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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 ) In the Matter of ) ) Enforcement of Section 275(a)(2) of the ) Communications Act of 1934, as amended by) the Telecommunications Act of 1996,) Against Ameritech Corporation ) ) Motion for Orders to Show ) CCBPol 96-17 Cause and to Cease and Desist ) ) MEMORANDUM OPINION AND ORDER ON REMAND AND ORDER TO SHOW CAUSE Adopted: September 15, 1998 Released: September 25, 1998 By the Commission: TABLE OF CONTENTS Paragraph I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . 1 A. Overview . . . . . . . . . . . . . . . . . . . . . . 1 B. Procedural Background. . . . . . . . . . . . . . . . 2 C. Ameritech's Acquisition of Assets. . . . . . . . . . 6 II. DISCUSSION. . . . . . . . . . . . . . . . . . . . . . . . 7 A. Definition of "Alarm Monitoring Service Entity". . . 7 B. Whether Ameritech Obtained "Financial Control" Over Circuit City's Alarm Monitoring Division. . . . . . . . . . . . . . . . . . . . . . 11 III. ORDERING CLAUSES . . . . . . . . . . . . . . . . . . . . 17 I. INTRODUCTION A. Overview 1. We revisit in this Order on Remand a "Motion for Orders to Show Cause and to Cease and Desist" filed by the Alarm Industry Communications Committee (AICC) against Ameritech Corporation (Ameritech). The Commission's initial order in this proceeding denied AICC's motion on the ground that Ameritech's acquisition of the alarm monitoring assets of a division of Circuit City Stores, Inc. (Circuit City) did not come within the ambit of section 275 of the Communications Act, as amended by the Telecommunications Act of 1996. That order was vacated on review by the United States Court of Appeals for the District of Columbia Circuit and remanded to the Commission. As directed by the court, we have considered anew the issues raised in this proceeding in light of the concerns identified by the court regarding our prior determination. Based on a more thorough analysis, we now conclude, for the reasons discussed below, that Ameritech's acquisition of Circuit City's alarm monitoring assets violates section 275(a)(2). We therefore grant, in part, AICC's motion and order Ameritech pursuant to section 312(c) of the Act, to show cause why a cease and desist order should not be issued pursuant to section 312(b). B. Procedural Background 2. On June 28, 1996, Ameritech acquired all the assets of Circuit City's Home Security Division, Circuit City's division exclusively devoted to providing alarm monitoring services. On August 12, 1996, AICC filed with the Commission a motion requesting the Commission to issue an Order to Show Cause and to Cease and Desist against Ameritech. AICC claimed in that motion that Ameritech's acquisition of Circuit City's alarm monitoring assets and its solicitation of further purchases of alarm monitoring assets from unaffiliated alarm monitoring service providers violate section 275(a)(2). That provision permits a Bell Operating Company (BOC) or BOC affiliate that was engaged in providing alarm monitoring services as of November 30, 1995, to continue to do so, provided that it may not acquire any equity interest in, or obtain financial control of, any unaffiliated alarm monitoring service entity after November 30, 1995 and until 5 years after the date of enactment of the Telecommunications Act of 1996, except that this sentence shall not prohibit an exchange of customers for the customers of an unaffiliated alarm monitoring service entity. AICC contended that Ameritech obtained "financial control" of an "unaffiliated alarm monitoring service entity," in violation of section 275(a)(2), by acquiring Circuit City's alarm monitoring assets. AICC urged the Commission to (1) direct Ameritech to show cause why it should not be required to rescind its purchase of Circuit City's alarm monitoring assets; and (2) issue a cease and desist order, requiring Ameritech to rescind its purchase of Circuit City's alarm monitoring assets and to refrain from attempting to acquire the assets of additional alarm monitoring service providers until February 8, 2001, the date on which the five-year statutory moratorium on BOC entry into alarm monitoring services expires. 3. The Commission established a pleading cycle for comments on AICC's motion on August 23, 1996 and received comments from Ameritech and reply comments from AICC. On March 25, 1997, the Commission released its Memorandum Opinion and Order, denying AICC's motion. The Commission ruled that Ameritech's acquisition of the alarm monitoring assets of Circuit City's Home Security Division did not come within the ambit of section 275(a)(2) on the basis of a finding that a division is not an "entity" within the meaning of that subsection. The Commission reasoned that "the statutory language regarding 'alarm monitoring service entity' is unambiguous" and that "the plain meaning of the term requires that an 'entity' have an independent legal existence." Because the Home Security Division was an unincorporated division of Circuit City, the Commission concluded that the Division did not have an independent legal existence and, therefore, was not an "entity" for purposes of section 275(a)(2). Having determined that Ameritech's acquisition of Circuit City's assets did not implicate section 275, the Commission did not address other issues raised by the parties, such as the meaning of "financial control," and denied AICC's Motion for Orders to Show Cause and to Cease and Desist. 