Post of the Day
June 22, 2000
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From the article posted by CoolidgeFool, I cite below some remarks which support the view that I have offered in other posts, to wit, that the prime mover of regulatory opposition to this merger is the need of the regulators to justify their institutional existence. This complaint sounds peevish, until one examines the facts. Regulatory agencies really often do act this way, and in my view the facts support the claim that they are so acting in this case. Regulatory agencies are not instituted by congress to let the regulated do as they like; they are instituted to stop them from doing as they like. A regulator who does not regulate is proving his paycheck a waste.
There are folks in Congress, primarily Republicans, who are aware that the institutional tendency of regulatory agencies, if left unchecked by those who instituted them (Congress), would eventually result in a command economy run by Washington bureaucracies. *Quis custodiat hos custodes,* as the Romans said of the pretorians: "Who shall guard these guards?" Remember how we all resented MSFT when it seemed almighty? And now many of us have begun to resent Joel Klein, wondering which entity is more fearsomely aggregating to itself power over the market, MSFT or the Justice Department.
I think that these folks, who may not have paid a great deal of attention to the WCOM / FON merger, would not look kindly on Klein's grand ambition to cripple yet another wonderful American company, or on the collusion in this unhappy enterprise of the Europeans. The latest talk is that Ebbers might consider selling WCOM if he cannot buy Sprint. In view of the importance of wireless to the future of telecommunications, this prospect seems to me not inconceivable. I understand that the price of likely wireless targets such as VSTR is now so high that WCOM could not buy them without major earnings dilution, which WCOM has hitherto avoided. The likely buyer of WCOM would be one of the European telcos with whom WCOM is presently in competition, such as VOD or DT, the latter of which is also considered a possible buyer of Sprint. The outcome, then, of America's misguided regulatory zeal might be the termination of the independent existence, and the transference to European control, of two great American telecom companies, one of which, a few short months ago, was seen as a acquirer, not an acquisition target. This is an outcome devoutly to be wished by the Europeans, but not, in my opinion, by us.
Hence I for one am contacting my representatives in Congress to ask their attention to this matter. Perhaps if others do so as well, the collective effort will have some effect.
The citations follow below. Note also the remarks in the article about the regulators not wanting to be seen as a "rubber stamp."
Joel Klein "got a particularly bitter taste in his mouth having to approve all these conglomerate mergers between the Baby Bells," Biggio says. "I think Joel felt a little powerless on the other ones, and here's one where he may be saying, 'I'm not going to be the person that sort of exercises prosecutorial discretion and lets the merger happen.' "
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