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Convergence Mergers: Where’s the Relevant Market?
Glenn B. ManishinPractising Law Institute — San Francisco, August 2000
Practising Law Institute
Telecom Mergers Redux
• 1999 — e.g., BA/NYNEX, SBC/Ameritech– DOJ and FCC act at cross-purposes– FCC imposes costing/OSS and sep. sub.
conditions in view of potential competition
• 2000 — e.g., AT&T/MOne, WCom/Sprint– Improved agency coordination– DOJ applies traditional LD market definition– Incremental issues (cable concentration v.
broadband competition)
Practising Law Institute
Changing Market Definition(s)
• Local v. long-distance telecom (and Section 271)
• Telecom v. Internet transport• Broadband v. cable television• Landline v. wireless• Portals v. gatekeepers
Practising Law Institute
Dueling Doctrine(s)
• Market definition– Clayton Act v. “public interest/diversity”
• Interconnection obligations– Essential facilities v. “necessary and
impair”
• Cable broadband unbundling (“open access”)– Refusal to deal v. Title II v. Title VI
Practising Law Institute
Relative Agency Competence
DOJ• Institutional
competence• Competition
standard with concrete guidelines
• H-S-R Act imposes timing restraint
FCC• Record of parties
and analysis• Public interest
“sliding scale” > Clayton Act
• License transfer provides policy leverage/extortion
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Open Access and AOL/TW
• Neither horizontal nor vertical overlaps• Politics makes strange bedfellows
– Content v. caching v. messaging– Impact of City of Portland– Limits of “voluntary” commitments
• Externalities:– Broadband build-out; DSL competition– AOL overreaching (IM)
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Doctrinal Conflict
Antitrust• Unilateral refusals
to deal permissible• Narrow Section 2
exception for firms with market power
• Market definition differentiates video and Internet access
Communications• 1996 Act not reflect
“convergence”• Proponents assume
cable has/will have market power
• Title II (carrier) v. Title VI (video) v. diversity policies
Practising Law Institute
Conclusions
• Doctrinal instability will continue as agencies and private parties temporize
• Market definitions still wedded in 20th Century notions
• Open access raises core conflict between government interventionism and long-term market development
• Political pressures will only increase!
