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Mergers
Crossing the Rubicon: Why the Comcast/Time Warner Cable Merger Should Be Blocked
Allen Grunes and I recently wrote a short article for Global Competition Review outlining why the Comcast/Time Warner Cable (TWC) merger should be blocked. One thought experiment is to suppose that the predictions of the financial community are correct. Suppose the merger, while not sailing through the regulatory process, is likely to remain relatively intact. If true, ask the following question: if Comcast can acquire TWC, what prevents Comcast from extending its footprint across America by acquiring all the remaining cable companies? It seems difficult to discern a limiting principle, since the same justification for the Comcast/TWC transaction could easily be offered for a Comcast/TWC/Charter deal. Cable companies tend not to compete with one another for customers. Comcast principally argues that it does not compete with TWC in the same geographic markets. Without any competitive overlap, according to Comcast, the acquisition does not really change anything. This, we argue in our article, is wrong for several reasons. First, a merger can violate section 7 of the Clayton Act without the parties competing in the same geographic market. Second, the Congressional command for section 7 is to “preserve competition among many small businesses by arresting a trend toward concentration in its incipiency before the trend developed to the point that a market was left in the grip of a few big companies.”  One