The Senate Commerce Committee, opposing its chairman at every turn, yesterday voted to bar the Federal Trade Commission from taking any antitrust actions against state-regulated professional groups, such as medical associations, that fix prices or boycott hospital facilities.
The committee also voted overwhelmingly to curb the FTC's powers to regulate unfair advertising. FTC officials say they fear that this restriction could jeopardize the agency's authority to require health warnings in cigarette advertisements.
By an 11-to-3 vote, Democrats joined with Republicans in a move to impose strict curbs on the FTC, continuing a four-year effort by business and professional groups to restrict the actions of the controversial 68-year-old agency. The bill is expected to pass the Senate essentially in the form approved by the committee.
The Senate bill, if it becomes law, would be the most damaging setback to the agency so far, permanently knocking out two broad areas of the agency's regulatory authority: unfair advertisements and professional groups.
Another blow to the FTC may come in the next few days, when Congress is expected to consider a resolution to veto the agency's used-car rule.
The rule, strongly opposed by the nation's auto dealers and many members of Congress, requires car dealers to disclose more information about the warranties and condition of the used cars they sell.
The one-sided margin of the committee's action stunned commission officials, including Chairman James C. Miller III. Although Miller has urged greater congressional restriction on the commission's authority in advertising issues, he has strongly opposed moves to bar the FTC from challenging professional groups that fix prices, engage in boycotts, restrict advertising and engage in fraud and deception.
"It is very bad to establish a privileged class and make it exempt from enforcement that everyone else is subject to," he said. "I fervently hope this provision can be turned around." He said the administration, in a policy statement issued yesterday, also opposed a complete exemption for the professional groups.
Commerce Committee Chairman Sen. Bob Packwood (R-Ore.), who tried unsuccessfully to amend the legislation, also indicated that he hoped to reverse the committee's decision on the issue.
Although he said he would not try to prevent a Senate vote on the legislation, he said he plans to work with Miller and Rep. John D. Dingell (D-Mich.), chairman of the House Energy and Commerce Committee, to seek less restrictive legislation.
Through committee aides, Dingell made it clear yesterday that he opposed the measure as passed by the panel. Rep. James J. Florio (D-N.J.), chairman of the committee's consumer subcommittee, also said he opposed the Senate measure, calling it a "radical approach" that could jeopardize House action on an FTC authorization bill. However, commission officials say they fear that pressure on the House to act may be too strong to resist. Commerce Committee Chairman Sen. Bob Packwood (R-Ore.), who tried unsuccessfully to amend the legislation, also indicated that he hoped to reverse the committee's decision on the issue.
The American Medical Association was pleased by the Senate committee bill. "The vote supports the position taken by the AMA that Congress did not intend for the FTC to have jurisidiction over professions that are regulated by the states and their associations," said Joseph F. Boyle, AMA's chairman of the board.
Since 1975 the FTC has targeted as one of its top priorities a number of activities by doctors, dentists and other professional groups, such as restrictions on advertising, boycotts, deceptive advertisements and requirements that bar eye doctors from giving eye-glass prescriptions to their patients so they can shop around for low prices.
The FTC has defended its actions, saying it has helped make the professions more competitive and has saved consumers hundreds of millions of dollars.
But the AMA and other professional associations have argued that these activities should be exempt from the FTC's scrutiny because these professions are regulated closely by the states. FTC interference, the AMA has argued, threatens to reduce the quality of service.
The Commerce Committee agreed yesterday, 10 to 5, after Sen. Ted Stevens (R-Alaska) accused the FTC of "extending federal bureacuracy more and more into daily lives."
Additionally, by a 13-to-2 vote, the committee overruled Packwood and insisted that the FTC be barred from regulating advertisements it considers unfair.
It still would be able to attack deceptive ads under the bill. But commission officials say the unfairness restriction could affect the agency's requirements for health warnings on cigarette advertisements, and attempts to curb advertisements that promote unsafe practices among children, such as those showing a child riding a bicycle down the middle of the street.