AT&T Corp. won court approval Thursday for its $12.6 billion plan to buy McCaw Cellular Communications, the nation's largest cellular phone company.
U.S. District Judge Harold Greene gave AT&T a partial waiver from his landmark order 10 years ago that broke up the telephone giant. The waiver allows AT&T to acquire cellular properties that McCaw co-owns with regional Bell telephone companies, including the lucrative Houston and Los Angeles markets."Today's ruling is good news for consumers and business customers as well as for competition in the cellular industry," said AT&T spokesman Jim McGann. The company hopes to complete the merger by Sept. 30.
Greene, in a 26-page opinion, wrote: "The court concludes that the waiver is suitably tailored."
The order says that if a proposed antitrust settlement between AT&T and the Department of Justice is not approved by the court, AT&T must divest its interests in the cellular systems co-owned with the Bell companies. Telecommunications attorneys called this stipulation routine.
In granting approval, Greene imposed a number of conditions on AT&T and McCaw designed to protect competition. AT&T said it had recommended these conditions.
The order says neither AT&T nor its affiliates can unfairly steer McCaw's 3.2 million cellular customers toward AT&T for their long-distance calls, which would harm competing long-distance companies.
And, given that AT&T is a major supplier of cellular equipment, the order bars the company from being the "beneficiary of any discrimination" involving the procurement of telecommunications equipment and technical services from its cellular systems.
Greene said the objective of the consent decree was to take away from regional Bell companies the incentive to discriminate in favor of AT&T.
While AT&T may be a partner with, for instance, BellSouth in Houston and Los Angeles, it will compete against BellSouth in other markets where it operates cellular systems, the order stated.
"Thus, even if the shared interest of AT&T and the regional companies in these particular systems raises the specter of the old Bell System," Greene wrote. "It is doubtful that the same incentives to favor one another exist."
Earlier this year Greene had ruled that the deal with McCaw could not be approved without a waiver of the decree that broke up the Bell System in 1984. The decree bars AT&T from owning any of the Bell companies' assets.
Greene's action is the last major regulatory hurdle for the deal. Last month, the Justice Department cleared the way as long as AT&T agreed to abide by conditions aimed at fostering competition.