(Bloomberg) -- U.S. regulators who approved CenturyLink Inc.'s purchase of the Level 3 Communications Inc. broadband provider used their review to grease the skids for future mergers.
Or they didn't.
Both claims were made by commissioners of the Federal Communications Commission as it cleared the $34 billion deal on Monday. At issue is whether the agency will impose extra requirements on companies seeking to merge.
The issue split the agency with minority Democrats criticizing the course taken by Republican Chairman Ajit Pai, who in turn said agency standards hadn't changed. He has long said the agency demanded too much of merging companies during the Obama years. The deal approval “radically alters the commission's long-standing merger review standards,” said Mignon Clyburn, a Democrat who voted against the deal.
The debate occurs at an agency that has veto power over multi-billion dollar telecommunications deals. In recent years it has helped kill a merger sought by Comcast Corp., imposed requirements on AT&T Inc., and deterred Sprint Corp. from even trying to buy T-Mobile US Inc.
Language in the CenturyLink order outlined the agency's approach to conditions, or behavioral requirements demanded in return for merger approvals. The agency's demands for conditions will be “narrowly tailored” and address only direct consequences of the deal itself, according to the order approving the merger.
10 Buildings
In the case of the CenturyLink merger, conditions amounted to short-term restrictions on how the combined company will set prices for broadband service in just 10 buildings, according to Clyburn. The combined company will serve about 75,000 different buildings, according to their merger announcement.
The FCC's “revised test” for mergers doesn't give enough weight to serving broader goals such as spreading broadband service more widely, enhancing competition, and ensuring diversity, Clyburn said in a statement published with the order.
FCC Commissioner Jessica Rosenworcel called the language “simply part of a larger effort to speed the way for the next billion-dollar transaction before us.”
Pai, chosen by President Donald Trump, was having none of it.
“We don't change the standard of review,” Pai said in his statement. He said the FCC was making clear that “transactional review is an occasion to carefully consider how the transaction itself impacts the public interest, not an opportunity to extract a range of concessions.”
FCC Republicans, when Democrats held agency leadership, criticized the agency for imposing conditions not strictly related to mergers. Pai for example in 2015 wrote of “forced tribute” exacted from AT&T as it received permission to buy DirecTV. The requirements imposed by the FCC included extending fast internet service to schools and libraries.
Pai's Republican colleagues welcomed the standards language. The FCC is adhering to “longstanding precedent,” said Commissioner Brendan Carr. Commissioner Michael O'Rielly said the FCC for several years had “had ventured into murky -- and potentially illegal -- waters by applying balancing tests and imposing conditions that had no connection to the applications at hand” and was now clarifying the standard of review for future transactions.
To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net.
To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Elizabeth Wasserman
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