Judge Refuses to OK Telco Mergers

U.S. District Judge Emmet Sullivan told lawyers representing the interests of both SBC and AT&T and of Verizon and MCI that he could not give final approval to either merger unless he received more information. While both have been given the go-ahead by the FCC, the courts have not yet decided if the mergers are in the public interest.

Sullivan first ordered a review of the mergers earlier this month, after he questioned if the mergers benefitted the general public. "Through the eyes of a layperson, the mergers, in and of themselves, appear to be against public interest given the apparent loss in competition," he wrote at the time.

The Justice Department was to respond as to why Sullivan may be mistaken, however apparently the agency's response was not good enough for the judge. "The court is not currently in a position to grant or deny the proposed consent decree," he said. The DOJ will sift through documents and provide those it felt are useful, it responded.

Several smaller telecommunications companies as well as interest groups have already complained to the court, asking the court to review the mergers. Sullivan has indicated he may hold a hearing at a later date on whether the mergers should be allowed to stand - something the companies and the government have voiced their opposition to, although he now says that may be premature.

Critics of the Bush administration say it has not acted forcefully enough in approving new mega-mergers, which has hurt smaller companies. Unlike other antitrust challenges, this particular case does not come out of any legal action from opponents. Rather, an independent judicial review of the settlements is granted by powers Congress awarded to federal judges in the 1970s.