AT&T, BellSouth merger passes antitrust test

Department of Justice's antitrust division gives blessing to $67 billion merger between AT&T and BellSouth.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
2 min read
AT&T and BellSouth got the green light from U.S. antitrust authorities on Wednesday to move forward with their proposed $67 billion merger, which will create the largest phone company in the United States.

The Department of Justice's antitrust division issued a statement approving the merger unconditionally.

"After thoroughly investigating AT&T's proposed acquisition of BellSouth, the antitrust division determined that the proposed transaction is not likely to reduce competition substantially," Thomas Barnett, assistant attorney general in charge of the Justice Department's antitrust division, said in a statement. "The merger would likely result in cost savings and other efficiencies that should benefit consumers."

The merger still needs approval from the Federal Communications Commission, which is scheduled to vote on the matter Thursday.

Announced in March, the merger is the latest in a long line of telecommunications mergers in the last few years.

Last year, the Justice Department approved the $16 billion merger between long-distance carrier AT&T and the local-telephony company SBC Communications. It also approved the $6.7 billion merger between MCI and Verizon Communications.

Critics have staunchly opposed these mergers, asserting that they will reduce competition, ultimately limit customer choice and eventually lead to price increases. Critics also have said a consolidated AT&T will wield too much power that the company may abuse by overstepping customer privacy barriers and limiting the type of traffic that traverses its networks.

"AT&T, with the help of a complicit government, is poised to control nearly half of the nation's phone lines and will also be the largest wireless and broadband Internet company in the country," Andrew Schwartzman, CEO of nonprofit law firm Media Access Project, said in a statement. "If consumers thought gas prices were out of control, wait until they get their next phone bill."

The unconditional approval also drew harsh words from Sen. Daniel Inouye, the Democratic co-chairman of the Senate Commerce Committee, which counts communications laws among its responsibilities. The Hawaii politician accused the Justice Department of ignoring potential negative effects from the reduced competition wrought by the merger, saying in a statement that the decision "not only flies in the face of the department's own merger guidelines, but also rests on the hope of potential facilities-based competition that may never materialize."

Inouye said it's now up to the FCC "to stand up for consumers and to insist upon strong conditions to protect competition."

The announcement comes as a federal court continues to scrutinize the Justice Departmennt's approval of the previous telecommunications mergers.

CNET News.com's Anne Broache contributed to this report.