New Leahy Bill Raises The Bar For Telco Mergers

June 16, 1998

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WASHINGTON (June 16) Sen. Patrick Leahy, DVt., today unveiled legislation that would toughen the conditions that large regional telephone companies must meet to merge.

Leahy, the Ranking Democrat on the Senate Judiciary Committee, which has jurisdiction over antitrust matters, released a draft of his bill during a Judiciary Committee hearing on "Mergers and the Corporate Consolidation in the New Economy."

The new Leahy bill would stipulate that any large local telephone company defined as local exchange carriers serving more than five percent of the nation's telephone access lines may not merge with another large local telephone company unless the Attorney General finds that the merger will promote competition for telephone exchange services and exchange access services, and the Federal Communications Commission certifies that both firms have opened up their networks for local competition under existing law.

"Under the misguided 1996 telecommunications bill, the old Ma Bell telephone monopoly is being reassembled, region by region, " said Leahy. "Consolidation is taking precedence over competition. This bill puts the correct priority on competition. Before these megamergers get the green light, it is increasingly important to assure consumers that this concentration will promote rather than undermine competition in local phone markets. Only those companies that have made serious efforts to open up their local loops to competition deserve the public blessing for a proposed merger."

Leahy said that the roots of the problem are the 1996 Telecommunications Reform Bill, which he, along with four other Senators, voted against. "The bill's promise of competition was a sales pitch that has not materialized to benefit consumers. Instead of competition, we see entrenchment, megamergers, consolidation and the divvying up of markets," Leahy noted in his hearing statement.

Companies whose future merger movements would be affected by the Leahy bill include Ameritech, which serves 11 percent of access lines; BellSouth (13 percent); Bell Atlantic (22.5 percent); GTE (11 percent); SBC (21 percent), and U.S. West (9 percent).

[summary and text of bill available on request]