Source: https://www.justice.gov/atr/reply-comments-implementation-non-accounting-safeguards-section-271-communications-act-1934-et
Timestamp: 2019-04-24 22:09:40+00:00

Document:
anticompetitive abuses as competition in local exchange markets.
telecommunications from one LATA to points outside the LATA, including international points.
dominant carrier regulations to the affiliates may have unintended adverse consequences.
need not engage in precise market definition here.
have met the conditions laid out in Section 271 of the Act.
behavior in an environment in which the BOCs' historic market power is undiminished.
by the BOC that such entry is "consistent with the public interest, convenience, and necessity."
condition for interLATA entry by the BOCs.
would serve consumer interests because market power had been replaced by competition.
intrastate. The Telecommunications Act explicitly gives the Commission such authority.
between LATAs within a state.
all Bell territory in the United States into geographically-based "exchange" areas. U.S. v.
confers upon the FCC the same scope of authority as that contained in the decree.
acts, "the new provisions should prevail as the latest declaration of legislative will." 1A J.
between domestic and international services, and no such distinction is contained in Section 272.
intended to change this approach.
former, but no longer extant, original BOC.
201, 202 and 271 already apply to a BOC's relationship with its prospective merger partner.
affiliate. They do not apply to BOCs' relationships with affiliates of prospective merger partners.
anticipatory rules may be less effective than continued case by case enforcement.
structural separation requirements and Sections 272 and 271's antidiscrimination requirements.
antidiscrimination provisions, in order to minimize such behavior.
as permitting what is not specifically prohibited.
carriers, including affiliates, be separate from affiliates that provide the competitive services.
must meet the separation requirements laid out in Section 272.
detection of cost misallocations between BOCs and their affiliates.
identifying and preventing such discrimination through regulatory measures.
discrimination are sufficiently great to warrant imposition of these reporting requirements.
both more effective in preventing anticompetitive behavior, and less costly, than that alternative.
continue to be available as statutory remedies for violations of Section 271.
the cases could not be resolved until the complainants had been allowed extensive discovery.
But such discovery cannot be conducted within a 90-day window for the whole proceeding.
Shifting the burden to the BOCs will solve this problem by requiring them to take the initiative.
evidence, the Commission may reasonably conclude that the complaints are valid.
their complaints, the complaint process would effectively be vitiated.
or revoke interLATA authority when it finds serious misconduct.
adopt such regulation for the BOCs' interLATA affiliates.
services. We address these two types of market power separately, below.
levels established through this regulation.
adequate measures to deal with the problem at that time.
define the relevant market(s) for interLATA services.
interstate, interexchange services may not be product substitutes for one another. NPRM, ï½¶ 118.
particular location to another particular location." NPRM, ï½¶ 123.
manageable groups of markets." NPRM, ï½¶ 124.
specific transaction under the antitrust laws.
Concerning the Interstate, Interexchange Marketplace, CC Docket No 96-61, FCC 96-123 (rel.
Interexchange NPRM, ï½¶ 47. This approach is not unreasonable, in our view, at least for now.
differences in the structure and performance of various product and geographic markets.
One such change will be the entry of BOCs or other firms into the interexchange market.
markets that it enters as a CLEC, but not in other markets where it has no local presence.
than for other services and other customer groups.
greater risk of anticompetitive behavior.
of dealing with that risk.
though not to in-region markets -- to justify comparable regulatory treatment at this time.
and those differences may necessitate distinct regulatory approaches.
conception of the competitive risks reflected in the NPRM is, in important respects, too narrow.
ignore the most likely anticompetitive effects of cost misallocation.
to consumers, cost misallocation can adversely affect prices for essential monopoly services.
to charge if the regulators could effectively prevent such misallocation.
exchange and access services to raise their long distance rivals' costs or restrict their output.
be anticipated in the future.
complaints concerning violation of Section 271.
primarily to curb abuses of market power through the reduction of output by a dominant carrier.
gained from these measures are outweighed by their disadvantages.
market share." NPRM, ï½¶ 132.
unaffiliated U.S. carriers." Id. at 3917, 3912. Although the Commission declared that U.S.
here. There, the parents' bottleneck services and facilities were not themselves subject to U.S.
2 Although we disagree with a number of the limits that the BOCs have suggested as constraints on the permissible scope of the Commission's public interest inquiry, counsel for one of the BOCs has written, "The standard public interest analysis considers the potential effect on competition." Wiley, Rein, & Fielding, Section 271 Guidebook, (July 1996).
