After a four-year tenure marked by an increased focus on privacy and aggressive consumer protection, Federal Trade Commission Chairman Jon Leibowitz announced today that he is stepping down on February 15.
"I don't have any regrets," Leibowitz said in a conference call with reporters. "I like to think we have made America in a small way a better place to live and helped ensure an even playing field for businesses."
Fittingly, he capped off his departure – "before I go off into the sunset," as he put it – by announcing two significant privacy actions. The FTC settled a case for $800,000 with the operator of the Path social networking app for improperly collecting personal information, and agency staff released a detailed report recommending ways to improve data and privacy practices in the mobile marketplace.
Path, a social networking service that allows users to keep journals about "moments" in their life and to share that journal with a network of friends, allegedly collected personal information from its users' mobile device address books without their knowledge and consent. The company also allegedly violated the Children’s Online Privacy Protection Act Rule by collecting personal information from 3,000 children under the age of 13 without first getting parental consent.
The FTC staff report makes recommendations to players in the mobile marketplace such as Amazon, Apple, BlackBerry, Google, and Microsoft, as well as app developers for ways to ensure consumers get clear and timely disclosures about what data is collected and how it is used.
Path is not the first social networking service to come under FTC fire – the agency under Leibowitz also went after Facebook, Twitter and MySpace for violating privacy promises to consumers. Google Inc. also agreed to pay a record $22.5 million civil penalty in August 2012 to settle charges that it misrepresented its privacy policies to users of Apple's Safari Internet browser.
However, the FTC's much-hyped antitrust investigation of Google's dominance in the search market came to an anticlimactic end on January 3, when the agency announced it had closed its inquiry. The FTC required Google to license patents that are essential to the interoperability of electronic devices but secured only minimal agreements related to Google's search business. "After promising an elephant more than a year ago, the Commission instead has brought forth a couple of mice," wrote FTC Commissioner J. Thomas Rosch in a dissent.
Overall, the FTC under Leibowitz filed 257 consumer protection cases in federal courts and 78 administrative cases, winning almost $260 million in consumer redress. Notable cases include a $40 million settlement with Skechers USA Inc. for making unsubstantiated claims that its shoes would strengthen and tone muscles, and cracking down on juice maker POM Wonderful for claiming pomegranate juice could help prevent and treat diseases.
On the antitrust side, the FTC under Leibowitz challenged 81 mergers, leading to 51 consent orders, 12 administrative complaints and 18 mergers that were abandoned.
Michael Keeley, an antitrust partner at Axinn, Veltrop & Harkrider, said Leibowitz will be remembered for his focus on so-called pay-for-delay deals between brand name and generic drug makers.
"He continued to pursue this in the courts even though the FTC lost over and over again, until he succeeded in obtaining a circuit split," said Keeley, noting that the U.S. Supreme Court will hear oral arguments in the FTC's case next month. "I found his persistence notable in keeping the issue alive in courts and Congress."
Sen. Patrick Leahy (D - Vt.), who chairs the Senate Judiciary Committee, recognized Leibowitz’s efforts on pay-for-delay in a statement. “Jon worked diligently both with the Judiciary Committee and in the courts to stop the anticompetitive use of patent litigation settlements by drug companies,” he said. “His efforts will speed generic competition and benefit consumers through lower healthcare costs.”
Jones Day antitrust head David Wales agreed that Leibowitz will be remembered for his "unwavering assault" on pay-for-delay. He continued, "Some have criticized Jon for too much horse trading and compromising antitrust principles in big matters, but having worked with Jon for several years, I know he always followed his internal moral compass and tried to do what he thought was the right thing," Wales said.
O’Melveny & Myers partner Richard Parker praised the commission under Leibowitz for doing "an excellent job on both the consumer protection and antitrust sides of the house. He's had an outstanding tenure and the commission as a whole should take pride in what they've done the last four years."
In the past, Parker, who previously served as director of the Bureau of Competition, has been mentioned as a possible successor, along with current Bureau of Economics head Howard Shelanski; Philip Weiser, the dean of the University of Colorado Law School who is a former senior White House advisor and DOJ antitrust official; as well as Leslie Overton, a deputy assistant attorney general in the Antitrust Division.
However, many antitrust lawyers think the two current Democratic FTC commissioners, Julie Brill and Edith Ramirez, are the leading candidates. Brill, formerly the senior deputy attorney general and chief of consumer protection and antitrust for the North Carolina Department of Justice, is known of her work in privacy protection and has a reputation for favoring vigorous enforcement.
Ramirez, a former partner with Quinn Emanuel Urquhart & Sullivan, is regarded as brilliant and somewhat reserved. She went to law school at Harvard with President Barack Obama and worked with him on the law review (fellow law review member Julius Genachowski has served as head of the Federal Communications Commission since June 2009).
Leibowitz's departure will leave the FTC with four commissioners, two Democrats and two Republicans. Until the fifth vacancy is filled, "One concern is the prospect of stalemate," said Hogan Lovells antitrust partner Janet McDavid. "The FTC requires an affirmative vote of the commission to act. If the vote is split 2-2, they can do nothing."
It's been an issue in the past. For example, the FTC deadlocked 2-2 in the early 1990s over whether to bring antitrust action against Microsoft Corp. As a result, the matter was referred to the U.S. Department of Justice, which brought the landmark case. And in 2001, the commission split 2-2 on whether to block General Mills proposed $5.4 billion acquisition of The Pillsbury Co., which meant the deal went through, albeit with voluntary remedies implemented by the parties.
Still, given that President Obama has cabinet level vacancies including the secretaries of the Treasury, Transportation and Labor to fill, the FTC may not be at the top of his list.
Leibowitz has not announced his future plans, although antitrust lawyers predict he will wind up at a law firm in Washington. Prior to joining the FTC in 2004 as a commissioner, Leibowitz was vice president for congressional affairs for the Motion Picture Association of America. Before that, he was Democratic chief counsel and staff director for the U.S. Senate Antitrust Subcommittee from 1997 to 2000.
With his departure from the FTC imminent, Leibowitz said he was "feeling a little wistful. These jobs are exhilarating and also a little exhausting, so probably it's a good time for me to move on."
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