The Federal Trade Commission (FTC)

The Federal Trade Commission (FTC) is a bipartisan federal agency that examines mergers and acquisitions and unfair business practices that may reduce competition and harm consumers. The FTC develops rules, investigates, and prosecutes companies that violate the laws, in addition to conducting research and providing guidelines for businesses.

Definition of the Federal Trade Commission

The Federal Trade Commission (FTC) is a federal agency with a dual mission to promote competition and protect consumers and is tasked with numerous responsibilities. In consumer protection, the FTC conducts investigations and prosecutes companies that violate the law and develops rules to ensure the rights of consumers and businesses are not infringed upon. It also gathers reports on data security and deceptive advertising and works with law enforcement agencies worldwide to ensure a safe marketplace for consumers. In promoting competition, the FTC enforces antitrust laws to ensure open markets and freedom. Antitrust laws focus on mergers and anti-competitive business practices that can harm consumers. Some examples of business practices that may raise antitrust concerns are price increases, reduced quality, diminished choices, or decreased innovation rates.

How the Federal Trade Commission Works

The Federal Trade Commission (FTC) was established in 1914 by President Woodrow Wilson with the aim of protecting consumers and promoting competition. Before the FTC, the Bureau of Corporations was the agency that gathered information about companies to determine whether they were acting in the public interest. Over the years, Congress has enacted additional laws to grant the FTC more authority to monitor anti-competitive practices. The FTC now administers over 70 laws and regulations including the Telemarketing Sales Rule, the Identity Theft Act, the Fair Credit Reporting Act, and the Clayton Act. The FTC investigates and examines topics such as:

• Consumer finance
• Mergers and competition
• Mobile technology
• No-call registry
• Truth in advertising
• Consumer privacy and security
• Identity theft
• Military consumer protection
• Mobile immunization

For example, the Truth in Lending Act stipulates that advertisements cannot be misleading and must be truthful. If the FTC finds a fraud case, it will file lawsuits in federal court for immediate and permanent injunctions to attempt to halt the fraud, prevent future fraud, freeze the assets of the fraudsters, and seek restitution for the victims.

Consumer Guidance from the Federal Trade Commission

The Federal Trade Commission (FTC) also issues guidance to ensure consumer protection in emerging industries. For instance, as Americans’ interest in “green” environmentally friendly products increases, companies have ramped up “green” marketing around the environmental benefits of their products. The FTC has designed green guidelines to help marketers avoid making environmental claims that mislead consumers. For example, it provides guidance on how marketers can substantiate and document claims that their products are “renewable” or offer “carbon offsets.”

Alternatives to the Federal Trade Commission

In addition to the Federal Trade Commission (FTC), the Department of Justice (DOJ) also plays a role in consumer protection through regulatory actions. Both agencies, for example, share jurisdiction over merger reviews. Most proposed deals affecting trade in the U.S. that exceed $92 million are reviewed by both agencies. If either the FTC or the DOJ believes that the merger would significantly reduce competition, they can take legal action to block it. Reviews are assigned to one agency, depending on which agency has more expertise in the industry. During the initial review, the parties must wait 30 days before closing their deal. Based on what the agency finds, it may allow the deal to proceed or, if the initial review raises competition concerns, the review may be extended and additional information requested. In addition to evaluating mergers, the FTC and DOJ issue research reports or guidance on mergers together. For example, they recently updated vertical merger guidelines, which outline how federal agencies assess the competitive impact of vertical mergers.

Conclusions

Home

The dual mission of the Federal Trade Commission (FTC) is to promote competition and protect consumers. The FTC investigates anti-competitive business practices that lead to higher prices, reduced product quality, and fewer consumer choices. The FTC looks into misleading advertisements and fraud to protect consumers. The FTC and the Department of Justice (DOJ) work together to assess mergers and provide guidance on mergers that may affect competition.

Source: https://www.thebalancemoney.com/what-is-the-federal-trade-commission-ftc-5214055

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