U.S. Vs Motorola, Inc. and Nextel Communications Case Analysis

Management Economics Policy Law Case Analysis

Case Overview

The case involved the United States of the America who acted as the complainant or the plaintiff and the Nextel Communications, Inc and Motorola, Inc. the two communication companies that were focusing on making a merger who were the defendants. This was an antitrust civil merger case in the specialized mobile radio among major metro cities market. The case was based on radiotelephone communication industrial code. The case was opened by the United States in 1998 and was terminated in 1999. The illegal act was the creation of low competition in the above mention industry through a merger between Nextel and Motorola, Nextel being the largest specialized mobile radio service provider in the country. The merger was announced in 1994 and has been going on during the time the case was filed.

Summary of the Legal Accusations

This is a case that involves the United States of America against Nextel Communications, Inc and Motorola, Inc. The cases started in 1994, October 27. The case is based on the civil antitrust complaint from the US where it is alleged that the proposed merger transaction between Motorola and Nextel is going to violate the Clayton Act, Section 7. This happened after Nextel the biggest national provider of specialized mobile radio (SMR) during that time had agreed to acquire the highest percentage of Motorola’s dispatch business. According to the U.S., this transaction was probable to substantially lower competition in 15 major United States cities in the trunked SMR services market, and thus they needed to enjoin the transaction. The Motorola, Nextel, and United States at the same time filed a condition by which they agreed a proposed Consent Decree entry structured to eliminate the transaction anticompetitive effects (Justice.gov., 1994).

The court on 1995 July, it ordered the Decree entry that was found to in the interest of the public. Based on the Decree terms the two companies were needed to substantially divest its entire SMR channels in the 900 MHZ band. It was also required to substantially release all the company managed 900 MHZ channels in various big cities upon license holders’ requests.  The two companies were also prohibited from acquiring or holding over 30 900 MHZ channels jointly in 20 major US cities and over 10 900 MHZ channels in four category B cities. The two companies were also needed to sell 42800 MHz channels to Atlanta, Georgia independent service provider. In 1999 a motion to vacate consent decree was filed by Nextel where Nextel seeked to obtain the Geotek license and extra 900 MHz spectrum after Geotek Communications, Inc failed in its business. This was opposed by the United States. According to the US, Nextel has failed in showing competitive essential entry had occurred in relevant dispatch markets. The US also settled that immediate Decree termination would have obstructed the new competition emergence by use of the Geotek licenses. This resulted to scheduling of motion evidentiary hearing of Nextel to vacate consent decree. Nextel and the United States in the hearing eve reached an agreement on the Decree proposed modification terms, and signed condition reflecting the agreement. In its response, the US explained that, while immediate and complete decree immediate termination, the solution employed by Nextel via vacate consent decree motion would not be in interest of the public in the competitive conditions light. In this regard, the proposed modification entry would be in interest of the public since it is tailored suitably in the developments response since the Decree entry (Justice.gov, 1999b).

Analysis Relevant to the Case

Prior to the modification of the agreed proposed decree of Nextel and the US is effected, the court was required to establish if easing particular decree restrictions matches the interest of the public in competition. The test of the public interest as employed to be asserted decree by all parties, it directs the support an uncontested modification as long as the consequential array of obligations and rights is in settlements consonant zone with the current public interest (Transition.fcc.gov, n.d.).

The ARC fails to satisfy the permissive intervention standards. It fails to advert to the required threshold to demonstrate that the government acted with neglect of in bad faith in advocating the interest of the public. In this regard the ARC was not supposed to interfere with public interest case. The US represented the best interest of the public. The decrease in the competition in the specialized mobile radio could have subjected the country into monopoly related market disadvantages which would be oppressive to the customers in the market. In this regard, the case against the Nextel and Motorola was very viable and focused to address the public interest. The court focused on regulating the expansion of Nixtel company in specialized mobile radio as a way of controlling its market share and creating a room for other developers in the industry to grow. In this regard the restriction was necessary (Justice.gov, 1999a).

Court Ruling

After listening to the case and all the involved parties presenting their arguments the court ordered to the modification of the Consent Decree to meet the following aspects. One is that as a group, the defendants might not acquire or hold licenses for over 108 900MHZ channels in any group A city or over 54 900 MHz channels in group B city before having a written plaintiff permission.  The defendants might refuse to end the agreement of management, or claim, enforce, maintain or exercise a first refusal to purchase right, or right to choose the SMR infrastructure equipment employed by a 900 MHz channel in a city in category A when integrating that channel the defendants control by management and by license agreement, joined 108 or less 900 MHZ channel in the city. They might also refuse to end the management contract, claim, enforce, maintain or exercise first refusal rights to purchase, or right to choose the equipment used by 900 MHZ channel SMR infrastructure in 54 or less 900 MHZ in the city. Third the court ruled that the defendants are restricted and enjoined from entering into a novel 900 MHZ channels management agreement in group B or A cities, except as to channel managed or owned by defendant as per 1944 August, with no the past written plaintiff permission, unless the managed channels number, together with the channels acquired or held by defendants is equal to or less than 108 channels of 900 MHZ in group A and 54 in group B cities. Defendant based on this ruling are further restrained and enjoined from acquiring or holding either indirectly or directly, channels of 900 MHZ in any group B or A cities without previously written plaintiff permission unless he management, control, entity or corporation ownership of 900 MHZ channels together with that of the defendants in equal to or less that 108 channels of 900 MHZ if a group A city and 54 channels of 900 MHz if group B city. The fourth ruling indicated that Nextel is restricted and enjoined from entering into or acquiring management agreements for licensing in the first ruling (Justice.gov, 1999b).

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