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Research: Competition in NBC/Comcast Merger

By 30 June 2010 No Comment

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

Speta examines the NBC – Comcast merger.  The merger will bring two large corporations that have significant control in their own sectors together with Comcast being majority owner.  Because the combined company would have both production and distribution capability of media and news coverage, the deal has received a significant amount of attention from the non-profit sector, the public and the government.

Speta believes that one of the main competition concerns in this deal is that this could potentially endanger the FCC’s goals of “localism and diversity” in media distribution.  In turn, he offers three tests for possible problems with competition due to this merger.

  1. “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. “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. “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 concludes that while the merger does raise some questions, that it will not “substantially lessen competition.”  If the competition screens are applied to the case, then in Speta’s opinion the concerns are far less than the noise that has been made about the merger.

You can read the full article here.

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