Federal Trade Commission Chairman James C. Miller III will seek legislation next week to dramatically curb the agency's powers to deal with unfair and deceptive advertising and other trade practices such as high-pressure sales tactics.
Commission sources said yesterday that Miller, who served as President Reagan's top regulatory adviser before taking over the agency last year, plans to ask Congress next week for legislation to "clip the agency's wings."
Among other things, Miller wants Congress to direct the commission to bring cases only when the unfair act--such as exaggerated comparative shopping advertisements--causes substantial consumer injury and when there are no significant consumer benefits.
Sources say Miller also may be considering a proposal that would permit the FTC to bring complaints against deceptive advertising only when the commission could prove the advertiser knew the commercial was misleading. Currently the commission needs no proof of intent before cracking down on misleading advertisements.
Miller's proposals represent the first time in the FTC's 68-year history that an FTC chairman has asked the Congress to curb the agency's authority.
Miller has declined to comment publicly on his legislative plan, but top agency officials have indicated that he regards his proposals as significant a move for the FTC as airline deregulation was for the Civil Aeronautics Board.
As one commission official noted, if enacted the legislation will not only limit the agency's powers but it also will give businessmen greater opportunities to challenge commission action because they "will have a hook to go to court to say we have overstepped our authority."
Miller's plan is stirring up much concern among the FTC commissioners. However, it is almost certain to be well received by many business groups and congressmen who want to limit the agency's antitrust and consumer protection powers.
With the agency's legislative authorization due to expire this fall, business groups have been drawing up legislative proposals to make it harder for the FTC to bring suits against unfair trade practices.
The business groups, including the National Association of Manufacturers and the U.S. Chamber of Commerce, are hoping to be as successful as they were three years ago in the last FTC reauthorization fight, when they persuaded Congress to gut many ongoing FTC's activities--including its proposal to ban television advertising aimed at children.
Miller wants to make sure that Congress enacts legislation to assure that similar controversial cases are never brought again.
The key issue, for Miller, is Section 5 of the Federal Trade Commission Act, which declares "unfair or deceptive acts of practices" unlawful.
In previous speeches and in a report on the FTC by the Reagan transition team--which Miller headed--Miller has long indicated his displeasure with this section of the law, calling it vague and an inadequate guide to the commission.
Among Miller's chief concerns is that the law does not require the FTC to weigh the costs of its actions. An economist who strongly believes in cost-benefit analysis before almost any government action is initiated, Miller has previously complained that the FTC "has failed to ground its efforts upon sound economic analysis."
For example, because of its requirement that all advertisements be substantiated to make sure they are correct, Miller charged in the transition report, "many firms are forced to prepare costly 'reasonable basis' reports . . . . Such costs, of course, are ultimately borne by consumers."
Thus, Miller is said to be considering asking Congress for legislation to require cost-benefit studies before a case can even be brought by the commission. FTC sources also say that Miller is weighing a proposal that would bar the commission from ordering a correction in advertising if the costs with complying with that rule would outweigh the benefits the correction would bring.
However, Miller has made it clear there is one business proposal seeking to curb the agency's powers that he will not accept. In a letter to Congress last week, Miller said he would strongly oppose any move to bar the FTC from regulating doctors, accountants and other professions.