Proceedings for establishment of such rules for an industry may be instituted by the Commission's own motion or upon application from members of the industry. In pursuance thereof, a survey and study of the competitive problems of the industry is made and the results reported to the Commission with recommendation as to whether an industry conference should be called or other appropriate action. taken.

Upon direction of the Commission that a conference be held, a public announcement is made as to the time and place and all members of the industry are invited to attend and participate. The conference considers proposed rules submitted by members of the industry and those deemed necessary or desirable.

These are studied and analyzed and report thereon is made to the Commission by the Director, together with his recommendations. Thereafter, proposed rules in the form deemed appropriate are released to the members of the industry and the public.

Notice of hearing is issued to all interested or affected parties under which they are afforded opportunity to obtain copies of the proposed rules and to submit their suggestions, objections, and views, and also to be heard at a time and place designated in such public notice. such hearings and trade-practice conferences are open to the public and are conducted by a commissioner or the director or other designated official of the Bureau.

All

After final hearing the entire proceedings, including the hearing record and other information submitted and bearing on the subject are considered and reported by the Director to the Commission with his recommendations.

Thereupon, the entire matter receives the consideration of the Commission and all rules approved and accepted by it are promulgated and published in the Federal Register as rules for the industry. Copies of the rules are supplied to members of the industry, together with a form of acceptance by which each member of the industry may record his intention of observing the rules of the conduct of his business.

Approved and accepted rules become operative 30 days after promulgation unless otherwise specified.

Administration of the rules and compliance work in respect thereto are likewise handled through this Bureau. Information is gathered from time to time as to operation of the rules and cooperative liaison with the industry is maintained to prevent, in accordance with the purposes of the rules, the inception or growth of unfair trade practices.

H. H. 3871 proposes to take from the Commission the power to decide whether the Federal Trade Commission Act has been violated and transfers that power to the United States district courts, leaving to the Commission only the function of initiating and prosecuting the proceedings under that act.

From the time such suit is filed in court it would be governed by the rules applying to other court cases under the rules and regulations of civil procedure and the judicial code.

In rendering the decision one district judge would be substituted for five commissioners and his power would be enlarged as indicated later. Contempt proceedings for violations of the court's injunctive order would seem to be the only remedy.

The idea that the factual issues in cases arising under the Federal Trade Commission Act should be tried by the courts may seem plau

sible at first because private litigants have to settle their differences before judges who are not experts in many of the matters they handle, such as medical questions. But Federal Trade Commission cases are not lawsuits, although they are tried in accordance with procedure similar to that followed in lawsuits.

Congress did not intend to make the Commission a court as it might have done. Instead, it created a commission responsible to Congress itself and did not make it a part of the judicial branch of the Government which is independent of Congress.

In a more primitive society Congress might pass a separate bill defining and forbidding each violation of fair trade practice. Under modern conditions this is impracticable, and so Congress created a commission responsible to it to apply the general standards set up by Congress to the facts of particular cases.

Congress provided for a review of the Commission's decisions by the courts, not because it wanted the factual issues decided by the courtshaving specifically made the finding of the Commission as to the facts conclusive when supported by substantial evidence-but to assure protection of constitutional and other legal rights of respondents and to provide judicial review on all questions of law.

The bill would put an end to quasi-judicial powers and functions of the Commission which it has exercised under the Federal Trade Commission Act for over 30 years and under which a large body of administrative law has been built up for the guidance of business under the safeguards of judicial review.

The whole philosophy of dealing with the increasing complexities of modern commerce through an agency directly responsible to the legislature and which acts as an agent of the Congress in its constitutional function of regulating commerce among the States would be abandoned if this bill were to become law. The philosophy of dealing with the problem through an agency which special zes in such complexities so that it becomes expert in them is a philosophy that the courts have frequently recognized with approval.

The philosophical basis underlying the legislation which confers remedial powers on the Commission was stated by the Circuit Court of Appeals for the Seventh Circuit in the Sears, Roebuck & Company case, as follows:

With the increasing complexity of human activities many situations arise where governmental control can be secured only by the "board" or "commission" form of legislation. In such instances Congress declares the public policy, fixes the general principles that are to control, and charges an administrative body with the duty of ascertaining within particular fields from time to time the facts which bring into play the principles established by Congress.

