Of all the regulatory agencies, the Federal Trade Commission (FTC) is one of the most important, both in its power to influence American business transactions and in its potential to reveal vital information about the regulatory process. Regarded in the late 1960s as inactive and ineffective, the current FTC, buttressed by substantial grants of power from Congress and the courts, is no longer content to concentrate on cases and enforcement dealing with single small firms or narrow areas of law. Rather, it has attacked whole industries, challenging both their structure and practices. Because it can impose wide-reaching rules with the force of law, the FTC has been called “the second most powerful legislative body in the United States … [with the power] to alter the structure of an industry.”

Two 1969 reports, both highly critical of the FTC, sparked this new approach to regulation. Understanding these reports and their impact is important because of their ultimate effect on the FTC. Section I of this chapter provides this background and briefly summarizes some of the steps the FTC has taken to achieve its current prominence. Section II then presents the plan of study.

Transformation of the FTC: 1969–70

The Commission until 1969

Two aspects of the FTC's history before 1969 help place the critical reports of that year in context. First, the Commission concentrated on trivia, focusing on small firms and narrow points of law.