FCC Transaction Review: Competition and the Community Interest

The particular Federal Communications Commission has long played a unique and pivotal part in reviewing communications transactions. Our own review is prescribed by the Marketing communications Act and is separate from (though complementary to) the analysis carried out by our sister, antitrust organizations under Section 7 of the Clayton Act.

Three factors about the Commission’s review of transactions are important to understand: First, the nature of the substantive review that Congress has instructed the Commission to apply. Second, the process that the Commission has instituted, in line with that statutory standard, to provide an open and fair means of reviewing dealings. Third, the manner in which the complementary approaches of the Commission and the antitrust organizations work harmoniously to serve the public interest in a sector that has traditionally been the subject of careful governmental overview.

The starting point of our own mission—and therefore , our substantive review—is the language of the Communications Act alone.

Congress has focused the Commission to review transactions concerning licenses and authorizations under the Marketing communications Act and to determine whether the suggested transaction would serve “the public interest, convenience, and necessity. ” 1 The particular breadth and importance of the public-interest standard to the review of transactions concerning our nation’s communications networks logically flows from the Commission’s statutory mission, since the conduct of buying other licensees can be as important to the public as the method a licensed company conducts itself in the absence of a transaction. This standard complements, but is different from the antitrust agencies’ standard set forth Section seven of the Clayton Act, which teaches them to challenge transactions that would “substantially lessen competition”.

In my opinion, as the Commission has consistently identified, 2 that the FCC’s actions should be informed by competition principles. These principles turn to the impact of practices upon consumers and the public interest, not merely on competitors. They are designed to be fact-based and data-driven. They reveal a common-law belief that the encounters of the present are, to paraphrase Justice Holmes, as important since the logic of the past. They should be used in a rigorous manner.

But , the “public interest” standard is not limited to purely economic results. It necessarily encompasses the “broad aims of the Communications Act, ” 3 which include, among other things, a deeply rooted preference for preserving and enhancing competitors in relevant markets, accelerating private-sector deployment of advanced services, ensuring a diversity of information sources and services to the public, 4 and generally controlling spectrum in the public interest. Our own public interest analysis may also involve assessing whether the transaction will affect the quality of communications services or even will result in the provision of new or even additional services to consumers. The leading examples may come from broadcast dealings, where the Commission has long used the congressional admonition to promote localism in programming, and especially news development, available to communities. 5 Consider also Justice Breyer’s concurring opinion in Turner Broadcasting v. FCC . 6 That case concerned a challenge to the “must carry” rules that require cable systems to carry local broadcast signals. In agreeing that the statute should be upheld, Justice Breyer expressly relied upon Congress’ goal of “promoting the widespread dissemination of information from a multiplicity of sources. ” seven

The second important principle of the Commission’s transaction-review could be the process by which it carries out the congressionally-mandated functions. Fundamental is the fact that applicants have the burden of demonstrating at the public record that their proposed deal is in the public interest. Oftentimes, the most popular understanding seems to be that the Commission is known as upon in the first instance to give a like this comment or thumbs down. That is incorrect.

As the Transactions Team Webpage explains in detail, the Percentage can approve a transaction or even it can approve a transaction along with conditions designed to ensure the public attention is served. But , if after a thorough review the FCC struggles to find that the proposed transaction acts the public interest or if the report presents a substantial and material question of fact, it must specify that transaction for an administrative hearing. Such an administrative hearing examines the facts of the transaction in the traditional adversary process that is the hallmark of our common-law jurisprudence. Following that hearing, the Commission would render a decision at the merits after which, of course , judicial review is available. Although such hearings happen to be rare, the Commission has been prepared to use them as the statute requires. For instance , at the time that the applicants in the AT& T/T-Mobile merger withdrew their apps, the Commission’s staff had ready a report recommending that the transaction be designated for hearing.

Understanding the process also illuminates the role of conditions. Conditions can be very important because, appropriately constructed and effectively applied, they can remedy public-interest harms that would otherwise occur. This relationship to the remedy of harm is fundamental and it means that not all conditions can serve that part. As I have said before, I realize of the reputation that some attribute to the FCC — that the solution is always “yes, ” and the path to “yes” is by bargaining with all the agency. It is hard to imagine that this type of view can be squared with the way the Commission assiduously applied the law to the facts of the proposed AT& T/T-Mobile transaction, among others.

The third principle concerns the manner in which we work with the antitrust organizations.

The ability of both the Commission and antitrust agencies to use their specialized, and complementary, skills is working well. The Percentage and the Antitrust Division of the Section of Justice cooperated closely to harmonize their approaches (always in line with their respective statutory commands) in the Comcast-NBCU and AT& T/T-Mobile dealings and that continues to be the way we work together today.

Fidelity to Congressional intent, rigor in the application of facts to law through an open up and fair process, and solid working relationships with the sister antitrust agencies — those are the principles that have worked well for the Percentage in the past and, as the Transactions Team Webpage and its materials help explain, will continue to serve the public attention, convenience and necessity.

one 47 U. Ersus. C. §§ 214(a) & 310(d).

2 . See, e. g., Applications of Comcast Corp., Gen. Elec. Co., and NBC Universal, Inc. for Consent to Assign Licenses and Transfer Control over Licenses , Memorandum Opinion and Order, 26 FCC Rcd. 4238, 4248, ¶23 (2011) (“Comcast/NBCU Order”).

3. Applications for Consent to the Transfer of Control over Licenses, XM Satellite Radio Holdings Inc., Transferor, to Sirius Satellite Radio Inc., Transferee , Memorandum Opinion and Order and Statement and Order, 23 FCC Rcd 12348, 12364, ¶31 (2008); News Corp. and DIRECTV Group, Inc. and Liberty Media Corp. for Authority to Exchange Control, Memorandum Opinion and Order , 23 FCC Rcd 3265, 3277-78, ¶23 (2008); Applications of AT& T Wi-fi Services, Inc. and Cingular Wi-fi Corp. for Consent to Exchange Control of Licenses and Authorizations , Memorandum Opinion and Order, 19 FCC Rcd 21522, 21544, ¶41 (2004).

4. 47 U. Ersus. C. § 521(4); see also 47 U. S. C. § 532(a).

5. Comcast/NBCU Order , 26 FCC Rcd. in 4249-50, ¶26-27.

6. 520 U. S. 180 (1997).

7. Id . at 226.

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