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media merger review
Senator rips plan to give power to Justice Dept.
In the rising war of words over the federal government's role in overseeing media mergers, powerful Senator Ernest "Fritz" Hollings is threatening to withhold funding of the Federal Trade Commission if the Bush Administration moves ahead with a plan to move review of mergers from the FTC to the Department of Justice.
Hollings, a Democrat from South Carolina, said at a hearing yesterday that he was incensed that the agreement, reached two weeks ago between the FTC and Justice, was done without consulting Congress, which oversees the FTC.
By attempting to switch oversight of media mergers over to Justice, Hollings said the FTC was reneging on its obligation to protect consumers.
If the plan is not scrapped, Hollings warned, he would freeze the FTC's budget for 2003, effectively crippling the agency, which is charged with protecting the public interest across a wide area of commerce.
Hollings' opposition to the agreement is being watched closely by Wall Street. Analysts believe that if Hollings succeeds in scuttling it, the effect would be to put a halt to the next round of media mergers that so many had been anticipating.
Just a week ago, Hollings announced that the Senate Commerce Committee, which he chairs, will formally review the agreement.
Hollings has been highly critical of the agreement, echoing complaints from consumer groups that moving media mergers reviews to Justice would severely weaken the protections the FTC offers consumers against the increasing concentration of media ownership.
The FTC is set up as an agency independent of the executive branch of government and overseen by a bipartisan panel of commissioners with the power to block mergers that it deems against the public interest, beyond antitrust concerns.
At Justice, pending mergers would be held to a far looser standard--whether they violated antitrust laws. In recent years, the federal government has considerably eased enforcement of antitrust laws.
Critics also contend that Justice reviews would be subject to far more political influence, since the Justice Department is part of the executive branch of government, with the attorney general reporting directly to the President.
"By granting the Department of Justice exclusive jurisdiction over all major media outlets--television, radio, newspapers, as well as movie theaters, production studios, and book publishers," Hollings wrote last week, "the agreement, in effect, has created for the DOJ complete oversight and control of all major public information distribution systems and media content producers."
At yesterday's hearing, FTC chairman Tim Muris defended the agreement as a way to streamline the review merger process, ending confusion and delays over which agency reviewed which deals.
March 20, 2002 © 2002 Media Life
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