Fair Play: The FCC and Justice Dept. Are Antitrust’s Odd Couple


FAIR PLAY

Antitrust deciphered.

Ajit Pai

If media consolidation ramps up, keep an eye on the relationship between the Federal Communications Commission and Justice Department’s antitrust division.

More specifically, keep an eye on the leaders of the two agencies, FCC Chairman Ajit Pai and DOJ assistant attorney general Makan Delrahim.

Mergers in tech or media often need stamps of approval from both the FCC and DOJ, which complicates life for bettors because the two agencies look at different things. The Justice Department is solely focused on market impacts – i.e., does the deal hurt or help competition. The FCC uses the harder-to-define “public interest” standard in assessing mergers.

Sprint Corp. and T-Mobile US Inc.’s imminent transaction will likely be the first deal to be reviewed by both agencies in this administration. Telecom and antitrust lobbyists expect the FCC to be friendly to the tie-up, but see the Justice Department as more of an open question. If there are overlapping markets where Sprint and T-Mobile regularly battle it out, DOJ investigators will take a close look.

Pai has dropped clues over the years in the minority at the FCC – in snappy dissents, no less – that he thinks the Justice Department may be better suited to address the broad questions posed by mergers. “Congress limited the scope of our review to the proposed transfer of spectrum licenses, not to other business agreements that may involve the same parties,” Pai wrote in a dissent to the FCC’s 2012 approval of Verizon Wireless’ purchase of spectrum from a group of cable companies.

As a Republican commissioner, Pai disagreed with FCC Democrats that the agency has jurisdiction over commercial agreements that don’t involve spectrum. As long as the DOJ addressed “key potential harms to consumers and competition” in its own consent decree, he wrote, “then any pronouncement about our authority is just dicta.”

Now, as leader of the FCC, Pai can embrace the narrow, statute-specific approach to reviewing deals he advocated while in the minority. But the DOJ may have a different idea about how the law should be applied. Many staffers who worked in the antitrust division in the Obama administration are still there, and the new leaders of the division have been outspoken about their adherence to what they see as nonpartisan legal analysis of competition.

The FCC and DOJ have independent missions and are guided by their own statutes. It’s not hard to imagine a scenario where Pai backs away from deals, asserting a lack of jurisdiction, and hands off the tough decisions to Delrahim.

Given his four-year FCC run, we have a good idea of where Pai stands on policy issues. Delrahim, on the other hand, is more of a wild card. He’s only been at the division for a month, and he hasn’t ruled on any high-profile mergers. But that will change as big deals come down the pipeline.

What’s Happening

The House Judiciary Committee’s antitrust panel will hold a hearing Wednesday on the role of antitrust in net neutrality.

The Federal Trade Commission is hosting its 10th annual microeconomics conference Thursday and Friday where economists will discuss the latest in consumer protection and antitrust.

Quote of the Week

“It’s kind of unusual and clearly meant to maximize the terms of Republican commissioners at the expense of Democrats and create a partisan stranglehold on the commission for years to come,” said a Senate Democrat aide of the White House’s strategy of appointing a new Republican FTC chairman to the longest open term, and a Democrat to a shorter one.

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