Thursday, December 13, 2007

Groups Seek Majoras Recusal in FTC Review of Google-DoubleClick Merger

This posting was written by John W. Arden.

Federal Trade Commission Chairman Deborah Platt Majoras should be disqualified from the FTC’s review of the proposed merger of Google and DoubleClick because the law firm where her husband practices antitrust law is advising DoubleClick on the U.S. and international competition law aspects of the deal, according to a complaint filed with the FTC by two public interest groups.

The complaint—filed by the Electronic Privacy Information Center and the Center for Digital Democracy—moves for the recusal of Chairman Majoras based on DoubleClick’s retainer of the Washington law firm of Jones Day “to represent the company before the Federal Trade Commission in the pending merger review.”

Relationship with Law Firm

Prior to her government service, Chairman Majoras was an equity partner in Jones Day’s antitrust section. Her husband, John M. Majoras, is currently an equity partner in the antitrust section, as well as the partner-in-charge of business development in the Washington, D.C. office, according to the complaint.

The complaining groups allege that Chairman Majoras has previously recused herself in antitrust matters where there was “a similar conflict of interest” with Jones Day. These matters included Proctor & Gamble’s acquisition of Gillette, the merger of Valero Energy Corp. and Premcor, and Federated Department Stores Inc.’s acquisition of the May Department Stores Co.

Financial Interest, Question of Impartiality

According to the complaint, the Chairman is subject to disqualification in this matter, under the Standards of Ethical Conduct for Employees of the Executive Branch, because (1) the matter has a “direct and predictable financial interest” on the Chairman’s spouse; (2) a reasonable person with knowledge of relevant facts would question the Chairman’s impartiality based on her prior association with the firm, her spouse’s current association and financial interest in the firm, her spouse’s specific expertise in antitrust issues involved the client’s matter, and the spouse’s responsibility for business development in the Washington, D.C. office; and (3) the Chairman failed to give notice of this arrangement.

The complaint was filed on December 12, 2007. The Electronic Privacy Information Center (EPIC) is a public research center in Washington, D.C, established in 1994 “to focus public attention on emerging civil liberties issues and to protect privacy, the First Amendment, and constitutional values.” The Center for Digital Democracy (CDD) is a not-for-profit group, based in Washington, D.C., “dedicated to ensuring that the public interest is a fundamental part of the new digital communications landscape.”

Antitrust and Privacy Concerns

The proposed merger—which would combine the world’s largest Internet search company (Google) with the leading company that places advertising on the Internet (DoubleClick)—has raised antitrust and privacy concerns in both the U.S. and Europe.

After a September 28 hearing conducted by the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights, Senators Herb Kohl (D-Wis.) and Orrin Hatch (R-Utah) sent a letter to Chairman Majoras, asking the FTC to examine the competition and privacy issues raised by the merger. The Senators voiced concern that the deal “could cause significant harm to competition in the Internet advertising marketplace.” Privacy advocates expressed serious misgivings about DoubleClick’s data on individual’s web use preferences coming under the control of Google, which can track individuals’ search requests.

The European Commission announced on November 13 that it will investigate whether the proposed merger would significantly impede effective competition within the European Economic Area.

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