[Congressional Record Volume 145, Number 77 (Wednesday, May 26, 1999)]
[Senate]
[Pages S6050-S6052]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCAIN (for himself, Mr. Ashcroft, Mr. Hatch, and Mr. 
        Mack):
  S. 1125. A bill to restrict the authority of the Federal 
Communications Commission to review mergers and to impose conditions on 
licenses and other authorizations assigned or transferred in the course 
of mergers or other transactions subject to review by the Department of 
Justice or the Federal Trade Commission; to the Committee on Commerce, 
Science, and Transportation.


              telecommunications merger review act of 1999

  Mr. McCAIN. Mr. President, I rise this morning to introduce The 
Telecommunications Merger Review Act of 1999, which will make the 
government's review of telecommunications industry mergers more 
coherent and effective.
  It seems like hardly a week goes by without the announcement of yet 
another precedent-setting merger in the telecommunications industry. 
Consumers are right to be concerned about the possible effects of these 
mergers, and the Congress is right to be concerned that government 
review of these mergers is careful and consistent in keeping consumer 
interests uppermost.
  The urgent need for competence and clarity in reviewing telecom 
industry mergers highlights a glaring problem in the current system. 
That problem, Mr. President, arises from the fact 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. How? By using its authority to 
impose conditions on the FCC licenses that are being transferred as 
part and parcel of the overall merger deal. Because the FCC must pre-
approve all license transfers, its ability to pass on the underlying 
licenses gives it a chokehold on the parties to the merger. And it uses 
that chokehold to prolong the process and extract concessions from the 
merging parties that oftentimes

[[Page S6051]]

have very little, if anything, to do with the merger itself.
  Mr. President, many people might ask, what's so bad about that? Won't 
the FCC's conditions make sure that consumer interests are served? The 
short answer is, the FCC is simply duplicating the review and that the 
Department of Justice performs with much more competence and 
efficiency. About the best you can say is that the FCC is wasting 
valuable resources that could more productively be spent elsewhere. But 
the real harm lies in the fact that the FCC is foisting needless 
burdens and restrictions on the merging companies that translate into 
higher costs for consumers.
  The FCC tries to defend its efforts by arguing that its job is really 
different from DOJ's--that DOJ makes sure that a merger won't harm 
competition, while the FCC makes sure that the same merger will help 
competition. In other words, according to the FCC, DOJ looks at a 
merger's effect on business; the FCC looks at its effect on people. For 
example, last week FCC Chairman Kennard gave a speech in which he 
proclaimed that, despite the strain these merger reviews were imposing 
on the agency, ``We will not rest until on each transaction we can 
articulate to the American public what are the benefits of this merger 
to average American consumers, because I believe that's what the 
public-interest review requires.''

  If that's true, I have good news for Chairman Kennard--he can take a 
rest, because DOJ is doing exactly the same thing. In a separate speech 
last week Assistant Attorney General Joel Klein, DOJ's chief merger 
review official, said that what most people do not understand 
(including, evidently, the FCC), is that ``everything we do in 
antitrust . . . is consumer driven.'' He then went on to say precisely 
what that means:

       We are a unique federal agency. Our interest is to protect 
     what the economists call consumer welfare. And there is one 
     simple truth that animates everything we do, and that is 
     competition--the more people chasing after the consumer, to 
     serve him or her better, to get lower prices, to get new 
     innovations, to create new opportunities--the more of that 
     juice that goes through the system, the better.

  To be accurate, there is one big difference between the way the FCC 
and the DOJ do merger reviews: DOJ is infinitely better at it. Two 
weeks ago the FCC's already-faltering merger review process hit rock-
bottom when a staff member (an ostensible antitrust expert) heading up 
the FCC's review of the SBC-Ameritech merger (which DOJ has already 
approved) publicly proclaimed that, unless the FCC imposed major 
conditions, the proposed transaction ``flunks the public interest 
test.'' An ``unnamed agency spokeswoman'' then cheerfully agreed that a 
majority of the Commissioners shared the same view.
  Can you imagine either the FTC or DOJ countenancing such happenings 
during the course of their merger review processes? I think not. This 
appallingly unprofessional behavior by the FCC staff drove the value of 
SBC and Ameritech stock down over $2 billion, and it confirmed that, if 
this is what passes for FCC merger review ``expertise,'' the FCC has no 
business being in it.
  Mr. President, this bill will restore integrity and professionalism 
to federal review of telecommunications industry mergers. 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.
  Under this bill the FCC may independently review proposed mergers 
when neither DOJ nor FTC states in writing its intent not to intervene. 
Nevertheless, because DOJ and FTC review all mergers and have authority 
to intervene in any merger, their nonintervention is any proposed 
merger appropriately signifies that they find the transaction at issue 
is unobjectionable. Therefore, any FCC review in such cases is subject 
to a strict 60-day deadline, and the FCC is directed to presume 
approval without attaching further conditions or obligations on any of 
the parties. Nothing (except extreme unlikelihood) would preclude the 
FCC from rebutting the presumption with hard facts, nor would the FCC 
be precluded from subsequently exercising its existing enforcement and 
rulemaking prerogatives to deal with any unanticipated problems.

