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U.S. v. SBC COMMUNICATIONS

October 13, 2004.

UNITED STATES OF AMERICA, Plaintiff,
v.
SBC COMMUNICATIONS INC. and BELLSOUTH CORPORATION, Defendants.



The opinion of the court was delivered by: PAUL FRIEDMAN, District Judge

MODIFIED FINAL JUDGMENT

WHEREAS, plaintiff, United States of America, filed its Complaint on August 30, 2000;

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 believes that entry of this Final Judgment is necessary to protect competition in markets for mobile wireless telecommunications services in California, Indiana, and Louisiana; AND WHEREAS, the essence of this Final Judgment is prompt and certain divestiture of certain wireless businesses that would otherwise be commonly owned and 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 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 California, Indiana, and Louisiana;

  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 over 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. "SBC" means SBC Communications Inc., a corporation with its headquarters in San Antonio, Texas, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, and their directors, officers, managers, agents and employees.

  B. "BellSouth" means BellSouth Corporation, a corporation with its headquarters in Atlanta, Georgia, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, and their directors, officers, managers, agents and employees.

  C. "Wireless System Assets" means, for each wireless business to be divested under this Final Judgment, all types of assets, tangible and intangible, used by defendants in the operation of each of the wireless businesses to be divested (including the provision of long distance telecommunications services for wireless calls; however, paging services are not included in the definition of Wireless System Assets). "Wireless System Assets" shall be construed broadly to accomplish the complete divestiture of the entire business of one of the two wireless businesses 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 BellSouth has an interest or in which SBC has an interest, but not both. The divestitures of the Wireless System Assets as defined in this Section II.C 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, office furniture, fixed assets and furnishings, supplies and materials, contracts, agreements, leases, commitments, spectrum licenses issued by the Federal Communications Commission ("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 "SBC," "Southwestern Bell," "Pacific Bell," "Ameritech," "Cellular One," "1-800-Mobile-1," "ClearPath," "Pick-Up and Go," "BellSouth," "Bell," the Bell Symbol, or "Mobile Memo") 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). Notwithstanding the foregoing, in the Indianapolis MTA Overlapping Wireless Market, as defined below, the divesting defendant shall not be required to divest those assets used solely to provide wireless service on a resale basis and contracts with customers served on a resale basis. 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.

  In the event that defendants elect to divest an interest in a PCS business in one of the PCS/Cellular Overlap Areas, defendants may retain up to 10 MHz of broadband PCS spectrum within that PCS/Cellular Overlap Area upon completion of the divestiture of the Wireless System Assets.

  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 FCC, in which BellSouth and SBC each hold ownership interests in one of the wireless licenses issued by the FCC as of the date of the filing of the Complaint in this action:
I. Cellular Overlap Areas
A. Baton Rouge MSA
B. New Orleans MSA
C. Louisiana 6 RSA-Iberville
D. Louisiana 8 RSA-St. James
E. Louisiana 9 RSA-Plaquemines
II. PCS/Cellular Overlap Areas
A. Los Angeles-San Diego MTA
1. Los Angeles MSA
B. Indianapolis MTA
1. Anderson MSA 2. Bloomington MSA
3. Indianapolis MSA
4. Lafayette MSA
5. Muncie MSA
6. Terre Haute MSA
7. Indiana 5 RSA-Warren
8. Indiana 7 RSA-Owen
9. Indiana 8 RSA-Brown
10. Indiana 9 RSA-Decatur
  E. "SBC/BellSouth Wireless Joint Venture" means the joint venture between SBC and BellSouth, as detailed in the Contribution and Formation Agreement between SBC and BellSouth dated as of April 4, 2000, for which defendants have filed a notification pursuant to the Hart-Scott-Rodino Antitrust Improvements Act on May 8, 2000.

  III

  Applicability and Effect

  A. The provisions of this Final Judgment shall be applicable to each of the defendants, as defined above, and 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 System Assets A. Defendants BellSouth and SBC shall divest themselves of the Wireless System Assets of one of the two wireless businesses in each of the Overlapping Wireless Markets, including both any direct or indirect financial ownership interests and any direct or indirect role in management or participation in control, to a purchaser or purchasers acceptable to plaintiff in its sole discretion, or to a trustee designated pursuant to Section V of this Final Judgment in accordance with the following schedule:

  1. The divestitures of the Wireless System Assets for each Cellular Overlap Area and the Indianapolis MTA PCS/Cellular Overlap Area shall occur prior to or at the same time as consummation of the transaction that gives rise to the overlap.

  2. The divestiture of the Wireless System Assets for the Los Angeles-San Diego MTA PCS/Cellular Overlap Area shall occur prior to or at the same time as consummation of the transaction that gives rise to the overlap, or by January 27, 2001, whichever is later.

  3. For the Wireless Overlap Markets defined in Section II.D.II, plaintiff may, in its sole discretion, extend the date by which the divestitures must occur by up to two thirty-day periods.

  If the divestitures in the Overlapping Wireless Markets have not been completed as of the date of the consummation of the transaction that gives rise to the overlap, then on or before the date of the consummation of the transaction that gives rise to the overlap, defendants will submit to plaintiff a definitive Divestiture List identifying the specific Wireless System Assets to be divested; provided, however, that the identification of the specific Wireless System Assets to be divested in the Los Angeles-San Diego MTA PCS/Cellular Overlap Area is not required before December 18, 2000.

  B. Defendants agree to use their best efforts to accomplish the divestitures set forth in this Final Judgment (i) as expeditiously as possible, including obtaining all necessary regulatory approvals, and (ii) except for the Los Angeles-San Diego MTA PCS/Cellular Overlap Area, to a purchaser or purchasers at or before consummation of the transaction that gives rise to the overlap. The divestitures carried out under the terms of this decree also shall be conducted in compliance with the applicable rules of the FCC, including 47 C.F.R. § 20.6 (spectrum aggregation) and 47 C.F.R. § 22.942 (cellular cross-ownership) or any waiver of such rules or other authorizations ...


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