COM/MP1/SK1/llj/acb Mailed 11/22/05
Decision 05-11-028 November 18, 2005
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
In the Matter of the Joint Application of SBC Communications, Inc. ("SBC") and AT&T Corp. Inc. ("AT&T") for Authorization to Transfer Control of AT&T's Communications of California (U-5002), TCG Los Angeles, Inc. (U-5462), TCG San Diego (U-5389), and TCG San Francisco |
Application 05-02-027 (Filed February 28, 2005) |
OPINION APPROVING APPLICATION TO TRANSFER CONTROL
Title Page
2. Procedural Background and Description of Financial Transaction 1212
3. The Corporate Entities 1818
4. Jurisdiction and Scope of Proceeding 1919
4.1. § 854(a) Applies to This Transaction 1919
4.2. Application of §§ 854(b) and (c) to This Transaction 110110
4.2.1. The plain language of § 853(b) affords the Commission significant discretion in determining whether to apply § 854 (b) and (c). 110110
4.2.2. Prior Commission decisions recognize our broad power to exempt mergers from review under §§ 854(b) and (c). 112112
4.2.3. Legislative history reaffirms the Commission's ability to exercise substantial discretion in determining whether to exempt a transaction from § 854 scrutiny. 116116
4.2.4. The specific facts and circumstances surrounding the SBC/AT&T merger indicate that we should not subject the transaction to §§ 854(b) and (c) review. 118118
5. Does the Proposed Merger of the Parent Companies and Change in Control "Not Adversely Affect Competition?" 128128
6. Does the Proposed Merger of the Parent Companies and Change in Control "Not Adversely Affect Competition?" 128128
6.1. Mass Market Local Exchange 130130
6.1.1. Advisory Opinion finds merger "will not have adverse effects upon competition in local markets" 130130
6.2. Mass Market Long Distance 142142
6.2.1. Advisory Opinion finds long distance services "readily available" and that merger will "have minimal effects on concentration." 142142
6.3. Enterprise Services 145145
6.3.1. Advisory Opinion finds merger tentatively concludes that "merger will not cause undue increases in concentration levels." 146146
7. Do the Proposed Transactions Meet the Public Interest Tests Contained in § 854(c)? 159159
7.1. Will the Change of Control Maintain or Improve the Financial Condition of the Resulting Utilities Doing Business in California? 160160
7.1.1. Position of Parties 160160
7.1.2. Discussion: The Merger will maintain or improve the Financial Condition of the resulting public utility 163163
7.2. Will the Merger of the Parent Companies and the Change of Control Maintain or Improve the Quality of Service to California Ratepayers? 164164
7.2.1. Position of Parties 164164
7.2.2. Discussion: Merger Will Maintain or Improve Service Quality 166166
7.3. Will the Merger of the Parent Companies and Changes of Control Maintain or Improve the Quality of the Management of the Resulting Utility Doing Business in California? 167167
7.3.1. Position of Parties 167167
7.3.2. Discussion: Proposed Transaction Will Maintain or Improve Management Quality 168168
7.3.3. Will the Merger of the Parent Companies and Change of Control Be Fair and Reasonable to the Affected Employees? 169169
7.3.4. Position of Parties 169169
7.3.5. Discussion: Changes will be Fair to Utility Employees 171171
7.3.6. Will the Merger of the Parent Companies and Change of Control Be Fair and Reasonable to a Majority of the Utility Shareholders? 172172
7.3.7. Positions of Parties 172172
7.3.8. Discussion: Transaction is in the Interest of Shareholders 172172
7.3.9. Will the Proposed Merger of the Parent Companies and Change of Control Be Beneficial on an Overall Basis to State and Local Economies and the Communities Served by the Resulting Utility? 173173
7.3.10. Position of Parties 173173
7.3.11. Discussion: Transaction Will Benefit Californians 176176
7.4. Will the Proposed Merger of the Parent Companies and Change of Control Preserve the Jurisdiction of the Commission and its Capacity to Effectively Regulate and Audit Public Utility Operations in California? 185185
8. Does the Proposed Merger of the Parent Companies and Change in Control Create Environmental Issues of Concern? 188188
9. Other Issues § 854(c)(8) § 854(d) 188188
10. The Commission Should Approve this Application for a Proposed Merger of the Parent Companies and Change in Control at this Time 194194
11. Comments to Alternate Decision 194194
ATTACHMENT A - List of Appearances
OPINION APPROVING APPLICATION TO TRANSFER CONTROL
1. Summary
We hereby approve the application of SBC Communications, Inc. (SBC) and AT&T Corp. (AT&T) (collectively, Applicants) for authority to transfer control of AT&T Communications of California and its related California affiliates from AT&T to SBC subject to the terms and requirements set forth in this order. We have reviewed the proposed merger under the authority of Public Utilities Code § 854 to determine whether it is in the public interest. We determine that § 854(a) applies to this transaction, and that it is appropriate to grant an exemption under § 853(b); therefore, §§ 854(b) and (c) do not apply to the transaction.
The Applicants must meet the conditions adopted herein in order to provide reasonable assurance that the proposed transaction will be in the public interest in accordance with § 854(a). We find that, subject to Applicants' compliance with the adopted conditions, the merger will produce net benefits for consumers and will not adversely affect competition for telecommunications service in California. Conversely, if the Applicants declined to implement the conditions set forth herein, we would conclude that the merger did not comply with § 854 and could not be approved.
