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Antitrust Shuffle?

By John Virata
January 17, 2002

If the U.S. government is supposed to be Of the People, By the People, and For the People, then why didn't some of our legislators learn about the Bush administration's plan to halve the Federal Trade Commission's responsibility of overseeing company mergers that could have antitrust implications?

According to an Associated Press story published today, the White House withdrew plans to broadly reorganize U.S. antitrust enforcement, in the face of stiff opposition from lawmakers and elements within the FTC who just learned of the scheme today. What irks me, and many other citizens of this country is the fact that discussions were held "quietly" (like those discussions that took place last year with executives from the energy sectors, including those from the sham that was Enron, to formulate some sort of energy policy) with hardly any forum for those opposed to the scheme to voice their dissent.

This aborted scheme would have given the Department of Justice authority to oversee all mergers that involved the Internet, software, telecommunications, and entertainment companies, while the FTC would review cases in other industries, including health care, energy, computer hardware, and biotechnology, according to the story. The DOJ would also oversee cable, publishing, toys, games, television, radio, newspapers, movies, advertising and music.

It appears that the legislative branch of government, the branch of government that is supposed to keep check on the executive branch and the judicial branch of government, was not adequately informed of the maneuvers being made by the White House, until the Fourth Estate published the news in this morning's newspapers.
Elements within the FTC were also vehemently opposed to the scheme.

The AP story quoted Commissioner Mozelle Thompson describing the proposed scheme as ``horse trading'' among the agencies that ``may deprive consumers of the benefit of the commission's independence, expertise and knowledge.''

The story also said that Sen. Ernest ``Fritz'' Hollings, D-S.C., chairman of the Senate Commerce Committee, which oversees the FTC and chairman of the appropriations subcommittee for the DOJ, expressed ``strong concerns why the authorizing and appropriating committees were never consulted,'' spokesman Andy Davis said.

So what are the implications of such an arrangement? Is the DOJ better prepared to handle issues relating to software and antitrust than the FTC? Is the FTC better prepared to handle a merger of a computer hardware company with another such company? Does the DOJ have more knowledge of an Adobe Systems or a Macromedia than the FTC does? Under whose authority would an IBM or an AOL fall? Or what if Apple Computer, which makes the "whole widget, wants to merge with Microsoft, who will handle such a case? Is it in the best interest to split the responsibilities of the FTC in its current form, today, or would an intact FTC better serve our nation and our people? If the FTC is understaffed to handle all the antitrust cases thrust upon it, then the FTC needs to beef up its staff to meet the workload.

The potential implications for our industry are huge. The mergers that already have taken place have really blurred the lines.

The DOJ and FTC officials are expected to meet next week on Capitol Hill to discuss the issue. It appears at least that the legislative branch of the U.S. government will have a say on the issue, now that they have been made aware of it. Should clearance procedures for antitrust investigations stay in the domain of the FTC or should some of the procedures be appropriated to the DOJ based on industry? And why have discussions that impact consumers suddenly become so hush hush?

For more information, visit www.usdoj.gov and www.ftc.gov

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John Virata is senior editor of Digital Media Online. You can email him at jvirata@digitalmedianet.com
Related Keywords:antitrust, government, DOJ, FTC

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