Does the merger of large companies limit consumer choice, or is it a natural impulse of the free market?
The proposed $45.2 billion amalgamation of the two leading cable service providers – Comcast and Time Warner Cable – has brought this question to the halls of Congress and conservative roundtables, dividing individuals and groups typically aligned on free market principals.
Before Wednesday’s congressional hearing addressing the merits and legality of the Comcast’s acquisition of Time Warner Cable, two groups of conservatives sent letters to lawmakers urging them consider their arguments before voting on the multi-billion dollar business deal.
One coalition of conservatives, which included Judson Phillips of the Tea Party Nation and Andrew Langer of the Institute for Liberty, wrote a note to senators on the Hill cautioning them not to be persuaded by Comcast’s deep-pocketed lobbying funds, and to thoroughly investigate the proposed merger before it is approved by the Justice Department and the Federal Communications Commission.
“As defenders of free markets and the rule of law — who adamantly oppose crony capitalism — we urge you to employ an exceptionally high standard of diligence in reviewing the proposed merger to ensure that the approval process is fair and does not become a rubber stamp for politically favored entities,” the letter reads.
According to an investigation by the Sunlight Foundation, the two cable giants have spent a combined $143.5 million lobbying Congress since 1989 on issues including telecommunications, technology, taxes and copyright.
The authors of the letter believe that this capital could persuade lawmakers to make a political choice, rather than a decision that would benefit consumers.
“Our founders and the framers of our Constitution understood the dangers of this kind of concentration of power, and that is why they gave us the First Amendment as our Constitutional guarantee of a diversity of viewpoints,” the group of conservatives wrote, arguing that a merger would create a monopoly-like environment in the cable market, therefore limiting choice and quality of service.
But another coalition of conservatives says that a merger of Comcast and Time Warner does not violate anti-trust laws and will actually benefit consumers by enhancing services and lowering prices.
In a letter to members of the Senate Committee on the Judiciary, Republican Sens. Chuck Grassley and Mike Lee, Grover Norquist of Americans for Tax Reform, Wayne Crews of the Competitive Enterprise Institute, and a list of other notable conservatives explained to the committee members that the government should not intervene in the cable companies’ decision to merge.
First, the authors outline why the business deal would not violate anti-trust laws: “Because Comcast and TWC do not operate in the same markets (and therefore, consumers will face no loss whatsoever of competitive choice in television and video, broadband Internet, and telephone choices) there is no apparent substantive antitrust concern here.”
“The transaction will simply swap one cable company for another in some markets – something which is competitively neutral on its face,” the letter adds.
Noting that Comcast offers higher Internet speeds, more streaming, high definition, On Demand, and mobile video options than Time Warner, the coalition made the case that former Time Warner customers would actually receive superior services under Comcast.
The letter ended by asking Congress to remove itself from the business deal, stressing the free market’s natural tendency to move in ways that best serves the consumer.
We call on “all members of Congress, the FCC and DOJ to show restraint and to allow the free market to function properly here without interference. That is the best way to ensure that market competition will thrive and consumers will be served,” the letter concludes.
Opinions regarding the consequences of the proposed merger were also divided during the public hearing on Wednesday.
Those opposed to the transaction, including Democratic Sen. Al Franken, warned it would result in less consumer choice.
“I believe this deal will result in fewer choices, higher prices, and even worse service for my constituents,” Franken said on Wednesday.
At the same time, Comcast and Time Warner representatives used the public setting as an opportunity to ease concerns about the anticipated consequences of the acquisition.
“The transaction will not lead to any reduction in competition or consumer choice in any market,” Comcast Executive Vice President David Cohen told lawmakers, later adding, “Nothing in this transaction will cause anyone’s bills to go up.”
The Department of Justice will evaluate the pending transaction for violation of laws protecting consumers from anti-competitive activity. And before the Comcast-Time Warner merger wins FCC approval, they have to prove the deal is in the public interest and would result in benefits that could not be realized outside the merger.
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