FTC Yes Time Warner/AOL Merger

files/pictures/picture-35.jpgOn Thursday, December 14, 2000, the Federal Trade Commission approved America Online's US$111 billion acquisition of Time Warner. As part of the approval, AOL must open its high-speed Internet access to competitors. At least three Internet service providers (ISPs) must be offered when AOL/Time Warner enters a new market. "Our concern was, and has always been, about access," said FTC chairman Robert Pitofsky. "We wanted to make sure that these two powerful companies could not injure competitors of AOL and competitors of Time Warner." However, consumers' choice of Internet service providers on AOL/Time Warner owned lines only lasts five years. Usually antitrust decrees last for 10 to 15 years, but the FTC ruled for lower constraints due to the fast-paced nature of developments in the technology sector. The merger still needs approval by the FCC. The FTC's approval could help quicken the FCC okay. FCC chairman Kennard told the Associated Press that, "We don't want to extend this out indefinitely." The merger makes the company the largest online company in the world. Time Warner will now have access to AOL's 26 million subscribers and in turn AOL will be able to tap into over 21 million homes with Time Warner's cable lines. Regarding this merger decision Pitofsky said, "I do think that open access is the way to go for this country, for consumers, for content producers, for everybody. We don't have the authority to impose that. I hope the market will produce that. And it may be, as some have said to us, that this model will lead to open access in other areas of the country. I hope that's true. If it isn't, then it is an issue I believe that should be addressed by Congress."