FCC Staff Calls Phone Merger Anti-Competitive

SBC Communications Inc.’s $84.7-billion purchase of Ameritech Corp. would be anti-competitive and should be rejected unless changes are made, Federal Communications Commission staff members said.

The agency staff tentatively concluded that the proposed transaction “flunks the public-interest test,” Tom Krattenmaker, who is leading the agency’s review of the transaction, said at an FCC hearing Thursday.

The agency can either block the transaction or impose conditions on it. Because it has never blocked a telecom merger, it is more likely to impose significant conditions aimed at promoting local competition, analysts said.

SBC’s takeover of Ameritech would be the second-biggest U.S. corporate merger next to Exxon Corp.’s proposed $91-billion purchase of Mobil. The combined firm would control a third of the U.S.’ local phone lines and have $46 billion in annual revenue.

The companies also hope to get approval to offer long-distance services to compete with AT&T; Corp. and others for a share of the $80-billion long-distance market.

Meanwhile, Bell Atlantic Corp. will receive antitrust clearance to buy GTE Corp. for $81.4 billion. The OK was an important hurdle in Bell Atlantic’s bid to become the largest U.S. phone company, sources said.