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Baker Wants to Overhaul FCC Merger Reviews

Says the process can chill investment, and she wants an end to ‘regulation-by-condition’

Meredith Attwell Baker thinks the Federal Communication Commission’s way of reviewing communications mergers like NBC/Comcast and Sirius/XM needs to be overhauled.

“I fear that the delay and uncertainty surrounding our current merger review process can have the unintended consequence of chilling consumer-enhancing investment,” the commissioner said in keynote remarks to an event held by the Institute for Policy Innovation.

She favors a more targeted, predictable process and would like to establish “limiting principles” to how the FCC handles negotiated merger conditions.

Baker, who holds one of the Republican seats on the commission, said the recent NBC/Comcast deal “certainly informs my views” but that she wasn’t trying to second-guess that one. She said the challenges in that case were symptoms of “long-term structural issues.”

Baker wants the commission to establish “commonsense limits” on conditions it imposes. “The process is always at risk of devolving into how to get more ‘benefits’ from a given transaction: playing down the offered benefits and overstating predicted harms to compel more conditions.” She calls this a “regulation-by-condition approach.”

She asked whether formal rulemaking wouldn’t be a better way to implement industry-wide policies than through merger conditions. Also, “Our goal of competitive and technological neutrality is undermined by imposing different rules and policies on those that seek merger approval. … By using so-called ‘voluntary’ conditions, the agency is able to effectively shield its policy from judicial review. By shaping our merger analysis through extensive interaction with the applicants, we also run the risk that our policy decisions are short-sighted or incomplete.” And she said the commission should “retire the notion” that such merger commitments really are voluntary at all.

Among other changes, she would limit the use of conditions more narrowly, to make sure a condition actually protects against some real public interest harm. Conditions should not hurt the rights of others not involved in the merger; and they should not get into matters that are subject to a current FCC rulemaking proceeding. “Too often conditions seemingly serve the immediate agenda of the commission without any clear connection to the transaction under review,” she said.

Whether her recommendations regarding merger conditions should be turned into outright rules, she said, was a good topic for more discussion.

But Baker also thinks the FCC should work with Congress to evaluate whether the dual-review system, which usually involves a review by another agency, is still a good one. And she called for the commission to follow a more “predictable and defined timeline,” noting that the NBC/Comcast merger review took 355 days and that, although the FCC has adopted a goal of deciding within 180 days, some deals have taken much longer, including 505 days for XM/Sirius. “We should either retire the shot clock or actually enforce it,” she said.

— Paul McLane