divestiture and the

proposed purchaser(s) or any other potential purchaser(s). Defendants

and the trustee shall furnish any such additional information requested

within fifteen (15) calendar days of the receipt of the request, unless

the parties shall otherwise agree. Within thirty (30) calendar days

after receipt of the notice, or within twenty (20) calendar days after

plaintiff has been provided the additional information requested from

defendants, the proposed purchaser(s), any third party, or the trustee,

whichever is later, plaintiff shall provide written notice to

defendants and the trustee, if there is one, stating whether or not

plaintiff objects to the proposed divestiture. If plaintiff provides

written notice to defendants and the trustee, if there is one, that it

does not object, then the divestiture may be consummated subject only

to defendants' limited right to object to the sale under Section V.B of

this Final Judgment. Absent written notice that plaintiff does not

object to the proposed purchaser(s) or in the event of an objection by

plaintiff, a divestiture shall not be consummated. Upon objection by a

defendant under the proviso of Section V.B, a divestiture proposed

under Section V shall not be consummated unless approved by the Court.

VII. Affidavits

A. Within twenty (20) calendar days of the filing of the Motion for

Leave to File Supplemental Complaint in this matter and every thirty

(30) calendar days thereafter until all divestitures have been

completed, defendants shall deliver to plaintiff an affidavit as to the

fact and manner of defendants' compliance with this Final Judgment.

Each such affidavit shall (i) include, inter alia, the name, address,

and telephone number of each person who, at any time after the period

covered by the last such report, made an offer to acquire, expressed an

interest in acquiring, entered into negotiations to acquire, or was

contacted or made an inquiry about acquiring, any or all of the

Wireless System Assets required to be divested, (ii) describe in detail

each contact with any such person during that period, and (iii) include

a summary of the efforts that defendants have made to solicit a

purchaser(s) for the Wireless System Assets to be divested in the

Overlapping Wireless Markets pursuant to this Final Judgment and to

provide required information to prospective purchasers.

B. Within twenty (20) calendar days of the filing of the Motion for

Leave to File Supplemental Complaint in this matter, defendants shall

deliver to plaintiff an affidavit which describes in reasonable detail

all actions defendants have taken and all steps defendants have

implemented on an ongoing basis to preserve the Wireless System Assets

to be divested pursuant to this Final Judgment. Defendants shall

deliver to plaintiff another affidavit describing any changes to the

efforts and actions outlined in defendants' earlier affidavits filed

pursuant to Section VII.B of this Final Judgment within fifteen (15)

calendar days after the charge is implemented.

VIII. Financing

Defendants shall not finance all or any part of any purchase by an

acquirer made pursuant to Sections IV or V of this Final Judgment.

IX. Hold Separate Order

A. Until accomplishment of the divestitures of the Wireless System

Assets to purchaser(s) approved by plaintiff pursuant to Section IV.C,

each defendant shall take all steps necessary to ensure that each of

the wireless businesses that it owns or operates in the Overlapping

Wireless Markets shall continue to be operated as a separate,

independent, ongoing, economically viable and active competitor to the

other mobile wireless telecommunications providers operating in the

same license area; and that except as necessary to comply with this

Final Judgment, the operation of said wireless businesses (including

the performance of decision-making functions relating to marketing and

pricing) will be kept separate and apart from, and not influenced by,

the operation of the other wireless business, and the books, records,

and competitively sensitive sales, marketing, and pricing information

associated with said wireless businesses will be kept separate and

apart from the books, records, and competitively sensitive sales,

marketing, and pricing information associated with the other wireless

business; provided that defendants may continue to use any trademarks,

trade names or service marks used in the operation of such wireless

businesses prior to the consummation of the Bell Atlantic/GTE Merger

and/or the creation of the Bell Atlantic/Vodafone Partnership.

B. Until the Wireless System Assets in each Overlapping Wireless

Market have been divested to purchaser(s) approved by plaintiff, or

transferred to a trustee pursuant to Section V of this Final Judgment,

each defendant shall in accordance with past practices, with respect to

each wireless business that it has an ownership interest in or operates

in the Overlapping Wireless Markets;

1. Use all reasonable efforts to maintain and increase sales of

wireless mobile telephone services, and maintain and increase

promotional, advertising, sales, technical assistance, and marketing

support for the mobile telephone service sold by the wireless

businesses;

2. Take all steps necessary to ensure that each wireless business

that it has an ownership interest in or operates in the Overlapping

Wireless Markets is fully maintained in operable condition and shall

maintain and adhere to normal maintenance schedules;

3. Provide and maintain sufficient working capital and lines and

sources of credit to maintain the Wireless System Assets as viable

ongoing businesses;

4. Not remove, sell, lease, assign, transfer, pledge or otherwise

dispose of or pledge as collateral for loans, any asset of each

wireless business that it has an ownership interest in or operates in

the Overlapping Wireless Markets, other than in the ordinary course of

business, except as approved by plaintiff;

5. Maintain, in accordance with sound accounting principles,

separate, true, accurate and complete financial ledgers, books and

records that report, on a periodic basis, such as the last business day

of each month, consistent with past practices, the assets, liabilities,

expenses, revenues, income, profit and loss of each wireless business

that it has an ownership interest in or operates in the Overlapping

Wireless Markets;

6. Be prohibited from terminating, transferring, or altering to the

detriment of any employees who work with each wireless business that it

has an ownership interest in or operates in the Overlapping Wireless

Markets as of the date of consummation of the Bell Atlantic/GTE Merger

or the creation of the Bell Atlantic/Vodafone Partnership, any current

employment or salary agreements, except: (a) In the ordinary course of

business, (b) for transfer bids initiated by employees pursuant to

defendants' regular, established job posting policies, (c) for an

individual who has a written offer of employment

[[Page 512]]

from a third party for a like position, or (d) as necessary to promote

accomplishment of defendants' obligations under this Final Judgment;

and

7. Take no action that would impede in any way or jeopardize the

sale of each wireless business that it has an ownership interest in or

operates in the Overlapping Wireless Markets.

C. On or before the consummation of the Bell Atlantic/GTE Merger or

the creation of the Bell Atlantic/Vodafone Partnership, defendants

shall assign complete managerial responsibility over each wireless

business that they have an ownership interest in or operate in the

Overlapping Wireless Markets to a specified manager who shall not

participate, during the period of such responsibility, in the

management of any of defendants' other businesses.

D. Defendants shall, during the period before all Wireless System

Assets have been divested to a purchaser(s) or transferred to the

trustee pursuant to Section V of this Final Judgment, each appoint a

person or persons to oversee the Wireless System Assets owned by that

defendant, who will be responsible for defendants' compliance with the

requirements of Sections VII and IX of this Final Judgment. Such

person(s) shall not be an officer, director, manager, employee, or

agent of another defendant.

X. Compliance Inspection

For the purposes of determining or securing compliance of

defendants with this Final Judgment, or of determining whether the

Final Judgment should be modified or vacated, and subject to any

legally recognized privilege, from time to time:

A. Duly authorized representatives of the United States Department

of Justice, upon written request of the Attorney General or the

Assistant Attorney General in charge of the Antitrust Division, and on

reasonable notice to the relevant defendant made to its principal

office, shall be permitted without restraint or interference from

defendants:

1. To have access during office hours of defendants to inspect and

copy all books, ledgers, accounts, correspondence, memoranda, and other

records and documents in the possession or under the control of

defendants, who may have counsel present, relating to any matters

contained in this Final Judgment; and

2. To interview, either informally or on the record, and to take

sworn testimony from the officers, directors, employees, or agents of

defendants, who may have counsel present, relating to any matters

contained in this Final Judgment.

