United States et al. v. Comcast Corp., et al.; Public Comments and Response on Proposed Final Judgment, 34750-34761 [2011-14629]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 76, Number 114 (Tuesday, June 14, 2011)]
[Notices]
[Pages 34750-34761]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-14629]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States et al. v. Comcast Corp., et al.; Public Comments 
and Response on Proposed Final Judgment

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h), the United States hereby publishes below the comments 
received on the proposed Final Judgment in United States et al. v. 
Comcast Corp. et al., Civil Action No. 1:11-CV-00106-RJL, which were 
filed in the United States District Court for the District of Columbia 
on June 6, 2011, together with the response of the United States to the 
comments.
    Copies of the comments and the response are available for 
inspection at the Department of Justice Antitrust Division, 450 Fifth 
Street, NW., Suite 1010, Washington, DC 20530 (telephone: 202-514-
2481), on the Department of Justice's Web site at https://www.usdoj.gov/atr, and at the Office of the Clerk of the United States District Court 
for the District of Columbia, 333 Constitution Avenue, NW., Washington, 
DC 20001. Copies of any of these materials may be obtained upon request 
and payment of a copying fee.

Patricia A. Brink,
Director of Civil Enforcement.

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,
STATE OF CALIFORNIA,
STATE OF FLORIDA, STATE OF MISSOURI,
STATE OF TEXAS, and STATE OF
WASHINGTON,

Plaintiffs,
v.
COMCAST CORP., GENERAL ELECTRIC CO., and NBC UNIVERSAL, INC., 
Defendants.

CASE: 1:11-cv-00106
JUDGE: Leon, Richard J.

PLAINTIFF UNITED STATES'S RESPONSE TO PUBLIC COMMENTS

    Pursuant to the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16(b)-(h) (``APPA'' or ``Tunney 
Act''), the United States hereby files the public comments 
concerning the proposed Final Judgment in this case and the United 
States's response to those comments. After careful consideration of 
the comments, the United States continues to believe that the 
proposed Final Judgment will provide an effective and appropriate 
remedy for the antitrust violations alleged in the Complaint. The 
United States will move the Court, pursuant to 15 U.S.C. Sec.  
16(b)-(h), to enter the proposed Final Judgment after the public 
comments and this Response have been published in the Federal 
Register pursuant to 15 U.S.C. Sec.  16(d).

[[Page 34751]]

    I. PROCEDURAL HISTORY
    On January 18, 2011, the United States and the States of 
California, Florida, Missouri, Texas, and Washington (``the 
States''), filed a Complaint in this matter, alleging that the 
formation of a Joint Venture (``JV'') among Comcast Corporation 
(``Comcast''), General Electric Company (``GE''), NBC Universal, 
Inc. (``NBCU''), and Navy, LLC, which gives Comcast majority control 
over the NBC broadcast and NBCU cable networks, would substantially 
lessen competition in the market for timely distribution of 
professional, full-length video programming to residential consumers 
in violation of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18. 
Simultaneously with its filing of the Complaint, the United States 
filed a Competitive Impact Statement (``CIS''), a proposed Final 
Judgment, and a Stipulation and Order signed by the United States 
and the Defendants consenting to entry of the proposed Final 
Judgment after compliance with the requirements of the APPA.
    The proposed Final Judgment and CIS were published in the 
Federal Register on January 31, 2011. See 76 Fed. Reg. 5,440 (2011). 
A summary of the terms of the proposed Final Judgment and CIS, 
together with directions for the submission of written comments 
relating to the proposed Final Judgment, were published in The 
Washington Post for seven days, from January 31, 2011 through 
February 7, 2011. The Defendants filed the statement required by 15 
U.S.C. Sec.  16(g) on April 18, 2011. The 60-day period for public 
comments ended on April 9, 2011, and eight comments were received as 
described below and attached hereto, including a comment from The 
American Antitrust Institute (``AAI''), a joint comment from The 
Consumers Federation of America and Consumers Union (``CFA/CU''), 
and six comments from individuals.

II. THE INVESTIGATION AND PROPOSED RESOLUTION

A. Investigation

    On December 3, 2009, Comcast, GE, NBCU and Navy LLC, entered 
into an agreement to form a JV to which Comcast and GE contributed 
their cable and broadcast networks, as well as NBCU's interest in 
Hulu, LLC. Over the next 13 months, the United States Department of 
Justice (``Department'') conducted a thorough and comprehensive 
investigation of the potential impact of the JV on the video 
programming distribution industry. The Department interviewed more 
than 125 companies and individuals involved in the industry, 
obtained testimony from Defendants' officers, required Defendants to 
provide the Department with responses to numerous questions, 
reviewed over one million business documents from Defendants' 
officers and employees, obtained and reviewed tens of thousands of 
third-party documents, obtained and extensively analyzed large 
volumes of industry financial and economic data, consulted with 
industry and economic experts, organized product demonstrations, and 
conducted independent industry research. The Department also 
consulted extensively with the Federal Communications Commission 
(``FCC'') to ensure that the agencies conducted their reviews in a 
coordinated and complementary fashion and created remedies that were 
both comprehensive and consistent. As part of its investigation, the 
Department also reviewed and considered many of the thousands of 
pages of comments filed in the FCC docket in this matter that raised 
competition issues, including but not limited to the comments filed 
by AAI and CFA/CU.\1\

    \1\ See, e.g., Comments of the American Antitrust Institute, in 
re Applications of Comcast Corporation, General Electric Company, 
and NBC Universal, Inc. for Consent to Assign Licenses or Transfer 
Control of Licensees, FCC MB Docket No. 10-56 (June 21, 2010) 
(``AAI's FCC Comments''); Reply to Opposition of Free Press, Media 
Access Project, Consumer Federation of America, and Consumer's 
Union, In re Applications of Comcast Corporation, General Electric 
Company, and NBC Universal, Inc. for Consent to Assign Licenses or 
Transfer Control of Licensees, FCC MB Docket No. 10-56 (Aug. 19, 
2010).
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B. Proposed Final Judgment

