A brief history of the U.S. Federal Trade Commission (FTC)

Since the establishment of President Woodrow Wilson in 1914, the Federal Trade Commission (FTC) has been protecting consumers, investors, and businesses from anti-competitive practices, such as monopolies, monopolistic mergers, price fixing, bid-rigging, fraud, and/ Or deceptive advertisements, and unfounded product claims. These important functions help the US economy to operate smoothly, safely, and fairly, serving businesses, consumers, and investors.

The early days of the Federal Trade Commission

The original motivation for the creation and promulgation of the FTC into law was the need to re-enforce, regulate and clarify the content prohibited by the earlier Sherman Antitrust Act and the Clayton Antitrust Act. Both laws prohibit business practices that restrict or eliminate competition to the detriment of consumers, investors, and the overall economy. The widespread public outrage over the abuse of these laws and continued anticompetitive business practices that violated earlier laws also prompted Wilson to take action against trusts and monopolies.

Initially, the FTC was responsible for preventing or dissolving monopolies and bringing civil actions against violators. In essence, monopoly is anti-competitive, and therefore harms the interests of consumers and investors, as well as the entire economy. Monopoly may determine consumer prices, control quality and distribution.

In the following decades, as the U.S. economy opened up more and more profitable foreign markets through technological innovation, increased productivity and personal income, the U.S. economy became more complex and prosperous, and the Federal Trade Commission did the same. Expanded and assumed additional functions and responsibilities.

Additional features of FTC

  • law enforcement: The FTC has the right to file civil suits in federal courts to ensure financial compensation and penalties for individuals or class-action parties who have suffered damages due to violations of applicable laws. Fines and penalties for offenders are directly imposed by the courts, not the Federal Trade Commission.
  • investigation: In response to complaints from consumers, companies, trade associations, or other sources, or to pass evidence of misconduct, the FTC may investigate companies to determine the validity of the allegations or allegations, and recommend further actions (such as court proceedings) against suspected violations ), if there is evidence. The FTC may issue suspension orders against companies that are found to use unfair practices or violate other restrictive regulations.
  • the Internet: Although Internet commerce was not covered by FTC regulations for most of the 1990s, data formulated by the FTC in 2000 showed that only 20% of Internet-based companies complied with applicable laws. As Internet business expands and becomes a larger part of GDP, new FTC regulations are expected to be implemented.
  • Supervision and monitoring: An important function of the FTC is to continuously monitor and supervise the illegal activities and unfair practices of the business community. In addition to its anti-competitive functions, the FTC is also trying to enforce the prohibition of false advertising and full disclosure requirements in various commercial transactions and activities (pricing, franchising, advertising, etc.).
  • Fact investigation: In recent decades, the rapid development of high-tech applications in the business world has necessitated continuous education for users of high-tech equipment and FTC. With the accumulation of facts and information about these technologies and related business practices, the FTC is better able to issue appropriate protective regulations.
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The results of a large number of FTC activities in the above-mentioned areas have proven to be beneficial to the public. A successful lawsuit filed by the US Federal Trade Commission against the tobacco industry stopped cigarette advertising targeted at teenagers and teenagers.

Target merger

Also subject to FTC review are many mergers completed in recent decades, such as the merger of Exxon Mobil and the marriage of Boeing-Macdonald Douglas and AOL and Time Warner. The FTC ensures that there are no antitrust or antitrust violations in the merger of these companies.

Composition and structure

A committee of five supervisory members appointed by the President of the United States is responsible for managing the activities of the FTC. The term of each committee member is seven years and must be approved by the Senate. The chairman elected by the president has the right to appoint an executive director as the chief operating officer. The committee members must approve the appointment.

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The three main bureaus of the FTC

The Consumer Protection Bureau protects consumers from deception and/or unfair business practices. FTC authorization includes deceptive advertising and fraudulent product and service claims.

The Competition Bureau investigates and tries to prevent anti-competitive business practices that may have a negative impact on business competition, such as monopoly, price fixing, and similar violations. Criminal violations in these areas are handled by the Antitrust Division of the US Department of Justice in cooperation with the Competition Bureau.

The Economic Affairs Bureau and the Competition Bureau collaborate to study FTC legislative measures and the economic impact of current laws. In mergers and acquisitions in key industries (such as telecommunications), mergers caused by trade restrictions or monopoly pricing may have a significant impact on the economy.

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Benefits and abuses of FTC surveillance

Over the years, the FTC has gained more supervisory powers and entered a period of active prosecution and sanctions in the early 1970s. However, by the end of the century, criticism of FTC activism from the business community and Congress has increased. One of the actions the FTC has been criticized for is that the committee issued regulations for the influential oil industry, which is a major contributor to GDP and taxes.

Critics in the late 1970s claimed that the FTC had become too powerful, too sensitive to the needs of businesses and the public, and operated almost independently, with little oversight by Congress or the President. Therefore, during Ronald Reagan’s first term, the Federal Trade Commission was accountable to (and under his control) the President. A new FTC attitude also emerged in the following years, which cooperated more with commercial interests without giving up the protection function. Eventually becoming as important as its anti-competitive function, the monitoring and enforcement of consumer fraud violations has become a major activity of the FTC.

Bottom line

The Federal Trade Commission provides important statutory safeguards for consumers, investors, businesses, and the overall economy. It also ensures strict compliance with regulations. At the same time, the FTC will not become an obstacle to doing business in the US free market. As the FTC becomes more flexible in its regulatory and enforcement functions, businesses, investors, consumers, and the economy will all benefit from it and may prosper.


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