17. What is the “Federal Trade Commission Act “and how does it regulate unfair competition?
The FTC Act §5 proscribes “unfair or deceptive acts or practices” and “unfair methods of competition.” Violations for the Sherman Act and Clayton Act will also violate the FTC Act, so most challenges are raised pursuant to those Acts. The Federal Trade Commission Act, Sherman Act, and Clayton Act, serve to “protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up.” The FTC enforces all of the federal antitrust laws.
• Note: This broad authority includes protection for consumers from false advertising practices.
The primary importance of the FTC Act is the regulatory and enforcement authority that it vests in the FTC, which include:
• Regulatory Authority – The FTC promulgates regulations to effectuation the objectives of the relevant statutory law;
• Investigate – The FTC investigates allegations against individuals or organizations alleged to violate antitrust law;
• Civil Actions – The FTC may bring civil actions halt or seek redress for activity violating the antitrust laws;
⁃ Note: This includes issuing cease and desist order to curb unfair corporate practices.
• Discussion: How do you feel about the extent of enforcement and regulatory authority vested in the FTC? Why do you think the FTC Act provides a second layer of prohibition against anticompetitive practices?
• Practice Question: ABC Corp faces scrutiny from the FTC over its growth and business practices. What is the authority of the FTC in seeking to prevent unfair, deceptive, and anticompetitive practices?