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 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 May 7, 1999, the

United States filed a Compliant alleging that the proposed acquisition

of GTE Corporation by Bell Atlantic Corporation would lessen

competition in the markets for wireless mobile telephone services in 10

major trading areas, and 65 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

Complaint, requires defendants to divest one of their two wireless

telephone businesses in each market where these businesses overlap

geographically. 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.

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 and Merger Enforcement.

United States District Court for the District of Columbia

United States of America, Plaintiff, v. Bell Atlantic Corporation

and GTE Corporation, Defendants.

[Civil No.: 1:99CV01119; Filed: 5/7/99]

Judge Louis F. Oberdorfer

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.

(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

[[Page 32524]]

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: May 7, 1999.

For Plaintiff United States of America:

Joel I. Klein,

Assistant Attorney General.

Donald J. Russell,

Chief, Telecommunications Task Force.

A. Douglas Melamed,

Principal Deputy Assistant Attorney General.

Constance K. Robinson,

Director of Operations and Merger Enforcement.

Laury Bobbish,

Assistant Chief, Telecommunications Task Force.

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

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

J. Philip Sauntry, Jr., D.C. Bar No. 142828.

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: May 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: May 6, 1999.

For GTE Corporation:

Steven G. Bradbury, D.C. Bar No. 416430

Kirkland & Ellis, 655 15th Street, NW., Washington, DC 20005, (202)

879-5000.

Date Signed: May 6, 1999.

Stipulation Approved For Filing

Done this ____ day of ________, 1999

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

United States District Judge

United States District Court for the District of Columbia

United States of America, Plaintiff, v. Bell Atlantic Corporation

and GTE Corporation, Defendants.

[Civil No.: 1:99CV01119; Filed: 5/7/99]

Judge Louis F. Oberdorfer

Final Judgment

Whereas, plaintiff, United States of America, filed its Complaint

on May 7, 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, Florida,

Illinois, Indiana, New Mexico, South Carolina, Texas, Virginia 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, Florida, Illinois, Indiana, New Mexico, South Carolina, Texas,

Virginia or 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

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 its

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

by Bell Atlantic and GTE on July 28, 1998.

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

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

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

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

entities.

D. ``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 Complaint in

this case, Bell Atlantic, by virtue of its partnership interest in PCS

PrimeCo, L.P. (``PrimeCo''), held an interest in PCS businesses, and

GTE held, or has plans to acquire,\1\ an ownership interest in cellular

businesses which serve the following MSAs and RSAs that geographically

overlap with the applicable PrimeCo MTA, as indicated:

\1\ Pursuant to an April 2, 1999 purchase agreement, GTE plans

to acquire the following cellular systems from Ameritech Mobile

Phone Service of Illinois, Inc., and Ameritech Mobile Phone Service

of Chicago, Inc.: Aurora-Elgin, IL MSA, Bloomington-Normal, IL MSA,

Champaign-Urbana-Rantoul, IL MSA, Chicago, IL MSA, Decatur, IL MSA,

Gary-Hammond-East Chicago, IN MSA, Joliet, IL MSA, Kankakee, IL MSA,

Springfield, IL MSA, Illinois 2--Bureau (B3) RSA, Illinois 4--Adams

(B1) RSA, Illinois 5--Mason (B2) RSA, Illinois 6--Montgomery RSA,

Illinois 7--Vermilion RSA, and Indiana 1--Newton (B2) RSA.

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

I. PCS/Cellular Overlap Areas

A. Jacksonville MTA

1. Jacksonville MSA

2. Florida 5-Putman RSA

B. Miami-Fort Lauderdale MTA

1. Fort Myers MSA

2. Florida 1--Collier (B1) RSA

3. Florida 2--Glades (B1) RSA

4. Florida 3--Hardee RSA

5. Florida 11--Monroe (B2) RSA

C. Tampa-St. Petersburg-Orlando MTA

1. Tampa-St. Petersburg MSA

2. Lakeland-Winter Haven MSA

3. Sarasota MTA

4. Bradenton MSA

5. Florida 2--Glades (B1) RSA

6. Florida 3--Hardee RSA

7. Florida 4--Citrus (B1) RSA

D. New Orleans-Baton Rouge MTA

1. Mobile, AL MSA

2. Pensacola, FL MSA

E. Chicago MTA

1. Aurora-Elgin, IL MSA

2. Bloomington-Normal, IL MSA

3. Champaign-Urbana-Rantoul, IL MSA

[[Page 32525]]

