A group of House and Senate members is preparing legislation that would effectively cripple the Federal Trade Commission's controversial antitrust case against the nation's ready-to-eat-cereal industry.
The legislation, prepared by Rep. Howard Wolpe (D-Mich.), already has the tentative support of 20 House members and at least four members of the Senate. The key Senate sponsor of the bill is expected to be Donald Riegle (D-Mich.).
The cereal companies, led by Kellogg Co., have been conducting an aggressive lobbying campaign in an effort to kill the eight-year-old case. The firms -- Kellogg, General Mills Inc. and General Foods Corp. -- face divestiture of certain plants if the commission staff wins the case. An FTC law judge is preparing an initial decision.
Sponsors of the legislation hope that the Reagan administration will endorse the bill in light of the president's sharp criticism of the FTC's handling of the matter made in a letter sent to Kellogg during last year's presidential campaign.
But the Reagan administration, which had proposed completely cutting out the FTC's antitrust authority, backed off that stand this week and even modified stiff budget cuts directed at the agency. It is also unclear whether Rep. John Dingell (D-Mich.) and Sen. Robert Packwood (R-Ore.), the chairmen of the commerce committees, which would handle the bill, would be willing to consider the legislation during the busy spring congressional schedule. An aide to Packwood said yesterday that it is highly unlikely that Packwood would support the effort.
Wolpe said in an interview yesterday that the bill would put a moratorium on the preparation of initial decisions in any shared-monopoly cases. At the current time, however, the cereals case is the only clear example of such a pending matter.
The shared-monopoly theory behind the case asserts that a few companies can dominate an industry illegally through monopolistic pricing and other practices. That moratorium would remain in place unless Congress defines shared monopolies and suggests possible judicial remedies.
"I think the FTC action against the cereal industry is really a classic example of a bureaucracy attempting through administrative law to write new law that was never contemplated by Congress," said Wolpe, who represents the Battle Creek home base of Kellogg.
"A company's practices should not be declared illegal or unlawful simply by virtue that an industry is structured in a particular way," he continued. "That's a pretty basic public-policy question that should be decided by Congress."