The FCC Should not Block or Condition the Comcast-TWC Merger

Today, the International Center for Law and Economics (ICLE) filed comments in response to the FCC’s public notice requesting public comments on the proposed merger of Comcast Corporation and Time Warner Cable, Inc. The comments focus on analyzing the merger under the consumer welfare standard of antitrust law.

“The most obvious outward effect of this merger will be to change the logo on the side of cable service vans, said Geoffrey Manne, Executive Director of ICLE. That’s a terrible reason for challenging this merger, but most of the criticism amounts to little more than an objection to Comcast taking over Time Warner Cable’s operations in cities where the two companies don’t compete.

Opposition to the merger rests largely on the unsubstantiated belief that ˜big is bad,’ and the highly politicized and emotional belief that the government should ˜do something about Comcast,’ adds Ben Sperry, Associate Director of ICLE. Neither of these concerns has any grounding in fact or in rigorous competition analysis, and we urge the Commission to reject them as grounds for stopping or conditioning this merger.

Foreclosure simply isn’t a problem here, adds Manne. Comcast currently has no ownership interest in the vast majority of programming it distributes ” and yet it eagerly distributes it. And it makes its own content widely available for distribution by competitors. Nothing about the proposed merger will change any of that.

In its merger review, the FCC should consider that:

  1. Increased concentration is not, in itself, evidence of anticompetitive effect, as President Obama’s Department of Justice has noted.
  2. Product markets should include all the reasonable substitutes to cable, like fiber, wireless, DSL, and satellite.
  3. Generally, mergers, like this one, that combine to meet only a 30% threshold (or less, if the market is properly defined) cannot be presumed to enable enough foreclosure to result in consumer harm.
  4. Mergers like this one, offer many efficiencies, from increasing shared knowhow among vertical steps in the production chain and increasing bargaining power against strong inputs, to improving governance, reducing transaction costs, and increasing economies of scale that can lead to benefits for consumers.

Read the full comments here. For some of our previous work on the Comcast-TWC merger, see: