A Brief History: The Evolution of the Federal Trade Commission

• Pages: 1-11

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CHAPTER I

A BRIEF HISTORY:

THE EVOLUTION OF

THE FEDERAL TRADE COMMISSION

A. Introduction

The Federal Trade Commission, a multi-function independent

agency with investigative as well as adjudicative powers and a broad

research and policy-development mandate, is very much a product of the

economic history of the United States over the past century. The

Sherman Act, the nation’s first federal antitrust law, was enacted in 1890.

Twenty-one years later, when the Supreme Court issued its ruling in

Standard Oil Co. v. United States,

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it intensified a national debate about

competition policy. Although the case led to the break-up of Standard

Oil, the Court enunciated the rule of reason, holding that only “undue”

restraints of trade are forbidden by the Sherman Act. To many critics, the

rule of reason undercut the Sherman Act’s utility as a tool to eradicate

monopolies.

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A growing uneasiness had emerged in the United States, as many

Americans began to fear large business combinations that had grown—

and continued growing—despite the prohibitions of the Sherman Act.

These fears reached the steps of the United States Senate, and in 1911 —

on the heels of Standard Oil—the Senate began “an inquiry into ‘what

changes are necessary and desirable’ in the laws relating to the creation

or control of corporations or to persons operating in interstate

commerce.”

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This laid the groundwork for what would become, in 1914,

the FTC Act (and the Clayton Act).

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. 221 U.S. 1 (1911).

2

. See Marc W inerman, The Origins of the FTC: Concen tration,

Cooperation, Control, and Competition , 71 ANTITRUST L.J. 1, 12-15

(2003) [hereinafter Origins]. For example, a newspaper run by three-time

Presidential nominee William Jennings Bryan declared, “The Trusts Ha ve

Won.” THE COMMONER, May 26, 1911, at 1.

3

. PETER C. WARD, FEDERAL TRADE COMMISSION: LAW, PRACTICE AND

PROCEDURE § 1.02 (1986).

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. Id. §§ 1.01-1.02.