Federal regulators routinely impose conditions on companies seeking to complete a merger or acquisition. Under standard circumstances, the Federal Communications Commission (FCC) must justify significant policy decisions by explaining assumptions underlying the decision; key alternatives; the rationale for that particular policy tactic; and how the new policy dovetails with agency precedent. Critics contend, however, that merger negotiations lack transparency and are too far-reaching. In fact, the FCC may negotiate with companies under review to extract conditions that
have minimal connection to actual concerns surrounding the transaction, and that circumvent established policymaking processes. Critics also assert that by engaging in closed-door
negotiations and “arm-twisting”, the FCC is able to evade judicial scrutiny—partially because companies in regulated industries fear repercussions if they challenge agency demands. For these reasons, members of Congress have sponsored legislation aimed at severely limiting—and even stripping—FCC regulators of their power to review acquisitions. Despite their controversial nature, merger negotiations often do result in a set of conditions that benefit the public. While this study focuses on U.S. deals, European merger obligations can also be used to achieve industry-wide policy goals.

This commentary examines the FCC’s historical use of “voluntary commitments” when approving telecommunications company mergers. Because complex factors such as market conditions, corporate lobbying, political climate and technological change dictate regulations, this study is grounded in a political economic framework. Using a focused synthesis, the authors examined key policy issues, such as the political climate and power structures in place during various telecommunications company transactions. The study contrasts the FCC’s ability to extract commitments from merging companies with unsuccessful attempts to achieve similar goals through the established rulemaking process. While multiple acquisitions are analyzed, the Comcast/NBC-Universal merger serves as a key case study. The newly formed company agreed to a slew of voluntary commitments that advanced policies—related to online video programming, digital inclusion and community journalism—strongly opposed by industry when the FCC attempted to impose them industry-wide.

Classic Conditioning: The FCC's Use of Merger Conditions to Advance Policy Goals (with G. Shaffer), Media, Culture, and Society, vol. 35(3), 2013, pp. 392-403.

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