Tech Law Journal Daily E-Mail Alert
March 6, 2002, 9:00 AM ET, Alert No. 382.
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FTC and DOJ Divide Antitrust Merger Review Authority
3/5. The Federal Trade Commission (FTC) and the Department of Justice's (DOJ) Antitrust Division announced that they have entered into a Memorandum of Agreement concerning clearance procedures for merger reviews and other antitrust matters. The agreement attempts to define, by industry, which transactions will be reviewed by which agency. Both the FTC and DOJ have statutory authority to conduct antitrust merger reviews. See also, FTC release.
The agreement states that the FTC will have responsibility for "Computer Hardware", which it defines as "Matters involving computer hardware do not become matters involving computer software, for purposes of this allocation, merely because software is being shipped with the hardware. In matters involving both hardware and software, clearance will be determined on the basis of the market in which the competitive effects being investigated are predominantly likely to occur." The FTC would also be assigned transactions involving "Professional Services" and "Satellite Manufacturing and Launch, and Launch Vehicles".
The agreement assigns to the DOJ's Antitrust Division transactions involving "Computer Software", which it defines as "Matters involving computer software do not become matters involving computer hardware, for purposes of this allocation, merely because the software is being shipped with hardware. In matters involving both hardware and software, clearance will be determined on the basis of the market in which the competitive effects being investigated are predominantly likely to occur."
The agreement also gives the DOJ "Media and Entertainment", which it states "Includes cable services, satellite services, television and radio broadcasting, publishing, newspapers, magazines, movies, movie theaters and upstream video distribution, advertising, music, toys and games, gaming, and sports".
The agreement also gives the DOJ "Telecommunications Services and Equipment", which it states "Includes set-top boxes, cable plant and related infrastructure, satellite data and programming, communications infrastructure, and telecommunications equipment (e.g., telephones, pagers, switches, Internet backbone, telephone cable)".
Finally, the agreement assigns to the DOJ "Financial Services/ Insurance/ Stock and Option, Bond, and Commodity Markets" and "Defense Electronics".
The FTC and DOJ had previously reached a similar agreement in January. However, they delayed formal announcement, due to opposition from Sen. Ernest Hollings (D-SC), Chairman of the Senate Commerce Committee.
A third federal government entity, the Federal Communications Commission (FCC), conducts license transfer proceedings, which in the case of some major mergers involving communications and technology companies, are in the nature of antitrust merger reviews. The agreement between the FTC and DOJ does not affect these duplicative reviews.
Charles James, Assistant Attorney General in charge of the Antitrust Division, stated in a release that "Allocating industry sectors in a more rational manner will enable the Department to investigate more efficiently possible anticompetitive conduct affecting consumers and will provide greater certainty to the business community, all of which is good for consumers."
The agreement also provides that "Nothing in this Memorandum in any way shall limit either agency in making an independent decision regarding what investigations it will undertake or in fulfilling its statutory responsibilities", and that "This Memorandum does not confer on any person any enforceable right or benefit."
The agreement also leaves uncertainty as to which agency would review certain transactions, an uncertainty that will increase as industries converge. For example, the agreement assigns computer hardware companies to the FTC, but assigns computer software companies to the DOJ. Similarly, the agreement assigns hardware companies to the FTC, and telecom equipment companies to the DOJ, even though there is already substantial convergence of these two sectors.
The agreement addresses such uncertainties. It states that "The agencies anticipate continued convergence between certain telecommunications and information technologies. In order to address clearance issues that arise as a result of such convergence, each agency will appoint two representatives to form an inter agency ``Convergence Committee´´ that will be tasked with recommending" further refinements to the division authority.
FRB Vice Chairman Addresses Disaster Recovery
3/4. Federal Reserve Board Vice Chairman Roger Ferguson gave a speech to the Institute of International Bankers in Washington DC titled "A Supervisory Perspective on Disaster Recovery and Business Continuity". He stated that "Through the routine supervisory process, we are talking to institutions about the robustness of their disaster recovery planning but are stopping short of setting detailed regulatory standards at this point."
Ferguson stated that "The Federal Reserve and other regulators, both here and abroad, have been analyzing the aftermath of the terrorist attacks with a view toward strengthening the overall resilience of the financial system."
He first reviewed three key lessons of September 11. "First, business continuity planning at many institutions, although improved by Y2K preparations, clearly had not fully taken into account the potential for wide spread disasters and for the major loss or inaccessibility of critical staff."
