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Some of the most critical antitrust decisions over the next few months will come not from the usual agencies but from the White House, which is set to make appointments at the Federal Trade Commission and the Department of Justice that could shape antitrust enforcement for years to come. The decisions also could affect some big pending deals. The FTC, whose members are appointed for seven-year terms, is where President Bush is most likely to leave a lasting imprint on antitrust law. Congress requires a rough partisan balance on the five-member commission, which cannot have more than three members from one political party. There are now three Republicans, one Democrat and one left-leaning independent. A Republican seat opened June 30, when Orson Swindle left, and another will open Sept. 25, when Thomas Leary’s term expires. Jockeying for those posts is well under way. The White House is expected to name William Kovacic, a George Washington University antitrust professor and former FTC general counsel, to replace Swindle. Kovacic has written extensively, urging reform of the United States’ multilayered, often confusing antitrust regime. Senate hearings would take about a month, depending on how much business is on the plate of the Senate Committee on Commerce, which reviews FTC nominees. There are no clear contenders for Leary’s seat. But he, like Swindle, looks inclined to stay past his term’s expiration if no successor emerges. “It would be bad government” to leave the seat vacant, he said last week. The other commissioners are: Chairman Deborah Platt Majoras, appointed last fall to complete the remaining four years of her predecessor’s term; Democrat Jon Liebowitz; and independent Pamela Jones Harbour, whom Bush appointed two years ago. At the DOJ, former antitrust division chief R. Hewitt Pate left the post June 30, taking Deputy Assistant Attorney General David Higbee with him. Replacing him is Acting Assistant Attorney General Thomas Barnett. The former Covington & Burling partner is favored to get the permanent slot, although Makin Delrahim, who has overseen international antitrust matters for a year, remains in the running. The White House also has interviewed a short slate of outside candidates interested in the job, all Republicans with extensive antitrust experience. They include Phillip A. Proger of Jones Day; Deborah A. Garza of Fried, Frank, Harris, Shriver & Jacobson; and J. Thomas Rosch at Latham & Watkins. If Barnett does get the nod at antitrust, one of these lawyers could pick up Leary’s slot at the FTC. One hurdle could be that Majoras was a partner at Jones Day, while her husband, John, still is. That connection could be problematic for Proger, who heads the antitrust shop at Jones Day. Meanwhile, Garza, a former special assistant to former AAG Charles F. “Rick” Rule, is rumored to have less interest in becoming an FTC commissioner than in returning to run the antitrust division. Historically, the FTC has been home to political appointees who were not experts in antitrust or consumer protection law — the agency’s two mandates — and some, like former Chairman Janet D. Stieger, were not even lawyers. Swindle, a Vietnam war veteran who spent more than six years in a Hanoi prison, is the only nonlawyer on the commission. Some think that should change. The White House “should be looking for someone with antitrust expertise,” says Andrew Gavil, an antitrust scholar and professor at Howard University School of Law. “There’s a huge benefit when people have more antitrust experience than just the traditional political appointees.” Others expect ideology to trump expertise. “The White House will be looking for somebody who trusts the markets, someone who doesn’t believe there is much market power around,” says Eleanor Fox, an antitrust professor at New York University School of Law. “Someone non-interventionist.” The pending staff changes could affect some big merger reviews if a vote on them comes up soon. Majoras is recused from matters involving Jones Day, which could leave only three FTC commissioners to vote on key matters represented by the Cleveland firm if Swindle’s seat is not filled soon. The vote to block a merger, or to bring an action against a company for an antitrust violation, requires a majority among participating commissioners. A tie means the agency takes no action. Things could be complicated even if Kovacic is named soon. His 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 she will. A power shift toward the Democrats could prove decisive on several widely watched reviews, among them Valero Energy Corp.’s proposed $8 billion purchase of Premcor Inc. FTC staff were rumored to want to clear the deal without a second request, but it’s unclear how the timing will play out on that matter. Copyright �2005 TDD, LLC. All rights reserved.

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