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American Antitrust Institute Also Opposes Comcast-Time Warner Deal

The prestigious American Antitrust Institute is opposing the $45 billion Comcast-Time Warner mega merger because it raises potentially serious problems for competition and consumers.

We at Consumer Watchdog have already stated our opposition to the deal to both the U.S. Department of Justice and the Federal Communications Commission.  The Justice Department must determine whether the deal is anticompetitive and would violate antitrust laws.  The FCC must decide if the deal is in the public interest.

The American Antitrust Institute describes itself "as an education, research, and advocacy organization working to increase the role of competition, assure that competition serves the interests of consumers, and challenge abuses of concentrated economic power in the American and world economy."

In the new white paper Rolling Up Video Distribution in the U.S.: Why the Comcast-Time Warner Cable Merger Should Be Blocked, AAI Vice President and economist Diana Moss analyzes key competitive problems raised by the merger.

“We have focused on specific competitive problems, including how a merged Comcast-TWC could exercise buyer market power against content and middle-market service providers and potentially exclude rivals in content and video distribution markets,” said Moss. The white paper sketches a troubling landscape against which the proposed deal would occur, including high levels of consumer dissatisfaction with Comcast and TWC and a history of swaps that have enabled large cable TV and broadband ISPs to divide markets and solidify their dominance.

The AAI analysis is critical of what it calls a weak efficiencies “defense” presented by Comcast-TWC. “It doesn’t pass the cost-benefit test,” said AAI’s President Bert Foer. “Based on our analysis, the potential competitive problems raised by the merger are not overcome by significant merger-specific cost savings or consumer benefits."

AAI's arguments are similar to the issues I raised in Consumer Watchdog's letters to the DOJ and FCC.

“The consolidation of the largest cable television providers would create a media juggernaut that would stifle completion and hurt consumers who would ultimately pay higher prices for even worse service,” I wrote in March. “The companies may try to argue that they don’t directly compete in any cities.  That is not the issue.  Rather the concern is the share of the national cable TV market the behemoth would control, which would be substantial. In most of the markets they serve, Comcast and Time Warner are the primary providers of broadband Internet access. Because in each of these markets the companies are effectively local monopolies, they are able to charge more for slower broadband service than is the case in other developed nations.”

I'm delighted the folks at AAI share our concerns. The DOJ and FCC should simply say, "No Deal."