WASHINGTON – Senator Mike Lee, Ranking Member of the Antitrust Subcommittee of the Judiciary Committee, delivered the following remarks at the start of the hearing regarding the merger of Comcast and Time Warner Cable:
Today’s hearing has received significant attention, and for good reason. The proposed merger between Comcast and Time-Warner has implications for two markets that affect the everyday lives of the vast majority of those in my state and in the country as a whole. Most Americans pay a monthly bill for video and broadband Internet. In fact, as recently as 2012, ninety percent of U.S. households with a television paid for a TV subscription. And a recent study concluded that approximately 70 percent of U.S. adults over the age of 18 have a broadband access within their home.
The parties to this proposed merger have carefully structured their transaction to maximize chances in an apparent effort of gaining regulatory approval. The two companies assure us that they do not currently compete in each other’s footprint, and the combined company would have less than 30 percent of the video market—a number some have suggested acts as a kind of safe harbor for concentration in that market. Comcast has vertically integrated with NBC Universal—a compiling factor for a large distributor of video content and broadband Internet that is seeking to become larger. But, as the company points out, it remains subject to conditions stemming from regulatory approval of that transaction.
The proposed merger has nonetheless raised some potentially serious concerns. This transaction takes place against the backdrop of significant pre-existing concerns with respect to the competitive state of the market for video and broadband Internet. I have heard concerns for some time that the effects of robust competition, whether experienced in terms of pricing or quality of service, are not currently enjoyed in these markets. It is important that this Committee takes account of the state of competition in the markets for video and Internet as pre-existing issues may make it more likely for a large transaction to pose a competitive threat. At the same time, if concerns related to this transaction result only from issues affecting these industries as a whole, it may be unfair to the merging parties to impose only on them conditions designed to ameliorate competition. Regardless of the outcome of the agencies’ review of this transaction, I believe it is important for Congress to continue to monitor the competitive state of these markets.
Concerns with this transaction also arise from the nature of the services at issue. Internet, in particular, is of obvious importance to American families and businesses. The combined company will potentially control greater than 50 percent of high-speed Internet access in the country. Markets change quickly, and government must be careful not to step in where economic forces will better direct and incentivize future investment and development of new products. But where the stakes are high—and they surely are high with respect to American’s access to the Internet—any potential for anticompetitive effects or undue control of that market must be carefully scrutinized.
This is an extremely large transaction affecting the video and Internet market. A complicating factor arises given that Comcast owns NBC Universal. Considering the significant share of the video and internet market that the new Comcast would have, and the well-known political leanings of NBC, I have heard concerns that Comcast might have the incentive and ability to discriminate against certain political content—namely conservative content.
As with any matter before this Committee or the relevant enforcement agencies, it is essential that we apply proper economic analysis and ground our conclusions in the evidence. By ensuring that we protect competition, and not any individual company or competitor, we can help create market conditions that benefit consumers and promote economic development.