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Timothy J. Muris may know the corridors of the U.S. Federal Trade Commission better than the layout of his own home. This is the FTC chairman’s third tour of duty at the agency. He served during the Reagan administration, working for two years as director of the consumer protection bureau before moving in 1983 for a two-year stint as director of the competition bureau. Muris also served during the Ford administration in the 1970s as assistant director of the planning office. The former George Mason University professor is a well-regarded expert on antitrust policy, espousing an analytical approach that strongly favors the economic evaluation of mergers. Muris, 51, has repeatedly said he differs only at the margins from his predecessor, Robert Pitofsky. In a wide-ranging interview with The Daily Deal‘s Jaret Seiberg, Muris outlines his views on competition policy and discusses his return to the agency. The Daily Deal: When you look at a merger and evaluate the competitive impact, what is important to you? Timothy J. Muris: The merger guidelines, which were very controversial when adopted but have since become universally accepted, lay out a very useful approach to evaluating markets and assessing issues like entry conditions and competitive effects. So we need to follow the guidelines in terms of our analytical approach. DD: But you can read the guidelines many different ways. Do you have an overriding principle about how to put the merger guidelines into practice? Muris: In mergers in particular there is going to be a lot more continuity than change. Most of the areas where I disagreed with the Pitofsky commission did not involve mergers. The guidelines are clear. The bipartisan consensus of the last 20 years is that the focus should be on horizontal mergers overwhelmingly. And that is what happened in the 1990s. They used economic analysis. The guidelines have been refined over time in useful ways. [Former Assistant Attorney General] Jim Rill changed the entry analysis and had useful things to say about unilateral effects. The changes that Bob Pitofsky and [Former Assistant Attorney General] Joel Klein made about efficiencies were beneficial and better than what the guidelines had stated before. I, on occasion, would be more receptive to efficiency claims. But in the 2-1/2 years I was here before in the competition bureau, I saw only two cases that hinged on efficiency claims. One was GM-Toyota, which everybody now thinks we were too restrictive, and the other case was closed because of our view. So one case in 2-1/2 years is not a big difference. DD: There was a feeling in the business community that antitrust policy would be eased in a Bush administration regardless of who was appointed to the antitrust agencies. Are you concerned about receiving mergers that under the Clinton administration companies would not even had considered? Muris: The overwhelming majority of mergers don’t get challenged. They don’t get challenged under Democrats or Republicans. But if people want to bring dumb mergers, we will be glad to stop them. I have heard the possibility that people might think they could do that, but I have not seen it yet. There is litigation experience on the staff. We are not afraid to litigate, and frankly it is very hard to beat the government. DD: There is a permanent staff here that stays regardless of administration. How does that affect your ability to set the agency’s approach to merger reviews? How free is the staff to pursue things, and how much are you trying to send out direction of how you want them to view deals? Muris: One of the nice things about the agency is that you have people that have been around for a long time. What matters is if there is a shared view on how to approach things. Twenty years ago, the answer was largely no. Today the answer was largely yes. When the answer was largely no, this was a very difficult time. Some of the staff people who wouldn’t adjust left. Today that is not an issue because there are with mergers in particular a widely shared view on how to approach mergers. Of course in individual cases you can get people who disagree. But in those cases they disagree about the facts. DD: Looking at the H.J. Heinz-Beech-Nut Nutrition Corp. case, the staff was split, as was the commission. How much weight do you want your bureau director to place on the staff recommendation and how much weight do you give the staff recommendation? Muris: What is crucial is that because there is a shared view of how to approach these things, I give a lot of the weight to the staff. At the end of the day [competition bureau director] Joe Simons and I and the other four commissioners have to make up our own independent minds. But the staff has spent more time with the matter, and in particular there are some staff members who have been around longer than others that have developed a track record and you know how comfortable you are with their judgment. Look, the staff here are professionals. The last thing they want to do is spend a lot of time working on cases that the leadership will not support. DD: Can anything be done to expedite judicial review of FTC decisions to challenge a merger? Muris: We certainly hope we can expedite the process and focus investigations as much as possible, and we are working toward that. DD: One of Pitofsky’s goals was to get the courts more involved in mergers. Do you see a role for the courts and will the courts be active? Muris: Under the statute, there is obviously a role for the courts. But in the six years Bob was here, there was only an average of one a year. The truth of the matter is there are not that many litigated merger cases, and many parties prefer to settle rather than risk litigation. DD: Are there ways to expedite the negotiation process for divestiture agreements? Muris: One of the things we are trying to find out is why the process has apparently become cumbersome. But I don’t know enough about it yet to comment. We are looking into it. DD: Does it matter that oversight of the FTC is now being handled by Sen. Ernest Hollings rather than Sen. John McCain? Muris: I was never here under Sen. McCain so I don’t have any experience with him. But I worked very closely with Sen. Hollings in the past. He was a very insightful and effective senator. And he is a supporter of the agency, as was Sen. McCain. So I don’t see any differences. DD: Your predecessor was grilled many times on Capitol Hill. Sen. Ted Stevens of Alaska once accused him of