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Baby Bell mergers probed
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December 9, 1998: 8:32 a.m. ET
FCC fears telecom megamergers may not be in the public interest
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NEW YORK (CNNfn) - The Federal Communications Commission reportedly may pull the plug on two upcoming Baby Bell mergers.
According to the Wall Street Journal, federal regulators are concerned SBC Communications Inc.'s $56 billion acquisition of Ameritech Corp. and Bell Atlantic Corp.'s $52 billion merger with GTE Corp. may not serve the "public interest."
The FCC apparently is worried the deals could lead to a slippery slope, as the mergers would leave just four of the original seven Baby Bells in existence. The local phone service companies were created in 1984, when AT&T was split for antitrust reasons.
Regulatory decisions regarding the mergers still are months away though, and the Justice Department appears unlikely to block either transaction on antitrust grounds because in neither case do joining parties compete. In addition, it is difficult to prove potential competition in court, the paper said.
But the FCC insists nothing is guaranteed and could halt the deals even if the Justice department gives the go-ahead. The commission also could require the companies to make agreements to open their local markets, as it did when Bell Atlantic merged with Nynex last year, the Journal said.
In fact, strong public statements about the deals could be a strategic move aimed at extracting greater concessions from the parties involved, the paper said.
The companies in question have all said they expect the deals to be approved.
Separately, a $32 billion deal between AT&T Corp. (T) and cable company Tele-Communications Inc. seems set for approval under certain conditions. Regulators reportedly are eager to endorse the merger, as it would be the first to join cable and phone interests.
Shares of SBC (SBC) fell 7/8 to 49-1/2 Tuesday, Ameritech (AIT) dropped 2 to 56-1/4, and Bell Atlantic (BEL) gained 3/4 at 58. GTE stock (GTE) picked up 1 to close at 66. 
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