FCC Commissioner Baker Outlines Plan For Merger Review Overhaul

WASHINGTON, March 3, 2011 – FCC Commissioner Meredith Baker outlined a plan to reform the Commission corporate mergers review process in a keynote address at the Institute for Policy Innovation’s Communications Summit Wednesday.

Commissioner Baker’s plan comes barely a month after the agency’s approval of the Comcast-NBC Universal (CNBCU) merger.  That merger review took nearly a year to complete and resulted in an agreement rife with conditions – including a major concession that the new company would abide by the FCC’s controversial Open Internet Order, even if the Order were eventually struck down in the courts.

Conservative critics have maligned the agreement as an unacceptable intrusion by government regulators into the free market.

Commissioner Baker, in addition to taking issue with the final agreement in the CNBCU merger, has also voiced objections to the merger review process as a whole, typifying it as one that is inefficient, overreaching and unnecessarily time-consuming.

“The Current FCC merger review process is ripe for overhaul,” Baker noted.

Citing concerns that the current merger process will discourage investment in telecommunications – or at least in telecommunications in the U.S. – Baker called out several parts of the review process for revision. Requiring multiple agencies to review mergers, she said, is duplicative and unnecessary, the process takes far longer than it ought to, and conditions attached frequently do not serve the public interest.

In response to the issues she presented, Baker also proposed a number of solutions, including working with Congress to streamline the process, imposing a binding timeline on reviews and ensuring that any conditions are more closely tied to actual and specific harms.

Baker elaborated further on instituting timelines and restricting merger conditions, both of which are issues she has publicly commented on during FCC open meetings and while testifying before Congress.  Her plan would implement a binding 180-day deadline on reviews, with a possible 60-day extension “that would be the exception, not the rule.”

The Commissioner also asserted that calling merger conditions “voluntary” is disingenuous. She then quoted former FCC Commissioner, Kathleen Abernathy, in calling such conditions “quid pro quo.”

“[Conditions] have become the cost of doing business with the Agency,” said Baker. “It devolves into how to get more out of the transaction.”

Rather, she said, conditions should only be allowed where they are closely tied to actual harms.  Specifically, she called out conditions in the CNBCU merger that require the new company to invest in broadband buildout and low-income access.  While Baker lauded the intention and effect of the programs, she took issue with the lack of direct link between the conditions and actual harms stemming from the merger.

“[Allowing expansive conditions] invites special interests to use mergers for their own purposes,” said Baker. “It delays and muddles reviews.”