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FEDERAL TRADE COMMISSION

Pennsylvania Avenue at Sixth Street NW., Washington, D.C. 20580

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[For the Federal Trade Commission statement of organization, see Code of Federal Regulations, Title 16, Part 0]

The basic objective of the Federal Trade Commission is the maintenance of strongly competitive enterprise as the keystone of the American economic system. Although the duties of the Commission are many and varied under law, the foundation of public policy underlying all these duties is essentially the same: to prevent the free enterprise system from being stifled, substantially lessened or fettered by monopoly or restraints on trade, or corrupted by unfair or deceptive trade practices.

In brief, the Commission is charged with keeping competition both free and fair.

This basic purpose finds its primary expression in the Federal Trade Commission Act, cited below, and the Clayton Act (38 Stat. 730; 15 U.S.C. 12), both passed in 1914 and both successively amended in the years that have followed. The Federal Trade Commission Act lays down a general prohibition against the use in commerce of "unfair methods of competition" and "unfair or deceptive acts or practices." The Clayton Act outlaws specific prac

tices recognized as instruments of monopoly. As an administrative agency, acting quasi-judicially and quasi-legislatively, the Commission was established to deal with trade practices on a continuing and corrective basis. It has no authority to punish; its function is to "prevent," through ceaseand-desist orders and other means, those practices condemned by the law. of Federal trade regulation; however, court ordered civil penalties up to

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$10,000 may be obtained for each violation of a Commission order.

The Federal Trade Commission was organized as an independent adminis'trative agency in 1951, pursuant to the Federal Trade Commission Act of 1914 (38 Stat. 717; 15 U.S.C. 41-51). Related duties subsequently were delegated to the Commission by the Wheeler-Lea Act, the Trans-Alaska Pipeline Authorization Act, the Clayton Act, the Export Trade Act, the Wool Products Labeling Act, the Fur Products Labeling Act, the Textile Fiber Products Identification Act, the Fair Packaging and Labeling Act, the Lanham Trade-Mark Act of 1946, the Truth in Lending Act, the Fair Credit Reporting Act, the Robinson-Patman Act, the Hobby Protection Act, and the Magnuson-Moss Warranty-Federal Trade Commission Improvement

Act.

Activities

The Commission's principal functions

are:

To promote free and fair competition in interstate commerce through prevention of general trade restraints such as price-fixing agreements, boycotts, illegal combinations of competitors and other unfair methods of competition;

To safeguard the public by preventing the dissemination of false or deceptive advertisements of consumer products generally and food, drug, cosmetics, and therapeutic devices, particularly, as well as other unfair or deceptive practices;

To prevent: discriminations in price; exclusive-dealing and tying arrangements; corporate mergers, acquisitions or joint ventures, when such practices or arrangements may substantially lessen competition or tend toward monopoly; interlocking directorates which may restrain competition; the payment or receipt of illegal brokerage; and discrimination among competing customers in the furnishing of

or the payment for services or facilities used to promote the resale of a product; To bring about truthful labeling of textile and fur products;

To regulate packaging and labeling of certain consumer commodities within the purview of the Fair Packaging and Labeling Act so as to prevent consumer deception and to facilitate value comparisons;

To supervise the registration and operation of associations of American exporters engaged in export trade;

To petition for the cancellation of the registration of trademarks which were illegally registered or used for purposes contrary to the intent of the Trade-Mark Act of 1946;

To achieve true credit cost disclosure by consumer creditors (retailers, finance companies, non-Federal credit unions, and other creditors not specifically regulated by another Government agency) as called for in the Truth in Lending Act; to assure a meaningful basis for informed credit decisions; and to regulate the issuance and liability of credit cards so as to prohibit their fraudulent use in interstate or foreign commerce;

To protect consumers against circulation of inaccurate or obsolete credit reports, and to insure that consumer reporting agencies exercise their responsibilities in a manner that is fair and equitable and in conformity with the Fair Credit Reporting Act; and

To gather and make available to the Congress, the President, and the public, factual data concerning economic and business conditions.

ENFORCEMENT

The Commission's law enforcement work falls into two general categories: actions to foster law observance voluntarily; and formal litigation leading to mandatory orders against offenders.

For the most part, law observance is obtained through voluntary and cooperative action by way of staff level advice, which is not binding on the Commission, advisory opinions by the Commission, trade regulation rules, and

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through issuance of guides delineating legal requirements as to particular business practices.

