Clayton Act Touted, Dismissed as FCC Entry Into AT&T/TW Review
Whether the FCC has the authority to use the Clayton Antitrust Act as a way to review AT&T's bid for Time Warner (TW) isn't clear, with antitrust and agency experts divided. But some say the idea -- floated by Commissioner Mignon Clyburn this week (see 1702210027) -- is likely a nonstarter at the agency. "I don't see this idea getting any traction," Tech Knowledge Director Fred Campbell told us.
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It would be an untested approach for the FCC, but "it's not crazy," said Gigi Sohn, former aide to Chairman Tom Wheeler. She said the Clayton Act language is fairly clear that it gives the FCC regulatory oversight over common carriers and AT&T is a common carrier.
The Clayton Act gives some agencies beyond the DOJ and FTC authority in transactions, but for the FCC the limit is on transactions of common carriers, which AT&T is but TW isn't, Campbell said. He said the best reading of the act is that it applies to situations involving two common carriers, not one common carrier's merger with a different kind of entity. He said it would be "a legal stretch" for the FCC to try to exercise such authority, especially since it never has before.
The act's common carrier language seems to be about mergers of common carriers, agreed telco consultant Jonathan Lee, a former DOJ antitrust division attorney, saying it's debatable that the law would confer broader jurisdiction here since it would result in separate actions by separate agencies under the same law. For the FCC to review the deal under the Clayton Act, it would need to actively inject itself into the process before the FTC -- with whom the original application is made under the Hart-Scott-Rodino Act, Lee said. And the FCC indicated it's interested only in reviews it's required to do, he said.
AT&T made much the same argument in a letter last week to 13 Democratic senators in defense of its TW bid (see 1702170062). In the letter, AT&T cited statements from then-Chairman Tom Wheeler that the agency wouldn't review the Verizon/Yahoo deal because no license transfers were involved. The letter also quoted the agency in a 2013 media story saying it wouldn't look at Al Jazeera's buy of Current TV because of a similar lack of regulatory oversight.
The DOJ already uses the Clayton Act, plus the Sherman Act, when evaluating mergers, so AT&T/TW would be subject to the same antitrust review under the FCC that the DOJ is doing, experts said. That would preclude the FCC using the broader public interest standard it employs in its standard reviews, Sohn said. But, she said, "Don't you think given that" the Trump administration previously expressed opposition to the merger "the FCC should at least look at this?” The FCC didn't comment.
Echoed former Commissioner Mike Copps, "It's kind of mind-boggling the FCC wouldn't take a look" at the deal given the scope and the likelihood it will fundamentally change the video marketplace. "This is a huge deal," he said, saying if he were still a commissioner an AT&T/TW proposal would be "dead on arrival. It's just tying up so much power to one company over what we see and how we see it and at what price." He said the Clayton Act would be a valid entry point for the agency, with the question then becoming whether the FCC could use its public interest standard or if it would be restricted to the antitrust concerns laid out in the act. A public interest-centric review "might not be impossible to do," he said.
An FCC review under the Clayton Act would have more opportunity for conditions since the agency is regulatory and the DOJ isn't, Sohn said. There also could be procedural benefits to an FCC Clayton Act review, since such a proceeding could work like a typical FCC proceeding with a public record and third-party commenters, Public Knowledge Senior Staff Attorney John Bergmayer emailed us.