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Where in the World Are the Federal Trade Commissioners?

MoJo obtains their travel records—and finds them briefing corporate lawyers in Aruba, Cancun, and elsewhere.

| Tue Jul. 7, 2009 8:00 AM EDT

The FTC commissioners' visits to ABA antitrust section meetings are also potentially problematic. The antitrust section largely consists of lawyers who get paid handsomely to advise big companies on how to stay out of trouble with the FTC or to defend them when they do. Their business meetings, like those in Aruba in 2007, are closed to reporters and the public; the FTC doesn't list them on its public calendar. The ABA says the meetings are closed because they simply involve dull association business. Yet three out of the five commissioners journeyed to Cancun in January 2008 for the ABA's gathering—including Majoras, who quit the FTC to work for Proctor & Gamble several weeks later.

In fact, the ABA frequently pays for some of the commissioners' travel to resort locations. Federal rules allow the ABA to pick up the tab because it is a nonprofit entity, and also because it isn't regulated by the commission.  However, the commission does regulate many of the companies represented by the lawyers who run the antitrust section. Its leadership includes Kovacic's wife, Kathryn Fenton, a partner at the Jones Day law firm who represents big companies in antitrust cases.

And on antitrust issues, the ABA is hardly a neutral voice: It has taken public positions on legislation and other issues that conflict with those of the FTC. For instance, the commission has long opposed big drug companies paying manufacturers to delay producing a generic drug. The ABA thinks this practice is fine. Another example: Sen. Herb Kohl (D-Wis.) recently introduced legislation that would reverse a Supreme Court decision loosening restrictions on corporate price fixing. At a May hearing, the ABA advocated against the bill; the FTC testified in its favor.

When FTC commissioners attend private ABA meetings, they are giving exclusive briefings to representatives of the companies they regulate. "It's too damn cozy. It's held in places that people would consider exotic and it's away from the press," says Art Amolsch, publisher of FTC:WATCH, who has unsuccessfully sought access to the meetings. Amolsch, who worked in the FTC's public affairs office during the Nixon and Ford administrations, says that telling corporate lawyers what the government intends to do is a cheap form of regulation, because the lawyers then advise their clients to follow the law. But when the commissioners travel to swanky resorts and meet privately with corporate attorneys, he adds, "The scandal is in the secrecy."

Max Blecher, a prominent California antitrust lawyer who represents plaintiffs, says, "I think the regulators should keep their distance from the regulated." He believes FTC rules should not allow the ABA to cover the commissioners' travel tabs. "That should be a conflict. I don't think they should be guests of a group that is really anti-antitrust," he says.

FTC chairman Leibowitz, who has attended some ABA meetings and says he will probably attend more, disagrees. He argues that the meetings "give them some insight into what we're doing. If we abandoned the field, that would be worse."

Most FTC watchers contacted for this story were surprised to hear how much time the commissioners spent abroad, particularly Kovacic. Whether the travel is appropriate depends on whom you ask. People who know Kovacic describe him as a hard worker, an expert who has spent most of his career spreading the gospel of antitrust regulation and helping foreign governments set up enforcement regimes. Albert Foer, president of the American Antitrust Institute, a nonprofit group devoted to supporting antitrust regulation, believes that Kovacic's travel provides value to the American public. "He gets an enormous amount of work done. He's not a guy to take junkets or enjoy himself on these trips. I don't think the taxpayers are getting shortchanged," he says.

Consumer advocates are somewhat less charitable. Silverglade of the Center for Science in the Public Interest says it's useful for Americans to learn from other countries. But during the Bush administration, at least, that wasn't all that FTC commissioners did. Silverglade cites a 2006 meeting in Brussels that he attended of the EU's Platform on Diet, Physical Activity and Health. Representatives of many Eastern European countries were desperate for information about how to protect consumers from the hard edges of capitalism. But then-FTC chair Majoras instead delivered a speech on the beauties of self-regulation in food marketing.

Kovacic defends the commission's record (and his own travel), noting that the FTC was far more aggressive on the antitrust front than the Justice Department during the Bush administration. But given that the Bush DOJ went seven years without bringing a single monopolization case, that's not saying much. The Europeans and other Asian governments have been much more proactive in enforcing antitrust laws. Take Intel, the world's largest computer-chip manufacturer, which has been accused of engaging in shifty practices to shut down its only major competitor. Last year, Korea fined the company $25 million for antitrust violations, and on May 13, after probing Intel for more than a decade, the EU fined the company a record $1.45 billion and ordered it to change its practices. The FTC only opened an investigation into Intel last year.  (Some observers expect the agency to become more aggressive under Leibowitz, a proponent of tougher antitrust enforcement.)

It's also hard to point to a specific regulation or policy development that stems directly from any of the commissioners' work abroad, a point that Kovacic acknowledges. Much of what he does overseas, says Kovacic, is create the infrastructure for pursuing global investigations and enforcement actions. He also says that part of his job has been to correct the impression that the US no longer enforces its antitrust laws. Kovacic argues that if Justice had been doing its job, he wouldn't need to spend so much time on the road. "A major part of what I try to do in these presentations is to say we're doing our damn jobs," he says.

Ultimately, says Marc Rotenberg, president of the Electronic Privacy Information Center, the propriety of the commissioners' travel should be weighed against the FTC's performance record, and like many consumer advocates, he finds that record wanting. "The FTC could have done a lot," he says. "Maybe if they didn't spend so much time at the beach we'd have better consumer protection law."

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