Analysis should Focus on Competitive Effects, Not Rhetoric
Contact: Amy Smorodin
May 10, 2010 – Antitrust analysis of the proposed merger between Comcast and NBC Universal should focus only on its effect on competition in relevant markets and resulting harm to consumers, states James Speta in “Screening and Simplifying the Competition Arguments in the NBC/Comcast Transaction” released today by the Technology Policy Institute.
To assist in weeding out criticism that falls outside the sphere of antitrust concerns, Speta, Professor at Northwestern University School of Law, suggest three “screens” that can help filter the arguments presented against the merger:
· The transaction should be blocked or conditioned only if the transaction actually makes matters worse in a relevant way, in a relevant market. For example, claims that cable companies behave badly by charging high prices to consumers are simply irrelevant, unless the merger increases market power. Similarly, claims that the broadcast market is not performing well are irrelevant, for the transaction does not relevantly change the broadcasting market – it simply changes control of the stations.
· The transaction should be blocked or conditioned only if the transaction injures competition in a manner that harms consumers. Antitrust laws are designed to protect “competition not competitors.” Thus claims that the joint venture will harm certain competitors because the joint venture will be able to offer products or services that are uniquely attractive are not claims that the transaction injures competition in the manner that the antitrust law recognizes.
· Competition analysis of the transaction should focus on market power in horizontal markets, for such power is necessary to create consumer injury. In this instance, the relevant horizontal markets are programming and distribution. In addition, if pro-competitive effects that are created through the merger outweigh the anticompetitive effects, standard merger analysis suggests the joint venture should proceed.
“While the NBC/Comcast transaction does raise some issues that require scrutiny in the merger review process,” states Speta, “the issues that raise genuine anticompetitive concerns are far fewer and far less exotic than critics of the merger have claimed.” He urges regulators to focus on the question of whether the parties are likely to gain market power in the relevant markets. “That is where government competition analysis will focus,” Speta concludes, “and where the debate should remain.”
The Technology Policy Institute
The Technology Policy Institute is a research and educational organization that focuses on the economics of innovation, technological change, and related regulation in the United States and around the world. More information is available at https://techpolicyinstitute.org/