Procedure upon applications for complaint. Procedure upon formal complaints.. Provisions of Wheeler-Lea amendment.- Survey of radio and periodical advertising.. PART III. SETTLEMENT OF CASES BY STIPULATION Corrective action through informal conferences_ PART IV. TRADE PRACTICE CONFERENCES Establishment and administration of trade practice rules for Group I and Group II rules explained... Conference and rule making activities during year-- 62 Appropriation acts providing funds for Commission work..... ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDED JUNE 30, 1948 INTRODUCTION ACTS ADMINISTERED BY THE COMMISSION The Federal Trade Commission herewith submits its report for the fiscal year July 1, 1947, to June 30, 1948. The Federal Trade Commission is one of the oldest administrative agencies of the Federal Government. It was organized March 16, 1915, pursuant to the Federal Trade Commission Act, which was approved September 26, 1914. A bipartisan agency, it consists of five members, who are appointed for 7-year terms by the President with the advice and consent of the Senate. Not more than three of them may be members of the same political party. Under the terms of its organic act, as well as four other statutes committed to its jurisdiction, the Commission devotes itself to activities designed to foster the successful operation, in the public interest, of the American economic system of free competitive enterprise. To this end, it seeks to prevent the use in interstate commerce of "unfair methods of competition and unfair or deceptive acts or practices." In addition, it administers other statutes passed by the Congress to supplement the antitrust laws and to provide specific protection to the consuming public. Its duties fall into two general categories: (1) legal activities in the enforcement of the laws it administers and (2) general investigations of economic conditions in interstate and foreign commerce. The Federal Trade Commission was established in response to the need demonstrated in the early 1900's for an administrative body to deal with trade practices on a continuing and preventive basis. Passage in 1914 of the Federal Trade Commission Act, as well as the Clayton Antitrust Act, certain sections of which are administered by the Commission, was intended to provide an effective supplemental means of carrying out the public policy expressed in the Sherman Antitrust Act of 1890. It was the purpose of these laws to stop monopolistic and other unfair practices in their incipiency. As originally enacted, the Federal Trade Commission Act declared "unfair methods of competition" to be unlawful and directed the Commission to take action against persons or corporations believed to be engaged in such practices. The action to be taken by the Commission was prophylactic in nature, not punitive. On the basis of the general legislative standard laid down in the act, the exact meaning and application of which must be arrived at by what has been described as "the gradual process of judicial inclusion and exclusion," the Commission has acted in the public interest to prohibit practices which, in the words of the Supreme Court, were "regarded as opposed to good morals because characterized by deception, bad faith, fraud, or oppression, or as against public policy because of their dangerous tendency unduly to hinder competition or create monopoly." Twenty-three years after its passage, the Federal Trade Commission Act was amended on March 21, 1938, when the Wheeler-Lea Act was approved, making unlawful not only "unfair methods of competition" but also "unfair or deceptive acts or practices in commerce." One of the principal purposes of the amendment was make it unnecessary for the Commission to offer evidence to establish injury to an actual or potential competitor. Injury to the public was now sufficient to warrant Commission action. Under other provisions of the Wheeler-Lea Act, the Commission's jurisdiction over false advertising of foods, drugs, cosmetics, and curative devices was strengthened and broadened. The general effect of the amendment was to give a greater measure of protection to the consuming public and to make more effective the orders issued by the Commission. The Commission is also empowered, under its basic statute, to make general economic investigations, to submit the resulting reports to the Congress or to the President, and to make recommendations for remedial legislation where needed. Publication of such reports has resulted in voluntary changes in the conduct of business in many industries to correct uneconomic or otherwise harmful trade practices spotlighted by the Commission's investigation. Other statutes, besides the Federal Trade Commission Act, administered in whole or in part by the Commission are the Clayton Act, the Webb-Pomerene Export Trade Act, the Wool Products Labeling Act, and certain sections of the Lanham Trade-Mark Act In the administration of these acts, the principal responsibilities of the Commission are: (1) To promote free and fair competition in interstate commerce in the interest of the public through prevention of price-fixing agreements, boycotts, combinations in restraint of trade, other unfair methods of competition, and unfair and deceptive acts and practices (Federal Trade Commission Act, sec. 5). (2) To safeguard the consuming public by preventing the dissemination of false or deceptive advertisements of foods, drugs, cosmetics, and devices (Federal Trade Commission Act, secs. 12 to 15). (3) To prevent certain unlawful price and other discriminations, exclusive-dealing and tying contracts and arrangements, acquisitions of the stock of competitors, and interlocking directorates (Clayton Act, secs. 2, 3, 7, and 8). (4) To protect producers, manufacturers, distributors, and consumers from the unrevealed presence of substitutes and mixtures in manufactured wool products (Wool Products Labeling Act of 1939). ELIMINATION OF UNLAWFUL PRACTICES 3 (5) To supervise the registration and operation of associations of American exporters engaged solely in export trade (Export Trade Act). (6) To apply for cancellation of registered trade-marks which are deceptive, immoral, or scandalous, or which have been obtained fraudulently, or which are in violation of other provisions of the Lanham Trade-Mark Act (Lanham Trade-Mark Act of 1946). (7) To gather and make available to the President, the Congress, and the public, factual data concerning economic and business conditions as a basis for remedial legislation where needed, and for the guidance and protection of the public (Federal Trade Commission Act, sec. 6). INDUSTRY-WIDE ELIMINATION OF UNLAWFUL PRACTICES For many years the Commission has sought to encourage voluntary compliance with the laws which it administers. It has utilized individual stipulation-agreements and conferences with whole industries and has otherwise cooperated with businessmen to inform and guide them with respect to the scope and meaning of the laws within its jurisdiction. A cooperative procedure similar to trade-practice conferences was first used by the Commission in about 1919; a Trade Practice Conference Division was established in 1926; and the present active list of trade-practice conference rules covers about 160 industries. These procedures to encourage more general observance of the laws administered by the Commission were given increased impetus under the reorganization plan placed in effect during the previous fiscal year. Designed to permit more prompt, equitable, and economical settlement of the issues involved than is otherwise possible, the program developed under this plan calls for emphasis upon simultaneous industry-wide action and expansion of the cooperative phases of the Commission's work. With greater emphasis placed on the use of cooperative means, industry members are given an opportunity, where circumstances permit, to eliminate unfair methods of competition or unfair or deceptive practices through stipulation-agreements to cease and desist, or through the establishment of trade practice rules. The Commission holds trade practice conferences either upon its own motion or upon request from an industry where such a proceeding appears an appropriate means of eliminating unfair trade practices. Cases are not disposed of, however, by voluntary agreement, either through trade practice conference proceedings or through stipulationagreements, where there are involved violations of the Clayton Act, combination or collective action in restraint of trade, or practices which are fraudulent or inherently dangerous to health. (The Commission's policy in such matters is set forth at p. 113.) During the fiscal year 1948, the program was continued, with industry-wide investigations conducted among automobile dealers in New York City and the District of Columbia, and in the following industries: Cast iron soil pipe, cheese, simulated and cultured pearls, floor wax products, shampoo and scalp preparations, wallpaper cleaning preparations, crib and carriage mattresses, and orthopedic or "health" |