AT&T BROADBAND-COMCAST MERGER FALLS TO JUSTICE DEPT
Justice Dept. confirmed Fri. that it was decision-making body on proposed Comcast acquisition of AT&T Broadband. Both companies said they had received requests from Justice’s Antitrust Div. for more information and were cooperating. Decision to leave merger in hands of Justice, rather than FTC, had consumer groups up in arms, and analysts concluded deal was more likely to be approved. Consumer groups agreed, but for different reasons. Center for Digital Democracy said it had “grave concerns that the Department of Justice may not engage in the same careful analysis of the cable industry’s market power as the FTC did in reviewing last year’s merger of AOL and Time Warner.” Specifically, while FTC was willing to place “open access” conditions on AOL-TW, Justice is seen as far less likely to do that on AT&T Broadband-Comcast, $72 billion deal that would leave merged company with 22 million subscribers nationwide.
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CDD and Consumers Union called on Congress to hold oversight investigation into how decision to give merger to Justice was reached. Demand came after govt. dropped plan that would have given media deal oversight exclusively to Justice (CD Jan 30 p 5). Media Access Project has urged Senate Commerce Committee Chmn. Hollings (D-S.C.) to open investigation into plan, which critics said was devised without proper consultation with Congress or FTC commissioners. CDD also was quick to point out that Attorney Gen. John Ashcroft received $154,399 in campaign contributions from media and telecom interests in 1999-2000 election cycle, when Mo. native was running to keep his Senate seat. CDD Exec. Dir. Jeff Chester called move to give deal to Justice “politically motivated.” However, others said Ashcroft probably wouldn’t have hand in decision and that ultimately it would fall to Asst. Attorney Gen.- Antitrust Charles James.
Analysts said interest groups would have tougher time lobbying Justice than FTC because latter has 5 commissioners and Justice has few people to go to. “The more decisionmakers there are, the more likely you are to find a sympathetic ear,” Legg Mason analyst Blair Levin said. Analyst Scott Cleland of Precursor Group said FTC tended to look more closely at content and diversity of voices than did DoJ. Analyst Paul Glenchur of Schwab Capital Markets said Justice was much less likely to place conditions on deal, as FTC did with AOL-TW, telling company executives they had to open up their delivery pipes to other ISPs. Levin noted that AOL-TW involved country’s largest ISP combined with one of largest cable providers, and AT&T Broadband-Comcast didn’t pose similar concerns about Internet access, despite fact that it would combine first and 3rd-largest cable operators in U.S. Glenchur noted that FTC’s process involved voting and debate: “That makes the FTC more unpredictable because it’s a group process. At the FTC, you've got more cooks in the kitchen. That can’t help but slow the process.” Glenchur also said FTC was independent agency, while Justice was arm of govt’s Exec. Branch, meaning Justice might be more closely aligned with Bush Administration’s deregulatory philosophies. Also, in past, Justice has been more inclined to impose structural remedies such as divestiture, rather than such as “open access” that would involve heavy regulatory monitoring and enforcement. Levin said that nowhere in Justice’s antitrust doctrine was idea that bigger was bad: “The question is: What are the antitrust effects?” Levin said he didn’t believe any potential effects posed serious obstacle to deal.
Comcast said it anticipated deal would close by end of 2002, subject to shareholder and regulatory approvals. In addition to Justice, FCC must approve deal for it go through.