HOME

TheInfoList



OR:

The Federal Trade Commission Act of 1914 was a
United States federal law The law of the United States comprises many levels of codified and uncodified forms of law, of which the most important is the nation's Constitution, which prescribes the foundation of the federal government of the United States, as well as ...
which established the
Federal Trade Commission The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction o ...
. The Act was signed into law by US President
Woodrow Wilson Thomas Woodrow Wilson (December 28, 1856February 3, 1924) was an American politician and academic who served as the 28th president of the United States from 1913 to 1921. A member of the Democratic Party, Wilson served as the president of ...
in 1914 and outlaws unfair methods of
competition Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). Competition can arise between entities such as organisms, ind ...
and unfair acts or practices that affect commerce.


Background

The inspiration and motivation for this act started in 1890, when the
Sherman Antitrust Act The Sherman Antitrust Act of 1890 (, ) is a United States antitrust law which prescribes the rule of free competition among those engaged in commerce. It was passed by Congress and is named for Senator John Sherman, its principal author. ...
was passed. There was a strong antitrust movement to prevent manufacturers from joining price-fixing cartels. After ''
Northern Securities Co. v. United States ''Northern Securities Co. v. United States'', 193 U.S. 197 (1904), was a case heard by the U.S. Supreme Court in 1903. The Court ruled 5-4 against the stockholders of the Great Northern and Northern Pacific railroad companies, which had essential ...
'', a 1904 case that dismantled a
J. P. Morgan John Pierpont Morgan Sr. (April 17, 1837 – March 31, 1913) was an American financier and investment banker who dominated corporate finance on Wall Street throughout the Gilded Age. As the head of the banking firm that ultimately became known ...
company, antitrust enforcement became institutionalized. Soon, US President
Theodore Roosevelt Theodore Roosevelt Jr. ( ; October 27, 1858 – January 6, 1919), often referred to as Teddy or by his initials, T. R., was an American politician, statesman, soldier, conservationist, naturalist, historian, and writer who served as the 26t ...
created the
Bureau of Corporations The Bureau of Corporations, predecessor to the Federal Trade Commission, was created as an investigatory agency within the Department of Commerce and Labor in the United States. The Bureau and the Department were created by Congress on February 14 ...
, an agency that reported on the economy and businesses in the industry. The agency was the predecessor to the Federal Trade Commission. In 1913, President Wilson expanded on the agency by passing the Federal Trade Commissions Act and the
Clayton Antitrust Act The Clayton Antitrust Act of 1914 (, codified at , ), is a part of United States antitrust law with the goal of adding further substance to the U.S. antitrust law regime; the Clayton Act seeks to prevent anticompetitive practices in their incipie ...
. The Federal Trade Commission Act was designed for business reform. Congress passed the act in the hopes of protecting consumers against methods of deception in advertisement and of forcing the business to be upfront and truthful about items being sold.


Summary

The Federal Trade Commission Act does more than create the Commission:
Under this Act, the Commission is empowered, among other things, 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 trade regulation rules defining with specificity acts or practices that are unfair or deceptive, and establishing requirements designed to prevent such acts or practices; (d) conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce; and (e) make reports and legislative recommendations to Congress.
The act was part of a bigger movement in the early 20th century to use special groups like commissions to regulate and oversee certain forms of business. The Federal Trade Commission Act works in conjunction with the Sherman Act and the Clayton Act. Any violations of the Sherman Act also violates the Federal Trade Commission Act and so the Federal Trade Commission can act on cases that violate either act. The Federal Trade Commission Act and both antitrust laws were created for the sole objective 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 acts are considered the core of antitrust laws and are still very important in today's society. This commission was authorized to issue "
cease and desist A cease and desist letter is a document sent to an individual or business to stop alleged illegal activity. The phrase "cease and desist" is a legal doublet, made up of two near-synonyms. The letter may warn that, if the recipient does not disc ...
" orders to large
corporations A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and r ...
to curb unfair trade practices. In addition, the Federal Trade Commission Act is also considered a measure that protects privacy since it allows the FTC to penalize companies that violate their own policies by false advertising and other actions that can harm consumers. Some of the unfair methods of competition that were targeted include deceptive advertisements and pricing. The act passed the Senate by a 43-5 vote on September 8, 1914 and the House on September 10 without a tally of yeas and nays. It was signed into law by President Wilson on September 26.


References


External links

* Federal Trade Commission Act, as amended i
HTMLPDFdetails
in the GPObr>Statute Compilations collectionPre-Merger Review and Challenges Under the Clayton Act and the Federal Trade Commission Act
Congressional Research Service The Congressional Research Service (CRS) is a public policy research institute of the United States Congress. Operating within the Library of Congress, it works primarily and directly for members of Congress and their committees and staff on a ...
, September 27, 2017. {{Authority control 1914 in law 1914 in the United States 63rd United States Congress Act Trade Commission Act Trade Commission Act Trade Commission Act United States federal legislation articles without infoboxes Progressive Era in the United States