The formal litigative proceedings are similar to those used in courts. Cases are instituted by issuance of a complaint charging a person, partnership, or corporation-the respondent-with violation of one or more of the statutes administered by the Commission. Cases may be settled by consent orders or occasionally through informal administrative correction of minor violations. If the charges are not contested, or if in a contested case and after hearing the charges are found to be true, an order to cease and desist is issued requiring discontinuance of the unlawful practices.

LEGAL CASE WORK

Cases before the Commission may originate through complaint by a consumer or a competitor; the Congress; or from Federal, State, or municipal agencies. Also, the Commission itself may initiate an investigation to determine possible violation of the laws ad

ministered by it. No formality is required in submitting a complaint. A letter giving the facts in detail is sufficient, but it should be accompanied by all evidence in possession of the complaining party in support of the charges made. It is the policy of the Commission not to disclose the identity of any complainant, except as required by law.

Upon receipt of a complaint, various criteria are applied in determining whether the particular matter should be docketed for investigation. Within the limits of its resources, investigations are initiated which are considered to best support the Commission's goals of maintaining competition and protecting consumers.

On completion of an investigation, there may be a staff recommendation for: informal settlement of the case; issuance of a formal complaint; or closing the matter.

If the Commission decides to issue a complaint, the respondent is served with a copy of the complaint and proposed order. Prior to the hearings, re

spondent and Commission counsel may negotiate a cease-and-desist order to which the respondent agrees to consent. If such a consent order is worked out, the respondent does not admit any : violation of the law but agrees to discontinue the challenged practice.

If an agreement containing a consent order is not entered into, litigation usually ensues.

The case is heard by an administrative law judge who, after taking testimony at public hearings, issues an initial decision. This becomes the decision of the Commission at the end of 30 days unless the respondent or the counsel supporting the complaint appeals the decision to the Commission, or the Commission by order stays the effective date or places the case on its own docket for review. In the Commission's decision on such appeal or review, the initial decision is sustained, modified, or reversed. If it is sustained or modified, a cease-and-desist order is issued.

Under the Federal Trade Commission Act, the Clayton Act, and the Wool, Fur, and Textile Acts, the order to cease and desist, or to take other corrective action such as affirmative disclosure, divestiture or restitution, becomes final 60 days after date of service upon the respondent, unless within that period the respondent petitions an appropriate United States court of appeals to review the order. In case of review, the order of the Commission becomes final after affirmance by the court of appeals or by the Supreme Court of the United States, if taken to that court on certiorari. Violations of an order to cease and desist after it becomes final subjects the offender to suit by the Government in a United States district court for the recovery of a civil penalty of not more than $10,000 for each violation and, where the violation continues, each day of its continuance is a separate violation.

Under each of these statutes the respondent may apply to a court of appeals for review of an order and the court has power to affirm, modify, or to

set the order aside. Either party, on writ of certiorari, may apply to the Supreme Court for review of the action of the court of appeals.

In addition to the regular proceeding by complaint and order to cease and desist, the Commission, after consultation with the Attorney General, may bring suit in a United States district court to enforce its subpoenas, to obtain preliminary injunctions, and to sue for civil penalties. The Commission also has specific authority to enjoin the dissemination of advertisements of food, drugs, cosmetics, and devices intended for use in the diagnosis, prevention, or treatment of disease, whenever it has reason to believe that such a proceeding would be in the public interest. The preliminary injunctions remain in effect until an order to cease and desist is issued and becomes final, or until the complaint is dismissed by the Commission or the order is set aside by the court on review.

Further, the dissemination of a false advertisement of a food, drug, device, or cosmetic, where the use of the commodity advertised may be injurious to health or where there is intent to defraud or mislead, constitutes a misdemeanor; and conviction subjects the offender to a fine of not more than $5,000, or imprisonment of not more than 6 months, or both. Succeeding convictions may result in a fine of not more than $10,000, or imprisonment of not more than 1 year, or both. The statute provides that the Commission shall certify this type of case to the Attorney General for institution of appropriate court proceedings.

COMPLIANCE ACTIVITIES

Through systematic and continuous review, the Commission obtains and maintains compliance with its ceaseand-desist orders. All All respondents against whom such orders have been issued are required to file reports with the Commission to substantiate their compliance. In the event compliance is not obtained, or if the order is subsequently violated, civil penalty proceed

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