October 11, 2006 10:31 AM PDT

AT&T, BellSouth merger passes antitrust test

AT&T and BellSouth got the green light from U.S. antitrust authorities on Wednesday to move forward with their proposed $67 billion merger, which will create the largest phone company in the United States.

The Department of Justice's antitrust division issued a statement approving the merger unconditionally.

"After thoroughly investigating AT&T's proposed acquisition of BellSouth, the antitrust division determined that the proposed transaction is not likely to reduce competition substantially," Thomas Barnett, assistant attorney general in charge of the Justice Department's antitrust division, said in a statement. "The merger would likely result in cost savings and other efficiencies that should benefit consumers."

The merger still needs approval from the Federal Communications Commission, which is scheduled to vote on the matter Thursday.

Announced in March, the merger is the latest in a long line of telecommunications mergers in the last few years.

Last year, the Justice Department approved the $16 billion merger between long-distance carrier AT&T and the local-telephony company SBC Communications. It also approved the $6.7 billion merger between MCI and Verizon Communications.

Critics have staunchly opposed these mergers, asserting that they will reduce competition, ultimately limit customer choice and eventually lead to price increases. Critics also have said a consolidated AT&T will wield too much power that the company may abuse by overstepping customer privacy barriers and limiting the type of traffic that traverses its networks.

"AT&T, with the help of a complicit government, is poised to control nearly half of the nation's phone lines and will also be the largest wireless and broadband Internet company in the country," Andrew Schwartzman, CEO of nonprofit law firm Media Access Project, said in a statement. "If consumers thought gas prices were out of control, wait until they get their next phone bill."

The unconditional approval also drew harsh words from Sen. Daniel Inouye, the Democratic co-chairman of the Senate Commerce Committee, which counts communications laws among its responsibilities. The Hawaii politician accused the Justice Department of ignoring potential negative effects from the reduced competition wrought by the merger, saying in a statement that the decision "not only flies in the face of the department's own merger guidelines, but also rests on the hope of potential facilities-based competition that may never materialize."

Inouye said it's now up to the FCC "to stand up for consumers and to insist upon strong conditions to protect competition."

The announcement comes as a federal court continues to scrutinize the Justice Departmennt's approval of the previous telecommunications mergers.

CNET News.com's Anne Broache contributed to this report.

See more CNET content tagged:
merger, antitrust, BellSouth Corp., AT&T Corp., approval


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No body learns anything...
We will be back in the same boat we were in when the Government determined the Monopoly was illegal and split them up. Look at the innovation we had while things were split. Where was the internet before this happen? Broadband?

Funny how history repeats itself.
Posted by umbrae (1073 comments )
Reply Link Flag
Um, what?
While I agree with the sentiment about the telco monopolies returning, you are way off about innovation.

Bell Labs (AT&T) was a PIONEER in microelectronics and communication technologies. Where do you think Unix came from? They also were a part of the birth of the internet. There was a reason broadband and the internet were pretty much non-existant prior to the AT&T breakup, but it had NOTHING to do with a monopoly.
Posted by waltsjc (19 comments )
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Must be a young one
Obviously you aren't old enough to remember how the price of telephones took off and nearly tripled after the old Bell system breakup tooj place. Busting the monopoly didn't enhance competition, it just made several smaller companies who all still had monopolies in their service areas who needed to make as much money as the one larger company did before the split in order to keep their stock prices up, ergo they had to charge more.
Posted by aabcdefghij987654321 (1721 comments )
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Not a big deal&
More and more people using cell phones as their only phones. I
and most of the people I know don't even have landlines anymore.
And as far as the internet goes AT&T will have to fight big time to
gain a monopoly in that area. Alot of people use cable for
highspeed, the price for satalite internet are coming down in price
and don't forget all the little dial-up companies out there, they will
have plenty of competition there.
Posted by jones_8099 (177 comments )
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The Real Concern
This is an excerpt from an email from:
Ben Scott
Policy Director
Free Press
The merger of AT&T and BellSouth would create a network behemoth that controls nearly half of all telephone land lines in the United States. But the new AT&T presents a far greater threat.

Under the rule of CEO Ed Whitacre, the company is leading the effort to gut Net Neutrality -- the longstanding principle that prevents phone companies from controlling what you do, where you go and what you see on the Internet.
Posted by zanzzz (138 comments )
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