The president has little love for large liberal organizations, especially those in the mainstream media. Thus, it was no surprise when he signaled that Comcast could be in for antitrust review. While the tweet echoed the comments of the American Cable Association — a trade association of small Comcast competitors — it should not be taken lightly. There could be more than bluster behind those 280 characters.
Not very long ago, President-elect Trump called out AT&T on similar grounds. That led to an extraordinary challenge by his administration of AT&T’s vertical merger with Time Warner. The Department of Justice lost the case at trial but has appealed to the D.C. Circuit. Antitrust experts questioned the legal basis of the challenge, as it appeared to defy conventional standards. The last time the government succeeded in stopping a vertical merger was during the Nixon Administration in 1972. Since then, it has approved hundreds of them, including the Comcast -NBCU deal in 2011.
As for Comcast, the prospect of more scrutiny from the Justice Department could not come at a worse time. Fresh off a pricey battle to buy British Sky Broadcasting from Fox, Comcast is a juggernaut just hitting its stride. Ambitious and accretive, it is the largest pay-TV company, the largest cable TV company, the largest home Internet service provider and the third largest home telephone service provider in the United States. Its acquisition of NBC — Universal in 2011 brought a top television network and numerous cable networks under its banner. The terms of the Comcast — NBCU merger called for a range of behavioral (as opposed to structural) conditions and agreement to abide by key net neutrality principles for seven years. Those conditions expired in September.
In many ways, Comcast is an easy target for antitrust review. Its aggregated size, scale and impact on the consumer market for media, communications and cable advertising services is unmatched. Its business practices have been criticized by both labor and industry. And for some reason (mostly liberal-left) consumer groups love to hate on the company, especially when it comes to official proceedings in Washington, where these groups have filed reams of opposing comments at the FCC. In this respect, the president is not alone in his criticism of the company, although it hails mainly from the Democratic wing that believes big is bad when it comes to corporations.
But the central question is not whether Comcast is anti-competitive in the lexicon of antitrust law, or even whether it plays by the rules. There are more pressing issues in this area facing the administration. First is how to define and enforce antitrust violations. Second is the fidelity and consistency in applying antitrust rules throughout the market. Third is the matter of setting priorities based on actual harm in the market.
In relative terms, for example, it is easier to make a more compelling case for antitrust enforcement against “big tech” players like Google (and perhaps Amazon). The sheer size and effect on both the consumer and commercial markets of these behemoth monopolies cry out for more governmental scrutiny. Upon discovery, their practices make competition difficult and their capacity to control pricing is unmatched. And while Google has been adept at evading antitrust enforcement, it now faces a comeuppance in Congress where both the Democrats and Republicans have serious problems with its privacy and political disposition. If there is to be a new era in antitrust enforcement, perhaps it should begin with the biggest and the baddest among big tech.
When the president was elected, Wall Street celebrated. Conventional wisdom suggested he would usher in a new era of growth and deregulation, especially for industries complaining of Obama’s heavy hand. Banking, finance, and telecom companies all looked forward to the lifting of erstwhile rules that were, according to the president, disincentives to growth. Investment capital, parked on the sidelines for years, revved up the engine in anticipation of little — or light touch — regulation.
The Street has not been disappointed. The market is strong; rates are stable, and growth is steady. Strict regulations are giving way to easier rules, or no rules at all. But these laudable achievements could become overshadowed by inconsistent antitrust policy. If investors value anything other than high returns, it is predictability. Out of nowhere the Justice Department upended decades of reliable merger regulation, replacing it with an ad hoc approach to deals and enforcement. Whether grounded in politics or personality, this is not what the business sector signed up for when they overwhelmingly supported candidate Trump, nor is it consistent with Republican orthodoxy.
The president has the prerogative to establish his own priorities when it comes to antitrust and competition policy. And the new, divided Congress will certainly have something to say about it. But as the policy unfolds, it should be informed by the bedrock economic principles which have produced a new era of prosperity, and not by politics.
Adonis Hoffman (@AdonisHoffman) is chairman of Business in the Public Interest. He is an adjunct professor at Georgetown University and held senior legal positions in the U.S. House of Representatives and the FCC.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.
