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Telecom merger stalls in FCC after DOJ antitrust approval

[JURIST] A proposed $78 billion merger between telecom giants BellSouth [corporate website] and AT&T [corporate website] stalled unexpectedly Friday in the Federal Communications Commission [official website] after two FCC commissioners, both Democrats, asked Chairman Kevin Martin for more time to study it. The deal had already been approved [text] without reservation by the US Department of Justice Antitrust Division [official website] following an eight-month investigation that concluded that AT&T's proposed acquisition of BellSouth was not likely to "substantially reduce competition" in the US telecom market. Focusing on residential local and long distance services as well as telecom services to business customers, the Division concluded that the presence of other competitors, changing regulatory requirements and the emergence of new technologies in the market ensured that the "transaction is not likely to harm consumer welfare."

The companies began talks in 2001 [CNET report] and AT&T made a formal announcement of its intention to buy BellSouth on March 5, 2006. AT&T says the merger will create more effective and efficient services in the wireless, broadband, video, voice and data markets [AT&T press release]. Critics of the merger allege that the purchase will push the market back to the monopolistic Bell Telephone System - old "Ma Bell" [Wikipedia backgrounder] that was broken up in 1984 - and will create higher prices for consumers. In their letter [PDF] Friday, the Democratic FCC commissioners said that serious questions remained about whether the merger would serve the public interest, especially against the backdrop of other forms of consolidation and concentration in the telecommunications industry. In the immediate wake of the DOJ approval, Democratic commissioner Michael Copps [official profile] publicly assailed the Department, claiming it had "packed its bags and walked out on consumers and small businesses by refusing to impose even a single condition in the largest telecom merger the nation has ever seen." AP has more.

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