Like survivors of a mine disaster, the commissioners and staff of the Federal Trade Commission are headed for the surface, coughing and blinking, and beginning to believe they will make it.
The wreckage still surrounds them. This week, House and Senate negotiators are to seek a compromise on separate authorization bills that sharply restrict the commission's activities in different ways. All sides say they want an agreement but it is far from certain they can get one.
Congressional hostility toward the FTC's free-wheeling consumer protection activities has affected the agency's budget, threatening its 1,700 employs with a 50 percent cut in the paychecks that go out on March 31 (although any reduction should be made up soon). a deadlock in the House-Senate conference, however would leave the agency's future uncertain and its staff unsettled. "Al lot are walking around with resumes in their pockets," said one FTC commissioner.
In the face of a nationwide lobbying assault by business, the FTC has narrowed several of its most important inquiries, including a four-year investigation of possible monopoly practices in the auto industry. The commissioners had turned that way more than a year ago, and they are locked on that course now.
But, says FTC Chairman Michael Pertschuk, at least they are breathing.
He even saw some good resulting from the chorus of complaints that the FTC was overregulating, hurling suboenas indiscriminately, trying to impose its tastes and social preferences on themarketplace. "There has been a wholesome result," he said in an interview. "It has forced us to take a harder look, to tighten up and really focus our investigations."
The next chapter may depend on whether Congress believes the FTC has learned a political lesson.
"I'd like to save the agency," said Sen. Wendell Ford (D-Ky.), chairman of the Commerce subcommittee that pushed through strict limits on the agency. It's the salvation of a sinnerthat he has in mind.
For more than a year, the FTC has felt the full force of a nationwide lobbying assault by a tightly organized business community. During the summer and fall, the FTC's major consumer protection and antimonopoly efforts were lined up like wooden milk bottles on the shelf at the carnival. Knock one down and win a prize. Threeballs for a quarter. Every business lobbyist worth his martini had taken aimand most were on target.
"It really was a rape of the agency,"said on commissioner. "Each day we'd hear of some new amendment, and we couldn't get to see the senator sponsoring it."
The darkest hours for the FTC camein November, during an unexpected push by Senator Howell T. Heflin (D-Ala.) to strip the FTC of its authority to force companies with monopoly control over a market to break themselves up into smaller, less powerful units.
To the FTC, Heflin's attack was akin to a law ordering the Internal Revenue Service not to audit tax returns. It captured the flavor of campaign against the FTC by Congressand business -- there had been no hearings on Heflin's proposal, no opportunity for the FTC to defend its long-standing authority, no foundation for the sudden change in antitrust policy.
His amendment, offered beore the Senate Commerce subcommittee, would have cut off four or five major FTC antimonopoly inquiries, including investigations of the major oil companies, auto manufacturers and breakfast cereal companies and several potential cases now in preparation.
In effect, Heflin was saying that itwas fine for the FTC to try to prevent companies from achieving a monopoly, but if they arrived there the FTC could not attempt to break them up. The Justice Department could take care of that.
Heflin's proposal came before the committee in November, in a room filled with business lobbyists, many of them with a direct stake in his proposal.
Ford urged Heflin to delay, at leastuntil hearings were held. "I believe I've got the votes right now," said Heflin.
Just hold the hearings, and then we'll vote, said Sen. Russell B. Long (D-La.). Heflin agreed, but by the time of the hearings, his opponents had publicized an embarrassing coincidence.A memo prepared by his staff to win support for Heflin's proposal had been copied in places, word for word without attribution, from a brief written on behalf of General Mills Inc. by Howrey & Simon, one of Washington's leading defense counsels for companies with antitrust problems.
That disclosure helped kill Heflin'sproposal and may have marked the turning point in the current congressional backlash against the FTC.
The House and Senate have passed essentially different bills. The Senate's version would halt an investigation of sales practices in the insurance industry, bar the agency from regulating private-industry boards that set quality and safety standards for consumer products, and prevent the FTC from regulating "unfair" advertising, thus killing the agency's efforts to regulate television ads pitched at children.
