Last week, time expired for weighing in with the FCC on the proposed Comcast deal with GE for NBC Universal. Business rivals, and those outright opposed to the deal, provided a wealth of ideas as to how to layer regulation on Comcast.
Merger reviews have become a feeding frenzy for negative rent seekers (i.e., seeking to gain an advantage by limiting, through government control, the competition’s ability to make money), regulatory zealots and shake down artists. The end result is the worst of policy making–the public in general, as well as those involved in the merger, lose even as some groups or organizations are advantaged.
Review (by the public and meaning that policy makers AT LEAST read the proposal) and debate are the hallmarks of good policy making. Predictably, rules made without critical review result in bad policy. Even worse are extremely subjective rules, such as those applied to only one entity, most dramatically biasing the marketplace towards, or away, from participants and depriving consumers of another competitor able to bring the best price, products and service to bear.
Only in a merger review is the free speech of critique and analysis so effectively quashed--hearings and debate all but ignored. Only the worst limitations are set, and the most ill-considered rules layered into existing regulation.
Any case for government rules should be vetted through a system that allows for broader public discourse, through hearings, via comments, and in the press. In other words, via a rulemaking procedure, not as the extraction of regulatory rents from an otherwise functioning market.
Extracting policy commitments from companies while they are at the mercy of a regulatory agency during a merger, or license transfer, review is more than troubling.
Special interest groups and so-called “consumer” groups have become adept at using such reviews as opportunities to further their agendas and achieve their personal goals through the unique and exceptional processes available to them. Some, in fact, seemingly spring to life only to shake down those in a vulnerable position. This is policy making under duress, and these policy concessions inevitably gain the power of precedent, even though they were obtained without anything resembling a deliberative process. Policy affecting the entire economy, or entire industries, should be set through a deliberative process, not under exceptional circumstances.
If mergers must be judged by government then they should be judged on their merits, while resisting the temptation to demand special conditions from the vulnerable.