American Business


Federal Trade Commission

The Federal Trade Commission (FTC), created in 1914, provides administrative enforcement of ANTITRUST LAWs. Section 5 of the Federal Trade Commission Act prohibits “unfair methods of COMPETITION.” While the CLAYTON ANTITRUST ACT, enacted in the same year, created judicial remedies for some anticompetitive activities, the FTC Act created a commission to review and regulate unfair competition. The FTC is composed of five people nominated by the U.S. president and confirmed by the Senate; no more than three members can be from the same political party. While structured as an independent agency, the FTC is subject to political influence, most often through budgetary constraints imposed by Congress. The commission’s primary antitrust remedy is issuance of “cease and desist orders” against parties found to violate Section 5 of the FTC Act. The commission can also impose civil penalties and restitution requirements. In recent years its primary activity has been evaluating mergers under the premerger-notification rules of the Clayton Act. When major companies announce a merger, the announcement almost always includes the statement “subject to government approval.” This approval includes review by the Antitrust Division of the U.S. Justice Department and review by the FTC. While review of mergers is the FTC’s primary activity, the commission is charged to enforce 46 laws in three categories: statutes relating to both competition and CONSUMER PROTECTION, statutes principally related to competition, and statutes principally related to consumer protection. Statutes relating to both competition and consumer protection include
• the Federal Trade Commission Act
• the Energy Policy and Conservation Act, which directs the commission along with the Justice Department to develop, implement, and monitor plans established by oil companies to deal with emergency international oil shortages. The act also addresses “energy efficiency ratings” on appliances, and, with the DEPARTMENT OF TRANSPORTATION, assesses penalties against automobile manufacturers for violating fuel-economy standards
• portions of the Lanham Trade-Mark Act (1946), authorizing the FTC under specified conditions to apply to the PATENT and TRADEMARK Office for the cancellation of registered trademarks
• the Packers and Stockyards Act, extending FTC jurisdiction to some activities of meat packers
The FTC enforces 10 acts related to competition.
• the Clayton Antitrust Act, preventing and eliminating unlawful TYING CONTRACTS, corporate mergers and acquisitions, and INTERLOCKING DIRECTORATEs
• the Hart-Scott-Rodino Antitrust Improvements Act of 1976, establishing waiting periods for certain acquisitions and requiring premerger notification to the FTC and the Antitrust Division of the Justice Department
• the Webb-Pomerene Act, providing for supervision of export-trade associations allowed under the act and allowing collaborative trade activities among companies that compete in the U.S. market
• the Deepwater Port Act of 1974 along with the Attorney General, mandates the FTC to assess the expected competitive effects of proposed licenses for deepwater ports
• the Defense Production Act of 1950, by which the FTC participates in establishing and monitoring voluntary agreements by oil companies to deal with domestic oil shortages, along with the Department of Justice
• the Conservation Service Reform Act of 1986, allowing the FTC to adjudicate complaints concerning the supply and installation of energy conservation measures by public utilities
• the Deep Seabed Hard Minerals Act (1980), providing the FTC with the opportunity to review and make recommendations regarding the antitrust implications of proposed licenses for extraction of minerals from deep seabed sites
• the National Cooperative Research and Production Act of 1993, providing regulatory protection for joint research and development ventures
• the International Antitrust Enforcement Assistance Act of 1994, authorizing the FTC and the Justice Department to enter mutual assistance agreements with foreign antitrust authorities
• the Interstate Commerce Commission Termination Act of 1995 along with other agencies the FTC files reports regarding possible anticompetitive features of rate agreements among common carriers.
The Federal Trade Commission administers 31 statutes related to consumer protection.
• The Wool Products Labeling Act (1939) concerns the manufacture, introduction, sale, transportation, distribution, or importation of misbranded wool. The statute requires that wool-product labels indicate the country in which the product was processed or manufactured and that mail-order promotional materials clearly and conspicuously state whether a wool product was processed or manufactured in the United States or was imported.
• The Fur Products Labeling Act (1998) requires that articles of apparel made of fur be labeled and that invoices and ADVERTISING for furs and fur products specify, among other things, the true English name of the animal from which the fur was taken and whether the fur is dyed or used.
• The Textile Fiber Products Identification Act (1960) requires disclosure in the labeling, invoicing, and advertising of textile fiber products.
• The Federal Cigarette Labeling and Advertising Act of 1966 requires the FTC to submit ANNUAL REPORTs to Congress concerning (a) the effectiveness of cigarette labeling, (b) current practices and methods of cigarette advertising and promotion, and (c) recommendations for legislation. The act also establishes the text of four health-related warning labels and requires that cigarette packages and advertisements carry these warnings on a rotating basis.
• The Fair Packaging and Labeling Act (1966) directs the FTC to issue regulations requiring that all consumer commodities other than food, drugs, therapeutic devices, and cosmetics be labeled to disclose net contents, the commodity’s identity, and the name and place of business of the product’s manufacturer, packer, or distributor. The act authorizes additional regulations where necessary to prevent consumer deception (or to facilitate value comparisons) with respect to descriptions of ingredients, slack fill of packages, use of “cents-off” or lower-price labeling, or characterization of package sizes.
