The U.S. Court of Appeals upheld yesterday the Federal Trade Commission's controversial "line of business" reporting system, which has been bitterly contested by about 180 of America's biggest corporations in the past four years.
The "line of business" system was designed by the FTC to require about 500 major U.S. corporations to submit confidential reports annually to the regulatory agency. These reports were to identify costs, profits and assets entailed in each line of business in which a corporation was engaged.
The FTC planned to use the "line of business" data to conduct industry-by-industry analyses that the agency contended would help in planning federal investigations of possible antitrust and other improper business practices.
The FTC also intended to provide overall statistics, based on its "line of business" reports, to aid other government agencies, economic researchers and investors. It pledged, nevertheless, never to disclose publicly any of the details in a corporation's confidential financial report.
The corporations that challenged the FTC's "line of business" reporting requirements disputed the FTC's assertions, contending that businesses would, indeed, be compelled to disclose confidential data. They also complained that the reports imposed an unfair burden on corporations, that the FTC's analysis of that data supplied by the companies would prove misleading, and that the FTC had violated federal procedures in launching its new program.
FTC lawyers yesterday hailed the appealate court ruling as a significant victory. "It seems to be a kind of a complete vindication of the commission's position," one FTC lawyer, who asked not to be identified, said. Steven S. Rosenthal, one of the lawyers who represented the corporations, said no decision had yet been made on whether to seek a re-hearing by the Court of Appeals or to appeal the decision to the U.S. Supreme Court.
The unanimous, 56-page decision was issued in an unsigned opinion yesterday by a three-judge federal panel.
The judges were David L. Bazelon, and Spottswood W. Robinson III, both of the appeals court, and Aubrey E. Robinson Jr., a District Court judge temporarily assigned to the appeals panel.
The judges struck down each of the corporations' key arguments and ordered the corporations to begin complying with the FTC's "line of business" reporting requirements within 30 days. They also upheld the FTC's "corporate patterns report" system, a broader but less detailed method of gathering financial information from U.S. corporations.
According to officials yesterday, more than 300 corporations have voluntarily complied with the FTC's "line of business" reporting system since it was set up in 1973 and 1974. Some 180 firms, including some of the biggest U.S. corporations, had refused.
Among the corporations that took part in the suit were American Cyanamid Co., Aluminum Co. of America, Inland Steel Co., Hoffman LaRoche, U.S. Gypsum Co., Ahsland Oil, Inc., Hughes Tool Co., Bethelehem Steel Corp., Norton Simon, Inc., Food Fair Stores, Inc., Republic Steel Corp., Bristol-Myers Co., Atlantic Richfield Co., Mobil Oil Corp., Gulf Oil Corp.. and Goodyear Tire and Rubber Co.