Federal Trade Commission Act

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Competition law
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The Federal Trade Commission Act of 1914 (15 U.S.C §§ 41-58, as amended) (FTC Act) established the Federal Trade Commission (FTC). The Act, signed into law by Woodrow Wilson in 1913, outlaws unfair methods of competition and to outlaw unfair acts or practices that affect commerce.[1] The act also creates the Federal Trade Commission, a five-member board, to regulate questionable business practices [1]

Origin of Act[edit]

The inspiration and motivation for this act started in 1890, when the Sherman Act was passed. This era in time was an antitrust movement to prevent manufacturers from joining price-fixing cartels.[2] After the case Northern Securities Co. v. United States, which dismantled a J. P. Morgan company, antitrust enforcement became institutionalized.[2] Soon after, Wilson created the Bureau of Corporations, an agency that reported on the economy and businesses in the industry.[2] This agency was the predecessor to the Federal Trade Commission. In 1913, President Wilson expanded on this agency by passing the Federal Trade Commissions Act along with the Clayton Antitrust Act.[2] The Federal Trade Commission Act was designed for business reform. Congress passed this Act with the hopes of protecting consumers against methods of deception in advertisement, forcing the business to be upfront and truthful about items being sold.[3]


Frame of an animation by the Federal Trade Commission intended to educate citizens about phishing[4] tactics.

The Federal Trade Commission Act does more than just create the Commission, "Under this Act, the Commission is empowered, among other things, to (a) prevent unfair methods of competition, and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; (c) prescribe trade regulation rules defining with specificity acts or practices that are unfair or deceptive, and establishing requirements designed to prevent such acts or practices; (d) conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce; and (e) make reports and legislative recommendations to Congress." [5] This act was part of a bigger movement in the early 1900s to use special groups like commissions to regulate and oversee certain forms of business.[1] The Federal Trade Commission Act works in junction with The Sherman Act and The Clayton Act.[6] Any violations of The Sherman Act will also violate the Federal Trade Commission Act so the Federal Trade Commission can act on cases that violate each act.[6] The Federal Trade Commission Act, along with other two antitrust laws, have were created for the sole objective to "protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up." [6] These acts are considered the core of antitrust laws and are still very important in today's society.

This commission was authorized to issue “cease and desist” orders to large corporations to curb unfair trade practices. Some of the unfair methods of competition that were targeted include deceptive advertisements and pricing. It passed the Senate by a 43-5 vote on September 8, 1914; passed the House on September 10, without a tally of yeas and nays, and was signed into law by President Wilson on September 26.


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