"Second, business concentrations, both market based and geographic, intensified the impact of operational disruptions. ... Moreover, significant telecommunications vulnerabilities resulting from concentrations became evident when failures affected numerous institutions, both within and outside lower Manhattan." And, "Third, the events of September 11 graphically demonstrated the interdependence among financial system participants, wherever located."
Ferguson then addressed the "steps that institutions are taking to improve their own preparedness and business continuity planning", such as "enhancing security measures, updating communication plans, and strengthening real time data backup". He went into detail about different back up models, including having an active operating site and a backup site, and having split operations. He also addressed communications diversification.
He stated that "Institutions are also exploring methods to provide a greater diversity of telecommunications services and to eliminate points of failure. Contract provisions and audit oversight of telecommunications vendors may heighten attention to this critical vulnerability. At the same time, many recognize that overcoming telecommunications vulnerabilities will be extremely difficult given the current physical infrastructure. In the longer term, establishing diverse telecommunications methods (such as Internet and wireless) and moving toward wider geographic diversification of operations may address these vulnerabilities. Industry wide discussions with telecommunications providers may help institutions to avoid some of the vulnerabilities exposed on September 11. Some institutions are reexamining arrangements with disaster recovery vendors because they have found that these vendors' ``first come, first served´´ policies mean just that."
Ferguson concluded that the FRB is "talking to our industry colleagues about appropriate sound practices", but is "stopping short of setting detailed regulatory standards at this point". He added, "Although I anticipate that we will issue updated supervisory guidance and examination procedures for business continuity before long, I am not certain that we want to approach this issue with a checklist."
3rd Circuit Reverses Local Zoning Board's Denial of Permit for Cell Tower
3/5. The U.S. Court of Appeals (3rdCir) issued its opinion in Nextel v. Unity Township, case involving a wireless phone company's efforts to obtain authority from a local zoning board to construct a radio tower on private land, to eliminate a gap in its cell phone service. The local authority denied permission. The District Court ruled for the local authority. The Appeals Court reversed and remanded.
Background. Nextel Communications sought to eliminate a gap in its service along Route 30 in western Pennsylvania. It requested a variance from Unity Township in order to build a 250 foot radio tower on a private farm that is in an area zoned residential. Unity denied the request. Nextel filed a complaint in U.S. District Court (WDPenn) against Unity. The District Court held that Nextel's claim had been mooted by an amendment to the original ordinance upon which the denial was based.
Court of Appeals. Nextel appealed. It argued that the zoning ordinance had the effect of prohibiting all wireless telecommunications towers in the Township, and that the Unity Township's disparate treatment of Nextel and a competitor constituted "unreasonable discrimination", in violation of the Communications Act of 1934 (TCA), at 47 U.S.C. § 332(c)(7)(B)(i).
The Appeals Court rejected the mootness argument. It then reversed, and held that "the case is remanded for three fact specific determinations: (1) whether the service gap was suffered by all wireless providers or only Nextel, (2) whether erecting a tower at the farm site proposed by Nextel was the least intrusive means for covering the gap in service along U.S. Route 30, and (3) whether the Township's discrimination between Nextel and Sprint was unreasonable. If the District Court finds that no provider was covering the service gap and that the farm site was the least intrusive means of covering that gap, or it finds that the Township's discrimination was unreasonable, then Nextel is entitled to remedies available under the TCA."
House Subcommittee to Mark Up Dot Kids Bill
3/5. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will mark up HR 3833 [PDF], the "Dot Kids Implementation and Efficiency Act of 2002", at 2:00 PM on Wednesday, March 6. This is the latest version of legislation sponsored by Rep. John Shimkus (R-IL) and Rep. Ed Markey (D-MA) to require the creation of a domain restricted to content suitable for minors.
The bill provides that "The NTIA shall require the registry selected to operate and maintain the United States country code Internet domain to establish, operate, and maintain a second level domain within the United States country code domain that provides access only to material that is suitable for minors and not harmful to minors". (Emphasis added.)
The original bill of Reps. Shimkus and Markey, HR 2417, would have required a "top-level, International domain". The Subcommittee held a hearing on HR 2417 on November 1, 2001. See, TLJ Daily E-Mail Alert No. 300, Nov. 2, 2001.
