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What is the “Federal Trade Commission Act of 1914”?
In 1914, the same year that the Clayton Act passed, Congress passed the Federal Trade Commission Act (FTC Act). This act created the Federal Trade Commission.
The FTC is an independent agency formed to protect consumers from fraud and to create a strong competitive market by implementing consumer protection and antitrust laws.
The FTC was formed in 1914 by Wilson’s administration to enforce the Clayton Act, which was aimed at curtailing monopolistic practices. The FTC bears primary responsibility for enforcing the Sherman Act, Clayton Act, and the regulatory provisions of the FTC Act itself. The FTC curtails anti-competitive behavior via the Bureau of Competition that oversees merger requests, in collaboration with the Department of Justice.
It also deals with unfair business operations. The Bureau of Consumer Protection carries out investigations enforcement actions and offers educational materials to parties. It is also in charge of the U.S. National Do Not Call Registry. The Bureau of Economics offers support in terms of research, including analysis of the effects of FTC actions.
The FTC pursues civil remedies, while the Department of Justice enforces the criminal (and some civil) provisions of the antitrust laws. State governments and private parties also have the ability to bring civil actions under the antitrust laws seeking civil damages or injunctions.
For example, the FTC cracked down on the funeral home industry’s deceptive pricing case in 1980s, by requiring funeral homes to provide a written price list to the requester.
• Note: The specific types of conduct prohibited under The FTC Act is discussed below.
• Discussion: What do you think about centralizing enforcement of antitrust laws with a single administrative agency?
• Practice Question: What federal agency is charged with enforcing the antitrust laws and what is its statutory authority?
How Does the FTC Act 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?