FTC Chair Ramirez Asked About Contradictions in Senate Testimony on Google Antitrust Probe

We are asking Federal Trade Commission (FTC) Chair Edith Ramirez to address “contradictions” in testimony she gave to the Senate Judiciary Committee on March 9 regarding the FTC’s dropping of an antitrust action against Google in 2013.

The request points to a variety of evidence obtained through open government laws that suggests that Ramirez and other FTC officials have unusually close relationships with Google, and that those relationships may have helped the company avoid antitrust action.

By highlighting Ramirez' obvious efforts to mislead Congress, we seek to bring public attention to a larger problem. It appears that FTC officials operate much like employees of Google, and that Google calls the shots about its own oversight. This is the most extreme example of “regulatory capture” we have seen in Washington in recent years.

The issue first came to the fore in March 2015 when the Wall Street Journal reported that the FTC staff had recommended an antitrust action against Google in a report leaked to the newspaper. In its wake, Ramirez has asserted that the FTC actions have been consistent with its own staff.

Here is the text of my letter:

Dear Chairwoman Ramirez:

The National Legal and Policy Center is writing to express our serious concerns about your recent testimony regarding Google during a hearing held by the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights on March 9^th, 2016, “Enforcement of Antitrust Laws.”

At that hearing, you testified under oath that the Federal Trade Commission (FTC) decision not to sue Google over antitrust violations was “consistent with the recommendation that had been made by our Bureau of Competition staff,” adding that any “press reports to the contrary are just flatly wrong.”[1] However, your statement is clearly contradicted by key portions of the FTC Staff report prepared by the Bureau of Competition staff, portions of which were inadvertently released last year.

The very first page of that report reads:

“RECOMMENDATION: That the Commission Issue the Attached Complaint.”[2] The FTC staff said it found Google was in violation of federal antitrust laws and recommended filing suit on three of the four areas it examined. They concluded:

“Staff concludes that Google’s conduct has resulted — and will result — in real harm to consumers and to innovation in the online search and advertising markets. Google has

strengthened its monopolies over search and search advertising through anticompetitive

means, and has forestalled competitors' and would-be competitors' ability to challenge those monopolies, and this will have lasting negative effects on consumer welfare.”

As a result, FTC staff in the report called for the Commission to sue Google for violations of antitrust law. “We conclude that these agreements violate Section 2 [of the Sherman Antitrust Act] (Page 102), staff said of Google’s “exclusive and restrictive” syndication agreements. They explicitly said: “We recommend that the Commission issue a complaint against Google for this conduct.” (Page 52)

In spite of these recommendations, the FTC declined to file a complaint over any of the three areas, closing the investigation with what observers called a “slap on the wrist.”[3]

The National Legal and Policy Center respectfully calls for you to clarify these conflicting statements, which were made under oath before Senators tasked with oversight of the nation’s antitrust. We also note that you previously have made similar statements at Google’s behest, as outlined in troubling emails obtained by BuzzFeed.[4]

After the FTC staff report was made public, Google’s lobbyist, Johanna Shelton, wrote the FTC saying the company was “deeply troubled” and “puzzled” by the agency’s “lack of an on-the-record clarification about the effect of the Bureau of Competition staff memo.”

Google’s lobbyist suggested you state that the Commission did not, in fact, override the staff’s recommendations. It also asked you to do it in Europe, where the company was facing growing antitrust scrutiny. “We understand the Chairwoman will be in Europe this week and may have opportunities to express that the staff memo was fully taken into account and not inconsistent with the final agency decision,” Ms. Shelton wrote.[5]

The public statement from your office followed two days later on March 25^th, when the FTC released a press statement that “[c]ontrary to recent press reports, the Commission’s decision on the search allegations was in accord with the recommendations of the FTC’s Bureau of Competition, Bureau of Economics, and Office of General Counsel.”[6]

Later that evening, Ms. Shelton sent another email to your Chief of Staff, Ms. Heather Hippsley, with the message “can you give me a quick call” in the Subject line.[7] The next day — at a German competition panel at which both you and Google’s general counsel, Kent Walker, were panelists — you stated: “I want to dispel any confusion from the Wall Street Journal report. The commission’s decision on Google was consistent with the recommendations of its staff.”[8]

Your remarks at the German competition panel echo almost exactly the remarks Google had demanded in its email.