B. Upon the written request of the Attorney General or the

Assistant Attorney General in charge of the Antitrust Division, made to

defendants at their principal offices, defendants shall submit written

reports, under oath if requested, relating to any of the matters

contained in this Final Judgment.

C. No information or documents obtained by the means provided in

this Section X or Sections VI and VII shall be divulged by plaintiff to

any person other than a duly authorized representative of the Executive

Branch of the United States, or to the FCC (pursuant to a customary

protective order or a waiver of confidentiality by defendants), except

in the course of legal proceedings to which the United States is a

party (including grand jury proceedings), or for the purpose of

securing compliance with this Final Judgment, or as otherwise required

by law.

D. If, at the time information or documents are furnished by

defendants to plaintiff, defendants represent and identify in writing

the material in any such information or documents as to which a claim

of protection may be asserted under Rule 26(c)(7) of the Federal Rules

of Civil Procedure, and mark each pertinent page of such material,

``Subject to claim of protection under Rule 26(c)(7) of the Federal

Rules of Civil Procedure,'' then ten (10) calendar days' notice shall

be given by plaintiff to defendants prior to divulging such material in

any legal proceeding (other than a grand jury proceeding) to which

defendants are not a party.

XI. Retention of Jurisdiction

Jurisdiction is retained by this Court for the purposes of enabling

any of the parties to this Final Judgment to apply to this Court at any

time for such further orders or directions as may be necessary or

appropriate for the construction or carrying out of this Final

Judgment, for the modification of any of the provisions hereof, for the

enforcement of compliance herewith, and for the punishment of any

violations hereof.

XII. Further Provisions and Termination

A. The entry of this judgment is in the public interest.

B. Unless this Court grants an extension, this Final Judgment shall

expire on the tenth anniversary of the date of its entry.

----------------------------------------------------------------------

United States District Judge

Certificate of Service

I hereby certify that copies of the foregoing Motion for Leave to

File Supplemental Complaint and Memorandum of Points and Authorities in

Support thereof were served this 6th day of December, 1999 upon the

following:

John Thorne (by hand),

Bell Atlantic Corporation, 1320 North Court House Road, Eighth Floor,

Arlington, VA 22201, Counsel for Defendant Bell Atlantic Corporation.

Steven G. Bradbury (by hand),

Kirkland & Ellis, 655 Fifteenth Street, NW, Washington, DC 20005,

Counsel for Defendant GTE Corporation.

Megan Pierson (by first class mail postage prepaid),

AirTouch Communications, Inc., One California Street, San Francisco, CA

94111, Counsel for Vodafone AirTouch Plc.

Lawrence M. Frankel,

Counsel for Plaintiff United States of America.

Competitive Impact Statement

The United States, pursuant to Section 2(b) of the Antitrust

Procedures and Penalties Act, 15 U.S.C. 16(b)-(h) (``APPA''), files

this Competitive Impact Statement relating to the proposed Final

Judgment submitted for entry in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

The United States filed a civil antitrust Supplemental Complaint on

December 9, 1999 alleging that: (1) The proposed acquisition of GTE

Corporation (``GTE'') by Bell Atlantic Corporation (``Bell Atlantic'')

(2) the proposed partnership between Bell Atlantic and Vodafone

AirTouch Plc (``Vodafone''); and (3) the combined effect of these two

transactions would violate Section 7 of the Clayton Act, 15 U.S.C. 18

by lessening competition in the markets for wireless mobile telephone

services in 13 major trading areas (``MTAs''), as well as 96

metropolitan statistical areas (``MSAs'') and rural service areas

(``RSAs'') in Alabama, Arizona, California, Florida, Idaho, Illinois,

Indiana, Montana, New Mexico, Ohio, South Carolina, Texas, Virginia,

Washington, and Wisconsin.\1\

---------------------------------------------------------------------------

\1\ The original Complaint in this proceeding was filed on May

7, 1999, challenging the July 28, 1998, merger agreement between

Bell Atlantic and GTE (``Bell Atlantic/GTE Merger''). On September

21, 1999, Bell Atlantic and Vodafone entered into an agreement to

create a partnership (``Bell Atlantic/Vodafone Partnership'') with

the intent of combining the wireless businesses of Bell Atlantic,

Vodafone, and GTE into a national wireless network. On December 6,

1999, the United States filed a motion requesting leave to file a

Supplemental Complaint and to add Vodafone as a defendant to this

action. That motion was granted by the Court on December 9, 1999,

and the Supplemental Complaint was accepted as filed on that date.

---------------------------------------------------------------------------

[[Page 513]]

Shortly before the Supplemental Complaint was filed, the United

States and defendants reached agreement on the terms of a revised

proposed Final Judgment. The revised proposed Final Judgment \2\

requires Bell Atlantic, Vodafone, or GTE to divest wireless assets in

96 markets. These overlapping markets include: (1) 58 MSAs and RSAs

where GTE owns in whole or in part a cellular mobile telephone services

business that overlaps part of one of the 10 MTAs where Bell Atlantic

and Vodafone provide personal communications services through PCS

PrimeCo, L.P. (``PrimeCo''), a business half owned by Bell Atlantic and

half owned by Vodafone; (2) four MSAs where Bell Atlantic and GTE own

in whole or in part competing cellular mobile wireless telephone

businesses; (3) three MSAs and one RSA where Bell Atlantic and Vodafone

own in whole or in part competing cellular mobile wireless telephone

businesses; (4) ten MSAs and one RSA where Vodafone and GTE own in

whole or part competing cellular mobile wireless telephone businesses;

and (5) ten MSAs and nine RSAs where Vodafone owns, or will own, in

whole or part, a cellular mobile wireless telephone business that

competes with GTE wireless PCS telephone business that overlaps all or

part of the area. These 96 overlap areas are collectively identified in

the Supplemental Complaint as the ``Overlapping Wireless Markets.''

---------------------------------------------------------------------------

\2\ The original proposed Final Judgment required either Bell

Atlantic or GTE to divest its wireless telephone business in those

markets where the two companies' business overlap. The revised Final

Judgment essentially includes those areas, as well as the areas

where Vodafone's wireless telephone businesses overlap with a

competing businesses owned either by Bell Atlantic or GTE.

---------------------------------------------------------------------------

In each of the Overlapping Wireless Markets, defendants can choose

which wireless business to divest. The proposed Final Judgment also

contains provisions, explained below, designed to minimize any risk of

competitive harm that otherwise might arise pending completion of the

divestiture. The proposed Final Judgment and a Stipulation by plaintiff

and defendants consenting to its entry were filed simultaneously with

the Supplemental Complaint.

The United States and defendants have stipulated that the proposed

Final Judgment may be entered after compliance with the Antitrust

Procedures and Penalties Act, 15 U.S.C. 16 (``APPA''). Entry of the

proposed Final Judgment would terminate this action, except that the

Court would retain jurisdiction to construe, modify, or enforce the

provisions of the proposed Final Judgment and to punish violations

thereof. The United States and defendants have also stipulated that

defendants will comply with the terms of the proposed Final Judgment

from the date of signing of the Stipulation, pending entry of the Final

Judgment by the Court. Should the Court decline to enter the Final

Judgment, defendants have also committed to continue to abide by its

requirements until the expiration of time for any appeals of such

ruling.

