Antitrust Law Daily Justice Department settlement allowing CenturyLink’s acquisition of Level 3 approved
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Monday, March 12, 2018

Justice Department settlement allowing CenturyLink’s acquisition of Level 3 approved

By Jeffrey May, J.D.

A Department of Justice settlement allowing telecommunications provider CenturyLink, Inc. to acquire Level 3 Communications, Inc., one of the largest competitive exchange carriers in the United States, subject to the divestiture of Level 3’s telecommunications networks in Albuquerque, Boise, and Tucson, was approved by the federal district court in Washington, D.C. The consent decree also required the combined company to authorize the sale of dark fiber, fiber-optic cable with no electronics attached to it, along 30 intercity routes across the United States. The consent decree resolved Department of Justice Antitrust Division concerns that without the relief, the combination would have reduced competition for fiber-optic-based telecommunications services in Albuquerque, Boise, and Tucson, as well as competition for the sale of dark fiber along the 30 intercity routes (U.S. v. CenturyLink, Inc., March 6, 2018, Jackson, K.).

CenturyLink announced the proposed acquisition, valued at approximately $34 billion, on October 31, 2016, and disclosed the completion of the deal on November 1, 2017. At that time, the company, which describes itself as the second largest U.S. communications provider to global enterprise customers, said that the deal "creates a leading global network services company capable of providing customers a wide range of high-quality technology solutions over a secure and reliable fiber-rich network."

The Justice Department settlement was announced on October 3, 2017. The Justice Department expressed concern that the transaction would consolidate two of the largest wireline telecommunications services providers in the United States. CenturyLink and Level 3 competed to provide fiber-optic-based connectivity and telecommunications services to enterprise and wholesale customers, it was noted. The two companies had the two of the three most extensive fiber-based metropolitan area networks in Albuquerque, Boise, and Tucson. The companies also owned substantial amounts of dark fiber connecting pairs of cities, known as "Intercity Dark Fiber," which is crucial for large, sophisticated customers that need to move substantial amounts of data between specific cities.

The case is No. 1:17-cv-02028-KBJ.

Attorneys: Scott L. Reiter, U.S. Department of Justice, for the United States. Ilene Knable Gotts (Wachtell, Lipton, Rosen & Katz) for CenturyLink, Inc. John Bruce McDonald (Jones Day) for Level 3 Communications, Inc.

Companies: CenturyLink, Inc.; Level 3 Communications, Inc.

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