4. AICC appealed the Commission's Circuit City Order to the D.C. Circuit on April 2, 1997. The court stayed the Commission's order pending appeal. On December 30, 1997, the court issued an opinion vacating and remanding the Commission's order. The court held that the Commission erred in concluding that the term "unaffiliated alarm monitoring entity," as used in section 275(a)(2), is "unambiguous" and that there is a plain meaning of the term that requires the entity to have an independent legal existence. The court rejected the Commission's reliance on a dictionary definition to give meaning to the term "entity" because this approach did not take into account other possible interpretations of the term, statutory objectives, or Congressional intent. The court specifically rejected the Commission's reliance on Black's Law Dictionary's definition of "entity" as "an organization or being that possesses a separate existence for tax purposes" on the basis that other dictionary definitions of "entity" are broad enough to include an unincorporated division, such as Circuit City's Home Security Division. Further, the court rejected the Commission's contention that section 274(i)(6), which defines "entity" for purposes of a BOC's entry into electronic publishing, supports its interpretation of "entity." The court determined that the list of examples of "entity" provided in section 274(i)(6) was not an exhaustive list and could include an unincorporated division because the list was not limited to separate legal organizations. 5. The court also expressed concern that the Commission's interpretation of "alarm monitoring service entity" could not be reconciled with other clauses of section 275(a)(2). Specifically, it observed that the Commission's interpretation of section 275(a)(2) would permit Ameritech to buy all the assets of a division, but preclude Ameritech from buying one share of stock in the corporation. The court could see no reason why Congress would draw such a distinction between asset and equity acquisitions. It also noted that the Commission's treatment of "entity" would make "superfluous" the final clause in section 275(a)(2), which permits the exchange of customer accounts. This final clause, the court suggested, would make sense only if section 275(a)(2) placed restraints on asset acquisitions. The court concluded that the disputed language was "uncertain," and vacated and remanded the case to the Commission "to decide how best to resolve the ambiguity in the phrase 'alarm monitoring service entity.'" The court stated that it did not intend to foreclose the Commission from interpreting the phrase narrowly, but that the Commission's interpretation must be based on more than a single dictionary definition. 6. The parties subsequently filed supplemental comments addressing points raised during the oral argument before the court and in the court's decision. The Common Carrier Bureau sent Ameritech written requests for further information and documentation relating to the Ameritech/Circuit City transaction. These requests sought information regarding, among other things, the types of assets Ameritech purchased, the number of Circuit City employees it hired, and the buildings or other facilities it acquired from Circuit City. Ameritech's responses to the Common Carrier Bureau's request for information, and the pleadings filed throughout this proceeding, establish the following relevant, undisputed facts regarding Ameritech's acquisition of Circuit City's alarm monitoring assets. C. Ameritech's Acquisition of Assets 7. Prior to Ameritech's June 28, 1996 acquisition of Circuit City's alarm monitoring assets, Circuit City provided alarm monitoring services through its Home Security Division. The Home Security Division's services included providing alarm protective equipment, installing the equipment, and monitoring signals activated by the equipment. These services were provided under the names "Circuit City Monitored Security Systems" and "Circuit City Home Security Systems." At the time of the asset acquisition, sixteen employees worked exclusively for the Home Security Division. Circuit City had a Director of the Home Security Division to manage the alarm monitoring service operations. Circuit City also maintained a separate accounting of the Division's finances. 