4. Discussion
A. Requirement of Pub. Util. Code 852 and 854.
As a preliminary matter, we note that Applicants styled their application as one pursuant to Pub. Util. Code § 852 rather than § 854. Because Section 852 relates only to public utility to public utility transactions, and we do not know the extent to which all acquiring companies are public utilities, we will deem the application to also seek approval pursuant to § 854. Both provisions require Commission authorization for transfers of stock or control affecting Commission-certificated telecommunications companies. Section 852 requires such approval when a public utility proposes to acquire stock of another public utility. Section 854 requires Commission approval before a company, whether or not incorporated in California, may "merge, acquire, or control . . . any public utility organized and doing business in this state. . . ."
The purpose of these sections is to enable the Commission, before any transfer of public utility property is consummated, to review the situation and to take such action, as a condition of the transfer, as the public interest may require.8 Because the public interest test applies to both Sections 852 and 854, and we find Applicants meet this test, we will not require Applicants to amend their application to refer to the latter section. Rather, we will deem the application to seek approval pursuant to both statutes.
We are satisfied that the proposed merger will benefit TVCI/SCI's California customers. Applicants represent that the combined company will have total invested and committed capital of $800 million, far more than TVCI/SCI have individually. TVCI/SCI will benefit from new management as a result of the combined Gabriel/TVCI/SCI management team that will be created as a consequence of the merger. Nor does the merger appear to have adverse consequences for TVCI/SCI's California customers. To these customers, the change will be transparent. Customers may use the same toll-free number to obtain service and report complaints, and may procure the same products and services. We are not granting TVCI/SCI authority to provide any new services in addition to those it already offers.
B. Motion for Protective Order
Applicants seek a protective order as to the following documents identified in two motions, filed on July 27, 2000 and August 29, 2000:
1. Agreement and Plan of Merger by and Among Gabriel Communications, Inc., Triangle Acquisition, Inc. and State Communications, Inc. dated as of June 9, 2000 (Application, Attachment E);
2. Gabriel Communications, Inc. and Subsidiaries Audited Financial Statements, December 31, 1999 and 1988 (Application, Attachment G); and
3. Schedules 2.7 and 3.7 to Agreement and Plan of Merger, disclosing pending TVCI and Gabriel litigation (Compliance Filing, Appendix D).
Applicants allege that the documents contain information about Applicants' finances and business plans that, if made public, likely would result in direct and immediate harm to them. They assert they will compete for customers with other telecommunications companies operating within California. Disclosure of the proprietary financial and marketing information would provide Applicants' competitors with valuable information relating to Applicants' financial condition and business plans. Applicants allege they have kept the documents secret and that because they are not publicly traded companies, the documents are not publicly available. On the basis of Applicants' allegations, we grant the motion.
C. Motion for Exemption from Rule 16(a)
Applicants seek exemption for Gabriel and Triangle from Commission Rule 16(a)'s requirements that applicants that are not domestic corporations shall file a copy of their certificate to transact business in California certified by the California Secretary of State. They allege that because Gabriel and Triangle are mere holding companies, with TVCI/SCI the only entity doing business in this state, they need not comply as to Gabriel and Triangle. In D.94-12-062, we granted a similar waiver to a holding company.9 We do have TVCI's certificate of qualification to do business in California. Nonetheless, we will require Gabriel and Triangle to file a statement, within 30 days of mailing of this decision, certifying, under oath, the following:
1. That they will not contest this Commission's jurisdiction to consider any matter relating to TVCI/SCI, their parents, holding companies, successors or subsidiaries by virtue of Gabriel and Triangle's lack of qualification to do business in California, and
2. That Gabriel and Triangle will be responsible for the actions of TVCI/SCI and their successors to the same extent as they would be had they complied with Section 16(a) and not received a waiver of that rule.
Provided Gabriel and Triangle timely make the foregoing filing, we will waive the Section 16(a) requirement as to them. If they fail to make the filing, Gabriel and Triangle shall, within 60 days of mailing of this order, comply with Rule 16(a).
D. Category and Need for Hearings
In Resolution ALJ 176-3044, dated August 3, 2000, the Commission preliminarily categorized this proceeding as ratesetting, and determined that hearings were not necessary. We uphold these preliminary determinations.
The application is granted, subject to the terms and conditions set forth below.
1. Notice of this application appeared in the Commission's Daily Calendar of August 3, 2000.
2. We will deem the application to seek approval pursuant to both Pub. Util. Code §§ 852 and 854 of a merger agreement affecting a California certificated carrier now known as TVCI, formerly known as SCI, and holding carrier identification number U-6079-C.
