Alleges Improper Conduct on Media Merger Issue

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WASHINGTON ( -- An ultimatum from the chairman of the Senate Commerce Committee to the chairman of the Federal Trade Commission today is likely to further strain an already tense relationship that includes charges of unethical behavior.

Sen. Ernest "Fritz" Hollings, D-S.C., the Commerce Committee chairman, attacked FTC Chairman Timothy Muris and his plan to move antitrust oversight over media deals to the Justice Department, and said unless Mr. Muris skuttles the agreement, he should be prepared to face major repercussions when the FTC's budget comes up for consideration.

The challenge was issued at a panel of the Senate Appropriations Committee that oversees funding for the FTC, a panel that Sen. Hollings also chairs.

Salary cuts threatened
The senator's threatened

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budgetary restraints on the FTC include cutting salary, eliminating political positions at the FTC and removing any flexibility the FTC has to reprogram its budget subject to needs during the year.

In sometimes strong words, Sen. Hollings told Mr. Muris that the agreement he made with the Justice Department to shift antitrust oversight over media consolidations could not be done without congressional approval. The plan was developed by Mr. Muris and Charles James, assistant secretary for antitrust for the Justice Department.

The agreement has become a flash point for Sen. Hollings, who last week notified both federal agencies that he was conducting a formal review of the decision an requested the list of meetings that were held to craft the agreement, including the "names and identities of any and all outside parties and consultants that provided recommendations and advice."

Critics of the plan point out that the FTC as an independent agency does not face the same political pressures as does the Justice Department, which as part of the executive branch could take its lead from the White House.

Accused of improper actions
Sen. Hollings also accused Mr. Muris of overstepping the bounds of proper public policy for enlisting an attorney who represented AOL in its merger with Time Warner before the FTC to help craft the agreement's wording.

"That is just outrageous," Sen. Hollings said. "I have sat up there with the Federal Trade Commission for 35 years. I've never heard of what you just related. We know how to act. If you think there is a problem of law, the proper thing to do isn't to go to the losing attorney and rewrite memorandums of understanding. Even if [the issues] had merit, we wouldn't believe it. That's totally improper."

In response, Mr. Muris testified today that the agreement was aimed at ending growing problems over clearance procedures for antitrust matters between the FTC and Justice. Because both agencies handle antitrust reviews, he said, converging technologies have led to disputes as to which agency would handle specific deals.

Mr. Muris said the number of disputes had grown from 10 to 80 per year and that one antitrust deal had been held in abeyance for a year while the FTC and Justice Department fought over who would handle it.

'Better if we don't fight'
"When I came in, I spent two full days not doing the public's business but in a fight with the anti-trust division on Justice on who would do the public's business," Mr. Muris said. "I think it is better if we don't fight."

Such disputes, the senator countered, should be brought before Congress.

"Perhaps we should assign you to the CIA, because you have kept what you pointed out top secret," Sen Hollings said. "I am chairman of the authorizing committee and I have never heard what you just stated."

Sen. Hollings said that in reviewing media deals, the FTC looks beyond antitrust impacts, taking into consideration what effect they might have on the public interest. The senator warned Mr. Muris that if the deal isn't dropped, the FTC's budget will see effects.

Mr. Muris said the FTC will push for stronger enforcement of privacy issues next year and move forward with its plans to create a national "do not call" list. He also asked Mr. Hollings to give the FTC additional authority over telephone advertising.

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