Wednesday, October 22, 2014

Antitrust Professor Letter to the FCC in Opposition to the Comcast/Time Warner Cable Merger

On Monday I filed a letter to the FCC* in opposition to the Comcast/Time Warner Cable merger. Over 30 professors of law and economics signed the letter. From the filing:

In this letter, we analyze four issues that, when taken together, require the Commission to block the merger:

-- First, we address important market definition issues. We consider the critically important national market for broadband distribution of content, and in so doing, we draw upon a highly relevant precedent: the AT&T/MediaOne transaction in 2000, in which the Department of Justice prevented the merging parties from combining broadband assets that would, like the current transaction, have given them roughly 40 percent of the national market for broadband distribution of content. On the consumer-facing side of the market, we address issues of switching costs and potential entry into local broadband access markets, and establish that neither competition from existing DSL providers nor credible entry threats would be effective to discipline the merged firm from engaging in anti-competitive behavior. We also reject claims that either mobile or satellite-based broadband should be included in the relevant market. And we point out that the parties’ “no overlap, no problem” argument, if accepted, would lead to the conclusion that the antitrust laws would permit one party to own the dominant cable provider in every local market in the United States. Such a notion, with no limiting principle, simply cannot stand.

-- Second, we address the long-term competitive threat to the merging parties’ cable business presented by online video distributors (“OVDs”), and show that the merger would significantly enhance the Applicants’ power to foreclose this important competition, resulting in fewer choices for consumers.

-- Third, we examine the parties’ claimed efficiencies and conclude that they are inadequate under case law and the 2010 DOJ Antitrust/FTC Horizontal Merger Guidelines (“2010 Merger Guidelines”) to offset the competitive harm threatened by the merger.

-- Finally, we explain why behavioral remedies are insufficient to prevent harm to competition and consumers and conclude that the merger should be blocked in its entirety under the Clayton Act and the Communications Act of 1934.


* All professors filed in their individual capacity and their affiliations are listed for identification purposes only.  In addition to my full time job as a law professor, I am also Senior Of Counsel at Wilson Sonsini in a part time capacity.  In my Wilson Sonsini capacity, I was compensated for my work in writing the letter.  I made note of this compensation in the letter to the FCC and do so in this blog post as well.

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