4. Chicago, IL MSA

5. Decatur, IL MSA

6. Fort Wayne, IN MSA

7. Gary-Hammond-East Chicago, IN MSA

8. Joliet, IL MSA

9. Kankakee, IL MSA

10. Rockford, IL MSA

11. Springfield, IL MSA

12. Illinois 1--Jo Daviess RSA

13. Illinois 2--Bureau (b1) RSA

14. Illinois 2--Bureau (B3) RSA

15. Illinois 3--Mercer RSA

16. Illinois 4--Adams (B1) RSA

17. Illinois 5--Mason (B2) RSA

18. Illinois 6--Montgomery RSA

19. Illinois 7--Vermilion RSA

20. Indiana 1--Newton (B1) RSA

21. Indiana 1--Newton (B2) RSA

22. Indiana 3--Huntington RSA

F. Dallas-Fort Worth MTA

1. Dallas-Fort Worth MSA

2. Austin MSA

3. Sherman-Denison MSA

4. Texas 10--Navarro (B3) RSA

5. Texas 11--Cherokee (B1) RSA

6. Texas 16--Burleson RSA

G. Houston MTA

1. Houston MSA

2. Beaumont-Port Arthur MSA

3. Galveston MSA

4. Bryan-College Station MSA

5. Victoria MSA

6. Texas 10--Navarro (B3) RSA

7. Texas 11--Cherokee (B1) RSA

8. Texas 16--Burleson RSA

9. Texas 17--Newton RSA

10. Texas 20--Wilson (B2) RSA

11. Texas 21--Chambers RSA

H. San Antonio MTA

1. San Antonio MSA

2. Texas 16--Burleson RSA

3. Texas 20--Wilson (B2) RSA

I. Richmond-Norfolk MTA

1. Norfolk-Virginia Beach-Portsmouth MSA

2. Richmond MSA

3. Newport News-Hampton MSA

4. Petersburg-Colonial Heights MSA

5. Virginia 7-Buckingham (B1) RSA

6. Virginia 8-Amelia RSA

7. Virginia 9-Greensville RSA

8. Virginia 11-Madison (B1) RSA

9. Virginia 12-Caroline (B1) RSA

10. Virginia 12-Carolina (B2) RSA

J. Milwaukee MTA

1. Wisconsin 8-Vernon RSA

II. Cellular MSA Overlap Areas

A. Greenville, SC MSA

B. Anderson, SC MSA

C. El Paso, TX MSA

D. Las Cruces, NM MSA

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

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

intangible, used by defendants in the operation of each 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, the Wireless System Assets to be divested

shall be either those in which Bell Atlantic has an interest or those

in which GTE has or will acquire an interest, but not both. These

divestitures of the Wireless System Assets as defined in this Section

II.E shall be accomplished by: (i) 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, inventory, office

furniture, fixed assets and furnishing, 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,

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 ``Airbridge,'' ``AmericaChoice,'' ``Bell

Atlantic Mobile,'' ``Cellular One,'' Conversation Card,''

DigitalChoice,'' ``EasternChoice,'' ``GTE,'' ``HomeChoice,''

``MetroMobile,'' ``Mobilnet,'' ``PCS Now,'' ``PCS Ultra,'' ``PrimeCo,''

``Welcome to the United State 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 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 Bell Atlantic's

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 Bell Atlantic's

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

Bell Atlantic/GTE Merger, may request approval from plaintiff to

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

boundaries and retain assets in one or more specified non-overlapping

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

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

sold in the non-overlapping BTAs are not needed to assure the

competitive viability 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 GTE holds a non-controlling

minority interest in an overlapping cellular business, defendants, at

least 90 calendar days prior to the consummation of the Bell Atlantic/

GTE

[[Page 32526]]