3. SCI is authorized by this Commission to provide resold local exchange service and switchless interexchange service in California. Commission records reflect a name change from SCI to TVCI in August 2000.
4. There will be no change in services or rates provided by TVCI as a result of the transfer of control. This decision authorizes no change in the services or rates TVCI now offers in California.
5. No Applicant currently has a complaint pending against it before this Commission or litigation pending against it in the California courts.
6. The complaints pending against Applicants before other Commissions and in other states do not materially affect our decision that the merger is consistent with the public interest.
1. The proposed merger is in the public interest.
2. This proceeding is designated a ratesetting proceeding; no protests have been received; no hearing is necessary.
3. Because both Sections 852 and 854 of the Public Utilities Code require Commission approval of transactions affecting ownership of California-certificated telecommunications companies on a public interest showing, we deem the application to seek authorization under both statutes.
4. TVCI should be authorized to operate under the CPCN, U-6709-C.
5. Applicants have shown entitlement to confidential treatment for the documents accompanying their motions for protective order filed on July 27, 2000 and August 29, 2000.
6. The Commission should waive as to Gabriel and Triangle the requirement in Commission Rule 16(a) that those entities be certified by the California Secretary of State to do business in California, provided Applicants comply with the conditions set forth in this decision.
7. The application should be approved.
IT IS ORDERED that:
1. State Communications, Inc. (SCI) (U-6079-C), TriVergent Communications, Inc. (TVCI), Gabriel Communications, Inc. (Gabriel), and Triangle Acquisition, Inc. (Triangle) (collectively, Applicants) are authorized pursuant to Sections 852 854 of the Public Utilities Code to enter into the transaction, as more fully described in the application and its exhibits, by which Gabriel will acquire control of TVCI, the entity operating in California.
2. Applicants shall notify the Director of the Commission's Telecommunications Division in writing of the transfer of authority, as authorized herein, within 10 days of the date of this order. A true copy of the instruments of transfer shall be attached to the notification.
3. Applicants shall file new tariffs incorporating any changes in name, rates, services and management authorized in the transfer transaction.
4. Applicants shall make all books and records available for review and inspection upon Commission staff request.
5. The certificate of public convenience and necessity granted to SCI in Decisions (D.) 98-11-047 and D.99-03-069 is transferred to the newly restructured TVCI, which is authorized to continue use of the utility identification number U-6709-C.
6. Applicants' motions for protective order are granted. The following documents Applicants filed under seal shall remain under seal for a period of two years from the date of this decision, and during that period shall not be made accessible or disclosed to anyone other than Commission staff except on the further order or ruling of the Commission, the Assigned Commissioner, the Assigned Administrative Law Judge (ALJ), or the ALJ then designated as Law and Motion Judge:
· Agreement and Plan of Merger by and Among Gabriel Communications, Inc., Triangle Acquisition, Inc. and Communications, Inc. dated as June 9, 2000 (Application, Attachment E);
· Gabriel Communications, Inc. and Subsidiaries Audited Financial Statements, December 31, 1999 and 1998 (Application, Attachment G); and
· Schedules 2.7 and 3.7 to Agreement and Plan of Merger, disclosing pending TVCI and Gabriel litigation (Compliance Filing, Appendix D).
7. If Applicants believe that further protection of these documents is needed after two years, they may file a motion stating the justification for further withholding the material from public inspection, or for such other relief as the Commission rules may then provide. This motion shall be filed no later than 30 days before the expiration of this protective order.
8. We will waive the requirement of Commission Rule 16(a) as to Gabriel and Triangle provided that they file a statement, within 30 days of mailing of this decision, certifying, under oath the following:
· That they will not contest this Commission's jurisdiction to consider any matter relating to TVCI/SCI, their parents, holding companies, successors or subsidiaries by virtue of Gabriel and Triangle's lack of qualification to do business in California, and
· That Gabriel and Triangle will be responsible for the actions of TVCI/SCI and their successors to the same extent as they would be had they complied with Commission Rule 16(a) and not received a waiver of that rule.
9. If they fail to make foregoing the filing, Gabriel and Triangle shall, within 60 days of mailing of this order, comply with Rule 16(a) and file notice of such compliance with this Commission.
10. Nothing in this decision shall be construed to allow any Applicant to offer products or services not already authorized.
11. Once Applicants comply with either ordering paragraph 7 or 8 of this Order, Application 00-07-050 shall be closed.
This order is effective today.