III. Description of the Events Giving Rise to the Alleged Violation

A. The Defendants and the Proposed Transaction

Bell Atlantic is one of the remaining five Regional Bell Operating

Companies (``RBOCs'') created in 1984 by the consent decree settling

the United States' antitrust case against American Telephone &

Telegraph Co. GTE is the largest non-RBOC local telephone operating

company in the United States. Vodafone is the world's largest mobile

telecommunications company, and the third largest wireless mobile

telephone service provider in the United States. Bell Atlantic and GTE

each provide local exchange services in distinct regions, as well as

wireless mobile telephone services, including cellular mobile telephone

services and PCS, both within and outside of their local exchange

service regions. Bell Atlantic is a 50/50 partner with Vodafone in

PrimeCo, a firm that provides wireless mobile telephone services in

many areas of the country.

Bell Atlantic, with headquarters in New York City, New York, is the

second largest RBOC in the United States, with approximately 42 million

total local telephone access lines. In 1998, Bell Atlantic had revenues

in excess of $31 billion. Bell Atlantic provides local telephone

services to retail customers in Connecticut, Delaware, the District of

Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey,

New York, Pennsylvania, Rhode Island, Vermont, Virginia, and West

Virginia, as well as cellular mobile telephone services in those

states. Bell Atlantic also provides cellar mobile telephone services in

some areas outside its local exchange service region, including areas

within the states of Arizona, Georgia, North Carolina, New Mexico,

South Carolina, and Texas. Through its partnership with Vodafone in

PrimeCo, Bell Atlantic also provides wireless services in the States of

Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa,

Louisiana, Michigan, Minnesota, Mississippi, New Mexico, North

Carolina, Ohio, Oklahoma, Texas, Virginia, and Wisconsin. Bell Atlantic

is the nation's fourth largest wireless mobile telephone service

provider, with about 7.5 million proportionate subscribers \3\

nationwide.

---------------------------------------------------------------------------

\3\ ``Proportionate subscribers'' refers to the number of

subscribers in a firm's wireless mobile telephone systems discounted

by the firm's ownership interest in each system. For instance, a

firm with a 100% ownership interest in a wireless business with

100,000 subscribers would have 100,000 proportionate subscribers,

but a firm with a 25% interest in a system with 100,000 subscribers

would be attributed 25,000 proportionate subscribers for that

system.

---------------------------------------------------------------------------

GTE, with headquarters in Irving, Texas, is the a largest non-RBOC

local telephone company in the United States, with over 23 million

total local telephone access lines. In 1998, GTE had revenues in excess

of $25 billion. GTE provides local telephone service to retail

customers in Alabama, Alaska, Arizona, Arkansas, California, Florida,

Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota,

Missouri, Nebraska, Nevada, New Mexico, North Carolina, Ohio, Oklahoma,

Oregon, Pennsylvania, South Carolina, Texas, Virginia, Washington, and

Wisconsin, and it also provides wireless mobile telephone service in 17

states. GTE is the nation's fifth largest wireless mobile telephone

service provider, with about 6.9 million proportionate subscribers

nationwide.

Vodafone, with its headquarters in Newbury, Berkshire, England, has

mobile operations in 23 countries in five continents, with more than 19

million proportionate customers outside of the United States. Within

the United States, Vodafone serves 9.1 million cellular mobile

telephone and PCS customers in 24 states and 22 of the top 30 U.S.

markets. Vodafone entered into an agreement on July 19, 1999 to acquire

certain cellular mobile telephone business from CommNet (``Vodafone/

CommNet Merger'') for $1.36 billion, which would make Vodafone a

provider of cellular mobile telephones services in an additional 11

midwestern and western states. The acquisition of CommNet's cellular

business would add about 360,000 subscribers to Vodafone's total number

of wireless subscribers nationwide.

On July 28, 1998, Bell Atlantic and GTE entered into a merger

agreement whereby the two firms would merge in a transaction valued at

approximately $53 billion at the time of the agreement. If this

transaction is consummated, the combined total of Bell Atlantic's and

GTE's wireless mobile telephone service

[[Page 514]]

subscribers, absent divestitures, would exceed 14 million.

On September 21, 1999, Bell Atlantic and Vodafone entered into an

agreement to create a new wireless partnership that will combine the

approximately $70 billion worth of wireless assets of Bell Atlantic,

Vodafone, and GTE. The new wireless partnership will be the largest

wireless business in the United States, serving over 23 million

customers in 49 of the top 50 U.S. wireless markets and boasting a

footprint covering 90% of the U.S. population.

B. Wireless Mobile Telephone Services

Wireless mobile telephone services permit users to make and receive

telephone calls, using radio transmissions, while traveling by car or

by other means. The mobility afforded by this service is a valuable

feature to consumers, and cellular and other wireless mobile telephone

services are commonly priced at a substantial premium above landline

services. In order to provide this capability, wireless carriers must

deploy an extensive network of switches and radio transmitters and

receivers, and interconnect this network with the networks of local and

long distance landline carriers, and with the networks of other

wireless carriers. Current annual revenues from the sale of wireless

mobile telephone services total approximately $37 billion in the United

States.

Initially, wireless mobile telephone services were provided

principally by two cellular systems in each MSA and RSA license area.

Cellular licenses were awarded by the Federal Communications Commission

(``FCC'') beginning in the early 1980s for each MSA and RSA.\4\ A

provider of Specialized Mobile Radio (``SMR'') services typically was

also authorized to operate with some additional spectrum in these

areas, including the Overlapping Wireless Markets.

---------------------------------------------------------------------------

\4\ 25 MHZ of spectrum was allocated to each cellular system in

an MSA or RSA. MSAs are the 306 urbanized areas in the United

States, defined by the federal government, and used by the FCC to

define the license areas for urban cellular systems. RSAs are the

428 areas defined by the FCC used to define the license areas for

rural cellular systems outside of MSAs.

---------------------------------------------------------------------------

In 1995, the FCC allocated (and subsequently issued licenses for)

additional spectrum for the provision of PCS, a type of wireless

telephone service that includes wireless mobile telephone services

comparable to those offered by cellular carriers. In 1996, one SMR

spectrum licensee began to use its SMR spectrum to offer wireless

mobile telephone services, comparable to that offered by cellular and

PCS providers and bundled with dispatch services, in a number of areas

including some of the Overlapping Wireless Markets. While the areas for

which PCS providers are licensed (MTAs and basic trading areas

(``BTAs'')) differ somewhat from the cellular MSAs and RSAs, they

generally overlap with them. In many areas, including most of the

Overlapping Wireless Markets, not all of the PCS license holders have

started to offer services or even begun to construct the facilities

necessary to begin offering service. The PCS providers have tended to

enter in the largest cities first, entering in smaller markets only

later and not on as wide a scale. Moreover, even in those areas where

one or more PCS providers have constructed their networks and have

started to offer service, including the Overlapping Wireless Markets,

the incumbent cellular providers, such as Bell Atlantic, Vodafone and

GTE, still typically have substantially larger market shares than the

new entrants.