Merger, may request approval from plaintiff to retain both the PCS

business and GTE's 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

each of defendants, its affiliates, subsidiaries, successors, and

assigns, and its directors, officers, managers, agents, employees,

attorneys, and shall also be applicable to all other persons in active

concert or participation with any of them 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 and GTE shall divest themselves of the

Wireless System Assets 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. On or before consummation of the Bell Atlantic/GTE Merger,

defendants shall divest Wireless System Assets in the Cellular MSA

Overlap Areas;

2. If Bell Atlantic has acquired 100% ownership of one or more of

the PCS businesses currently operated by PrimeCo in MTAs in the PCS/

Cellular Overlap Areas more than ninety (90) calendar days prior to

consummation of the Bell Atlantic/GTE Merger, defendants shall divest

the Wireless System Assets in the PCS/Cellular Overlap Areas on or

before consummation of the Bell Atlantic/GTE Merger;

3. If Bell Atlantic has not acquired, more than ninety (90)

calendar days prior to consummation of the Bell Atlantic/GTE Merger,

100% ownership of one or more of the PCS businesses currently operated

by PrimeCo in MTAs in the PCS/Cellular Overlap Areas:

(a) defendants will submit to plaintiff, on or before consummation

of the Bell Atlantic/GTE Merger, a definitive Divestiture List

identifying the specific Wireless System Assets in each of the PCS/

Cellular Overlap Areas that will be divested;

(b) the cellular MSA and RSA businesses on the Divestiture List

shall be divested within ninety (90) calendar days after consummation

of the Bell Atlantic/GTE Merger; except that if Bell Atlantic acquires

100% ownership of one or more of the PCS businesses currently operated

by PrimeCo in MTAs in the PCS/Cellular Overlap Areas within the ninety

(90) calendar day period prior to consummation of the Bell Atlantic/GTE

Merger, the cellular MSA and RSA businesses on the Divestiture List

shall be divested on or before consummation of the Bell Atlantic/GTE

Merger;

(c) the PCS MTA businesses on the Divestiture List shall be

divested within 90 calendar days after Bell Atlantic acquires 100%

ownership of one or more of the PCS businesses currently operated by

PrimeCo in MTAs in the PCS/Cellular Overlap Areas, but in no event

later than one hundred eighty (180) calendar days after consummation of

the Bell Atlantic/GTE Merger.

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 GTE 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, 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 either

of 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 of 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 the Bell Atlantic/GTE Merger

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

[[Page 32527]]

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.E. 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 who work or have worked since July

29, 1998 (other than solely on a temporary assignment basis from

another part of Bell Atlantic 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.E,

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. Defendant 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 the schedule in

Section IV to a purchaser or purchasers that have been approved by

plaintiff pursuant to Section IV.C, then:

1. Defendants 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 be effected by creation of such an entity for sale to

purchser(s)) and control such assets, subject to the terms of 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 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 sever 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

[[Page 32528]]

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 effects made to divest the Wireless System Assets.

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

the PCS/Cellular Overlap Areas 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 Systems 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 order 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 Bell

Atlantic or GTE, with sole control over operations, marketing and

sales. Bell Atlantic and GTE 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 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 with 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 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. With respect to the period preceding the

consummation of the Bell Atlantic/GTE Merger, 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

[[Page 32529]]

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 Complaint

in this matter, defendants shall deliver to plaintiff an affidavit

which describes in reasonable detail at 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 outlines in

defendants' earlier affidavit filed pursuant to Section VII.B of this

Final Judgment within fifteen (15) calendar days after the change 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 purchase(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.

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 services 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,

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 written offer of employment 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,

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 the 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 the other defendant.

X. Compliance Inspection

For the purposes of determining or securing compliance of

defendants with this Final Judgment, 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

[[Page 32530]]

Antitrust Division, made to defendants at their principal offices,

defendants shall submit writ ten 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 a 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

United States District Court for the District of Columbia

United States of America, Plaintiff, v. Bell Atlantic Corporation

and GTE Corporation, Defendants.

