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Saturday, December 9, 2006

Can DOJ merger reviews inform the FCC?
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Telecom mergers must pass review by both the U.S. Department of Justice and the Federal Communications Commission. Several people have written about this issue of double-jeopardy (links to recent op-eds at the bottom of this entry). One part of this approach to telecom mergers, however, has received much less attention: the DOJ's analysis cannot typically provide much input into the FCC's decision.

When the DOJ challenges a merger it releases vast amounts of information regarding its analyses. When it chooses not to challenge a merger, it simply closes the case and releases very little information. With telecom mergers, the FCC then must conduct its own investigation even though the DOJ undertook its own, very similar, investigation. It is therefore possible that additional information from the DOJ on why it closed the case could help the FCC make its decision.

To be sure, it would be costly for the DOJ to put together detailed public analyses of each finding of no competitive harm and subsequent decision to close a case. Given the large number of mergers and other antitrust matters the DOJ investigates each year, these costs could add up quickly (see here for detailed statistics on the antitrust division's workload).

With limited resources, this additional transparency could easily have negative consequences. For example, the DOJ might be forced to spend less time on big cases if they have to devote more time to explaining decisions not to investigate others. And even if such disclosure were initially required only of telecom mergers, groups who oppose other mergers in other industries would surely demand similar details on closed cases.

Nevertheless, sometimes releasing more information about a decision to close a case could yield substantial benefits.

Consider the pending AT&T-BellSouth merger. The DOJ found no evidence that it would harm competition, but released little more than a three-page press release explaining why.

The FCC, meanwhile, has been unable to reach a conclusion on the merger after eight months. It is possible that the FCC's decision would be easier if the DOJ had released a detailed analysis of why it believed the merger would have no impact on competition.

It is not necessarily true that requiring the DOJ to be more transparent about why it closes some cases would be a net benefit. But at least one benefit in the case of telecom mergers could be speeding up similar decisions at the FCC. Perhaps the issue is worth additional thought.

Recent op-eds on the AT&T-BellSouth merger and the problem of telecom merger investigations generally:

Gregory Rosston, "Humpty-Dumpty? The Competitive Effects of the AT&T-BellSouth Merger."

Harold Furchtgott-Roth, "Puzzling Telecom Merger System Needs Overhaul."

Robert Hahn and Scott Wallsten, "The AT&T-BellSouth Merger: The Real Story."

posted by Scott Wallsten @ 12:38 PM | Antitrust & Competition Policy

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