DOJ AND FTC MOVE ON NEW MEDIA MERGER REVIEW PLANS

Dept. of Justice (DoJ) and FTC formally unveiled their revised antitrust review process Tues., saying new procedures would reduce length of reviews and “thereby allow both agencies to enforce antitrust laws more effectively.” DoJ and FTC said they delayed introduction of their memorandum of understanding after congressional request for more information earlier this year. Having satisfied that request, they now have allocated primary responsibility for media and entertainment mergers to Justice. Senate Judiciary Committee ranking Republican Hatch (Utah) said it was “sensible arrangement that will result in more efficiency and certainty in the antitrust review of many important transactions… I have long been concerned about past allocation of investigations to each agency, which resulted in substantial delays and wasted enforcement resources.” House Judiciary Committee Chmn. Sensenbrenner (R-Wis.) expressed similar support for plan, saying that it would reduce “unnecessary and duplicative burdens placed on employees and employers.”

However, Senate Commerce Committee Chmn. Hollings (D- S.C.) said information submitted on issue was unconvincing and accused DoJ and FTC of trickery in moving the proposal forward. Hollings, who also is chmn. of Commerce, Justice, State Appropriations Subcommittee, said proposed changes in antitrust review process violated appropriations law. Without specifying what steps he might take, Hollings pledged action: “For some reason, this Administration doesn’t like government. Under the law, they're supposed to submit their restructuring proposal to Congress… We were in the middle of discussions on how to proceed, and they just moved forward on their own. It’s a tricky way to forgo consultation. We have our tricks, too.”

FTC Comr. Mozelle Thompson told us he was “profoundly disappointed” with decision by FTC Chmn. Timothy Muris and Attorney Gen. John Ashcroft to proceed with antitrust agreement. He agreed with Hollings’ rejection of claim by Muris and Ashcroft that discussions with Congress had been sufficient: “Unfortunately, that dialog has not taken place.” He said “manner in which the agreement has been handled only raises more questions,” with ramifications extending beyond the decision to reallocate responsibility for merger reviews: “Now I think this is an issue between Chairman Muris, Attorney General Ashcroft and the Senators who are the chairmen of their appropriations and authorization committees.”

Thompson said Justice and FTC leaders had “downplayed the deliberative process that the FTC brings” to complex matters such as AOL-Time Warner merger. He said it was ill- advised to give Justice sole oversight of matters involving creative content, software and product distribution, particularly without proper consultation with Congress: “I'm disappointed that they didn’t even avail themselves of the opportunity to gain a bipartisan agreement that would benefit all consumers.”

Justice-FTC plan allocates DoJ oversight of telecom services and equipment, including cable and DBS, but gives FTC responsibility for reviews involving satellite manufacturing and launch vehicles. Muris said this delineation of responsibilities is based on respective entities’ experience in dealing with certain industries: “For example, the FTC’s expertise in multichannel video distribution programming -- including cable and satellite -- is more limited than the DoJ’s. Although the FTC has investigated numerous cable transactions, most of its expertise in this area is too old to count in the clearance dispute process. In any event, the majority of the FTC’s cable investigations involved only horizontal issues, and did not present the complex vertical issues raised by media mergers in the last few years.”

Center for Digital Democracy Exec. Dir. Jeff Chester questioned this claim, saying instead that new process will hurt consumers and competitors: “The FTC has played a unique and important role in media-related mergers, given its orientation as both an antitrust and consumer protection agency. Now all such mergers will be under the supervision of a presidential appointee.” Chester said this is problematic, given Bush Administration’s support for media deregulation: “One can only surmise that today’s announcement sends a strong signal to big special interests that they will get easy treatment.”

Consumers Union expressed similar concerns, saying review process can be streamlined without splitting oversight responsibilities. Senior Dir. Gene Kimmelman said: “In the area of cable mergers, the FTC has been quite aggressive in cracking down on discrimination against programmers and Internet service providers. And the FTC established a strong antitrust precedent for promoting competition in media markets through its oversight of transactions involving AOL and Time Warner, Time Warner and Turner Broadcasting, and TCI and Cablevision.”