[Civil No.: 99-119 (LFO); Filed: May 7, 1999]

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 Complaint on May 7, 1999,

alleging that the proposed acquisition of GTE Corporation (``GTE'') by

Bell Atlantic Corporation (``Bell Atlantic'') would violate Section 7

of the Clayton Act, 15 U.S.C. Sec. 18 by lessening competition in the

markets for wireless mobile telephone services in 10 major trading

areas (``MTAs''), 65 metropolitan statistical areas (``MSAs'') and

rural service areas (``RSAs'') in Florida, Alabama, Illinois, Indiana,

Texas, Virginia, Wisconsin, New Mexico, and South Carolina. In the 10

MTAs, Bell Atlantic has a 50% interest in PCS PrimeCo, L.P.

(``PrimeCo''), a firm that provides personal communications services

(``PCS'') in 61 MSAs and RSAs where cellular mobile telephone services

are provided by GTE, or by a firm that GTE has an interest in or will

acquire. In addition, this acquisition affects four additional MSAs

where competing cellular mobile wireless telephone businesses are owned

in whole or in part by Bell Atlantic and GTE. These areas are

identified in the Complaint as the ``Overlapping Wireless Markets.''

Shortly before the Complaint in this matter was filed the United

States and defendants reached agreement on the terms of a proposed

Final Judgment, which requires Bell Atlantic and GTE to divest one of

the wireless telephone businesses in each of the Overlapping Wireless

Markets. 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 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. Sec. 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.

II. 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. Bell Atlantic and GTE each provide local

exchange services in distinct regions, and they also provide 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% partner 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 one

of the largest RBOCs 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 cellular 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 50% partnership in

PrimeCo, Bell Atlantic provides wireless service in the states of

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

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

Carolina, Ohio, Oklahoma, Texas,

[[Page 32531]]

Virginia, and Wisconsin. Bell Atlantic is the nation's fourth largest

wireless mobile telephone service provider, with about 6.6 million

subscribers nationwide.

GTE, with headquarters in Irving, Texas, is the 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

most of these states. GTE is a major wireless mobile telephone service

provider with about 4.8 million subscribers nationwide. GTE also has

entered in to an agreement, dated April 2, 1999, to acquire certain

cellular mobile telephone businesses from Ameritech Mobile Phone

Service of Illinois, Inc., and Ameritech Mobile Phone Services of

Chicago, Inc., (``Ameritech'') for $3.27 billion, which would make GTE

a provider of cellular mobile telephone services in additional areas in

Illinois and Indiana. The acquisition of the Ameritech cellular

businesses would add about 1.7 million subscribers to GTE'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 dollars at the time of the agreement. If this

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

GTE's cellular and other wireless mobile telephone service subscribers,

absent divestitures, would be 13.1 million, including the number of

subscribers GTE would receive from its acquisition of Ameritech

cellular business.

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. In 1998, revenues from the sale of wireless mobile

telephone services totaled approximately $30 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, within any given MSA or RSA.\1\

Providers of Specialized Mobile Radio (``SMR'') services typically were

also authorized to operate with some additional spectrum in these

areas, including the Overlapping Wireless Markets.

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

\1\ 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

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 and GTE, still

typically have substantially larger market shares than the new

entrants.

C. Anticompetitive Consequences of the Proposed Acquisition

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

or will be competing providers of wireless mobile telephone services in

65 cellular license areas in nine states. These areas are referred to

in the Complaint as follows:

