A Regulator to End All Regulators

Outside of the White House itself, the most vocal opponent of the federal regulatory agencies is, of all people, one of Washington's most active regulators. In his two years as chairman of the Federal Trade Commission, Lewis A. Engman, 39, has adopted what seems like a wildly improbable posture. On the one hand, he is an outspoken champion of the free enterprise system and is leading a frontal attack on the federal bureaucracy that he believes is subverting it. At the same time he is an aggressive regulator of business. Yet Engman's self-appointed role as a sort of Ralph Nader out of Adam Smith involves no serious contradiction. He simply believes consumers are best served by a highly competitive business community, and he happens to be in a job that allows him to press that case forcefully.

A Harvard-trained lawyer who had a corporate practice in Grand Rapids, Engman was appointed to the FTC chairmanship in 1973. The Nixon White House evidently wanted a reliably controllable chairman to replace prickly, independent Miles W. Kirkpatrick, who revived the long calcified FTC as a trade watchdog and riled the business community with his emphasis on consumer protection. But instead of taming the FTC, Engman stepped up its activity. Hardly a week passes that the 1,600-man agency does not announce some new rule, investigation or lawsuit. Its principal targets have been monopoly, unfair influence, industrial or professional conspiracy--any form of economic power, indeed, that in Engman's view distorts the workings of a free market and unjustifiably hikes prices.

That philosophy may find the FTC attacking business methods in one regard, supporting them in another. Thus the commission advocates the banning of advertising that Engman deems deceptive because it unfairly attracts buyers. Nonetheless, Engman is vigorously for advertising, which he believes is necessary if consumers are to "make a rational choice" among competing products. The FTC recently acted to permit pharmacists to advertise the price of prescription drugs (TIME, June 16). Engman would also like to break what he terms the "conspiracies of silence" by the closely knit associations of doctors, lawyers and funeral directors who do not now advertise their fees.

Lawyer Engman does not use the term conspiracy lightly. He means it in its strict antitrust sense. Engman's FTC has been quick--too quick, some business critics say--to deploy the key weapon that the commission shares with the Justice Department: the power to press antitrust charges. To date, Engman's legal staff has brought no fewer than 31 antitrust suits, most notably its 1973 complaint against Exxon and seven other big U.S. oil companies. The FTC's argument: the firms control so much of the petroleum business--from wellhead through refinery to gasoline pump--that they effectively manage the market.

Businessmen, Engman observes wryly, "love free enterprise but hate competition, which is something for the other guy." He sees the FTC as "the policeman on the economic beat," charged with ensuring that free competition survives. Yet though he wants smaller businesses to survive, he has no sympathy for inefficiency. In fact, his assault on outmoded federal regulatory agencies stems from his belief that they perpetuate poor business practices. He argues that the Civil Aeronautics Board and the Interstate Commerce Commission have allowed the regulated transportation industries to become "federal protectorates living in a cozy world of 'cost-plus,' protected from the ugly specters of competition and innovation." The resulting inefficiencies, he charges, feed inflation.

Critics complain that Engman's emphasis on antitrust may mire the FTC in years of litigation, to the detriment of its consumer watchdog activities. But defenders of his legal activism point to the fact that for the first time in years, top law-school graduates are seeking jobs at the FTC. One current question in Washington is how long Engman will be there to lead them. It would be no surprise to some Engman watchers if, when Michigan Democratic Senator Philip Hart retires after his current term, Native Son Engman tries for his seat.

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