Some Thoughts on FCC Merger Review Occasioned by the Demise of the Comcast-Time Warner Cable Deal

by Daniel Deacon — Wednesday, Apr. 29, 2015

In non-net neutrality telecom news, last week saw the announcement that Comcast has ended its $45 billion bid for Time Warner Cable. The announcement came after government officials met with Comcast executives and expressed their opposition to the merger. For their part, FCC staff members were reportedly prepared to refer the merger to an FCC Administrative Law Judge, a move that would have effectively killed the deal.

I don’t have much to say about the merits of the Comcast-TWC merger itself, and few outside the two companies appear truly upset that this deal in particular went down. But there are two intertwined process points related to the merger that I thought worth mentioning.

First, it seems a shame that we will, in all likelihood, never receive an explanation—outside of a couple of cursory press releases —from government officials for why they decided to oppose the merger. That we don’t know the precise basis for the government’s opposition is particularly regrettable because this was not a typical horizontal merger that would have resulted in less consumer options for broadband service (by and large, Comcast and TWC do not compete for customers in the same geographic markets). Concerns expressed about the merger instead rested on more nuanced theories about the power a combined Comcast-TWC could wield against independent online video providers and other third parties. I, for one, would have liked to know more about how the government approached these claims. Companies considering similar mergers probably feel the same way (Charter Communications is reportedly already exploring a bid for Time Warner Cable now that Comcast is out).

Second, the FCC process for evaluating proposed mergers appears not to be functioning the way Congress intended. By statute, the FCC cannot reject a deal as violating the public interest without referring the case to an ALJ. But the resulting adjudication process is considered so onerous that the reference to the ALJ (or merely the announcement that the FCC will refer) effectively denies the merger. Merging parties prefer simply walking away to fighting in front of the ALJ. Of course, there is a similar dynamic when the DOJ files suit seeking to prevent a merger, and perhaps there’s no real problem here. At minimum, though, we should recognize that the idea the FCC cannot deny a merger without sending it to a neutral adjudicator is largely a fiction.

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About Daniel Deacon

Dan Deacon’s primary interests are in administrative law and telecommunications and Internet regulation. His work has appeared in the Yale Law Journal, the Administrative Law Review, the Virginia Law Review, and the NYU Law Review. Topics he has written about include executive enforcement discretion, processes for deregulation, and the changing face of communications regulation in the United States.

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