FTC Chairman Stays Put in Google-DoubleClick Review

Federal Trade Commission Chairman Deborah Platt Majoras on Friday said she will not recuse herself from the regulatory body’s review of the Google-DoubleClick merger, drawing further criticism from a pair consumer advocacy groups calling for her ouster.

On Wednesday, both the Center for Digital Democracy (CDD) and the Electronic Privacy Information Center (EPIC) filed a petition with the FTC demanding Majoras recuse herself from the investigation because her husband, John Majoras, is an antitrust lawyer for Jones Day, a prominent law firm that DoubleClick has retained to advise it on antitrust and competition laws relating to the merger.

The CDD and the EPIC, in their petition, claimed that text found on Jones Day’s corporate Web site stated the firm was advising DoubleClick on the “international and U.S. antitrust and competitive aspects” of the proposed $3.1 billion merger.

Nancy Judy, the FTC’s director of public affairs, on Wednesday told InternetNews.com that Jones Day was only advising DoubleClick on the European Commission’s investigation of the acquisition, adding that “Jones Day has not appeared” before the FTC on DoubleClick’s behalf.

Majoras defended her decision to continue participating in the merger investigation on the FTC’s Web site:

“My husband does not represent any party in the Google-DoubleClick matter,” she said. “He is in no way connected to the matter, nor are any of the parties to the matter otherwise currently his clients.”

Majoras added that because her husband converted from an equity to a non-equity status and became a fixed participation partner at Jones Day in January 2006, his compensation will not be increased or affected by changes in the firm’s income.

“Further, all benefits my husband receives from Jones Day are the same as those earned by other similarly situated non-equity partners in the firm,” she said. “Therefore, my husband does not have a financial interest in the firm’s income, and thus I don’t have an imputed financial interest.”

Three of the four other FTC commissioners agreed with Majoras’ decision to remain on board. The fourth, William Kovacic, whose wife is also a non-equity partner at Jones Day, also said he would not recuse himself from the investigation for the same reasons.

“We agree with the analyses in Chairman Majoras’ and Commissioner Kovacic’s responses, and see no legal grounds that would disqualify them from participating in the investigation of the Google-DoubleClick transaction,” they said in a statement. “It is evident that these Commissioners have at all times taken affirmative steps to conduct themselves in complete conformity with the ethical standards that apply to their positions.”

Undeterred, the CDD and the EPIC on Friday filed a Freedom of Information Act Request seeking all FTC documents and correspondences regarding Jones Day and the pending merger as well as documents related to Jones Day and consumer privacy complaints or enforcement.

In a joint statement issued Friday, Marc Rotenberg, EPIC’s executive director, and Jeffrey Chester, CDD’s executive director, made it clear they weren’t satisfied with the Commission’s response.

“We understand their arguments and respect their position, but we do not believe that the Chairman has made a persuasive case against recusal,” they said. “In fact, her comments on this matter, combined with developments subsequent to the filing of our original petition with the Secretary of the Commission, have strengthened the case for recusal.”

Rotenberg and Chester assert that Jones Day’s Web site made it clear the firm was representing DoubleClick in the merger review at the FTC, contrary to Majoras’ claim that it was not. “Moreover, once we called attention to the Jones Day statement on this matter, the firm promptly removed the relevant page from their Web site.”

“The logical conclusion is that Jones Day represents DoubleClick in this matter, became aware of the conflict of interest once it was brought to their attention, and sought to destroy the relevant evidence,” they said. “Jones Day’s admission makes clear the case for recusal and it is nowhere addressed in the Chairman’s statement.”

They also took issue with Majoras’ argument that, because neither she nor her husband would benefit financially from any changes in the firm’s income, she should not be compelled to recuse herself.

“This argument would be more persuasive if Mr. Majoras worked in the firm in an unrelated field or did not have the specific responsibility for business development,” they said. “But in fact, Mr. Majoras is both an antitrust expert for the firm—the central question now before the Commission in the DoubleClick review—and his key responsibility for his firm is business development in Washington, D.C.

“The Chairman’s statement indicates that this latter factor alone would not be sufficient to establish a conflict of interest, but that factor combined with the others cited in our petition clearly does,” they said.

Despite all the drama, the Google-DoubleClick merger will likely sail through the approval process.

The Washington, D.C., research and analysis firm Stifel Nicolaus suggests that even if Chairman Majoras were to recuse herself from the review, the FTC would still likely approve the merger.

Majoras would likely vote to approve the merger, which would result in 3-2 vote among the five-person commission greenlighting the deal. The FTC requires a majority vote to block a merger, so even without Majoras’ approving vote, the commissioners would be tied 2-2 and the deal would still be approved, Stifel has concluded.

InternetNews.com Staff Writer Kenneth Corbin contributed to this report.

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