... as critics worry about new FTC head and marketplace regulation
Chicago — Consumer activists are worried about the new man at the helm of the Federal Trade Commission (FTC). They fear he may ''sink the ship'' by making the consumer protection agency ineffective as he steers it onto a course of less Washington and more marketplace regulation.
Business argues that consumers won't even notice the difference, since enforceable rules are on the books and self-regulation has become the norm.
New FTC head James Miller III, an economist who headed up the President's task force on regulatory reform, says the agency needs to be run with more ''common sense.'' Charged by law to regulate against ''unfair or deceptive acts or practices'' by business, the FTC has focused largely on advertising and antitrust activity.
Mr. Miller, who says his philosophy on regulation closely parallels that of President Reagan, wants to limit FTC cases to those he says would give consumers the strongest economic benefits.
Specifically, Miller questions the wisdom, cost, and rigidity of the FTC requirement that advertisers back up the claims they make for their products. Though he considers the theory of substantiating claims a sound one, he questions the method. In his view, industry self-regulation may do a more economical and equally effective job and considers that idea worthy of study.
Miller also suggests that instead of focusing on conglomerate mergers, which he considers comparatively less important, the commission should concentrate on antitrust cases where collusion has been involved in price-fixing and mergers.
How far the FTC will change course under the new leader will depend on whether or not its Republican majority agrees with Miller's philosophy.
But consumer advocates point to the FTC's recent backoff from antitrust probes of cereal manufacturers, the auto industry, and oil companies, and the decision to drop efforts to regulate children's advertising on TV, as evidence of growing caution at the agency. They are worried about the agency's basic survival.
''There's a difference between keeping it alive and actually doing something with it,'' says David Greenberg, Consumer Federation of America legislative director. In his view, Miller's proposed shift in advertising policy is an ''arrow to the heart'' of the FTC's mission.
Barbara Pequet, a lawyer with the National Consumers League, says it's contradictory for the Reagan administration to urge cutting back advertising regulations without a corresponding increase in dollars spent for consumer education, such as labels that inform shoppers precisely what they are buying.
In her view, the proposed antitrust shift would mark a sharp retreat for the agency, hurting the consumer. She argues that vertical mergers (which involve one company merging with another product-related firm) and conglomerate mergers (two firms which are totally different), which would get less attention under the new administration, can also have a significant negative impact on competition.
Still, the FTC's purpose remains the same under Miller, and he insists he has no plans to dismantle the agency, but will appoint some highly qualified people to top posts.
Within the agency, where morale is described as low because of the change in direction and the reshuffling of jobs, some label the new management as ''zealous'' academics, prone to empire building but with little practical experience in government. Others are more charitable.
''They have a limited view of antitrust and consumer protection - it's a real change - but it's not a wrecking crew,'' says one staffer appointed under the last administration.
Many in the business community argue that the consumer probably won't notice that much change with the new team. Industry self regulation in advertising has been working well for a decade and, if anything, will become more active in light of the changes, says Robert Purcell of the American Association of Advertising Agencies.
He concedes that the National Advertising Review Board, the policing arm of his groups which acts largely on complaints from consumers and competitors, has to rely on industry willingness to cooperate. Though stressing that truthful advertising is in the best interest of business as well as consumers, he admits that there is no way to reform the ''sharp operator on the fringe,'' aside from turning such cases over to the FTC.