WASHINGTON -- The Justice Department urged a federal judge Tuesday to allow a merger of GTE Corp. and the 'Sprint' telephone network despite concern the move would allow the divested Bell companies to enter the long-distance phone business.
In a hearing to clear up U.S. District Judge Harold Greene's final questions about the proposed merger, the Justice Department said the agreement for the nation's second largest phone company to buy Southern Pacific Co.'s satellite and long-distance operations -- including 'Sprint' -- also had been changed to rule out any possibility of anti-competitive practices.
The hearing cleared the way for Greene's decision on whether the $750 million merger is in the public interest.
The Justice Department has already approved the merger and Greene has allowed the companies to proceed with their plans while they await his decision. However, the entire arrangement is still subject to approval from the Federal Communications Commission.
The merger raised antitrust questions because it would allow GTE to participate in both local and long-distance telephone service -- the very thing forbidden in last year's consent decree ordering American Telephone & Telegraph to divest itself of its local operating companies Jan. 1. Greene presided over the AT&T divestiture.
MCI Communications Corp., another long-distance telephone company, had asked Greene to block the merger. MCI attorney Chester Kamin said if Greene approved the GTE plan, it would encourage the Bell regional operating companies to seek permission to disregard parts of the AT&T divestiture agreement and enter the long-distance phone business.
Jeffrey Blumenfeld of the Justice Department's antitrust division, however, said a section of the revised consent decree would make it impossible for the Bell operating companies to prove such an action would not be anti-competitive.
Greene said GTE differs from the Bell companies because it is far more spread out geographically, which would have an effect on its ability to become monopolistic.
Kamin said MCI was also concerned GTE might not provide MCI the same access to its local phone lines as it would for Sprint or other long-distance companies.
Blumenfeld argued the consent decree would require GTE to provide equal access to 67 percent of its customers by Aug. 1,1987, and by Dec. 1, 1990, to all its offices serving more than 10,000 customers.
GTE and the Justice Department said it altered part of the agreement that would have allowed GTE, the exclusive provider of phone service in Hawaii, to use Sprint for interconnections to the mainland. Under the revised plan, AT&T would provide service to the continental United States.