I. PCS/Cellular Overlap Areas

A. Jacksonville MTA

1. Jacksonville MSA

2. Florida 5--Putnam RSA

B. Miami-Fort Lauderdale MTA

1. Fort Myers MSA

2. Florida 1--Collier (B1) RSA

3. Florida 2--Glades (B1) RSA

4. Florida 3--Hardee RSA

5. Florida 11--Monroe (B2) RSA

C. Tampa-St. Petersburg-Orlando MTA

1. Tampa-St. Petersburg MSA

2. Lakeland-Winter Haven MSA

3. Sarasota MSA

4. Bradenton MSA

5. Florida 2--Glades (B1) RSA

6. Florida 3--Hardee RSA

7. Florida 4--Citrus (B1) RSA

D. New Orleans-Baton Rouge MTA

1. Mobile, AL MSA

2. Pensacola, FL MSA

E. Chicago MTA

1. Aurora-Elgin, IL MSA

2. Bloomington-Normal, IL MSA

3. Champaign-Urbana-Rantoul, IL MSA

4. Chicago, IL MSA

5. Decatur, IL MSA

6. Fort Wayne, IN MSA

7. Gary-Hammond-East Chicago, IN MSA

8. Joliet, IL MSA

9. Kankakee, IL MSA

10. Rockford, IL MSA

11. Springfield, IL MSA

12. Illinois 1--Jo Daviess RSA

13. Illinois 2--Bureau (B1) RSA

14. Illinois 2--Bureau (B3) RSA

15. Illinois 3--Mercer RSA

16. Illinois 4--Adams (B1) RSA

17. Illinois 5--Mason (B2) RSA

18. Illinois 6--Montgomery RSA

19. Illinois 7--Vermilion RSA

20. Indiana 1--Newton (B1) RSA

21. Indiana 1--Newton (B2) RSA

22. Indiana 3--Huntington RSA

F. Dallas-Fort Worth MTA

1. Dallas-Fort Worth MSA

2. Austin MSA

3. Sherman-Denison MSA

4. Texas 10--Navarro (B3) RSA

5. Texas 11--Cherokee (B1) RSA

6. Texas 16--Burleson RSA

G. Houston MTA

1. Houston MSA

2. Beaumont-Port Arthur MSA

3. Galveston MSA

4. Bryan-College Station MSA

5. Victoria MSA

6. Texas 10--Navarro (B3) RSA

7. Texas 11--Cherokee (B1) RSA

8. Texas 16--Burleson RSA

9. Texas 17--Newton RSA

10. Texas 20--Wilson (B2) RSA

11. Texas 21--Chambers RSA

H. San Antonio MTA

1. San Antonio MSA

[[Page 32532]]

2. Texas 16--Burleson RSA

3. Texas 20--Wilson (B2) RSA

I. Richmond-Norfolk MTA

1. Norfolk-Virginia Beach-Portsmouth MSA

2. Richmond MSA

3. Newport News-Hampton MSA

4. Petersburg-Colonial Heights MSA

5. Virginia 7--Buckingham (B1) RSA

6. Virginia 8--Amelia RSA

7. Virginia 9--Greensville RSA

8. Virginia 11--Madison (B1) RSA

9. Virginia 12--Caroline (B1) RSA

10. Virginia 12--Caroline (B2) RSA

J. Milwaukee MTA

1. Wisconsin 8--Vernon RSA

II. Cellular MSA Overlap Areas

A. Greenville, SC MSA

B. Anderson, SC MSA

C. El Paso, TX MSA

D. Las Cruces, NM MSA

In the Overlapping Wireless Markets, the population potentially

addressable by wireless mobile telephone systems exceeds 25 million.

GTE and Bell Atlantic are direct competitors in wireless mobile

telephone services in the Cellular MSA Overlap Areas. The cellular

businesses owned in whole or in part by Bell Atlantic and GTE are the

only two providers of cellular mobile telephone services, and the two

primary providers of all wireless mobile telephone services, in the

Cellular MSA Overlap Areas. In addition, GTE and PrimeCo, and Ameritech

and PrimeCo, are direct competitors in wireless mobile telephone

services in the PCS/Cellular overlap Areas. In each of the Overlapping

Wireless Markets, the wireless businesses owned or to be owned in whole

or in part by Bell Atlantic and GTE compete to sell the best quality

service at the lowest possible rates and are among each other's most

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

cellular business to be acquired or owned in whole or in part by GTE

and the PCS business owned by PrimeCo are two of a small number of

providers of wireless mobile telephone services.

Therefore, bell Atlantic's acquisition of GTE would cause the level

of concentration among firms providing wireless mobile telephone

services in each of the Overlapping Wireless Markets to increase

significantly. 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 MSA Overlap Areas, Bell

Atlantic's and GTE's individual market shares, measured on the basis of

the number of subscribers, exceed 35%. The combined market share of GTE

and Bell Atlantic in the provision of wireless mobile telephone

services, measured by the number of subscribers, is in the range of 75

to 95%, taking into account other operational wireless mobile

competitors. 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

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 merger, the HHI

in these markets will be in excess of 5500.

