INTRODUCTION POWERS AND DUTIES OF THE COMMISSION AMENDMENT OF FEDERAL TRADE COMMISSION ACT GENERAL LEGAL ACTIVITIES TRADE PRACTICE CONFERENCES PROGRESS UNDER THE ROBINSON-PATMAN ACT ILLEGAL STOCK ACQUISITIONS PERIODIC INDUSTRY REPORTS NATIONAL ECONOMIC COMMITTEE GENERAL INVESTIGATIONS COMMISSIONERS AND THEIR DUTIES HOW COMMISSION WORK IS HANDLED PUBLICATIONS OF THE COMMISSION COMMISSION OCCUPIES NEW QUARTERS RECOMMENDATIONS ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDED JUNE 30, 1938 INTRODUCTION POWERS AND DUTIES OF THE COMMISSION The Federal Trade Commission herewith submits its report for the fiscal year, July 1, 1937, to June 30, 1938. Organized March 16, 1915, under the Federal Trade Commission Act, approved September 26, 1914, which was amended March 21, 1938, the Commission is an administrative agency. Its functions are chiefly: (1) to prevent unfair methods of competition and unfair or deceptive acts or practices in interstate and foreign commerce; (2) to make investigations at the direction of Congress, the President, the Attorney General, or upon its own initiative; (3) to report facts in regard to alleged violations of the antitrust laws; (4) to prevent price and other discriminations in violation of Section 2 of the Clayton Act as amended by the Robinson-Patman Act; (5) to prevent exclusive dealing contracts, capital-stock acquisitions and interlocking directorates in violation of Sections 3, 7, and 8, respectively, of the Clayton Act, and (6) to administer the Webb-Pomerene or Export Trade Act, aimed at promotion of foreign trade by permitting the organization of associations to engage exclusively in export trade, and providing that nothing contained in the Sherman Act shall be construed as declaring to be illegal any combinations or "associations" entered into for the sole purpose of engaging in, and actually solely engaged in, export trade. In performing these functions, the Commission's duties fall into two categories, namely, (1) legal activities in enforcement of the laws it administers, and (2) general investigations of economic conditions in domestic industry and interstate and foreign commerce. Legal activities have to do with (1) prevention and correction of unfair methods of competition and unfair or deceptive acts or practices, in accordance with Section 5 of the Federal Trade Commission Act, in which it is declared that unfair methods of competition and unfair or deceptive acts and practices in commerce are unlawful; (2) administration of Section 2 of the Clayton Act, as amended by the Robinson-Patman Act, dealing with price discriminations and other discriminations, and Sections 3, 7, and 8 of the Clayton Act dealing with tying and exclusive dealing contracts, acquisitions of capital stock, and interlocking directorates, respectively, and (3) administration of the Webb-Pomerene or Export Trade Act. In connection with its foreign-trade work, the Commission has the power under section 6 (h) of the Federal Trade Commission Act, to investigate, from time to time, trade conditions in and with foreign countries where associations, combinations, or practices of manufacturers, merchants, or traders, or other conditions, may affect the foreign trade of the United States, and to report to Congress thereon, with such recommendations as it deems advisable. The general investigational and economic work of the Commission arises chiefly under section 6 (a), (b), and (d) of the Federal Trade Commission Act, giving the Commission power (a) To gather and compile information concerning, and to investigate, from time to time, the organization, business, conduct, practices, and management of any corporation engaged in commerce, excepting banks and common carriers * * and its relation to other corporations and to individuals, associations, and partnerships. commerce * * (b) To require, by general or special orders, corporations engaged in com merce, excepting banks, and common carriers subject to the act to regulate to file with the Commission in such form as the Commission may prescribe annual or special, or both annual and special, reports or answers in writing to specific questions, furnishing to the Commission such information as it may require as to the organization, business, conduct, practices, management, and relation to other corporations, partnerships, and individuals of the respective corporations filing such reports or answers in writing. * (d) Upon the direction of the President or either House of Congress to investigate and report the facts relating to any alleged violations of the antitrust acts by any corporation. An investigation under section 6 (d) of the organic act, when requested by Congress, is undertaken by the Commission as a result of a concurrent resolution of both Houses. This is in conformity with the United States Code (48 Stat. 291, 15 U. S. C. A., sec. 46a), and the Independent Offices Appropriation Act, 1934 (Public, No. 78, 73d Cong.). AMENDMENT OF THE FEDERAL TRADE COMMISSION ACT The Federal Trade Commission Act, basis of a major portion of the Commission's activities, which was passed in 1914 as a part of President Wilson's legislative program, was amended on March 21, 1938, in the passage of Public, No. 447, Seventy-fifth Congress, third session, sometimes known as the Wheeler-Lea Act. This act is purely amendatory, its provisions having been incorporated and integrated entirely in the provisions of the Federal Trade Commission Act. Sections 1, 4, and 5 of the Federal Trade Commission Act of 1914 were amended and 7 new sections, 12 to 18, inclusive, added. Principal amendments are: (1) Declaring unfair or deceptive acts or practices in commerce unlawful. (2) Providing that the Commission's cease and desist orders shall become final within 60 days from date of service unless appealed from by the respondents. (3) Fixing the time when the Commission's orders from which appeals have been taken by respondents shall become final. (4) Providing civil penalties not to exceed $5,000 for violations of orders to cease and desist after they shall have become final. (5) Specifically making unlawful the dissemination or the causing of the dissemination of false advertisements of food, drugs, devices, or cosmetics, and defining "advertisements," "food," "drugs," "devices," and "cosmetics." If the use of the commodity advertised may be injurious to health when used under the conditions prescribed in the advertisement or under customary or usual conditions, or if there be intent to defraud or mislead, the dissemination, or the causing of the dissemination, becomes a misdemeanor with a penalty of fine or imprisonment, or both. Further, the Commission is authorized, when it appears to be in the public interest, to proceed in a United States District Court by injunction to halt an existing or to prevent a threatened violation of the provisions above referred to, pending the issuance by it of a complaint and a final determination thereunder. Other amendments are minor in character, largely procedural or clarifying. Unfair or deceptive acts or practices.-The Commission had previously recommended in its annual report that section 5 of its organic act be so amended as to declare unlawful, not only "unfair methods of competition," as the original act declared, but also "unfair or deceptive acts or practices." The reason for the recommended amendment was that there were some unfair or deceptive commercial practices which primarily injured the public rather than competitors, and in many cases, injury to competitors being difficult to show, the Commission was frequently put to much trouble, delay, and expense in proving competition and injury thereto. Finality of cease and desist orders.-The Commission also recommended the amendments now incorporated in its organic act which |