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Antitrust regulators on Tuesday overhauled how industries are divided between the Federal Trade Commission and the Department of Justice, though it is unclear how long the accord will be in effect. The controversial agreement gives the Justice Department’s antitrust division control over all media, telecommunication and entertainment mergers. In exchange, the FTC is handling all energy, pharmaceutical, and biotechnology transactions. The agreement is effective immediately and applies to any transaction not yet assigned to either agency for review. The FTC and antitrust division implemented the accord despite fierce opposition from Senate Commerce Committee Chairman Ernest Hollings and consumer advocates, both of which want the FTC to handle at least some media mergers. The agencies first attempted to adopt the accord on Jan. 17, but had to retreat after Hollings objected. Sources said the agencies are worried Hollings may insert language in an appropriations bill that would force FTC to handle some media deals. This could be accomplished either by barring the antitrust division from spending money to review cable mergers or by requiring the agencies to alternate reviews of media deals. This latter approach is much more difficult to implement through an appropriations bill. That is because Hollings would need to insert language permitting only the antitrust division to spend money to review a media merger if the FTC had investigated the previous media industry merger. Such legislation would be tough, but not impossible, to draft for Hollings’ staffers, who are experienced at using the appropriations process to achieve policy objectives. A spokesman for Hollings did not return calls for comment, but the South Carolina Democrat released a prepared statement blasting the antitrust agencies for implementing the accord without properly consulting Congress. He threatened retaliation, though he did not specify what steps he would take. “We have our tricks, too,” Hollings said. A legislative fix already enjoys support from consumer activists, who charge that the merger clearance accord is part of the Bush administration’s plan to encourage media consolidation. “We urge [Hollings] to seek a legislative remedy to reverse this decision,” said Jeff Chester, executive director of the Center for Digital Democracy. FTC Chairman Timothy J. Muris and Assistant Attorney General Charles James have sought to build support for the accord since the agencies were forced to withdraw it two months ago. They have been touting the plan on Capitol Hill and soliciting support from the private sector, including the American Bar Association antitrust section, the Business Roundtable and the U.S. Chamber of Commerce. “Clearance disputes waste merger investigation time,” James said. “That is not good for law enforcement or the public interest.” To show support for the accord on Capitol Hill, regulators released Tuesday a March 1 letter from Senate Judiciary antitrust subcommittee Chairman Herb Kohl and ranking member Mike DeWine endorsing the agreement. “We realize that the proposed agreement’s industry allocation has been a source of conflict … but we fully support your goals and agree that it is in the public interest to reduce the potential for wasteful conflicts and bureaucratic infighting,” the Wisconsin Democrat and Ohio Republican, respectively, said in the joint letter. Muris said Tuesday at a press briefing that Hollings was the only member of Congress to object to the proposal. He said FTC officials briefed the senator’s staff, though the lawmaker did not have time to meet with him. “We hope this will enable us to be more pro-active,” Muris said. The agreement attempts to consolidate at a single agency responsibility for reviewing mergers in related sectors. The Justice Department will add cable mergers and entertainment to its overall responsibilities in telecom and media. For example, Justice would have handled the America Online Inc.-Time Warner Inc. merger. The FTC adds the trucking sector to its overall automobile responsibilities. It also gets the entire energy sector — Justice’s antitrust division historically has handled electricity deals. In the computer industry, the antitrust division will handle software deals while the FTC will oversee hardware. If the transaction involves both types of company, the merger will be allocated to the agencies based on whether the competitive problem centers on software or hardware. The agencies also clarified jurisdiction over the pharmaceutical and biotechnology sectors. FTC will handle all deals except for those that make products specifically for agribusinesses, which is under the antitrust division’s bailiwick. FTC also will review all healthcare deals, though the Justice Department retains jurisdiction over health insurance as part of its broader authority over financial services. FTC remains the lead watchdog for satellite construction and launch, munitions, airframes, and the retail sector, including groceries. The antitrust division keeps avionics, aeronautics, mining, armored vehicles, travel and transportation, which includes airlines, railroads and ocean shipping. For instance, that means the agreement would have sent the rival bids by Royal Caribbean and Carnival Corp. for P&O Princess Cruises to the Justice Department rather than to the FTC, which is in the midst of its investigation. The FTC will retain jurisdiction over the P&O transaction. The accord also takes steps to improve the clearance process. Agency officials will meet weekly to review merger clearances, and they will post on their Web sites a manual explaining the system. In instances where neither agency would concede jurisdiction, the accord calls for the appointment of a neutral third-party to rule. The agencies plan to review the accord in four years. Copyright (c)2002 TDD, LLC. All rights reserved.

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