IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

)

United States of America,	)

)	Civil Action No.: 1:05CV02102 (EGS)

Plaintiff,	)

)

v.	)

)

SBC Communications, Inc. and	)

AT&T Corp.,	)

)

Defendants.	)

)

)

United States of America,	)

)	Civil Action No.: 1:05CV02103 (EGS)

Plaintiff,	)

)

v.	)

)

Verizon Communications Inc. and	)

MCI, Inc.,	)

)

Defendants.	)

)

UNITED STATES' OPPOSITION TO ACTEL'S MOTION FOR

LEAVE TO FILE SURREPLY

The United States opposes the motion by amicus ACTel to file a surreply. ACTel argues that another filing is necessary so that it can address "arguments to which it has not otherwise had an opportunity to respond,"1 but the Proposed Surreply simply reiterates ACTel's arguments that the United States' Complaints should have alleged broader harm. ACTel should not be permitted to prolong these proceedings and burden the Court and the parties by being granted yet another opportunity to advance arguments that have been submitted and responded to in multiple pleadings.

The Proposed Surreply repeats ACTel's argument, made in its Response, that high market concentration is inconsistent with the United States' decision not to allege broader harm beyond 2-to-1 buildings.2 However, nothing in the Horizontal Merger Guidelines ("Merger Guidelines")3 or the case law supports a merger challenge based solely on HHIs or other measures of concentration.4 To the contrary, and as the United States has already shown, the law of this Circuit and Department practice under the Merger Guidelines reject the proposition that a merger may be challenged based on concentration figures alone.5

In an effort to breath new life into an old argument, ACTel suggests that the United States' Reply Submission ("Reply") adopted "new, far more stringent criteria" for merger review.6 To the contrary, the United States has demonstrated in both its initial Submission and its Reply that its approach to these mergers followed well-established economic principles, the Merger Guidelines, and the case law of this Circuit. To challenge a merger, the United States must have evidentiary support to demonstrate that the merger will cause harm. As described in the Merger Guidelines, the two overarching theories of harm are coordinated effects and unilateral effects.7 As Dr. Majure explained, the Department looked at both coordinated and unilateral effects, taking into account the nature of competition, the products, and the competitors. Dr. Majure concluded that a complete analysis indicated that it would be hard to establish that either type of harm was likely from the mergers in 4-to-3 or 3-to-2 buildings.8 Nothing in this analysis represented a departure from existing standards for merger review, the Merger Guidelines, or precedent. Moreover, the United States has repeatedly explained its analysis of these issues in prior filings.9

ACTel sets up a straw-man argument, asserting that the United States has announced that it will challenge a merger only where it can establish that the acquired firm is unique – and that this standard will impair future antitrust enforcement.10 ACTel attempts to support this argument by pointing to portions of the United States' Reply and Dr. Majure's Reply Declaration which conclude that AT&T and MCI are not uniquely capable competitors for local private lines ("LPL").11 ACTel ignores, however, that these discussions respond to arguments in the Responses of ACTel and other amici that MCI and AT&T were unique competitors for LPL.12 The United States' Reply and Dr. Majure's Reply Declaration explain that the United States investigated – but did not find evidence to support – arguments that AT&T or MCI had unique advantages in selling LPL services.13 Moreover, ACTel fails to recognize that unique characteristics of the merging parties or their products can be one of many factors relevant to traditional unilateral effects analysis. As Dr. Majure has explained, unilateral effects would be more likely if AT&T's and MCI's LPL products were substantially differentiated from those of other CLECS, but that the evidence did not support the conclusion that they were.14 This is far from establishing a standard that mergers can only be challenged if the acquired firms are unique. Even where firms are not unique, other market factors may suggest that a merger is likely to have unilateral or coordinated effects. The United States' approach here is neither new nor novel.

The Tunney Act proceedings in these matters have afforded all interested parties ample opportunities to provide their views to the Court on these and other issues. Beginning during the statutory comment period, continuing through several rounds of motions, and culminating in its response to the United States' Submission, ACTel has filed close to 500 pages of briefs, exhibits, and declarations. ACTel's Proposed Surreply adds nothing new to these proceedings and does not warrant modifying the Court's briefing schedule. Therefore, the United States respectfully submits that ACTel's motion should be denied.

Conclusion

For the foregoing reasons, the Court should deny ACTel's motion.

Respectfully submitted,

Laury E. Bobbish

Assistant Chief

Claude F. Scott, Jr. (D.C. Bar No. 414906)

Jared A. Hughes

John M. Snyder (D.C. Bar No. 456921)

Trial Attorneys

Telecommunications & Media Section

Antitrust Division

U.S. Department of Justice

1401 H Street, N.W., Suite 8000

Washington, D.C. 20530

(202) 514-5621

Attorneys for the United States

Dated: Sept. 28, 2006