In each of the PCS/Cellular Overlap Areas, the GTE or Ameritech

cellular business has one of the two largest market shares in the

provision of wireless mobile telephone services, and PrimeCo is one of

a small number of new PCS entrants into these markets. In some of these

markets, such as Richmond, Houston, and Tampa, PrimeCo was the first

new PCS entrant, is the third largest wireless firm in terms of number

of subscribers, and has managed to garner a significant share.

Competition between PrimeCo and GTE or Ameritech, created by PrimeCo's

entry into markets that were previously an effective duopoly, has

resulted in lower prices and higher quality in these markets than would

otherwise have existed absent such competition. There is already a high

level of concentration in the provision of wireless mobile telephone

services in the PCS/Cellular Overlap Areas. In virtually all, the

individual shares of the two cellular carriers--one of which is GTE or

Ameritech--are in the range of 30 to 40% and the HHI exceeds 2000. In

the PCS/Cellular Overlap Areas, the combined market share of PrimeCo

and the cellular business in question is generally in the 35 to 50%

range.

If GTE and Bell Atlantic merge, and GTE completes its acquisition

of the Ameritech cellular businesses, the PCS/Cellular Overlap Areas

will become significantly more concentrated, and the competition

between PrimeCo and GTE or Ameritech in wireless mobile telephone

services in these markets will be eliminated. As a result of the loss

in competition between the PrimeCo and GTE or Ameritech cellular

businesses, there will be an increased likelihood both of unilateral

actions by the combined firm in these markets 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 merger of Bell Atlantic and GTE is that prices would

increase, and the quality or quantity of service together with

incentives to improve network facilities would decrease, in the

provision of wireless mobile telephone services in the PCS/Cellular

Overlap Areas.

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 this

acquisition, if it were to be consummated.

For these reasons, the United States concluded that the merger as

proposed may substantially lessen competition, in violation of Section

7 of the Clayton Act, in the provision of wireless mobile telephone

services in 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.E, 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.E states. Section II.E also specifies in

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

described throughout the consent decree 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

[[Page 32533]]

businesses to be divested, including the provision of long distance

telecommunications service for wireless calls. Section II.E 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.E

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.E 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

Complaint, 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.E, defining the Wireless System Assets to

be divested, generally requires the divestiture of trademarks, trade

names and service marks, with the sixteen 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.E.1 provides that if defendants

elect to divest Bell Atlantic's 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/Celluar Overlap Area upon

completion of the divestiture of the Wireless System Assets. In this

instance, defendants will still be required to divest the entire PCS

business, including 20 MHz of broadband PCS spectrum, to insure 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, Section II.E.2 of the Final Judgment allows defendants to

request approval from plaintiff to partition the PCS license along BTA

geographic boundaries and retain assets in one or more specified non-

overlapping BTAs, in the event that defendants elect to divest Bell

Atlantic's interest in PCS business in one of the PCS/Cellular Overlap

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

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

sold in the non-overlapping BTAs are not needed to assure the

competitive viability 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.E.2 requires defendants to

seek this approval at least 90 calendar days prior to the consummation

of the Bell Atlantic/GTE Merger.

Finally, Section II.E.3 allows, with approval from plaintiff, the

merged entity to retain both Bell Atlantic's PCS business and GTE's

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.E.3 requires defendants to seek this approval at

least 90 calendar days prior to the consummation of the Bell Atlantic/

GTE Merger.

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 businesses without impairment, Section

IV.F prohibits defendants from interfering with a purchaser's

negotiations to retain any employees who work or have worked with the

Wireless System Assets since the date of the announcement of the

merger, or whose principal responsibility relates to the Wireless

System Assets.

[[Page 32534]]

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

divestitures 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 circumstances regarding Bell

Atlantic's interest in PrimeCo.

