The opposition to the merger of NBC’s Universal content production unit with cable company Comcast comes from two general sources: those predisposed to worry about what big companies are doing, and big companies predisposed to worrying about what their competitors are doing.
Companies merge, spin off subsidiaries, and grow internally based on how they can best organize themselves to efficiently fit their markets. If they fail in that attempt, even if it’s because their motives are nefarious in some way, the market will punish them.
It ultimately harms everyone for competitors to try to use the power of government to interfere with that process.
It is no less harmful when those pushing for regulation are mere busy-bodies, or those out to maximize their own power.
Policy Analysts: ‘Industry, Not Government, Should Determine Extent of Vertical Integration’
Consumers lose when the government tries to decide what amount of vertical integration is best, according to Bruce Owen, Stanford University senior fellow and Public Policy Program director.
Owen spoke on the proposed merger between Comcast and NBC and other issues confronting the information technology and telecommunications industries at the Technology Policy Institute forum, Antitrust and the Dynamics of Competition in High-Tech Industries, last October,
In his paper entitled “Antitrust and Vertical Integration in ‘New Economy’ Industries.” Owen said: “There is no difference in principle between General Motors buying a parts maker and Comcast buying a program supplier. In each, there is a very strong presumption that the purchase will be good for consumers, and a small chance that it won’t.”
One necessary condition for a bad outcome is whether GM or Comcast possesses monopoly power, said Owen, addressing one of the concerns expressed by opponents of the proposed merger. “If there is competition in car manufacturing or in video distribution, the chances of a bad outcome are very remote,” said Owen. “That tells me that the FCC’s suspicions about vertical integration are not well-grounded. Acting on those suspicions by banning or penalizing vertical integration is the wrong policy.”