C. Anticompetitive Consequences of the Proposed Acquisition

Bell Atlantic, Vodafone and GTE, or firms in which they have an

interest, are or will be competing providers of wireless mobile

telephone services in 96 cellular license areas in 15 states. These

areas are referred to in the Supplemental Complaint as follows:

I. Cellular/Cellular Overlap Areas

A. Bell Atlantic Cellular/Vodafone Cellular Overlap Areas

1. Arizona

a. Phoenix MSA

b. Tucson MSA

c. Arizona 2--Coconino RSA

2. New Mexico

a. Albuquerque MSA

B. Bell Atlantic Cellular/GTE Cellular Overlap Areas

1. New Mexico

a. Las Cruces MSA

2. South Carolina

a. Greenville MSA

b. Anderson MSA

3. Texas

a. El Paso MSA

C. GTE Cellular/Vodafone Cellular Overlap Areas

1. California

a. Salinas-Monterey-seaside MSA

b. San Diego MSA

c. San Francisco MSA

d. San Jose MSA

e. Santa Rosa-Petaluma MSA

f. Vallejo-Napa-Fairfield MSA

2. Ohio

a. Akron MSA

b. Canton MSA

c. Cleveland MSA

d. Lorain-Elyria MSA

e. Ohio 3--Ashtabula RSA

II. PCS/Cellular Overlap Areas

A. PrimeCo PCS/GTE Cellular Overlap Areas

1. Jacksonville MTA

a. Jacksonville MSA

b. Florida 5--Putnam RSA

2. Miami-Fort Lauderdale MTA

a. Fort Myers MSA

b. Florida 1--Collier (B1) RSA

c. Florida 2--Glades (B1) RSA

d. Florida 3--Hardee RSA

e. Florida 11--Monroe (B2) RSA

3. Tampa-St. Petersburg-Orlando MTA

a. Tampa-St. Petersburg MSA

b. Lakeland-Winter Haven MSA

c. Sarasota MSA

d. Brandenton MSA

e. Florida 2--Glades (B1) RSA

f. Florida 3--Hardee RSA

g. Florida 4--Citrus (B1) RSA

4. New Orleans-Baton Rouge MTA

a. Mobile, AL MSA

b. Pensacola, FL MSA

5. Chicago MTA

a. Aurora-Elgin, IL MSA

b. Bloomington-Normal, IL MSA

c. Champaign-Urbana-Rantoul, IL MSA

d. Chicago, IL MSA

e. Decatur, IL MSA

f. Fort Wayne, IN MSA

g. Gary-Hammond-East Chicago, IN MSA

h. Joliet, IL MSA

i. Kankakee, IL MSA

j. Rockford, IL MSA

k. Springfield, IL MSA

l. Illinois 1--Jo Daviess RSA

m. Illinois 2--Bureau (B1) RSA

n. Illinois 2--Bureau (B3) RSA

o. Illinois 4--Adams (B1) RSA

p. Illinois 5--Mason (B2) RSA

q. Illinois 6--Montgomery RSA

r. Illinois 7--Vermilion RSA

s. Indiana 1--Newton (B1) RSA

t. Indiana 1--Newton (B2) RSA

u. Indiana 3--Huntington RSA

6. Dallas-Fort Worth MTA

a. Dallas-Fort Worth MSA

b. Austin MSA

c. Sherman-Denison MSA

d. Texas 10--Navarro (B3) RSA

e. Texas 11--Cherokee (B1) RSA

f. Texas 16--Burleson RSA

7. Houston MTA

a. Houston MSA

b. Beaumont-Port Arthur MSA

c. Galveston MSA

d. Bryan-College Station MSA

e. Victoria MSA

f. Texas 10--Navarro (B3) RSA

g. Texas 11--Cherokee (B1) RSA

h. Texas 16--Burleson RSA

i. Texas 17--Newton RSA

j. Texas 20--Wilson (B2) RSA

k. Texas 21--Chambers RSA

8. San Antonio MTA

a. San Antonio MSA

b. Texas 16--Burleson RSA

c. Texas 20--Wilson (B2) RSA

9. Richmond-Norfolk MTA

a. Norfolk-Virginia Beach-Portsmouth MSA

b. Richmond MSA

c. Newport News-Hampton MSA

d. Petersburg-Colonial Heights MSA

e. Virginia 7--Buckingham (B1) RSA

f. Virginia 8--Amelia RSA

g. Virginia 9--Greensville RSA

h. Virginia 11--Madison (B1) RSA

[[Page 515]]

i. Virginia 12--Caroline (B1) RSA

j. Virginia 12--Caroline (B2) RSA

10. Milwaukee MTA

a. Wisconsin 8--Vernon RSA

B. GTE PCS/Vodafone Cellular Overlap Areas

1. Cincinnati-Dayton MTA

a. Cincinnati MSA

b. Dayton MSA

c. Hamilton/Middleton MSA

d. Springfield MSA

e. Ohio 4- Mercer RSA

f. Ohio 8--Clinton RSA

2. Seattle MTA

a. Bellingham MSA

b. Bremerton MSA

c. Olympia MSA

d. Seattle-Everett MSA

e. Tacoma MSA

f. Washington 1--Clallam RSA

g. Washington 2--Okanagan RSA

h. Washington 4--Gray's Harbor RSA

3. Spokeane-Billings MTA

a. Spokane MSA

b. Idaho 1--Boundary RSA

c. Idaho 2--Idaho RSA

d. Montana 1--Lincoln RSA

e. Washington 3--Ferry RSA

In the Overlapping Wireless Markets, the population potentially

addressable by wireless mobile telephone systems exceeds 57 million.

Bell Atlantic, Vodafone, and GTE are direct competitors in wireless

mobile telephone services in the Cellular/Cellular Overlap Areas. The

cellular businesses owned in whole or in part by Bell Atlantic and GTE,

Bell Atlantic and Vodafone, or GTE and Vodafone are the two largest

providers of cellular mobile telephone services, and the two primary

providers of all wireless mobile telephone services, in the Cellular/

Cellular Overlap Areas. Moreover in the PCS/Cellular Overlap Areas,

PrimeCo or GTE offer, or will soon offer, PCS wireless mobile telephone

service, while either GTE, Vodafone, or CommNet owns all or part of a

business offering cellular mobile telephone service. Thus, PrimeCo and

GTE, GTE and Vodafone, and GTE and CommNet are among each other's most

significant competitors in wireless mobile telephone services in the

PCS/Cellular Overlap Areas. In each of the PCS/Cellular Overlap Areas,

the GTE, Vodafone, or CommNet cellular business has one of the two

largest market shares in the provision of wireless mobile telephone

services while PrimeCo and GTE as one of a small number of new PCS

entrants in these markets.

Therefore, the Bell Atlantic/GTE Merger and the Bell Atlantic/

Vodafone Partnership would significantly increase the level of

concentration among firms providing wireless mobile telephone services

in each of the Overlapping Wireless Markets. A high level of

concentration in the provision of wireless mobile telephone services

already exists in each of the Overlapping Wireless Markets. In the

Cellular/Cellular Overlap Areas, Bell Atlantic, Vodafone, and GET's

individual market shares in the provision of wireless mobile telephone

services, if measured on the basis of the number of subscribers,

exceeds 35% and their combined market share ranges between 75-95%. As

measured by the Herfindahl-Hirschman Index (``HHI''), which is commonly

employed by the Department of Justice in merger analysis and is

explained in more detail in Appendix A to the Supplemental Complaint,

concentration in these markets is already in excess of 2800, well above

the 1800 threshold at which the Department normally considers a market

to be highly concentrated. After the consummation of these

transactions, the HHI in these markets will be in excess of 5500.

There is also already a high level of consentration in the

provision of wireless mobile telephone services in the PCS/Cellular

Overlap Areas. In virtually all, the individual share of the two

cellular carriers--one of which is GTE, Vodafone, or CommNet--is the

ranger of 30-40% and the combined market share of PrimeCo's PCS and

GTE's cellular business, or the GTE PCS and Vodafone cellular business,

is generally in the 35-50% range, resulting in an HHI over 2000. In

almost all of these markets, PrimeCo or GTE is one of the very few PCS

firms that have begun to vigorously compete against, and take share

away from, the two dominant cellular firms, one of which is, or will

be, owned, in whole or part, by GTE or Vodafone. The competition

between PrimeCo and GTE PCS businesses, and between GTE and Vodafone or

CommNet cellular businesses, created by PrimeCo's or Vodafone's entry

into markets that were previously in effective duopoly, has resulted in

lower prices and higher equality in these markets than would otherwise

have existed absent such competition.

