Chapter 13: Problem 6

The importance of the Federal Trade Commission Act of 1914 is that it a. set up an independent antitrust agency with the power to investigate complaints. b. strengthened the law against mergers. c. strengthened the law against price discrimination. d. did none of the above.

Short Answer

Expert verified

The importance of the Federal Trade Commission Act of 1914 is that it set up an independent antitrust agency with the power to investigate complaints.

Step by step solution

Background of the Federal Trade Commission Act of 1914

The Federal Trade Commission Act, passed in 1914, created the Federal Trade Commission (FTC) as an independent regulatory body. The purpose of the FTC is to protect consumers and ensure that businesses engage in fair competition. Its primary focus is to prevent unfair or deceptive practices, anti-competitive behavior, and antitrust violations. Now let's analyze each option:

Option a: Set up an independent antitrust agency with the power to investigate complaints

As stated earlier, the Federal Trade Commission Act of 1914 established the FTC as an independent regulatory agency. The FTC's purpose is to protect consumers and ensure fair competition by investigating and enforcing against anti-competitive practices and antitrust violations. Thus, this option seems correct.

Option b: Strengthened the law against mergers

While the Federal Trade Commission Act of 1914 did address antitrust issues, it did not specifically strengthen the law against mergers. The law's primary focus is on preventing unfair or deceptive practices and ensuring fair competition among businesses. Therefore, this option is not correct.

Option c: Strengthened the law against price discrimination

The Federal Trade Commission Act of 1914 is not focused on strengthening the law against price discrimination. Price discrimination is mainly covered under the Clayton Antitrust Act, which was also enacted in 1914. While the FTC does address some instances of price discrimination, its main goal is to prevent unfair or deceptive practices and ensure fair competition. So, this option is not correct.

Option d: Did none of the above

As we have already analyzed and concluded that option a is correct, option d is not valid.

Conclusion

Based on our analysis, the correct answer is option a: The importance of the Federal Trade Commission Act of 1914 is that it set up an independent antitrust agency with the power to investigate complaints.

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