WASHINGTON-With the tidal wave of telecommunications mergers occurring, regulators must ensure that whatever conditions they impose on companies to protect consumers are done right the first time.
“It is not really practical to go back later. You do the best you can … we have imposed some conditions that give us some level of enforcement … fundamentally you are left with the challenge of not screwing up in the first place,” said FCC Chairman William Kennard.
Kennard, in testimony before the Senate Commerce Committee, said the FCC is trying to learn from the merger reviews it recently conducted, but does not believe rules could be written that would predict every possible combination the commission would be required to review. For this reason, the soon-to-be-created merger-review team will develop guidelines, but continue to process each merger separately.
“The public-interest [test] is inherently fact specific and can only be defined based on the circumstances of each individual case,” Kennard said in his prepared testimony.
MCI WorldCom Inc. is banking on a case-by-case review in its proposed merger with Sprint Corp. “It’s important to remember that not all mergers are the same. This is not a merger of monopoly providers-this merger is being done so we can become large enough in scope to compete with the monopoly powers,” said John W. Sidgemore, vice chairman of MCI WorldCom.
The review could be a difficult process for the new WorldCom. When it was announced, Kennard questioned the merger. At the hearing, he was more cautious. “That merger will be before the FCC so it would not be appropriate for me to forecast what the decision will be there,” he said.
The merger-the largest in history-has been valued at $130 billion. The hearing before the Senate Commerce Committee was the second in as many weeks that has examined the Sprint/WorldCom marriage. At a hearing on Nov. 4, Sen. Mike DeWine (R-Ohio), chairman of the Senate antitrust subcommittee, said he could not support a Sprint/WorldCom deal.
Congress is not done. Sen. John McCain (R-Ariz.), chairman of the Commerce Committee, said he will ask the General Accounting Office to study telecom mergers. The results of the GAO investigation will be the jumping-off point for future hearings when Congress reconvenes in January, McCain said.