  Mr. President, we can streamline the way the federal government 
reviews telecom industry mergers and still safeguard the public 
interest. That's what this bill is intended to do by eliminating 
bureaucratic mismanagement while preserving essential federal review 
and enforcement prerogatives. I urge my colleagues to give it careful 
consideration and support.
  This bill, the Telecom Merger Review Act of 1999, would do nothing to 
change the authority that the Department of Justice and the Federal 
Trade Commission currently have to review all telecom industry mergers.
  Mr. President: I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1125

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Telecommunications Merger 
     Review Act of 1999''.

     SEC. 2. FINDINGS.

       The Congress finds the following:
       (1) A stated intent of the Congress in enacting the 
     Telecommunications Act of 1996 was to reduce regulation.
       (2) Under existing law, the Department of Justice and the 
     Federal Trade Commission exercise primary authority to review 
     all mergers, including telecommunications industry mergers. 
     The Federal Communications Commission has only limited 
     authority under the Clayton Act to review telecommunications 
     industry mergers.
       (3) The Department of Justice and the Federal Trade 
     Commission have extensive expertise in analyzing issues of 
     industry concentration and its effects on competition. The 
     Federal Communications Commission has only limited expertise 
     in analyzing such issues.
       (4) Notwithstanding the limitations on its Clayton Act 
     jurisdiction and on its substantive expertise, the Federal 
     Communications Commission exercises broad authority over 
     telecommunications industry mergers pursuant to the 
     nonspecific public interest standard and other provisions in 
     the Communications Act of 1934 that allow it to impose terms 
     and conditions on the assignment and transfer of licenses and 
     other authorizations.
       (5) The Federal Communications Commission's exercise of 
     broad authority over telecommunications industry mergers 
     overreaches its intended statutory authority and its 
     substantive expertise and produces delay and inconsistency in 
     its decisions.
       (6) Under existing law, parties to a proposed 
     telecommunications industry merger are unable to proceed 
     without the prior approval of the Federal Communications 
     Commission, even if the Department of Justice or the Federal 
     Trade Commission have already approved the merger.
       (7) The Federal Communications Commission's existing 
     rulemaking and enforcement prerogatives constitute normal and 
     effective means of assuring that all licensees, including 
     parties to a telecommunications industry merger, operate in 
     the public interest.
       (8) The primary jurisdiction and preeminent expertise of 
     the Department of Justice and the Federal Trade Commission on 
     all matters involving industry concentration and its effects 
     on competition, combined with the Federal Communications 
     Commission's existing rulemaking and enforcement 
     prerogatives, make the exercise of separate 
     telecommunications industry merger approval authority by the 
     Federal Communications Commission unnecessary.
       (9) Because the duplication of effort, inconsistency, and 
     delay resulting from the Federal Communications Commission's 
     review of telecommunications industry mergers is unnecessary, 
     it imposes unwarranted costs on the industry, on the 
     Commission, and on the public, and it fails to serve the 
     public interest.

     SEC. 3. REPEAL OF MERGER APPROVAL AUTHORITY.

       Section 11(a) of the Clayton Act (15 U.S.C. 21(a)) is 
     amended by striking ``in the Federal Communications 
     Commission where applicable to common carriers engaged in 
     wire or radio communication or radio transmission of 
     energy;''.

     SEC. 4. REPEAL OF AUTHORITY TO CONDITION LICENSES, ETC.

