Federal Trade Commission Act of 1914
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The Federal Trade Commission Act (FTCA) is a federal law passed in 1914 establishing the Federal Trade Commission (FTC). It was signed into law by President Woodrow Wilson on September 26, 1914. The five-member body was created to protect consumers by preventing what it deemed unfair methods of competition between businesses and deceptive business practices. The FTC investigates “price-fixing agreements and other unfair methods of competition;” prohibits “mergers and price discriminations that threatened to lessen competition;” investigates “deceptive practices such as false advertising;” and regulates “packaging and labeling of consumer goods to prevent deception,” according to the National Archives and Records Administration. It replaced the Bureau of Corporations.[1][2]
Background
During the Progressive Era, there was an effort to regulate monopolies through antitrust laws. In 1890, Congress passed the Sherman Act, which forbade “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations,” and made it illegal “to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations.” Questions about the Sherman Act that were raised in the 1911 U.S. Supreme Court cases Standard Oil Co. v United States and United States v. American Tobacco Co. made antitrust laws central to the 1912 election. This issue led in part to President Woodrow Wilson's election.[3]
In 1913, during his first year in office, Wilson created the Bureau of Corporations, which was tasked with investigating monopolistic business practices. Then, in 1914, with the backing of Wilson, the Federal Trade Commission Act created the Federal Trade Commission. The Senate approved the FTCA on September 8, 1914, by a vote of 43-5. The House approved the bill by voice vote on September 10, 1914. The commission was launched in March 1915. The FTC replaced the Bureau of Corporations, which was created under President Theodore Roosevelt, and expanded its authority.[4]
Provisions
The FTCA created the Federal Trade Commission. The act gave the commission the authority to “(a) prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; (c) prescribe rules defining with specificity acts or practices that are unfair or deceptive, and establishing requirements designed to prevent such acts or practices; (d) gather and compile information and conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce; and (e) make reports and legislative recommendations to Congress and the public.”[5]
Commission members
The five commissioners of the FTC are nominated by the president and must be confirmed by the Senate. Commissioners are appointed for seven-year terms. No more than three of the FTC members can be from the same political party.[1]
Unfair Practices
The FTCA bans unfair business practices. According to Al Krulick of Debt.org, “the FTC considers a set of criteria established in the Supreme Court’s 1972 Sperry and Hutchinson ruling” to determine whether a practice is unfair. The criteria include unjustified consumer injury, violation of public policy, and deceptive practices.Cite error: Invalid <ref> tag; invalid names, e.g. too many
FTC Bureaus
The FTC includes the Bureau of Consumer Protection, the Bureau of Competition, and the Bureau of Economics.Cite error: Invalid <ref> tag; invalid names, e.g. too many
Enforcement
According to Krulick, if the FTC finds that a business violated the provisions of the FTCA, the FTC can “seek compliance through a consent order, or file an administrative complaint. Litigation is also possible. Administrative complaints are heard in front of an independent administrative law judge, with the FTC serving as prosecutor. The FTC can also bring cases to the federal courts, which can impose fines, appoint receivers and monitors, and freeze business assets when deemed necessary. The FTC also promulgates and enforces trade rules, which regulate business practices.”Cite error: Invalid <ref> tag; invalid names, e.g. too many
Amending statutes
Below is a partial list of subsequent laws that amended provisions of the Federal Trade Commission Act:[6]
- The Robinson-Patman Act (1936) outlawed price discrimination, defined by Investopedia as "a pricing strategy that charges customers different prices for the same product or service." This act added price discrimination as an anticompetitive practice regulated by the FTC.[7][8]
- The Wheeler-Lea Act (1938) expanded the FTC's regulatory authority to include unfair and deceptive practices targeting consumers, such as false advertising. Prior to this act, the FTC was limited to regulating anticompetitive practices among businesses.[9]
- The Magnuson-Moss Warranty—Federal Trade Commission Improvement Act (1975) authorized the FTC to regulate written warranties on consumer products.[10]
- The Hart-Scott-Rodino Act (1976) requires the parties to a large merger or acquisition to provide notification and information to the FTC before the transaction is completed.[11]
See also
External links
Footnotes
- ↑ 1.0 1.1 Office of the Legislative Counsel, "Federal Trade Commission Act," accessed January 21, 2018
- ↑ National Archives and Records Administration, "Federal Trade Commission. 1914-," accessed January 21, 2018
- ↑ FTC.gov, "The Origins Of The FTC: Concentration, Cooperation, Control, And Competition," accessed January 21, 2018
- ↑ FTC.gov, "The Origins Of The FTC: Concentration, Cooperation, Control, And Competition," accessed January 21, 2018
- ↑ FTC.gov, "Federal Trade Commission Act," accessed January 21, 2018
- ↑ FTC.gov, "Federal Trade Commission Federal Trade Commission 90th Anniversary Symposium 90th Anniversary Symposium," September 22-23, 2004
- ↑ Investopedia, "Robinson-Patman Act," accessed March 12, 2018
- ↑ Investopedia, "Price Discrimination," accessed March 12, 2018
- ↑ AllBusiness, "Wheeler-Lea Act," accessed March 12, 2018
- ↑ Federal Trade Commission, "Magnuson Moss Warranty-Federal Trade Commission Improvements Act," accessed March 12, 2018
- ↑ Federal Trade Commission, "Premerger Notification Program," accessed March 12, 2018
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