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OpenMarket: Antitrust and Competition

  • CEI Statements on the Failed Comcast-Time Warner Merger

    April 27, 2015 3:35 PM

    CEI responded to the news that the Comcast-Time Warner merger failed. You can read more analysis from CEI's Vice President for Policy Wayne Crews here.

    "The deck was stacked against this deal from the beginning: Comcast and Time Warner Cable had to seek permission to merge from not only the Department of Justice, but also the Federal Communications Commission. While the DOJ must win in court before it can block an acquisition, the FCC has unilateral power to send a transaction into regulatory limbo for years before the merging parties get a chance to be heard by an independent federal judge. This process turns the rule of law on its head, and only Congress can fix it." 

    -- Ryan Radia, Associate Director of Technology Studies

    “The collapse of the Comcast-Time Warner merger merely because of the interference of government, not because of actual market rejection, illustrates the overwhelming power of the modern state to undermine the advance of communications technologies and services. These bureaucrats have decided on our behalf to award other communications industry companies a government-granted reprieve from the pressures of competition.”

    -- Wayne Crews, CEI Vice President for Policy

  • Comcast-Time Warner Cable Merger Derailed

    April 23, 2015 5:17 PM

    Today we’ve learned again that bureaucrats and their enormous kingdoms come before consumer welfare. 

    The collapse of the Comcast-Time Warner Cable merger merely because of the interference of government, not because of actual market rejection, illustrates the overwhelming power of the modern state in undermining the advance of communications technologies and services specifically in this instance, and of free competitive enterprise generally. 

    The proposed transaction was first announced well over a year ago, and as is now the unfortunate and disruptive norm, the parties had to await the verdicts of bureaucracies rather than set immediately about serving consumer markets. Now, the Justice Department’s Antitrust Division and the Federal Communications Commission, whose edicts change the direction of entire industries with the slightest gesture, have decided to derail the deal.  

    These bureaucrats have decided on our behalf that the merger wouldn’t help us. What they have really decided is that no competitor will need to react to the Comcast-TWC merger, and so competitors have been awarded a government-granted reprieve from the pressures of competition. Over and over, antitrust routinely harms consumers far more than any ordinary business transaction like this can ever do.

    Sometimes mergers work, sometimes they don’t—like the failed AOL-Time Warner merger. But such matters should be settled in the marketplace, not by overlords in Washington who, if we are the slightest bit honest, are the real wielders of unchecked monopoly power over all industries, not just one sector like this.  

    For an earlier discussion of this merger, here’s a column of mine in Forbes. “Why Organized Conservative Opposition To The Comcast Time Warner Deal Misfires.”

    On the folly of antitrust regulation (and it is regulation), see my formal comments to the Federal Trade Commission’s Antitrust Modernization Commission

  • Premature Capitulation?

    February 3, 2015 4:13 PM

    Over the decades I’ve spent in this Heart of Darkness (a.k.a., the bowels of American politics), I’ve learned two lessons that have encouraged the steady politicization of the American economy:

    • When the right time comes, I’ll take a principled stand (sadly, too often, once you’re no longer in office); and
    • Of course, we know the “right” answer is often to liberalize current rules, but that would be politically naïve, so our goal should be to avert even worse rules (but, of course, sacrificing principle rarely assuages those favoring more government control).

    And both lessons seem to have been forgotten in the Republican rush to avert the threatened action by FCC Chairman Tom Wheeler to transform the Internet into a federally regulated utility. Senator Thune, Representative Upton, and Representative Walden have proposed a “compromise” bill that would strip the FCC of its purported authority to reinterpret the Communications Act to consider the Internet as a “public” utility.

    Unfortunately, their language concedes perhaps the most dangerous part of such a reclassification: removing the freedom of network owners to price their services. Well, actually not quite: the Republicans would remove providers’ ability to price in ways that some view as “discriminatory.” They explicitly mention pricing policies that might result in “throttling” (like congestion-managed toll lanes?), unreasonable “network management” (as decided by whom?), and “paid prioritization” (like that used for just-in-time transportation services by most transport companies?).

    But proponents argue if FCC is left alone, its rules might even be worse. And, indeed, they probably will be—but FCC action would be administrative, reversible by a future administration or via inevitable legal challenge. If Congress—led by erstwhile opponents of net neutrality—accedes to forcing the Internet into quasi-utility status, the losses could be permanent.

    Those contemplating this action should reflect on the consequences of similar regulation on an earlier network—the railroads. This was America’s first national network, knitting together then small town and rural America into the national economy. Railroads dramatically lowered transportation costs—changing the economy and resulting in growth in some regions, contraction in others.

  • STB Reauthorization Bill Threatens Rail Investment

    September 16, 2014 3:31 PM

    The U.S. Senate Committee on Commerce, Science, and Transportation has scheduled a markup for tomorrow afternoon of the Surface Transportation Board (STB) Reauthorization Act (S.2777). If enacted, the bill (specifically, Section 14) would threaten much needed investment in railroad infrastructure and reverse three decades of progress on railroad regulation.

    Senate Commerce chair Sen. Jay Rockefeller (D-W.V.), irresponsibly joined by Sen. John Thune (R-S.D.), has for years sought to reverse the partial deregulation enacted by Congress over 30 years ago. Since 1980, when the Staggers Act was enacted, average real freight rates have fallen by nearly 50 percent, railroad employee productivity and safety have dramatically improved, and the industry is now healthy and reinvesting more than $20 billion of its own funds every year.

    But hydraulic fracturing revolution has led crude oil shipments to skyrocket in recent years—since 2005, originated carloads of crude oil on major railroads have increased by more than 6,500%. With continued steady growth in intermodal movements, new capacity investments are needed to ensure America’s freight rail system remains the envy of the world. Unlike road and air carriers, the railroad industry owns and manages its own networks and uses its own funds for infrastructure investment.

    While singling out the private railroad industry for its alleged sins, Sen. Rockefeller has often championed subsidies for other modes of transportation. West Virginia’s highway system has long been one of the most federally subsidized in the nation, and Sen. Rockefeller never misses an opportunity to protect wasteful taxpayer subsidies of government-owned Amtrak and the completely misnamed and unessential Essential Air Service.

  • Duplicative New Affirmative-Action Rule Drives Up Taxpayer Costs and Restricts Competition

    August 20, 2014 4:42 PM

    Does it make sense to require a park campground operator that has a few hundred employees at 120 different locations to come up with 120 separate affirmative-action plans, one for each site? Just because it also receives a measly $52,000 federal contract to clean bathrooms used by tourists (which it does very cheaply, at cost, in order to make its nearby concessions more attractive)?

    To any economist, the answer would be “no.” But to the Obama administration, the answer is “yes.” If a federal contractor gets $50,000 annually from the federal government, or “serves as a depository of Government funds in any amount” or has “government bills of lading” worth $50,000, it generally has to have a separate affirmative action plan for “each of its establishments,” under a regulation issued by the Department of Labor in March 2014. 

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