Updated: The FTC chair denies any conflict of interest in reviewing the proposed merger between the online advertising giants.
Federal Trade Commission Chair Deborah Platt Majoras refused Dec. 14 to recuse herself in the agency's review of the proposed $3.1 billion merger of online advertising giants Google and DoubleClick.
Her refusal received the full support of her four fellow FTC commissioners.
The Electronic Privacy Information Center and the Center for Digital Democracy questioned Majoras' impartiality in the merger review in a Dec. 12 filing with the FTC. The groups claimed Majoras' husband, John M. Majoras, is an equity partner at the powerful Washington law firm Jones Day, which EPIC and CDD said is representing DoubleClick in the merger review.
Click here to read more about the EPIC and CDD petition.
Majoras adamantly denied EPIC's and CDD's claims.
P>"My husband does not represent any party in the Google-DoubleClick matter. He is in no way connected to the matter, nor are any of the parties to the matter otherwise currently his clients," Majoras said in a statement.
Majoras said her husband converted from an equity to a nonequity status at Jones Day on Jan. 1, 2006. "I understand that as a fixed participation partner, his compensation will not be increased or affected by changes in the firm's income," she said.
Moreover, Majoras said, Jones Day does not represent DoubleClick in the FTC review. Jones Day does represent DoubleClick in the European Commission review of the merger.
"In dozens of meetings and submissions, [Jones Day] has never appeared or even been mentioned. The law firm of Simpson, Thacher & Bartlett LLP represents DoubleClick before the FTC," Majoras said. "I understand that no one at the FTC was aware that Jones Day was involved in the EC review of this transaction until the afternoon of Tuesday, Dec. 11, 2007, at which time staff learned and contacted me."
After consulting with FTC ethics officials, Majoras said she would continue to be involved in the merger review.
"Because my participation in this matter is consistent with federal ethics laws and regulations, I intend to fulfill the duties entrusted to me when I was appointed and confirmed," Majoras said.
In a Dec. 14 statement by EPIC and CDD, the two groups contended that Majoras had not made a "persuasive" case against recusal. They claim Jones Day told them, shortly before EPIC and CDD filed an opposition to the merger, that the law firm did represent DoubleClick. In addition, the two advocacy groups noted that after EPIC and CDD asked for Majoras' recusal, Jones Day "promptly removed the relevant page from their Web site."
EPIC and CDD said in a joint statement, "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. ... Jones Day's admission makes clear the case for recusal and it is nowhere addressed in the Chairman's statement."
Jones Day did not return calls from eWEEK.
The EPIC and CDD petition also pointed out that Majoras had recused herself at least three times previously when cases involving Jones Day came before the FTC, a fact that Majoras did not deny.
"In 2004 and 2005, when my husband was still an equity partner, I assumed that I would have a financial interest in FTC matters in which Jones Day represented a party and recused myself in such matters," she said. "After my husband relinquished his equity interest in the firm's income, I began to consider participating in FTC matters in which Jones Day represented a party."
The flurry of controversy that surrounded Majoras' participation in the deal review prompted FCC Commissioner William E. Kovacic to note that his wife, Kathryn Fenton, is also an attorney at Jones Day who converted to a nonequity status at the firm and became a fixed participation partner in 2006.
"Even though the petition does not ask for my recusal, I want my position to be clear to avoid any future questions relating to this issue," Kovacic said in a statement. "Because, like the Chairman, I do not have any current conflicts in this matter, I have determined not to recuse myself."
FTC Commissioners Pamela Jones Harbour, Jon Leibowitz and J. Thomas Rosch also issued a statement supporting Majoras' position.
"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. "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."
Neither EPIC nor CDD were immediately available for comment.
Editor's Note: This story was updated to include information about the Dec.14 statement by the Electronic Privacy Information Center and the Center for Digital Democracy.
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