PART III. GENERAL LEGAL WORK

DESCRIPTION OF PROCEDURE

A case before the Federal Trade Commission may originate in several ways. The most common origin is through application for complaint by a competitor or from other public sources. Another way in which a case may begin is by direction of the Commission.

No formality is required for anyone to make an application for a complaint. A letter setting forth the facts in detail is sufficient, but it should be accompanied by all evidence in possession of the complaining party in support of the charges being made.

INFORMAL PROCEDURE

When such an application is received, the Commission, through its legal investigating division, considers the essential jurisdictional elements. Is the practice complained of being carried on in interstate commerce? Does it come under jurisdiction of the Federal Trade Commission? Would the prosecution of a complaint in this instance be in the public interest?

It is essential that these three questions be capable of answer in the affirmative.

Frequently it is necessary to obtain additional data by further correspondence or by a preliminary investigation before deciding whether to docket an "application for issuance of complaint."

Once an application is docketed it is assigned by the chief examiner to an examining attorney or a branch office of the Commission for investigation. It is the duty of either to obtain all facts regarding the matter from both the applicant and the proposed respondent.

Without disclosing the name of the applicant, the examiner interviews the party complained against, advising of the charges and requesting submission of such evidence as is desired in defense or explanation.

After developing the facts from all available sources, the examining attorney summarizes the evidence in a final report, reviews the law applicable thereto, and makes a recommendation as to action.

The entire record is then reviewable by the chief examiner. If it appears to be complete, it is submitted with recommendation to the board of review or to the Commission for consideration. Recommendations for dismissal outright or upon the signing by the proposed

respondent of a stipulation of facts and an agreement to cease and desist from the unlawful practice charged ordinarily are sent direct to the Commission. Recommendations for complaint and for certain types of stipulations go to the board of review.

If submitted to the board of review, all records, including statements made by witnesses interviewed by the examiners, are reviewed and passed on to the Commission with a detailed summary of the facts developed, an opinion based on the facts and the law, and the board's recommendation.

The board may recommend (1) dismissal of the application for lack of evidence in support of the charge or on the ground that the charge indicated does not violate any law over which the Commission has jurisdiction, or (2) dismissal of the application upon the signing by the proposed respondent of a stipulation of the facts and an agreement to cease and desist the unlawful practice charged, and (3) issuance of a complaint without further procedure.

Usually if the board believes that complaint should issue, it grants the proposed respondent a hearing. Such hearing is informal, involving no taking of testimony.

The procedure as outlined thus far is applied in all cases except those pertaining to false and misleading advertising in newspapers and periodicals as handled by the special board of investigation. (See p. 131.)

FORMAL PROCEDURE

Only after most careful scrutiny does the Commission issue a complaint. The complaint and the answer of respondent thereto and subsequent proceedings are a public record. The case is now in charge of the Commission's chief counsel for preparation of complaint and trial of the case before the Commission.

A complaint is issued in the name of the Commission acting in the public interest. It names a respondent and charges a violation of law, with a statement of the charges. The party first complaining to the Commission is not a party to the complaint when issued by the Commission, nor does the complaint seek to adjust matters between parties: The proceeding is to prevent unfair methods of competition for the protection of the public.

The Commission's rules of practice and procedure provide that in case the respondent desires to contest the proceedings he shall, within 30 days from service of the complaint, file with the Commission an answer to the complaint. The rules of practice also specify a form of answer for use should the respondent decide to waive hearing on the charges and not contest the proceeding.

Failure to appear or to file an answer within the time specifiedshall be deemed to be an admission of all allegations of the complaint and to authorize the Commission to find them to be true and to waive hearing on the charges set forth in the complaint.

In a contested case the matter is set down for taking of testimony before a trial examiner. This may occupy varying lengths of time according to the nature of the charge or the availability and number of witnesses to be examined. Hearings are held before a Commission trial examiner, who may sit in various parts of the country, the Commission and the respondent each being represented by its own attorneys.

