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6/2. The Senate Commerce
Committee held a hearing on five pending nominations, including the nominations
of Deborah Majoras and Jonathan Liebowitz to be Commissioners of the
Federal Trade Commission (FTC). President Bush has
nominated Majoras, a Republican, to replace Tim Muris as Chairman, and Liebowitz, a
Democrat, to replace Mozelle Thompson.
The hearing did little to establish these nominees' positions on technology
related maters within the jurisdiction of the FTC, or their qualifications to be
Commissioners. Rather, most of the hearing was taken up by partisan election
year posturing on issues largely unrelated to matters that will be decided by
the FTC.
Most of the two hour long contentious hearing was devoted to gas prices on
the West Coast. Sen. Ron Wyden (D-OR) and
Sen. Barbara Boxer (D-CA), who are
both Democratic members of the Committee, and who are both up for re-election in
November, railed at length about gasoline prices and oil companies. Moreover,
they directed their questions and statements solely at the Republican nominee, Majoras.
Sen. John McCain (R-AZ), the Chairman
of the Committee, was alone in raising some technology related matters.
 Sen. Wyden
(at right) has invoked the Senate procedure of placing a hold a nominee, to
at least temporarily block consideration of the Majoras nomination. He has cited gas
prices as his rationale.
This contrasts with a recent conclusion of the
Progressive Policy Institute (PPI), a
Democratic think tank based in Washington DC. The PPI released a
paper on May 27, 2004 in which it concludes that "The
primary causes of higher oil prices are Saudi decisions to constrain output in
the face of growing demand for oil -- particularly in the United
States and China -- and President Bush's failure to successfully
engage with OPEC in order to ensure that it provided enough oil to the market to
support moderate prices." The PPI paper adds that "if President Bush were
serious about driving prices down, he would stop topping off the Strategic
Reserve, which is currently at 94 percent of its capacity."
The FTC has no authority to regulate gasoline prices. Nor does it have
sectoral regulatory authority over gasoline retailers, oil
companies, or the energy sector generally. Rather, it has limited statutory
authority with respect to certain consumer protection matters, and it shares
antitrust authority with the Department of Justice's (DOJ)
Antitrust Division.
Sen. Wyden and Sen. Boxer asserted that there is
anti-competitive behavior by oil companies that warrants FTC action.
 Sen. Wyden and Sen. Boxer
(at left) repeatedly invited Majoras to join in their
rhetorical assaults on oil companies and gasoline prices. She did not.
They invited her to commit the FTC to actions against oil companies. She is
not yet a member of the FTC, would only be one of five Commissioners, and even
if confirmed, would have no authority to predetermine enforcement actions
or merger reviews prior to agency review.
Sen. Wyden stated that the FTC has engaged in a "long running
campaign of inaction", and that he wanted to "hear more" from Majoras, and that
he wanted "specific changes".
Sen. Boxer asked her to impose a moratorium on further oil industry mergers.
Majoras said she knew of no statutory authority for imposing an industry wide
merger moratorium.
Majoras stated that she shared the Senators' concerns, and promised to study the
issues that they raised. Sen. Wyden called this "business as usual", and
demanded that she "drain the swamp". Sen. Wyden repeated many lines of
questioning over and over again.
Jonathan Liebowitz, who has also been nominated to be a Commissioner, was
spared this line of questioning. Nevertheless, Sen. Wyden proclaimed that he is
"eminently qualified" to be an FTC Commissioner.
Sen. Mike DeWine (R-OH) and
Sen. Herb Kohl (D-WI) testified at the hearing.
Liebowitz worked for Sen. Kohl for twelve years before going to work for the
Motion Picture Association of America (MPAA) in 2000.
The two Senators are the Chairman and ranking Democrat on the
Senate Judiciary Committee's Antitrust
Subcommittee.
Sen. DeWine praised both Leibowitz and Majoras, and recommended that both be
confirmed. Sen. Kohl praised only Leibowitz, and recommended only his
confirmation. He did not mention Majoras.
Sen. Kohl mentioned that Leibowitz had done fine work for the Antitrust
Subcommittee on the issues of media concentration and media violence.
Sen. Wyden did not reference his hold on the nomination during the hearing.
Although, he discussed it with reporters afterwards. He confirmed that he
maintains his hold, and that is talking with other Senators who might also oppose the
nomination.
Sen. Wyden did allude to his hold while briefly questioning Leibowitz.
Without mentioning the hold, he told Liebowitz that he regretted the position in
which he has put Leibowitz.
