The Other Merger Cases Are Distinguishable

Even if the other merger cases had set precedent, they would be distinguishable from the present case. If WorldCom completes the merger, the resulting long distance market will be highly concentrated. The parties opposed to this Motion estimate the combined AT&T and post-merger WorldCom long distance market share at upwards of 80%.¹⁰ Whether or not this figure is accurate, there is no dispute that in a post-merger market, AT&T and WorldCom will serve the majority of long distance customers, at least for some time. This is a far different situation from that presented in the mergers of MCI with WorldCom and BT, and is even more distinguishable from the AT&T/TCI and AT&T/Teleport mergers.

The two previous MCI mergers - involving WorldCom and BT - are not comparable to the present one. As the California Attorney General points out, "at the time of the MCI/WorldCom transaction, WorldCom had `no advertising directed at California residential customers, and . . . no direct mail or telemarketing to California residential customers."¹¹ Similarly, the AG points out, "although BT terminated approximately 30 million minutes of U.K.-U.S. traffic in California, neither BT nor any of its United States subsidiaries provided more than a minimal amount of telecommunications services within this country."¹² While WorldCom disputes the AG's characterization that the prior MCI merger cases "involv[ed] entities that did not compete or had limited regulated operations," it does not contest the AG's specific factual assertions about BT or WorldCom. Indeed, the Commission's BT decision reasoned that "BT operates exclusively in the United Kingdom and does not propose physically to enter the California market." ¹³

The AT&T mergers are even less relevant here. As ORA notes, one of the reasons for the Commission's decision to grant an exemption to the AT&T/TCI merger was that "the California operations of [TCI-Telephony] are minuscule and the Commission exercises no jurisdiction at all over the other subsidiaries of TCI and their operations."¹⁴ Likewise, in granting an exemption to the AT&T/Teleport merger, the Commission did not consider arguments about the resulting market concentration after the merger's consummation. Indeed, annual revenues of the three California Teleport subsidiaries being acquired were substantially less than $ 500 million, and, unlike Sprint and MCI/WorldCom, Teleport did not compete in the residential/small business mass market for telephony.¹⁵

One of the key reasons the legislature adopted §§ 854(b) and (c) was to protect the competitive marketplace from excess concentration. As noted in the legislative history, the proposed Southern California Edison/Southern California Gas and Electric merger that prompted passage of the statutory amendments would have created the "nation's largest electric utility." ¹⁶ The legislature's concerns about the effect of this level of market concentration on consumers, employees and communities are relevant here. Because this merger is of a magnitude that is not comparable to those in the previous cases, the Commission's prior merger decisions do not apply here.