    The proposed Final Judgment is designed to preserve competition 
in the market for timely distribution of professional full-length 
video programming to residential consumers in the United States. The 
proposed Final Judgment accomplishes this in a number of ways. 
First, the proposed Final Judgment requires the JV to license its 
broadcast, cable, and film content to online video distributors 
(``OVDs'') on terms comparable to those contained in similar 
licensing arrangements with traditional multichannel video 
programming distributors (``MVPDs'') or OVDs. It provides two 
options through which an OVD may be able to obtain the JV's content. 
The first option, set forth in Section IV.A of the proposed Final 
Judgment, requires the JV to license the linear feeds of the JV's 
video programming to OVDs on terms that are economically equivalent 
to the terms contained in certain MVPDs' video programming 
agreements. The second option, set forth in Section IV.B of the 
proposed Final Judgment, requires the JV to license to a qualified 
OVD the broadcast, cable, or film content of the JV that is 
comparable in scope and quality to the content the OVD receives from 
one of the JV's defined programming peers.\2\ While the first option 
ensures that Comcast, through the JV, will not disadvantage OVD 
competitors in relation to MVPDs, the second option ensures that the 
programming licensed by the JV to OVDs will reflect the licensing 
trends of its peers as the industry evolves. If an OVD and the JV 
are unable to reach an agreement for carriage of programming under 
either of these options, the OVD may apply to the Department to 
submit the dispute to baseball-style arbitration pursuant to Section 
VII of the proposed Final Judgment.\3\
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    \2\ The programming peers include the owners of the three major 
non-NBC broadcast networks (CBS, FOX, and ABC), the largest cable 
network groups (including News Corporation, Time Warner, Inc., 
Viacom, Inc., and The Walt Disney Company), and the six largest 
production studios (including News Corp., Viacom, Sony Corporation 
of America, Time Warner, and Disney).
    \3\ ``Baseball-style'' arbitration is a method of alternative 
dispute resolution in which each party submits its preferred price 
and other terms, and the arbitrator selects the proposal that is 
most reasonable and fair in light of the relevant market. The 
arbitrator must choose one party's proposal or the other's, with no 
option to implement a different set of price and other terms, e.g., 
a compromise involving aspects of both. The name is derived from 
arbitrations of Major League Baseball player salary disputes in 
which this format has been employed for a number of years. The FCC 
has also adopted this format as part of the conditions set forth in 
several merger orders. See, e.g., Memorandum Opinion and Order, In 
re General Motors Corporation and Hughes Electronics Corporation, 
Transferors, and The News Corporation Limited, Transferee, for 
Authority to Transfer Control, 19 F.C.C.R. 473,] 222 (rel. Jan. 14, 
2004), available at https://hraunfoss.fcc.goviedocs_publiclattachmatchIFCC-03-330A1.pdf.
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    Second, the proposed Final Judgment alters the JV's relationship 
with Hulu, LLC (``Hulu''), an OVD in which the JV owns a 32 percent 
interest. Hulu is one of the most successful OVDs to date. Section 
V.D of the proposed Final Judgment requires the Defendants to 
relinquish their voting and other governance rights in Hulu, and 
Section IV.E prohibits them from receiving confidential or 
competitively sensitive information concerning Hulu. At the same 
time, Section V.G of the proposed Final Judgment seeks to ensure 
that the JV continues to honor its commitments to supply programming 
to Hulu at levels commensurate with the supply of content provided 
to Hulu by its other media partners.
    Third, the proposed Final Judgment prohibits Defendants from 
engaging in certain conduct that could prevent OVDs or MVPDs from 
competing effectively. Section V.A of the proposed Final Judgment 
prohibits Defendants from discriminating against, retaliating 
against, or punishing any content provider for providing programming 
to any OVD or MVPD. Section V.A also prohibits Defendants from 
discriminating against, retaliating against, or punishing any OVD or 
MVPD for obtaining video programming, for invoking any provisions of 
the proposed Final Judgment or any FCC rule or order, or for 
furnishing information to the Department concerning Defendants' 
compliance with the proposed Final Judgment.
    Fourth, the proposed Final Judgment further protects the 
development of OVDs by preventing Comcast from using its position as 
the nation's largest MVPD or as the licensor, through the JV, of 
important video programming, to enter into agreements containing 
restrictive contracting terms. Sections V.B and V.0 of the proposed 
Final Judgment set forth broad prohibitions on restrictive 
contracting practices, including exclusives, with appropriately 
tailored exceptions. In so doing, the proposed Final Judgment 
strikes a balance between allowing reasonable and customary 
exclusivity provisions that enhance competition while prohibiting 
provisions that, without offsetting procompetitive benefits, hinder 
the development of effective competition from OVDs.
    Fifth, Section V.G requires Comcast to abide by certain 
restrictions on the operation and management of its Internet 
facilities, which OVDs depend upon in order to deliver video content 
to OVD customers. Absent such restrictions, Comcast would have the 
incentive and ability to undermine the

[[Page 34752]]

effectiveness of the proposed Final Judgment by, for instance, 
giving priority to non-OVD traffic on its network, thus adversely 
affecting the quality of OVD services that compete with Comcast's 
OVD or MVPD services.
    Finally, Sections IV.I-0 and VIII.A-B of the proposed Final 
Judgment impose reporting and document retention requirements on the 
Defendants to better enable the Department to monitor compliance and 
to assist it in enforcement proceedings.

