Screening and Simplifying the Competition Arguments in the NBC/Comcast Transaction
James B. Speta
Technology Policy Institute
May 5, 2010

Speta produces an article which examines the proposed merger between NBC and Comcast.  He points out that Comcast will be the majority owner and is already the nation’s largest distributor of cable services.  The company already owns several of its own channels including sports, news, and political content.  Speta points out that the media industry is one that has always had a watchful anti-trust eye over it, and even had a specialized regulator.  The author feels that because of the traditional nature of the media industry and policy surrounding the industry, it was not surprising that the potential merger received so much attention.

Speta points out that most of the criticism surrounding the merger has related to anticompetitive concerns, focused on advertising, programming, and distribution.

But the author believe he has three ways to screen the process that will reduce competition concerns:

1. “First, 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 from General Electric to joint control with Comcast to, perhaps, eventual sole control by Comcast.”
2. “Second, the transaction should be blocked or conditioned only if the transaction injures competition in a manner that harms consumers. This simply applies the rule that antitrust laws are designed to protect ―competition not competitors.‖5 Thus, claims that the joint venture will drive certain competitors out of business (or at least injure them) because the joint venture will be able to offer products or services that are uniquely attractive, such as advertising packages that cannot easily be duplicated, are not claims that the transaction injures competition in the manner that the antitrust law recognizes.”
3. “Finally, as a corollary of the first two, competition analysis of the transaction should focus on market power in horizontal markets, for such power is necessary to create consumer injury. Vertical combinations can, of course, give rise to foreclosure opportunities, but foreclosure opportunities arise only if the company has the necessary power to effect foreclosure. The analysis of that question starts with a horizontal analysis.”

Speta believes that by applying these screens it is easy for anyone to see that the anticompetitive concerns are far less drastic than originally imagined.  And that the concerns over the ability of Comcast to now offer new products to consumers is not an anticompetitive move, but should increase competition amongst the players.