8. Ameritech purchased Circuit City's alarm monitoring service assets with cash, pursuant to an Asset Purchase Agreement signed by Circuit City and Ameritech. The assets purchased included all of Circuit City's alarm monitoring contracts, machinery and equipment, intellectual property and goodwill, and books and records pertaining to the alarm monitoring business. Ameritech also acquired the building Circuit City had used as its headquarters for alarm monitoring services and as its alarm monitoring facility. In addition, Ameritech made offers of employment to fifteen of the sixteen Circuit City employees whose work was fully dedicated to the Home Security Division. Twelve of those employees accepted Ameritech's offer of employment. 9. Ameritech subsequently integrated Circuit City's alarm monitoring assets and employees into its existing SecurityLink operations. Ameritech sent letters to Circuit City's former customers explaining that Ameritech would now provide their security services. To Ameritech's knowledge, Circuit City did not continue to provide alarm monitoring services or subsequently engage in a new alarm monitoring service business. II. DISCUSSION A. Definition of "Alarm Monitoring Service Entity" 10. The D.C. Circuit remanded the Circuit City case to the Commission "to resolve the ambiguity in the phrase 'alarm monitoring service entity,'" based on more than a dictionary definition. Consistent with the court's directive, we consider Ameritech's Circuit City transaction in light of the concerns expressed by the court regarding the Commission's prior holding. Based on this more extensive analysis, we believe that the Commission's initial Circuit City Order defined "entity" too narrowly as an organization requiring a separate legal existence. We now conclude on remand, after examining the statutory objectives underlying section 275(a)(2), that a broader definition of "entity" that includes any organizational unit such as Circuit City's Home Security Division is more consistent with the Congressional purpose underlying section 275(a)(2). This interpretation is also consistent with the idea that "entity" is "the broadest of all definitions which relate to bodies or units," which is recognized by the D.C. Circuit and reflected in judicial and statutory definitions of "entity" in other contexts. Accordingly, we reject the Commission's prior construction of the term "entity" as used in section 275(a). 11. When the meaning of a statute is ambiguous, it is appropriate to turn to legislative history for guidance. The legislative history of section 275(a)(2), however, sheds little light on how we should define "alarm monitoring service entity." As the D.C. Circuit noted, there are directly contradictory statements by individual legislators regarding whether asset purchases violate section 275(a)(2). The legislative history therefore provides no conclusive guidance in determining whether Congress intended to prohibit the acquisition of alarm monitoring assets from an unincorporated division. 12. As the legislative history does not offer any guidance on the meaning of "entity" in section 275(a)(2), we next consider whether a broader interpretation of the term is consistent with the statutory intent of that section. We find that a broader interpretation of "entity" allows for a sensible reading of section 275 and gives meaning to all its various provisions. The term "entity" can be interpreted narrowly to refer only to a separate legal entity, or more broadly to encompass any organization or unit. Defining "entity" narrowly as an organization that has a separate legal existence raises the question that troubled the D.C. Circuit: Why would Congress prohibit a grandfathered BOC from obtaining control of an alarm monitoring service provider through the purchase of a single share of stock, but allow that BOC to obtain all the assets of that company by structuring the transaction as an asset acquisition? 13. Ameritech advances several arguments in response to this question, none of which we find persuasive. First, Ameritech argues that Congress intended to prohibit equity acquisitions, while permitting the acquisition of assets, because section 275(a)(2) does not expressly bar asset acquisitions. We agree that section 275(a)(2), on its face, does not prohibit all asset acquisitions. We concluded in a previous order, and reaffirm here, that it does prohibit transactions that result in financial control over the selling company and that the statutory language does not exclude asset acquisitions from the prohibition. Ameritech further explains that Congress made this distinction because it was primarily concerned with preventing hostile takeovers. The D.C. Circuit found Ameritech's explanation unpersuasive. The court described this argument as "far-fetched" because it does not account for section 275(a)(2)'s prohibition of all types of equity acquisitions, including takeovers welcomed by the target company or the acquisition of even one share of stock. Ameritech subsequently added, in its Supplemental Comments, that section 275(a)(2)'s prohibition of only equity acquisitions was a result of legislative compromise and that the Commission must honor that compromise. There is no evidence, however, that Congress intended to forge such an illogical compromise and, as stated above, the legislative history offers no guidance on this point. The D.C. Circuit could find no reason why Congress would have distinguished between asset and equity transactions when the transactions achieve the same result -- i.e., the acquisition of an alarm monitoring business, and, on further reflection, neither can we. As the D.C. Circuit noted, there is no evidence that Congress was more concerned with the form of the transaction rather than its substance. 