The Deal: Sprint Deal Prompts New Call for FCC Timing Rules

NEW YORK ( The Deal) -- Miffed that the Federal Communications Commission missed its self-appointed deadline for completing its review of SoftBank's takeover of Sprint Nextel ( S), Republican Commissioner Ajit Pai is using the occasion to renew his call for the commission to codify its largely disregarded 180-day "shot clock" for deciding whether or not to approval a deal.

The FCC approved the companies' revised merger agreement Friday -- 217 days after their initial application was submitted.

Pai, who has repeatedly criticized the FCC's nonchalant approach to adhering to the voluntary timetable, issued a statement calling on his fellow commissioners to make the six-month review period a binding deadline. Such a move "would give the parties and the public more confidence that the agency is acting with dispatch," he wrote.

SoftBank restructured its original offer on June 10 in order to give shareholders a larger cash payout. The move increased SoftBank's bid by $1.5 billion to $21.6 billion. To offset the drain on its finances SoftBank also reduced the amount it was pledging to invest in Sprint's operations in the first year following the deal from $8 billion to $5 billion.

Pai said the FCC's quick approval despite needing to review new details on the deal is proof that the agency can act quickly on merger investigations if it tries. "In under a week, the proposed order was circulated, my colleagues graciously accommodated my suggested changes, and we adopted the final order," he said. "Our prompt disposition of this matter underscores the importance of codifying the 180-day shot clock in our rules."

Despite the prompt action at the tail end of the review, Pai said he was disappointed that the overall review went 35 days beyond the shot clock's parameters.

There appears to be little appetite for addressing Pai's timing concerns among his fellow commissioners. In her own statement, Acting Chairwoman Mignon Clyburn said she was "pleased that the commission was able to act in a timely manner, voting to adopt an order within two weeks of the parties providing the commission notice of the revised terms of their transactions."

In its order approving SoftBank's application, the FCC noted that it disregarded a request by satellite TV carrier Dish Network ( DISH), which was pushing a rival bid for Sprint, to subject the June 10 revised merger agreement to a new round of public comment, an action that would have added at least a couple of months to the investigation.

The FCC frequently takes a less-than-exacting approach to its 180-day merger review timetable. The FCC's January 2011 approval of Comcast ( CMCSA)'s $30 billion takeover of NBC Universal came 234 days after the commission's investigation commenced, and that's not including 43 days when the count was suspended. In January 2013 the commission approved Liberty Media's ( LMCA) request for control of Sirius XM ( SIRI) after considering the deal for 279 days.

Since joining the commission in May 2012, Pai has made a priority of shortening the time the commission takes on all types of proceedings. In February he told the Federal Communications Bar Association that the commission should codify the merger review shot clock and create an online dashboard of the FCC's performance in other proceedings. A former staffer in the General Counsel's office, Pai said at the time there were more than 100 items pending before the commission, many of them stalled indefinitely.

Other critics of the FCC's merger review process have long called for the agency to be bound by strict timing rules similar to the obligations that ostensibly cover antitrust merger reviews conducted by the Federal Trade Commission and Department of Justice. However, the antitrust agencies have substantial leeway to extend merger reviews beyond their statutory limits.

Those agencies are given only 30 days under the Hart-Scott-Rodino act to decide to clear a deal or subject it to a longer review by issuing a second request for information but can prod merging parties to reset the clock by withdrawing and refiling their merger notification documents. Once the merging parties have certified compliance with a second request, the antitrust regulators again have only 30 days to approve the deal or challenge it in court. The agencies, however, can refuse to certify that the second request has been fully satisfied or can pressure the merging parties to enter a timing agreement not to close the deal until a later date.

Written by Bill McConnell

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