The House voted to block FTC investigations of consumer abuses in the funeral industry cut off an antitrrust case against Sunkist Growers Inc. charging the $500 million-a-year California cooperate with monopolizing the western market in lemons and oranges, and bar the FTC from regulating familiar trademarks such as Formica or Scotch tape, which may stand for a whole category of products in the public's mind.
The two houses also passed different measurses intended to give Congress veto power over particular FTC investigations.
Of the two sides, the Senate is likely to be less yielding, predicts Jeffrey H. Joseph, head of the Regulatory Action Center of the Chamber of Commerce, which organized a grass-roots protest by small and large businesses against the FTC.
The Senate held extensive hearings on its FTC legislation last year, the House did not, he said, adding that "Sen. Ford (chairman of the consumer protection subcommittee) has put an awful lot of work on this bill." The House bill caters somewhat more towardsspecial business interests than the Senate's does, and thus may be harder to defend in the House-Senate conference.
By this reasoning, Sen. Ford, author of the Senate legislation, holds the key to the outcome.
Ford would not disclose his bargaining strategy for the House and Senate conference, except to say there has been"no change in attitude" on the Senate's part regaring its restrictions.
Until this summer, he had stood behind the FTC, blocking attempts by House to derail the agency's investigations. Some time in August, he reversed position.
Ford, former governor of Kentucky, who prides himself in maintaining close ties to the state, said he was turned around by the rising protest from small businessmen about government harrassment, of which the FTC was the prime example.
One not-so-small constituent in particular got his attention. Brown & Williamson Tobacco Co. of Kentucky, which sold $1.8 billion worth of Belairs, Kools and companion brands. For 15 years, the FTC had been seeking documents from B&W and other major tobacco companies to aid in its study of whether cigarette advertising was "unfair and deceptive."
A long struggle over the evidence ended last year with a court order directing the companies to answer the FTC. As a compromise, the agency said it would settle for a few briefcases full of documents initially and then decide whether more was needed.
B&W, however, arrived in Washingtonin July with a truckload of company papers weighing 7 tons to dramatize whatit felt was an unreasonable government demand. Not long afterward, Ford turned on the FTC.
"If you were a senator from Kentucky and the FTC did that to one of your constituents, wouldn't you be a little upset?" he said.
His position in the conference is hard to predict. Although his amendments introduced broad new limitations on the FTC, he helped block Heflin's proposal and other moves against the agency in the Senate. "I might be the saviour of the agency," Ford said.
Clearly, the FTC has been "born again" in a more cautious form, trying to continue its consumer protection actionswithout triggering a new congressional attack. The past year proved it no longer can count on Democratic support.
Ford, for example, is chairman of theDemocratic Senate campaign committee, and the companies opposing the FTC have political action committees standing by with millions of dollars to contribute to sympathetic members of Congress. Last year, the Democratic Congressional Dinner Committee, a major source of political funding for the party, did well, raising $1.49 million, at least one-quarter of that from companies at odds with the FTC.
Apart from the influence of the business political action committees, the congressional assault reflects a genuineshift in political mood against business regulation, Pertschuk says. "The basic mood in Congress was that the world was up in arms about the FTC, and nobody would care if it was reined in," he said. He contends the opposition has softened.
Joseph says the mood persists. His advice to the agency is to "take its medicine," accept the congressional limitations "and go on about its business. They'll be better off in thelong run."
The FTC's business will continue to include broad, industrywide investigations of anticompetitive conduct rather than the limited, case-by-case approach congressional and business critics have demanded, said Michael Sohn, the FTC general counsel.
"You can sue five funeral directors or five used car dealers and not get much political heat,' said Sohn. "Butwhen you take on the whole industry, you hear about it. I'd hope the commission would think more carefully about which ones it picks."