FTC chief pushes more curbs on agency authority

Two weeks ago, at a surprise birthday party given by his staff, James C. Miller III, chairman of the Federal Trade Commission, received an ideologically significant gift: a battered highway sign that says ''Keep Right,'' with an arrow pointing in the appropriate direction.

But the controversial chairman would likely be able to keep his thoughts in line without such a reminder. A conservative economist, who was executive director of the White House task force on regulatory relief, Mr. Miller has long been critical of government regulation in general and the agency he heads in particular.

Since being named FTC chief last year, he has pushed for cost-benefit analysis of agency actions, and has asked Congress to define more narrowly what constitutes an unfair or deceptive business practice.

Critics say it's a classic case of the fox being named chairman of the henhouse. Mr. Miller says he's simply reining in an agency that has had too much autonomy.

''I've always been impressed, in fact disturbed, by how terribly broad (the FTC's) discretion is,'' the agency chairman said at a recent meeting with a small group of reporters. ''It tends to be more responsive to what is in vogue today and what is faddish than to what is sustainable in the long run.''

And his efforts to curb the FTC reflect not only the President's beliefs, but the mood of Capitol Hill, he says.

''There is substantial mistrust of this agency'' in Congress, Mr. Miller says. ''Congressmen are more critical in private than in public, just because they don't want to be labeled anticonsumer.''

In 1980, irked at the FTC's relative independence and what it regarded as regulatory ferocity, Congress gave itself veto power over FTC regulations. It also stripped the agency of authority to issue industrywide rules on fairness in advertising, though individual abuses could still be challenged.

Now the FTC is again being scrutinized on Capitol Hill. Its congressional authorization expires this fall, and proposed legislation to refund the agency contains new statutory restraints on its activities.

The Senate Commerce Committee's reauthorization bill, awaiting a vote on the Senate floor, would completely bar the FTC from cracking down on ads because they are ''unfair,'' even on a case-by-case basis. FTC authority to regulate other unfair business practices would also be limited.

Mr. Miller is comfortable with these proposed limits. In fact, he asked that they be imposed. He wants FTC authority restricted to cases in which injury to consumers is not outweighed by an economic benefit.

''I ask two questions when a case is proposed,'' he says. ''Do we have a legal case? Do we have an economic case? Will the result be to increase competition and increase consumer welfare?''

Critics say Miller is trying to hang dollar signs on such benefits as freedom from predatory business practices benefits that are impossible to measure. They say any statutory definition of ''unfair'' would be an unnecessary straitjacket limiting the FTC's flexibility in handling individual cases.

''What (Miller) is trying to do is apply textbook economics to the real world ,'' says Jay Angoff, an attorney for Congress Watch, a consumer lobbying group.

Ironically, Miller is campaigning against one provision in the Senate reauthorization bill. He cites it as an instance in which congressional mistrust has been carried too far. The section would shield professional groups, such as doctors and lawyers, from FTC antitrust investigations - a move Miller calls ''bad law,'' because it would grant a special-interest group its own private antitrust exemption.

If passed, he says, the exemption would enjoin the FTC from enforcing many existing rules, such as an order prohibiting dental associations from restricting the advertising of their members.

Trade groups like the American Medical Association have lobbied hard for this antitrust immunity. The Senate Commerce Committee, which tacked the change onto a bill reauthorizing the FTC for three more years, felt state regulation and Justice Department oversight would be enough to guard against abuses.

''Basically, the thought was that there's enough regulation of these professions already,'' says a Commerce Committee staff member.

In a rare example of unanimity with the FTC's conservative chairman, consumer groups also object to exempting doctors, lawyers, and other professionals from FTC scrutiny. They say the Justice Department has neither the expertise nor the inclination to press antitrust cases in that area.

But what may be the most contentious issue involving FTC jurisdiction won't come before Congress until later this month. On July 22 the Senate Commerce Committee will open hearings on a Miller request that the FTC's ability to police ''deceptive'' business practices be limited by law. Most of the agency's challenges to advertisers are brought on charges of ''deception.''

''There's some question in the way we go about policing deception - whether we don't provide restraints on the communication of practical information and result in giving more impetus to puffery and subjective claims,'' Mr. Miller says.

As an example, he points to a past FTC ruling, promulgated before the Environmental Protection Agency began fuel-efficiency tests for cars, which restrained the Ford Motor Company from advertising mileage figures.

Consumer advocates say this is yet another example of how the FTC chairman tries to set strict guidelines for something that must be evaluated on a case-by-case basis.

Defining deception ''can't be done,'' Congress Watch attorney Angoff says flatly.