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Antitrust 01/31/2022

Chapter 6. The Federal Trade Commission and the Federal Trade Commission Act

Moving forward, we’ll be diving into the antitrust enforcement agencies and the laws that created them. This chapter will focus on the Federal Trade Commission and the Federal Trade Commission Act.

6.1 The Federal Trade Commission Act (1914) created the Federal Trade Commission.

The Federal Trade Commision Act, signed into law in 1914, created the Federal Trade Commission to prohibit “unfair methods of competition” and “unfair or deceptive acts or practices.” 

While that language differs from the Sherman Act’s, the Supreme Court has interpreted this to mean that anything that violates the Sherman Act automatically violates the FTC Act. But the reverse is not true: the FTC Act extends to conduct outside the Sherman Act’s reach. 

In other words, both the FTC and DOJ can enforce the Sherman Act, but only the FTC can enforce the FTC Act.

6.2 The Federal Trade Commission was designed to be an independent agency of experts who enforce antitrust regulation.

When created, the FTC was an agency designed to be a neutral and apolitical council, or almost “court,” for antitrust action. 

Its format is simple:

  • 5 commissioners will be at the FTC at a time, with no more than 3 of the same party.
  • Each commissioner serves for 7 years, with staggered start dates.
  • No commissioner will be removed without cause.

6.3 The Federal Trade Commission overlaps with DOJ and has limited enforcement mechanisms.

We’ll get into DOJ enforcement later on, but know this—for many Sherman and Clayton antitrust cases, the FTC and DOJ have overlapping enforcement power. Because they get to pick and choose what cases to take, this can mean that sometimes one agency, both agencies, or none have taken on a case.

You see this with the current disputes around cases involving tech companies. The case against Meta is being brought by the FTC while the case against Google is being brought by the DOJ. Enforcement can get even more complicated when you bring state attorneys and private parties into the mix, too.

When the FTC chooses to take enforcement action, it can seek relief in two courts—its own administrative “court” or in federal court. The FTC may ask for injunctive and civil (monetary) relief. 

Generally speaking, injunctive relief stops a business from continuing or starting a practice that the FTC believes is unlawful.

In this sense, injunctive relief is meant to stop current or future wrongs, while civil relief is meant to remedy a past wrong. So while the FTC may seek an injunction to prevent two businesses from merging, it might instead choose civil remedies in enforcing against “deceptive trade practices” that have already harmed consumers.

  • Chapter 6 Recap

    • The Federal Trade Commision Act of 1914 created the Federal Trade Commission to ban “unfair methods of competition” and “unfair or deceptive acts or practices.” 
    • Anything that violates the Sherman Act automatically violates the FTC Act, but the FTC Act also includes violations that don’t fit neatly into the categories of the Sherman Act. 
    • The FTC consists of 5 commissioners from both parties who serve for staggered 7-year terms.
    • The FTC and DOJ have overlapping enforcement power.
    • The FTC may ask for injunctive relief to stop current or future harm to consumers or civil relief to remedy a past harm.
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