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Escalating his campaign against the merger clearance accord, Sen. Ernest Hollings, D-S.C., on March 19 threatened retribution against the Federal Trade Commission’s top appointees if it fails to reassert authority over media deals. Under consideration are a pay cut for top FTC officials, a decrease in the agency’s overall budget and a reduction in the number of authorized political appointees, which means FTC Chairman Timothy J. Muris could be forced to fire some of his top deputies. “We are going to have to cut that budget to get their attention,” said Hollings, who chaired the Senate Appropriations subcommittee hearing on the FTC’s budget. The FTC and Department of Justice adopted the clearance accord March 5 to expedite merger reviews. It delineates the agencies’ antitrust jurisdiction by industry, with Justice handling all media, telecommunications and entertainment deals and the FTC reviewing biotechnology and energy transactions. The agencies tried to adopt the accord in January, but delayed formalizing the arrangement for two months after Hollings objected. Tuesday’s hearing marked Muris’ first appearance before Hollings since the start of the merger imbroglio. Hollings underscored that he does not intend to drop the matter. He admonished the FTC chief even after the hearing, when witnesses and senators typically exchange pleasantries. “We never had any problems before,” Hollings told Muris as he was leaving the room. Appropriation hearings are intended to let regulators justify budget requests. Muris stuck to that in his opening statement, arguing that the agency needs $176.6 million to enforce consumer protection and competition laws. Responding to criticism from Hollings, Muris argued that the clearance accord is a “good government” effort to reduce antitrust delays. The number of investigations where both Justice and FTC assert jurisdiction has risen to 80 a year, up from 10 in the 1980s, he said. Muris also said that even without the accord, Justice would have reviewed all media mergers because it has handled far more of these deals than has his agency. He noted that the only recent media deal over which the FTC presided was America Online Inc. and Time Warner Inc. Even that transaction does not count, Muris said, because the antitrust division only relinquished control of the transaction after the FTC agreed not to cite the merger in clearance disputes. Hollings disagreed, accusing Muris of exceeding his authority by changing the FTC’s mission without congressional approval. FTC authority over media mergers is important because the agency can demand remedies beyond what the antitrust laws authorize, Hollings said. “You have general authority for protecting the public interest,” he said. “It does not have to be antitrust.” To support his argument, Hollings cited comments at a 2001 American Bar Association meeting by Joe Sims, a partner at Jones, Day, Reavis & Pogue in Washington who represented AOL and Time Warner in their merger and who joined with three other former antitrust regulators to write a draft of the merger clearance accord. In those remarks, Sims said the antitrust laws did not give the FTC the right to demand that AOL Time Warner open its cable systems to rival Internet service providers. Muris responded that Hollings was misinterpreting the comments. The FTC has maintained that antitrust laws, and not any other law, gave it the right to impose the AOL Time Warner requirements. Hollings also picked up his first Senate ally against the clearance system. Sen. Jack Reed, D-R.I., said it should be irrelevant which agency has more experience with media mergers. “You can get it if you need it,” Reed said. “This continues to be a concern to me.” FTC commissioners Sheila Anthony and Mozelle Thompson have publicly dissented from Muris’ prepared remarks. Anthony said she supports streamlining the clearance process but questioned whether the approach Muris adopted maximizes the FTC’s institutional assets. In a much lengthier statement, Thompson questioned the need for reform. He argued the agencies do a better job today than in 1999 at resolving which one should review a deal. For instance, 21 percent of contested clearances were resolved within six business days in 1999, compared with 41 percent in 2001. Also, only 1 percent of clearance disputes between 1995 and 2001 took more than 20 days to resolve, he said. “While there may be room for clearance process improvement, the testimony may misrepresent the nature of clearance contests because the simple fact is that the antitrust agencies have already improved the clearance process substantially,” Thompson said. Copyright (c)2002 TDD, LLC. All rights reserved.

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