More than 112 mergers and acquisitions have been announced in 2015, totaling more than $4.6 trillion in value. That makes this year the most active in history. But regulators in Washington have a dysfunctional disposition when it comes to mergers and acquisitions these days – the combination of anti-merger attitude and corporate cronyism.
At present, the federal government is suing to block a deal between Office Depot and Staples, while a number of other deals have fallen through namely, General Electric-Electrolux, Bumble Bee-Chicken of the Sea, Pepco-Exelon, and Sysco-U.S. Foods, to just name a few.
While some proposed mergers may seem anti-consumer and anti-competitive, the federal government should not take an activist role in the process. For example, the proposed mergers between Marriott and Starwood and between Charter Communications/Time Warner Cable (aka New Charter), seem to be clearly in the best interest of consumers. New Charter has identified numerous ways it would engage customers, including keeping costs low and quality at a premium. For example, New Charter would exercise flat-rate billing, allow unlimited data use, and not issue modem fees. It’s committed to investing significantly in its broadband network, meaning better access for residential customers and more American jobs. Netflix, a company with a stake in a fast, video-friendly Internet, backs the deal. Any delay in approving it seems unwarranted.
In addition to an anti-merger sentiment in Washington, the deal is being challenged by heavy opposition from DISH Network, which is trying desperately to hold on to its fading relevance and flagging business model. DISH is undergoing a “lobbying ramp up,” according to Politico, in order to prohibit competitors from succeeding where it has failed. And as Katy Bachman reported on Twitter Monday, “I’ve lost count: @dish files another ex parte against #CharterTWC.” DISH is essentially flooding the Federal Communications Commission with nuisance complaints. It’s a familiar role for a company Bloomberg labeled “the meanest company in America.”
The company is obviously not opposed to mergers in principle – only its competitors’ mergers. DISH played both sides of the mergers and acquisitions fence with video streaming service Hulu. In 2010 DISH aggressively opposed Hulu, saying it would destroy the TV industry. A year later, DISH bid $1.9 billion in an effort to buy Hulu. DISH has also attempted to merge with DirecTV and T-Mobile.
Elsewhere, DISH was caught red handed trying to grab some corporate welfare from taxpayers. Trying to mask itself as a small company by using two companies to bid on the wireless spectrum, DISH received a $3 billion subsidy for the spectrum they bought. The Federal Communications Commission (FCC) eventually wised up to their shenanigans and stripped DISH Network of the subsidy, stopping a $3 billion corporate welfare giveaway.
This is the behavior of a bad actor, which federal regulators should remember when considering DISH’s opposition to the acquisition.
The federal government does play a role in assuring consumers are protected when large companies merge. It should be a limited and narrowly defined role, but it has a role nonetheless. However, that should not grant license to marginal and overly litigious industry players to gum up the works simply because their own business is floundering.
David Williams is the President of Taxpayers Protection Alliance.