III. STANDARD OF JUDICIAL REVIEW

    The APPA requires that proposed consent judgments in antitrust 
cases brought by the United States be subject to a sixty-day comment 
period, after which the court shall determine whether entry of the 
proposed Final Judgment ``is in the public interest.'' 15 U.S.C. 
Sec.  16(e)(1). In making that determination in accordance with the 
statute, the court is required to consider:
    (A) The competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of relief sought, anticipated effects of 
alternative remedies actually considered, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.
    15 U.S.C. Sec.  16(e)(1)(A)-(B). In considering these statutory 
factors, the court's inquiry is necessarily a limited one as the 
government is entitled to ``broad discretion to settle with the 
defendant within the reaches of the public interest.'' United States 
v. Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995). See 
generally United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 
(D.D.C. 2007) (assessing public interest standard under the Tunney 
Act); United States v. InBev N.V./S.A., 2009-2 Trade Cas. (CCH) ] 
76,736, No. 08-1965 (JR), 2009 U.S. Dist. LEXIS 84787, at *3 (D.D.C. 
Aug. 11, 2009) (noting that the court's review of a consent judgment 
is limited and only inquires ``into whether the government's 
determination that the proposed remedies will cure the antitrust 
violations alleged in the complaint was reasonable, and whether the 
mechanisms to enforce the Final Judgment are clear and 
manageable'').
    As the United States Court of Appeals for the District of 
Columbia Circuit has held, under the APPA, a court considers, among 
other things, the relationship between the remedy secured and the 
specific allegations set forth in the government's complaint, 
whether the decree is sufficiently clear, whether enforcement 
mechanisms are sufficient, and whether the decree may positively 
harm third parties. See Microsoft, 56 F.3d at 1458-62. With respect 
to the adequacy of the relief secured by the decree, a court may not 
``engage in an unrestricted evaluation of what relief would best 
serve the public.'' United States v. BNS, Inc., 858 F.2d 456, 462 
(9th Cir. 1988) (citing United States v. Bechtel Corp., 648 F.2d 
660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d at 1460-62; 
United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); 
InBev, 2009 U.S. Dist. LEXIS 84787, at *3. Courts have held that:
    [t]he balancing of competing social and political interests 
affected by a proposed antitrust consent decree must be left, in the 
first instance, to the discretion of the Attorney General. The 
court's role in protecting the public interest is one of insuring 
that the government has not breached its duty to the public in 
consenting to the decree. The court is required to determine not 
whether a particular decree is the one that will best serve society, 
but whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.
    Bechtel, 648 F.2d at 666 (emphasis added) (citations 
omitted).\4\ In determining whether a proposed settlement is in the 
public interest, the court ``must accord deference to the 
government's predictions about the efficacy of its remedies, and may 
not require that the remedies perfectly match the alleged 
violations.'' SBC Commc'ns, 489 F. Supp. 2d at 17; see also 
Microsoft, 56 F.3d at 1461 (noting the need for courts to be 
``deferential to the government's predictions as to the effect of 
the proposed remedies''); United States v. Archer-Daniels-Midland 
Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court 
should grant due respect to the United States's prediction as to the 
effect of proposed remedies, its perception of the market structure, 
and its views of the nature of the case).
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    \4\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
'reaches of the public interest'').
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    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be 
approved even if it falls short of the remedy the court would impose 
on its own, as long as it falls within the range of acceptability or 
is ``within the reaches of public interest.'' United States v. Am. 
Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 1982) (citations 
omitted) (quoting United States v. Gillette Co., 406 F. Supp. 713, 
716 (D. Mass. 1975)), aff'd sub nom. Maryland v. United States, 460 
U.S. 1001 (1983); see also United States v. Alcan Aluminum Ltd., 605 
F. Supp. 619, 622 (W.D. Ky. 1985) (approving the consent decree even 
though the court would have imposed a greater remedy). As this Court 
has previously recognized, to meet this standard ``[t]he government 
need not prove that the settlements will perfectly remedy the 
alleged antitrust harms, it need only provide a factual basis for 
concluding that the settlements are reasonably adequate remedies for 
the alleged harms.'' United States v. Abitibi-Consolidated Inc., 584 
F. Supp. 2d 162, 165 (D.D.C. 2008) (citing SBC Commc'ns, 489 F. 
Supp. 2d at 17).
    Moreover, the Court's role under the APPA is limited to 
reviewing the remedy in relationship to the violations that the 
United States has alleged in its complaint, rather than to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459. Because the 
``court's authority to review the decree depends entirely on the 
government's exercising its prosecutorial discretion by bringing a 
case in the first place,'' it follows that ``the court is only 
authorized to review the decree itself,'' and not to ``effectively 
redraft the complaint'' to inquire into other matters that the 
United States did not pursue. Id. at 1459-60. As this Court recently 
confirmed in SBC Communications, courts ``cannot look beyond the 
complaint in making the public interest determination unless the 
complaint is drafted so narrowly as to make a mockery of judicial 
power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
    In its 2004 amendments to the Tunney Act,\5\ Congress made clear 
its intent to preserve the practical benefits of utilizing consent 
decrees in antitrust enforcement, stating ``[n]othing in this 
section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. Sec.  16(e)(2). The clause reflects what 
Congress intended when it enacted the Tunney Act in 1974, as Senator 
Tunney explained: ``[t]he court is nowhere compelled to go to trial 
or to engage in extended proceedings which might have the effect of 
vitiating the benefits of prompt and less costly settlement through 
the consent decree process.'' 119 Cong. Rec. 24,598 (1973) 
(statement of Senator Tunney). Rather, the procedure for the public-
interest determination is left to the discretion of the court, with 
the recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' 
SBC Commc 'ns, 489 F. Supp. 2d at 11.
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    \5\ The 2004 amendments substituted the word ``shall'' for 
``may'' when directing the courts to consider the enumerated factors 
and amended the list of factors to focus on competitive 
considerations and address potentially ambiguous judgment terms. 
Compare 15 U.S.C. Sec.  16(e) (2004), with 15 U.S.C. Sec.  16(e)(1) 
(2006); see also SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding 
that the 2004 amendments ``effected minimal changes'' to Tunney Act 
review).
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IV. SUMMARY AND RESPONSE TO PUBLIC COMMENTS

    During the 60-day public comment period, the United States 
received comments from the following associations and individuals: 
The American Antitrust Institute (``AAI''); The Consumers Federation 
of America and Consumers Union (``CFA/CU''), filing jointly; and 
Noelle Levesque, Chris Muse, David Neckolaishen, Denna Teece, Ira 
Warren

[[Page 34753]]

Patasnik, and Bill Dunn. Upon review, the United States believes 
that nothing in these comments demonstrates that the proposed Final 
Judgment is not in the public interest. Indeed, the joint comments 
filed by CFA/CU outline the numerous public benefits flowing from 
the proposed Final Judgment. What follows is a summary of the 
comments and the United States's responses to those comments.