3 "Simply put, [a Standard Metropolitan Statistical Area] is a U.S. Department of Commerce designation that includes a city and its suburbs. All SMSAs have a population of at least 50,000." U.S. v. Western Electric, 569 F.Supp. at 993, n. 8.
4 States served by a BOC with only one LATA are: Delaware (the only State without a single autonomous LATA); Maine; New Hampshire; New Mexico; Rhode Island; South Dakota; Utah; Vermont; and Wyoming. The District of Columbia is covered entirely by one LATA, that also covers portions of southern Maryland and northern Virginia.
5 NPRM, ï½¶ 26, n. 50. Sections 251 and 276, for example, grant the Commission jurisdiction for some purposes even over intraLATA telecommunications. If Section 2(b) applied to those sections, these grants of authority would be nullified.
6 In American Airlines, Inc. v. Remis Industries, Inc., 494 F.2d 196 (2nd Cir. 1974) the court relied upon this principle in refusing to apply a provision of the Truth in Lending Act that exempted extensions of credit for business or commercial purposes, to an amendatory provision that made no such limiting distinction, even though Congress had not altered the limiting provision. The court stated "that by applying [the previously enacted provision] to limit the scope of . . . the credit card provision added in 1970, . . .we would produce such statutory obfuscation that it would surely thwart the intent of Congress." Id. at 200-201.
7 See U.S. v. Western Electric Co., Inc., 12 F.3d 225 (D.C. Cir. 1993) ("Among the most important of [the purposes of the AT&T Decree] was to å£®harply limit the ability of businesses with bottleneck control of local telephone service to utilize their monopoly advantages to affect competition in competitive markets.' That objective would not be served if the reach of section II (D) were limited to BOCs and entities they own or control, as çnything that can be accomplished by ownership of two [firms in vertical markets] also can be accomplished by a properly drawn contract' between them." at p.233 [citations omitted]).
8 BellSouth is mistaken when it asserts in its comments that burden shifting here is barred by Section 7 of the Administrative Procedure Act. 5 U.S.C. ï½§ 556(d). That section imposes "formal" adjudicatory procedures, including allocation of the burden of proof to proponents, only on "hearings required by [the APA's] section 4 or 5." Section 4 is irrelevant here and Section 5 applies, by its own terms, only in "case[s] of adjudication required by statute to be determined on the record after opportunity for an agency hearing." 5 U.S.C ï½§554(a). The phrase "to be determined on the record" is a term of art. Formal adjudicatory procedures are not required, the courts have repeatedly held, unless a statute specifically requires hearings to be determined on the record. A general requirement of hearings does not have the same effect. U.S. v. Florida East Coast Railway Co., 410 U.S. 224, 234 (1973); U.S. v. Allegheny-Ludlum Steel Corp., 406 U.S. 742, 757 (1972). Here, Section 271(6)(A) authorizes the Commission to impose penalties "after notice and opportunity for a hearing." It does not require this hearing to be "on the record." The APA's formal adjudicatory procedures, including allocation of burden to proponents, therefore are not required.
9 Implementation of the Local Competition Provision in the Telecommunications Act of 1996, First Report and Order, CC Docket No. 96-98, FCC 96-325 (rel. August 8, 1996), ï½¶ 55.
10 If the Commission chooses to define markets in this proceeding, it should, we believe, keep in mind the different objectives of regulation and antitrust enforcement, and how those differences may affect the application of market definition principles in those contexts. The manner in which the Commission applies market definition principles may differ in both methodology and purpose from how those principles are applied under the antitrust laws. The Commission's market definition, like market definition under the antitrust laws, should be guided by the basic economic principles that inform competitive analyses and market definitions under the DOJ Merger Guidelines. The Commission's objective, however, is to devise rules of general applicability. Such rules must apply to a large number of markets and market participants, must be established prospectively, and must remain reasonably stable over time. Moreover, the Commission must act on the basis of the limited information that is voluntarily supplied by parties in the rulemaking context. By contrast, in merger cases brought under Section 7 of the Clayton Act, the objective is to delineate specific, individual markets, for the purpose of determining whether a particular acquisition may tend substantially to lessen competition "in any line of commerce in any section of the country . . ." 15 U.S.C. ï½§ 18 (emphasis added). In antitrust cases, market definition is based on intensive examination of the specific conditions associated with a specific transaction, using the full range of discovery powers provided under the Hart-Scott-Rodino Act, the Antitrust Civil Process Act, and the Federal Rules of Civil Procedure. Finally, in Clayton Act cases, the decision maker must decide whether a particular transaction is lawful or unlawful, rather than promulgate prospective, practically administrable rules of general applicability.

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