DOJ: Verizon Must Sell Assets, Will Look at Alltel Merger

by Jamie Walden  on Wednesday, Jun. 11, 2008 3:30 pm  

The Department of Justice ruled that Verizon Communications Inc. must sell assets in Vermont, Washington and New York to proceed in its acquisition of Rural Cellular Corp. of Minnesota.

Upon the complaint by the State of Vermont filed Tuesday, Judge Emmet G. Sullivan ruled that Verizon must divest assets in six cellular market areas. Click here to view the ruling.

The original proposed deal would have "substantially lessened competition to the detriment of consumers of mobile wireless telecommunications services in those areas, potentially resulting in higher prices, lower quality and reduced network investments," the department said in a news release.

Verizon must sell one metropolitan statistical area and two rural service areas in Vermont, two rural service areas in Washington and one rural service area in New York. The Federal Communications Commission uses the term "cellular market area" to define cellular license areas, which are divided into two categories - metropolitan statistical areas and rural service areas.

"These divestitures are necessary to preserve the benefits of competition for residents throughout the state of Vermont and in areas of New York and Washington," Thomas O. Barnett, assistant attorney general in charge of the department's Antitrust Division, said in the release.

The $2.7 billion buyout still needs to be approved by the FCC, according to the release.

All this to say that Verizon Wireless may be selling off more than six markets once the Alltel buyout proposal - a deal nearly 10 times the size of the Rural Cellular acquisition - approaches the bench.

In these types of mergers, a company must file a "Notification and Report Form" under the Hart-Scott-Rodino Antitrust Improvements Act with the Federal Trade Commission and the assistant attorney general in charge of the Antitrust Division of the DOJ. After which the two agencies have 30 days to determine if any antitrust laws would be violated by the merger. If so, an investigation can be opened.

Debra Lewis, manager of public relations and corporate communications of Verizon Wireless, said the form was schedule to be submitted soon and did not think it had be filed yet.

"We would be interested in looking at it, at the proposed transaction," a spokesman for the Department of Justice said.

 

 

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