A. AAI

    AAI describes itself as ``an independent Washington-based non-
profit education, research, and advocacy organization.'' \6\ AAI's 
membership is comprised primarily of antitrust lawyers and 
economists. It is managed by a Board of Directors that authorized 
the filing of its comments in this proceeding.\7\
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    \6\ Tunney Act Comments of the American Antitrust Institute on 
the Proposed Final Judgment, United States, et al., v. Comcast 
Corp., et al., No. 1-II-cv-00106 (RJL) (D.D.C.), at 2 (Mar. 29, 
2011) (``AAI Comments''). These comments are attached as Exhibit A.
    \7\ Id. at 2.
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    AAI argues that because the proposed Final Judgment contains 
conduct remedies, it fails to match the allegations of the Complaint 
with an appropriate cure and thereby diverges from the Department's 
Antitrust Division Policy Guide to Merger Remedies and from 
longstanding policy in vertical merger cases.\8\ AAI's statement of 
Department policy is incorrect. The Department has long recognized 
that there may be certain situations, i.e., vertical mergers in 
particular, ``where a structural remedy is infeasible.'' \9\ In such 
cases, the Department's choice ``necessarily will come down to 
stopping the transaction or imposing a conduct remedy.'' \10\ The 
Department analyzes each merger according to its unique facts. In 
this case, the Department determined that the transaction would 
result in anticompetitive harm and that the harm was not outweighed 
by merger-specific efficiencies. Contrary to AAI's comments, the 
Complaint does not allege that there were no efficiencies associated 
with the transaction. Rather, the Complaint alleges that ``[Ole 
proposed JV will not generate verifiable, merger-specific 
efficiencies sufficient to reverse the competitive harm of the 
proposed JV.'' \11\ The proposed Final Judgment cures the 
anticompetitive harm while preserving the potential efficiencies 
flowing from the transaction.
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    \8\ Id. at 5.
    \9\ U.S. Dep't of Justice, Antitrust Division Policy Guide to 
Merger Remedies, at 21 (Oct. 2004) (``Antitrust Division Remedies 
Guide''). The Antitrust Division Remedies Guide clarifies the policy 
considerations behind the Department's merger remedies. It expressly 
states that conduct remedies may provide effective relief for the 
likely anticompetitive effects of some vertical mergers. Id. Indeed, 
the Department has imposed conduct remedies in decrees pertaining to 
previous transactions involving vertical elements. See, e.g., Final 
Judgment, United States v. Northrop Grumman Corp. et al., 2003-1 
Trade Cas. (CCH) ] 74,057 (D.D.C. June 10, 2003), 2003 WL 21659404.
    \10\ Antitrust Division Remedies Guide at 22.
    \11\ Complaint, United States, et al. v. Comcast Corp., et al., 
No. 1-11-cv-00106 (RU), ] 56 (D.D.C. filed Jan. 18, 2011).
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    AAI also criticizes the proposed Final Judgment's licensing 
provisions as ``requir[ing] ongoing oversight, monitoring, and 
compliance'' that antitrust enforcers and courts are ``woefully'' 
equipped to handle.\12\ This criticism ignores the proposed Final 
Judgment's incorporation of an arbitration mechanism to resolve any 
disputes over whether the JV is meeting its obligations under the 
proposed Final Judgment to license popular NBCU content to 
competitors. Arbitration is commonly used to resolve such disputes, 
and the arbitration mechanism incorporated in the proposed Final 
Judgment should prevent the Department, or the Court, from being 
unnecessarily embroiled in difficult issues.'' \13\
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    \12\ AAI Comments at 11. AM's criticism is disingenuous. 
Elsewhere in its comments, AM suggests that a conduct remedy 
involving ``[w]alling off management decisions on the programming 
side of the JV from decisions on the distribution side will help 
prevent foreclosure of OVDs.'' Id. at 19-20. AAI does not explain 
how or why the proposed Final Judgment's conduct remedies are less 
likely to be successful than AAI's proposed conduct remedy.
    \13\ AAI's criticism also ignores the ongoing regulation and 
oversight of this industry by the FCC. Indeed, the FCC has imposed 
licensing conditions on the Defendants similar to those contained in 
the proposed Final Judgment. See Memorandum Opinion and Order, In re 
Applications of Comcast Corp., General Electric Co. and NBC 
Universal, Inc. for Consent to Assign Licenses and Transfer Control 
of Licensees, FCC MB Docket No. 10-56, 2011 WL 194538 (rel. Jan. 20, 
2011), available at litvilwww.fcc.govily--Releases-- Business12011/
db0309/FCC-11-4A1pdf.
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    AAI further argues that the proposed Final Judgment contains 
requirements with subjective terms that ``will open the door to 
disputes * * * '' \14\ Any remedy, particularly one that involves a 
rapidly changing, high-technology market, will necessarily contain 
some open-ended or subjective terms to preserve needed flexibility. 
Arms-length negotiations should resolve most issues regarding these 
terms. The proposed Final Judgment sets out a general framework of 
access with a backstop of baseball-style arbitration. Unlike the 
FCC's arbitration provisions, which are appealable, arbitration 
under the proposed Final Judgment is binding on the parties. Thus, 
the parties have an increased incentive under the proposed Final 
Judgment to reach a commercial agreement without intervention by a 
third-party arbitrator. To the extent that the parties cannot reach 
agreement, an aggrieved OVD may appeal to the Department for the 
right to arbitrate. Under baseball-style arbitration, both parties 
submit their best offers to a neutral, third-party arbitrator who 
then decides which of the two offers is more reasonable based upon 
evidence in the record, including contracts with other parties. 
Baseball-style arbitration has been successfully employed as a 
vertical merger remedy pursuant to numerous FCC orders \15\ and 
there is no evidence that it will not be an effective remedy in this 
case.
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    \14\ AAI Comments at 13.
    \15\ See, e.g., Memorandum Opinion and Order, In re The DirecTV 
Group and Liberty Media Corp., Applications for Transfer of Control, 
23 F.C.C.R. 3265, 3342-49 (2008); Memorandum Opinion and Order, In 
re Adelphia Communications Corp., Time Warner Cable Inc., and 
Comcast Corp., Applications for Transfer of Control, 21 F.C.C.R. 
8203, 8337-40 (2006); Memorandum Opinion and Order, In re General 
Motors Corporation, Hughes Electronics Corporation, and News 
Corporation, Applications for Transfer of Control, 19 F.C.C.R. 473, 
677-82 (2004).
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    AAI also claims that the proposed Final Judgment relies on 
static benchmarks that fail to account for change in an emerging and 
dynamic OVD industry.\16\ AAI is mistaken. The proposed Final 
Judgment explicitly recognizes that online video distribution is in 
its infancy and that the identity of new competitors, and the terms 
and conditions under which providers of programming will contract 
with them, may change. The proposed Final Judgment, therefore, sets 
forth different scenarios under which OVDs may seek video 
programming from the JV, both now and in the future. For example, 
Section IV.B.6 of the proposed Final Judgment sets forth different 
scenarios under which a Qualified OVD may seek additional video 
programming from the JV. Similarly, Section IV.B.7 defines the 
circumstances under which an OVD that subsequently becomes a 
Qualified OVD may seek new or additional video programming from the 
iv. Finally, Section IV.G which governs the JV's provision of video 
programming to Hulu, contemplates that the JV will enter agreements 
with Hulu on substantially the same terms and conditions as those of 
the broadcast owner whose renewed agreement is most economically 
advantageous to Hulu.
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    \16\ AAI Comments at 15.
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    With respect to Hulu, AAI further argues that the proposed Final 
Judgment's delegation of voting rights in Hulu to the non-JV 
partners compromises the development of Hulu.\17\ Although there is 
no question that Fox and ABC have a greater say in Hulu as a 
consequence of the proposed Final Judgment's requirement that 
Comcast vote its shares in line with their votes, AAI has not 
explained how this requirement is harmful to Hulu's development. The 
integrated Comcast-NBCU has different incentives vis-[agrave]-vis 
Hulu than does a standalone NBCU. By requiring the JV to relinquish 
its voting rights in Hulu to the non-JV partners, the proposed Final 
Judgment does not deprive the decision-making process of an 
``independent'' non-voting member but, rather, restores how a 
standalone media partner would have voted with respect to Hulu. 
Additionally, Hulu, whose future competitiveness AAI purports to 
protect, does not object to the delegation of voting rights.
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    \17\ Id. at 17.
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    Ultimately, AAI's comments boil down to the argument that other 
remedies would be better than those contained in the proposed 
settlement. At some points, AAI contends that nothing short of a 
full prohibition of the merger would be adequate to redress the harm 
alleged in the Complaint.\18\ At other

[[Page 34754]]

points, it suggests a variety of modifications to the proposed Final 
Judgment.\19\ Although AAI concedes that ``this Court is not 
authorized to re-write the consent decree,'' it appears to invite 
the Court to do exactly that. However, the Department in a Tunney 
Act proceeding must show only that the settlement is ``within the 
range of acceptability or `within the reaches of the public 
interest.' ''\20\ As set forth in the CIS and as discussed above, 
the Department believes that the proposed Final Judgment is not only 
``reasonably adequate,'' \21\ but that it provides effective, 
carefully tailored relief that will prevent the anticompetitive 
harms alleged in the Complaint. Nothing in AAI's comments should 
dissuade this Court from concluding that entry of the proposed Final 
Judgment is in the public interest.
---------------------------------------------------------------------------

