DOJ Asks Level 3 for More Information About Global Crossing Deal

July 12th, 2011 by · 3 Comments

Level 3 Communications (NYSE:LVLT, news, filings) revealed today that it has received a request for additional information from the Department of Justice regarding the proposed Global Crossing merger.  Commonly known as a second request, this is what the DOJ does when it has more questions about possible anti-competitive aspects of a deal and can involve killing a lot of trees.

Yesterday, XO said it intended to oppose the deal due to the effects on the Tier 1 backbone space, but I don’t think those comments have even been filed yet.  The DOJ is probably thinking along similar lines though, as there is not really any other area that might raise eyebrows over there.  It would be quite something if the government really dipped its toes into the transit/peering system in any significant way.  It would be an even bigger something if they opposed such a small deal after letting Comcast/NBC go through and overseeing the reconstruction of Ma Bell over in the other corner for ten years.

Level 3 says it will respond appropriately to the request, and still expect to close the transaction by the end of the year as anticipated.  They had already budgeted extra time, although I think that was mainly due to foreign regulatory approval processes.  If the DOJ does see concerns, I suspect Level 3 might satisfy concerns by agreeing to some sort of clarified peering policy. Any other possibilities?

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Categories: Government Regulations · Internet Backbones · Mergers and Acquisitions

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3 Comments So Far

  • Carlk says:

    The possibilities are almost endless, depending upon who holds the purse-strings affecting the hearts, souls and minds of govt. agencies. Considering there is a national security issue at stake here with Asia, more specifically, China, it’s not impossible that even better terms tied to such things as “transit/peering” are established from this inquiry. Such an assumption is based upon a regulator or law body, intent on protecting its citizens versus letting criminal operators “CLOUD” their judgment making processes as has been the case in recent U.S. financial market history.

  • Laura says:

    Carl …. Don’t you mean Singapore instead of China? There is a difference but definitely requires further review. I also believe the size of the combined “merge co” as it pertains to Internet is the issue here.

  • en_ron_hubbard says:

    China? Singapore? Who cares? As far as Carl is concerned it’s all a criminal conspiracy led by Winnick/Clinton based on cheap labor. I think Rockefeller may be involved as well, although I’m not sure about that.

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