14. Rather, we conclude that Congress apparently viewed section 275(a)(2) as a pro- competitive provision and that it meant to authorize grandfathered BOCs to continue in the alarm business and to grow that business only through competition, not through equity acquisitions or asset acquisitions that result in financial control. Congress, in enacting section 275, appeared concerned about ensuring a "level playing field" between the BOCs and the alarm monitoring industry. A broader interpretation of "entity," for purposes of determining section 275(a)(2)'s restrictions, therefore comports best with this stated intent. We can find no reason "why it would have mattered to Congress whether a potential target of Ameritech ran its alarm monitoring business through a wholly-owned incorporated subsidiary or, as here, through an unincorporated operating division." If section 275(a)(2) prohibited asset acquisitions only from separate subsidiaries, companies could easily circumvent the law by transforming a subsidiary into an unincorporated division. A more rational interpretation is that Congress intended to prohibit equity transactions and non-equity acquisitions that result in financial control of any type of entity, regardless whether the entity has a separate legal existence. 15. Interpreting the term "entity" more broadly also gives meaning to the final clause of section 275(a)(2). That clause expressly permits a grandfathered BOC, i.e., Ameritech, to exchange customers with an "unaffiliated alarm monitoring service entity," without violating section 275. The D.C. Circuit questioned why this clause would allow the acquisition of one kind of asset (i.e., customer accounts), if "the clauses preceding the customer exchange clause place no restraints on asset acquisitions of less than everything the corporation holds." On further reflection, we agree that this clause would appear to be superfluous if section 275(a)(2) permits, as Ameritech contends, a grandfathered BOC to acquire all, or substantially all, of an alarm monitoring service entity's assets. Reading the term "entity" more broadly to pertain to all types of organizations, including an unincorporated division, thus gives meaning to the final clause of section 275(a)(2) and allows us to read this clause consistently with the other clauses in that subsection. 16. Our review of judicial and statutory definitions of "entity," in other contexts, also supports a broader interpretation of "entity," for purposes of section 275(a)(2). The D.C. Circuit, for example, in reviewing the term "entity" in the context of the Foreign Missions Act, stated that "[t]he meaning of the term 'entity' in general usage is quite broad . . . ." Similarly, other statutes that use the term "entity," define it to include organizations including, but not limited to, those with a separate legal existence. "Entity" has been statutorily defined to include an "organization," an "association," a division of a government bureau, and a "person." In contrast, in other contexts, Congress has expressly made statutes applicable to separate "legal entities" when it has so intended, or further defined the type of entity affected by the statute. These further definitions would not be necessary if the term "entity," on its own, was understood to require a separate legal existence. 17. Finally, as the D.C. Circuit observed in AICC v. FCC, most dictionary definitions of "entity" are broad enough to include Circuit City's Home Security Division. For example, The American Heritage Dictionary of the English Language defines "entity" as "something that exists as a particular and discrete unit" and defines "unit" as an "individual, a group, a structure or other entity regarded as an elementary structural or functional constituent of a whole." As the court noted, "it is hardly evident why Circuit City's operating division was something other than a 'group' or 'structure' that was a 'functional constituent of a whole,' the whole being the Circuit City corporation -- in other words, the division was a particular and discrete unit, an 'entity.'" 