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CONTACT: Patrick Ross
June 1, 2005
(202) 289-8928
FCC Self-Restraint Needed on Mergers
May Urges Against Imposition of 'Voluntary' Conditions

WASHINGTON D.C. - The Federal Communications Commission can benefit consumers in a shifting marketplace by exercising self-restraint in its merger review process, says Progress & Freedom Foundation Senior Fellow Randolph May. In "Reform the Process" in the National Law Journal, May acknowledges the importance of reviewing telecom mergers, but says the FCC should largely defer to the Department of Justice (and the Federal Trade Commission when applicable) regarding competitive concerns.

"The FCC substantially duplicates the effort undertaken by DoJ," writes May, PFF director of communications studies. "And its process frequently has been characterized by a whiff of regulatory extortion resulting from the imposition of merger conditions unrelated to compliance with existing statutory requirements or rules."

May has two recommendations for the FCC:

  • The FCC should largely defer to the antitrust authorities regarding competitive concerns instead of attempting to measure competition through a "public interest" standard. "The indeterminate nature of this 'public interest' standard creates opportunities for regulatory overkill and abuse."
  • "The FCC should refrain from imposing 'voluntary' conditions on merger proponents that are unrelated to existing statutory or regulatory requirements." Past actions involving off-the-record negotiations where companies are told that if they volunteer conditions their license-transfer applications will be approved should become a thing of the past.

"In my view, today's industry environment argues in favor of a dynamic competitive analysis that takes full account of the rapid destruction of old business models and the emergence of new ones," May says. This is very much a real issue, as the FCC currently is reviewing the mergers of Verizon and MCI, SBC and AT&T, Sprint and Nextel, and Comcast's and Time Warner's acquisition of Adelphia. According to May, under new forward-looking chairman, Kevin Martin, the FCC has a great opportunity, in an exercise of regulatory self-restraint, to reform its process so that merger proposals are considered in a fair, timely, and efficient manner.

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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