Challenges to the Conventional Wisdom About Mergers and Consumer Welfare in a Converging Internet Marketplace

61 Pages Posted: 14 Dec 2020

See all articles by Rob Frieden

Rob Frieden

Pennsylvania State Law ; Pennsylvania State University - Donald P. Bellisario College of Communications

Date Written: December 13, 2020


This paper identifies substantial flaws in how U.S. government agencies and courts assess the impact of proposed mergers by firms using broadband networks to reach consumers. Based on current market definitions, consumer impact assessments and economic doctrine, antitrust enforcement agencies may fail to identify the risk of harm to consumers and competition, a so-called false negative.

In recent years, the Department of Justice, Federal Communications Commission and Federal Trade Commission, individually and collectively, have assessed the competitive consequences of numerous multi-billion dollar acquisitions and have conditionally approved almost all of them. These agencies appear predisposed to favor deals that involve vertical integration between market segments, based on assumptions that short term consumer welfare gains exceed any potential competitive harms.

The paper concludes that reviewing government agencies appear too willing to extend current assumptions about how “bricks and mortar” markets work to transactions occurring via broadband networks. By “fighting the last war,” these agencies fail to identify new risks to consumer welfare, particularly by ventures operating in multiple markets that do not readily fit into the conventional assessment of mutually exclusive vertical and horizontal “food chains.” In a broadband ecosystem where both technologies and markets converge, ventures can appear to offer consumers an incredible value proposition. Like economists’ determination that there is no such thing as a free lunch, a better calibrated, multi-dimensional analysis would identify significant offsetting harms to “free” Internet services like that offered by Facebook and Google.

The paper concludes that recent and future acquisitions of broadband ventures have a much greater likelihood of generating legitimate concerns about competitive and consumer harms, particularly as markets become ever more concentrated, often dominated by a single firm. The paper does not recommend a repudiation of Chicago School antitrust doctrine, but recommends that reviewing agencies and courts calibrate empirical measures of prospective costs and benefits to consumers from a proposed merger by identifying short term and longer-term impacts on core and adjacent markets.

Keywords: antitrust, Chicago School antitrust doctrine, vertical integration, multichannel video programming distributors, media market concentration, IPTV, broadband, over the top video

JEL Classification: K21, K23, L13, L22, L41, L42, L43, L51. L78, L82, L83, L86, L96

Suggested Citation

Frieden, Rob, Challenges to the Conventional Wisdom About Mergers and Consumer Welfare in a Converging Internet Marketplace (December 13, 2020). TPRC48: The 48th Research Conference on Communication, Information and Internet Policy, Available at SSRN: or

Rob Frieden (Contact Author)

Pennsylvania State Law

Lewis Katz Building
University Park, PA 16802
United States

HOME PAGE: http://

Pennsylvania State University - Donald P. Bellisario College of Communications ( email )

University Park, PA 16802
United States
814-863-7996 (Phone)
814-863-8161 (Fax)


Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics