Wednesday, July 13, 2011

States Should Defer to DOJ on Antitrust Reviews of Interstate Wireless Mergers

Recent press reports point out that a handful of state attorneys general offices are now undertaking their own respective antitrust reviews of the proposed AT&T/T-Mobile merger. The reviews being conducted by Arizona, Florida, Hawaii, Illinois, Minnesota, NewYork, Pennsylvania, Texas and Washington come on top of the pending review of the merger by the U.S. Department of Justice's Antitrust Division and the review proceeding at the FCC.

Late last year I described the unnecessary and costly nature of duplicative state public utility commission (PUC) reviews of telecom mergers in a Perspectives paper titled "Multiple Government Regulatory Reviews Burden Telecom Mergers with Too Many Conditions." In that paper I pointed out that:

The existing multi-level, multi-agency telecommunications merger review process involves costly, time-consuming, redundant reviews by federal and state regulators. And it often results in merging carriers being subjected to numerous approval conditions that are unrelated to specific harms posed by such mergers.

Telecom mergers are already subject to review by two federal agencies – the FTC or DOJ as well as the FCC. Thus, I concluded that:

Once market power concerns are addressed by FTC-DOJ reviews, a law of diminishing returns kicks in with regard to subsequent FCC and state PUC merger reviews. There is little reason to expect seven, thirteen, or two-dozen government agencies will provide an optimum outcome that would not otherwise be reached through reviews conducted by one, two or even a few government agencies.

For similar reasons, I also made the case why state PUCs should stay out of the AT&T/T-Mobile merger in a blog post from June titled "State Regulators Should Refrain from Reviewing Wireless Mergers."

Most – if not all – of those same considerations that weigh against state PUCs creating a multi-state regulatory review pile-up on proposed interstate wireless mergers also weigh against state AGs creating their own multi-state review pile-up on such mergers. State antitrust analyses of intrastate conduct and effects based on consumer welfare criteria possibly might embody more disciplined approaches to interstate wireless mergers than state PUC "public interest" standards.

Nonetheless, state antitrust reviews pose similar concerns regarding expensive, repetitive, delay-prone processes that are most likely unnecessary in light of DOJ's antitrust review process.