Though the action of the Commission in finding of facts and declaration of them to be specific offenses of the character embraced within the general definition by Congress may be deemed to be quasi legislative, it is so only in the sense that it converts the actual legislation from a static into a dynamic condition. But the converter is not the electricity. And though the action of the Commission in ordering desistance may be counted quasi-judicial on account of its form, with respect to power it is not judicial because a judicial determination is only that which is embodied in a judgment or decree of a court and enforceable by execution or other writ of the court.

On the fact of this statute the legislative intent is apparent. The Commissioners are not required to aver and prove that any competitor has been damaged or that any purchaser has been deceived. The Commissioners, representing the Government as parens patriae, are to exercise their common sense, as informed by their knowledge of the general idea of unfair trade at common law,

and stop all those trade practices that have a capacity or a tendency to injure competitors directly or through deception of purchases, quite irrespective of whether the specific practices in question have yet been denounced in commonlaw cases. But the restraining order of the Commissioners is merely provisional. The trader is entitled to his day in court, and there the same principles and tests that have been applied under the common law or under statutes of the kinds hereinbefore recited are expected by Congress to control.

This prima facie reading of legislative intent is confirmed by reference to committee reports and debates in Congress, wherein is disclosed a refusal to limit the commission and the court to a prescribed list of specific acts (Congressional Record, 63d Cong., 2d sess., pp. 13, 18, 533, 12246; supra p. 311; 258 Fed. 307).

In addition to these matters of basic import there are a number of incidental points concerning the bill which may be mentioned. Deprived of its power to decide cases the relation between the Commission and its attorneys would be much like that existing between a United States district attorney and his assistants. The question would then arise as to why there need be any commission at all, and why, if it be desirable to put the decision in the hands of a single judge without specialized experience, it would not be equally desirable to place matters of investigation and prosecuting in the hands of district attorneys without specialized experience.

The point need not be labored that the Commission is better able than the courts to make the decisions involved, for the courts have often said so themselves. By no possible arrangement could each of the district courts duplicate the Commission's advisory staff.

In addition, the five Commissioners are presumably chosen by the President with a view to their special fitness to deal with the particular matters committed to the Commission's jurisdiction.

The bill would not only give the power of decision to nonexpert single judges, but it enlarges the scope of the remedy available to a point which may be dangerous. The court may enter "such order, in the nature of a permanent injunction, as it shall deem appropriate' H. R. 3871, sec. 2 (c)). By contrast the Federal Trade Commission may only enter an order requiring the respondent "to cease and desist from using such method of competition or such act or practice" (Federal Trade Commission Act, sec. 5 (b)).

The Commissioners, because of their short terms and because Federal judges have a constitutional life tenure, are presumably more responsive to the will of Congress than such judges. The idea that the Commission acts as prosecutor, judge, and jury involves the idea that the President may appoint and the Senate may confirm men who maladminister their trust.

While such an appointment might at some time be made, there is no reason to believe that the President and the Senate would be any more fortunate in their selection of judges who are responsive to the will of Congress than in the selection of Commissioners.

The present act provides the public and respondents with a more complete trial of the facts than the courts can supply and affords all of the legal protection which the proposed bill offers. This would be true even if crowded court dockets would permit as expeditious trials. Those who make a business of deceiving or exploiting the public can be more quickly and more adequately dealt with by those there who can devote their entire time to that business.

Some significant statements appear in the final report of the Attorney General's Committee on Administrative Procedure to the effect that:

The 94 Federal district and Territorial courts are structurally incapable of the same uniformity in the application of law as a single centralized agency. The need of bringing to. bear upon difficult social and economic questions the attention of those who have tiine and facilities to become and remain continuously informed about the was recognized very early (p. 15).

* * *

It is thus apparent that varied types of subject matters have been entrusted by Congress to administrative agencies at least in part for similar reasons: In order to assure continuous attention to and clearly allocated, responsibility for the effectuation of legislative policies (p. 17).

For example, Congress, believing it necessary to supervise and check competitive practices which tended toward monopoly and restraint of trade, in 1914 created the Federal Trade Commission * * (p. 16).

Another significant statement is taken from a work of the Brookings Institution to this effect:

*

*

*

Administrative courts can handle public-law cases much better than the ordinary courts. * In public-law controversies the judicial authorities are dealing with a subject matter which in the majority of instances is quite separate and distinct from the subject matter of private law. It is often so complex and technical that only a judge who is thoroughly familiar with its intricacies can possibly make a reasonable and properly balanced decision.