Dated , at San Francisco, California.
APPENDIX A
-Original Message-----
From: Smith, Melissa [mailto:MSmith@KelleyDrye.com]
Sent: Tuesday, October 24, 2000 2:00 PM
To: 'ALJ Sarah Thomas'
Cc: Freeman, James J.; Jenkins, Eric
Subject: State Communications, Inc., et al. for Approval of Transfer of Control - A.00-07-050
Importance: High
<<(DC01-129757-v1) trivergent california complaint detail.DOC>>
ALJ Thomas:
Per our phone conversation today, attached please find a document listing the detail of the FCC/PUC complaints as you requested. The additional
detail for the litigation item is as follows:
Business Telecom, Inc. v. James P. Dunn and TriVergent
Type of Claim: Tortious Interference with Contract; Violations of the North
Carolina Unfair Trade Practices Act.
Responsible Attorney: Matthew Keene - Ogletree Deakins Nash Smoak & Stewart
Status: Company's investigation completed May 15, 2000 and Answer of Company filed May 24, 2000. BTI agreed to a voluntary dismissal with prejudice
following receipt of correspondence from Charlie Houser and a voluntary
dismissal of Mr. Dunn's counterclaim. Accordingly, upon motion by BTI, the
case has been dismissed with prejudice.
Please do not hesitate to contact me if you require anything further. And, please advise as to the next step for this transfer of control application.
Thanks!
INFORMATION ON COMPLAINTS
Bret R. Chase
Case Number: 00-N17741
Jurisdiction: FCC
Allegations: Mr. Chase alleged that he was overbilled by MCI for calls that should have been local calls according to his service plan.
Applicants' Response: Mr. Chase was overcharged by MCI for some of his local calls that were mistakenly classified as long distance calls by MCI. TriVergent Communications (formerly State Communications) did not bill him for these calls. This is a matter that should be addressed with MCI.
Expected Outcome: Favorable for TriVergent Communications. MCI should be responsible for charges. Response sent to FCC from TriVergent Communications on 9/1/00.
Nancy Mogenson
Case Number: 00-N19584
Jurisdiction: FCC
Allegations: Ms. Mogenson alleged that she was billed for calls to her toll-free number after her service was changed from TriVergent Communications to BellSouth. Ms. Mogenson also alleges that TriVergent Communications promised to pay transfer fees for her switching her service from TriVergent to BellSouth.
Applicants' Response: After researching this matter, it was found that Ms. Mogenson was charged for calls to her toll-free number after she switched her service to BellSouth. TriVergent issued her a credit of $4.83 for these calls. In regards to her claim that TriVergent would pay for her transfer fees when switching to BellSouth, the account information that Ms. Mogenson received when she became a TriVergent customer states that no cancellation fees would be charged if she switched to another carriers. It does not state that transfer charges would be provided to her.
Expected Outcome: Favorable for TriVergent. A credit was given to the customer. Response sent to FCC on 9/14/00.
H.J. Bosworth:
Case Number: 00-N20221
Jurisdiction: FCC
Allegations: Mr. Bosworth alleged that he was billed for services that he did not request.
Applicants' Response: Mr. Bosworth was credited his entire balance and his account was cancelled per the customers' instructions.
Expected Outcome: Favorable for TriVergent. Customer was credited entire balance. Response sent to FCC on 9/14/00.
Dana Smith (Prime Business Insurance Agency):
Case Number: 100023529
Jurisdiction: Georgia Public Service Commission
Allegations: Mr. Smith ordered a bundled package from TriVergent Communications, which included DSL Internet, local and long distance service. After placing his order, Mr. Smith decided that he wanted to switch back to BellSouth. His service had already been switched to TriVergent when he made the request to switch back to BellSouth.
Applicants' Response: TriVergent informed the Georgia Public Service Commission that Mr. Smith must contact BellSouth so that BellSouth can place an order to have his service switched from TriVergent to BellSouth.
Expected Outcome: Mr. Smith switched his service to BellSouth successfully.
Janice Allen:
Case Number: None
Jurisdiction: South Carolina Public Service Commission
Allegations: Ms. Allen requested credits for various charges on her August 2000 bill.
Applicants' Response: After reviewing her bill. Ms. Allen was credited $42.02 for various disputed charges in regards to features charges and long distance billing.
Expected Outcome: TriVergent was cleared in regards to this informal complaint by the SC PSC.
8 San Jose Water Co., 10 CRC 56 (1916). 9 1994 Cal. PUC Lexis 1126 at *3 n.2.
