Bush policy on mergers hits obstacle

Jan 21, 2002  •  Post A Comment

Sen. Ernest Hollings, D-S.C., a leading critic of a Bush administration plan to dramatically restructure how the government reviews media mergers and other deals, has begun a dialogue with federal regulators on the proposal.
The veteran senator played a key role late last week in prompting the Federal Trade Commission and Justice Department to abruptly cancel an announcement of the new policy.
At deadline, aides to Sen. Hollings and other senators were scheduled to meet Jan. 23 with FTC and Justice staffers to discuss congressional concerns about the initiative. The fate of the plan remains unclear, and it could still be resurrected.
One of the lawmaker’s gripes is that the proposal forces the FTC to relinquish its review of media transactions to Justice.
“He’s of the opinion that the FTC has done excellent work on [communications] mergers in the past,” said Hollings spokesman Andy Davis. Another concern is that Congress was never consulted.
Also contributing to the administration about-face: Democratic FTC regulator Mozelle Thompson, who was left out of the loop along with other agency commissioners. He issued a statement complaining that the plan was developed in secret and should have been put to a vote.
He said the public would lose out because the FTC, a bipartisan and largely independent agency, would relinquish authority in several areas to Justice, which is run by presidential appointees.
Government officials came close on Jan. 17 to unveiling the policy change, which was quietly brokered by FTC Chairman Timothy Muris and Assistant Attorney General Charles James.
Reporters who showed up for a press conference were informed there would be no briefing and no announcement.
Under the plan, the agencies would have divided merger reviews along industry lines, with all media deals falling exclusively under the Justice Department.
At present, either the FTC or Justice reviews a particular media combination, depending on the nature of the transaction and the agency’s expertise.
Had the new policy been adopted, it would have been the first significant change to merger review in decades and would have impacted pending deals, including the Comcast-AT&T combination being scrutinized by the FTC.
Sen. Hollings went into action after he picked up his newspaper last Thursday morning while in South Carolina for the congressional recess and saw a story on the proposal.
Furious about what he read, he had staffers call the agencies and express his outrage.
As it turns out, the senator is someone the administration can’t ignore: He heads the powerful Senate Commerce Committee, which includes FTC oversight among its responsibilities, and chairs an appropriations panel that funds the Justice Department.
Watchdogs last week accused the Bush administration of trying to weaken the merger review process.
“Giving away review of media mergers to the [Justice Department] is the best New Year’s present the Bush administration can give to media conglomerates,” said Jeff Chester, executive director of the watchdog Center for Digital Democracy.
He said the FTC has considerable expertise in evaluating media mergers involving digital networks.