by it as it shall deem expedient in the public interest, except trade secrets and names of customers.

Under section 6 the Commission derives its authority for conducting general economic investigations into the business practices of industry throughout the country. Under such authority the Commission has conducted many economic inquiries, chiefly at the request of the President, the Senate, or the House, to whom reports have been made, and has gathered and published for the use of the Congress, the executive departments and agencies, and the public, a great deal of information regarding many of the essential industries of the country.

Important laws to which some of the Commission's general investigations above referred to have led, directly or indirectly, include, among others, the Export Trade Act, the Packers and Stockyards Act, the Securities Act of 1933, the Securities Exchange Act of 1938, the Public Utilities Holding Company Act of 1935, the Natural Gas Act of 1938, the present Federal Power Commission Act and the Robinson-Patman Antidiscrimination Act of 1936, which amended section 2 of the Clayton Act.

Important inquiries recently completed and also in progress under section 6 are described on page 679 et. seq.

Section 7 of the organic act provides that in any suit in equity brought by or under the direction of the Attorney General, as provided in the antitrust acts, the court may refer said suit to the Commission, as a master in chancery, to ascertain and report an appropriate form of decree therein.

Other sections of the act give to the Commission authorization for such investigations and the compilation of data, with provisions for procedure under the act, and penalties prescribed for refusal of persons, partnerships, or corporations to furnish such material or to comply with orders of the Commission to testify, produce evidence, or file reports, as required.

Section 12 makes unlawful the dissemination or the causing of the dissemination of any false advertisement "by United States mails, or in commerce by any means, for the purpose of inducing, or which is likely to induce, directly or indirectly, the purchase of food, drugs, devices, or cosmetics; or by any means, for the purpose of inducing, or which is likely to induce, directly or indirectly, the purchase in commerce of any food, drugs, devices, or cosmetics." It also provides that the dissemination or the causing of the dissemination of any such false advertisement shall be an unfair or deceptive act in commerce within the meaning of section 5 of the Federal Trade Commission Act.

Section 13 authorizes the Commission to apply to any district court of the United States or in the United States Court of any Territory for a temporary injunction to enjoin the dissemination or the causing of the dissemination of any false advertisement of food, drugs, devices, or cosmetics whenever it has reason to believe that such injunction, pending final action upon a complaint issued by the Commission under section 5, would be to the interest of the public.

Section 14 provides that any person, partnership, or corporation violating any provision of section 12 (a) shall be guilty of a misdemeanor punishable by fine and imprisonment if the use of the commodity so advertised may be injurious to health because of results from such use under the conditions prescribed in the advertisement thereof, or under such conditions as are customary or usual, or if such violation is with intent to defraud or mislead.

Section 15 defines the term "false advertisement" and also defines "food," "drug," "devices," and "cosmetics."

Section 16 provides that whenever the Commission has reason to believe that any person, partnership, or corporation is liable to the penalty under section 14 or under subsection (1) of section 5, it shall certify the facts to the Attorney General, whose duty it shall be to cause appropriate proceedings to be brought for the enforcement of the provisions of such section or subsection.

THE CLAYTON ACT

The Commission is vested with jurisdiction with respect to sections 2, 3, 7, and 8 of the Clayton Act. Procedure under this act is, with some exceptions, identical with procedure under the Federal Trade Commission Act.

Section 2 of the Clayton Act, as amended by the Robinson-Patman Antidiscrimination Act, declares that it shall be unlawful for any person engaged in commerce, either directly or indirectly to discriminate in price between different purchasers of commodities of like grade and quality, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof, or the District of Columbia, where the effect of such discrimination may be to substantially lessen competition or tend to create a monopoly in any line of

commerce or to injure, destroy, or prevent competition. This section outlaws discriminations in price, services, and facilities and prohibits the payment or receipt of certain brokerage fees and allowances or other compensations, with certain limitations and statutory exceptions provided.

Section 3 prohibits, in certain cases, so-called tying contracts, or contracts whereby, as a condition of sale or lease, the seller or lessor exacts from the purchaser or lessee an agreement that he shall not use or deal in the goods or other commodities of a competitor of the lessor or seller, where the effect of such agreement may be to substantially lessen competition or tend to create a monopoly in any line of commerce.

Section 7 prohibits acquisition by one corporation of the share capital of another corporation engaged in commerce, or acquisition by one corporation of the share capital of two or more corporations engaged in commerce, where the effect, in either case, may be to substantially lessen competition between the acquiring and acquired companies, or to restrain commerce or tend to create a monopoly.

