The Comcast-Time Warner Cable deal has drawn a lot of attention from the media. One of the biggest concerns about this merger is that it could be in violation of the Clayton Act. One thing the Clayton Act concentrates on is addressing mergers and interlocking board of directors, meaning that the same person or groups of people are making the decisions for competing companies. “If the Time Warner Cable and Comcast merger is approved by the Federal Communications Commission, the new company would have two-thirds of all cable customers and control 40 percent of the high speed internet market” (Bannon,2014). If Comcast and Time Warner were to merge, that merger will give them more market power. While the two companies would have more bargaining power for prime-time television, passing those savings onto their customers is not guaranteed thus creating monopoly pricing. As explained by Wikipedia-Monopoly Pricing, once a company becomes the sole supplier of a product within the market, the monopolistic company will always take into consideration the demand for its product as it considers the price; thus the company can and will choose the best option to guarantee a maximum economic profit. This is achieved by making sure the marginal cost is the same as the marginal revenue. The marginal revenue is determined by the demand for the product within the industry, and is the change in revenue that will take place by lowering the price just enough that additional product will be sold.
Comcast and Time Warner Cable argue that they are not competing companies. “Comcast maintains that the deal isn't anticompetitive because the two companies don't compete in the same markets, and says the merger will result in improved service for consumers” (Guston, 2014). Worstall from Forbes.com argues that the reason why they don’t compete in geographic areas, only across them could be that cabling an area is so expensive that it forms a natural monopoly. Also the way that localities...