Summary of Bills Pertaining to
Telecom Antitrust Merger Reviews
in the 106th Congress
This page summarizes the following bills:
Introduction
| This page was last updated on June 26, 2000. |
All of these bills deal with the review of mergers and acquisitions in the telecommunications industry. Presently, three government agencies have a hand in the review process: Federal Trade Commission, Antitrust Division of the Justice Department, and the Federal Communications Commission. The FTC and DOJ have roles that are expressly stated in statutes. The FCC, on the other hand, has authority to approve the transfer of telecommunications licenses, but has used this authority to largely duplicate the antitrust review process of the DOJ. The FCC does have a limited merger review authority under the Clayton Act, but it is not exercising that authority. (Also, just as the agencies have overlapping authority, and are trying to defend their roles, the Judiciary and Commerce Committees in the House and Senate have overlapping authority in this area, and especially in the House, are competing over jurisdiction.)
Critics of the process have complained about many things. Some have argued that agency reviews, particularly by the FCC, are taking far too long for the fast moving telecommunications industry. Some have have criticized the FCC for leaking information about the progress of its reviews. Some have criticized the FCC for exercising an authority which it does not possess. Some have criticized the FCC for not adopting rules which define and govern its antitrust merger reviews. Some have criticized the FCC for using the merger review process to extract concessions from telecom companies that have nothing to do with the merger.
Sen. DeWine's bill, S 467, deals only with the problem of delay. It would require the FCC to act within specified time limits. Sen. McCain's bill, S 1125, would all but remove the FCC from the process. It responds to the criticisms that the FCC role duplicates that of the DOJ, and that the DOJ is better equipped and more professional in handling the review. The Hyde bill, HR 2533, deals solely with the FCC. The Pickering bill, HR 2783, limits the FCC to 60 days (extendable another 30 days) for most mergers, and 45 days for small LECs.
Of course, others like the current state of regulatory affairs. Some are alarmed by the extent of mega-mergers in telecommunications, and would like to see a more stringent, even duplicative, review process. Some like the FCC role in merger reviews because it greatly increases it ability to extract commitments out of companies.
Sen. Leahy's bill, S 1121, does not impose any limits on the merger review process. Rather, it limits future mergers involving the regional bell operating companies.
S 467, the Antitrust Merger Review Act
Sponsors. Mike DeWine (R-OH) and Herb Kohl (D-WI).
Summary. S 467 RS amends the Section 7A of the Clayton Act by imposing time limits on Federal Communications Commission reviews of mergers. The bill does not remove any authority from the FCC.
Sen. DeWine stated that his bill "would impose a deadline for FCC action on telecommunications mergers. This bill will not limit the scope of the FCC review, nor will it attempt to dictate to the FCC how to evaluate these mergers ... the FCC would have 30 days to request information and documents. If no information is requested, the merger would be deemed approved. If the FCC does request additional information, the parties must provide the requested information and then certify that they are in compliance. Once they certify, the FCC would have 180 days to decide on the merger. If no decision is made after 180 days, the merger would be deemed approved." (See, opening statement at 4/13/99 hearing.)
Status. This bill was introduced on February 25, 1999. Two hearings were held. After several postponements, the Judiciary Committee reported out an amendment in the nature of a substitute.
Legislative History with Links to Related Materials.
S 1121, the Antitrust Improvements Act of 1999
Sponsor. Sen. Patrick Leahy (D-VT). No cosponsors.
Summary. S 1121 IS is designed to limit future telecommunications mergers. Sen. Leahy stated that "the mergers among Regional Bell Operating Companies, which continue to have a virtual stranglehold on the local telephone loop, pose a great threat to healthy competition in the telecommunications industry." (See, statement in Congressional Record, 5/25/99.)
Sen. Leahy described his bill as follows:
"The bill provides that a 'large local telephone company' may not merge with another large local telephone company unless the Attorney General finds that the merger will promote competition for telephone exchange services and exchange access services. Also, before a merger can take place, the Federal Communications Commission must find that each large local telephone company has for at least one-half of the access lines in each State served by such carrier, of which as least one-half are residential access lines, fully implemented the requirements of sections 251 and 252 of the Communications Act of 1934."
Status. This bill was introduced on May 25, 1999. No action has been taken.
Legislative History with Links to Related Materials.
S 1125, the Telecommunications Merger Review Act
Sponsors. John McCain (R-AZ). Cosponsors: Orrin Hatch (R-UT) and John Ashcroft (R-MO).
Summary. S 1125 IS cuts the FCC out of the telecommunications merger review process. Sen. McCain says that the problem is "that different agencies sequentially go over the same issues, and, after considerable delay, can make radically different decisions on the same sets of facts. Two of these agencies, the Department of Justice and the Federal Trade Commission, have extensive expertise in analyzing the competition-related issues that are involved in mergers, and they approach the merger review process with a great deal of professionalism and efficiency. The third agency, the Federal Communications Commission, has comparatively little expertise in these issues, and only limited authority under the law. Nevertheless, the FCC has bootstrapped itself into the unintended role of official federal dealbreaker." (See, statement in Congressional Record, 5/26/99.)