18. We conclude, therefore, that the term "entity," for purposes of section 275(a)(2), should be construed to include any "organization" or "unit," including an unincorporated division such as the Home Security Division. This conclusion is consistent with Ameritech's position that the term "entity" must apply to the "holder of the assets" and does not "encompass an amorphous collection of assets." We regard the Home Security Division, not its alarm monitoring assets, as the "entity." The fact that the Home Security Division was organized exclusively to provide Circuit City's alarm monitoring services, had its own director and employees, its own assets, and maintained a separate accounting of its finances, demonstrates that the Home Security Division operated as a separate unit or organization within Circuit City, such that it was an "entity" distinguishable from the Circuit City corporation. B. Whether Ameritech Obtained "Financial Control" Over Circuit City's Alarm Monitoring Division 19. Having decided that Circuit City's Home Security Division is an "entity" within the meaning of section 275(a)(2), we now address whether Ameritech "obtained financial control" of the Home Security Division in violation of section 275(a)(2). As explained above, the Commission did not reach this issue in its initial Circuit City Order. We now determine that Ameritech obtained "financial control" of the Home Security Division because it acquired control of the Division's entire business operations and integrated those operations into its own ongoing alarm monitoring business. 20. We previously considered the issue of "financial control," for purposes of section 275(a)(2), in our CCA/Norman/Masada Order, which addressed Ameritech's transactions with three other alarm monitoring service entities. In that proceeding, Ameritech and AICC raised virtually the same arguments regarding "financial control" as they raise here. We explained in that order that the issue of "financial control" must be determined by looking at the totality of circumstances in a particular case. Because a broad range of factors could demonstrate direct or indirect control, we declined to identify a single criterion or factor that would determine whether Ameritech obtained "financial control" of another alarm monitoring service entity. 21. We concluded in our CCA/Norman/Masada Order that section 275(a)(2) prohibits those asset sales that confer "financial control" of an alarm monitoring service entity. We explained in that order that the legislative history regarding section 275 is not illuminating on the issue of financial control. We determined, however, that while Congress did not expressly prohibit all asset acquisitions, it did prohibit transactions through which the buying company obtains "financial control" of the selling company. We further determined that such prohibited transactions could include asset acquisitions. While we recognized that not all asset acquisitions result in "financial control," we concluded that section 275(a)(2) bars those asset acquisitions that do confer such control over an alarm monitoring service entity. 22. With respect to the CCA, Norman, and Masada transactions, we concluded that Ameritech obtained "financial control" of the entities because it engaged in more than a simple purchase of assets. Ameritech integrated those three entities' businesses into its own alarm monitoring business by hiring virtually all those entities' employees, assuming liabilities related to their alarm monitoring business, and subsequently serving the entities' former customers. The fact that these transactions were structured as tax-free "reorganizations," requiring the entities to liquidate and dissolve following the asset acquisitions, supported our conclusion that the selling entities no longer exerted "financial control" over their business functions and that Ameritech obtained control of the entities' entire alarm monitoring business through these transactions. 23. Ameritech advances in this proceeding many of the same arguments in support of its contention that section 275(a)(2), on its face, permits all asset acquisitions that the Commission rejected when it determined that Ameritech obtained financial control over CCA, Norman, and Masada. Ameritech also advances many of these same arguments in support of its contention that section 275(a)(2) permits the purchase of assets from an unincorporated division, i.e., Circuit City's Home Security Division. We reject Ameritech's arguments in support of its contention that it did not obtain "financial control" over the Home Security Division, for the reasons the D.C. Circuit rejected, and the Commission now rejects, Ameritech's arguments with respect to what constitutes an "entity." Ameritech basically reiterates its view that Congress did not ban asset acquisitions, and therefore, that it could not obtain "financial control" of an entity in violation of section 275(a)(2) through an asset acquisition. As stated above, however, Ameritech has yet to offer any sound policy reason or evidence why Congress would intend to permit a grandfathered BOC to purchase all or part of an alarm monitoring entity's assets, but not a single share of stock of the entity. Ameritech also reasserts its argument that Congress intended only to prohibit hostile takeovers in section 275(a)(2), as support for its contention that it could not obtain "financial control" of the Home Security Division through an asset acquisition. Again, the argument is without merit in light of the fact that it is impossible to engage in a hostile takeover by purchasing one share of stock, yet section 275(a)(2) expressly prohibits the acquisition of even one share of stock from an alarm monitoring service entity. We have also rejected Ameritech's argument that the "customer exchange provision" does not favor a broad interpretation of "financial control" that prohibits certain types of asset acquisitions. 