Lawmakers Chastise FCC on Merger Reviews

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Washington -- Calling for sweeping changes in the way
mergers are reviewed by the Federal Communications Commission, lawmakers lashed out at the
agency from both sides of the aisle last Tuesday.

"These are remarkable exercises in arrogance,"
Rep. John Dingell (D-Mich.) said during a House telecommunications hearing. "The
behavior of the commission ... approaches what might well be defined as not just
arrogance, but extortion."

Lawmakers from both parties endorsed a draft bill, authored
by Reps. Charles Pickering (R-Miss.) and Richard Burr (R-N.C.), that would require the FCC
to approve most mergers after 90 days.

Under current FCC policies, merging companies must prove
that consolidation will benefit the public interest before agency approval is granted.

Rep. Billy Tauzin (R-La.), chairman of the House
Telecommunications Subcommittee, restated his earlier complaints that the current system
takes too long.

"The FCC now repeatedly reviews compound mergers in a
manner that takes far too long, is far too costly [and] is too duplicative of the reviews
conducted by the Department of Justice and the Federal Trade Commission," Tauzin
said.

Adding that the review process was "out of
control," Tauzin said the current system creates conditions for merging companies
that are not related to the effects of a merger. "Meeting these conditions is seldom
necessary to bring the affected parties into compliance with FCC rules and
regulations," he said.

Dingell said the system was designed to hinder merging
companies and to help competitors that are not required to follow the same rules.
"Competitors can gain this advantage with little effort since the merging parties are
under great pressure to strike a deal with the commission," he added.

Bruce Ryan, a spokesman for Comulus Media, a
Wisconsin-based radio conglomerate, testified that regulatory delays often impose
financial hardship on companies that must continue to operate whether or not ownership
changes are approved.

Other lawmakers said the current system allows competitors
to manipulate the system by creating delays that prevent the merging companies from
raising needed venture capital.

FCC chairman William Kennard, who did not attend the
hearing, defended the commission's role in reviewing mergers, saying it was the only
agency that offered a public forum for discussion.

"These solutions would create speed and certainty only
by sacrificing the meaningful participation of the American people, by eliminating
regulatory flexibility in a context where it is most essential and by casting
significantly increased responsibilities (but no additional resources) on the Justice
Department and the FTC while eliminating interagency cooperation," Kennard said in a
prepared statement.

Kennard -- who has appointed a task force to revise the
merger-review process -- said the commission will increase public disclosure of agency
action and streamline procedures so that FCC efforts do not duplicate those at other
agencies.

But commissioner Harold Furchtgott-Roth, who testified
before the panel of lawmakers, said the task force would not prove effective because
Kennard has no significant policy changes slated.

"The commission's merger-review team has no plans
to address any substantive issues related to merger review, such as legal standards of
review or the practice of conditioning mergers," Furchtgott-Roth said.

Agreeing with the panel, commissioner Michael Powell said
the law should be revised so that the FCC cannot create conditions of merger approval that
are not related to the merger effects.

"I am very uncomfortable with a standard that places
harms on one side of a scale and then collects and places any hodgepodge of conditions --
no matter how ill-suited to remedying the identified infirmities -- on the other side of
the scale," Powell said.

Tauzin -- who said Furchtgott-Roth had informed the
committee that merger conditions were often crafted in secret -- asked the witnesses how
the meetings were conducted. "If we knew, it wouldn't be secret,"
Furchtgott-Roth said, adding that his staff had been denied access to the merger meetings
conducted by bureau staffs.

Powell and Furchtgott-Roth said legislation to permit all
commissioners to attend merger meetings was not necessary.

States News Service

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