AOL/Time Warner agree to next set of concessions
They want this merger real bad. The FTC knows it
AOL and Time Warner have narrowly avoided an FTC court case by agreeing to a new set of concessions before their $150 billion merger is allowed to go through. The game of bluff this time revolves around competition for Internet access.
The FTC agreed to delay any action for "no more than three weeks" after the two companies said they would offer "new proposals to address competitive issues". Does anyone else find this high-profile cat and mouse game a little tedious? Anyway, the issue this time is a guarantee of competition in the Internet access market and/or a delay on when AOL can use Time Warner's cable infrastructure.
With the two companies merged, it would be a fairly simple manoeuvre to edge everyone else out of the market. AOL has therefore agreed to give people using cable TV a choice of three ISPs. However, the FTC still reckons AOL will get an unfair headstart because it will be able to offer high-speed access from day one. It's right too.
Previously AOL said it wouldn't launch its service until at least one other company has set up against it. Fortunately, the FTC would have none of it.
It looks as though the FTC is pushing for AOL to agree and sign contracts with alternative suppliers before the merger is given the green light. AOL and Time Warner will eventually agree as long as the FTC stands its ground.
The City was a little upset on the news and both companies' shares slipped: AOL by 6.9 per cent and Time Warner by 5.5 per cent. ®