Justice Dept. Orders Verizon Divestiture

U.S. officials Tuesday moved to block Verizon Communications Corp.’s takeover of Rural Cellular Corp. until it divest assets in certain regions.

The U.S. Justice Department’s Antitrust Division filed a civil lawsuit in Washington to head off the $2.7 billion takeover of Rural Cellular, which does business as Unicel. But Justice officials also proposed a consent decree under which Verizon could proceed with the acquisition if it relinquishes assets in six geographic areas in Vermont, New York and Washington.

Without the divestiture, the transaction would substantially lessen mobile wireless telecommunications competition in those areas, Justice officials contend.

These divestitures are necessary to preserve the benefits of competition for residents throughout the state of Vermont and in areas of New York and Washington, said Thomas O. Barnett, assistant attorney general in charge of the Antitrust Division.

Verizon is the second largest mobile wireless telecommunications services provider in the United States as measured by subscribers, serving more than 65 million subscribers in 49 states. Rural Cellular is the 10th largest with almost 790,000 subscribers in 15 states.

The transaction also is subject to review by the Federal Communications Commission. The state of Vermont joined the department in the complaint and proposed consent decree.