BXA Issues Wassenaar Rule Changes
3/5. The Commerce Department's Bureau of Export Administration (BXA) issued rule changes [PDF] pertaining to the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual Use Goods and Technologies. These rule changes revise the Commerce Control List (CCL) to implement changes in Category 4 (Computers) of the Wassenaar List of Dual Use Goods and Technologies, particularly with respect to million theoretical operations per second (MTOPS) levels. The rule changes are effective March 5, and will be published in the Federal Register on March 8.
A Free Trading Nation
3/5. President Bush announced that he is imposing a 30% tariff on the importation of certain steel products from certain countries. Speaking at a joint press conference with Egyptian President Hosni Mubarak, Bush stated, "we're a free trading nation".
The President's announcement follows, in part, a recommendation by the U.S. International Trade Commission. The statutory authority for this action is Section 203(b) of the Trade Act of 1974, 19 U.S.C. § 2253. See also, the President's Steel Products Proclamation and White House release.
This action does not apply to Canada, Israel, Jordan, and Mexico, the four countries with which the U.S. has free trade agreements. Nor does it apply to "a developing country that is a member of the World Trade Organization (WTO), as long as that country's share of total imports of the product, based on imports during a recent representative period, does not exceed 3 percent".
U.S. Trade Representative (USTR) Robert Zoellick explained it this way: "So the President believes that free trade benefits America's consumers and families, and that it's vital to generating jobs for America's workers, opening markets for American products and services, and in spurring economic growth. But the President also recognizes that some industries, workers and communities can't respond as quickly as one might wish to the changes of a fast moving global economy. We all know that financial and information markets move with lightening speed. But some traditional manufacturing industries and the communities that depend on them cannot. Some may need a breathing space to regain competitiveness. And this includes the steel industry. The global steel industry has been rife with government intervention, subsidies and protection. These unfair practices have hurt the U.S. steel industry because our market has been much more open than others." See, transcript of press conference.
EU Trade Commissioner Pascal Lamy responded that "The US decision to go down the route of protectionism is a major setback for the world trading system. Imports are not the cause of US difficulties and the measures announced today will not only not provide a solution but aggravate matters. I fear today's short sighted move will end any hope of finding an internationally agreed solution at the OECD to overcapacity problems faced by the world steel industry, and will not rein in global subsidies. The EU will of course launch an immediate complaint in Geneva against this clear violation of WTO rules and we will take whatever measures are necessary to safeguard our own market." See, EU release.
Microsoft Opposes Government Imposed Copy Protection Standards
3/5. Microsoft published in its web site an essay titled "Pirates of the Information Age". This essay states that "Some believe government legislated standards for copy protection are the way to go, but such a course could actually slow the development of new solutions ..."
Microsoft continued that "There clearly is a need, however, for government and industry to work together to fight the piracy problem. The White House is including piracy enforcement in trade negotiations with foreign countries. Law enforcement agencies, working in partnership with the high tech industry, are becoming more aggressive and sophisticated in their efforts to curb software theft. Microsoft and other software companies are undertaking worldwide education campaigns to help businesses and consumers recognize counterfeit software."
Microsoft also advocated "stronger anticounterfeiting laws, multilateral cooperation, sustained resources and industry cooperation".
People and Appointments
3/5. Candi Wolff was named Assistant to the Vice President for Legislative Affairs. From 1996 to 2000 she was Deputy Staff Director to the Senate Republican Policy Committee. Before that, she was Legislative Counsel to the Senate Steering Committee and Tax Counsel to former Sen. Malcolm Wallop (R-WY). And before that, she was an associate in the Public Policy and Law section of the law firm of Akin Gump. See, White House release.
3/5. The Board of Directors of the Competitive Telecommunications Association (CompTel) elected new officers. Richard Burk (P/CEO of nii Communications) is the new Chairman; he replaces Doug Hanson. Jerry James (President of Grande Communications) is the new Vice Chairman; he replaces Drew Walker. Joseph Ambersley (EVP at PaeTec) is the new Vice Chairman and Treasurer; he replaces Burk. See, CompTel release.
More News
3/5. Attorney General John Ashcroft and Deputy Attorney General Larry Thompson held a press conference to announce the creation of the Department of Justice's National Security Coordination Council. See, transcript.
3/5. The Bureau of Export Administration (BXA) updated its Denied Persons List.
3/5. The Federal Communications Commission's (FCC) Common Carrier Bureau announced that it is seeking nominations for a board member position on the Universal Service Administration Company's (USAC) Board of Directors. For more information, contact Sheryl Todd at 202 418-7400.
