Statement of Commissioner Mozelle W. Thompson

Concerning the Abandoned
Memorandum of Agreement Between The Federal Trade Commission and
the Antitrust Division of the United States Department of Justice
Concerning Clearance Procedures for Investigations

Yesterday, Assistant Attorney General James and Chairman Muris abandoned their plans to announce an Agreement that would have redefined how the Federal Trade Commission and the Antitrust Division of the Department of Justice allocate the review of future antitrust matters. Under the claim that the Agreement would streamline the federal government's review of antitrust matters, the abandoned Agreement would have reallocated by industry the agencies' antitrust review responsibilities. While generally I favor interagency agreements that enhance the speed and efficiency of case processing, the abandoned Agreement raised substantial concerns.

First, redefining the Commission's future antitrust responsibility raises weighty issues that warrant close attention from each Commissioner in order to ensure that the public interest is adequately protected. Rather than simply codifying or clarifying the existing merger review responsibilities, the abandoned Agreement would have altered which agency would have primary responsibility for investigating both mergers and other anticompetitive practices in certain industries.(1) Such an important change demands careful consideration by each of the five Commissioners.

The abandoned Agreement was the product of private discussions between Chairman Muris and Assistant Attorney General James. Chairman Muris failed to consult with, or provide meaningful opportunity for, other Commissioners to provide any input. In fact, I was not even provided with a copy of the completed proposed Agreement until yesterday. This lack of transparency makes it difficult for the other four Commissioners to discharge their obligation to determine whether consumers would actually benefit from such a significant change at this agency.

Second, I am also concerned about the substance of this private "horse trading" because it may deprive consumers of the benefit of the Commission's independence, expertise, and knowledge. The Commission is an independent, nonpartisan body made up of five presidential appointees with varied expertise and professional experiences. I believe these perspectives have led to significant, positive agency actions in dynamic "new economy" industries that presented novel antitrust issues. But Chairman Muris's Agreement would have transferred the Commission's jurisdiction in publishing, media, entertainment, computer software, and Internet-related industries to the Department of Justice, thereby consolidating responsibility for the review of all matters relating to media content in the Department of Justice. This transfer would have deprived the public of the benefit of the Commission's recent experience in matters such as:

• AOL/Time Warner(2) (broadband);
• Random House(3) (book publishing);
• MSC.Software(4) (computer-aided engineering software);
• Hearst(5) (pharmaceutical databases);
• Sony(6) (compact disc cooperative pricing policies); and
• Time Warner/EMI(7) (pre-recorded music).(8)

Moreover, the public would have also lost the full potential of synergies arising from other ongoing related Commission activities that encompass: law enforcement investigations in Internet fraud cases; Internet privacy policy workshops and studies; advertising enforcement activity in the media space; and public workshops in cutting-edge areas (such as the June, 2000 Business-to-Business Electronic Marketplaces Workshop).

In summary, I am disappointed that the Commissioners were not invited to participate in this public policy decision that would have so profoundly shaped the future of the Commission. The lack of transparency in the negotiation of matters as important as those covered in the abandoned Agreement can compromise my responsibility to the public to give thorough and careful consideration to matters that will have an important impact on all consumers. However, my greater fear is that the abandoned Agreement would have compromised opportunities for independent consideration of important antitrust matters and how America will grow.

Endnotes:

1. I believe that the changes embodied in the proposed Agreement exceed merely administrative responsibilities and go to the core of the agency's mission.

2. In the Matter of America Online, Inc. and Time Warner Inc., Docket No. C-3989 (Consent accepted December 14, 2000) <<www.ftc.gov/opa/2000/12/aol.htm>>.

3. In the Matters of Harper & Row et al., Docket Nos. 9217-9222 (Order dismissing administrative complaints September 20, 1996) <<www.ftc.gov/opa/1996/9609/book.htm>>.

4. In the Matter of MSC.Software Corporation, Docket No. 9299 (Administrative complaint filed October 10, 2001) <<www.ftc.gov/opa/2001/10/msc.htm>>.

5. FTC v. The Hearst Trust et al., Civ. No. 1:01CV00734 (D.D.C. 2001) <<www.ftc.gov/opa/2001/12/hearst.htm>>.

6. In the Matters of Sony Music Entertainment, Inc. et al., Docket Nos. C-3971-3975 (Consents accepted May 10, 2000) <<www.ftc.gov/opa/2000/05/cdpres.htm>>.

7. Time Warner's proposed acquisition of EMI in 2000 was abandoned during the Commission's investigation.

8. Because Chairman Muris failed to apprise his fellow Commissioners of the existence of his discussions, negotiations, and industry allocations until four days ago, I have not fully appraised the impact of the proposed shifts on the Commission's de facto jurisdiction.