United States v. Western Electric Company, Inc. American Telephone and Telegraph Company, Bellsouth Corporation, Bell Atlantic Corporation

46 F.3d 1198, 310 U.S. App. D.C. 281, 31 Fed. R. Serv. 3d 657, 1995 U.S. App. LEXIS 2975, 1995 WL 62775
CourtCourt of Appeals for the D.C. Circuit
DecidedFebruary 17, 1995
Docket94-5252
StatusPublished
Cited by58 cases

This text of 46 F.3d 1198 (United States v. Western Electric Company, Inc. American Telephone and Telegraph Company, Bellsouth Corporation, Bell Atlantic Corporation) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Western Electric Company, Inc. American Telephone and Telegraph Company, Bellsouth Corporation, Bell Atlantic Corporation, 46 F.3d 1198, 310 U.S. App. D.C. 281, 31 Fed. R. Serv. 3d 657, 1995 U.S. App. LEXIS 2975, 1995 WL 62775 (D.C. Cir. 1995).

Opinion

Opinion for the court filed by Circuit Judge RANDOLPH.

RANDOLPH, Circuit Judge:

We have before us still another appeal dealing with the antitrust consent decree— the “Modification of Final Judgment” — issued in United States v. American Telephone & Telegraph Co., 552 F.Supp. 131, 226-34 (D.D.C.1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001, 103 S.Ct. 1240, 75 L.Ed.2d 472 (1983). The question is whether, under Rule 60(b) of the Federal Rules of Civil Procedure, the district court properly granted American Telephone and Telegraph Company’s motion to modify restrictions imposed by the decree. The court’s order permitted AT & T to acquire McCaw Cellular Communications, Inc., an independent, “non-wireline” carrier and the largest cellular telephone service provider in the United States. United States v. Western Elec. Co., 158 F.R.D. 211 (D.D.C.1994).

Ten years ago, in compliance with the decree, AT & T divested itself of the Bell System’s twenty-two companies that had been providing local telephone, or local exchange, service. “Thereafter, these regional Bell operating companies, or ‘BOCs,’ were to engage in two major activities: providing telephone service among parties within each local exchange and granting access to the exchanges to long-distance carriers.” Illinois Bell Tel. Co. v. FCC, 988 F.2d 1254, 1257 (D.C.Cir.1993). “The consent decree also led to the creation of seven Regional Holding Companies (RHCs), each of which wholly owned and operated a set of BOCs.” Id.

One of the RHCs, BellSouth Corporation, opposed AT & T’s request for a modification and now brings this appeal. The United States and Bell Atlantic, an RHC, supported the modification and join AT & T in arguing in favor of affirming the district court’s order.

I

A

The United States has twice sued AT & T for monopolization and other violations of the *1200 Sherman Act, 15 U.S.C. §§ 1-3. The first action, begun in New Jersey federal court in 1949, ended with a consent decree in 1956. United States v. Western Elec. Co., Civil Action No. 17-49 (D.N.J.). The government sued again in 1974 in the United States District Court for the District of Columbia. AT & T then owned local exchange monopolies, competed in the long-distance market, and manufactured and marketed the equipment used not only by telephone subscribers but also in the telecommunications network. This placed AT & T in a position to impede competition in the long-distance and telephone equipment manufacturing markets, or so the government claimed. See generally American Tel. & Tel. Co., 552 F.Supp. at 222-23. After years of pretrial discovery and months of trial proceedings, but before the government had presented its rebuttal case, the parties proposed a settlement and a consent decree. The district court invited comments and held a hearing on the proposal. In August 1982, it issued a lengthy opinion approving the parties’ proposed decree with ten modifications. American Tel. & Tel. Co., 552 F.Supp. 131.

Section I of the consent decree, as modified, required AT & T to divest itself of those portions of the twenty-two Bell Operating Companies that had been providing monopoly local exchange services. AT & T was to separate the assets of the BOCs used to provide local exchange and exchange access services, and then transfer ownership of those separated portions to seven Regional Holding Companies, each of which would provide local exchange services in a specific region of the country. Id. at 226-27. Section II prohibited the divested BOCs from providing interexchange (long-distance) telecommunications services, and from manufacturing or providing “telecommunications products” either “directly or through any affiliated enterprise.” Id. Other provisions in the decree directed the cancellation of contracts that had economically integrated the monopolies and the competitive portions of the Bell System; and required that, upon divestiture, each BOC undertake to eliminate any discrimination between AT & T and its long-distance and manufacturing competitors. Id. at 226-27 (sections 1(A) and 11(A)-(C)).

B

Cellular radio is a service enabling mobile customers to place or receive telephone calls wherever they are located. It provides this capability over separate systems of radio and switching facilities that are interconnected to and dependent on the local bottleneck “land-line” telephone monopoly. The Federal Communications Commission began receiving applications for cellular radio licenses before the district court entered its consent decree in this case. By the time AT & T divested itself of the BOCs — January 1, 1984 — many licenses in the top thirty markets had been granted. The Commission had initially decided to allocate two bands of the radio spectrum to the development of cellular service in each of the country’s regional telephone areas. “A” block licenses were awarded to companies not associated with the local BOC; “B” block licenses were awarded to the BOCs. Each divested RHC succeeded to each of the Bell System’s “B” block cellular licenses and license applications in that RHC’s region. Since then, “B” block licenses have generally remained under the control of the RHCs. Interests in the “A” block licenses, however, have frequently changed hands. In the mid-1980’s, the RHCs began seeking to purchase “A” block cellular systems outside their regions. At the urging of the Department of Justice, the district court ruled that the consent decree prohibited such acquisitions. United States v. Western Elec. Co., 627 F.Supp. 1090, 1104-09 (D.D.C.1986). This court reversed. The court thought it likely that “the parties and the district court never considered the possibility that the BOCs might want to provide exchange services outside of their geographic regions.” United States v. Western Elec. Co., 797 F.2d 1082, 1091 (D.C.Cir.1986). As a result, they could not have agreed to bar such extraterritorial business ventures and the decree itself contained no such express or implied geographic prohibition. Id. at 1089-92. After this court’s decision, the Commission approved the RHCs’ acquisition of “A” block licenses outside their own regions. See *1201 In re James F. Rill & Pacific Telesis Group, 1 F.C.C.R. 918 (1986).

C

McCaw Cellular Communications, Inc., the nation’s largest provider of cellular services, has a majority or minority interest in many “A” block cellular radio systems that provide local telephone service and thus compete with the BOC or other carrier possessing the “landline” telephone monopoly in the relevant geographic region.

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Bluebook (online)
46 F.3d 1198, 310 U.S. App. D.C. 281, 31 Fed. R. Serv. 3d 657, 1995 U.S. App. LEXIS 2975, 1995 WL 62775, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-western-electric-company-inc-american-telephone-and-cadc-1995.