This merger has set a precedence since with this deal, the FCC has outlined a new standard by which the agency will review future mergers.
Telecommunications provider CenturyLink Inc has won regulatory approval for its $24 billion acquisition of Level 3 Communications Inc, said the U.S. Federal Communications Commission in a statement.
The deal will enable CenturyLink to expand its footprint in the communications market and help it better compete with AT&T Inc and Verizon Communications Inc, said CenturyLink in a statement while adding that it plans on closing the deal on Wednesday.
The U.S. Justice Department gave its approval with strings attached which include some divestitures.
The approval marks the first major telecom merger under President Donald Trump.
The deal assumes significance since with this approval, the FCC outlined a new standard by which the agency will review future mergers, thus easing the way for large media and telecommunications to win merger approvals.
The FCC is currently evaluating Sinclair Broadcast Group’s $3.9 billion acquisition of Tribune Media Co which has drawn fire from across the political spectrum.
According to critics, the FCC has taken a number of regulatory steps to boost Sinclair.
“It has reached a point where all our media policy decisions seem to be custom built for this one company,” said FCC Commissioner Jessica Rosenworcel of the Sinclair deal at a congressional hearing last week.
In the past, the FCC has employed a balancing test, weighing potential public interest harms against any potential public interest benefits with applicants having to provide the burden of proof.
As per the FCC order,CenturyLink’s Level 3 deal offered a more limited standard of review that would use “narrowly tailored transaction-specific conditions to remedy” harms.
As per the office of FCC Commissioner Mignon Clyburn, the Republican majority “radically alters the commission’s long-standing merger review standards”.
Rosenworcel said “instead of using the agency’s decades-old merger review standard, (the FCC) arbitrarily introduces a new one.”
Republican commissioners have pushed for a stop in the practice of demanding conditions or concessions from companies seeking to merge that are not directly related to a transaction.
FCC Chairman Ajit Pai, who has been fiercely critical of the FCC review process under former President Barack Obama, denied that the FCC was changing the standard of review in issuing the decision.
“But we do make clear what had become increasingly hazy in recent years. This clarity will help the public to see that transactional review is an occasion to carefully consider how the transaction itself impacts the public interest, not an opportunity to extract a range of concessions, tangentially-related at best,” said Pai.