Originally published: February 21, 2014
Last updated: March 5, 2014 - 8:37am
If US antitrust enforcers decide to challenge the proposed merger of Comcast and Time Warner Cable, it may be because of an idea with a funny-sounding name that has been gaining currency in government offices. The idea is monopsony power, the mirror image of the better-known monopoly power but a concept that is just as old.
A monopoly is one seller with many buyers, while a monopsony (pronounced muh-NOP-suh-nee) is one buyer with many sellers. A textbook example is a milk processor that is the only option for dairy farmers to sell to, and that then forces farmers to sell for less. The US Justice Department's Antitrust Division is all but certain to examine the potential monopsony power, or buying power, that a combined Comcast and Time Warner Cable would have over media companies that provide TV programming, according to lawyers with expertise in antitrust law. The combined company would have a near 30 percent share of the US pay television market, Comcast has said, as well as be a major provider of broadband Internet access.