WASHINGTON- Commerce Secretary William M. Daley, in a letter to congressional leaders, today expressed concern about pending legislation that would restrict the Federal Communications Commission's authority to review mergers in the economically booming telecommunications industry.

Numerous bills pending in Congress seek to limit the FCC's role in approving mergers either by limiting the amount of time the Commission has to approve a merger, or by limiting the Commission's authority to impose conditions on merger approvals.

Consolidation in the telecommunications sector affect a number of important public interest issues that are of serious concern to the American public, Daley said. Such proposed restrictions as time limits for merger reviews, would impinge on the FCC's ability to conduct a thorough public interest analysis of complex issues, the Secretary said.

Noting an unprecedented increase in the number of merger-related activities in the telecommunications industry recently, Daley said, "Because the overall impact of the growth of mergers is unclear, careful and thorough government review of individual transactions is essential to ensure that the resulting industry consolidation does not harm competition, consumers or the Nation."

While both the Justice Department and the Federal Trade Commission conduct merger reviews, they do not vitiate the need for independent Commission review, which is broader and done in the public view, he said. "The Commission employs a public interest standard, has affirmative market-opening goals, and initiates a public comment process," he said.

Daley said the Commerce Department agrees that merger reviews must be conducted expeditiously and with predictable and transparent standards. But so-called "shot clock" or time limits on reviews, as proposed in legislation, may not give the FCC sufficient time to conduct a thorough analysis of mergers, he added.

"As the chief regulator for the telecommunications industry, the Commission must not be restricted in considering the ways that mergers and consolidation affect numerous public interest issues such as national security, law enforcement, cross-ownership, local competition, and universal service," Secretary Daley told the lawmakers. "In fact, cross-ownership, which affects content, diversity and localism issues, is a serious concern to the American public with respect to consolidation in the communications sector," he said.

Daley noted that the Commission is conducting its own study of its merger review process. "I believe strongly that the Commission should have an opportunity to complete its merger review and implement its processes," Daley said, "These steps by the Commission eliminate the need for further congressional action," he said.

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Note to Editors:

Secretary Daley's letter was sent to: Senator John McCain, Chairman of the Senate Commerce Committee; Senator Orrin G. Hatch, Chairman of the Senate Judiciary Committee; Senator Ernest F. Hollings, Ranking Minority Member of the Senate Commerce Committee; Senator Patrick J. Leahy, Ranking Minority Member, Senate Judiciary Committee; Rep. Thomas J. Bliley, Jr., Chairman of House Commerce Committee; Rep. Henry J. Hyde, Chairman of the House Judiciary Committee; Rep. John D. Dingell, Ranking Minority Member, House Commerce Committee; and Rep. John Conyers, Jr., Ranking Minority Member, House Judiciary Committee.

A copy of the letter is attached.

The Honorable Thomas J. Bliley, Jr.
Chairman
Committee on Commerce
House of Representatives
Washington, DC 20515-6115

Dear Mr. Chairman:

I am writing to express concern about pending legislation that would restrict the authority of the Federal Communications Commission (FCC or Commission) to review mergers and impose conditions on licenses and other authorizations assigned or transferred in the course of mergers.

The market-opening provisions of the Telecommunications Act of 1996 have sparked an economic boom in the telecommunications industry. This boom, coupled with the convergence of technologies and the increasing globalization of markets, has resulted in an unprecedented increase in the number of merger-related activities. Because the overall impact of the growth of mergers is unclear, careful and thorough government review of individual transactions is essential to ensure that the resulting industry consolidation does not harm competition, consumers or the Nation. Mergers in the telecommunications industry, by nature, require the transfer of licenses, and the Communications Act of 1934 clearly requires the Commission to review the transfer of control of licenses taking into account the public interest, convenience and necessity standard. See e.g., 47 U.S.C. §§ 214(a), 307(a), 310(b)(4), 310(d).

Both the Department of Justice and the Federal Trade Commission conduct merger reviews under the antitrust laws. Their activities are not the same as the Commission's analysis, and do not vitiate the need for independent Commission review. The Commission employs a public interest standard, has affirmative market-opening goals, and initiates a public comment process. And while the Federal Trade Commission has been active in mergers involving the cable and entertainment industries, it is barred by the Clayton Act from exercising jurisdiction over common carriers.

Recent legislation seeks to limit the Commission's role in approving mergers by limiting the amount of time that the Commission has to approve a merger, or by limiting the Commission 's authority to impose conditions on merger approvals. I agree that FCC merger reviews should be completed expeditiously, and with predictable and transparent standards. I believe, however, that imposing time limits on FCC merger reviews ignores the fact that each merger presents different issues and concerns, some more difficult and complex than others. "Shot clock" time limits may not give the Commission sufficient time to conduct a thorough public interest analysis. This approach could also limit any flexibility that parties may need to amend applications to address particular concerns, deficiencies, or changing circumstances. As a result, the Commission may be forced to deny an application that would otherwise be approved if the parties were afforded sufficient time to address public interest concerns.

I also oppose legislation that restricts the Commission's authority to impose conditions on parties to a merger. As the chief regulator for the telecommunications industry, the Commission must not be restricted in considering the ways that mergers and consolidations affect numerous public interest issues such as national security, law enforcement, cross-ownership, local competition, and universal service. In fact, cross-ownership, which affects content, diversity, and localism issues, is a serious concern to the American public with respect to consolidation in the communications sector.

Finally, I would note that the Commission has undertaken its own study of its merger review process. On January 12, 2000, Chairman Kennard directed the Commission's General Counsel to assess the Commission's merger review process to determine how to facilitate future FCC merger reviews while ensuring that the public interest is met. This "transaction team" is also establishing procedures to ensure that the internal merger review procedures are uniform, transparent, and streamlined. I believe strongly that the Commission should have an opportunity to complete its merger review and implement its processes. These steps by the Commission eliminate the need for further congressional action.

Sincerely,

William M. Daley