Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Comcast-Time Warner Cable merger opposed by American Antitrust Institute, (Jun 13, 2014)

By Edward L. Puzzo, J.D.

In a newly-issued white paper, the American Antitrust Institute (AAI) called on antitrust enforcers to block the proposed Comcast merger with Time Warner Cable (TWC) as anti-competitive. The AAI white paper, “Rolling Up Video Distribution in the U.S.: Why the Comcast-Time Warner Cable Merger Should Be Blocked”, argues that the proposed merger raises significant competitive issues, provides little or no offsetting cost savings or consumer benefits, and would be extraordinarily difficult to fix with either structural or behavioral remedies.

The AAI is concerned that the merged company could exercise its buyer market power against content and middle-market service providers and potentially exclude rivals in content and video distribution markets. The white paper sketches a troubling landscape against which the proposed deal would occur, including high levels of consumer dissatisfaction with Comcast and TWC and a history of swaps that have enabled large cable TV and broadband ISPs to divide markets and solidify their dominance. It explains why Comcast-TWC’s efficiency claims are not defensible and makes the case for why grafting the remedies from the Comcast-NBC Universal merger onto Comcast-TWC would spare neither competition nor consumers from harm.

Prohibitions and requirements on the conduct of merged firms are difficult to monitor and enforce, stated the AAI. “Merged companies have incentives to develop ‘workarounds’ to avoid or minimize the remedies,” explained AAI Vice-President Diana L. Moss. “We don't think the merger is fixable, given what would need to be done on the remedies side to ensure that competition and consumers are not harmed.”

“We are looking at this merger through the lens of sea-changes in the landscape of the cable TV and broadband ISP markets,” explained Moss. “Multiple deals are on deck, including AT&T-DirecTV, which pose unusual burdens and challenges for the resources of the U.S. Department of Justice and Federal Communications Commission.” The Comcast-TWC deal also comes at a critical time when telecommunications regulators are grappling with open Internet principles. More powerful merged companies with economic and political clout could shape those outcomes. “The AAI suggests merger enforcers adopt a ‘step back’ or a ‘go slow’ policy in light of rapid and significant consolidation in the cable TV-broadband ISP space,” said Moss.

The American Antitrust Institute is an independent, Washington-based non-profit education, research, and advocacy organization. Its stated mission is to increase the role of competition, assure that competition works in the interests of consumers, and challenge abuses of concentrated economic power in the American and world economy.

Companies: Comcast Corporation; Time-Warner Cable

News: Antitrust ConsumerProtection