The DoJ’s Antitrust Division studied the desirability of a net neutrality requirement in weighing the Bell-South-AT&T merger last year but found no “significant market failure” to justify such a measure, Thomas Barnett, assistant attorney general in charge of the division said Thursday at a Practising Law Institute conference. The FCC did impose a neutrality obligation when it approved the merger.

“From an antitrust enforcement perspective they were not required, which is why we closed the investigation without seeking any net neutrality commitments,” Barnett said. “The FCC has a different and broader mandate in terms of the public interest and so I defer to them.” Net neutrality “sounds good and it can be good,” he said, calling it “a vague concept” that has varying meanings.

Barnett termed the telecom industry hugely competitive. He cited industry data showing increased competition and investment. “We’ve made tremendous progress,” he said. “We’re clearly doing some things right.” But DoJ must take care in investigating mergers, he said. “Every merger transaction, every investigation, is fact-specific.” DoJ’s record shows that “where the investigation indicates that no challenge is warranted…we get out of the way,” he said.

DoJ investigates differentiations between products even when a market has several competitors — for example, in the recent wireless mergers, Barnett said. DoJ must scrutinize claims that future technologies will eliminate present-day competitive concerns, Barnett said. “Such predictions are often fraught with uncertainty,” he said. “Sometimes they are imminent enough and credible enough to be given significant weight in our analysis.” He
cited slower-than-expected rollout of broadband over powerlines and persistent uncertainty about WiMAX.

Efficiencies flowing from a merger often are given “significant weight” by DoJ, Barnett said. “We do not, however, take them at face value,” he said. “We look for evidence that will support the projections in the particular case.” In a typical analysis DoJ discounts a “significant” amount of the efficiencies merger partners say will result. — Howard Buskirk