Regulators OK Bell, Nynex Merger

Federal regulators on Thursday approved the merger of Bell Atlantic Corp. and Nynex, creating a local telephone colossus with 39 million phone lines from Maine to Virginia.

Approval by the Federal Communications Commission had been a foregone conclusion since the two regional Bell companies pledged July 19 to make it easier for rivals to compete in local phone markets.

“On balance, these pro-competitive benefits outweighed the potential harms to competition from the merger,” the FCC said in a statement Thursday.

The merger, valued at $23 billion when it was announced in April 1996, would create the second-biggest phone company behind AT&T; Corp. The new company, to be called Bell Atlantic, will serve 13 states and the District of Columbia.

The consolidation is the second-largest in U.S. history, exceeded only by the $25-billion combination of RJR Nabisco and Kohlberg Kravis Roberts & Co. in 1989.

In the most important condition to protect competition, Bell Atlantic and Nynex agreed last month that the combined firm would let potential rivals lease parts of the local phone network or plug into the network at lower prices. Rivals need to do this to offer local service.

The companies also agreed to test their computer systems, known as operator support systems, and to develop uniform systems through the company’s territory to make it easier for competitors to process new customers, bill them and complete repairs. This would also help competitors who buy local phone service to resell.

These and other conditions agreed upon would make it easier for potential rivals such as AT&T; and MCI to break into the local phone business, regulators have said.

The competitive conditions will last four years and are enforceable by the FCC, Hundt said. If the combined company violates the conditions, it could be ordered to comply or be fined by the FCC, agency attorneys have said.

Consumer groups have opposed the merger.

The Justice Department approved the merger with no strings attached in April, concluding that the combination of the two Baby Bells along the Eastern Seaboard does not violate antitrust laws. The action infuriated consumer groups, which argue Bell Atlantic and Nynex would have been each other’s biggest competitors.

The union between Philadelphia-based Bell Atlantic and New York-based Nynex takes advantage of a telecommunications law enacted in February 1996 that freed local, long-distance and cable companies to get into each other’s business. The law has fueled an unprecedented wave of telecommunications and media mergers.

Shares of Bell Atlantic rose $1.25 to close at $75.94, and Nynex shares gained $1.06 to close at $58. Both trade on the New York Stock Exchange.