DoJ ASKS CARRIERS FOR MASSIVE AMOUNTS OF DATA IN MERGER REVIEW

Sources at the other national carriers confirmed they've received similar requests in the form of “civil investigative demands” for large amounts of information, including how much each customer paid for service and the number of min. used. The request is a form of subpoena, with compliance mandatory.

The carriers have been scrambling to provide the requested data. Sources said the recent information request was comparable in scale to DoJ’s investigation of the Nynex- Bell Atlantic merger, completed in 1997, but only after DoJ staff initially recommended rejection of the $23 billion deal. The Cingular-AT&T merger is considered likely to be cleared by federal regulators, but the data could help DoJ assess whether to order the carriers to sell off spectrum or customers, we're told.

The Cingular-AT&T merger so far has met with relatively little opposition, based on filings at the FCC. One attorney said Tues. DoJ sometimes looks more critically at merger filings when there’s no significant opposition -- with an eye on why competitors seem comfortable with the deal. An attorney and antitrust expert said DoJ is using the merger as an opportunity to “go to school” on wireless -- an industry that has changed markedly in recent years.

“The dept. is seeking data it will use to figure out if there is an econometric model that shows a correlation between market power and price -- is there a point with increased concentration where price levels are affected?” the attorney said. “They'll give this data to their economists trying to do some modeling and try to find an inflection point.” The attorney said the data will help DoJ and the FCC assess whether to approve the merger “with no divestitures or lots of divestitures… It’s been several years since they've looked at the cellular industry and a lot has changed… This isn’t surprising. It’s intended to create a framework for all of their thinking about the wireless industry.”

Last week, AT&T and Cingular officials met with FCC staff to discuss a June 30 request for information on the merger, the companies said Mon. in an ex parte filing. The FCC posed 12 pages of questions probing fine points of the proposed merger (CD July 6 p1). A response is due this week.

Rudy Baca, an analyst with Precursor, told us he still expects the merger to be approved. “I don’t think it’s unusual for the department to actually ask other competitors in the market for information, especially when they didn’t get a lot of filings,” Baca said. “What they don’t want is to be accused of being Republican and pro-business. “I think it’s all on track,” he added. “Cingular is making all the right moves… They're making every effort to say we're doing this because we need the spectrum assets -- this isn’t going to allow us to engage in anticompetitive behavior.”

Mark Cooper, research dir. for the Consumer Federation of America, said Tues. his group has launched a campaign to get states to scrutinize the merger. “This is sort of the central decision, like Nynex-Bell Atlantic was,” Cooper told us. “If you approve this merger there are 2 or 3 others that are going to go and there’s nothing you can do. We've made our case about what’s wrong with the merger… This is a bad merger. We've got the facts. We're launching a campaign around the country to get individual states to look at it.”

“They're digging even deeper than I had anticipated, in part to have a better understanding of the market dynamics in anticipation of future consolidations,” said a regulatory attorney who has followed the case. “It’s not a good development for [Cingular-AT&T]. It doesn’t necessarily mean that it’s a bad development. It means they're doing a pretty exhaustive review.”