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Antitrust Enforcement And Sectoral Regulation: The Competition Policy Benefits Of Concurrent Enforcement In The Communications Sector

 |  July 29, 2013

Jonathan Baker, Jul 28, 2013

The US competition agencies – the Antitrust Division of the Department of Justice (DOJ) and the Federal Trade Commission (FTC) – often share jurisdiction with sectoral regulators also charged with fostering competition, including the Federal Communications Commission (FCC), the Federal Energy Regulatory Commission (FERC), and several agencies that regulate financial institutions. This article highlights how this institutional structure – concurrent jurisdiction – helps protect competition through the lens of recent US experiences involving the communications industry.

In my experience, the FCC pays more attention than the antitrust agencies to political considerations. One window into why this occurs comes from comparing the FCC and FTC. These agencies have a similar formal structure: each is an independent agency with Commissioners from both political parties, and each has both rulemaking and adjudicative powers. Despite these similarities, the agencies have different internal atmospheres, with politics mattering more at the FCC. My sense is that there are two main reasons.

First, the FCC focuses on a single sector of the economy: communications. This focus puts the FCC in “repeated play” with providers of wireless, wireline, video distribution, and satellite services. In consequence, large communications firms like AT&T and Comcast devote substantial “Washington office” resources to monitoring FCC activities and interacting with agency officials, as well as engaging with other governmental actors in Congress and the Executive Branch that influence communications policy. By contrast, the antitrust agencies’ jurisdiction is economy-wide and, most firms, even large ones, tend to view their interactions with the competition agencies as episodic not routine. This difference means that, on average, the FCC confronts more concentrated interest groups, which tend to be able to organize politically (by solving collective action problems) more effectively than “diffuse” groups.