Bill Targets Merger Reviews

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Washington -- Two leading senators introduced legislation
last week designed to severely limit the Federal Communications Commission's role in
the federal review of telecommunications mergers.

The bill's lead sponsors were Senate Commerce
Committee chairman John McCain (R-Ariz.) and Senate Judiciary Committee chairman Orrin
Hatch (R-Utah). McCain and Hatch secured Sen. John Ashcroft (R-Mo.) as a co-sponsor, but
they failed to pick up support from any Democrats.

Last Wednesday, McCain complained about the FCC's
handling of SBC Communications Inc.'s proposed $84.2 billion merger with Ameritech
Corp. -- especially public comments by FCC economist Tom Krattenmaker that the merger
"flunks the public-interest test."

At an FCC oversight hearing, McCain told commission
chairman William Kennard that Krattenmaker's comments were "unacceptable,"
claiming that they were responsible for shearing off $4 billion in market capitalization
from SBC's and Ameritech's publicly traded stock.

The bill (S. 1125) would require the FCC to transfer any
licenses necessary if the Department of Justice or Federal Trade Commission approve a
merger or refuse to intervene.

In a prepared statement, McCain and Hatch said the DOJ and
the FTC were the expert agencies on mergers, and the FCC should defer to them in nearly
all cases to minimize bureaucratic red tape.

"Separate FCC review of mergers typically adds months
to the process and millions of dollars in costs," the statement said.

When reviewing a merger, involved companies must show the
DOJ and the FTC that the combination would lessen competition. Before the FCC, the parties
have to show that the deal would serve the public interest.

A Washington antitrust attorney, who asked not to be
identified, disputed the notion that the FCC was "a rogue agency that is going beyond
its statutory mandate."

However, the attorney said, at some point, it may be wise
to phase out the FCC's merger-review authority.

Sen. Mike DeWine (R-Ohio), chairman of the Senate Antitrust
Subcommittee, took a different tack. His bill (S. 467) would require the FCC to act on a
merger within 30 days. The bill would give the FCC 180 days if it requests additional
information from the parties. Failure to meet the deadlines would trigger approval without
conditions.

In the House, Telecommunications Subcommittee chairman
Billy Tauzin (R-La.) is preparing FCC-reform legislation for introduction this summer.

And Rep. George Gekas (R-Pa.), chairman of the Commercial
and Administrative Law Subcommittee, is reportedly drafting a bill that would curtail the
FCC's merger-review authority by forcing the agency to defer to decisions by the DOJ
and the FTC.

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