Potential Competition and Local Telephone Service:
             The Bell Atlantic-NYNEX Merger (1997)
             The announcement of their plans to merge placed Bell Atlantic and NYNEX, two of the original Baby Bell companies formed after the break up of AT&T, in a position of critical review. According to Dr. Steven Brenner: "The FCC found that the merger eliminated Bell Atlantic as a likely, significant competitor in markets to supply local exchange and exchange access service to residential and smaller business customers in the New York metropolitan area." However, after weighing both the potential harms and benefits to the public interest, the Commission approved the merger. An analysis of both the reasons for and against the merger unveils why the FCC decided to grant permission to the merging firms.
             Bell Atlantic and NYNEX were not competitors at the time that they announced their agreement to merge. NYNEX provided service to six Northeastern states, and Bell Atlantic served six Mid-Atlantic States. Because these firms operated in adjacent regions, there was the possibility of one of them entering their neighboring market. Eliminating a possible entrant would violate Section 7 of the Clayton Act on the basis that that it would impair competition.
             The potential competition issue was focused on the possibility of Bell Atlantic supplying services in the New York City area or in other areas served by NYNEX. In fact, Bell Atlantic was considered a likely closest substitute to NYNEX. Furthermore, Bell Atlantic admitted to, and documentation confirmed, considering the New York markets and competing head-to-head with NYNEX before pursuing the merger. In addition, Bell Atlantic was among only four other firms viewed as significant market participants; therefore, removing it from the equation would heighten the possibility of coordinated interaction in these markets and disadvantage the customers. In this light, because Bell Atlantic ...