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October 23, 1998

Separate Statement of Commissioner Harold W. Furchtgott-Roth

Re: Application For Consent to the Transfer of Control of Licenses and Section 214 Authorizations from Southern New England Telecommunications Corporation to SBC Communications, Inc.; CC Docket No. 98-25.

I support today's decision approving the proposed purchase of Southern New England Telecommunications Corporation by SBC Communications Inc. I concur in that result, but write separately to express my concern with the underlying reasoning. I continue to be uncomfortable with the Commission's proposed framework for analyzing mergers as I believe that it is (i) essentially duplicative of the merger analysis already conducted by the Department of Justice, (ii) excessively time-consuming since this agency waits until after DOJ clearance has been granted before proceeding, and (iii) too speculative in its analysis of who may be potential competitors.

Cumbersome and Time-Consuming Review Process

I continue to be frustrated by this agency's unwieldy review of mergers and the length of time that we take to do so. As I have noted in several recent orders,(1) I am troubled that this agency takes as long as it does to review mergers. The transfer currently before us was filed on February 20, 1998 and cleared the Department of Justice without condition on February 21, 1998. Moreover, this is a relatively small transaction and one that appears to raise fewer legal issues than past mergers. Indeed, only five parties filed comments or petitions to deny. It should not take this agency an additional 8 months beyond the Department of Justice's review to agree that there are no negative competitive effects.(2)

As I have indicated before, I am troubled that the Commission engages in such extensive market analysis and the development of conclusions about market structure and market power that duplicate work done by other federal agencies. Our staff has invested substantial talent and resources in the review of this merger, as is evident by the accompanying Order. But our staff is hard working and has many demands placed on their time. Another agency of the federal government, one with specific statutory authority to review mergers and with substantially more staff that specialize in nothing other than merger analysis, has already examined this merger in all market contexts and has found it acceptable. For this reason, I would prefer a more thorough consideration of ways to eliminate the duplicative nature of this dual analysis of proposed mergers. Surely there is a more efficient and less time-consuming process that could be followed.

For example, it is the obligation of this agency to find the transfer of licenses is in the "public interest."(3) A finding by this agency that the transfer of licenses involves merging parties that have in the past and are currently complying with existing Commission rules, and that no extraordinary reason to oppose the transfer of licenses is articulated by the public, would seem the proper basis for this agency to exercise its responsibility.

Several regulatory authorities, both at the state and federal level, have already approved the merger with various qualifications. The FCC seems always to be the last among countless agencies to offer an opinion. I concur in the decision to approve this transaction, but I do so with deep reservations about the process that these companies have had to endure.

1. Statement of Commissioner Furchtgott-Roth regarding the Application of Worldcom, Inc. and MCI Communications Corporation for Transfer of Control of MCI Communications Corporation to WorldCom, Inc. (Sept. 14, 1998); Statement of Commissioner Furchtgott-Roth regarding the Application to Transfer Control of Teleport Communications Group Inc. to AT&T Corp. (July 22, 1998).

2. Again I note that the Commission's internal procedures that typically limit the Commissioners' input until after an item has been fully drafted and presented is not only precluding full consideration of important issues by the entire Commission in a timely manner, but ultimately delaying the decision-making process. I look forward to working with my colleagues to attempt to rectify this situation.

3. I emphasize that it is the obligation of this agency to find only the transfer of licenses is in the public interest, not the merger or acquisition of the underlying firms. I note that the Commission has some limited shared Clayton Act jurisdiction to review the merger more broadly, but that jurisdiction does not involve a "public interest" standard. The standard there is quite specific: "substantially to lessen competition, or tend to create a monopoly," 15 U.S.C. Section 18, which does not require that a proposed merger be demonstrably "pro-competitive," and under which the Department of Justice has promulgated guidelines for the type of evidence required to meet that standard. The Commission makes no specific findings with respect to this standard. Moreover, another federal agency, with substantially more expertise, has already applied that standard.