3/5. The U.S. Department of Justice published a notice in the Federal Register regarding the Tunney Act public comments that it received relating to the Revised Proposed Final Judgment in U.S. v. Microsoft, Civil Action No. 98-1232. See, Federal Register, March 5, 2002, Vol. 67, No. 43, at Pages 9984 - 9985.
3/4. The U.S. District Court (NDOhio) sentenced Brian Wildman to five months in prison, and five months of home confinement. Wildman plead guilty to two counts of mail fraud, in violation of 18 U.S.C. § 1341, in connection with an eBay Internet auction fraud scheme. See, USAO release.
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Wednesday, March 6
The House will meet at 10:00 AM for legislative business. It is scheduled to take up the Federal Information Technology Workforce and Acquisition Improvement Act.
9:00 AM - 5:00 PM. The National Institute of Standards and Technology's (NIST) Computer System Security And Privacy Advisory Board (CSSPAB) will meet to discuss computer security legislation, privacy issues, critical infrastructure protection, the USPS's electronic postmark products, and other matters. The CSSPAB advises the Secretary of Commerce and the Director of NIST on security and privacy issues pertaining to federal computer systems. This is the second day of a three day meeting. See, notice in Federal Register. Location: General Services Administration, 7th and D Streets, SW, Room 5700.
10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in NeoMagic v. Trident MicroSystems, No. 01-1631, an appeal from the U.S. District Court (DDel) in a patent infringement and antitrust case involving embedded memory semiconductors. The District Court granted summary judgment of non infringement to Trident MicroSystems. Location: Courtroom 201, LaFayette Square, 717 Madison Place, NW.
10:00 AM - 4:00 PM. The SEC will hold a roundtable meeting to examine proposals for better protecting investors by reforming financial disclosure and auditor oversight. The morning session (10:00 AM - 12:00 NOON) will focus on financial disclosure. The afternoon session (2:00 - 4:00 PM) will focus on auditor oversight. See, SEC notice. Location: Douglas Room, Basement, SEC.
10:00 AM. The House Appropriations Committee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the proposed budget for FY 2003 for the State Department. Location: Room 2359, Rayburn Building.
10:30 AM. The House Judiciary Committee will meet to mark up several bills, including HR 2314, the "Class Action Fairness Act of 2001", sponsored by Rep. Bob Goodlatte (R-VA). Location: Room 2141, Rayburn Building.
10:30 AM. The Senate Judiciary Committee's Subcommittee on Antitrust, Competition, and Business and Consumer Rights will hold a hearing titled "Dominance in the Sky: Cable Competition and the Echostar Direct TV Merger". Sen. Herb Kohl (D-WI) will preside. The scheduled witnesses include Charlie Ergen (Echostar), Eddy Hartenstein (DirecTV), Gene Kimmelman (Consumers Union), Robert Pitofsky (Arnold & Porter), and Jay Nixon (Attorney General of Missouri). Location: Room 226, Dirksen Building.
TIME? Ron Sommer, Chairman of the Board of Management of Deutsche Telekom AG, will deliver a luncheon address at the U.S. Chamber of Commerce titled "The Transformation Into a Global Company: Meeting Market and Regulatory Challenges" The price to attend is $75 for members and $115 for non members. For more information, contact Chris Merida at 202 463-5500. Location: 1615 H Street, NW.
12:15 PM. The FCBA's Online Committee will host a brown bag lunch. The speaker will be Anthony Rutkowki, VP Internet Strategy, Verisign. He will address "Broadband, When? -- Verisign's' View." RSVP to Scott Harris at sharris Location: Lampert & O'Connor, 5th Floor, 1750 K Street, NW.
2:00 PM. The House Commerce Committee's Subcommittee on Telecommunications and the Internet will mark up HR 3833 [PDF], the "Dot Kids Implementation and Efficiency Act of 2002", sponsored by Rep. John Shimkus (R-IL) and Rep. Ed Markey (D-MA). Rep. Fred Upton (R-MI) will preside. Location: Room 2322, Rayburn Building.
2:00 PM. The House Appropriations Committee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the proposed budget for FY 2003 for the FBI. Location: Room 2359, Rayburn Building.
