Relations between the federal antitrust authorities need fundamental reform with greater coordination of the activities of the agencies responsible for protecting competition, said Federal Trade Commissioner William E. Kovacic. He said that too often there was little in the way of cooperation between the Federal Trade Commission, Department of Justice, industry-specific regulators and state attorneys general. “We have an archipelago of policy makers with very inadequate ferry service between the islands,” said Kovacic, in an interview with Dow Jones Newswires Thursday. “In too many instances when you go to visit those islands the inhabitants come out with sticks and torches and try to chase you away.” … Kovacic said relations between European Union antitrust authorities and his agency at times were better than those between the FTC and Department of Justice. “We develop more effort internationally with our counterparts to cooperate in the competition area than we do domestically with our counterparts,” he said. Such an observation is striking, considering that the two agencies sit almost directly across Pennsylvania Avenue from each other. One clear difference between the two agencies, said Kovacic, was how they dealt with disputes between international antitrust agencies. “You will not see the kinds of fairly pointed critiques that have come from our sister agency especially in connection to GE Honeywell,” said Kovacic. He was referring to the public spat between the DOJ and European Union competition authorities in 2001 after the EU vetoed the merger between General Electric Co. (GE) and Honeywell International Inc. (HON) after the U.S. had already cleared the merger. “You can have debates and disagreements, but there is a culture inside this building that the sharpest of disagreements get vetted internally and your counterparts are never surprised,” said Kovacic. … Kovacic saved his harshest comments for the situation involving drug makers Schering-Plough Corp. (SGP), Upsher Smith Laboratories and American Home Products – now Wyeth Pharmaceuticals (WYE) – that came to a head last summer. For five years, the FTC had been pursuing a case against the companies alleging that Schering-Plough offered a payment to the other two firms to delay their entry into particular drug market. Its decision was overturned by the 11th Circuit Court of Appeals in May 2005. The Supreme Court then refused to hear the case after the Solicitors General’s Office, according to Kovacic, on the advice of the Department of Justice’s antitrust unit, told the court it didn’t believe the FTC had a case. “It is as though the expertise that is supposed to entitle us to some deference entitled us to exactly none,” he said, still visibly angry at what happened. “I think from both the antitrust division and the 11th Circuit we got the deference that a wayward child would get from an irate parent, which is to say zero.”
Among the many interesting aspects to Commissioner Kovacic’s comments is his criticism of the courts, particularly the Supreme Court. Although it has been several months since the Court declined to hear the Shering-Plough case, he became “visibly angry” about it. Interestingly, he was upset not (or, at least not only) because he thought the case had merit but due to the courts’ lack of “deference” to the FTC. This is not surprising as Commissioner Kovacic has spent a significant part of his professional career with the FTC; in addition to his current position as a Commissioner, he was the FTC’s General Counsel from 2001-2004 and from 1979 to 1983 worked in the the Bureau of Competition’s Planning Office and then as an attorney advisor to former Commissioner George W. Douglas.