Merger Review by the Federal Communications Commission: Comcast-NBC Universal

Abstract

The Communications Act of 1934 created a dual review process in which mergers in the communications industry are reviewed by the Federal Communications Commission (FCC) as well as the antitrust authorities. Commentators have criticized dual review not only as costly and redundant, but also as subject to substantive and procedural abuse. The process of clearing the 2011 Comcast-NBC Universal merger provides a useful case study to examine whether such concerns are justified. A review of the empirical context reveals that the FCC intervened even though the relevant markets were not structured in a way that would ordinarily raise anticompetitive concerns. In addition, the FCC was able to use differences between its review process and that used by the Justice Department to extract concessions from the merging parties that had nothing to do with the merger and which were more properly addressed through general rulemaking. Moreover, the use of voluntary commitments also allowed the FCC to avoid subjecting certain aspects of its decision to public comment and immunized it from having to offer a reasoned explanation or subjecting its decision to judicial review. The aftermath of the merger provides an opportunity to assess whether the FCC’s intervention yielded consumer benefits.

Keywords: competition policy, Clayton Act, horizontal integration, vertical integration, Merger Guidelines, cable television, public interest standard, direct broadcast satellites (DBS), multichannel video programming distributors (MVPDs), online video distributors (OVDs), voluntary commitments, Netflix

JEL Classification: D40, K21, K23, L41, L42