A Different Kind of Trustbuster

Tim Muris, Bush's pick for FTC chief, could be more likely to O.K. takeovers and less fearful of monopolies

For the past decade, an elite group of lawyers has gathered at Washington's sleek 701 restaurant to discuss fine points of antitrust law. Two regulars are Robert Pitofsky, chairman of the Federal Trade Commission, and Timothy J. Muris, the man President Bush has tapped to take his place.

In the cozy world of antitrust, Republicans and Democrats amicably criticize each other's positions over pan-seared scallops and Cointreau chocolate torte. But beneath the camaraderie lies an unavoidable fact: Pitofsky and Muris disagree about almost everything. Indeed, the rise of Muris, a 51-year-old law professor at George Mason University in Fairfax, Va., to the chairmanship is expected to herald the biggest policy shift at the FTC in nearly two decades. "It's not an accident that we battle over elections," says Howard University law professor Andrew I. Gavil. "Muris really takes a fundamentally different approach."

RIGHTWARD HO. It's different--and far more conservative. In fact, he is almost the anti-Pitofsky. Whereas the current FTC chairman was to the left of the antitrust mainstream--and tried to extend the reach of the law into new areas--Muris has staked out a position just as far to the right. He's dubious of Pitofsky's claims that the New Economy necessitates a new approach to antitrust. And he thinks some of Pitofsky's lawsuits--notably his 1998 case against Intel Corp.--take antitrust into dangerous territory. "The agency appears to believe that in monopolization cases proof of anticompetitive effect is unnecessary," Muris wrote in a recent law review article. (Because of his pending confirmation, he declined to speak to BusinessWeek.)

Like many other Bush appointees, Muris is likely to disappoint those who were hoping for a centrist Administration. The best way to understand him, friends and colleagues say, is to view Muris as an aging revolutionary--a Reagan revolutionary, that is. In 1981, his staunchly deregulatory views landed him a senior staff position at the FTC at just 31. There he argued that mergers can create huge efficiencies that outweigh the loss of competition. His arguments provided the intellectual grist for Reagan's hands-off antitrust policy. He was also an early opponent of so-called predatory-pricing cases, concluding that the practice rarely hurts the public. And he headed the FTC's consumer protection bureau, where he reined in its role as truth police for television advertising. "We're concerned he won't be as open to consumer protection and antitrust as his predecessor," says Gene Kimmelman of the Consumers Union.

Once the Reagan revolution ended, Muris retreated to academia. But rather than become an egghead in an ivory tower, he worked to maintain strong political contacts. Muris advised George W. Bush's campaign, volunteered for duty in the Florida recount, and helped the fledgling Administration draft its first budget. "Tim definitely knows his way around the White House," adds James C. Miller III, the former FTC chairman, who hired him in 1981.

HARD-NOSED. In fact, Muris is an expert on the federal budget and ended up on the short list to head Bush's Office of Management & Budget. A numbers whiz, he has told colleagues that he developed the ability to read 10-digit codes on train cars and keep a running tally as they passed. He's also a Civil War buff, who knows every detail about the two battles of Manassas.

Muris is likely to apply hard-nosed economic reasoning to the FTC's enforcement agenda. During the Clinton Administration, the FTC tried to steer a subtle course for antitrust that involved speculative predictions about the future. In high-tech industries, for example, Pitofsky believed in the existence of a winner-take-all phenomenon called "network effects": The first company to get established becomes dominant, even if it doesn't have the best technology. As a result, Pitofsky gave tech deals a close review. Before signing off on the AOL Time Warner merger, for example, he placed a series of restrictions on the company's efforts in interactive television--an industry barely in its infancy. In the 1996 merger that created Novartis, he acted even more prospectively, requiring the divestiture of some promising pharmaceutical products that were at least five years from commercial production.

WARY. Muris will be more inclined to approve mergers and less inclined to extract concessions. By acting early, he has argued, the government has no way of measuring harm to competition in the marketplace. He is also suspicious of network effects--a notion concocted, he thinks, to encourage government intervention. "The fact that network effects are everywhere should give us pause about the usefulness of the concept," he has written.

Although expected to be less activist than Pitofsky, Muris won't simply put an "out to lunch" sign on the FTC door, say colleagues. In the antitruat arena, he'll focus on finding measurable threats to competition. Where those exist, however, he is expected to be tough. Muris may be reluctant, for instance, to halt the FTC's current probe of drugmaker Schering-Plough Corp. for allegedly keeping generic rivals off the market. Such practices, after all, could lead to increased prices.

Nor is Muris likely to abandon all consumer protection efforts. When he was the agency's top antifraud cop in the early 1980s, he led a crackdown on hardcore swindlers. Muris hasn't written or said much about privacy--another key issue for the FTC--but the Bush Administration has indicated that it will continue to police this issue.

One other thing he won't give up if confirmed: the regular antitrust dinner at the 701. The group has always functioned as a way for those in power to hear what people on the outside have to say. Muris will do a lot of listening--and, like Pitofsky, will probably encounter plenty of vigorous criticism.

By Dan Carney in Washington

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