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Deborah Majoras today will be publicly sworn in as the next chairman of the U.S. Federal Trade Commission, a job she technically took over last month when Timothy J. Muris resigned. The position represents a return to government for the former Jones Day partner, who until January was the No. 2 official in the antitrust division at the Department of Justice. Majoras almost did not get the job. Sen. Ron Wyden, D-Ore., blocked her Senate confirmation to protest the FTC’s handling of oil mergers. She only became chairman because President Bush made her a recess appointment, which means that unless confirmed to a full term she must leave when Congress adjourns in 2005. In her first interview on competition policy since returning to government, Majoras discusses her views on oil industry consolidation, merger remedies and international antitrust enforcement. The Deal: Why return so soon to government? Majoras: It is a great opportunity, I loved my experience at the Department of Justice, and I hope to be able to do some more good for consumers. What have you learned about oil industry competition since becoming chairman? I’ve spent a fair amount of time reviewing the FTC’s past and ongoing work in this industry. That, of course, includes work on mergers. I’m continuing to work with staff here, which is very knowledgeable and very aggressive. They have ongoing projects. While I’ve learned a lot, at this early date I don’t have any plans to change the way we do mergers. I want to stress that this is not an area where overenforcement would be OK. One gets the feeling that folks who look at high gasoline prices and wonder if oil mergers have had an impact want to say, let’s just start blocking all the mergers or let’s go back and undo some of the mergers. What could be the harm about that? The truth is that if we reach the wrong conclusion, we could contribute to higher prices. We need to proceed with prudence and caution because if we get it wrong, then we may deny efficiencies that can lead to lower prices or at least not so high prices for consumers. Do you still intend to appoint a special counsel for oil industry competition? I will do it as soon as I can. I’m working on it right now. Either an internal candidate or an outsider would bring strengths to the position. But because we are working actively on this right now, I want to wait to discuss this until we appoint someone. The Justice Department occasionally applies a “fix-it-first” approach, which means companies try to remedy a deal before the agency reviews it. Will this approach be used at the FTC? I doubt it. It is not particularly frequent at the Justice Department, and I can think of at least one instance where I rejected it there. My general approach to remedies is that just as fact must dictate whether there is an anti-competitive problem, the facts must be taken into account when we craft a remedy. We have to be flexible. There is no one size fits all for remedies. That is becoming even clearer now that we are crafting so many remedies for transactions with a high level of intellectual property. Why does that change things? Historically, most of the remedies the FTC has put in place involved hard assets such as plants and machinery and inventory. Intellectual property is a different type of property without tangible characteristics. That presents both challenges and opportunities to craft successful remedies. With IP, use of the property is not a zero-sum game. It could under the right circumstances — and it has at both agencies — open the door for remedies that don’t have to involve complete divestiture. But again, the circumstances need to be the right ones. I don’t want to give the impression that anytime we have IP issues that we will just have a licensing. That obviously is not the case. Will the FTC continue its program to review consummated mergers? It is likely that we will find consummated mergers that we will need to investigate. There is an entire category created when the $50 million threshold was added to the Hart-Scott-Rodino Act statute, so now there are some mergers which, in particular markets, might be significant and might have a significant impact on consumers which the agency might not learn about. So that is an area where we will have to be quite vigilant. Tim Muris established the hospital merger task force to look at consummated hospital mergers. That project is still under way. One case has resulted from that project, and we are committed to continuing that work. As for future large consummated merger cases in industries, I’d always have to look at the strong need for doing it against the high cost of doing it because they are very resource-intensive. What do you make of the recent string of merger challenges losses involving Arch Coal Inc., Dairy Farmers of America Inc. and Oracle Corp.? There is plenty to take away from them. The strength of our merger review system is that you have to convince a court before you can block a merger from closing. I believe that the courts add a lot. We will very carefully evaluate the district court’s opinion in the Arch Coal injunction and the Department of Justice opinions in Oracle and Dairy Farmers. There are common threads. If you look at Arch Coal and Oracle, in both of those opinions the district court judges have rejected the customer complaints, or at least diminished their significance. Given that customer views, if they are backed up by their business documents, play a very significant role if we challenge a merger, that is a common thread that is worth examining. Any immediate changes by the antitrust agencies because of these opinions? It is too early at this point. It is important that we take a close look at every decision we get in a court and determine whether we should do things differently. That ranges from the theories we pursue to the evidence we gather and put on to the strategies we use at trial. What is happening with international antitrust enforcement? Our international competition agenda with regard to mergers is becoming less of an agenda item and more of a way of life. It is extremely important that we work cooperatively with our counterparts in Europe, Canada and Japan and the whole host of countries with merger regimes. What do you hope for your legacy at the FTC? That I stood up for consumers and I made this agency better and stronger. That is what I want people to say by the time I finish. Copyright �2004 TDD, LLC. All rights reserved.

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