Verizon Settles FCC Merger Probe For $260,000
By Mark Wigfield, Of DOW JONES NEWSWIRES
Tuesday August 20, 3:04 pm Eastern Time
Dow Jones Business News
WASHINGTON -(Dow Jones)- Verizon Communications (NYSE:VZ - News) has agreed to pay $260, 000 to end an investigation into whether it violated conditions of its June 2000 merger with GTE Corp.
The company also agreed to establish a steering committee at the vice presidential level and initiate other processes to prevent future problems.
The Federal Communications Commission said information submitted by Verizon to verify compliance with conditions meant to ensure the company opened its local markets to competition may have been inadequate, incomplete or inaccurate. According to an outside audit, the problems occurred during in the first six months of the merger; Verizon itself said they continued through 2001.
Verizon attributed the inaccuracies to administrative problems. The errors actually overstated Verizon's compliance problems, the company said, causing it to make unnecessary payments to the FCC at the time for failure to meet performance standards. The FCC said another audit indicated that Verizon failed to file 11 of its 157 agreements with Genuity Inc. (NasdaqNM:GENU - News) , the data company spun off from GTE as a condition of the merger, in time to be reviewed. An FCC condition requires that auditors review the agreements to ensure arms- length transactions between the two companies.
Verizon originally intended to reunite with Genuity after winning regulatory permission to provide long-distance data service. But Verizon has since backed away from that plan.
"Verizon recognizes the need for improvement in the quality of the information in the performance reports," said Jeffrey W. Ward, Verizon's senior vice president for regulatory compliance. "However, the isolated administrative errors cited in the audit did not inhibit competition or negatively affect the service we provide to other carriers."
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