Does winter weather get you down? Would you rather spend chilly days at the beach in Cancun or skiing in Quebec rather than sitting behind a desk? Well, maybe you should become a commissioner of the Federal Trade Commission. FTC commissioners are charged with managing the affairs of the federal government’s premier consumer protection agency—a job that seems to entail a significant amount of foreign travel, some of it legitimate, some of it a bit questionable.
On the questionable side: In January 2007, the American Bar Association’s antitrust section held its annual midwinter leadership meeting in Aruba at the swank new Hyatt Regency hotel and casino. It was an exclusive group, mostly private defense lawyers who represent some of the nation’s biggest companies. But joining the white-shoe attorneys at the beach were two FTC commissioners, Pamela Jones Harbour and William Kovacic, who delivered a private briefing. The group, whose members tend to oppose the agency’s regulatory agenda, subsidized the commissioners’ travel.
The Aruba trip kicked off a busy travel year for the commissioners, who each made at least one foreign trip in 2007, according to FTC records released to Mother Jones through a Freedom of Information Act request. Here’s a sampling from their itineraries (these numbers represent a rough estimate and may include days where a commissioner only spent part of the time traveling):
- William Kovacic: After Aruba, Kovacic headed to Johannesburg for five days for a meeting of the South African Competition Tribunal in early February. Then, after a short stop in DC, Kovacic was off to Paris, Ottawa, and Brussels. Other highlights that year included visits to Istanbul, Moscow, Zurich, Sydney, Kazakhstan, Lima, Singapore, Seoul, Luxembourg, Barcelona, Toulouse, and multiple visits to Brussels. Total days abroad: 123.
- Pamela Jones Harbour: After soaking up some Aruba sunshine, Jones Harbour dashed off to Sydney. Later, she visited Mexico City; Australia; Whistler, British Columbia, and attended meetings on e-commerce in Tokyo and Hanoi. She flew back and forth to Asia, business class, to the tune of $10,000. Total days abroad: 46.
- Deborah Majoras: She jetted off to Davos for a week at the World Economic Forum, and attended conferences or gave speeches in Zurich, Bucharest, Moscow, Lisbon, Brussels, and Brazil, where she provided technical assistance to the Brazilian government’s competition office. Total days abroad: 38.
- John Rosch: He gave speeches to legal groups in Zurich, Florence, and Venice. Days abroad: 26.
- Jon Leibowitz: The new FTC chairman is the least traveled commissioner, but he did manage to escape Washington’s summer for the ABA antitrust section meeting in Whistler, Canada, in August 2007. Total days abroad: 11.
While 2007 was a busy year for the commissioners, these itineraries aren’t atypical—especially for Kovacic, whom FTC staffers have christened “Commissioner Magellan” for his globe-trotting ways. Since President George W. Bush appointed Kovacic to a Republican slot in 2006, he has averaged nearly 100 days of foreign travel a year. So far in 2009, he has been abroad for more than 60 days. (He spent the end of June in Taiwan, Rome, and London, and celebrated July 4th in China at a conference on competition law.)
All this jetting about appears somewhat out of sync with the commission’s largely domestic role. The FTC’s wide-ranging mandate includes everything from enforcing used car sales regulations to ensuring that clothing manufacturers properly instruct consumers whether or not to put their shirts in the dryer. It runs the “do not call” registry to keep telemarketers at bay and cracks down on bogus weight loss cures. The agency also shares responsibility with the Justice Department for overseeing mergers and acquisitions of big companies and enforcing antitrust laws.
Referring to Kovacic’s 2007 itinerary, Bruce Silverglade, legal affairs director at the Center for Science in the Public Interest, says, “A hundred and twenty three days in one year at first blush does seem excessive. It’s not the international trade commission.” But Jon Leibowitz, the new FTC chairman, approves. “Bill is wonderfully dedicated. He’s like a rock star on the international antitrust circuit…The work he’s done internationally has been very helpful to the commission and he’s never missed a meeting.”
The FTC’s broad mission does require some foreign travel. For instance, an FTC member represents the United States at the Organisation for Economic Co-Operation and Development (OECD), whose meetings are usually abroad. The FTC also participates in various international consumer protection and competition networks to facilitate law enforcement. In recent years, these issues have become more global in scope, creating a need for greater international cooperation. And with encouragement from Congress, the FTC has worked to shore up other countries’ antitrust enforcement mechanisms, hoping that increased competition will open markets and ultimately reduce poverty.
But some of the commissioners’ trips seem less than critical. For instance, in 2006, Jones Harbour attended a New York State Bar Association meeting in Shanghai, an outing that cost the FTC about $1,869. The association arranged a “pre-meeting” excursion around Beijing, including tours of the Great Wall and Tiananmen Square, which Jones Harbour participated in. She paid for her own lodging and meals on those days, but during the 10 days or so she was in Asia, her official work consisted of giving just one speech to the Shanghai conference plus an off-the-record presentation, according to the FTC.
In February 2007, Kovacic appeared on a panel at a Brussels conference hosted by the Progress and Freedom Foundation, an American advocacy group linked to former House Speaker Newt Gingrich and funded largely by big telecom companies, whose mergers and other business practices the FTC often monitors. The foundation picked up the tab for Kovacic’s trip from Paris to Brussels for the day. Kovacic says he also conducted official business in Brussels, meeting with European Commission representatives as well as with members of the US mission to the European Union.
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.”