S 1125 IS provides that the FCC would have "no authority to review a merger ... or to impose any term or condition on the assignment or transfer of any license ... in the course of a merger ... while that merger ... is subject to review by either the" DOJ or FTC. It also provides that the DOJ and FTC have "primary authority under existing law to review mergers" including telecommunications mergers involving license transfers. However, the FCC "may file comments in any proceeding before the" DOJ or FTC in these proceedings, if the majority of the FCC commissioners approve those comments. Furthermore, if the DOJ or FTC reviews a telecommunications merger and either "issues a written decision of absolute or conditional approval of, or issues a written statement of nonintervention in," then the FCC must approve any license transfers in the merger, without imposing any conditions.
Sen. McCain describes his bill this way: "It does not touch either DOJ's or FTC's broad authority to review all mergers, including all telecommunications industry mergers. It would make sure that any FCC concerns are heard by incorporating the FCC into DOJ and FTC merger review proceedings. Nor does it touch the FCC's broad authority to adopt and enforce rules to govern the behavior of telecommunications companies. What it does do is tell the FCC that, in cases where either DOJ or FTC has reviewed a proposed telecommunications merger and stated in writing no intent to intervene, the FCC must follow the determination of these expert agencies and transfer any FCC licenses without further delay."
Status. This bill was introduced on May 26, 1999. No action has been taken.
Legislative History with Links to Related Materials.
HR 2533, Fairness in Telecommunications License Transfers Act.
Sponsor. Rep. Henry Hyde (R-IL). Original Cosponsors. George Gekas (R-PA) and Bob Goodlatte (R-VA). Additional Cosponsors. Joe Scarborough (R-FL).
Summary. HR 2533 IH reflects the great displeasure which some in Congress have with the way the FCC is conducting itself in certain license transfer proceeding. It targets the FCC's failure to promulgate rules governing its merger reviews. It would amend the Administrative Procedure Act to require the FCC to write rules governing their license transfer proceedings.
Status. HR 2533 IH was introduced on July 15, 1999. No action has been taken.
Legislative History with Links to Related Materials.
HR 2783 IH.
Sponsor. Rep. Chip Pickering (R-MS). Additional Cosponsors. Steve Largent (R-OK), Barbara Cubin (R-WY), Vito Fossella (R-NY), and Mike Oxley (R-OH).
Summary. HR 2783 IH sets deadlines for FCC decision on license transfers and line acquisitions. The basic rule would be that the FCC would have to decide within 60 days of receiving the application. However, the FCC could extend its decision once for 30 days upon a majority vote of the Commission. Also, in the case of small local exchange carriers, the deadline would be 45 days, and not be subject to extension.
Specifically, it provides:
"The Commission shall make a determination with respect to the public interest, convenience, and necessity in connection with any application for the transfer or assignment of any license under title III, or with respect to an application for the acquisition or operation of lines under title II, not later than 60 days after the date of submittal of such application to the Commission, except as provided ..."
Status. This bill was introduced on August 5, 1999, and referred to the House Commerce Committee.
Legislative History with Links to Related Materials.
HR 3186, Telecommunications Merger Review Act of 1999.
Sponsor. Rep. Richard Burr (R-NC). Cosponsors. Mike Oxley.
Summary. HR 3186 IH
Status. This bill was introduced on November 1, 1999. No action has been taken.
Legislative History with Links to Related Materials.
HR 4019, Telecommunications Merger Review Act of 2000
Sponsor. Chip Pickering (R-MS). Initial Cosponsors. Rick Boucher (D-VA), Richard Burr (R-NC), Nathan Deal (R-GA), John Dingell (D-MI), Vito Fossella (R-NY), Gene Green (D-TX), Ralph Hall (D-TX), Ron Klink (D-PA), Steve Largent (R-OK), Mike Oxley (R-OH), Billy Tauzin (R-LA). Additional cosponsors: Henry Hyde (R-IL).
Summary. HR 4019 IH is Rep. Pickering's second bill on this topic. (See, summary of HR 2783 IH, above.) This bill would amend the Communications Act of 1934 by adding a new section 417 to limit the FCC's merger review authority.
First, it has similar, but not identical time limits on FCC merger review proceedings (90 days, and 60 for small carriers).
HR 4019 would also prohibit the FCC from denying a license transfer unless is will result in a violation of FCC. This, of course, would force the FCC to promulgate some rules, which is has not done, and be bound by those rules. HR 4019 provides, in part:
"In any proceeding to approve an application to assign or transfer control of a license, permit, or certificate pursuant to the provisions of section 214 or 310, the Commission (1) may not deny such application unless (A) the assignment or transfer of control will result in a violation of the Commission's rules and regulations ... and (B) such violation cannot be cured by the conditional approval of the assignment or transfer of control ..."
Status. This bill was introduced on March 16, 2000. The House Telecom Subcommittee amended and approved it on June 27, 2000.
Legislative History with Links to Related Materials.
Tech Law Journal Stories.
Other Bills.
HR 3850, the Independent Telecommunications Consumer Enhancement Act of 2000, sponsored by Rep. Barbara Cubin (R-WY) and S 2572, the Facilitating Access to Speedy Transmissions for Networks, E-commerce, and Telecommunications (FASTNET) Act, sponsored by Sen. Conrad Burns (R-MT) would, among other things, limit the FCC's merger review authority over mergers and acquisitions involving two local exchange carriers with fewer than two percent of the Nation's subscriber lines.