If GTE and Bell Atlantic merge and Bell Atlantic and Vodafone form

their partnership, the Overlapping Wireless Markets will become

significantly more concentrated, and the competition between the

defendants in wireless mobile telephone services in these markets will

be eliminated. As a result of their loss of competition in these

markets, there will be an increased likelihood both of unilateral

actions by the combined firm to increase prices, diminish the quality

or quantity of service provided, or refrain from making investments in

network improvements, and of coordinated interaction among the limited

number of remaining competitors that could lead to similar

anticompetitive results. Therefore, the likely effect of the Bell

Atlantic/GTE Merger and the Bell Atlantic/Vodafone Partnership on the

provisions of wireless mobile telephone services in the Overlapping

Wireless Markets is that prices would increase, and the quality or

quantity of service together with incentives to improve network

facilities would decrease.

It is unlikely that entry within the next two years into wireless

mobile telephone services in the Overlapping Wireless Markets would be

sufficient to mitigate the competitive harm resulting from the

consummation of these two transactions.

For these reasons, the United States concluded that Bell Atlantic/

GTE Merger and the Bell Atlantic/Vodafone Partnership as proposed may

substantially lessen competition, in violation of Section 7 of the

Clayton Act, in the provision of wireless mobile telephone services

within the Overlapping Wireless Markets.

III. Explanation of the Proposed Final Judgment

A. The Divestiture Requirement

The proposed Final Judgment will preserve competition in the sale

of mobile wireless telephone services in each of the Overlapping

Wireless Markets by requiring defendants to divest one of their two

wireless telephone businesses in each of the overlapping Wireless

Markets. This divestiture will eliminate the change in market structure

caused by the merger.

The divestiture requirements of the proposed Final Judgment, as

stated in Sections IV.A and II.G, direct defendants to divest one of

their wireless telephone businesses (to be selected by defendants) in

each of the Overlapping Wireless Markets. Section IV.C permits

different wireless businesses in separate Overlapping Wireless Markets

to be divested to different purchasers, but requires that, for any

individual wireless business, the Wireless System Assets be divested

entirely to a single purchaser, unless the United States otherwise

consents in writing.

The proposed Final Judgment's divestiture provisions are intended

to accomplish the ``complete divestiture of the entire business of one

of the two wireless systems in each of the Overlapping Wireless

Markets,'' as Section II.G states. Section II.G also specifies in

detail the types of assets to be divested, which collectively are

described throughout the consent decree

[[Page 516]]

as ``Wireless System Assets,'' and addresses some special circumstances

concerning the divestiture of those assets. In all of the Overlapping

Wireless Markets, Wireless System Assets means all types of assets,

tangible and intangible, used by defendants in the operation of each of

the wireless businesses to be divested, including the provision of long

distance telecommunications service for wireless calls. Section II.G

enumerates in detail, without limitation, particular types of assets

covered by the divestiture requirement.

For the most part, the divesting defendant is required to transfer

to the purchaser the complete ownership and/or other rights to the

Wireless System Assets. However, the merged firm will retain a number

of other wireless businesses in areas that do not overlap, and prior to

the merger each defendant may have had certain assets that were used

substantially in the operations of its overall wireless business and

that must be retained to some extent to continue the existing

operations of the wireless businesses not being divested. Section II.G

permits special divestiture arrangements for such assets if they are

not capable of being divided between the divested and retained wireless

businesses, or if the divesting defendant and the purchaser agree not

to divide them. For these assets, the divestiture requirement is

satisfied if the divesting defendant grants to the purchaser, at the

election of the purchaser, an option to obtain a non-exclusive,

transferable license for a reasonable period to use the assets in the

operation of the wireless business being divested, so as to enable the

purchaser to continue to operate the divested wireless businesses

without impairment.

The definition of Wireless System Assets in Section II.G contains

special provisions relating to intellectual property. One addresses

intellectual property rights that defendants may have under third-party

licenses that could not be transferred to a purchaser entirely or by

license without the consent of the third-party licensor. If any such

assets are used by the wireless businesses being divested, defendants

must identify them in a schedule submitted to plaintiff and filed with

the Court as expeditiously as possible following the filing of the

Supplemental Complaint, and in any event, prior to any divestiture and

before the Court approves the proposed Final Judgment. Defendants must

explain the necessary consents and how a consent would be obtained for

each asset. This proviso is not intended to afford defendants any

opportunity to withhold intellectual property rights over which they

have any control, which could impair the ability of a purchaser to use

the divested wireless business to compete effectively. It relates only

to intellectual property assets that defendants have no power to

transfer themselves, and defendants must do all that is possible to

transfer the entire business of the divested wireless businesses. To

make this clear, Section IV.G obligates defendants to cooperate with

any purchaser as well as a trustee, if any, to seek to obtain the

necessary third-party consents, if any assets require such consents

before they may be transferred to a purchaser.

Another proviso relates to certain specific trademarks, trade names

and service marks. Section II.G, defining the Wireless System Assets to

be divested, generally requires the divestiture of trademarks, trade

names and service marks, with the 25 specified exceptions which contain

names under which defendants' retained wireless businesses, or their

corporate parents or affiliates, do business. Such trademarks, trade

names and service marks, like other assets, are either to be divested

in their entirety, except for marks and names that must be retained to

continue the existing operations of defendants' remaining wireless

properties and that are not capable of being divided (or that the

divesting defendant and purchaser agree not to divide), which are to be

made available to the purchaser through a non-exclusive, transferable

license.

Under limited circumstances, defendants are allowed to retain

specified portions of the Wireless System Assets in the Overlapping

Wireless Markets. First, Section II.G.1 provides that if defendants

elect to divest an interest in a PCS business in one of the PCS/

Cellular Overlap Areas, defendants may retain up to 10 MHZ of broadband

PCS spectrum within that PCS/Cellular Overlap Area upon completion of

the divestiture of the Wireless System Assets. In this instance,

defendants will still otherwise be required to divest the entire PCS

business, including 20 MHZ of broadband PCS spectrum, to ensure that

the market structure does not change as a result of the merger and that

the divested business will be able to compete as effectively under new

ownership as under its current ownership.

Second, in the event that defendants elect to divest an interest in

a PCS business in one of the PCS/Cellular Overlap Areas, Section II.G.2

of the Final Judgment allows defendants to request approval from

plaintiff to partition the PCS license along BTA geographic boundaries,

or county boundaries in the Case of Kenosha County, Wisconsin, and

retain assets in one or more specified non-overlapping BTAs or in

Kenosha County. Plaintiff's approval of the request shall be subject to

a determination by plaintiff in its sole discretion that the assets to

be retained in the non-overlapping BTAs or Kenosha County are not

needed to assure the competitive effectiveness of the divested business

in the remainder of the MTA, and that the purchaser of the Wireless

System Assets in the remainder of the MTA will be able to operate the

divested PCS business as a fully competitive entity. Section II.G.2

requires defendants to seek this approval at least 90 calendar days

prior to the consummation of the transaction which gives rise to the

overlap.