Section 8 prohibits so-called interlocking directorates in cases where one person shall at the same time be a director in any two or more corporations (any one of which has capital, surplus, and undivided profits aggregating more than $1,000,000) engaged in interstate or foreign commerce, other than banks, banking associations, trust companies, and common carriers subject to the act to regulate commerce, if such corporations are or have been competitors, so that the elimination of competition by agreement between them would constitute a violation of any of the provisions of any of the antitrust laws.

THE EXPORT TRADE ACT

This law permits the formation of export associations which are required to file with the Federal Trade Commission copies of their organization papers and current reports as to their operation. Under the terms of the act, such a group shall be engaged solely in export trade, and shall not restrain the trade of a domestic competitor, artificially or intentionally enhance or depress prices in this country, or substantially lessen competition or otherwise restrain trade within the United States.

THE WOOL PRODUCTS LABELING ACT OF 1939

This act provides, in substance, that purchasers shall be informed as to the true content of articles which are made or appear to be made in whole or in part of woolen fiber, and that producers, manufacturers, merchants, and the public generally shall be safeguarded against the deception and unscrupulous competition arising from misbranding or nondisclosure of content. The act, approved by the President October 14, 1940, and effective July 14, 1941, is enforced and administered by the Federal Trade Commission. Wool products coming under the act are required to be labeled so as to disclose the kind and percentage of each different fiber contained therein including the respective percentages of "wool," "reprocessed wool," and "reused wool." Disclosure of the maximum percentage of loading and adulterating material, if any, and the name of the manufacturer of the wool product or the name of a qualified distributor or reseller must also appear as part of the required information. The label or a proper substitute specified by the statute is to remain on the merchandise through the channels of trade until sold or delivered to the purchaser-consumer. Products covered by the act include in general all articles of clothing, blankets, etc., containing or purporting to contain woolen fibers; also the yarns and fabrics of the wool textile industry and the products of manufacturing industries using such yarns and fabrics. General compliance work is conducted throughout the United States by field inspectors of the Commission. Under the act, false and deceptive labeling and failure to properly label products subject to the act is unlawful. Likewise unlawful is the removal or mutilation of required labels from wool products with intent to violate provisions of the act. The Commission is authorized, through its regular procedure, to issue cease and desist orders prohibiting such practices. Under specific authority the Commission is empowered to petition an appropriate United States district court for an injunction to restrain the sale and shipment of misbranded wool products, and is further empowered to invoke the aid of the courts in condemnation proceedings involving merchandise misbranded under the terms of the act. Willful violations are punishable as misdemeanors and may be reported to the Attorney General for prosecution.

THE LANHAM TRADE-MARK ACT OF 1946

Under the Lanham Trade-Mark Act of July 5, 1946, which became effective July 5, 1947, the various trade-mark laws of the United States are incorporated

within a single statute. The Federal Trade Commission is given the duty of making applications for the cancellation of registered trade-marks under certain specified conditions as set forth in subsections (c) and (d) of section 14 of said act and in the administration of the provisions of the act committed to it must maintain liaison with the Patent Office, the Antitrust Division of the Department of Justice, and other Government agencies so as to enable the Commission to properly prepare, submit and prosecute applications for cancellation of those registered trade-marks which have been or are being used contrary to the public interest. The Commission, as applicant, must secure the proper evidence upon which the application for cancellation is based, prepare the application, stating the grounds relied on, and be represented at the hearing before a Patent Office examiner for the purpose of presenting the evidence relied upon and to otherwise prosecute the matter to a conclusion.

THE REORGANIZATION PLAN AND PROGRAM

In February 1946 the Commission submitted to the President a reorganization plan which was designed to expand the cooperative phases of its work and thereby improve and expedite observance of the laws under its jurisdiction, and which the President approved.

The program, put in effect in August 1946 following the provision of funds by the Congress to initiate the same and implement its aims and ideals, contemplates

The undertaking, in appropriate situations, of investigations and the taking of uniform corrective action on an industry-wide basis;

The undertaking of simultaneous formal proceedings against those members of an industry in which unfair practices are found to be prevalent who do not voluntarily agree, either through trade-practice conferences or through stipulations, to abandon such unfair practices;

The placing of greater emphasis on the elimination of unfair trade practices through cooperative means by broadening and strengthening the trade-practice conference procedure and the initiation in appropriate situations of such proceedings by the Commission itself;

The improvement of the informal stipulation procedure in the correction, in proper cases, of unlawful trade practices; and

The avoidance of conflicting action or duplication with the work of the Food and Drug Administration and continued cooperation with it in the seeking of common objectives under the respective statutes.