• The TRUTH IN LENDING ACT (1968) gives the FTC responsibility for assuring compliance by nondepository entities with a variety of statutory provisions, including certain written disclosures concerning all finance charges and related aspects of credit transactions (i.e., disclosing finance charges expressed as an annual percentage rate). The act also establishes a three-day right of rescission in certain transactions involving the establishment of a security interest in the consumer’s residence and establishes certain requirements for advertisers of credit terms.
• The Fair Credit Billing Act (1975), amending the Truth in Lending Act (1968), requires prompt written acknowledgment of consumer billing complaints and investigation of billing errors by creditors. The amendment prohibits creditors from taking actions that adversely affect the consumer’s credit standing until an investigation is completed, and it affords other protection during disputes. The amendment also requires that creditors promptly post payments to the consumer’s account and either refund overpayments or credit them to the consumer’s account.
• The Fair Credit Reporting Act (1971) protects information collected by consumer reporting agencies such as credit bureaus, medical information companies, and tenant-screening services.
• The Fair Credit and Charge Card Disclosure Act (1988), amending the Truth in Lending Act (1968), requires credit- and charge-card issuers to provide certain disclosures in DIRECT MAIL, telephone, and other solicitations to open-end credit and charge accounts and under other lending circumstances.
• The Equal Credit Opportunity Act (1976) prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good-faith exercise of any rights under the CONSUMER CREDIT PROTECTION ACT.
• The FAIR DEBT COLLECTION PRACTICES ACT (1977) prohibits third-party debt collectors from employing deceptive or abusive conduct in the collection of consumer debts incurred for personal, family, or household purposes.
• The ELECTRONIC FUND TRANSFER ACT (1978) establishes the rights, liabilities, and responsibilities of participants in electronic fund-transfer systems.
• The Consumer Leasing Act (1976) regulates personal property leases that exceed four months in duration and that are made to consumers for personal, family, or household purposes.
• Magnuson Moss Warranty-FTC Act (1975) authorizes the Federal Trade Commission to develop regulations for written and implied warranties.
• The Hobby Protection Act (1973) outlaws manufacturing or importing imitation numismatic and collectible political items unless they are marked in accordance with regulations prescribed by the Federal Trade Commission.
• The Petroleum Marketing Practices Act authorizes the FTC to prescribe requirements for the calculation and posting of gasoline octane ratings by gasoline distributors and retailers.
• The Postal Reorganization Act of 1970 authorizes the FTC to prosecute any use of the mails to send unordered merchandise as an unfair or deceptive practice in violation of the FTC Act.
• The Comprehensive Smokeless Tobacco Health Education Act of 1986 requires manufacturers, packagers, and importers of smokeless-tobacco products to place one of three statutorily prescribed health-warning labels on product packages and in advertisements. It also prohibits advertising of smokeless tobacco products on radio and television.
• The Federal Deposit Insurance Corporation Improvement Act of 1991 amends the Federal Deposit Insurance Act to impose certain disclosure requirements on non-federally insured depository institutions and to require that the FTC prescribe the manner and content of those disclosures.
• The Dolphin Protection Consumer Information Act (1990) makes it unlawful under section 5 of the Federal Trade Commission Act for any producer, importer, exporter, distributor, or seller of any tuna product that is exported from or offered for sale in the United States to deceptively claim that its tuna is “dolphin safe.”
• The Energy Policy Act of 1992 requires the FTC to issue disclosure rules regarding the energy efficiency of lightbulbs, plumbing fixtures, and other energy-related products.
• The Telephone Disclosure and Dispute Resolution Act of 1992 regulates advertising, operation, and billing for “900 number” services.
• The Telemarketing and Consumer Fraud and Abuse Prevention Act (2001) regulates deceptive TELEMARKETING practices.
• The Violent Crime Control and Enforcement Act of 1994 establishes domestic content requirements for products labeled “Made in America” or “Made in USA.”
• The Telecommunications Act of 1996 expands the definition of “pay-per-call service.”
• The Home Equity Loan Consumer Protection Act requires creditors to provide certain disclosures for credit plans secured by consumers’ dwellings and imposes limitations on such plans.
• The Home Ownership and Equity Protection Act (1994) establishes disclosure requirements and protection from abusive practices in connection with high-cost MORTGAGEs.
• The Credit Repair Organizations Act (1996) prohibits untrue or misleading representations regarding “credit repair” services.
• The Children’s Online Privacy Protection Act (1998) provides protection of information from children collected online.
• The Identity Theft Assumption and Deterrence Act of 1998 directs the FTC to create a central clearinghouse for identity-theft complaints.
• The Gramm-Leach-Billey Act requires the FTC and other agencies to issue regulations ensuring that financial institutions protect the PRIVACY of consumers’ personal financial information.