The Federal Trade Commission Act of 1914 is a United States federal law which established the Federal Trade Commission. The Act was signed into law by US President Woodrow Wilson in 1914 and outlaws unfair methods of competition and unfair acts or practices that affect commerce.
The inspiration and motivation for this act started in 1890, when the Sherman Antitrust Act was passed. There was a strong antitrust movement to prevent manufacturers from joining price-fixing cartels. After Northern Securities Co. v. United States, a 1904 case that dismantled a J. P. Morgan company, antitrust enforcement became institutionalized. Soon, US President Theodore Roosevelt created the Bureau of Corporations, an agency that reported on the economy and businesses in the industry. The agency was the predecessor to the Federal Trade Commission.
In 1913, President Wilson expanded on the agency by passing the Federal Trade Commissions Act and the Clayton Antitrust Act. The Federal Trade Commission Act was designed for business reform. Congress passed the act in the hopes of protecting consumers against methods of deception in advertisement and of forcing the business to be upfront and truthful about items being sold.
The Federal Trade Commission Act does more than 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.
The act was part of a bigger movement in the early 20th century to use special groups like commissions to regulate and oversee certain forms of business. The Federal Trade Commission Act works in conjunction with the Sherman Act and the Clayton Act. Any violations of the Sherman Act also violates the Federal Trade Commission Act and so the Federal Trade Commission can act on cases that violate either act. The Federal Trade Commission Act and both antitrust laws 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." The 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. In addition, the Federal Trade Commission Act is also considered a measure that protects privacy since it allows the FTC to penalize companies that violate their own policies by false advertising and other actions that can harm consumers. Some of the unfair methods of competition that were targeted include deceptive advertisements and pricing.
The act passed the Senate by a 43-5 vote on September 8, 1914 and the House on September 10 without a tally of yeas and nays. It was signed into law by President Wilson on September 26.
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