Where in the World Are the Federal Trade Commissioners?

Published on
by
Mother Jones

Where in the World Are the Federal Trade Commissioners?

by
Stephanie Mencimer

—Photo by flickr user SF Brit used with a Creative Commons license.

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."

 

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