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How FCC Transaction Reviews Threaten Rule of Law and the First Amendment

The Federal Communications Commission (FCC) has the power to approve or deny any transfer of licenses issued under its jurisdiction. In recent years, the FCC has increasingly been using this power to review mergers and extract regulatory concessions from merging companies as a way to enforce rules that it is otherwise unable or unwilling to promulgate through the normal rulemaking process. Merging companies have little choice but to agree to the nominally voluntary concessions if they want their merger to go through. Furthermore, because these regulatory concessions are considered voluntary, many of them are practically unappealable, shielding the FCC’s actions from judicial review. The FCC has used its ability to extract these merger conditions to skirt statutory, and in some cases constitutional, limits on its power, posing a threat to good governance, free speech, and the rule of law.

A new study for the Mercatus Center at George Mason University examines how and why the FCC uses its power over license transfers to extract regulatory concessions from businesses, and identifies the legal implications of the expanding use of this power. The FCC has used transaction reviews both to maximize the scope of its jurisdiction and to avoid oversight. This power, which is supposed to benefit the “public interest,” has instead served the political interests of FCC administrators, stifled free speech, and created a climate of legal uncertainty in the communications industry.

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