    \18\ See AAI Comments at 4, 18. This argument is not new. As 
noted above, AAI previously filed comments with the FCC in which 
encouraged the Commission to deny approval of the Comcast/NBCU 
transaction. AAI's FCC Comments at 7, 26.
    \19\ See, e.g., AAI Comments at 19.
    \20\ See United States v. Am. Tel. & Tel. Co., 552 F. Supp. 131, 
151 (D.D.C. 1982) (citations omitted) (quoting United States v. 
Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd sub nom. 
Maryland v. United States, 460 U.S. 1001 (1983); see also, e.g., SBC 
Commc'ns, 489 F. Supp. 2d at 17 (``Further, the Court must accord 
deference to the government's predictions about the efficacy of its 
remedies, and may not require that the remedies perfectly match the 
alleged violations because this may only reflect underlying weakness 
in the government's case or concessions made during negotiation.''). 
In this case, the Department concluded that entry of the proposed 
Final Judgment was preferable to incurring the costs and risks 
associated with seeking an injunction to block the transaction, 
especially since the former may allow the realization of merger-
specific efficiencies.
    \21\ See SBC Commc 'ns, 489 F. Supp. 2d at 17.
---------------------------------------------------------------------------

B. CFA/CU

    The Consumers Federation of America (``CFA'') is an association 
of three hundred nonprofit organizations that promote consumer 
issues through research, education, and advocacy.\22\ Consumers 
Union (``CU''), the publisher of Consumer Reports, is a non-profit 
that provides consumers with information, education, and policy 
advice on a range of issues affecting consumer health and 
welfare.\23\ Both CFA and CU met with the Department and filed 
comments with the FCC relating to this transaction.\24\ While CFA/
CU's ``initial take'' on the acquisition was that it should be 
blocked, CFA/CU now believes that ``the FCC and the DOJ have put 
together a set of conditions and enforcement measures that * * * 
protect consumers and promote the public interest.'' \25\ 
Specifically, CFA/CU argues that the proposed Final Judgment's 
licensing conditions, which require the JV to match the best 
practices of its peers, as well as the proposed Final Judgment's 
prohibitions on restrictive contracting practices, will better 
ensure the availability of programming for online video 
distribution.\26\ CFA/CU not only believes that the licensing 
provisions are enforceable, but that the proposed Final Judgment 
provides the Defendants with strong incentives to reach commercially 
reasonable agreements without invoking enforcement mechanisms.\27\ 
For these and other reasons, CFA/CU concludes that ``[c]onsumers and 
competition will be better off as a result of the judgment than if 
the merger had been denied.'' \28\
---------------------------------------------------------------------------

    \22\ See Tunney Act Comments of Consumer Federation of America 
and Consumers Union, United States, et al., v. Comcast Corp., et 
al., No. 1-11-cv-00106 (RJL) (D.D.C.), at 1 n.1 (Apr. 1, 2011) 
(``CFAJCU Comments''). These comments are attached as Exhibit B.
    \23\ Id.
    \24\ See supra note 1.
    \25\ CFA/CU Comments at 2.
    \26\ See id. at 4.
    \27\ Id. at 4-5.
    \28\ Id. at 5.
---------------------------------------------------------------------------

C. Additional Comments

    The United States also received comments from six citizen 
complainants.\29\ The citizen complainants generally argue that the 
Department should not have allowed the transaction to have gone 
forward. None of these comments raises substantive issues regarding 
the efficacy of the relief contained in the proposed Final Judgment 
to remedy the competitive harm in the market for distribution of 
full-length professional video programming to residential consumers 
alleged in the Complaint.
---------------------------------------------------------------------------

    \29\ The citizen complainants are Noelle Levesque, Chris Muse, 
David Neckolaishen, Denna Teece, Ira Warren Patasnik, and Bill Dunn. 
Their comments are attached as Exhibits C-H. Pursuant to a specific 
request, the Department has redacted the e-mail and mailing 
addresses of the citizen complainants.
---------------------------------------------------------------------------

V. CONCLUSION

    After careful consideration of the public comments, the United 
States concludes that entry of the proposed Final Judgment will 
provide an effective and appropriate remedy for the antitrust 
violations alleged in the Complaint and is therefore in the public 
interest. The relatively small number of comments filed by persons 
objecting to the settlement, especially when weighed against the 
size and complexity of the transaction, is itself indicative of the 
adequacy of the proposed Final Judgment. Accordingly, after the 
comments and this response are published, the United States will 
move this Court to enter the proposed Final Judgment.

Dated: June 6, 2011

Respectfully submitted,

\s\
Yvette F. Tarlov
(D.C. Bar 442452)
Attorney
Telecommunications & Media Enforcement Section
Antitrust Division
U.S. Department of Justice
450 Fifth Street, N.W., Suite 7000
Washington, DC 20530
Telephone: (202) 514-5621
Facsimile: (202) 514-6381
Email: Yvette.Tarlov@usdoj.gov

March 29, 2011

VIA ELECTRONIC MAIL

Nancy Goodman
Chief, Telecommunications & Media Enforcement Section
Antitrust Division
Department of Justice
450 Fifth Street, NW.,
Suite 7000
Washington, DC 20530

Re: Tunney Act Comments in U.S. v. Comcast Corp., General Electric 
Co., and NBC Universal, Inc.

Dear Ms. Goodman:

Attached please find comments of the American Antitrust Institute in 
U.S. vs. Comcast Corp., General Electric Co., and NBC Universal, 
Inc., pursuant to Section 2(b) of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16 (Tunney Act).

Sincerely,

Diana L. Moss
Vice President and Director

American Antitrust Institute
P.O. Box 20725
Boulder, CO 80208
phone: 720-233-5971
e-mail: antitrustinstitute.org">dmoss@antitrustinstitute.org
web: www.antitrustinstitute.org

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA,
STATE OF CALIFORNIA,
STATE OF FLORIDA,
STATE OF MISSOURI,
STATE OF TEXAS, and
STATE OF WASHINGTON,

Plaintiffs,
v.

