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U.S. antitrust regulators appear close to implementing a controversial accord that would give the Department of Justice regulatory control over all media mergers and the Federal Trade Commission corresponding sway over all energy deals. The two agencies put aside their merger clearance agreement in January in response to strong opposition from Senate Commerce Committee Chairman Ernest Hollings, D-S.C. and U.S. consumer groups, which want the FTC to review at least some media mergers. But in the past days, both the FTC and Justice Department have laid the groundwork for reviving the accord, which assigns each agency jurisdiction over mergers in specific sectors of the economy. The FTC on Wednesday released new data and documents supporting the accord, including a letter from the American Bar Association antitrust section and a joint letter from The Business Roundtable, National Association of Manufacturers and the U.S. Chamber of Commerce. “Because a publicly announced agreement allocating responsibility by industry will lead to a more expeditious, efficient and transparent review process at least with respect to the allocated industries, the section’s council unanimously supports an agreement embodying that consent,” ABA antitrust section chairwoman Roxane C. Busey wrote in the Jan. 24 letter. The FTC disclosures Wednesday came a day after U.S. Attorney General John Ashcroft told Congress that the accord would lead to more vigorous and efficient antitrust enforcement. Those were Ashcroft’s first public comments on the accord. FTC spokeswoman Cathy MacFarlane said the feedback Muris has received from business and legal leaders has reinforced his commitment to adopting the accord. “We remain eager to move forward,” she said. A Department of Justice spokeswoman declined to comment. A spokesman for Hollings had no immediate comment. Included with the FTC documents was a release explaining why the agency favors the proposal. The FTC said the goal is to ensure the regulator with the greatest expertise for an industry reviews all deals in that sector. To do this, the agencies created a large list that specifies which industries are assigned to the antitrust division and which to the FTC. Besides energy, the FTC would handle computer hardware, automobiles, trucks, healthcare, retail, supermarkets and pharmaceuticals. The DOJ’s antitrust division would handle agriculture, avionics, software, industrial equipment, media, entertainment, telecommunications and travel. To support this allocation, the FTC released a chart showing how many deals in each sector both regulators investigated or prosecuted since 1997. In media and entertainment the Justice Department had 217 actions while the FTC reviewed 35 matters. For energy, the FTC reviewed 60 matters while the DOJ did 44. The FTC said the accord would reduce delays that occur when the agencies are unable to immediately agree on which should review a specific deal. About four deals per month require more than two weeks for the two agencies to sort out which of them will review the transaction, said the FTC report. Nearly two-thirds of the deals took more than 15 business days to resolve regulatory jurisdiction. One opponent of the proposal, however, questioned the accuracy of the data. “They are cooking the books,” the opponent said, who asked not to be identified. This source said the FTC inflated the media and entertainment numbers by including all radio and newspaper mergers. These always have been handled by the Justice Department, the source said. The FTC should have separately broken out all cable deals to see which agency actually had more experience with the industry, the source said. This opponent also questioned the clearance delay data. Some of those delays were caused by the change in administration, the source said, adding that the number of cases where disputes occur between the two sets of regulators remains a tiny fraction of the 7,000 mergers that went through both agencies in the relevant time frame. Among the other documents released was the Dec. 11 memo that jump-started negotiations. Written by Joe Sims of Cleveland-based Jones Day Reavis & Pogue, Bill Baer of Washington, D.C.’s Arnold & Porter, Steve Sunshine of New York’s Shearman & Sterling and Kevin Arquit of Clifford, Chance, Rogers & Wells, it proposes a breakdown of industries by agency. This group is the first to recommend that the Justice Department handle all media deals. Jeff Chester, executive director of the Center for Digital Democracy, said he is concerned with the involvement of the four lawyers. “It is inappropriate to bring in advisers who have a monumental conflict of interest,” he said. “Those with media clients are trying to refer all media deals to the DOJ.” FTC general counsel William Kovacic said it does not matter whether these lawyers work on media or deals involving other industries that they recommend be assigned to a specific agency. The reason: It’s just as likely they would be hired by a competitor to try to stop a merger as by an acquirer trying to get a deal approved. Copyright (c)2002 TDD, LLC. All rights reserved.

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