24. Nor do we find persuasive Ameritech's argument that Congress intended to permit all asset acquisitions because it replaced language in an earlier bill containing a broad prohibition against acquisitions of "the alarm monitoring service activities of another entity," with the final language prohibiting "equity interest" and "financial control." Ameritech provides no explanation as to why Congress dropped the original language. Nothing in the ultimate version adopting the "financial control" language detracts from our conclusion that, at a minimum, Congress intended to bar those asset acquisitions resulting in financial control of an alarm monitoring service entity. In fact, it could be argued that the ultimate language imposes broader restrictions than the original language because it prohibits, not only acquisitions, but other types of transactions that result in "financial control." 25. Finally, Ameritech raises several constitutional arguments in its Supplemental Comments to support its contention that section 275(a)(2) permits all asset acquisitions. Ameritech asserts that section 275(a)(2) would be an unconstitutional bill of attainder if construed to prohibit asset acquisitions because it would prohibit Ameritech from engaging in, what it considers to be, lawful behavior. We reject Ameritech's bill of attainder argument for several reasons. First, in the CCA/Norman/Masada Order and in this order, we have not interpreted section 275(a)(2) to prohibit all asset acquisitions. Rather, we have rejected Ameritech's argument that section 275(a)(2) permits all asset acquisitions. Consistent with the language of section 275(a)(2), we have interpreted section 275(a)(2) to prohibit equity transactions and only those asset acquisitions that result in the buying company obtaining "financial control" over an alarm monitoring service entity. Second, section 275(a)(2) does not bar Ameritech from engaging in alarm monitoring, nor from growing its alarm monitoring business through non-equity transactions or transactions that do not result in Ameritech obtaining financial control over an alarm monitoring entity. In BellSouth v. FCC, the D.C. Circuit rejected BellSouth's argument that section 274 of the Act was a bill of attainder, for the reason, inter alia, that section 274 did not bar the BOCs from engaging in electronic publishing, but only required structural separation. This type of structural separation, the court found, "has the earmarks of a rather conventional response to commonly perceived risks of anticompetitive behavior." Similarly, section 275(a)(2) was intended to help create a "level playing field" between BOCs and the alarm monitoring industry and established restrictions on BOC alarm monitoring acquisitions to achieve this pro- competitive goal. 26. Ameritech also asserts that construing section 275(a)(2) as prohibiting asset acquisitions would violate its due process rights because "there is no rational basis for restricting Ameritech's out-of-region activities." We view this argument as a constitutional challenge to the statute itself. As Ameritech has repeatedly stated in its submissions to the Commission, section 275 was the result of compromise. We view the resulting compromise as limiting Ameritech's out-of region alarm monitoring activities only when those activities involve asset acquisitions resulting in "financial control" of an unaffiliated alarm monitoring service entity. To the extent that Ameritech still contends that the statute gives rise to due process concerns, its remedy is a judicial challenge to section 275. 27. In addition to arguing that it cannot obtain "financial control" of an entity through an asset acquisition because section 275(a)(2), on its face, allows asset acquisitions, Ameritech also disputes that the facts of the Circuit City transaction gave it "financial control" of an alarm monitoring service entity. According to Ameritech, the term "financial control" means to "control the entity financially - i.e., to have the power to make the entity's financial decisions." Even an acquisition of 100% of a company's assets, Ameritech argues, does not give it "financial control" of that company because decisions regarding the company's financial destiny continue to be made by the selling company's officers, directors, and shareholders. Ameritech asserts that the selling company "can remain in business conducting its remaining operations (just as Circuit City has done after the sale of its alarm monitoring assets to Ameritech) and/or it can enter into new operations." This argument is problematic for several reasons. First, it assumes that the selling entity is still an ongoing entity conducting business. As we found with respect to Ameritech's transactions with CCA, Norman, and Masada, however, Ameritech can