COMCAST CORP., GENERAL ELECTRIC CO., and NBC UNIVERSAL, INC.,
Defendants

Case: 1:11-cv-00106
Judge: Richard, J. Leon

TUNNEY ACT COMMENTS OF THE AMERICAN ANTITRUST INSTITUTE ON THE PROPOSED 
FINAL JUDGEMENT

I. Introduction

    The American Antitrust Institute (AAI) is an independent 
Washington-based nonprofit education, research, and advocacy 
organization. The AAI is devoted to advancing the role of 
competition in the economy, protecting consumers, and sustaining the 
vitality of the antitrust laws. The AAI is managed by its Board of 
Directors, which alone has approved this filing. Its Advisory Board 
consists of over 115 prominent antitrust lawyers, economists, and 
business leaders. The AAI has had an interest in this proceeding 
because it raises critical issues of competition policy and consumer 
choice involving video programming and distribution and diversity in 
the media. In June 2010, the AAI filed comments with the Federal 
Communications Commission (FCC) in the docket assigned to the 
Comcast/NBCU joint venture (IV).\1\ Those comments discuss some of 
the key competitive issues raised by the JV and urge the FCC to 
reject the transaction.\2\
---------------------------------------------------------------------------

    \1\ See Federal Communications Commission, in the Matter of 
Applications of Comcast Corporation, General Electric Company and 
NBC Universal, Inc. for Consent to Assign Licenses or Transfer 
Control of Licensees, MB Docket No. 10-56.
    \2\ American Antitrust Institute, Comments, in the Matter of 
Applications of Comcast Corporation, General Electric Company and 
NBC Universal, Inc. for Consent to Assign Licenses or Transfer 
Control of Licensees, MB Docket No. 10-56 (June 21, 2010). Available 
at https://www.antitrustinstitute.oresiteddefault/files/AAI_Comcast_NBCU%20Comments_2_070220101958.pdf.

---------------------------------------------------------------------------

[[Page 34755]]

    Pursuant to Section 2(b) of the Antitrust Procedures and 
Penalties Act (APPA), 15 U.S.C. Sec.  16 (Tunney Act), the AAI 
submits these comments on the Proposed Final Judgment (PFJ or 
consent decree) in the above-mentioned case.\3\ Congress has made 
this Court the final arbiter of the propriety of mergers under the 
antitrust laws. The Court must ``determine that the entry of such 
judgment is in the public interest.'' \4\ If the Court cannot make 
this finding, it must reject the PFJ unless more adequate provisions 
are made to protect the public interest. In the following analysis, 
the AAI respectfully argues that for the numerous reasons set forth, 
the consent decree is not in the public interest and should be 
rejected by the Court.
---------------------------------------------------------------------------

    \3\ U.S. Department of Justice, Proposed Final Judgment, U.S. 
and Plaintiff States v. Comcast Corp., et al., No. 1:11-cv-00106 
(D.C. Cir. January 18, 2011).
    \4\ 15 U.S.C. Sec.  16(e). See, e .g., United States v. 
Microsoft Corp., 56 F.3d 1448, 1458 (D.C. Cir. 1995).
---------------------------------------------------------------------------

    The AAI's comments proceed as follows. Section II provides an 
overview of the Comcast/NBCU JV and details the major reasons why it 
will establish poor precedent for merger policy. Section III 
summarizes the U.S. Department of Justice (DOJ) Complaint.\5\ 
Section IV outlines specific problems that make the consent decree 
unsuitable, and Section V concludes with suggested modifications to 
the PFJ that would bring it more into line with the Complaint. The 
PFJ suffers from the following problems:
---------------------------------------------------------------------------

    \5\ U.S. Department of Justice, Complaint, U.S. and Plaintiff 
States v. Comcast Corp., et al., No. 1:11-cv00106 (D.C. Cir. January 
18, 2011).
---------------------------------------------------------------------------

     The PFJ lacks a strong justification for the use of 
open access remedies, which are inconsistent with the DOJ's 
guidelines and principles of antitrust remedies.
     The PFJ contains requirements that are defined by 
subjective terms and therefore invite dispute, arbitration, delay, 
and expense.
     The PFJ's requirements are based on static benchmarks 
that will undoubtedly change in an emerging and dynamic online video 
distribution (OVD) industry but for which the PFJ envisions no 
adjustments or flexibility.
     The PFJ's delegation of NBCU's voting rights in Hulu 
will compromise important voting dynamics regarding management and 
governance, potentially affecting how the most important OVD 
develops.
     Short of the DOJ suing to stop the transaction, no set 
of remedies will prevent the JV from controlling how rivalry 
develops between two major, important systems--the delivery of 
programming through cable television and cable modem high-speed 
internet (HSI).

II. Overview

    The combined Comcast/NBCU will arguably be the pre-breakup 
``Standard Oil'' of modern video programming and distribution. By 
placing valuable and important NBCU programming under Comcast's 
control, the JV will directly or indirectly control everything from 
the creation to delivery of video programming to the consumer 
through a variety of distribution conduits or channels. With the JV, 
Comcast will be in a position to decide whether or not to sell 
important NBCU programming to its rivals, including other multi-
video programming distributors (MVPDs) such as digital broadcast 
satellite (DBS) providers, telcos, cable overbuilders, and OVDs. 
Because the OVD segment of the video programming distribution (VPD) 
market is in the early stages of development and would benefit the 
most from competitive market forces, the JV is particularly 
troublesome. And because Comcast is a dominant supplier of cable 
modem HSI and cable television services in numerous geographic areas 
in the U.S., its control over NBCU will enable it to determine, 
step-by-step, how the delivery of programming via the two competing 
modes of distribution develops over time. As a result, the JV will 
adversely affect competition in the market for VPD, to the detriment 
of consumers.
    Thousands of pages of comments and protests in the FCC docket 
describe the multitude of competitive and consumer harms potentially 
inflicted by the merger.\6\ Questions, concerns, and calls for 
rigorous merger enforcement have been raised in media commentaries, 
hearings, and other public fora. Yet we need look no further than 
the DOJ Complaint itself to assess the gravity of the JV's 
anticompetitive effects:
---------------------------------------------------------------------------

    \6\ See Federal Communications Commission transaction team re: 
Comcast Corporation and NBC Universal. Available https://www.fcc.gov/transaction/comcast-nbcu.html#record.
---------------------------------------------------------------------------

    * * * the proposed joint venture * * * would allow Comcast, the 
largest cable company in the United States, to control some of the 
most popular video programming among consumers, including the NBC 
Television Network [ ] and the cable networks of NBC Universal, Inc. 
[]. If the JV proceeds, tens of millions of U.S. consumers will pay 
higher prices for video programming distribution services, receive 
lower-quality services, and enjoy fewer benefits from innovation.\7\
---------------------------------------------------------------------------

    \7\ Supra note 5, at para. 2.
---------------------------------------------------------------------------

    Herein lies the dilemma facing the court. The DOJ's failure to 
match its Complaint with an appropriate cure diverges from its own 
remedies guidelines and from long-standing precedent in vertical 
merger cases. For example, the DOJ's Antitrust Division Policy Guide 
to Merger Remedies (Policy Guide) states: ``There must be a 
significant nexus between the proposed transaction, the nature of 
the competitive harm, and the proposed remedial provisions.'' \8\ 
For the reasons set forth in Section IV below, the lack of such a 
nexus means that the PFJ will not protect or restore competition, 
which the Supreme Court has emphasized is the paramount purpose of 
an antitrust remedy.\9\ Moreover, if the PFJ is found by the Court 
to be in the public interest, it will set a dangerous precedent for 
merger policy, for three major reasons.
---------------------------------------------------------------------------

