Federal Trade Commission

• Author: Jeffrey Lehman, Shirelle Phelps

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The Federal Trade Commission (FTC) is an independent federal regulatory agency charged with the responsibility of promoting fair competition among rivals in the marketplace by preventing unfair and deceptive trade practices and restraining the growth of monopolies that tend to lessen free trade.

The Federal Trade Commission was established on September 26, 1914, by the Federal Trade Commission Act (15 U.S.C. 41 et seq). Created by Congress at the urging of President WOODROW WILSON, the FTC was designed to regulate trusts and prevent UNFAIR COMPETITION in interstate commerce. The FTC succeeded

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the Bureau of Corporations as the federal agency in charge of regulating unfair and non-competitive trade practices.

The FTC's creation was supported both by anti-monopolists seeking to halt "unfair competition" that resulted from the trust building actions of larger corporations and by businessmen seeking "fairness" as a basis for greater order and stability in the marketplace.

The FTC is composed of five commissioners appointed by the President of the United States, with the advice and consent of the Senate, for a term of seven years. Not more than three of the commissioners may be members of the same political party. One commissioner is designated by the president as chairman of the commission and is responsible for its administrative management.

Generally speaking, the FTC is bestowed with the power to oversee, issue, and enforce federal rules, regulations, and laws governing unfair competition among businesses in the United States. Under the SHERMAN ANTITRUST ACT (15 U.S.C. § 1) and CLAYTON ANTITRUST ACT (15 U.S.C. § 18), the FTC is charged with the duty of applying the so-called "Rule of Reason" to disputes of unfair competition. Under this rule, restraints of trade are deemed unlawful only to the extent they are "unreasonable."

Specifically, the FTC's functions include:(1) promoting competition through the prevention of general trade restraints such as price-fixing agreements, boycotts, illegal combinations of competitors, and other unfair methods of competition; (2) stopping corporate mergers, acquisitions, or joint ventures that substantially lessen competition or tend to create a MONOPOLY; (3) preventing interlocking directorates (an interlocking director is a director who simulaneously serves on the boards of two or more corporations that deal with each other or have allied...