Someone on reddit asked why this isn't considered an Antitrust violation (akin to Microsoft). An anti-trust lawyer explained why, but better yet, provided more context around the merger. It appears that this will ultimately go through, given the climate of the current administration and the dynamics of the merger.

Here is the anti-trust lawyer's explanation:

Antitrust lawyer here.

For one, we're talking about different antitrust issues. Broadly speaking, the antitrust laws prohibit (1) concerted action that harms competition, like price fixing cartels; (2) unilateral action by a monopolist that harms competition; and (3) mergers and acquisitions that significantly diminish competition.

Microsoft was alleged to have used its position as a monopolist to undermine competition. That's (2) above. Typically, monopolization entails an element of foulplay. Achieving or maintaining a monopoly through normal, reasonable business practices is not illegal.

Comcast and TWC are proposing to merge. That's (3) above. When evaluating a merger, the DOJ looks at whether the companies directly compete in any markets, and whether the merger is likely to reduce competition in those markets.

Comcast and TWC claim that they do not directly compete. That's true, but there's more to the story. Comcast and TWC will point out that cable systems are "natural monopolies" -- it costs a lot to lay cable, and where one company has already laid cable in a given area, it enjoys a huge cost advantage over other would-be competitors, who would have to lay their own cable to compete.

But on the other hand, Comcast and its rivals have also done some dubious stuff in the past that has led to the current competitive landscape. For example, Comcast, TWC, and others have engaged in a number of anticompetitive deals, such as geographic market allocation and customer swapping, to create large regional monopolies. These deals themselves arguably violate the antitrust laws -- see (1) above -- and indeed are the subject of ongoing litigation. But unfortunately, the DOJ most likely would not take this background into account when evaluating the likely effect of the merger on competition.

So when Comcast and TWC say that the merger will not reduce competition because they do not currently compete, that is in part due to the fact that they have already agreed not to compete. It's like two members of a price fixing cartel saying that merging would not reduce competition because, hey, they aren't competing anyway.

We don't know yet whether the DOJ will challenge the merger. The Obama DOJ has been decent in this area; they challenged the AT&T/T-Mobile merger and US Air/American Airlines merger. But neither of those cases played out -- the FCC killed AT&T/T-Mobile, and the DOJ caved once politicians began pressuring the agency to let US Air/American Airlines go through.

Given that Comcast is so well connected in Washington, and in light of the potential difficulties in establishing that the merger will actually reduce competition, I expect that the DOJ will approve the Comcast/TWC merger, subject to certain concessions.

Politics is a core issue when it comes to antitrust enforcement. In fact, I don't think the Obama DOJ would sue Microsoft today. Clinton's DOJ was a bit more aggressive in this area.

Hope this helps.

https://www.reddit.com/r/explainlikeimfive/comments/2h87ob/e...

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