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Court Reviews Verizon/MCI & AT&T/SBC

The Verizon/MCI and SBC/AT&T mergers are getting a once over from the U.S. District Court for D.C. Wednesday under a new judicial review for contested melds.

Telecom association COMPTEL--FCC Commissioner Robert McDowell's former digs--was one of two parties that petitioned the court for the judicial review of the already-closed merger, arguing the merger was not in the public interest. That review is possible as a result of 2004 revisions to antitrust law stemming from what the government review of antitrust claims against Microsoft.

Among the questions the court wants the petitioners and defendants--the government, and surviving parties AT&T and Verizon--to address include:

1) "Through the eyes of a layperson, the mergers in and of themselves, appear to be against public interest given the apparent loss in competition. In laypersons terms, why isn't that the case?"; 2) "Has the government provided the court with sufficient information for it to make an independent determination as to whether entry of the proposed consent decrees is in the public interest"; and 3) "What weight, if any, should the court give to the findings of the FCC as related to these two mergers."

The FCC applied its own conditions, including a 30-month "net neutrality" mandate.

At issue are the consent decrees between the companies and parties that allowed the mergers to take place. Essentially DOJ sues the companies, then they settle on conditions that address antitrust concerns. New York Attorney General Eliot Spitzer, for one, has criticized the antitrust protections in those as insufficient.

The companies, not surprisingly, have argued that the court should be deferential to the government, but Judge Emmet Sullivan wants to know how that approach squares with the intent of the antitrust law (Tunney Act) revisions in 2004, whose intent was to overturn his own court's precedents that, Congress said, employed "too deferential a standard in evaluating consent decrees."

This is the first judicial review of a contested merger under the new law. Though it is unlikely to unwind the mergers, if the court asks for more conditions or better justification, it could conceivably lead to more conditions on the proposed AT&T/Bell South merger.