How Ftc Proposed Rules Affect Trade Associations and Their Members

• Date: 01 June 1977
• Published date: 01 June 1977
• DOI: 10.1177/0003603X7702200208
• Author: Neil H. Offen
• Subject Matter: Article

HOW

FTC

PROPOSED

RULES

AFFECT

TRADE

ASSOCIATIONS

AND

THEIR MEMBERS

by

NEIL H. OFFEN*

Substantive rulemaking, as we know it, was instituted in

1962 when Paul Rand Dixon was chairman of the Federal

Trade Commission. The concept supporting rulemaking was

that

over the years the Commission attorneys had brought

and tried many cases which involved essentially the same

types of violation. In each succeeding case, they would be

forced, in effect, to reinvent the wheel. That is, they would

have to produce witnesses and evidence to show that each

suc-

ceeding respondent's acts were unfair or deceptive. Early rules

(such as the one covering the practice of purchasing used

motor oil from service stations, re-refining it and selling it to

the public without disclosing its origin) were based on the ex-

pertise which the Commission had acquired in litigation over

the years.

Eventually, the reasoning behind rulemaking shifted. The

Commission believed

that

if a new type of unfair or deceptive

practice is widespread in the country, then why should the

Commission be forced to bring it under control by the tedious

method of case-by-case litigation. Industrywide rules then

began to contain not only prohibitions against unfair and

deceptive practices but spelled out affirmative steps which in-

dustry members must take in carrying out their business. The

Commission stated

that

such rules would be a great help to

business in avoiding more violations. In 1972, the

Commis-

sion's legislative rulemaking authority was challenged by the

National Petroleum Refiners Association and 34 gasoline

refining companies. National Petroleum Refiners Association

v.

FTC,

340 F. Supp. 1343

(D.D.C.

1972).

*Legal Counsel, Direct Selling Association, Washington, D.C.

317