FCC 3-2 Adopts new Policies for Confidential Information
The FCC approved rules for how it will handle confidential information in Charter Communications' planned buys of Bright House Networks and Time Warner Cable and in other regulatory proceedings going forward. The agency said Wednesday that the rules on the handling of confidential information had been passed in a 3-2 vote and adopted, but said they would release them later.
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The new rules create "vast exposure for communications providers' market sensitive information, including pricing and other contractual terms," Commissioner Michael O'Rielly said in a statement Wednesday criticizing the rules. Formal FCC regulatory review of Charter's $89.1 billion deals, including the public comment period, has been on hold until new rules were hammered out in response to a U.S. Court of Appeals for the D.C. Circuit ruling earlier this year that FCC handling of video programming confidential information (VPCI) in Comcast's now-aborted purchase of TWC and of AT&T's now-completed takeover of DirecTV was "substantively and procedurally flawed" (see 1505080053). Chairman Tom Wheeler last month said the shot clock on the Charter deals wouldn't start until new protective rules were in place (see 1508060055).
The rules the commissioners had been considering in light of that court decision reportedly would have differed substantially from what the FCC was trying to do in the AT&T/DirecTV and Comcast/TWC considerations (see 1508040060). That included the creation of one category of highly confidential information, instead of segregating some as VPCI; determining that the appellate court standards don't apply if a protective order for the information is in place; and doing away with what had been the FCC's "necessary" standard of letting third parties review information only if there were some necessary link to the transaction. Those proposals have already been criticized by such groups as NAB and MPAA, arguing in docket 15-149 that the FCC's making such materials available to third parties that sign the protective order acknowledgement still gives those third parties an edge in future negotiations. Charter didn't comment Wednesday.
The new protective rules subject "innumerable parties, even those not seeking Commission approval of a transaction, to potentially irreparable harm when information they thought would be protected is disclosed as well," O'Rielly said in his dissent. "The biggest problem with this item is the replacement of the 'necessary link' standard for public disclosure of confidential information with an incomprehensibly vague new standard based on relevance. While the court may have left the door open for the Commission to meet its existing standard or potentially establish a new one grounded in sound policy, in this latest iteration the Commission eliminates any sort of rational test and instead gives itself complete discretion to disclose materials upon a persuasive showing of relevance. In effect, the Commission is asserting the right to demand documents not necessary to a transactional review, call them relevant, and disclose them to outside entities. In total, it is a wild over-reach that hopefully will be reviewed and rejected by the courts, or Congress."
The D.C. Circuit court ruling indicated the agency needed to make clear the procedures for handling confidential information in transaction reviews, and the new rules "balances legitimate confidentiality interests with the need for the Commission to be informed by diverse opinions," an FCC official said.