Currently, Bell Atlantic has a 50% interest in PrimeCo, and its

ability to divest this interest is limited by its partnership

agreement. Bell Atlantic has publicly announced plans to dissolve the

PrimeCo partnership. If this dissolution does occur, Bell Atlantic may

take full ownership of some or all of the PrimeCo PCS businesses, and

the other PrimeCo partner, Airtouch, may also take full ownership of

some or all of the other PrimeCo PCS businesses. To the extent that

Bell Atlantic's interest in one or more of the PrimeCo businesses is

transferred to Airtouch, one or more of the wireless overlaps would be

eliminated, thereby obviating the need for any further divestiture. To

the extent that Bell Atlantic takes full control over one or more

PrimeCo properties, it will enhance its ability to completely and

satisfactorily divest its interest to an interested purchaser.

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

Assets in the Cellular MSA Overlap Areas to a purchaser or purchasers

approved by the United States on or before consummation of Bell

Atlantic/GTE merger. Similarly, if Bell Atlantic has acquired 100%

ownership of one or more of the PCS businesses currently operated by

PrimeCo in MTAs in the PCS/Cellular Overlap Areas more than ninety (90)

calendar days prior to consummation of the Bell Atlantic/GTE Merger,

defendants will be required to divest the Wireless System Assets in the

PCS/Cellular Overlap Areas on or before consummation of the Bell

Atlantic/GTE Merger.

If, ninety (90) calendar days prior to consummation of the Bell

Atlantic/GTE Merger, the PrimeCo dissolution is not complete and Bell

Atlantic has not acquired 100% ownership of one or more of the PCS

businesses currently operated by PrimeCo in MTAs in the PCS/Cellular

Overlap Areas, defendants will submit to plaintiff, on or before

consummation of the Bell Atlantic/GTE Merger, a definitive Divestiture

List identifying the specific Wireless System Assets in each of the

PCS/Cellular Overlap Areas that will be divested. The cellular MSA and

RSA businesses on the Divestiture List are required to be divested

within ninety (90) calendar days after consummation of the Bell

Atlantic/GTE Merger; except that if Bell Atlantic acquires 100%

ownership of one or more of the PCS businesses currently operated by

PrimeCo in MTAs in the PCS/Cellular Overlap Areas within the ninety

(90) calendar day period prior to consummation of the Bell Atlantic/GTE

Merger, the cellular MSA and RSA businesses on the Divestiture List

shall be divested on or before consummation of the Bell Atlantic/GTE

Merger. Additionally, the PCS MTA businesses on the Divestiture List

shall be divested within 90 calendar days after Bell Atlantic acquires

100% ownership of one or more of the PCS businesses currently operated

by PrimeCo in MTAs in the PCS/Cellular Overlap Areas, but in no event

later than one hundred eighty (180) calendar days after consummation of

the Bell Atlantic/GTE Merger. If all Wireless System Assets have not

been divested upon consummation of the Bell Atlantic/GTE merger, there

will be no adverse impact on competition, because defendants are

required to operate the businesses independently, pursuant to the Hold

Separate Order contained in Section IX of the Final Judgment.

Defendants are also required by Section IV.B to use their best efforts

to accomplish the divestitures of the Wireless System Assets in the

Overlapping Wireless Markets and to obtain all required regulatory

approvals as expeditiously as possible.

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 do not burden the parties unnecessarily. Although

the proposed Final Judgment, in some circumstances, permits the parties

to retain both wireless properties for some period of time after

closing, the primary reason for this involves the nature of Bell

Atlantic's interest in PrimeCo. The proposed Final Judgment is designed

to provide time for the PrimeCo partnership to be dissolved. The

additional time period, beyond the closing date of the Bell Atlantic/

GTE merger, in which the merged firm can hold both wireless properties

pending divestiture applies only to PCS/cellular overlaps and is

dependent in part on when Bell Atlantic takes control of one or more

PrimeCo properties. However, in no event can the merged firm retain

both wireless properties beyond 180 days after closing. Thus, the Final

Judgment strikes a balance between allowing the parties time to resolve

their special situation and guaranteeing a timely divestiture. The

period in which the merged firm will own both entities should not pose

any significant competitive risks because the Hold Separate Order,

contained in Section IX, will be in place during this time, and the

time will be short.

