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Seeking to end the feud over the proposed merger clearance accord, the Federal Trade Commission has presented Senate Commerce Committee Chairman Ernest Hollings with a revised agreement that calls for the agency to review some media mergers. “The FTC would be back in media,” according to a source who has seen the proposal. Senior agency officials briefed Hollings’ staff Thursday on the compromise. As of late Friday, there was no indication whether the plan goes far enough to satisfy the South Carolina Democrat, who has threatened to eliminate funding for all political appointees at the agency unless the accord is changed. A spokesman for Hollings did not return calls for comment. The Department of Justice antitrust division has signed off on the change, the source said. To secure DOJ acceptance, the FTC had to return oversight of several industries to the antitrust division that the commission was supposed to have primary jurisdiction over under the initial clearance accord. None of the industries ceded to the Justice Department include parts of the energy sector, the source said. The original accord gives FTC control over all electricity and natural gas deals; previously the agency handled natural gas and the Justice Department reviewed electricity sector mergers. Robert Lande, a professor at the University of Baltimore law school and a co-founder of the American Antitrust Institute, said it makes sense for the agencies to compromise. “If they can satisfy Hollings, then all is well,” he said. For the agencies, it is more important to rationalize the distribution of industries even if it means that they must split media, Lande said. “It may not be perfect, but if you can get most of what you want then the compromise looks wonderful,” he said. The antitrust agencies in March revamped the procedures for determining whether the FTC or the antitrust division reviews a merger. Part of the accord included a reallocation of the industries over which each agency has primary jurisdiction. The pact outraged consumer groups because it assigned the antitrust division to review all media and entertainment mergers. Advocacy groups, supported by Hollings, charged that the FTC was better suited to review media deals because they claimed it is less susceptible to political pressure. Hollings had derailed efforts by the agencies to adopt the accord in January, having his staff call Attorney General John Ashcroft to complain that the senator had not been consulted. Speaking at a George Mason University law school symposium Friday, Deputy Assistant Attorney General Deborah Majoras confirmed the division has begun discussions on how to end the fight, which she said is consuming resources that would be better spent on enforcement. “We want our time and resources devoted to antitrust matters,” she said. Majoras would not elaborate on the discussions, including saying with whom the division was talking or how she expects the parties to end the fight. But in response to a question she said it was “possible” the division could share some media merger responsibilities with the FTC. “We hold out hope we can settle the controversy and can continue to operate under the accord,” Majoras said. Joe Sims, a partner at law firm Jones, Day, Reavis & Pogue in Washington, D.C., said it is inevitable the agencies will amend the accord because they cannot battle Hollings indefinitely. “I hope it will be a minimal modification that won’t affect the impact of the deal,” said Sims, who was one of four outside lawyers recruited by the FTC and antitrust division to draft the preliminary version of the clearance accord. He said that the Justice Department is unlikely to cede partial authority over media mergers to the FTC unless the commission relinquishes power over other industries to the antitrust division. Earlier at the conference, Center for Digital Democracy executive director Jeff Chester said he expects consumer groups and Hollings to emerge victorious in the clearance spat. “We expect the Federal Trade Commission to resume concurrent jurisdiction over media mergers,” Chester said. In her remarks, Majoras said the antitrust agencies attempted through the accord to replace a 50-year-old allocation system that impeded speedy clearances. Under the old system, an agency could cite experience gained reviewing a deal to assert jurisdiction over future mergers in that industry. That made regulatory staff wary of clearing deals to the other agency, especially transactions involving cutting-edge technologies, Majoras said. Since the new accord was adopted, clearances average only 1.5 days, Majoras said. That leaves 28.5 days on average to conduct the preliminary merger investigation. Before the accord, some cases took two to three weeks to get cleared, she said. Copyright (c)2002 TDD, LLC. All rights reserved.

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