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By Ronald Fink
Google CEO Eric Schmidt downplayed concerns that he would have to resign from the board of Apple, even as the Federal Trade Commission looks into whether the ties between the two companies violate anti-trust laws. But some anti-trust experts say he may have his work cut out for him.
Schmidt, along with former Genentech CEO Arthur Levinson, sits on the boards of both companies. Schmidt told reporters yesterday that he did not consider Google and Apple to be primary competitors, and that he recuses himself when competitive issues are discussed.
Google General Counsel Kent Walker confirmed media reports that the company is "in pending" discussions with the FTC concerning the two shared directors. Under the law, companies are prohibited from sharing directors if they compete in areas that account for more than 2% of their revenue.
While Schmidt insisted that Google and Apple are under that threshold, anti-trust experts say it’s not easy to determine what constitutes competition, and that the FTC might pursue the case even if the commission is on weak ground in the belief that the companies won’t want the publicity it would generate.
The provision against interlocking boards has rarely been enforced in recent decades, but FTC chairman Jon Leibowitz has indicated he will be tough on anti-competitive behavior. And some experts contend that the revenue threshold isn’t the only issue Schmidt has to worry about in connection with his board seat at Apple.
Albert Foer, president of the American Antitrust Institute in Washington, D.C., noted that another anti-trust provision, under Section 5 of the Sherman Act, could help the FTC in court. “The FTC also can find illegality under its ‘unfair methods of competition’ jurisdiction, which the current commission has expressed an interest in more fully utilizing,” said Foer.
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