A Brief History: The Evolution of the Federal Trade Commission

• Pages: 1-9

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CHAPTER I

A BRIEF HISTORY:

THE EVOLUTION OF

THE FEDERAL TRADE COMMISSION

A. Introduction

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,1 it intensified a national

debate about competition policy. The Court held that only “undue”

restraints of trade are forbidden by the Sherman Act and enunciated the

rule of reason. To many critics, though, the decision undercut the

Sherman Act’s utility as a tool to eradicate monopolies.

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 twenty-one-year-

old Sherman Act. These fears reached the steps of the United States

Senate, and in 1911—on the heels of the Supreme Court’s decision in

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” and laid the

groundwork for what would become the FTC Act.2

Two years later, the Senate Committee issued its report. The

Committee declared that “the progress of the world depends in large

measure upon that fair, reasonable rivalry among men.”3 It further

announced “that the Sherman Act should stand as the ‘fundamental law’”

on the issue of the nation’s competitive landscape.4 But it proposed,

among other changes, new legislation that would “specifically prescribe

certain conditions upon which persons and corporations shall be

permitted to engage in commerce.”5 The Committee also called for the

creation of a new commission to (1) administer and enforce the proposed

laws, (2) serve as a reference for information about corporations’

1. 221 U.S. 1 (1911).

2. Peter C. Ward, FEDERAL TRADE COMMISSION: LAW, PRACTICE AND

PROCEDURE §§ 1.01-1.02 (1986).

3. Id. (quoting S. Rep. No. 1326, 62d Cong., 3d Sess. (1913)).

4. Id.

5. Id.