Another troubling factor is that your remarks were apparently coordinated with Google. Internal emails show that your draft speech was shared in advance with Google’s Kent Walker and Google’s European director of competition, Julia Holtz.

NLPC has been investigating potential ethics issues related to Google’s unusually close relationships with the Obama administration and Federal Trade Commission (FTC) officials, and how those relationships may have helped the company avoid antitrust action by law enforcement officials.

The following timeline of events — informed by documents obtained under open-records requests, White House visitors logs and other sources — suggests the unusually high degree of influence that Google and the Administration had in the FTC settlement. In particular, they raise serious questions about the extent to which the FTC, Obama administration and Google coordinated to limit fallout from the public release of the FTC staff report.

1) The existence of the FTC staff report was first revealed by The Wall Street Journal in a March 19, 2015, article, “Inside the U.S. Antitrust Probe of Google.”[9] The day before Google counsel Rob Mahini emailed your Chief of Staff, Heather Hippsley, at 5:18 pm about an “urgent situation” that Google’s General Counsel Kent Walker “would like to speak with the Chairwoman about.”[10]

2) White House visitor logs reveal that on the same day as Mr. Walker’s “urgent situation” email to you, a private Oval Office meeting was also scheduled between Google Chairman Eric Schmidt and President Barack Obama for the next day, March 19 at 12:30 pm. White House logs show the appointment being made at 2:11 pm on March 18^th for the meeting less than 24 hours later.[11]

3) Four days later, on March 23, Google lobbyist Johanna Shelton told you in an email that “Google remains deeply troubled by the FTC’s lack of an on-the-record clarification about the effect of the Bureau of Competition staff memo…We understand the Chairwoman will be in Europe this week and may have opportunities to express that the staff memo was fully taken into account and not inconsistent with the final agency action.”

Several aspects of this timeline should be of concern to anyone who believes that law enforcement should be free from influence by the White House or one of its principal corporate supporters. First, we find the timing of the meeting between Eric Schmidt and the President in the Oval Office unusual to say the least. The meeting occurred the same day that the Wall Street Journal article was published.

Second, Ms. Shelton’s email demanding an FTC response to the FTC staff report was followed two days later by an FTC statement that acquiesced to Shelton’s demands shows the influence Google wields in Washington.

Third, between the WSJ’s publication of the FTC staff report on March 19^th and the release of the FTC’s statement defending the Commission on March 25^th, Google’s Mr. Schmidt and Ms. Shelton attended at least three additional White House meetings, according to visitor logs.[12] While there is no way to know whether the FTC staff report was a topic of discussion at these meetings, the timing of the meetings as well as Mr. Schmidt’s and Ms. Shelton’s participation raises troubling questions.

The FTC has a hard-won reputation for even-handed application of the law and, as an independent agency, for being impervious to political pressure from the White House. Unfortunately, your actions in this case have called that into question. We call upon you to immediately correct the contradictions in the public record, which have raised questions about the independence of the Commission you oversee and to do so at your earliest opportunity. END LETTER

The letter was copied to:

The Honorable Charles E. Grassley, Chairman, Senate Committee on the Judiciary

The Honorable Patrick Leahy, Ranking Member. Senate Committee on the Judiciary

The Honorable Mike Lee Chairman, Subcommittee on Antitrust, Competition Policy and Consumer Rights, Senate Committee on the Judiciary

Honorable Amy Klobuchar, Ranking Member, Subcommittee on Antitrust, Competition Policy and Consumer Rights, Senate Committee on the Judiciary

The Honorable Orrin Hatch, Member, Subcommittee on Antitrust, Competition Policy and Consumer Rights, Senate Committee on the Judiciary

Ms. Roslyn A. Mazer, Inspector General, Federal Trade Commission

Footnotes:

[1] http://www.judiciary.senate.gov/meetings/oversight-of-the-enforcement-of-the-antitrust-laws-2016

[2] http://graphics.wsj.com/google-ftc-report/img/ftc-ocr-watermark.pdf

[3] http://www.computerworld.com/article/2494399/search/ftc-gives-google-slap-on-wrist-instead-of-face.html

[4] http://www.buzzfeed.com/williamalden/how-googles-lobbyists-get-things-done-in-washington#.svbzVXkRx