Antitrust review delayed as company offers new assurances

Thursday, November 9th 2000, 12:00 am
By: News On 6

WASHINGTON (AP) _ The Federal Trade Commission voted Thursday to postpone action on the proposed merger between America Online and Time Warner to give the companies time to address competitive problems raised by their $129 billion deal.

The five-member panel unanimously agreed to put off their decision for no more than three weeks, after meeting in private Thursday to discuss whether to let the deal go forward conditionally or to block it in court.

Company officials and FTC staff members have been tussling for weeks over how to implement a requirement that the combined AOL Time Warner open its high-speed cable lines to rival Internet companies.

Such a condition would mean that a customer subscribing to Time Warner's superfast Web service could sign up easily for online providers other than AOL.

While agreeing broadly to such conditions, the two sides have struggled to settle on specifics such as how many rivals must be allowed on Time Warner's cable systems and under what terms.

With the possibility the agency might find their concessions on this issue insufficient and vote to stop the deal, the companies committed in the last 24 hours to offer fresh proposals addressing competitive problems involving the merger, according to the FTC.

The deal also awaits review at the Federal Communications Commission, which temporarily has suspended its evaluation until antitrust officials complete their work.

Some commissioners reportedly have sought more concessions from the companies in recent days. They want AOL Time Warner to sign a deal with a rival Internet provider, the contract approved by the FTC, before the merger can be completed, The Wall Street Journal reported Thursday. That would bolster the ability of competitors to negotiate with the merging companies.

AOL Time Warner would not comment on the process except that conversations are continuing with the FTC. But the delay buys the parties time to reach a settlement and avoid a court battle over the deal's future.

The government wants to ensure that the merger does not stymie competition in the emerging market for superfast Internet service referred to as ``broadband.''

Cable companies like Time Warner have taken the lead in offering this access over their high capacity lines at speeds dozens of times faster than today's dial-up connections. The phone, satellite and wireless industries are scrambling to catch up with competing services over their systems.

Public interest groups interpreted the delay as a sign that the agency is taking a tough position against the companies.

``We're very encouraged that the FTC is taking the competitive concerns about the merger very seriously and is not willing to sign off on a consent decree that is too vague or too ambiguous,'' said Gene Kimmelman of Consumers Union.

Another issue under scrutiny is Time Warner's links to AT&T, the nation's top cable operator. AT&T owns a 25 percent stake in Time Warner Entertainment, a subsidiary that owns most of Time Warner's cable systems.