    \8\ United States Department of Justice, Antitrust Division, 
ANTITRUST DIVISION POLICY GUIDE TO MERGER REMEDIES (October 2004), 
at p. 2. Available https://www.justice.goviatr/public/guidelines/205108.pdf.
    \9\ Id., at p. 4. Citing to United States v. E.I. du Pont de 
Nemours & Co., 366 U.S. 316, 326 (1961).
---------------------------------------------------------------------------

    First, the troubling incongruity between the strength of the 
DOJ's Complaint and the weakness of the PFJ will only encourage the 
very conduct identified in the Complaint; it is reminiscent of when 
a larcenist gets off with a warning and immediately repeats his 
crime. This incongruity creates a standard that is likely to serve 
as a green light for all future mergers to come--no matter how 
anticompetitive or anti-consumer. Enforcement with a ``bark but no 
bite'' will limit the effectiveness of merger control as a tool for 
protecting competition in the U.S. economy.
    Second, the PFJ employs weak, regulatory-style conduct remedies 
for a transaction that, as discussed later, the DOJ Complaint states 
is devoid of any countervailing efficiencies.\10\ Indeed, the 
antitrust agencies have reserved conduct remedies for cases where 
they specifically wish to preserve demonstrated efficiencies 
resulting from vertical integration. The Policy Guide states, for 
example, that:
---------------------------------------------------------------------------

    \10\ Supra, note 5, at para. 56.
---------------------------------------------------------------------------

    * * * the use of conduct remedies standing alone to resolve a 
merger's competitive concerns is rare and almost always in 
industries where there already is close government oversight. Stand-
alone conduct relief is only appropriate when a full-stop 
prohibition of the merger would sacrifice significant efficiencies 
and a structural remedy would similarly eliminate such efficiencies 
or is simply infeasible.\11\
---------------------------------------------------------------------------

    \11\ Id. at para. 20.
---------------------------------------------------------------------------

    Whether this departure from the agency's preferred practice 
reflects the undue influence of the regulatory culture in the DOWFCC 
collaborative process or other forces, it is a dangerous line to 
cross. If the PFJ is not rejected, it is likely to set a precedent 
for the use of weak behavioral remedies in similarly harmful 
transactions.
    Finally, we can expect that the demonstrated and documented 
problems with conduct remedies will come to bear on the post-merger 
conduct of the JV, limiting their effectiveness and exposing 
competition and consumers to the harms so clearly described in the 
Complaint. For example, conduct remedies are known to be easy to 
circumvent. Moreover, such remedies are difficult to enforce and 
impose undue compliance and monitoring burdens on the Courts. For 
these reasons, the antitrust agencies themselves have typically 
disfavored such approaches. Adopting conduct remedies here is 
unprecedented and effectively transforms the DOJ into a regulatory 
agency.

III. The Complaint--Competitive Harm Inflicted by the Proposed Comcast/
NBCU JV

    According to the Complaint, by adding NBCU's content to its 
existing arsenal of assets, Comcast will have the increased ability 
to cut off or raise the price of important NBCU programming to rival 
VPDs. Those distributors include both (1) traditional MVPDs such as 
rival cable companies, DBS, cable overbuilders, and

[[Page 34756]]

telcos, and (2) OVDs.\12\ These effects thus capture standard 
anticompetitive vertical foreclosure or raising rivals costs 
concerns associated with vertical integration. Comcast/NBCU, 
however, is a one-sided coin. Vertical efficiencies such as 
economies of coordination and lower transaction costs that often 
have a countervailing effect on anticompetitive harms are not 
present here. The Complaint, in fact, states that the proposed JV 
``will not generate verifiable, merger-specific efficiencies 
sufficient to reverse the competitive harm of the proposed JV.'' 
\13\
---------------------------------------------------------------------------

    \12\ Supra note 5, at para. 4.
    \13\ Id., at para. 56.
---------------------------------------------------------------------------

    The loss of NBCU as an independent force in the production of 
programming will inflict particularly serious damage to competition 
and consumers. For example, the Complaint stresses the importance of 
NBCU's programming to both MVPDs and OVDs, referring to it as 
``vital'' and a ``potent tool'' which, if controlled by Comcast, 
could be used to disadvantage VPD rivals.\14\ Moreover, NBCU content 
is critical for rival distributors to ``attract and retain 
customers'' and to ``compete effectively.'' \15\ Further, NBCU has 
been one of the content providers ``most willing to support OVDs and 
experiment with different methods of online distribution.'' \16\ The 
Complaint's predicted effects of the IV include a diminution of 
innovation in the relevant market for VPD, fewer choices for 
consumers, and higher prices for programming.\17\
---------------------------------------------------------------------------

    \14\ Id., at para. 4.
    \15\ Id., at para. 6 and 49.
    \16\ Id., at para 52.
    \17\ Id., at para 4.
---------------------------------------------------------------------------

    The likely effect of the JV on OVDs, however, is particularly 
pernicious. The Complaint notes that Comcast documents 
``consistently portray the emergence of OVDs as a significant 
competitive threat'' \18\ and that Comcast has taken steps to 
prevent its cable customers from cord-shaving or cord-cutting in 
favor of OVDs.\19\ The Complaint characterizes the impact of the JV 
on emerging competition from OVDs as ``extremely troubling'' given 
that OVDs are in the nascent stages of development and that they 
have the potential to ``significantly increase competition'' by 
introducing programming with new and innovative features, packaging, 
pricing, and delivery methods.'' \20\
---------------------------------------------------------------------------

    \18\ Id., at para 36 and 46.
    \19\ Id., at para. 53.
    \20\ Id., at para. 52.
---------------------------------------------------------------------------

    Thus, by cutting off or raising prices of NBCU content to OVDs, 
the Complaint predicts that Comcast could ``curb'' nascent OVD 
competition and ``encumber'' the development of ``nascent 
distribution technologies and the business models that underlie 
them.* * *'' \21\ As a result, Comcast will face less competitive 
pressure to innovate and the future evolution of OVDs will likely be 
muted.\22\ Given that entry in traditional VPD in Comcast's many 
service areas is difficult and unlikely, the Complaint states that 
OVDs' are ``likely the best hope for additional video programming 
distribution competition in Comcast's cable franchise areas.'' \23\ 
Impairing competition from OVDs would therefore inflict particularly 
grave harm on consumers.
---------------------------------------------------------------------------

    \21\ Id., at para. 54.
    \22\ Id.
    \23\ Id., at para. 9.
---------------------------------------------------------------------------

IV. The Proposed Final Judgment--Weak Conduct Remedies that Fail to 
Address Competitive Harms and do not Preserve Competition

