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CONTACT: Patrick Ross
April 26, 2005
(202) 289-8928
FCC Deference to DoJ Urged on Mergers
May Says Agency Also Must Resist Conditions on SBC-AT&T

WASHINGTON D.C. - The Federal Communications Commission should largely defer to the Justice Department or the FTC in analyzing competitive aspects of mergers, Progress & Freedom Foundation senior fellow Randolph J. May wrote to FCC Chairman Kevin Martin late Monday. In a letter also sent to the other three FCC commissioners, May, PFF's director of communications studies, also says the agency should not impose so-called "voluntary" conditions on merger participants that often are unrelated to statutory or regulatory obligations.

"While it appears based on the information available that the proposed SBC/AT&T merger will not have adverse impacts on competition in today's dynamic marketplace," says May, "I am writing principally to urge, especially as the new era marked by your chairmanship begins, that the Commission adopt two process-related merger review reforms. The agency should: (1) defer to the expertise of the antitrust authorities to address any claimed competitive concerns; (2) refrain from imposing conditions on approval of the merger applications that are not directly related to compliance with statutory or rule requirements."

When the FCC acts on SBC/AT&T, as well as a Qwest or Verizon merger with MCI, May writes the agency will do so "in the context of a rapidly changing, dynamic industry environment--one much different than any previous Commission confronting merger applications has faced." New technologies, eroding geographical boundaries and shifting service distinctions all reflect a marketplace "in which digital services increasingly are becoming more ubiquitous." As a result, May writes, "claims that one participant or another exercises market power in the 'long distance' or 'local' market, or in the 'voice' or 'data' or 'video' market, should be viewed with considerable skepticism."

The Commission is authorized to review telecom mergers under the Clayton Act to determine if they will substantially lessen competition, but traditionally uses its "public interest" authority. When the FCC has tried to determine if a merger promises to yield affirmative public interest benefits, May writes, "the Commission has gone astray." Exercising "regulatory self-restraint" -- by deferring to the antitrust expertise of other agencies and by resisting the imposition of "voluntary" conditions that are voluntary only based on the threat of merger rejection -- would be consistent with the Communications Act, May argues, and "will promote confidence in the integrity of the Commission's exercise of its regulatory authority."

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



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