Separating Politics from Policy in FCC Merger Reviews: A Basic Legal Primer of the 'Public Interest' Standard

19 Pages Posted: 19 Jun 2010

See all articles by Thomas Koutsky

Thomas Koutsky

USAID Global Development Lab

Lawrence J. Spiwak

Phoenix Center for Advanced Legal & Economic Public Policy Studies

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Date Written: June 17, 2010

Abstract

The purpose of this article is to present a brief primer of the “public interest” standard that the Federal Communications Commission (“FCC” or “Commission”) uses in reviewing mergers pursuant to the Communications Act. As outlined more fully below, precedent dictates that the FCC has independent (and indeed broader) authority to review communications industry mergers separate from the authority bestowed upon the Department of Justice (“DOJ”) or Federal Trade Commission (“FTC”), and that this public interest review provides a useful and unique purpose. To the extent the FCC finds that the proposed transaction harms the public interest in some way, the Commission is well within its public interest authority to issue narrowly-tailored conditions to its approval of the merger. However, precedent also dictates that the FCC’s “public interest” authority is not unfettered. The public interest test requires an analysis of economic and competitive considerations, and the courts have sometimes rebuked the FCC for not being consistent in this analysis. Absent a clear nexus to any merger-related harm, the FCC should not use case-specific merger adjudications to achieve indirectly via coerced “voluntary commitments” what it cannot do directly via rulemakings to accommodate particular political constituencies. Indeed, despite the FCC’s mantra over the last decade or so that a merger must “enhance competition,” the case law simply does not support such an expansion of power. To the contrary, the case law is clear that the FCC is bound by the same standard as antitrust enforcement agencies in that the agency cannot “subordinate the public interest to the interest of ‘equalizing competition among competitors.’” Accordingly, if there are generic, unresolved policy issues -- such as the increasingly contentious issue of network neutrality -- then those issues are better handled in formal industry-wide inquiries or rulemakings where they can be effectively dealt with in a comprehensive manner. Important issues of public policy should not be decided in the course of closed negotiations over merger conditions in which only the regulator and the regulated entity participate. In contrast, Notices of Proposed Rulemakings (“NPRMs”) or, at minimum, Notices of Inquiry (“NOIs”), have the benefit of offering the public a complete opportunity to comment on proposals and also result in consistent, industry-wide resolution of issues that apply across the board and, hopefully, stand the test of time.

Keywords: Federal Communications Commission, mergers and acquisitions, public interest

JEL Classification: K20, K23, K40, L50, L51, L96, L98, O38

Suggested Citation

Koutsky, Thomas M. and Spiwak, Lawrence J., Separating Politics from Policy in FCC Merger Reviews: A Basic Legal Primer of the 'Public Interest' Standard (June 17, 2010). CommLaw Conspectus - Journal of Communications Law and Policy, Vol. 18, 2010, Available at SSRN: https://ssrn.com/abstract=1626370

Thomas M. Koutsky

USAID Global Development Lab ( email )

1300 Pennsylvania Avenue NW
Washington, DC 20577
United States

Lawrence J. Spiwak (Contact Author)

Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States
202-274-0235 (Phone)
202-318-4909 (Fax)

HOME PAGE: http://www.phoenix-center.org

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