TLJ asked Liebowitz about the hold after the hearing. He declined to discuss
it.
Hypothetically, if the Senate does not confirm Majoras, but it does confirm
Liebowitz, and Chairman Muris leaves the FTC, then the Republicans would loose their
3-2 majority on the FTC. Thus, it is possible that
Senate Republicans might not act on the Leibowitz nomination unless the Majoras nomination is
also approved.
Leibowitz defended and praised Majoras several times during the hearing.
Sen. Frank Lautenberg (D-NJ) said
of the five nominees, "every one of them is well qualified". However, he
referenced the gasoline prices issue, and refrained from stating that all five
should be confirmed. He devoted almost all of his time during multiple rounds of
questioning to a nominee for the Amtrak Board. The Amtrak train runs across
his state of New Jersey, and he is a supporter of federal subsidies for Amtrak.
While the FTC has no authority to regulate gasoline prices, and does not have
sectoral regulatory authority over oil companies, it does play an increasingly
important role in regulating new technologies. However, the members of the
Committee all but ignored these technology related issues.
Opening Statements of Nominees. Majoras and Leibowitz made reference to
a few of these issues in their opening statements.
Majoras said in her prepared testimony, which she read at the hearing, that
"The range of commercial activity that the FTC must patrol is ever growing. The
rise of the Internet and other technology-related developments have brought
consumers and suppliers closer together, creating new fora for providing and
obtaining marketplace information and engaging in efficient commercial
transactions. But these new tools have also, in another sense, driven consumers
and suppliers further apart, as those bent on deception now can hide behind
phony identities and jurisdictional borders and can steal private information
without immediate detection. Working cooperatively with other law enforcers and
with Congress, the FTC must lead the way in the fight against fraud, in whatever
form it takes."
Leibowitz described the mission and history of the FTC in his prepared
testimony, which he read at the hearing. He said that "When SPAM began to clog
the in-boxes of millions of computers and made parents afraid to let their
children read e-mail, Congress turned to the FTC to start going after the worst
spammers and help tackle this technological traffic jam."
Leibowitz also said that "when a constant barrage of telemarketing calls
disrupted the dinner tables of America, the FTC devised a plan to protect the
privacy that all Americans deserve in their own homes. The ``Do Not Call List´´
has improved the lives -- and the dinners -- of literally tens of millions of
Americans."
Division of Antitrust Matters Between the FTC and DOJ. Sen. McCain
asked Majoras about the short lived
Memorandum of Agreement
between the FTC and DOJ Antitrust Division concerning clearance procedures for
merger reviews and other antitrust matters.
The FTC and Antitrust Division share
antitrust authority. However, the Senate Commerce Committee oversees the FTC,
but not the Antitrust Division. (The Senate Judiciary Committee oversees the
DOJ.) Hence, the agreement also affected committee oversight. The FTC and
Antitrust Division abandoned the agreement following opposition from, and
threats of appropriations cuts by, Sen.
Ernest Hollings (D-SC). See, story titled "DOJ & FTC Abandon Merger Review
Agreement Under Threat from Sen. Hollings" in
TLJ Daily E-Mail
Alert No. 436, May 22, 2002.
Sen. McCain complained that there was little consultation with the Senate,
and asked Majoras, "Why did you believe that this agreement was needed at the
time?"
Majoras, who was a Deputy Assistant Attorney General in the Antitrust
Division at the time, stated that "At the time we believed that the agreement
was needed because the two agencies, which share jurisdiction for enforcement of
the antitrust laws, had gotten quite bogged down. And indeed, there was one
matter that was in need of investigation, and both agencies agreed on that, and
yet they had allowed the matter to sit for sixteen months, not being
investigated by either agency, because they were arguing over which one was
entitled to do it. That was what at the time, Chairman McCain, we thought a
change was a good idea. There is no question that we should have handled it
differently. We did not handle it well. And, I regret that that was the case. I
would also add, that, were I to be confirmed, Senator, I have no intention of
resurrecting that clearance agreement, which, of course, has also been banned
now by legislation."
 Spam. Sen. McCain (at
right) asked Majoras and Leibowitz about the CAN SPAM Act.
The Congress passed
S 877,
the Controlling the Assault of Non-Solicited Pormography and Marketing Act of
2003 (also known as the CAN-SPAM Act), late last year. On December 16, 2003,
President Bush signed the bill. It became Public Law No. 108-187. It is codified
at 15 U.S.C. § 7701, et seq.
