DOJ Approves Cingular's Acquisition of AT&T Wireless, Subject to Divestitures

October 25, 2004. The Department of Justice (DOJ) approved Cingular Wireless's acquisition of AT&T Wireless, subject to divestiture of assets in 13 markets. Cingular Wireless is a joint venture between SBC Communications Inc. and BellSouth Corporation.

To put this settlement into effect, the DOJ, and the states of Texas and Connecticut, filed a complaint [19 pages in PDF] in U.S. District Court (DC) against Cingular, SBC, BellSouth, and AT&T Wireless. It alleges that "The effect of Cingular's proposed acquisition of AT&T Wireless, if it were to be consummated, may be substantially to lessen competition in interstate trade and commerce in the relevant geographic markets for mobile wireless telecommunications services and mobile wireless broadband services, in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18."

The complaint adds that "Unless restrained, the transaction will likely have the following effects in mobile wireless telecommunications services and mobile wireless broadband services in the relevant geographic markets".

However, the DOJ and states simultaneously filed a Proposed Final Judgment [24 pages in PDF] that sets forth the required divestiture of assets, including spectrum and customer contracts. See also, Plaintiff United States's Explanation of Consent Decree Procedure's [3 pages in PDF].

Pursuant to the Tunney Act, before the District Court may enter the proposed consent decree, the proposed settlement and the DOJ's competitive impact statement must be published in the Federal Register, and there must be a 60 day public comment period.

Hewitt Pate, Assistant Attorney General in charge of the DOJ's Antitrust Division, stated in a release that "Today's action by the Department ensures that consumers of mobile wireless services will continue to benefit from competition ... Without these divestitures, wireless customers in these markets would have had fewer choices for their wireless telephone service and faced the risk of higher prices, lower quality service, and fewer choices for the newest high-speed mobile wireless data services."

Stan Sigman, P/CEO of Cingular Wireless, stated in a release that "Today's decision by the Department of Justice is an important step in the approval process ... We hope the merger process will continue to progress in an orderly and expeditious fashion. This merger will create a premiere provider that is very well equipped to meet the most demanding needs of wireless customers today and in the future."

Meanwhile, the Consumers Union and the Consumer Federation of America stated in a joint release that this merger approval "spells bad news for consumers, who ultimately can expect higher prices and diminished service as fewer companies compete for their business".

This case is U.S.A., State of Connecticut, and State of Texas v. Cingular Wireless Corporation, SBC Communications, Inc., BellSouth Corporation, and AT&T Wireless Services, Inc., U.S. District Court for the District of Columbia, D.C. No. 1:04CV01850 (RBW).