Finally, Section II.G.3 allows defendants, with approval from

plaintiff, to retain both the PCS business and the non-controlling

minority interest in an overlapping cellular business in a PCS/Cellular

Overlap Area. Plaintiff's approval of the request shall be subject to a

determination by plaintiff in its sole discretion that the retention of

a non-controlling minority interest will be entirely passive and will

not significantly diminish competition. GTE has a number of non-

controlling minority interests in cellular businesses, ranging from 2%

to 40%, in the Overlapping Wireless Markets. To be permitted to retain

a minority cellular interest, defendants will be required to

demonstrate that the interest they wish to keep is entirely passive,

such that they receive no competitively sensitive information about the

competing cellular business and have no input into the business

decisions of the competing cellular provider that could have

anticompetitive consequences. Plaintiff, in its sole discretion, will

determine that the retention of the non-controlling minority interest

will not significantly diminish competition before approval will be

granted for the merged firm to retain a minority interest. Section

II.G.3 requires defendants to seek this approval at least 90 calendar

days prior to the consummation of the transaction which gives rise to

the overlap.

Section IV contains other provisions to facilitate divestiture,

including notification of the availability of the Wireless System

Assets for purchase in Section IV.D, access to information about the

Wireless System Assets in Section IV.E, and preservation of records in

Section IV.H. In addition, to ensure that a purchaser will be able to

operate the divested wireless business without impairment, Section IV.F

prohibits defendants from interfering with a purchaser's negotiations

to retain

[[Page 517]]

any employees who work or have worked with the Wireless System Assets

since the date of the announcement of the merger of partnership, or

whose principal responsibility relates to the Wireless System Assets.

B. Timing of Divestiture

In antitrust cases involving mergers in which the United States

seeks a divestiture remedy, it requires completion of the divestiture

within the shortest time period reasonable under the circumstances. The

proposed Final Judgment in this case requires, in section IV.A, the

divestiture of the Wireless System Assets in the Overlapping Wireless

Markets on a strict schedule, but provides defendants with some

flexibility in recognition of the special timing issues involved in a

divestiture of this size and complexity.

Under Section IV.A, defendants must divest the Wireless System

Assets of one of the two wireless businesses in the Cellular/Cellular

Overlap Areas on or before consummation of the transaction that gives

rise to the overlap. The divestitures of the Wireless System Assets for

each PCS/Cellular Overlap Area shall occur prior to or at the same time

as consummation of the transaction that gives rise to the overlap, or

June 30, 2000, whichever is later. Plaintiff may, in its sole

discretion, extend this date by up to two thirty-day periods. If one or

more divestitures have not been completed as of the date of the

consummation of the transaction that gives rise to the overlap,

defendants will submit to plaintiff Divestiture List identifying the

specific Wireless System Assets in each of the PCS/Cellular Overlap

Areas that will be divested.

The divestiture timing provisions of the proposed Final Judgment

will ensure that the divestitures are carried out in a timely manner,

and at the same time will permit the parties an adequate opportunity to

accomplish the divestitures through a fair and orderly process. Even if

all Wireless System Assets have not been divested upon consummation of

the transaction that gives rise to the overlap, there will be no

adverse impact on competition given the short duration of the period of

common ownership and the detailed requirements of the Hold Separate

Order contained in Section IX of the Final Judgment.

Section IV. B of the proposed Final Judgment requires that, in

carrying out the divestitures, defendants comply with all of the

applicable rules of the FCC, or any waiver of such rules or other

authorization granted by the FCC. These rules include 47 CFR 20.6

(spectrum aggregation) and 47 CFR 22.942 (cellular cross-ownership)\5\

These FCC requires may add to, but cannot subtract from or impair, the

requirements of the proposed Final Judgment, since Section IV.B

specifies that authorization by the FCC to conduct divestiture of a

wireless business in a particular manner will not modify any of the

requirements of the degree. The provisions of the proposed Final

Judgment have been designed to avoid any conflict with the FCC's rules.

---------------------------------------------------------------------------

\5\ The FCC's spectrum aggregation rules, in 47 CFR 20.6, do not

permit a licensee to have an attributable interest in more than 45

MHZ of spectrum licensed for cellular, PCS or SMR with significant

overlap in any geographic area. The FCC will attribute an interest

if it is controlling, or if in most cases it is 20% or more of the

equity, outstanding stock or voting stock of the licensee. The FCC's

cellular cross-ownership rules, in 47 CFR 22.942, also prohibit a

licensee or any person controlling a licensee from having a direct

or indirect ownership interest of more than 5% in both cellular

systems in an overlapping cellular geographic service area, unless

such interests pose ``no substantial threat to competition.''

---------------------------------------------------------------------------

C. Use of a Trustee Subsequent to Consummation of the Acquisition

The proposed Final Judgment provides in Section IV.A that

defendants must divest the Wireless System Assets in each of the

Overlapping Wireless Markets in accordance with the schedule contained

therein, either to purchasers acceptable to plaintiff in its sole

discretion, or to a trustee designated pursuant to Section V of the

Final Judgment. As part of this divestiture, defendants must relinquish

any direct or indirect financial ownership interests and any direct or

indirect role in management or participation in control. If a trustee

is appointed pursuant to Section V of the proposed Final Judgment, the

trustee will then own and control the systems until they are sold to a

final purchasers, subject to safeguards to prevent defendants from

influencing their operation.

Section V details the requirements for the establishment of the

trust, the selection and compensation of the trustee, the

responsibilities of the trustee in connection with divestiture and

operation of the Wireless System Assets, and the termination of the

trust. If defendants have not divested all of their Wireless System

Assets in the Overlapping Wireless Markets to approved purchasers in

accordance with Section IV.A, Section V. A requires: (1) defendants to

identify the Wireless System Assets in each Overlapping Wireless Market

to be divested; (2) the Court to appoint a trustee, which shall be

selected by the United States; (3) defendants to submit a form of Trust

Agreement consistent with the terms of the Final Judgment, and which

form agreement must have received approval by the United States; and

(4) defendants, after receiving FCC approval for the license transfers,

to divest irrevocably the unsold Wireless System Assets to the trustee.

The trustee will then have the obligation and the sole

responsibility for the divestiture of any transferred Wireless System

Assets. Under Section V.B, the trustee has the authority to accomplish

divestitures at the earliest possible time and ``at the best price then

obtainable upon a reasonable effort by the trustee.'' In addition,

notwithstanding any provision to the contrary, plaintiff may, in its

sole discretion, require defendants to include additional assets that

substantially relate to the wireless mobile telephone business in the

Wireless System Assets to be divested if it would facilitate a prompt

divestiture to an acceptable purchaser. This provision allows

plaintiff, in its discretion, to require defendants to divest

additional Wireless System Assets that substantially relate to the

wireless mobile telephone business to ensure that the trustee can

promptly locate and divest to a purchaser acceptable to plaintiff.

Defendants are not entitled to object to divestiture based on the

adequacy of the price the trustee obtains or any other grounds, unless

the trustee's conduct amounts to malfeasance. The terms of the

trustee's compensation, under Section V.C, will provide incentives

based on the price and terms of the divestiture and the speed with

which it is accomplished. As provided by Section V.B and V.C.,

defendants will pay the compensation and expenses of the trustee, and

of any investment bankers, attorneys or other agents that the trustee

finds reasonably necessary to assist in the divestiture and the

management of the Wireless System Assets.

The trusteeship mechanism has been used by the FCC, in a variety of

contexts, to provide a short period of time in which to complete a sale

of a spectrum licensee that must be divested, while permitting the

broader merger or acquisition that necessitates the divestiture to go

forward. In this context, the critical feature of the trusteeship

arrangement is that the trustee will not only have responsibility for

sale of the Wireless System Assets, but will also be the authorized

holder of the wireless license, with full responsibility for the

operations, marketing and sales of the wireless business to be

divested, and will not be subject to any control or direction by

defendants. Defendants will no longer

[[Page 518]]

have any role in the ownership, operation or management of the Wireless

System Assets to be divested following consummation of their merger, as

provided by Section V.H, other than the right to receive the proceeds

of the sale, and certain obligations to provide cooperation to the

trustee in order to complete the divestiture, as indicated in Section

V.D. Under V.E., the trustee also has monthly reporting obligations

concerning the efforts made to divest the Wireless System Assets.

