There is a growing tendency for federal agencies to make policy through the antitrust merger review process whether at the Federal Communications Commission, Federal Trade Commission, or the Justice Department—extracting policy commitments from companies while they are at the mercy of a regulatory agency during a merger review.
Special interest groups and supposed “consumer” groups have become adept at using merger reviews as opportunities to further their agendas. This process allows the federal government to become heavily involved in regulating otherwise unregulated or lightly regulated areas of the marketplace—attempting to achieve their policy goals through the unique and exceptional processes available to them during a merger review.
This is policy making under duress, and these policy concessions inevitably obtain the power of precedent, even though they were obtained without anything resembling a deliberative policy process. Policymaking in this way is wrong.
A fundamental tenant of good policy making is review and debate. Almost predictably rules made without critical review result in bad policy. Moreover, extremely subjective rules, such as those applied to only one entity are the worst rules because they dramatically bias the marketplace depriving consumers of a competitor who is able to bring the best price, products and service to bear.
Policy affecting entire industries, and hence the entire economy, should be set through a deliberative process, such as a regulatory rulemaking, or legislative, process. Policy should not be made under exceptional circumstances such as a merger review. Discriminatory rules, opportunistically applied, are best viewed as harmful to the marketplace, depriving consumers of the best potential products and services.
In an environment such as a merger review, any rules crafted to apply to the new entity would be rules that otherwise would not, or could not, be imposed. That is to say that only in such an environment would the free speech of critique and analysis be effectively quashed, that hearings and debate would be all but completely shunted. In this environment only the worst limitations could be set, and only the most ill considered rules layered into existing regulation.
If there is a compelling case for new regulations, then those potential government rules should be vetted through a system that allows for broader public discourse, through hearings, via comments, and in the press--via a rulemaking procedure, not as the extraction of regulatory rents from an otherwise functioning market.
When government has to be involved at all a merger should be judged on its merits. Regulators must resist the temptation to apply special conditions to a merger of organizations, regardless of the arguments by special interests.