A. Introduction
Mergers and acquisitions are an important aspect of the
telecommunications sector. A primary benefit of mergers to the economy
is their “potential to generate significant efficiencies and thus enhance
the merged firms ability and incentive to compete, which may result in
lower prices, improved quality, enhanced service, or new products.”1 On
the other hand, mergers can have the potential to produce anticompetitive
effects, for example by eliminating competition between actual or
potential competitors (horizontal mergers) or by foreclosing or raising
rivalscosts ) when one of the merging companiesproducts may be a
necessary component or complement of the other company’s products
(vertical mergers).2 In these cases, the issue is whether the merged firm
may be able to raise prices unilaterally or otherwise exercise market
power, or whether the increased market concentration could facilitate
coordinated interaction among rival firms.3
This chapter provides an overview of the legal standards that govern
the examination of mergers for potential anticompetitive issues,
describes how these standards are applied to mergers in the
GUIDELINES (2010) [hereinafter 2010 MERGER GUIDELINES]. The 2010
Merger Guidelines followed and supplanted the 1992 Merger
Guidelines, as amended in 1997. DEPT OF JUSTICE & FED. TRADE
[hereinafter 1992 MER GER GUIDELINES]. The 1992 Me rger Guidelines,
in turn, had followed and s upplanted the 1984 Merger Guidelines
promulgated by the Department of Justice. U.S. DEPT OF
JUSTICE , MERGER GUIDEL INES (1984) [hereinafter 1984
2. See, e.g., Willard K. Tom, Anticompetitive Aspects of Market-Share
Discounts and Ot her Incentives to E xclusive Deals, 6 7
ANTITRUST L.J. 615 (2000); Memorandum Op. & Orde r, In re MCI
Commcns Corp., 12 FCC Rcd. 15351, 15410, ¶ 155 (1997); see also
Chapter 1, Part G.
3. See 2010 MERGER GUIDELINES, supra note 1.
234 Telecom Antitrust Handbook
telecommunications sector, and discusses remedies to address potential
anticompetitive harm.
B. Overview of Legal Standards
Federal Antitrust Laws
Generally, t he bulk of merger reviewand merger litigationin the
United States is conducted by either the Antitrust Division of the U.S.
Department of Justice (DOJ) or the Federal Trade Commission (FTC),
which share jurisdiction over federal antitrust enforcement.4 Insofar as
mergers involve entities in the telecommunications sector that hold
Federal Communications Commission (FCC) licenses and authorizations,
the FCC also plays an important role.5
When analyzing the competitive implications of a merger, the DOJ
and the FTC will do so using the principles laid out in the agencies
jointly published 2010 Horizontal Merger Guidelines.6 The analytical
framework developed and applied by the federal antitrust agencies
through these guidelines has become the primary framework for merger
analysis, whether conducted by one of the antitrust agencies, by state
attorneys general, or by the courts.7 While the FCC has not formally
adopted the 2010 Merger Guidelines, it has relied on them in recent
decisions.8 However, an understandin g of merger analysi s begins with
the relevant statutory schemes.
4. The agencies “clear” mergers to each other to avoid duplicative review;
most telecommunications mergers are cleared to the DOJ. The clearance
process is discussed in more detail later in this section.
5. See infra, Part B.2.a.
6. See 2010 MERGER GUIDELINES and their predecessors, supra note 1 .
7. See, e.g., FTC v. Sysco Corp., 113 F. Supp. 3d 1, 38 (D.D.C. 2015)
(noting that the “Merger Guidelines are not binding, but the Court of
Appeals and other courts have looked to them for guidance in previous
merger cases” (citing FTC v. H.J. Heinz Co., 246 F.3d 708, 716 n.9 (D.C.
Cir. 2001) and United States v. H & R Block, Inc., 833 F. Supp. 2d 36, 52
n.10 (D.D.C. 2011))).
8. See Memorandum Op. and Order & Declaratory Ruling, In re Cellco
P’ship, 27 FCC Rcd. 10,698, 10,717, ¶ 52 & n.118 (2012) [hereinafter
Verizon Wireless/SpectrumCo ] (citing the 2010 Merger Guidelines for
market definition); see also Memorandum Op. & Order & Declaratory
Ruling, In re Deutsche Telekom, 28 FCC Rcd. 2322, 2336, ¶ 42 n.101
(2013) (citing the 2010 Merger Guidelines in relation to unilateral ef fects
from a horizontal merger).
Mergers 235
a. The Clayton Act
The antitrust review of mergers and acquisitions is primarily
governed by Section 7 of the Clayton Act.9 Section 7 prohibits any
merger, stock acquisition or asset acquisition in which the effect of the
transaction may be to “substantially lessen competition” or “tend to
create a monopoly” “in any line of commerce or in any activity affecting
commerce in any section of the country.” 10 Although mergers are
typically challenged before consummation, the legality of a transaction
under Section 7 may be determined at “any time”11 and the antitrust
9. 15 U.S.C. §18. Both the FTC and t he DOJ have direct aut hority to
enforce Section 7 of the Clayton Act, although the FTC currently lacks
jurisdiction over mergers of communications common carriers. See
Federal Trade Commission Act § 5a, 15 U.S.C. § 45(a)(2). The DOJ can
also directly enforce Sections 1 and 2 of the Sherman Act, 15 U.S.C.
§§1, 2; the FTC possesses similar authority under Section 5 of the FTC
Act. See 15 U.S.C. §45. The FCC has jurisdiction to analyze mergers of
communications common carriers under Sections 7 and 11 of the Clayton
Act, as well as jurisdiction under the Communications Act of 1934, as
amended, 47 U.S.C. §§ 151-614.
10. 15 U.S.C. §18.
11. See United States v. E.I. du Pont de Nemours & Co., 353 U.S. 586, 597
(1957). Indeed, the challenge in the du Pont case occurred 30 years after
the transaction closed. See id. at 598. More recently, the FTC challenged
St. Lukes Health Systems acquisition of Saltzer Med ical Group P.A.
months after the transaction closed. Complaint, Saint Alphonsus Med.
Ctr.-Nampa, Inc. v. Saint Lukes Health Sys., 2014 U.S. Dist. LEXIS
9264 (D. Idaho 2014), ECF. No. 98. Mergers can also be challenged ex
ante or ex post under Sections 1 or 2 of the Sherman Act. Section 1 of the
Sherman Act prohibits “combinations” in restraint of trade, whether “in
the form of trust or otherwise,” 15 U.S.C. §1, and Section 2 makes it
illegal for parties to “combine or conspire with any other person or
persons to monopolize any part of . . . trade or commerce,” 15 U.S.C. §2.
However, amendments to the Clayton Act in 1950 and 1980 have
rendered Section 1 largely redundant in merger litigation, except in cases
involving some regula ted firms or pre-1980 mergers. In the rare recent
merger cases that have been challenged under Section 1, courts have
applied the same substantive test applicable in merger cases br ought
under Section 7 of the Clayton Act. See United States v. Rockford Meml
Corp., 898 F.2d 1278 (7th Cir. 1990) (holding that mergers ar e
condemned by the Clayton and Sherman Acts under the same standards).
There is scant authority, however, for the application of Section 2 to
mergers, though it is at least conceivable that Section 2 might reach

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