TRADE PRACTICE CONFERENCE WORK OF THE COMMISSION

Under the reorganization program the trade-practice conference provides the means whereby law enforcement is accomplished on an industry-wide basis and through voluntary cooperation, as opposed to compulsory proceedings against individual offenders. Upon its own motion, or pursuant to industry request filed with it, the Commission invites all of the members of an industry to attend an industry conference to consider practices in the industry and adopt rules covering such practices as are deemed unfair. After further hearing of interested parties, rules are promulgated for the industry and the members thereof given opportunity to indicate their willingness to observe such rules in the conduct of their business. By agreeing to abide by the rules for their industry they, in effect, agree to abandon or refrain from using the unfair practices covered therein. After rules are established for an industry, the same principle of cooperation is applied under the rule administration program to the problem of maintaining continued observance of the provisions against unfair practices.

Trade-practice rules established under this procedure provide for the elimination and prevention of unfair methods of competition, unfair or deceptive acts or practices, and other illegal business methods. There may also be included in the rules provisions for otherwise fostering and promoting fair competitive conditions and ethical standards of business conduct in harmony with the public interest. Rules established for an industry are classified as group I and group II rules. In group I are placed all rules which proscribe practices that are illegal as constituting unfair methods of competition, unfair or deceptive acts or practices, or are otherwise within the inhibitions of laws administered by the Commission. Appropriate proceedings in the public interest will be instituted by the Commission to prevent the use of such unlawful practices in commerce. Group II rules embrace the wholly voluntary or recommended industry practices. However, no such rule is received by the Commission unless the provision is in

harmony with law and the public interest and is constructively in support of the maintenance of fair competitive conditions in the industry.

FALSE AND MISLEADING ADVERTISING CASES

For the purpose of effecting a more direct and expeditious method of handling certain cases involving false and misleading advertising, violative of the provisions of the Federal Trade Commission Act, as amended, the Commission maintains its Division of Radio and Periodical Advertising and its Bureau of Stipulations. Advertisers, publishers, broadcasting stations, and advertising agencies may confer directly with the heads of these divisions, with a view to reaching an agreement in such cases as are appropriate for negotiating a stipulation, thereby disposing of the issues involved and obviating the necessity of formal trial.

By this procedure the advertisers are afforded an opportunity informally to present for consideration such evidence relating to the advertising claims questioned by the Commission as they may care to submit, with a view to determining whether or not a revision of their advertising is required, and to stipulate the discontinuance of any representations which, after a consideration of all the evidence, are determined to be false or misleading. In most cases the results obtained by this procedure are as effective as those that could be accomplished by the issuance of cease and desist orders; and litigation expensive to both the advertisers and the Government is thereby avoided.

INDUSTRIAL ECONOMICS

Since its inception in 1914, the Federal Trade Commission has been engaged in general investigations into broad economic problems. The Commission is empowered by Sec. 6 of the Federal Trade Commission Act to make such investigations and reports upon the direction of the President or either House of Congress, or upon application of the Attorney General, or upon the initiative of the Commission. Many of these reports have contributed significantly to the subsequent development and passage of important pieces of legislation, including the WebbPomerene Act of 1918, the Packers' and Stock Yards Act of 1921, the Grain Futures Act of 1921, the Perishable Commodities Act of 1930, the Radio Act of 1927, the Federal Communications Act of 1934, the Securities Act of 1933, the Public Utilities Holding Company Act of 1935, the Federal Power Act of 1935, the Robinson-Patman Anti-Price Discrimination Act of 1936, and the amendment of the Perishable Agriculture Commodities Act of 1937.

In the fiscal year of 1947, the Commission completed and transmitted to Congress the following reports which presented the results of general investigations: Present Trend of Corporate Mergers and Acquisitions, the Copper Industry, the Sulfur Industry and International Cartels, the Wholesale Baking Industry, Growth and Concentration in the Flour Milling Industry, and Economic Effects of Grain Exchange Actions Affecting Futures Trading During the First Six Months of 1946.

In the current fiscal year, the Commission is making general investigations into such subjects as the continuing trend of mergers and acquisitions, the cost structure of the fertilizer industry, the trends of prices and profits of selected identical companies between 1940 and 1948, and distribution practices of large corporations affecting small business.

