Federal Trade Commission

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The Federal Trade Commission (FTC) is an independent  federal administrative agency, created by Congress in 1914 with the FTC Act. The FTC  is composed of five Commissioners appointed by the President and confirmed by the Senate. Each Commissioner serves a seven-year term. The Commission may not have more than three Commissioners belonging to the same political party. The FTC has a Bureau of Competition, a Bureau of Consumer Protection and a Bureau of Economics, and several other offices that support the activities performed by the FTC.

In general, the main functions of the FTC are the following:

  • Consumer Protection: The FTC investigates natural persons or entities to prevent and impede unfair, deceptive, or fraudulent practices in the marketplace. 
    • For example, the FTC may impose penalties on a corporation for violating consumer’s privacy.
    • The FTC also educates consumers and businesses about their rights and responsibilities under the law.
  • Competition Promotion: The FTC enforces antitrust laws by preventing natural persons or entities from using unfair methods of competition or unfair or deceptive acts or practices that may affect commerce in the United States.
    • For example, the FTC may challenge a merger that may have an anti-competitive effect on the relevant market.
    • The FTC can take two courses of action against a party possibly violating antitrust laws: 
      • First, it can pursue an internal administrative action, bringing the claim against the violating party before an administrative law judge, whose decision will be reviewed by the 5 commissioners. 
      • In addition to this, the FTC can file a federal court action in order to obtain a preliminary injunction to block the potential antitrust violation, such as a merger, while the FTC reviews the potential violation through its internal administrative action.

The FTC has concurrent jurisdiction with the Department of Justice to enforce both the Clayton Act and the Sherman Act

[Last updated in December of 2022 by the Wex Definitions Team]