WASHINGTON — The American Cable Association, which represents small cable and broadband operators, is asking the Justice Department to investigate Comcast-NBCUniversal for antitrust violations, specifically citing whether Hulu was being used as a “new weapon against its rivals.”
In a Nov. 6 letter to DOJ’s antitrust chief Makan Delrahim, ACA’s Matthew Polka wrote that “Comcast-NBCU’s incentive to cause harm is not just based on economic theory — Comcast has engaged in specific behavior that has undermined competition while it’s been subjected to the now-expired conditions.”
The conditions placed on 2011 Comcast-NBCUniversal transaction expired this year. One of the conditions required Comcast to enter into binding arbitration to settle program carriage disputes, but that provision has now expired. Polka wrote that “we do not even know how many times Comcast’s rivals had to threaten to utilize the arbitration or some other condition to get Comcast-NBCU to limit to some degree its natural proclivity to harm rivals.”
ACA argued that without any conditions placed on the transaction, Comcast-NBCU “can act with impunity, and DOJ should expect this to happen.”
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Comcast holds a 30% stake in Hulu. The merger conditions allowed it to continue to hold a stake in the streaming service, but with restrictions on its influence.
“We have heard from ACA members that they fear that Comcast- NBCU may restrict, if it is not already restricting, their ability to access Hulu and make it available to their customers as an alternative to their cable offerings.” Polka wrote. “This is especially troubling because their customers increasingly seek over-the-top options to prime offerings.”
Comcast and NBCUniversal agreed to a set of conditions as conditions for the approval of their merger by the Justice Department and the FCC in 2011, but the provisions had an expiration date. According to Bloomberg, Delrahim informed Comcast-NBCUniversal in August that the Justice Department would continue to monitor the merger even after the set of conditions expired on Sept. 1.
Polka, however, argued that “while monitoring by DOJ is certainly a step in the right direction, such a passive approach is unlikely to be effective against a sophisticated, giant firm like Comcast-NBCU.”
In response to the ACA’s letter, a Comcast spokeswoman said that “the video programming and distribution markets are incredibly competitive. New programmers and distribution platforms are offering consumers increasing choices on what and where to watch. At Comcast NBCUniversal, we are competing in this dynamic environment the way we always have — by continuing to innovate and conducting our business in compliance with antitrust laws and other legal requirements.”
She added, “Among other things, Comcast Cable has brought Netflix and YouTube to our X1 platform. And NBCUniversal has provided content to Hulu, Netflix, and hundreds of other traditional and over-the-top providers. We believe that ACA’s letter is without merit and constitutes an inappropriate attempt to gain leverage in the commercial marketplace.”
The company has long defended its adherence to the merger conditions, outlined in regular reports, and has pointed out that the Justice Department never took any action for non-compliance.
Polka, however, pointed to complaints that Comcast was not offering consumers the option of standalone broadband internet service, as was required by a condition imposed by the FCC, and instead marketing its bundling of cable, voice and internet services. In 2012, Comcast agreed to pay the FCC a $800,000 fine after the agency concluded that it was not adequately marketing the availability of a $49.95-per-month standalone service.
The ACA’s letter was released on Monday. A spokesman for the Antitrust Division did not immediately respond to Variety’s request for comment, though it was a federal holiday.