FTC, DoJ DROP MERGER AGREEMENT AS HOLLINGS FOCUSES ON LONG TERM

While abandonment of controversial FTC-Justice Dept. (DoJ) merger review agreement late Mon. may not result in renewed focus by FTC on media merger issues, Sen. Hollings (D-S.C.) is more concerned about long-term policy rather than policies of individual FTC chairmen, spokesman for Senate Commerce Committee head said. “Hollings is looking past this particular [FTC] chairman and is focusing on issues down the road,” spokesman said: “FTC Chairman [Timothy] Muris may not seek media merger cases as aggressively as did [former FTC Chmn. Robert] Pitofsky, but the policy is what’s important.” Policy that would have restricted FTC from reviewing certain types of mergers, and therefore from building expertise in those areas, would have constrained future chairmen, spokesman said.

Short-term impact of abandoning agreement wasn’t clear, and FTC had no official comment. Muris has said DoJ would get most media merger reviews anyway since that agency has more experience in that area. There’s no indication that Hollings would try to use budget process to compel FTC to focus on merger reviews, spokesman said. Hollings said abandoning agreement was “appropriate.” As chairman of Senate Appropriations Commerce Subcommittee, he has oversight over FTC budget and had threatened to impose funding limitations as a means to compel FTC to abandon agreement. Both Senate and House Appropriations committees are considering FTC’s budget, which requests $176.5 million, up $20.5 million from last year.

DoJ Antitrust Div. Chief Charles James said: “The Department stands by its view that the agreement was good public policy that was working to make antitrust enforcement more effective. In fact, since the agreement became effective, antitrust investigations were being commenced within a matter of days, and there were no clearance disputes between the agencies.”

Budget concerns prompted DoJ to abrogate agreement, sending notice to Hollings late Mon., Hollings’ spokesman said. James said “budgetary consequences for the entire Justice Department if we stood by the agreement” prompted him to nullify accord. Hollings’ spokesman said DoJ was first to pull out of agreement, with FTC following shortly thereafter. In May 20 letter to Hollings, Muris said agreement was “void.” However, he said proposal discussed by FTC, DoJ and Senate Commerce Committee staff that would preserve full concurrent jurisdiction by 2 agencies for media, entertainment and software mergers, while retaining industry allocations in other cases, could be a base for further discussion of those issues. Another potential solution would have given FTC 1/3 of media merger reviews, Hollings’ spokesman said, but Hollings felt such a solution was ineffective because it was too industry-specific and wouldn’t create competition between agencies that Congress wanted to see.

Agreement, which would divide merger review “clearance” between 2 agencies by industry, drew criticism from Hollings, who argued that Congress had intended that agencies compete for merger reviews. Hollings’ spokesman said he was particularly upset about DoJ’s getting all media reviews, arguing that FTC should have involvement in those issues because its mission was decidedly more proconsumer than that of Justice, which examines mergers on strict legal grounds. “I think it’s appropriate that they abandoned this agreement,” Hollings said in a release. “The FTC has broad discretion to protect consumers in merger reviews, whereas the Justice Department is looking for crime. The FTC protects the public interest.”

FTC official told us merger review agreement had helped contribute to low morale among staff. Official said staff was “buzzing” over news that agreement had been canceled. Many felt it had given DoJ sole jurisdiction over many of cutting-edge issues.

Hollings’ spokesman said senator still was concerned about how agreement was reached and he still could investigate its genesis. Four former FTC and DoJ attorneys submitted documentation to agencies that supported merger review agreement and made some suggestions. In budget appropriations hearing, Hollings questioned Muris on appropriateness of involving outside attorneys, especially when other FTC commissioners complained they weren’t adequately informed about pending agreement. At hearing, Hollings said he had been working with FTC for more than 30 years and at no time had officials voiced concerns about merger review clearance problems.