Illinois regulator Ruth Kretschmer takes a stand against deals that would rub out competitors.
I can't recall seeing a more cogent, convincing andpassionate plea for utility regulators to get off their backsides and actually take a stand on something, as when just the other day, I came across the dissenting opinion issued Sept. 23 by Ruth Kretschmer, of the Illinois Commerce Commission. There she takes her own agency to task for voting (3-2) to approve the proposed mega-merger between the telephone giant SBC Communications Inc. and homegrown Ameritech Corp., parent company of Illinois Bell. But is Ruth too late? Already SBC has swallowed Pacific Bell, one of the former seven "Baby Bells." And at one time SBC was looking to combine with AT&T - a deal that defied belief, at least until Sprint started talking with MCI/WorldCom.
Last month I sat in as a "guest expert" when National Public Radio aired a program on electricity deregulation on the syndicated call-in talk show, "Public Interest." The hour flew by much too fast to really get into the topic, but I do remember one caller. She summed up the feelings of many Americans when she asked, "What do you mean, competition? They don't compete. They merge."
Now that the Federal Energy Regulatory Commission has decided to conduct a largely antitrust analysis when it reviews mergers between electric and gas utilities, moving away from the prior test that examined operational savings and efficiency (ideas lying more within its area of expertise), I often wonder why we don't hand the job over to the Federal Trade Commission or Department of Justice - the antitrust experts.
By contrast, the state PUCs have continued more or less to evaluate mergers based on cost savings and ratepayer benefits. But that may be changing.
In the SBC-Ameritech case, the Illinois commission attempted to gauge the merger's effect on competition. But it used only a two-year horizon, finding it unlikely that SBC would have challenged Ameritech's market during that time. This circular reasoning reveals the fallacy of using antitrust analysis where the players are already monopolies. That's where Ruth stepped in, with some plain talk.
"The majority appears to be claiming that because Ameritech Illinois has a monopoly on the local exchange market, the merger will not increase their monopoly share. Frankly, according to the record, it would be almost impossible for Ameritech to increase its market share. ¼ The reality is that in order for competition to flourish, Ameritech will have to lose market share just as AT&T lost market share after divestiture in 1984.
"We do not have a smoking gun showing SBC's plans to enter Illinois. ¼ [However] I believe ¼ that SBC would have been forced to enter Illinois in the near future."
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