5. Discussion
The documents sought by Applicants here are relevant to the issues of whether the Verizon/MCI merger will have a significant competitive impact in the markets for telecommunications and internet services, as Cox alleges. (Cox Protest, at 14-16.) To the extent that this ruling eliminates one of the requests and significantly narrows the required production as to data request 1 (pursuant to the parties' meet-and-confer agreements), the discovery request cannot be said to be overbroad or unduly burdensome. To the extent that Cox is concerned about the confidentiality of its marketing documents, the data can be made subject to nondisclosure agreements similar to those that apply to Cox's receipt of Verizon and MCI documents. (See ALJ Judge's Ruling Granting, in Part, Motion for Protective Order, dated July 15, 2005.)
Applicants seek documents concerning Cox's plans, projections or strategies for providing telecommunications services in California. The Commission has held that the number and strength of competitors remaining in the market after a merger is relevant in determining whether the merger would adversely affect competition. Thus, in the Enova/Pacific Enterprises merger case, the Commission upheld an ALJ ruling requiring Southern California Edison Company to produce documents relating to its "current plans in the area of competition," and ordering sanctions for refusing to provide such documents. (Re Pacific Enterprises (1998) 70 CPUC2d 343.) The ALJ had found that such documents were relevant to analyzing the "competitive environment that will exist subsequent to the consummation of the proposed merger." The Commission also noted that "[w]hat matters in assessing a merger is how the merger will change the competitive circumstances that would obtain absent the merger." (70 CPUC2d at 378.)
Similarly, in the Telesis/SBC merger case, the Commission noted the importance of considering the future plans of potential competitors in the California markets for local exchange or instrastate services. (Re Pacific Telesis Group (1997) 71 CPUC2d 351.) Likewise, in the GTE/Bell Atlantic merger case, the Commission relied on the presence of other actual and potential competitors, and their relative strengths and weaknesses, in finding that the proposed merger would not adversely affect competition. (Re GTE Corporation and Bell Atlantic Corporation (2000) D.00-03-021, at 106.) In Re AT&T (1994) Decision 94-04-042, the Commission held that "[i]ncreasing competition in the market for interexchange services and the emergence of several alternative to cellular service will subject [the combined AT&T and McCaw Cellular] to competitive pressures that will prevent them from exerting market power in the relevant markets."
Moreover, in the context of this data request and the protest of this particular intervenor, this ruling finds that relevant documents as defined in the narrowed request should be produced without regard to whether they reference the Verizon/MCI merger. The Commission in the Pacific/Enova case ordered Edison to produce its "current plans in the area of competition." (79 CPUC2d at 415.) In the SBC/Telesis case, the Commission ordered AT&T to produce its "pre- and post-merger business and marketing plans." (79 CPUC2d at 418.)
The relevance of competitive business plans to a merger proceeding is, among other things, that such plans allow the Commission to evaluate the competitive landscape that a combined Verizon/MCI would face and to assess whether, within that landscape, the new company would be able to exercise any market power. Pre-transaction business plans, like those ordered to be produced in the SBC/Telesis case, are relevant because they provide a baseline to which post-transaction plans could be compared, in order to determine whether any meaningful change had occurred. In other words, a showing that Cox business plans changed markedly following announcement of the Verizon/MCI merger arguably could support Cox's argument that the proposed merger adversely affects competition. On the other hand, a showing that Cox business plans showed little change before and after the Verizon/MCI merger arguably could support an inference that the merger has not had a substantial effect on Cox's competition.
In summary, Cox in the context of this case and these data requests has not provided a convincing rationale as to why it should not be required to produce responsive documents to the modified data request 1 to the extent that it possesses responsive documents. Accordingly, Cox is directed to provide responses to modified data request 1 as specified below.
IT IS RULED that:
1. The Applicants' Joint Motion to Compel Responses by Cox California Telcom, LLC (Cox) to Applicants' First Set of Data Requests is granted in part and denied in part.
2. Parties shall promptly meet and confer as necessary to resolve specific details concerning materials to be produced and the degree of confidentiality, if any, to be accorded such documents.
3. Cox shall produce relevant documents that are responsive to Applicants' data request 1 of Applicants' First Set of Data Requests, as modified by agreement of the parties as discussed above.
4. Cox need not produce documents responsive to data request 6 provided that it has provided a full response to data request 1.
5. Cox's production of documents in response to Applicants' data request 1 shall be made within three business days of the date of this order, unless otherwise mutually agreed by the parties.
Dated August 5, 2005, at San Francisco, California.
/s/ GLEN WALKER
Glen Walker
Administrative Law Judge
CERTIFICATE OF SERVICE
I certify that I have by mail, and by electronic mail to the parties for whom an electronic mail address has been provided, this day served a true copy of the original attached Administrative Law Judge's Ruling Addressing Applicants' Motion to Compel Responses by Cox California Telcom, LLC on all parties of record in this proceeding or their attorneys of record.
Dated August 5, 2005, at San Francisco, California.
/s/ ERLINDA PULMANO
Erlinda Pulmano
NOTICE
Parties should notify the Process Office, Public Utilities Commission, 505 Van Ness Avenue, Room 2000, San Francisco, CA 94102, of any change of address to insure that they continue to receive documents. You must indicate the proceeding number on the service list on which your name appears.
