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United States v. Verizon Communications, Inc.

United States District Court, District Circuit

August 9, 2013

UNITED STATES, et al., Plaintiffs,
v.
VERIZON COMMUNICATIONS, INC., et al., Defendants.

OPINION

ROSEMARY M. COLLYER United States District Judge.

After following the appropriate procedures under the Antitrust Procedures and Penalties Act, 15 U.S.C. §§ 16(b)-(h) (commonly known as the APPA or Tunney Act), the Government moves for entry of final judgment in this antitrust case. Mot. for Final J. [Dkt. 27]. As stated below, the motion will be granted.

I. FACTS

In December 2011, Verizon Communications, Inc. (Verizon) and Cellco Partnership d/b/a Verizon Wireless[1] entered into certain Commercial Agreements with Comcast Corporation, Time Warner Cable Inc., Bright House Networks LLC, and Cox Communications, Inc. (Cable Defendants). The Commercial Agreements allow the sale of bundled services such as Verizon Wireless services together with Cable Defendants’ residential wireline voice, video, and broadband services. They also entered into a joint venture (a Joint Operating Entity or JOE) to develop integrated wireline and wireless technologies through research and development. The Government investigated and found that the Commercial Agreements would have certain anticompetitive effects in the marketplace. As a result, the Government filed this antitrust case against Verizon, Verizon Wireless, and the Cable Defendants (collectively, Defendants).[2] The Government alleges that Commercial Agreements between Defendants unreasonably restrain trade in violation of the Sherman Act, 15 U.S.C. § 1. Compl. [Dkt. 1] ¶¶ 45-47.

At the same time it filed the Complaint, the Government filed a Competitive Impact Statement (CIS) [Dkt. 3]; a proposed Final Judgment [Dkt. 2-1; refiled at Dkt. 27-1]; and a Stipulation and Order [Dkt. 2] whereby the parties agreed to entry of the Final Judgment after compliance with the Tunney Act requirements. The proposed Final Judgment is intended to remedy the anticompetitive effects of the Commercial Agreements between Defendants by preserving competition in numerous local markets for broadband, video, and wireless services.

In some areas, Verizon offers fiber-based voice, video, and broadband services under the trade name “FiOS.” FiOS is offered in various areas in which the Cable Defendants also offer cable services. The Commercial Agreements would have resulted in Verizon retail stores selling two competing “quad play” (i.e., video, broadband, telephone, and mobile wireless services) packages: (1) Verizon Wireless and a Cable Defendant’s services or (2) Verizon Wireless and Verizon FiOS services. The Government determined that the Commercial Agreements and the JOE would have diminished Verizon’s incentives and ability to compete vigorously against the Cable Defendants with its FiOS services and that the JOE created a product development partnership with unlimited duration, which would decrease competition and innovation in the long term in a fast changing field. The Government negotiated a consent decree (i.e., the proposed Final Judgment) with Defendants to remedy the anticompetitive effects of the Commercial Agreements.

To satisfy the Tunney Act requirement for public notice and comment, the Government published the proposed Final Judgment and CIS in the Federal Register on August 23, 2012, see Fed. Reg. 51048, and placed a summary for these documents in the Washington Post on August 18-24, 2012. As a result, the Government received and responded to comments from four entities: RCN Telecom Services LLC (RCN), a cable over-builder (i.e., a facilities-based provider of wireline services); Communications Workers of America (CWA), a trade union representing workers in the telecom industry; Montgomery County, Maryland; and the City of Boston, Massachusetts (collectively, Objectors). See Gov’t Resp. to Public Comments [Dkt. 26].

Asserting that the proposed Final Judgment provides an effective and appropriate remedy for the antitrust violations alleged in the Complaint, the Government now seeks entry of Final Judgment. RCN was granted leave to participate in this case, and it filed a Reply brief objecting to entry of the proposed Final Judgment and asserting the same concerns that it set forth during the comment period. See RCN Reply [Dkt. 31]; RCN Comments [Dkt. 26-3].

II. LEGAL STANDARD

Entry of final judgment in antitrust cases is governed by a statute that requires that the Court determine whether entry of judgment is in the public interest:

(e) Public interest determination
(1) Before entering any consent judgment proposed by the United States under this section, the court shall determine that the entry of such judgment is in the public interest. For the purpose of such determination, the court shall consider—
(A) the competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the relevant market or markets, upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, ...

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