Justice Expected to Provide Some Response Soon on Verizon/Cable Transactions
Verizon Wireless, the SpectrumCo partners and Cox should have some idea about whether the Justice Department has major objections to the proposed sale of AWS licenses to Verizon in the late May or early June timeframe, industry and government officials said. Justice typically offers some guidance to companies involved in such transactions within about 30 days of when they provide all of the data requested by the department. Verizon and the cable companies have either completed or are about to wrap up data submissions on the spectrum parts of the transactions, officials said. The major parties are still submitting information on the other part of the transactions: marketing agreements between Verizon and the three cable operators.
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Justice announced its lawsuit to block AT&T’s buy of T-Mobile Aug. 31, about five and half months after that deal was unveiled. Verizon agreed in early December to pay about $3.6 billion for 122 AWS licenses from SpectrumCo (CD Dec 5 p1), a venture of Bright House Networks, Comcast and Time Warner Cable, and later that month to pay another $315 million for 30 AWS licenses from Cox Communications.
The FCC’s 180-day informal clock for reviewing the deals is set to expire in July -- Monday was day 102 of the review. One big question mark at the agency is the possible addition of new commissioners Ajit Pai and Jessica Rosenworcel, which looks increasingly likely before a vote on the Verizon/cable transactions, and whether Chairman Julius Genachowski will allow more time so they can get caught up on issues raised in the proceeding, an FCC official said.
"Should the Justice Department determine that the transaction meets antitrust muster, then this should be viewed as a green light for the deal to be approved,” said a government official Monday. “It would be surprising if any serious antitrust concerns were raised because Verizon is not acquiring a competitor. It’s not acquiring customers. It’s acquiring spectrum that has laid fallow and there’s no hope of build out by SpectrumCo.” “It’s still an ongoing investigation,” a DOJ spokesman said Monday.
Industry and government officials said it seems likely Justice will provide some reaction before the start of summer. “The timing does sound reasonable, but this is a very unusual transaction, and it is therefore more difficult than usual to predict timing or possible actions which may be taken,” said deal opponent Andrew Schwartzman, formerly with the Media Access Project.
"DOJ and the FCC in this administration have tried very hard to work together and jointly address mutual concerns,” said Public Knowledge Legal Director Harold Feld, another opponent. “DOJ may have a better sense of its issues sooner than the FCC, given its somewhat narrower focus and jurisdiction, but DOJ may not wish to communicate that to the parties until it has the opportunity to consult with the FCC.” Another wild card is what issues Justice will find “ripe for investigation outside of the transaction review,” Feld said. “For example, if the DOJ decides that the side agreements raise antitrust issues that are unrelated to the spectrum transfer, and wants to address them separately, it could choose to open a separate investigation as the FCC has apparently done. DOJ might or might not inform the parties if it chose to proceed in this fashion. On the other hand, the DOJ generally does not like to proceed by surprise, and will generally work with applicants to point to issues that raise concern."
The FCC should slow down its review given the pending arrival of new commissioners and the amount of data filed so far, said Free Press Policy Adviser Joel Kelsey. “The form in which data is being placed in the [FCC] docket makes it very, very difficult for people to review,” he said. “Verizon just submitted an additional 20,000-odd documents to complete the data request. If we're abiding by kind of the spirit of APA [the Administrative Procedure Act], the idea is the commission benefits and conducts a more informed decision making by hearing from a diverse number of stakeholders.”
"The timetable you're hearing tends to sound reasonable to me, considering the length of time the Justice Department will have had to drill down on the Verizon/cable deals,” said Jeff Silva, analyst at Medley Global Advisors. “By late May/early June, government antitrust lawyers will have been able to integrate into their analysis Verizon’s proposed sale of 700 MHz A and B block [licenses] … and express their views on cross-marketing arrangements that have begun to be rolled out in more markets.”