Deregulation

• Author: Gene Brown, Hal Kirkwood
• Pages: 177-179

Page 177

Deregulation refers to the deletion, abandonment, or relaxation of various laws, rules, and regulations that affect business and industry. However, the topic of deregulation is best understood by first understanding the purposes and effects of regulations.

REGULATION

It is often thought that individual firms lack the perspective and/or the incentive to protect society. Consequently, the regulation of business and industry by government is for the purposes of consumer protection and or the enhancement of business competition. Regulation is generally thought to also protect minorities, employees, investors, and the environment.

The railroad industry was one of the first industries that the federal government targeted. As a result, the Interstate Commerce Act was passed in 1887. As such, the Interstate Commerce Act created the first regulatory body in the United States—the Interstate Commerce Commission, which still regulates transportation rates, as well as establishes rules and regulations for interstate commerce.

Page 178

The United States government expanded its control over industry by focusing on trusts, where a company is established for the purpose of controlling multiple companies. Consequently, the Sherman Antitrust Act was enacted in 1890 to control monopolies. In 1914, the Clayton Act amended the Sherman Act by forbidding specific business actions. For example, tying contracts interlocking directorates, and discriminatory pricing were made illegal if the results of these actions lessened competition.

The Federal Trade Commission Act, also enacted in 1914, formally established the Federal Trade Commission (FTC). Among other responsibilities, the FTC remains responsible for defining, detecting, and enforcing compliance with the Clayton Act. The Wheeler-Lea Act of 1938 expanded FTC jurisdiction to include any practice or practices that harm the public in general and those practices that harm competitors. The Robinson-Patman Act was enacted in 1938 due to the growth of large retailing conglomerates. This law covered discrimination against buyers as well as sellers.

In 1958 the National Traffic and Safety Act was enacted. This legislation provided for the creation of compulsory safety standards for automobiles and tires.

In 1966 the Fair Packaging and Labeling Act was passed. This...