Consumer Advocates Urge Justice Dept. To Block Comcast/TWC Merger

Comcast-TWCLogoThe FCC isn’t the only agency reviewing the Comcast/Time Warner Cable merger; the Antitrust Division of the Department of Justice is all over it, too. And while the full public doesn’t get to have its riotous say with the DoJ the same way we did with the FCC, businesses and consumer advocates can file in opposition (or support). Our colleagues down the hall at Consumers Union, the advocacy arm of Consumer Reports, have now officially chimed in to ask the DoJ to watch out for the interests of consumers, and block the merger.

We’ve talked a lot about the FCC half of the regulatory approval process, but less so about the Justice Department.

That’s because unlike the FCC, which has a well-publicized timetable for merger review that includes advertised public comment periods, the DoJ process happens much more behind the scenes. The process tends to stay mostly private until it isn’t anymore. When the DoJ files a formal lawsuit, that enters the public record. However, they may not file a suit until a settlement agreement resolving that suit has already been reached.

That’s what happened in the case of the Comcast/NBCU merger in 2011: the lawsuit to block the merger and the settlement that agreed on the conditions that would permit the merger were announced at the same time.

There are also 25 states signed on as a group to review the proposed transaction. (This is in addition to other state-review processes like those of the New York Public Service Commission.)

Officials at the DoJ have been quietly looking at the merits of the Comcast/TWC merger since March. That investigation has included interviews with media companies like Disney and CBS, where the DoJ looked into the same kind of potentially anticompetitive deals that the FCC has been (trying) to ask about.

Although there is no official public comment period during this investigation, several of the same companies and groups who expressed concerns to the FCC about the strong possible harms that could result from the merger have also been filing documents with the DoJ. And that’s where Consumers Union comes in.

In their formal opposition (PDF), CU argues the potential harms that could result, both to consumers and to businesses, make the merger of Comcast and Time Warner Cable anticompetitive. In a nutshell, those harms are:

  • Killing competition. Most consumers already don’t have choices, and letting two huge companies merge won’t increase that. Smaller cable programmers have pointed out that the bigger Comcast gets, the harder it is for them to stay in business anywhere. And starting a new competitor? That’s basically impossible.
  • Squashing innovation. Comcast, CU argues, can interfere with innovation in two key ways. One is by hindering companies like (famously) Netflix from trying new things online video distribution. The other is in hardware: there really is no competition in set-top boxes, and if one entity (Comcast) continues to dominate, there won’t be. Additionally, Comcast can squeeze out hardware platforms like TiVo and Roku by, for example, not permitting their content to stream on those devices. (Or not letting Comcast subscribers use them to access services like HBOGo.)
  • Blocking media diversity. That the post-merger Comcast would control nearly all of the largest TV markets in the country (16 of the top 20, and plenty of smaller ones besides) doesn’t just demonstrate how many million people the deal would affect. It points to their gatekeeper power:
    Because Comcast would control almost every key metropolitan market, video programmers would absolutely need distribution carriage through Comcast. In effect, Comcast could dictate what programs do or don’t get carried — not only in its markets, but across America. A nightly business program, for example, would not get off the ground if it were carried only in rural markets. It would need access to cable subscribers in the New York City region, for example — and those would be Comcast/TWC subscribers.”

Putting conditions on the merger asking for good behavior just won’t cut it, CU concludes. The DoJ tried that four years ago with the NBCU merger and those conditions “have proven to be costly, time-consuming, and ineffective … no conditions or piecemeal divestitures would be effective in preventing or overcoming the significant harms it would cause.”