Thorough knowledge of specialized subject matter by the court is a very great advantage of administrative adjudicating agencies of every kind. Where a high degree of expertness and administrative knowledge is necessary for a correct and fair decision, or where facts and figures must be gathered and correlated in order that the decision may correspond with present-day reality, some special kind of administrative tribunal is likely to be the best means of meeting the situation. * * Since administrative adjudicatory authorities handle only administrative cases, they can secure a far better and more detailed knowledge of the subject matter involved in the different branches of administration than can the ordinary judicial courts, which must deal with the wide fields of criminal and civil law as well as with public law (Administrative Legislation and Adjudication, by the Brookings Institution, pp. 209, 210, 216, and 217).

*

As I have already indicated in my statement, the O'Hara bill involves a fundamental change in theory and policy of government as well as in the distribution of governmental powers. The theory of the bill is that there should be no commingling in one agency of functions that are quasi-legislative, quasi-judicial, and quasi-executive.

Such a theory goes far beyond the latest action of Congress in dealing with that question. After years of investigation by the Attorney General's Committee on Administrative Procedure, by the American Bar Association, by the House and Senate Judiciary Committees, and by the full House of Representatives and Senate of the United States, Congress unanimously passed the Administrative Procedure Act which was approved June 11, 1946.

That act dealt comprehensively with the subject of procedure before administrative agencies including the Federal Trade Commission on which Congress had in numerous instances conferred remedial powers and commingled functions, but contented itself with safeguarding against possible abuses by requiring a more effective internal separation between the investigative, prosecuting, and deciding functions of all such agencies. It should be emphasized that the Federal Trade Commission was created by Congress primarily as a branch of the legislative branch of the Government and made directly responsible to Congress. It was not created as a court and is not a part of

the judicial branch of the Government. It was created to do for Congress certain things that Congress desired done but could not in a practical way do for itself. The standards of unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce declared to be unlawful by Congress in section 5 of the Federal Trade Commission Act were purposely not defined.

In House Report No. 1142, at the Sixty-third Congress, second session, September 4, 1914, the House Managers of the Conference Committee reported with reference to the Federal Trade Commission Act the following:

There

It is impossible to frame definitions which embrace all unfair practices. is not limit to human inventiveness in this field. Even if all known unfair practices were specifically defined and prohibited, it would be at once necessary to begin over again.

If Congress were to adopt the method of definition, it would undertake an endless task. It is also practically impossible to define unfair practices so that the definition will fit business of every sort in every part of this country. Whether competition is unfair or not generally depends upon the surrounding circumstances of the particular case. What is harmful under centain circumstances may be beneficial under different circumstances.

In the case of Federal Trade Commission v. Raladam Company (283 U. S. 643), the Supreme Court, speaking through Justice Sutherland, in part stated:

The bill which was the foundation of the act, as it first passed the Senate, declared "unfair competition" to be unlawful. Debate apparently convinced the sponsors of the legislation that these words, which had a well-settled meaning at common law were too narrow. When the bill came from conference between the two Houses, these words had been eliminated and the words "unfair methods of competition" substituted.

Undoubtedly the substituted phrase has a broader meaning but how much broader has not been determined. It belongs to that class of phrases which does not admit of precise definition, but the meaning and application of which must be arrived at by what this Court elsewhere has called "the gradual process of judicial inclusion and exclusion."

Continuing this discussion in the case of Schechter Corporation v. United States (295 U. S. 495), the Supreme Court, speaking through Chief Justice Hughes, in part stated:

The Federal Trade Commission Act— section 5

introduced the expression "unfair methods of competition" which were declared to be unlawful. That was an expression new in the law. Debate apparently convinced the sponsors of the legislation that the words "unfair competition," in the light of their meaning at common law were too narrow. We have said that the substituted phrase has a broader meaning, that it does not admit of precise definition, its scope being left to judicial determination as controversies arise. * * * What are "unfair methods of competition" are thus to be determined in particular instances, upon evidence, in the light of particular competitive conditions and substantial public interest.

To make this possible Congress set up a special procedure. A commission, a quasi-judicial body, was created. Provision was made for formal complaint, for notice and hearing, for appropriate findings of fact supported by adequate evidence, and for judicial review to give assurance that the action of the Commission is taken within its statutory authority.

Of course, Congress has the power, the duty, and the responsibility of determining public policy regarding these matters, but the O'Hara bill seems to reflect a philosophy of government which would reopen a basic controversy supposedly long since settled in the public interest.