structure an asset acquisition that also results in the dissolution of the selling company and the acquisition of that company's entire business. We determined that, as a result of those transactions, Ameritech obtained "financial control" over the future of CCA, Norman, and Masada's business enterprises. Additionally, for purposes of this case, Ameritech incorrectly assumes that Circuit City, or its collection of alarm monitoring assets, is the "alarm monitoring service entity" at issue. We have determined, however, that the Home Security Division constitutes an "entity" and is, therefore, the relevant "alarm monitoring service entity" in this proceeding. As such, the relevant question is whether Ameritech acquired "financial control" of the Home Security Division, not of Circuit City. 28. We conclude that Ameritech obtained "financial control" of Circuit City's Home Security Division based on facts similar to those that led us to the same conclusion in our CCA/Norman/Masada Order. Ameritech has not identified anything that was previously a part of Circuit City's Home Security Division that did not become a part of Ameritech. Ameritech's responses providing supplemental information confirm that Ameritech acquired all of Circuit City's alarm monitoring assets. This transaction, like those with CCA, Norman, and Masada, was more than a simple asset purchase. Ameritech acquired the entire alarm monitoring business of the Home Security Division by hiring the vast majority of its employees, integrating the Home Security Division's alarm monitoring business into its own ongoing alarm monitoring subsidiary, and subsequently serving Circuit City's former customers. Unlike Ameritech's transactions with CCA, Norman, and Masada, this transaction was not arranged as a tax-free "reorganization" whereby the selling entity agreed to liquidate and dissolve. Nevertheless, the evidence suggests that, after the sale of assets to Ameritech, the Home Security Division ceased to exist. We therefore conclude that, because Ameritech obtained control of the Home Security Division's entire business operations, it obtained "financial control" of that entity. 29. Having found that Ameritech obtained "financial control" of the Home Security Division through its asset purchase, we conclude that Ameritech has violated section 275(a)(2). We grant AICC's motion insofar as AICC seeks an order directing Ameritech to show cause why it should not be required to cease and desist its violations of section 275(a)(2). Pursuant to sections 312(c) and 4(i) of the Act, Ameritech is required to show cause in writing within thirty (30) days of the release of this Memorandum Opinion and Order on Remand and Order to Show Cause why we should not issue a cease and desist order pursuant to section 312(b) directing Ameritech to divest itself of the assets formerly owned by Circuit City. Because a show cause proceeding must precede any cease and desist order we issue pursuant to section 312(b), we deny AICC's motion to the extent that AICC seeks an order to cease and desist at this time. We will consider whether such an order is warranted upon reviewing Ameritech's response to our Order to Show Cause. 30. We also deny AICC's motion insofar as it seeks an Order to Show Cause as to why Ameritech should not be required to cease and desist from soliciting or engaging in further purchases of alarm monitoring assets of unaffiliated entities. As explained above, not all asset purchases violate section 275(a)(2). We must examine the individual facts relating to each transaction in order to determine whether a violation has occurred. We therefore cannot conclude, at this time, that all future asset acquisitions necessarily violate section 275(a)(2). Nevertheless, our orders on this issue should provide Ameritech guidance in determining which transactions might violate that statute. III. ORDERING CLAUSES 31. Accordingly, IT IS ORDERED that AICC's Motion for Order to Show Cause and to Cease and Desist in CCBPol 96-17 is granted in part, insofar as we find that Ameritech's transaction with Circuit City violated section 275(a)(2) and grant the Motion for an Order to Show Cause with respect to Ameritech's transaction with Circuit City. 32. IT IS FURTHER ORDERED that AICC's Motion for Orders to Show Cause and to Cease and Desist is denied in part, insofar as we deny, at this time, AICC's Motion for an Order to Cease and Desist pertaining to the Circuit City transaction and deny AICC's Motion requesting that we order Ameritech to cease and desist from soliciting or engaging in further purchases of alarm monitoring assets of unaffiliated entities. 33. IT IS FURTHER ORDERED that Ameritech, pursuant to sections 312(c) and 4(i) of the Act, shall show cause in writing within thirty (30) days of the release of this Memorandum Opinion and Order and Order to Show Cause why a cease and desist order should not be issued, pursuant to section 312(b), directing Ameritech to divest itself of the assets formerly owned by Circuit City. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary