Although the propriety of the FCC’s practice has been questioned by some, the FCC engages in merger review pursuant to its authority for approving the transfer of FCC-granted licenses resulting from the completed merger.
AT&T filed its application with the FCC to acquire Centennial--a regional wireless and broadband carrier with more than one million subscribers in six states plus Puerto Rico and the Virgin Islands—back on November 21, 2008. The FCC’s 180-day merger review period ended back on June 14, 2009. No date for the conclusion of the review has been set yet by the FCC.
Agency delay is harmful to the merging parties that stand to gain from efficiencies and economies of scale. In a competitive, dynamic market, such delay is also harmful to the consumers who would otherwise benefit from improved services and prices from the merged parties. As the Department of Justice’s Antitrust Division Chief recently stated, “the vast majority of mergers are either procompetitive and enhance consumer welfare or are competitively benign.” If a proposed merger poses real anticompetitive concerns, prompt and decisive agency decision-making gives the merging parties finality and lets them turn their attention elsewhere. Agency delays keep potential merging parties in a state of suspended animation.
Aside from the undesirable economic dislocations, FCC merger review delays have also been the device by which FCC has extracted extra-regulatory “concessions” by merging parties. FSF President Randolph May has called this phenomena “regulation by condition,” with merging parties agreeing to conditions that may have nothing to do with any claimed antitcompetitive effect of the proposed merger. As FSF advisory board member and professor of law Christopher Yoo has written about the precarious position of merging parties subjected to lengthy FCC merger review:
as their need for regulatory approval becomes increasingly urgent, they begin trying to obtain clearance of their merger emphasized by the FCC. Because these conditions are purportedly not the result of agency action, the FCC need not engage in any extended analysis of whether it represents a change in policy or how to integrate the conditions into the larger regulatory scheme.For instance, in the AT&T-BellSouth merger, FCC approval was obtained at the price of a network neutrality condition based on conjectures about imagined future network discrimination practices. Whereas FCC rules typically arise through the formal APA process that includes public comment and a larger contemplative element, “voluntary” merger conditions are the largely the result of private negotiations made under time-sensitive conditions.
The FCC should only consider imposing merger conditions to address alleged anticompetitive claims raised by a particular proposed merger. A more modest step would be for the FCC to take its 180-day shot clock for merger approval seriously. The AT&T-Centennial merger delay is simply another exhibit pointing to the need for the FCC to engage in self-restraint.