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Guide

Overview of the FCC’s Review of Significant Transactions

Introduction

Congress has charged the FCC with initially assigning licenses and authorizations under the Communications Act – for example, broadcast radio and television licenses, licenses used by wireless companies, satellite authorizations, and authorizations to provide landline telephone service. Congress also requires that the FCC approve any time one of those licenses or authorizations is assigned to another person, or control of the company holding that license or authorization is transferred. In plain terms, the FCC must approve every time a license changes hands. As a practical matter, then, the FCC reviews every merger involving a telecommunications company.

The standards for the FCC’s review have also been set by Congress. Both in making the initial assignment and in reviewing the transfer of any license, the FCC must determine whether “the public interest, convenience, and necessity” would be served by granting the application. A large part of that determination involves assessing the competitive impact of the license transfer. But unlike other parts of the federal government, the FCC examines not only whether competition would be harmed by approving the license transfer but also whether it would be enhanced. In addition, the FCC examines the likely effects of the transfer on the private sector deployment of advanced services, the diversity of license holders, and the diversity of information sources and services available to the public.

After reviewing the evidence and hearing the views of the public, the Commission issues its decision. The Commission may approve the application outright, or with conditions designed to ensure that the public interest is served. Transactions can be approved with conditions that allow the transaction to proceed but eliminate or mitigate the potential harms the Commission has found are likely to occur. If the Commission is unable to approve the transaction, it will refer it to an Administrative Law Judge for a hearing.

Steps in the process

Filing of Application. The FCC’s review begins with the filing of an application by the current license holder and the person who is seeking to acquire it. An FCC license cannot be transferred until the FCC approves, but there is no time limit between when parties may reach an agreement to transfer their licenses – and announce that fact to the public – and when they must file their application.

Initial Public Notice. When the FCC receives an application, it generally reviews it for completeness. When the staff has determined the application is in good order, it will announce in a Public Notice that the application has been accepted for filing. At that point, interested people may file comments or oppositions. Most applications, however, are routine and are granted quickly, and the Commission has instituted a number of procedures to streamline the process. Both the receipt and approval of these routine applications are announced in Public Notices that the FCC issues several times a week.

Major Transactions. If the transaction is significant, for example, because it presents a novel or complex issues of law or policy, proposes a combination of companies that is likely to have a significant impact on the public or involves issues that are likely to elicit significant public comment, the Commission will issue a separate Public Notice notifying the public that the application has been received and setting a schedule for accepting comments and oppositions. A web page will also be set up to provide the public with easier access to the documents in the case: the application, the supporting materials, Commission orders, and comments and responses. The rest of this page discusses the steps in the Commission’s review of these significant transactions.

Contents of Application. In their application, the parties will not only describe their transaction, but will discuss the benefits they expect they will achieve, such as increased competitiveness or costs savings. They may also discuss the potential harms, for example, the potential decrease in competition, and either explain why they believe those harms will not occur or offer potential remedies that the Commission could adopt to mitigate the harms.

Public Comment. After the application has been accepted for filing, comments on the application and oppositions to the application (termed Petitions to Deny) are due, usually within 30 days. Here, interested parties offer their views, either in support of or in opposition to the proposed transaction. Those opposed may provide their own analyses and may propose their own remedies and conditions. The applicants’ response is often due 10 to 15 days after that, and the commenters’ response is typically due 7 days later. These time periods can be lengthened if the issues are complex, and may be made shorter if they are not, although there will always be at least 30 days provided for persons to file their initial comments.

Information Requests and Treatment of Confidential Information. Usually shortly before or after the last set of comments have been filed, the Commission staff will issue a set of information requests to the applicants. These will typically consist of direct questions, requests for information (sales data, calculations of claimed benefits, etc.), and requests for documents (e.g., analyses of competitors). The Commission may also seek information from third-parties, such as competitors or customers of the applicants. Much of this material may be confidential and would significantly harm the companies if their competitors were to see it. The Commission therefore issues a protective order that limits who may examine the confidential material and prohibits anyone from using the material outside of the Commission’s proceeding.

“Ex Parte” Rules. In significant transactions, the proceedings will generally be designated as “permit but disclose.” This means that people may talk to and meet with the Commission staff and individual Commissioners during the review process without all the various parties being present (what is termed an ex parte presentation), so long as within two business days, they file a summary of what was said and attach any documents that were handed out. Those summaries will be posted on the transaction’s web page usually within a day or two after they are filed, allowing the public to see who met with whom and what was discussed. However, if someone fears retaliation for talking to the Commission, the conversation can be kept confidential.

Timeline. The Commission endeavors to complete its review of all transactions and issue an order within 180 days of accepting the application for filing. The web page for the transaction shows the status of a transaction on this informal timeline. Occasionally, the transaction “clock” is stopped – shown by red on the web page – if for some reason beyond the Commission’s control, the staff cannot move forward with its review. This may occur, for example, if the applicants delay in responding to an information request or if significant new issues have arisen in the proceeding.

A list of Frequently Asked Questions can be found here.

Published: August 15, 2014 Updated: July 10, 2014
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