McCain asked Majoras, "Do you share the concern that consumers are being
rapidly driven away from e-mail as a result of spam?" She responded, "I do share
that concern, Chairman McCain. I think the Federal Trade Commission --"
Sen. McCain interjected, "What do you think needs to be done?" Majoras
responded, "I think, what needs to be done, now that the CAN SPAM has been
passed, which is a very very good first step, in which the Federal Trade
Commission --"
McCain again interjected, "Do you think that going after the businesses that
hire the spammers is a method you might pursue?" Majoras said, "Absolutely,
and indeed I think that the Federal Trade Commission is already pursuing
that, and that is a method that I think should be further pursued."
Section 6 of the CAN SPAM Act provides that "It is unlawful for a person to
promote, or allow the promotion of, that person's trade or business, or goods,
products, property, or services sold, offered for sale, leased or offered for
lease, or otherwise made available through that trade or business, in a
commercial electronic mail message the transmission of which is in violation of
section 5(a)(1) if that person (1) knows, or should have known in the ordinary
course of that person's trade or business, that the goods, products, property,
or services sold, offered for sale, leased or offered for lease, or otherwise
made available through that trade or business were being promoted in such a
message; (2) received or expected to receive an economic benefit from such
promotion; and (3) took no reasonable action (A) to prevent the transmission; or
(B) to detect the transmission and report it to the Commission." (Section
5(a)(1) prohibits false or misleading transmission information.)
"What else would you like to say on that?", asked Sen. McCain.
She said "I think that the CAN SPAM Act which was a very good
first step. Part of the problem with new methods, such as spamming, and the like,
is that those who those who engage in it, and much of the spam, of course, is
deceptive, have all kind of new methods that the enforcement agencies need to
learn about, and I think that we need to build on the CAN SPAM Act now, see
whether there are any more gaps in the FTC's enforcement arsenal, and move
forward in bringing the enforcement actions, and in discussing with the Congress
whether any further legislation might be needed."
McCain then asked, "Do you have anything to add to that Mr. Leibowitz?"
Leibowitz responded, "Just a little bit. I generally agree with what
Debbie said. I think the CAN SPAM bill is very very important, and a very useful tool
for the Commission. I think you are saying, Section 6, which you are saying, as I
understand it, says follow the money, is something that we should be looking at if we
are fortunate enough to be confirmed. And, Debbie and I talked about it, and we will
take a good hard look at that section. But, you know, we are not at the end of this
process, with respect to the spam problem or the CAN SPAM bill. I think we are more at
the end of the beginning at best, and spam is a problem that is going to take a lot of
resources of the Commission, and it is going to require a lot of work with the Committee,
and it is going to require, as well, more consumer education, and technology. It is not
an easy problem to solve."
Issues Not Addressed. The hearing left altogether untouched most of
the technology related issues before the FTC. Nothing was said about the relationship of
antitrust law and intellectual property rights.
Nothing was said about privacy issues
raised by the collection, storage, aggregation, and sharing of personal data
made possible by new computer and internet technologies. There was nothing about
radio frequency ID tags, online privacy practices, recent FTC privacy related
enforcement actions, the Children's Online Privacy Protection Act, the privacy
provisions of the Gramm Leach Bliley act, any pending bills that would give
further privacy related rulemaking or enforcement authority to the FTC, or other
privacy related matters.
Nothing was said about the FTC's efforts to promote consumer cyber security.
Nothing was said about spyware.
Nor did the hearing touch on mergers of technologies companies, state
barriers to electronic commerce, international cooperation on cross border
consumer protection issues, or international cooperation on antitrust.
Sen. George Allen (R-VA), who usually
takes a keen interest in technology related matters before the Senate Commerce
Committee, did not participate in this hearing.
Conflicts of Interest and Recusals. Confirmation hearing also
typically involve introduction of the families of the nominees. Liebowitz brought his
wife, Ruth Marcus, who is a member
of the editorial page staff of the Washington Post. Majoras brought her husband,
John Majoras, an antitrust lawyer with the law firm of Jones Day, which has
an extensive antitrust practice.
Sen. Wyden and Sen. Boxer questioned Majoras at length about the possibility
that she might recuse herself in oil industry matters as a result of her having
done work for Chevron Texaco when she worked at Jones Day. They did not enquire
about recusals based on her husband's work. Nor did they ask Liebowitz about recusals
from entertainment industry matters based upon his lobbying for the MPAA.
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Wu (at right) said in his opening
statement that he intends to focus the