Today in 1914: The Federal Trade Commission is created

September 26, 2014

Today in Legal HistoryFew federal agencies retain their relevance a century after they were created, but the Federal Trade Commission (FTC) is one such agency.  The FTC is today celebrating its 100th birthday, having been created by the enactment of the Federal Trade Commission Act, which was signed into law on September 26, 1914.  And the FTC is just as influential in the U.S. regulatory landscape as it was 100 years ago, if not more so.

The Act came after the Supreme Court anti-trust rulings against Standard Oil and American Tobacco in 1911; the intent behind the law was to create a means of enforcing anti-trust laws faster than moving through the courts.  After the 1912 elections, in which antitrust was a major issue and which found the majority of political parties calling for the creation of a federal commission on trade, the bill finally had enough momentum to see passage and enactment.

Although the original FTC Act has been repeatedly amended, thus expanding the agency’s regulatory authority, the Act’s first incarnation was primarily concerned with prohibiting “unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce.”

The agency had and continues to have fairly wide discretion to determine which acts and practices were “deceptive” (a Supreme Court decision in 1972 recognized the FTC’s longstanding use of the “unfairness doctrine,” under which the FTC can declare a business practice “unfair” because it is oppressive or harmful to consumers even though the practice is not an antitrust violation, in word or “in spirit.”

The FTC didn’t actually begin operating until the following March, when it absorbed the work and staff of the Commerce Department’s Bureau of Corporations.  And much like the Bureau of Corporations, the FTC could conduct investigations, gather information, and publish reports.  However, unlike the Bureau of Corporations, the FTC had actual enforcement powers, in that it could bring administrative actions. In addition, although the original impetus for the creation of the FTC was to enforce antitrust laws, the agency soon moved into other areas of interstate deceptive trade regulation, such as bribery and false advertising.

The FTC continued to evolve over its century-long lifespan (so far), with notable changes including changing the manner in which the FTC chairman is selected in 1950 (previously, the commissioners chose their own chairman; now, s/he is appointed by the president and has additional responsibilities) and the broadening of the FTC’s enforcement responsibilities to include credit regulations.  However, since the creation of the Consumer Finance Protection Bureau (CFPB) in 2011, many of the FTC’s credit regulatory responsibilities have been delegated to the newer agency.

Still, the FTC continues to tackle a wide range of unfair and deceptive trade practices through administrative actions and lawsuits.  Indeed, one only need search a news website to see the number and variety of actions in which the FTC is currently involved (at the time of this writing, such actions include suing pharmaceutical companies for filing “baseless patent-infringement litigation” against potential generic-drug competitors to delay copycat versions of a popular drug, and suing a Bitcoin-mining company for allegedly defrauding customers).

As the FTC begins its next 100 years, it seems that the agency is still going strong, and that its regulatory reach is unlikely to diminish anytime soon.