In addition, the proposed Final Judgment requires in Section IV.B

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).\2\

These FCC requirements 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 decree. The provisions of the proposed Final

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

Since the FCC's approval is required for the transfer of the wireless

licenses to a purchaser, Section V.F provides one exception to the 180-

day divestiture period. 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 defendant to

delay the divestiture of any other Wireless System Assets for which

license transfer approval has been granted.

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\2\ 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 22.941, 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.''

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[[Page 32535]]

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

The proposed Final Judgment provides in Section IV.A that Bell

Atlantic and GTE must divest the Wireless 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, Bell Atlantic and GTE must

relinquish any direct or indirect financial ownership interests and any

direct or indirect role in management or participation in control.

Pursuant to Section V of the proposed Final Judgment, the trustee will

own and control the systems until they are sold to a final purchaser,

subject to safeguards to prevent Bell Atlantic and GTE 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 have the obligation and the sole responsibility,

under Section V.B, for the divestiture of any transferred Wireless

System Assets. 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 insure 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 ground, 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

Sections 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 content, 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 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 received 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. 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. They ensure that the

trusteeship arrangement is consistent with the FCC's rules.

D. Criteria for the United States' Approval of Purchasers

Under the proposed Final Judgment, the United States has an

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

wireless businesses, to ensure that the purchasers chosen by defendants

or the trustee are adequate from a competitive viewpoint. The United

States' approval or rejection of a purchaser is at its sole discretion,

as Section IV.A specifies, but the consent decree also embodies 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,

[[Page 32536]]

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. It 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 their merger, and their actions to

preserve the Wireless System Assets to be divested. Under V.E, the

trustee also has monthly reporting obligations concerning the efforts

made to divest the Wireless System Assets.

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 both defendants and both wireless businesses in any Overlapping

Wireless Market, obliging them 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 XI.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, and

reinforce the provisions of Section V.H concerning the separation of

defendants and the trustee after the merger is consummated but while

there are still Wireless System Assets awaiting sale.

Section IX.B requires the defendant whose assets will be divested

(or both, if it has not yet been decided which system will be divested

in a particular market) to take certain specified steps to preserve the

assets in accordance with past practices. These steps including

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 inspection of

defendants' records, the ability 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 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 the 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 USC 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 proposed 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, NW, Suite 8000, Washington, DC

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 construe the

Final Judgment, to modify any if its provisions, to enforce compliance,

and to punish any violations of its provisions.

[[Page 32537]]

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

merger 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 on 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

considerations 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 USC 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 his 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.'' \3\ Rather,

\3\ 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. Sec. 16(f), those procedure are discretionary. A court

need not invoke any of them unless it believes that the comments

have raised significant issues and that 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.

[a]bsent a showing of corrupt failure of the government to discharge

its duty, the Court, in making its public interest finding, should *

* * carefully consider the explanations of the government in the

competitive impact statement and its responses to comments in order

to determine whether those explanations are reasonable under the

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

circumstances.

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, (9th Cir. 1988) (citing United States v. Bechtel Corp.,

648 F.2d 660,666 (9th Cir.), cert denied, 454 U.S. 1083 (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.\4\

\4\ 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 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 that 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: June 7, 1999.

[[Page 32538]]

Respectfully submitted,

Joe 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,

J. Philip Sauntry, Jr., D.C. Bar #142828,

Trial Attorneys, U.S. Department of Justice, Antitrust Division,

Telecommunications Task Force, 1401 H Street, NW., 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 7th day of June, 1999 upon each of the

parties listed below:

John Thorne, Senior Vice President & Deputy General Counsel, Bell

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

Arlington, VA 22201, Counsel for Bell Atlantic Corporation.

Steven G. Bradbury, Kirkland & Ellis, 655 Fifteenth Street, NW.,

Washington, DC 20005, Counsel for GTE Corporation.

Hillary B. Burchuk,

Counsel for Plaintiff.

[FR Doc. 99-15418 Filed 6-16-99; 8:45 am]

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