    The breadth and depth of the competitive concerns articulated in 
the Complaint could, in theory, support a government decision to 
seek a full-stop injunction that would prevent the parties from 
consummating the transaction. Absent that, the strength of the 
Complaint warrants conditions that are far stronger than the conduct 
remedies that are contained in the consent decree. The contrived 
world in which the JV is allowed to go forward will be defined by a 
series of prescriptive and far-reaching prohibitions, requirements, 
and permissions regarding the JV's conduct, many of which are 
duplicated in the FCC's order.\24\ The DOJ's guidelines for remedies 
clearly disfavor conduct-based fixes. The logic behind this is well 
known. For example, the Policy Guide states that:
---------------------------------------------------------------------------

    \24\ See Federal Communications Commission, Memorandum Opinion 
and Order, the Matter of Applications of Comcast Corporation, 
General Electric Company and NBC Universal Inc. for Consent to 
Assign Licenses or Transfer Control of Licensees, MB Docket No. 10-
56 (January 20, 2011), Appendix A.
---------------------------------------------------------------------------

    ``A carefully crafted divestiture decree is simple, relatively 
easy to administer, and sure to preserve competition. A conduct 
remedy, on the other hand, typically is more difficult to craft, 
more cumbersome and costly to administer, and easier than a 
structural remedy to circumvent.'' \25\
---------------------------------------------------------------------------

    \25\ Supra note 8, at p. 8 (internal citation and quotation 
omitted).
---------------------------------------------------------------------------

    The following sections address several flaws in these myriad 
conditions that make them subject to dispute and arbitration, 
relatively ineffective, difficult to enforce, and therefore not in 
the public interest.
    A. The PFJ lacks a strong justification for the use of open 
access remedies, which are inconsistent with the DOJ's guidelines 
and principles of antitrust remedies.
    The core of the PFJ describes what is essentially an open access 
or fair dealing requirement for how Comcast/NBCU may deal with OVDs 
that the Complaint stresses are particularly imperiled by the JV. 
The open access requirement also covers how the JV deals 
specifically with Hulu, a leading OVD, in which NBCU will be allowed 
to maintain its ownership interest. The FFJ requires the JV to 
provide programming to OVDs that is: (1) Economically equivalent to 
what it provides to rival MVPDs and (2) economically equivalent and 
comparable to what a rival OVD receives from a peer (i.e., broadcast 
networks, cable programmers, etc.).\26\ The PFJ also requires the JV 
to provide programming to Hulu comparable to that offered by a Hulu 
broadcast network owner providing the greatest quantity of 
programming.\27\
---------------------------------------------------------------------------

    \26\ Supra note 3, Sections IV(A) and (B).
    \27\ Id., Section IV(G).
---------------------------------------------------------------------------

    Presumably, the open access requirement is designed to replicate 
a situation where competitive market forces govern how an 
independent NBCU engages with OVDs. This is a notoriously difficult 
task, however, and doing so in a nascent industry is a largely 
untested and risky endeavor. This regulatory framework will shape 
how the industry evolves, the pace of innovation, and the choices 
available to consumers, with uncertain and potentially harmful 
effects relative to what might happen if NBCU remained independent. 
The Policy Guide again provides critical insight: ``When used at all 
in Division decrees, such [conduct] provisions invariably require 
careful crafting so that the judgment accomplishes the critical 
goals of the antitrust remedy without damaging market performance.'' 
\28\
---------------------------------------------------------------------------

    \28\ Supra note 8, at p. 25.
---------------------------------------------------------------------------

    Open access conditions have been favored by regulators in 
restructuring industries such as electricity, natural gas, and 
telecommunications. They have also been employed in some cases as 
conditions required for regulatory approval of mergers.\29\ Conduct 
remedies require ongoing oversight, monitoring, and compliance that 
regulators are institutionally set up to deal with, but which the 
courts are woefully not. Such fixes have even stymied regulators, as 
vertically-integrated firms find loopholes and ways to work around 
the requirements to engage in the discriminatory behavior that is in 
their best economic interest. Indeed, the DOJ's Policy Guide 
identifies this very concern in discussing conduct remedies when it 
states: ``* * * care must be taken to avoid potential loopholes and 
attempted circumvention of the decree.'' \30\ Perhaps the most 
notable example is open access in the U.S. electricity industry. 
Ongoing anticompetitive behavior by vertically-integrated 
transmission owners has perpetuated successive rulemakings designed 
to patch or close gaps in conduct requirements.\31\
---------------------------------------------------------------------------

    \29\ See, e.g., Public Serv. Co. of Col., 58 F.E.R.C. 61,322, at 
62,039 (1992) (approving the proposed merger because the parties 
agreed to provide transmission access to third parties).
    \30\ Supra note 8, at p. 6.
    \31\ See, e.g., Preventing Undue Discrimination and Preference 
in Transmission Service, Order No. 890, FERC Stats. & Regs.1 ] 
31,241, at para. 26.
---------------------------------------------------------------------------

    Rarely have open access conditions been employed as a merger 
remedy by an antitrust agency. In the merger of America Online/Time 
Warner, the Federal Trade Commission used an open access requirement 
to ensure that the merged firm would not foreclose rival internet 
service providers.\32\ However, in comparison to the sweeping open 
access requirements employed by the DOJ in Comcast/NBCU, it was a 
tailored remedy and did not involve technologies or markets in the 
same formative stage as OVDs. In light of the foregoing, the use of 
open access or fair dealing remedies are inconsistent with internal 
guidelines and well-established principles of antitrust remedies. As 
a result,

[[Page 34757]]

there ought to be a strong justification for their use here, which 
is lacking in the PFJ.
---------------------------------------------------------------------------

    \32\ See Federal Trade Commission, Decision and Order, in the 
Matter of America Online Inc. and Time Warner Inc., Docket No. C-
3989 (December 14, 2000).
---------------------------------------------------------------------------

    B. The PFJ contains requirements that are defined by subjective 
terms and therefore invite dispute, arbitration, delay, and expense.
    Under the PFJ's open access requirements, programming to be 
provided by the JV to OVDs must be economically equivalent to that 
which: (1) It provides to MVPDs and (2) peers provide to OVDs. 
Economically equivalent means the ``prices, terms, and conditions 
that, in the aggregate, reasonably approximate'' those on which the 
JV provides programming to an MVPD.\33\ The open access requirement 
with respect to the programming provided by the JV to an OVD is also 
required to be ``comparable'' or ``reasonably similar in kind and 
amount, considering the volume and its value'' to that which an OVD 
receives from a peer.\34\ Moreover, the programming to be provided 
by the JV to Hulu must be ``comparable'' in terms of ``type, 
quantity, ratings, and quality'' and provided on ``substantially the 
same terms and conditions.'' \35\
---------------------------------------------------------------------------

    \33\ Supra note 3, at Section IV(A).
    \34\ Id., at Section IV(B).
    \35\ Id., at Section IV(G).
--------------------------------------------------------