       (a) Basic Administrative Authority.--Section 4(i) of the 
     Communications Act of 1934 (15 U.S.C. 154(i)) is amended by 
     adding at the end thereof the following: ``The authority of 
     the Commission to impose terms or conditions on the transfer 
     or assignment of

[[Page S6052]]

     any license or other authorization assigned or transferred in 
     a merger or other transaction subject to review by the 
     Department of Justice or the Federal Trade Commission is 
     subject to section 314.''.
       (b) Public Convenience and Necessity.--Section 214(c) of 
     the Communications Act of 1934 (47 U.S.C. 214(c)) is amended 
     by inserting after ``require.'' the following: ``The 
     authority of the Commission to impose terms or conditions on 
     the transfer or assignment of any such certificate assigned 
     or transferred in a merger or other transaction subject to 
     review by the Department of Justice or the Federal Trade 
     Commission is subject to section 314.''.
       (c) Restrictions and Conditions Necessary To Carry Out 1934 
     Act; Treaties; International Conventions.--Section 303(r) of 
     the Communications Act of 1934 (47 U.S.C. 303(r)) is amended 
     by adding at the end thereof the following: ``The authority 
     of the Commission under this paragraph to impose terms or 
     conditions on the transfer or assignment of any license or 
     other authority assigned or transferred in a merger or other 
     transaction subject to review by the Department of Justice or 
     the Federal Trade Commission is subject to section 314.''.
       (d) Alien-operated Amateur Radio Stations.--Section 310(d) 
     of the Communications Act of 1934 (47 U.S.C. 310(d)) is 
     amended by adding at the end thereof the following: ``The 
     authority of the Commission to impose terms or conditions on 
     the transfer or assignment of any authorization issued under 
     this section that is assigned or transferred in a merger or 
     other transaction subject to review by the Department of 
     Justice or the Federal Trade Commission is subject to section 
     314.''.
       (e) Preservation of Competition in Commerce.--Section 314 
     of the Communications Act of 1934 (47 U.S.C. 314) is amended 
     to read as follows:

     ``SEC. 314. PRESERVATION OF COMPETITION IN COMMERCE.

       ``(a) In General.--Notwithstanding any other provision of 
     law, the Commission has no authority to review a merger or 
     other transaction, or to impose any term or condition on the 
     assignment or transfer of any license or other authorization 
     issued under this Act that is proposed to be assigned or 
     transferred in the course of a merger or other transaction, 
     while that merger or other transaction is subject to review 
     by either the Department of Justice or the Federal Trade 
     Commission.
       ``(b) Communications Mergers Primarily Reviewable by DOJ 
     and FTC.--The Department of Justice, or the Federal Trade 
     Commission, has primary authority under existing law to 
     review mergers and other transactions involving the proposed 
     assignment or transfer of any license or other authorization 
     issued under this Act. The Commission may file comments in 
     any proceeding before the Department of Justice or the 
     Federal Trade Commission to review a merger or other 
     transaction involving the proposed assignment or transfer of 
     any license or other authorization issued under this Act if 
     those comments reflect the views of a majority of the 
     Commission.
       ``(c) Commission Shall Implement DOJ or FTC Decision 
     without Additional Terms or Conditions.--If--
       ``(1) the Department of Justice or the Federal Trade 
     Commission reviews a merger or other transaction involving 
     the proposed assignment or transfer of any license or other 
     authorization issued under this Act; and
       ``(2) it issues a written decision of absolute or 
     conditional approval of, or issues a written statement of 
     nonintervention in, the proposed merger or other transaction,

     then the Commission shall authorize the assignment or 
     transfer of any license or other authorization involved in 
     the merger or transaction in accordance with the decision, if 
     any, or as proposed, if a written statement of 
     nonintervention is issued. The Commission may not impose any 
     other term or condition on the assignment or transfer of the 
     license or other authorization so assigned or transferred, or 
     impose any other obligation on any party to that merger or 
     transaction.
       ``(d) Commission Review of Mergers Absent DOJ or FTC 
     Pronouncement.--
       ``(1) In general.--The Commission may not review any 
     application for assignment or transfer of a license or other 
     authorization issued under this Act in connection with a 
     merger or other transaction unless neither the Department of 
     Justice nor the Federal Trade Commission issues a decision or 
     statement described in subsection (c)(2) in connection with 
     that merger or other transaction.
       ``(2) 60-day turnaround.--The Commission shall conclude any 
     review of a merger or other transaction it may conduct under 
     paragraph (1) within 60 days after the date on which the 
     Department of Justice and the Federal Trade Commission, 
     whichever is appropriate, issues such a decision or 
     statement.
       ``(3) Presumption; default approval.--In reviewing an 
     application under paragraph (1), the Commission shall apply a 
     presumption in favor of unconditional approval of the 
     application. If the Commission fails to issue a final 
     decision within the 60-day period described in paragraph (2), 
     the application shall be deemed to have been granted 
     unconditionally by the Commission.''.
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