Antitrust

Case Against AT&T-Time Warner Merger Is Weak

Posted by | Antitrust | One Comment

Antitrust and media experts were surprised last week when the Department of Justice (DOJ) leaked its staff’s opposition to the AT&T-Time Warner merger. The surprise is summed up by Ed Lee, managing editor at Recode, who told CNBC that AT&T “has a slam dunk court case” against the Justice Department. If the agency decides to pursue staff’s recommendation, it’s likely to lose in federal court and the court of public opinion.

Most antitrust challenges involve mergers between companies that serve the same customers (“horizontal” mergers), like Walgreens’ attempt to acquire Rite Aid, because horizontal mergers eliminate a competitive choice from the marketplace. The AT&T-Time Warner deal is a “vertical” merger of companies who don’t serve the same set of customers — Time Warner creates programming to sell to distributors and AT&T distributes programming to consumers.

Challenges to vertical mergers are rare because the number of competitive choices for each set of customers remains the same. To successfully challenge this vertical merger, DOJ would need to show that the combined company would have sufficient market power to foreclose rival video distributors from accessing Time Warner content or rival programmers from accessing AT&T’s distribution network. Precedent, economic theory, and empirical evidence make it unlikely that the DOJ could prove the combined company would have sufficient market power to engage in either foreclosure strategy. Read More

How The Obama Administration Is Rewriting Competition Law At The FCC

Posted by | Antitrust, Broadband Internet, Internet Analogies, Net Neutrality Series 2.0 | No Comments

In his first presidential campaign, then-Senator Obama said “antitrust is the American way to make capitalism work for consumers,” because, “unlike some forms of government regulation, it ensures that firms can reap the rewards of doing a better job” and “insists that customers … are the judges of what best serves their needs.” Obama vowed to “reinvigorate antitrust enforcement” and work with other jurisdictions to “curb the growth of international cartels” so that “all Americans benefit from a growing and healthy competitive free-market economy.”

Regrettably, the Obama presidency’s competition policies have not matched his campaign rhetoric. According to Daniel Crane, a law professor at the University of Michigan, Obama has not reinvigorated antitrust enforcement: “With only a few exceptions, current enforcement looks much like enforcement under the Bush Administration.”

Obama has instead shown a strong preference for relying on other forms of government competition regulation — the kind that prevents firms from reaping the rewards of their investments in American infrastructure and limits what customers can demand — while complaining about the antitrust enforcement efforts of other jurisdictions that might affect U.S corporate interests. In the process, the Obama Administration has slowly been rewriting U.S. competition law in unprecedented ways.

This process has been especially apparent in communications regulation at the Federal Communications Commission (FCC). Though it was once seen as a “sleepy backwater,” the FCC has radically transformed its approach to competition law during the Obama Administration. The FCC’s new approach to competitive analyses runs the risks of spillover to interpretation of antitrust laws and speculation regarding the limits of government intervention in business transactions throughout the economy. Read More