The Federal Trade Commission has warned the Senate Commerce Committee that its recent move to exempt advertisers and professional groups such as medical associations from the agency's antitrust and consumer-protection authority will harm consumers and the economy.
In a strongly worded eight-page letter sent to the committee this week, the commission said that legislation passed by the committee two weeks ago "will cause substantial injury to consumers and to our nation's economy" because it would bar the commission from attacking price-fixing schemes, boycotts, and false advertising of state-regulated professional groups.
The letter represented the FTC's first major defense since the committee voted overwhelming to impose sharp curbs on the agency's authority. The measure has substantial support in the Senate, and there is considerable pressure in the House to pass similar provisions, even though key House leaders oppose them.
"The exemptions clearly have no justification in law or in fact, provide no benefits to consumers or competition, and plainly are contrary to the public interest," FTC Chairman James C. Miller III wrote.
Noting that the commission's activities over the past few years have saved consumers hundreds of millions of dollars, Miller complained that the exemption for professionals "would confer privileged status on one class of citizens--professionals" because they would be exempt from FTC scrutiny, even though they are engaged in virtually the same types of activities as all other large and small businesses.
What's more, Miller and other commissioners complained that the committee's decision to bar the commission from regulating any unfair advertising is so broad that it could prohibit the commission from regulating any unfair labels, sales literature and oral sales pitches.
Meanwhile, Miller yesterday formally suspended his plans to close four of the agency's 10 regional offices, bowing to pressure from Congress, which wanted them kept open.
Miller, backed by a majority of the commission, had decided to close the offices in Denver, Los Angeles, Seattle and Boston to save money. However, Congress became concerned that several major FTC enforcement actions would be hurt by the closings, despite Miller's assurances to the contrary. On Thursday, the Senate added language to an emergency funding bill instructing the FTC not to close the offices.
Miller's action yesterday prevented employes from leaving the agency this weekend and qualifying for severance pay. Aides said Miller hasn't abandoned his goal.