Defendants are precluded under Section V.H from communicating with the

trustee, or seeking to influence the trustee, concerning the

divestiture or the operation and management of the wireless businesses

transferred, apart from the limited communications necessary to carry

out the Final Judgment and to provide the trustee with the necessary

resources and cooperation to complete the divestitures. Defendants and

the trustee are subject to an absolute prohibition on exchanging any

non-public or competitively sensitive marketing, sales or pricing

information relating to either of the wireless businesses in the

Overlapping Wireless Markets. These safeguards will protect against any

competitive harm that could arise from coordinated behavior or

information sharing between the two wireless businesses during the

limited period while sale of the Wireless System Assets is not yet

complete, and ensure that the trusteeship arrangement is consistent

with the FCC's rules.

Section V.F. requires the trustee to divest the Wireless System

Assets to a purchaser or purchasers acceptable to the plaintiff no

later than 180 days after the assets are transferred to the trustee.

However, since the FCC's approval is required for the transfer of the

wireless licenses to a purchaser, Section V.F provides that if

applications for transfer of a wireless license have been filed by the

FCC within the 180-day period, but the FCC has not granted approval

before the end of that time, the period for divestiture of the specific

Wireless System Assets covered by the license that cannot yet be

transferred shall be extended until five days after the FCC's approval

is received. This extension is to be applied only to the individual

wireless license affected by the delay in approval of the license

transfer and does not entitle defendants to delay the divestiture of

any other Wireless System Assets for which license transfer approval

has been granted.

D. Criteria for the United States' Approval of Purchasers

Under the proposed Final Judgment, the United States plays an

important role in the approval of purchasers for each of the divested

wireless businesses by ensuring that the purchasers chosen by

defendants or the trustee are adequate from a competitive viewpoint.

Section IV.A specifies that the United States' approval or rejection of

a purchaser is at its sole discretion, but also enumerates certain

criteria that the United States will apply in making the approval

decision.

In the case of any divestiture by defendants or the trustee, it is

important to ensure that the ongoing wireless businesses go to

purchasers with the capability and intent to operate them as effective

competitors in the lines of business they already serve, and that there

are no conditions restricting competition in the terms of the sale.

Specifically, Section IV.C of the proposed Final Judgment requires that

the divestitures of Wireless System Assets be made to a purchaser or

purchasers for whom it is demonstrated to plaintiff's sole satisfaction

that: (1) The purchaser(s) has the capability and intent to compete

effectively in the provision of wireless mobile telephone service using

the Wireless System Assets; (2) the purchaser(s) has the managerial,

operational and financial capability to compete effectively in the

provision of wireless mobile telephone service using the Wireless

System Assets; and (3) none of the terms of any agreement between the

purchaser(s) and either of defendants shall give defendants the ability

unreasonably (i) to raise the purchaser(s)'s costs, (ii) to lower the

purchaser(s)'s efficiency, (iii) to limit any line of business which a

purchaser(s) may choose to pursue using the Wireless System Assets, or

otherwise to interfere with the ability of the purchaser(s) to compete

effectively. All of these criteria must be satisfied whether the

divestiture is accomplished by defendants or the trustee.

E. Other Provisions of the Decree

Section III specifies the persons to whom the Final Judgment is

applicable, and provides for the Final Judgment to be applicable to

certain interim Parties to whom defendants might transfer the Wireless

System Assets, other than purchasers approved by the United States.

Section VI obliges defendants, or the trustee if applicable, to

notify the United States of any planned divestiture of Wireless System

Assets within two business days of executing a binding agreement with a

purchaser. This section enables the United States to obtain information

to evaluate the chosen purchaser as well as other prospective

purchasers who expressed interest and establishes a procedure for the

United States to notify defendants and the trustee whether it objects

to a divestiture. The United States' notification of its lack of

objection is necessary for a divestiture to proceed. This section also

provides for an objection by defendants to a sale by the trustee under

the limited situation of alleged malfeasance, but in that case it is

possible for the Court to approve a sale over defendants' objection.

Section VII establishes affidavit requirements for defendants to

report to the United States on their compliance with the proposed Final

Judgment, their activities in seeking to divest the Wireless System

Assets prior to consummating the transaction that gives rise to the

overlap, and their actions to preserve the Wireless System Assets to be

divested.

Section VIII prohibits defendants from financing all or any part of

a purchase made by an acquirer of the Wireless System Assets, whether

the divestiture is carried out by defendants or by the trustee.

Section IX, the Hold Separate Order, contains important

requirements concerning the operation of the wireless businesses before

divestiture is complete, and the preservation of the Wireless System

Assets as a viable, ongoing business. The obligations of Section IX.A

fall on each defendant and both wireless businesses in any Overlapping

Wireless Market to ensure that such wireless businesses continue to be

operated as separate, independent, ongoing, economically viable and

active competitors to the other wireless mobile telecommunications

providers in the same area. Section IX.A requires separation of the

operations of the two wireless businesses and their books, records and

competitively sensitive information. The requirements of Section IX.A

serve to ensure that defendants maintain their two wireless businesses

in the Overlapping Wireless Markets as fully separate competitors prior

to consummating their merger, notwithstanding their expectations that

the merger will take place. The requirements also reinforce the

provisions of Section V.H concerning the separation of defendants and

the trustee after the merger is consummated but white Wireless System

Assets are still awaiting sale.

Section IX.B requires the defendant whose assets will be divested

(or both, if it has not yet been decided which

[[Page 519]]

system will be divested in a particular market) to take certain

specified steps to preserve the assets in accordance with past

practices. These steps include maintaining and increasing sales,

maintaining the assets in operable condition, providing sufficient

credit and working capital, not selling the assets (except with

approval of plaintiff), not terminating, transferring or reassigning

employees who work with the assets (with certain limited exceptions),

and not taking any actions to impede or jeopardize the sale of the

assets. Section IX.D obliges each defendant, during the period while

they still control Wireless System Assets, to appoint persons not

affiliated with the other defendant to oversee the Wireless System

Assets to be divested and to be responsible for compliance with the

Final Judgment.

In order to ensure compliance with the Final Judgment, Section X

gives the United States various rights, including the ability to

inspect defendants' records, to conduct interviews and take sworn

testimony of defendants' officers, directors, employees and agents, and

to require defendants to submit written reports. These rights are

subject to legally recognized privileges, and any information the

United States obtains using these powers is protected by specified

confidentiality obligations, which permit sharing of information with

the FCC under a customary protective order issued by that agency or a

waiver of confidentiality. Under Section III.B, purchasers of the

Wireless System Assets must also agree to give the United States

similar access to information.

The Court retains jurisdiction under Section XI, and Section XII

provides that the proposed Final Judgment will expire on the tenth

anniversary of the date of its entry, unless extended by the Court.

Although the required divestitures will be accomplished in a

considerably shorter time, defendants are also precluded from

reacquiring the divested properties within the term of the decree.

