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Federal Trade Commissioner Orson Swindle said he would step down by June 30, a development that could shift the balance of FTC power in some critical merger reviews. Swindle, a Clinton appointee and Republican whose term expired in September, has remained in the post awaiting a successor. He told FTC staff on Thursday he would leave before June 30 if a replacement is approved earlier. Republican William Kovacic, who was general counsel under Chairman Timothy Muris and is a widely respected antitrust scholar, is considered most likely to replace Swindle. The Senate Commerce Committee and then the full Senate must confirm the nominee. But antitrust experts doubt that Kovacic could be confirmed much before the Senate’s August recess. With FTC Chairman Deborah Platt Majoras recused from matters involving her former law firm, Jones Day, that could leave only three commissioners to vote on key matters with Jones Day representation after June 30. The three are Jon Liebowitz, a Democrat; Pamela Jones Harbour, an Independent (though widely regarded to lean Democratic), and Thomas Leary, a Republican. Past voting patterns suggest that Democrats are more likely to oppose mergers than Republican commissioners. The vote to block a merger, or to bring an action against a company for an antitrust violation, requires a majority: three votes if four or five commissioners participate, two if only three commissioners vote. A tie means the agency takes no action: That’s what happened when the FTC considered bringing a case against Microsoft Corp. several years ago, and why the Department of Justice’s antitrust division ended up bringing it instead. But voting blocs are not the only critical factor determining merger-review outcomes. At least as important is the chairman’s power to influence staff, to affect the timing of votes and to build a consensus among commissioners. All that is lost on matters where Majoras is recused. “If the case is marginal, it’s in trouble,” a lawyer said. “At this point, God only knows what will happen,” said another Washington-based antitrust lawyer with a large practice before the regulatory agencies. Further complicating matters, Kovacic’s wife, Kathryn M. Fenton, is also a partner at Jones Day. She could spare him any recusals by becoming a non-equity partner — in theory eliminating the fiduciary interest that would pose a conflict of interest — but it’s unclear whether that has already happened. Majoras’ husband, John Majoras, is also a partner at Jones Day, and unless he takes non-equity status Majoras will remain recused from FTC matters with Jones Day representation. Just to make life more interesting for the firm, one of its other antitrust partners, Phillip A. Proger, has been interviewed by the White House for the slot as head of the Department of Justice’s Antitrust Division. If nominated and confirmed, he, too, would be recused from deciding on cases represented by Jones Day for at least a year at the nation’s other antitrust shop. Back at the FTC, a shift of power toward the Democrats could prove decisive on a number of widely watched matters. First, the Valero Energy Corp. purchase of Premcor Inc., an $8 billion deal. The companies have yet to file their paperwork required under the Hart-Scott-Rodino Act. Staff is rumored to want to clear the deal without a second request following the initial 30-day review. It’s unclear how the timing will play out on that matter. Also, ChevronTexaco Corp.’s $18 billion bid for Unocal Corp., under review at the agency, has caused speculation in the antitrust bar. The FTC brought a case against Unocal for violating antitrust laws by influencing a California panel body responsible for setting gasoline emissions standards. The FTC claims Unocal failed to disclose that it had applied for patents on a gasoline formula that the state subsequently adopted on advice of the panel. Some antitrust lawyers speculate that Chevron, which refines and sells gas, could raise rivals’ prices once the patent is approved. ChevronTexaco’s top in-house lawyer is Charles James, a former Jones Day partner, and he’s already decided to hire Jones Day to represent the company in its merger. Another big Jones Day matter under FTC review is Procter & Gamble Co.’s proposed $54 billion acquisition of Gillette Co. That deal is in the second-request phase, and it’s unclear when the FTC might vote on it. P&G and Gillette announced Thursday that they will hold shareholder votes in July. Copyright �2005 TDD, LLC. All rights reserved.

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