By Rob Frieden (Pennsylvania State University)
This article identifies substantial flaws in how U.S. government agencies and courts assess merger proposals by ventures operating in the information, communications and entertainment (“ICE”) marketplace. Using current market definitions, consumer impact assessments and economic doctrine, antitrust enforcement agencies may fail to identify the risk of harm to consumers and competition, a so-called false negative.
In recent years, the Department of Justice, Federal Communications Commission and Federal Trade Commission, individually and collectively, have assessed the competitive consequences of numerous multi-billion dollar acquisitions and have conditionally approved almost all of them. These agencies appear predisposed to favor deals that involve vertical integration up and down market segments, based on an assumption that short terms consumer welfare gains would exceed any potential competitive harms.
The article concludes that reviewing government agencies appear to overemphasize past and current marketplace conditions rather than assess future impacts on consumers and competition. By “fighting the last war,” these agencies fail to identify new risks to consumer welfare, particularly by ventures operating in multiple markets that do not readily fit into the conventional assessment of mutually exclusive vertical and horizontal “food chains.” In an ecosystem where both technologies and markets converge, ven…