Do State Reviews of Communications Mergers Serve the Public Interest?

09 March 2019
Dr. Jeffrey A. Eisenach and Dr. Robert Kulick

NERA Managing Director Dr. Jeffrey A. Eisenach and Senior Consultant Dr. Robert Kulick authored a study in issue 71.2 of the Federal Communications Law Journal, which examines the effects of public utility commission (PUC) oversight of mergers involving communications carriers. The appropriate level of state involvement in the merger review process has long been debated by academics and policymakers. Proponents of state government involvement argue state authorities have local knowledge of competitive conditions and other advantages that allow them to contribute to the antitrust enforcement endeavors of the Department of Justice and the Federal Trade Commission. Opponents point out that state intervention is a more costly, duplicative, and time-consuming avenue of review. Additionally, critics argue that states often ignore consumer welfare in favor of political interests that serve a narrow constituency rather than the public at large.

Dr. Eisenach and Dr. Kulick present data that suggest the concerns raised by critics of state involvement are particularly relevant to PUC reviews of communications mergers. Specifically, the report provides new evidence that validates critics’ concerns that state involvement creates additional costs stemming from procedural inconveniences and delays, and that they are more inclined to serve narrow interests rather than the overall public interest. Ultimately, the authors conclude, PUC-imposed costs and delays harm overall consumer welfare and economic performance. Dr. Eisenach and Dr. Kulick recommend that both federal and state policymakers consider reforms to limit PUC intervention in communications mergers.