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DOJ: No Rush to Merger Conditions

Antitrust chief signals skepticism, but says they can be effective 4/04/2016 8:00 AM Eastern
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The Justice Department has suggested it will be keep a sharp eye on any Charter-TWC deal conditions.

Washington — At press time, neither the Federal Communications Commission nor the Department of Justice had come out with a decision on the Charter Communications-Time Warner Cable merger — an FCC source suggested no action was likely last week — but DOJ antitrust chief Bill Baer has already provided some clues as to what the government is looking for from merged companies in terms of compliance with deal conditions and how DOJ intends to enforce it.

 

Think of it as: Antitrust, but verify. Baer told the Senate Judiciary Committee he thought there were “limited circumstances” in which some conduct remedies can be effective. But he signaled they were hardly a panacea.

 

“We don’t rush to them,” Baer told the committee. “We are skeptical of them, and want to make sure they are effective and enforceable.”

 

The Charter-TWC deal, if approved as expected, will almost certainly have conditions related to access to over-the-top and traditional video, as well as on contracts — such as most-favored-nation clauses — critics say make it harder for independent programmers to get distribution.

 

Sen. Amy Klobuchar (D-Minn.) had sent the FCC and DOJ a letter back in February asking it to “carefully” vet the Charter-TWC deal for any potential obstacle to accessing alternative video content, something the FCC was clearly already doing, according to document requests from the companies.

 

She followed up with Baer in the hearing, asking how the Justice official was going to make sure the conditions were “truly enforceable” and if there were any lessons to be learned from recent mergers.

 

Baer said the first question was whether a deal was “fixable” by conditions, as Klobuchar had suggested might be the case with Charter- TWC, or whether it’s “too big to fix.” Baer said he liked that metaphor as well.

 

For instance, Baer said the merger of Comcast and Time Warner Cable, scuttled last year, was deemed too big to fix, and explained why. “The conditions that would have been required to protect consumers would have had my folks as regulators, not antitrust law enforcers,” he said. “And that is not a role we aspire to, nor should we be entrusted with.”

 

He contrasted that with Comcast’s 2011 merger with NBCUniversal, where the DOJ had concluded there were conditions that could safeguard the competitive risks. Baer suggested those conditions worked. He said that from the reports he has been getting he believes those are enforceable and are “getting us the information we need.”

 

He also pointed to the opportunities for complaining content providers not only to talk to the FCC and DOJ, but the option of seeking binding arbitration in the NBCU deal. Satellite- TV provider Dish Network has recently signaled it would invoke that arbitration condition in a carriage impasse with NBC.

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