FTC investigates Apple and Google ties

The FTC believes that certain board appointments breach the Clayton Antitrust Act

The US Federal Trade Commission is carrying out an investigation into the boards of Apple and Google to see whether the two companies are breaking anti-trust rules.

The FTC is looking to determine whether certain board appointments at the two companies breach the Clayton Antitrust Act of 1914, which prohibits a person serving on the board of two rival companies when it would reduce competition.

Eric Schmidt, chief executive of Google, and Arthur Levinson, former chief executive of Genentech, are on the boards of both companies. Google and Apple compete in the mobile phone and browser sectors, and the FTC has concerns that this may contravene the legislation.

"Government actions under Section 8 [of the Clayton Antitrust Act] are rare, but they are brought under circumstances when the presence of a common director on competing boards is likely to be anticompetitive," said Andrew Gavil, an anti-trust expert and professor at the Howard University School of Law.

Apple has always claimed that Schmidt excuses himself from board meetings whenever Apple's phone business is discussed, but this may not be enough for the regulators.

However, a large fine is unlikely if the FTC rules against the companies on the matter, since the executives will simply stand down from the boards.

The move puts more pressure on Google, which was recently described as an effective monopoly by Christine Varney, the new assistant attorney general for anti-trust at the US Department of Justice.

Sanford Litvack, a partner at law firm Hogan & Hartson, who worked to block the Google/Yahoo deal, said: "I expect the administration to be aggressive, generally, on anti-trust enforcement."

"I do not expect Google to be singled out, or to receive a free pass because of Schmidt's relationship with the administration."