The price of progress: Rent seeking in the FCC’s approval of the AT&T/DirecTV merger

[Commentary] Operating under its broad public interest standard, the Federal Communications Commission is largely free to ask firms for an almost unlimited range of concessions in exchange for favorable outcomes in matters before the commission. Such rent-seeking is business as usual. In the merger context, the only practical limit on what the Commission can request is however much the parties are willing to give up before walking away from the deal.

Past examples have included requiring firms to make “voluntary” donations to support public safety initiatives, agreeing to abide by net neutrality requirements that had been rejected by the courts, offering wholesale discounts to competitors, repatriating outsourced jobs, offering discounted accesses to disadvantaged communities, and more. While these conditions often represent laudable goals, they often are unrelated to the matter before the commission. And they frequently impose obligations upon the transaction that are otherwise outside of the commission’s legal authority.

We see another, even more stark, form on display in the regulatory approval of the AT&T/DirecTV deal. FCC Chairman Wheeler is proposing to approve the deal subject to various conditions that will impose various (and costly) requirements on the merged firm. This, in and of itself, is not surprising. It is typical – if often concerning in its specifics – for the commission to approve mergers subject to conditions. What is remarkable in this case is that the Department of Justice is closing its investigation into the merger – that is, it is effectively approving the merger – without any conditions. This is because, as stated clearly in its statement, the DOJ investigation concluded that the deal “does not pose a significant risk to competition.”

[Hurwitz is an assistant professor at the University of Nebraska College of Law]