To hear some of the more vociferous proclaimed consumer advocates tell it, and to read certain press accounts, the Senate Commerce Committee recently bowed obediently to the powerful special interest groups that had stormed the corridors of Capitol Hill to ravish the unsuspecting and defenseless American consumer.
When the committee reported out the Federal Trade Commission authorization bill, it bowed to no one. Rather, it fully met its oversight responsibilities by providing clear and firm direction to a troubled agency obviously confused as to how best to serve the American public.
To better understand the committee's actions, one needs to reflect upon the awkward and sometimes schizophrenic state the Ftc has found itself in during the last decade. Nearly 10 years ago, eager Nader's raiders, as well as the American Bar Association, rightly criticized the FTC for being a failing agency without the wherewithal and spirit to effectively take on American business.
Following those attacks the commission regrouped and picked up new congressional authority in the nature of the Magnuson-Moss Act. What emerged was a revamped FTC with new commissioners accompanied by aggressive, talented new faces in key policy staff slots. This was now a commission prepared to embark upon a course of action designed to ensure that the previous criticisms of impotence and no guts would never again be hurled in its direction. If the FTC was once the paper tiger on Pennsylvania Avenue, it would now be the toughest, most unrelenting regulator in town.
The purpose and direction seemed quite appropriate, but somewhere along the way it all fell apart. In its zestful determination to reverse the way it once regulated, or failed to regulate, the FTC appeared to be fully prepared to push its statutory authority to the very brink and beyond . Equally disturbing to many observers was the that the FTC had lost sight of the necessity to listen to the evidence and legal arguments of its opponents and to accord those opponents the respect normally prevalent in adversarial relationships. Good judgment and wisdom had clearly been replaced with an arrogance that seemed unparalleled among independent regulatory agencies.
Sensing the futility of the situation, some industries did begin looking to the Hill as an alternative. They did so, not because the commission's rules were beginning to bite or the FTC was finally serious about regulation, as some have suggested, but because they were convinced of the basic soundness of their arguments. The commission mistakenly assumed Congress would ignore, or be indifferent to, those arguments.
Many who initially turned to the Hill for relief did so with considerable reluctance. Surely American industry would prefer to see its business regulated by an independent agency rather than subjected to the unpredictable whims of each new Congress.
As to be expected, some businesses, with less than compelling arguments against the FTC, seized upon its current vulnerability to press Congress for relief on specific problems. The Senate Commerce Committee did not respond to such groups or the pressures they asserted.
Instead, the committee addressed only those instances in which the commission had exceeded its legal authority, as in the used-car rule; or where the commission initiated rule-making under questionable circumstances, as in the standards rule, or where the FTC acted unwisely and precipitously in launching the children's advertising inquiry on the basis of spurious and undefined legal theories. Additionally, the committee was precise in providing the FTC with clearer guidelines as to when subpoenas might be appropriately used. In several instances in which proposals were offered narrowing the commission's authority but there was uncertainly as to their full implications, the committee deferred action.
Little mention has been made of the barrage of so-called "special interest" amendments (to stop rule-making proceedings at the FTC) that were not adopted by the Commerce Committee.
Strung by the breadth of the committee's proposals, the FTC has understandably overreacted. The commission asserts that making its subpoenas in consumer cases reasonably specific will cripple enforcement. But one sitting member of the commission, Robert Pitofsky, has stated this will not be the case. The commission also insists that eliminating "unfairness" as an independent basis for regulating commercial advertising will gut enforcement power. Yet the commission falls to note that until the 1970s in virtually all cases it alleged some element of deception in advertising cases.
Sen. Howard Cannon summed it up when he observed that senators had exercised remarkable restraint in view of their frustrations with the FTC. He says he will urge his Senate colleagues to respond with similar restraint when this bill comes to the floor for debate. If appropriate restraint had been exercised earlier by the FTC and its staff, it is quite possible the agency would not be facing the difficult dilemma that confronts it today.