Release Date: 02/ 23/ 2006
The Federal Trade Commission Act (FTCA) provides for the creation of a Federal Trade Commission and delineates the rights and responsibilities of its commissioners. The FTCA empowers the Commission to prevent and punish unfair commercial practices and to promulgate trade regulation rules.
Unfair Business Practices
- Price fixing between competing businesses
- Minimum Price Law requires retailers to charge a specific minimum price based on the cost of the merchandise plus a percentage for overhead to keep large businesses from undercutting the competition
- Agreements to restrict output
- Group boycotts which stop new businesses from entering the market
- Division of the market in sectors so as to reduce competition
- Setting minimum resale prices
- Any otherwise legal practices that result in harm to competition:
- Tie-in sales of one product to another product by the same manufacturer
- Manufacturer imposed service or territorial sales obligations
- Agreements to restrict advertising
Elements of Unfair Business Practice
- Evidence of an agreement between the parties to engage in a prohibited practice
- Practice results in an unreasonable restraint of trade and competition
Legal Action under the FTCA
- Investigation can be triggered by any source, including consumer or business letters
- If violation is found:
- FTC offers the business a consent order, which requires it to stop the practice in question
- If there is no consent, the case is presented in front of an administrative judge
- If a decision is rendered and upheld at appeal, the FTC can ask for civil penalties and/or injunction
- If the violation affects a whole industry, the FTC can utilize its rulemaking powers to change the regulations for that industry
For a complete copy of this law or any other information please contact the Federal Trade Commission Web site at (202) 326-3128 or visit www.ftc.gov.
