No 'rubber-stamp' for US telco mega-merger

A federal judge in the US has warned that he was no intention of "rubber-stamping" the merger of AT&T-SBC Communications and Verizon-MCI.

Judge Emmet Sullivan, of the US District Court for the District of Columbia, continued to press the Department of Justice (DoJ) to explain why he should approve twin mergers involving some of the US' largest telephone companies, and said he plans to issue an opinion only after an "independent review" of the materials presented to him.

At the beginning of an afternoon hearing in Washington, which lasted more than two hours, Judge Sullivan said: "Don't I have to scrutinise that merger to determine if it's in the public interest?"

The pair of deals got the green light more than a year ago from the Federal Communications Commission and the DoJ's antitrust division, which collectively imposed only minor conditions aimed at alleviating competition concerns.

Both AT&T and Verizon have since closed the books on their respective acquisitions.

Some observers say Sullivan's actions could also affect the outcome of another megamerger, between AT&T and BellSouth, which won unconditional approval from the Justice Department this autumn. The Federal Communications Commission has repeatedly postponed a decision on that deal because of reported disagreements over what restrictions to impose.

Sullivan has maintained it's his duty to give the deals a thorough look. A 1974 federal antitrust law called the Tunney Act calls for the courts to vet agreements negotiated between the Justice Department and the companies involved to ensure the deals satisfy the "public interest".

When the telecommunications giants and the government appeared before the judge in July, Sullivan scolded the Justice Department for allegedly failing to present enough facts. He said he would not be able to sign off on the mergers until he received more information about the deals' potential impact on the public.

He said on Thursday "it remains to be seen whether the record is complete yet" and questioned whether the government was withholding "significant documents". Justice Department attorney Claude Scott replied that the government had submitted to the court a "fair representation" of the thousands of documents and interviews they had gathered while vetting the deals.

Anne Broache writes for CNET News.com