Global Policy Forum

by Jeffrey Benner

The chairman of the Senate Commerce committee slammed new merger review procedures agreed upon Tuesday by the Federal Trade Commission and the Department of Justice, charging that the agreement was made in violation of a law requiring consultation from Congress.

"I believe this is in violation of appropriations law, which states that we be consulted," said Sen. Fritz Hollings (D-South Carolina), referring to a law requiring federal agencies to consult Congress before restructuring in a way that will impact their budgets.

The agreement divides responsibility for reviewing mergers between the two agencies. It assigns responsibility for overseeing media and entertainment mergers to the DOJ, which consumer groups worry will result in less stringent oversight of media mergers, given the DOJ's handling of the Microsoft case.

The FTC and the Justice Department originally planned to announce their agreement on Jan. 17 but canceled the press conference at the last minute, due to objections from Hollings and consumer groups. Since then, the agencies have held a few meetings with critics to explain the proposal -- but then decided to go ahead with it, unchanged, despite the criticism.

FTC Commissioner Mozelle Thompson, one of two Democrats on the five-member body, criticized the decision to go ahead. "I'm very disappointed," he said. "They have gone forward with the same agreement as before."

Thompson complained that he had not been included in the negotiating process for the agreement, which was largely based on a report that private attorneys prepared in secret. In response to Freedom of Information Act requests from consumer groups, the FTC released the contents of that report last week. "I don't think talking to private lawyers with matters before us is a substitute for talking to commissioners," Thompson said.

FTC chairman Timothy Muris and Assistant Attorney General Charles James defended the agreement as a way to streamline the merger review process and eliminate squabbling over which agency has jurisdiction over a given deal. "We see this agreement as a means of increasing the effectiveness, efficiency and cooperation of our agencies' law enforcement activities," Muris said. He defended the decision to go forward despite continuing objections from Hollings, arguing that the FTC had released sufficient data to defend and explain its decision.

Hollings, who also is chairman of the Senate committee that approves the Justice Department budget, issued a veiled threat to fight back."We were in the middle of discussions on how to proceed, and they just moved forward on their own," Hollings said. "It's a tricky way to forego consultation. We have our tricks too." Consumer groups opposed to the agreement are gearing up for a fight as well. A consortium of groups, including the Consumer Union and the Center for Digital Democracy plan to ask Congress to investigate. At the least, they hope that keeping attention on the issue will pressure the Justice Department into giving media mergers closer scrutiny. "They were going to do what they were going to do," said Mark Cooper, of the Consumer Federation of America, referring to the decision to approve the new procedures. "But one would hope the firestorm over this issue sensitizes them to the extreme scrutiny mass media mergers deserve."

"We were in the middle of discussions on how to proceed, and they just moved forward on their own," Hollings said. "It's a tricky way to forego consultation. We have our tricks too."

Consumer groups opposed to the agreement are gearing up for a fight as well. A consortium of groups, including the Consumer Union and the Center for Digital Democracy plan to ask Congress to investigate.

At the least, they hope that keeping attention on the issue will pressure the Justice Department into giving media mergers closer scrutiny. "They were going to do what they were going to do," said Mark Cooper, of the Consumer Federation of America, referring to the decision to approve the new procedures. "But one would hope the firestorm over this issue sensitizes them to the extreme scrutiny mass media mergers deserve."

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