In addition, a considerable body of economic information has been presented by the Commission to the Congress in the form of hearings before subcommittees of the House and Senate Judiciary Committees which have been considering proposed amendments to Sec. 7 of the Clayton Act, to give the Commission power to prevent acquisitions of assets, generally similar to its present power over acquisitions of stock. Detailed information has been presented on the extent and character of mergers in a wide variety of different industries. [The material presented to the House of Representatives has been printed as Hearings before Subcommittee No. 2 of the House Judiciary Committee, Eightieth Congress, First Session, on H. R. 515, “Amending Sec. 7 and 11 of the Clayton Act." Insofar as the Senate is concerned, the hearings have not as yet been printed, but the material presented is available at the Senate Judiciary Committee in the form of transcripts of the record.]

In addition to making general investigations into broad economic problems, economic work is involved in the Commission's price-fixing cases, its price discrimination cases, its compliance work, and its trade practice conferences.

Price-fixing cases require an analysis, from an economic viewpoint, of pricing policies and distribution practices in relation to the legal issues of monopolistic

practices, price-fixing, and restraints of trade. Such studies frequently examine pricing "systems" which result in identical prices to a buyer from different producers, regardless of where those producers are located and regardless of the amount of the transportation cost from the producing point to the buyer's location.

Market research frequently discloses the use of a variety of devices such as: (1) books of standard factors for computing freight charges which actually have little or no relation to the real freight charges, but result in identical delivered price quotations from all sellers; and (2) standard commodity classifications and price factors by means of which prices of a wide variety of products are arbitrarily tied to some common base with the result of securing price uniformity. In many instances, it is found that such systems and practices are designed for and result in the avoidance of price competition and in gross discriminations, which may be of such importance as to doom to failure one enterprise in favor of another; and to restrict the growth of industry in one geographical region in favor of another. Economic and accounting work is involved not only in price fixing and conspiracy cases but also in many of the Commission's actions against price discrimination under the Robinson-Patman amendment to the Clayton Act. Such cases may require appraisal of the effects of quantity discounts made by producers to various types of distributors, the nature and extent of price discrimination, and the extent to which the discrimination is justified, as provided in the Robinson-Patman Act, by lower costs associated with greater volume.

In those price discrimination cases in which the Commission makes an industrywide investigation looking toward a proceeding for the fixing of maximum quantity limits, as provided under Sec. 2 (a) of the Clayton Act, the company may offer in defense statistical studies showing a decline in cost with increasing volume. This necessitates an accounting analysis of these data by the Commission to determine their reliability and validity. Extensive economic analysis is involved in making the determination, which is required by the law, as to whether or not the price discriminations practiced are of such a character as to be unjustly discriminatory and promotive of monopoly.

Economic and accounting information is also involved in the Commission's trade practice conference work, specifically on such questions as the extent to which a particular practice is followed by the various segments of an industry; the probable economic implications of the various proposed solutions; the character of a particular practice in one industry as compared with similar practices in other industries; the ways in which a practice prevalent in one industry has been modified or eliminated in other industries, etc.

Finally, the Commission must keep itself currently informed on the occurrence and prevalence of significant economic developments, such as the spread of particular types of unfair trade practices, the occurrence of restraints of trade, the development of monopolistic tendencies, and the existence of discriminatory policies, which are susceptible of action under the laws administered by the Commission.

INDUSTRIAL FINANCIAL REPORTS

Under section 6 of its organic act the Federal Trade Commission is empowered to collect annual or special reports from corporations engaged in commerce (except banks, common carriers, and other corporations specifically exempted by law). The Commission performed this function prior to the war but discontinued the work after the Office of Price Administration obtained similar authority and commenced performing this function.

On December 12, 1946, the President, by Executive Order No. 9809, returned the financial reporting function from the Office of Price Administration to the Federal Trade Commission. Accordingly, the Commission thereupon resumed

its peacetime work in this field.

The plan for resumption of the work was carefully developed after intensive work by an interagency committee on financial statistics, representing nine Government agencies. This committee operated through the Bureau of the Budget as provided for by the Federal Reports Act of 1942, in order to determine the needs of the Government for these data. This committee on financial statistics recommended a program of quarterly and annual financial reports. The work was assigned jointly to the Federal Trade Commission and the Securities and Exchange Commission. The latter is responsible for the collection and compilation of information for corporations with securities listed on a national stock exchange, and the Federal Trade Commission is responsible for the collection of information from a sufficient number of large, medium and