Convergence Mergers: Wheres the Relevant Market? Glenn B. Manishin Practising 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
Practising Law Institute 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)
Practising Law Institute 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!