2:30 PM. The Senate Commerce Committee's Subcommittee on Communications will hold a hearing on wireless communications infrastructure. The witnesses will be Agostino Cangemi (NYC Dept. of Info. Tech. and Telecom.), Steve Souder (Montgomery Co., MD, 911 Emergency Communications Center), Ari Wax (NYC Deputy Commissioner of Technological Development), Glen Nash (Assoc. of Public Safety Communications Officials), Paul Crotty (Verizon), Gloria Harris (AT&T Wireless), Larissa Herda (Time Warner Telecom), and Christopher McLean (ComCare Alliance). Sen. Daniel Inouye (D-HI) will preside. Location: Room 253, Russell Building.
Thursday, March 7
9:00 AM - 5:00 PM. The National Institute of Standards and Technology's (NIST) Computer System Security And Privacy Advisory Board (CSSPAB) will meet. This is the third day of a three day of meeting. See, notice in Federal Register. Location: GSA, 7th and D Streets, SW, Room 5700.
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in USTA v. FCC. Judges Edwards, Randolph and Williams will preside. Location: 333 Constitution Ave. NW.
10:00 AM. The Senate Appropriations Subcommittee's Subcommittee on Commerce, Justice, State, and the Judiciary (CJS) will hold a hearing on the administration's proposed budget estimates for FY 2003 for the SEC and the FCC. SEC Chairmam Harvey Pitt and FCC Chairman Michael Powell will testify. See, CJS release. Location: Room 253, Russell Building.
10:30 AM - 12:30 PM. The House Science Committee's Subcommittee on Research will hold a hearing titled "Meeting the Demands of the Knowledge Based Economy: Strengthening Undergraduate Science, Mathematics and Engineering Education". Location: Room 2325, Rayburn Building.
10:00 AM. The Senate Banking Committee will hold a hearing. Federal Reserve Chairman Alan Greenspan will deliver his semi annual report on monetary policy. Location: Room 106, Dirksen Building.
10:00 AM. The Senate Judiciary Committee has scheduled a business meeting. Location: Room 226, Dirksen Building.
Friday, March 8
12:15 PM. The FCBA's Transactional Practice Committee will host a brown bag lunch on mass media transactions. RSVP to Sue Fischer at (202) 776-2491. Location: Dow Lohnes & Albertson, 1200 New Hampshire Ave.
12:30 - 2:00 PM. The New American Foundation will host a panel discussion titled "Unwired Security: Is a National Wireless Emergency Network Necessary?" The speakers will be Reed Hundt (McKinsey & Co.), Thomas Wheeler (P/CEO of the Cellular Telecommunications & Internet Association), and Robert Gurss (Shook Hardy & Bacon). RSVP to Laura Gillespie at gillespie or 202 986-4901. Location: 1630 Connecticut Ave., NW, 7th Floor.
Extended deadline for submitting comments to the FCC in response to its Further Notice of Proposed Rulemaking regarding the current state of the market for local and advanced telecommunications services in multi tenant environments. See, FCC notice of extension of deadline [PDF]. This is WT Docket No. 99-217.
Monday, March 11
8:30 - 10:00 AM. The American Enterprise Institute (AEI) will host a press breakfast on the topic "Taxing Broadband". Harold Furchtgott-Roth and other AEI scholars will speak. RSVP to Veronique Rodman at (202) 862-4871 or Location: AEI, 1150 17th Street, NW, 11th Floor Conference Room.
8:30 AM - 12:00 NOON. The ITAA and the CSIS will co-host a conference titled "Managing Identity and Authentication on the Internet". For more information, contact Shannon Kellogg at skellogg See, ITAA notice. Location: CSIS, B1 Conference Center, 1800 K Street, NW.
Deadline to submit comments to the Copyright Office in response to its Notice of Proposed Rulemaking on "the requirements for giving copyright owners reasonable notice of the use of their works for sound recordings under statutory license and for how records of such use shall be kept and made available to copyright owners." See, notice in Federal Register.
Tuesday, March 12
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in USTA v. FCC, No. 01-1085. Judges Ginsburg, Rogers and Garland will preside. Location: 333 Constitution Ave. NW.
10:00 AM. The Senate Appropriations Subcommittee's Subcommittee on Commerce, Justice, State, and the Judiciary will hold a hearing on the administration's proposed budget estimates for FY 2003 for the Department of State. Location: Room 138, Dirksen Building.
1:30 PM. The U.S. International Telecommunication Advisory Committee (ITAC) will hold a meeting. See, notice in Federal Register. Location: State Department.