IV. Remedies Available to Potential Private Litigants

Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any

person who has been injured as a result of conduct prohibited by the

antitrust laws may bring suit in federal court to recover three times

the damages that the person has suffered, as well as costs and

reasonable attorneys' fees. Entry of the proposed Final Judgment will

neither impair nor assist the bringing of any private antitrust damage

action. Under the provisions of Section 5(a) of the Clayton Act, 15

U.S.C. 16(a), the proposal Final Judgment has no prima facie effect in

any subsequent private lawsuit that may be brought against defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

Plaintiff and defendants have stipulated that the proposed Final

Judgment may be entered by the Court after compliance with the

provisions of the APPA, provided that the United States has not

withdrawn its consent. The APPA conditions entry upon the Court's

determination that the proposed Final Judgment is in the public

interest.

The APPA provides a period of at least sixty (60) days preceding

the effective date of the proposed Final Judgment within which any

person may submit to the United States written comments regarding the

proposed Final Judgment. Any person who wishes to comment should do so

within sixty (60) days of the date of publication of this Competitive

Impact Statement in the Federal Register. The United States will

evaluate and respond to the comments. All comments will be given due

consideration by the United States, which remains free to withdraw its

consent to the proposed Final Judgment at any time prior to entry. The

comments and the responses of the United States will be filed with the

Court and published in the Federal Register.

Written comments should be submitted to: Donald J. Russell, Chief,

Telecommunications Task Force, Antitrust Division, United States

Department of Justice, 1401 H Street, N.W., Suite 8000, Washington,

D.C. 20530.

The proposed Final Judgment provides, in Section XI, that the Court

retains jurisdiction over this action, and the parties may apply to the

Court for any order necessary or appropriate to carry out or construe

the Final Judgment, to modify any of its provisions, to enforce

compliance, and to punish any violations of its provisions.

VI. Alternatives to the Proposed Final Judgment

The United States considered, as an alternative to the proposed

Final Judgment, seeking an injunction to block consummation of the Bell

Atlantic/GTE Merger and Bell Atlantic/Vodafone Partnership and a full

trial on the merits. The United States is satisfied, however, that the

divestiture of Wireless System Assets and other relief contained in the

proposed Final Judgment will preserve competition in the provision of

wireless mobile telephone services in the Overlapping Wireless Markets.

This proposed Final Judgment will also avoid the substantial costs and

uncertainty of a full trial on the merits of the violations alleged in

the complaint. Therefore, the United States believes that there is no

reason under the antitrust laws to proceed with further litigation if

the divestitures of the Wireless System Assets are carried out in the

manner required by the proposed Final Judgment.

VII. Standard of Review Under the APPA for Proposed Final Judgment

The APPA requires that proposed consent judgments in antitrust

cases brought by the United States be subject to a sixty (60) day

comment period, after which the court shall determine whether entry of

the proposed Final Judgment ``is in the public interest.'' In making

that determination, the court may consider--

(1) the competitive impact of such judgment, including

termination of alleged violations, provisions for enforcement and

modification, duration or relief sought, anticipated effects of

alternative remedies actually considered, and any other

consideration bearing upon the adequacy of such judgment;

(2) the impact of entry of such judgment 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) (emphasis added). As the United States Court of Appeals

for the D.C. Circuit held, this statute permits a court to consider,

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 United States v. Microsoft, 56 F.3d 1448, 1461-62 (D.C. Cir. 1995).

In conducting this inquiry, ``[t]he Court is nowhere compelled to

go to trial or to engage in extended proceedings which might have the

effect of vitiating the benefits of prompt and less costly settlement

through the consent decree process.'' \6\ Rather,

\6\ 119 Cong. Rec. 24598 (1973). See United States v. Gillette

Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest''

determination can be made properly on the basis of the Competitive

Impact Statement and Response to Comments filed pursuant to the

APPA. Although the APPA authorizes the use of additional procedures,

15 U.S.C. 16(f), those procedures are discretionary. A court need

not invoke any of them unless it believes that the comments have

raised significant issues and the further proceedings would aid the

court in resolving those issues. See H.R. Rep. 93-1463, 93d Cong. 2d

Sess. 8-9 (1974), reprinted in U.S.C.C.A.N. 6535, 6538.

---------------------------------------------------------------------------

[[Page 520]]

[a]bsent a showing of corrupt failure of the government to discharge

its duty, the Court, in making its public interest filing, should *

* * carefully consider the explanations of the government in the

competitive impact statement and its responses to comments in order

to determine whether those explanations are reasonable under the

---------------------------------------------------------------------------

circumstances.

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. (CCH)

para. 61,508, at 71,980 (W.D. Mo. 1977).

Accordingly, 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. Precedent requires that

the 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.\7\

\7\ Bechtel, 648 F.2d at 666 (emphasis added); see BNS, 858 F.2d

at 463; United States v. National Broadcasting Co., 449 F. Supp.

1127, 1143 (C.D. Cal. 1978); Gillette, 406 F. Supp. at 716. See also

Microsoft, 56 F.3d at 1461 (whether ``the remedies [obtained in the

decree are] so inconsonant with the allegations charged as to fall

outside of the `reaches of the public interest' '').

---------------------------------------------------------------------------

The proposed Final Judgment, therefore, should not be reviewed

under a standard of whether it is certain to eliminate every

anticompetitive effect of a particular practice or whether it mandates

certainty of free competition in the future. Court approval of a final

judgment requires a standard more flexible and less strict than the

standard required for a finding of liability. ``[A] proposed decree

must be approved even if it falls short of the remedy the court would

impose on its own, as long as it falls within the range of

acceptability or is `within the reaches of public interest.' '' United

States v. American Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C.

1982), aff'd sub nom., Maryland v. United States, 460 U.S. 1001 (1983)

(quoting Gillette Co., 406 F. Supp. at 716), United States v. Alcan

Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985).

Moreover, the court's role under the Tunney Act 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. Since ``[t]he 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 might have but did

not pursue. Id.

VIII. Determinative Documents

There are no determinative materials or documents within the

meaning of the APPA that were considered by the United States in

formulating the proposed Final Judgment. Consequently, the United

States has not attached any such materials to the proposed Final

Judgment.

Dated: December 22, 1999.

Respectfully submitted,

Joel I. Klein,

Assistant Attorney General.

A. Douglas Melamed,

Principal Deputy Assistant Attorney General.

Constance K. Robinson,

Director of Operations and Merger Enforcement.

Donald J. Russell,

Chief, Telecommunications Task Force.

Laury E. Bobbish,

Assistant Chief, Telecommunications Task Force.

Hillary B. Burchuk,

D.C. Bar #366755.

Lawrence M. Frankel,

D.C. Bar #441532.

Susan Wittenberg,

D.C. Bar #453692.

Trial Attorneys, U.S. Department of Justice, Antitrust Division,

Telecommunications Task Force, 1401 H Street, N.W., Suite 8000,

Washington, DC 20530, (202) 514-5621.

Certificate of Service

I hereby certify that copies of the foregoing Plaintiff United

States' Competitive Impact Statement, were served via U.S. Mail, first

class postage prepaid, on this 22nd day of December, 1999 upon each of

the parties listed below:

John Thorne,

Bell Atlantic Corporation, 1320 North Court House Road, Eighth Floor,

Arlington, VA 22201, Counsel for Bell Atlantic Corporation.

Steven G. Bardbury, Kirkland & Ellis, 655 Fifteenth Street, N.W.,

Washington, DC 20005, Counsel for GTE Corporation.

Megan Pierson,

AirTouch Communications, Inc., One California Street, San Francisco, CA

94111, Counsel for Vodafone AirTouch Plc.

Lawrence M. Frankel,

Counsel for Plaintiff.

[FR Doc. 00-197 Filed 1-4-00; 8:45 am]

BILLING CODE 4410-11-M