trying to kill his state’s economy in relation to an oil industry merger. How do you deal with political pressure? Muris: When I was here before I was grilled repeatedly at hearings. It goes with the territory. For the most part I have not found when I was here before that there is a lot of direct political pressure. But obviously if a senator or representative is unhappy with what you are doing, they are going to tell you. That is how our system works. But antitrust decisions and consumer protection decisions are not based on politics. DD: The FTC is supposed to be an independent agency, but clearly the president has some sway. How much contact do you have with the White House, and how much sway does the president have over FTC policy? Muris: The FTC’s independence is widely recognized. I don’t anticipate any change from the past practice. I don’t anticipate White House involvement in FTC cases or investigations. On the other hand, there are lots of policy issues that the FTC has been involved in that involved discussions with the White House in the past, and I’m sure that will continue. DD: Is there a role for White House on antitrust policy? Muris: In the 1980s, the president closed an investigation when there was a conflict between the Justice Department and the State Department. But that is not the norm. Obviously when there are policy issues above individual cases, antitrust has a relevance and I would hope the White House would consider the views of the FTC. DD: When you deal with a merger that requires approval by foreign governments, when does it stop being something for antitrust authorities and become something for the U.S. Trade Representatives and others in the administration? Muris: I don’t know the specifics of GE-Honeywell, and I would refer it to Charles James at the Justice Department. I really can’t comment on the particulars of the deal. DD: Have relations between the FTC and EC been hurt by GE-Honeywell? Muris: I have only been here a month, so it is hard to know. But whatever the ramifications of GE-Honeywell, they have happened and they exist. But it is clear that there are differences between how the two systems work. DD: Do we need more harmonization of competition regimes? Muris: Everyone recognizes that convergence has benefits, both substantive and procedural. Obviously if the convergence is of the wrong type, there could be costs to it as well. I would hope we could work to increase the benefits of convergence. DD: Where do you see the benefits of convergence? Muris: When someone files a merger, they have to deal with a lot of countries and a lot of complications. I don’t have a lot of specific recommendations because I’m new to the job. But I do think the Global Competition Forum is a useful idea. DD: Should antitrust issues be discussed as part of the next WTO round? Muris: I know the Europeans are interested in that, and I have had some discussions within the U.S. government and with the Europeans. It is not completely clear to me the scope of what the Europeans have in mind. But I hope over the next several weeks that we can understand how such a process might work and then make a decision. I have an open mind about it. DD: Did you support the February 2001 changes to the Hart-Scott-Rodino Act, including increasing the pre-merger notification filing requirement to $50 million from $15 million? Muris: Raising the thresholds was obviously a sensible step. The thresholds were catching a lot of deals and requiring them to pay fees while the overwhelming number of those deals did not raise problems. DD: Can a small merger raise antitrust issues? Muris: Absolutely. We have a consent agreement now that we are negotiating on a small merger. We have heard there are people trying to sneak $45 million mergers to monopoly, and we are looking for those. There are lots of niche products in the world so you can have a small product market. DD: HSR reform also changed the amounts of filing fees. It was supposed to be revenue neutral. While fee collections have been up recently, overall collections for the fiscal year remain down. Are you concerned? Muris: The amounts of the fees picked up greatly in May and June. The numbers were much larger. But there is obviously an issue about fee-based funding. I don’t have a crystal ball to know what will happen with mergers. DD: Should the FTC’s budget be linked to HSR fees? Muris: That really is a question for Congress. How does it want to fund regulatory agencies? Whatever happens, I expect Congress will give us adequate resources. I have no understanding or expectation that anything other than that will happen. DD: Why did you want to head the FTC? Muris: The mission is important. I am committed to the mission. I have a lot of experience with these issues. That combination will, I hope, let me be an effective chairman. DD: Your return to the FTC was obviously helped by your service as an adviser to the then Texas governor. How did you end up on the Bush campaign? Muris: In a past life I was an expert on the federal budget and regulatory issues, and Larry Lindsey was putting together an economic group and asked me to serve on that group. DD: When did you hook on to the campaign? Muris: It was around February 1999. We had a lot of meetings in Austin through the spring and the fall. We were working on the tax plan. In fact, the president did a nice event when he signed the tax bill. We got front row seats. I wasn’t on the campaign day-to-day, though sometimes it was day-to-day. There were lots of weeks where we did a conference call every day, but I wasn’t traveling with him. I was on the policy end, not the politics end. DD: Were you involved in any of the debate preparations? Muris: Only peripherally. I would get calls with questions and send it up to them, but I wasn’t there when we did the practicing. DD: Why get involved in the campaign? Muris: I am a Republican, and I had worked for his father and had met him in Kennebunkport, Maine in 1998. I admired what he was doing in Texas. I thought he would be a good president. And I knew a lot about the issues on which they wanted my advice. It was a good marriage. DD: There was talk after the election that you wanted to run the Office of Management and Budget. Did you seek that job? Muris: The only job I ever told anyone I wanted was head of the Federal Trade Commission, and I am very happy being head of the Federal Trade Commission. It is a great job. Copyright (c)2001 TDD, LLC. All rights reserved.

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