After the taking of testimony and the submission of evidence on behalf of the Commission in support of the complaint, and on behalf of the respondent, the trial examiner prepares a report of the facts for the information of the Commission, counsel for the Commission, and counsel for the respondent. Exceptions to the trial examiner's report may be taken by counsel for either side.

Within a stated time after receipt of the trial examiner's report, briefs are filed and the case comes on for final argument before the full Commission. Thereafter the Commission reaches a decision either sustaining the charges of the complaint or dismissing the complaint.

If the complaint is sustained, the Commission makes a report in which it states its findings as to the facts and conclusion that the law has been violated, and thereupon an order is issued requiring the respondent to cease and desist from such practices.

If the complaint is dismissed, an order of dismissal is entered. These orders constitute the final functions of the Commission as far as its own procedure is concerned.

CASES MAY BE TAKEN TO FEDERAL COURTS

No penalty is attached to an order to cease and desist, but a respondent against whom it is directed is required within a specified time, usually 60 days, to report in writing the manner in which he is complying with the order. If he fails or neglects to obey an order while it is in effect, the Commission may apply to a United States circuit court of appeals for review of the Commission's order.

The respondent may also petition for review. The circuit courts have power to affirm, modify, or set aside the order of the Commission. These proceedings may be carried by either party on certiorari to the Supreme Court of the United States for final determination.

LEGAL INVESTIGATION AND REVIEW

PRELIMINARY INQUIRIES PRIOR TO FORMAL COMPLAINT

The legal investigating work of the Commission embraces all new cases brought before the Commission upon application for complaint. and the disposition of these cases up to the point where they are passed on to the board of review for further recommendation or sent to the Commission.

This investigational work is supervised by the chief examiner. It includes the investigation of complaints preliminary to the taking of formal action for the correction of such unfair methods of competition under the law administered by the Commission as may be found to exist.

Tables showing the number of legal investigations handled since the work began will be found on pages 106 and 107. When the present fiscal year began there were pending 423 preliminary or undocketed cases of alleged unfair methods of competition. During the year 1593 new applications for complaint were received. Preliminary investigations were made by the chief examiner in 1538 of these cases, leaving 478 undocketed applications for complaint yet to be handled.

Of the preliminary cases, 264 were docketed as regular applications for complaint. These, with 137 pending at the first of the year, totaled 401, of which 287 were disposed of during the year.

A number of the attorneys of the chief examiner's staff usually assigned to the investigation of regular complaints were engaged on the special inquiries being made pursuant to Senate resolutions, namely, cottonseed, peanut prices, cement, and building materials. However, the regular work has been kept well in hand, notwithstanding the fact that no vacancies could be filled or new appointments made. This is evidenced by the fact that the average length of time on all docketed applications as of June 15 of the present year was but 7 days more than of the same date last year.

The chief examiner also conducts, by direction of the Commission or on requests of different units of the Commission, supplemental investigations as follows: (1) In matters originating with the special board of investigation; (2) where additional evidence is necessary in connection with formal complaints; (3) where it appears or is charged that cease and desist orders of the Commission are being violated; and (4) where it appears that stipulations entered into between the respondent and the Commission to cease and desist from unfair competitive practices are not being kept in good faith.

The legal investigating work of the Commission is directed from its main office in Washington and carried on through that office and the four branch offices situated at 45 Broadway, New York City; 608 South Dearborn Street, Chicago; 544 Market Street, San Francisco; and 801 Federal Building, Seattle. Business men may confer at these places with qualified representatives of the Commission regarding cases and with reference to rulings made by the Commission.

BOARD REVIEWS CASES FOLLOWING INQUIRIES

Following preliminary investigation by the chief examiner's staff, 98 applications for complaint were reviewed by the board of review, which consists normally of five lawyers. Ninety-seven of these cases