Wednesday, July 12, 2006

The Party’s Not Quite Over

Fairly unnoticed in this week’s news are the actions of U.S. District Judge for the District of Columbia Emmet Sullivan, who has been given responsibility for reviewing both the SBC-AT&T and Verizon-MCI mergers under the Tunney Act. Both mergers have already been approved by the U.S. Justice Department, but the Tunney Act is intended to provide the Federal judiciary, acting on behalf of consumers, final oversight of Justice Department judgments or actions with antitrust implications. Most Tunney Act reviews are simply rubber stamps of the Justice Department’s decisions, but Judge Sullivan looks like he might seriously review the mergers.

You may remember that in 2002, Judge Colleen Kollar-Kotelly reviewed the settlement between Microsoft and the Justice Department. While Kollar-Kotelly eventually accepted the agreement with relatively minor changes, it threw a scare into both Microsoft and the DOJ, and provided the last serious opportunity for public review of and comment on the heavily watered-down settlement.

Now, we may have another opportunity to see the DOJ squirm. More importantly, it’s an incredible opportunity to see AT&T and Verizon squirm, as they’re forced to prove that their mergers are not anticompetitive. Given both companies’ positions on Net Neutrality and their usage of the backbone networks that they acquired (SBC from AT&T and Verizon from MCI) to gain leverage over the leading content and service providers, they’re clearly consolidating their market power over access and prices in a way that’s at least suggestive of monopoly power.

According to News.com, Judge Sullivan held a seven-hour hearing on July 12th and scheduled a status conference for July 25th to disclose his course of action. As with the Microsoft settlement, the DOJ, AT&T and Verizon are very much on the same side, so we consumers shouldn’t expect any support there. However, the Tunney Act requires a period of open public comment, and that’s where we can have our say. AT&T and Verizon really don’t want to have to reopen their mergers. If they have to concede some ground on Net Neutrality in order to keep their done deals done, they’ll do it. Depending on what Judge Sullivan rules on July 25th, the telcos could be in a world of hurt that even Senator Ted Stevens can’t save them from.

On or shortly after July 25th, either Judge Sullivan or the DOJ should announce the procedures for accepting public comments. You’ll find the Judge’s biography here, but for Pete’s sake, don’t start contacting him until the procedures for public comments are announced. In the Microsoft case, the public comments were collected by the Justice Department, so that will probably be the procedure in this case as well. I’ll let you know how to comment as soon as the announcement is made.

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