One hundred years ago today, Congress created the Bureau of Corporations, predecessor to the Federal Trade Commission. The Bureau was created as an investigatory agency within the Department of Commerce and Labor, also created on February 14, 1903.
The modern research tradition at the Commission and current projects, such as the generic drug study, are the direct descendants of the work of the Bureau of Corporations. Over its twelve years of existence, the Bureau produced a legacy of respected reports. Its 1906 report on petroleum transportation made recommendations that became part of that year's Hepburn Act. Its investigation and report on the petroleum industry facilitated the government's prosecution of Standard Oil. The Bureau also conducted studies of other major industries, including tobacco, steel and lumber.
In 1915, the FTC replaced the Bureau of Corporations. Then Commissioner of Corporations, Joseph E. Davies, became the FTC's first Chairman. The FTC found its first chief economist in Francis Walker, former Deputy Commissioner of Corporations, who stayed with the FTC for a tenure of 26 years. The new Commission inherited both staff and ongoing investigations from the Bureau of Corporations.
The Bureau of Corporations' legacy of industrial study continued in the new agency, especially in the Economics Division (which in 1954 became the Commission's Bureau of Economics). For example, the FTC's "Report on Cooperation in American Export Trade" (1916) led to the passage of the Webb-Pomerene Export Trade Act of 1918. An extensive report on utilities corporations contributed to passage of the Public Utilities Holding Company Act of 1935, the Natural Gas Act of 1938, the Securities Act of 1933, and expansion of Federal Power Commission authority through the Federal Power Act of 1935. While undertaking a sweeping investigation of American industry, the Temporary National Economic Committee (TNEC) received several economic reports from FTC staff between 1938 and 1941. The most important document for TNEC examined the relative efficiency of large, medium, and small firms based on accounting cost data.
From stocks to oil to antibiotics, reports by the Commission and its staff played a crucial role in economic policy. A series of related reports, including "The Merger Movement: A Summary Report" (1948) supported passage of the Celler-Kefauver Act of 1950, which made asset transfers as well as stock sales subject to the merger provisions of the Clayton Act. Other influential reports include the 1952 international petroleum cartel study and the 1958 report on antibiotics manufacture. The next decade saw the 1964 staff report on cigarette advertising and output. That report was the precursor to a trade regulation rule, which led to the first Congressional legislation on cigarette health warnings.
The agency also studied such issues as concentration in food manufacturing, mergers in food retailing, dairy mergers, drug industry profitability, and conglomerate mergers. Notable efforts from the 1970s included studies of energy markets, undertaken at Congressional request, and a 1977 report on the promotion of prescription drugs. Significant reports from the 1980s included studies of hospital competition and certificate of need laws, mergers in the petroleum industry, and generic drug substitution. In the 1990s, the Commission or its staff reported on global competition, the multi-state tobacco settlement, the effects of state gasoline divorcement laws, self-regulation in the alcohol industry, and weight loss advertising. More recent studies include reports on "Competition Policy in the World of B2B Electronic Marketplaces," slotting allowances, generic drug entry prior to patent expiration, and online privacy.
Not only has the Commission presented views in general public reports and reports to Congress, it often has presented the results of studies to other federal agencies and to state agencies and legislatures through the Commission's competition and consumer advocacy program. Some significant filings were comments to the Federal Communications Commission on price-cap versus rate-of-return regulation for long-distance telephone rates, comments to the Department of Transportation on airport slot regulation, comments to the Food and Drug Administration on health claims for cereals, and comments to the International Trade Commission on costs of trade restraints. These filings contained empirical research on each specific regulatory issue. Other notable advocacy comments include those filed with the Federal Energy Regulatory Commission and the states on electricity deregulation.
Beginning one hundred years ago with the Bureau of Corporations, the tradition of studies and reports continues today, extending across the agency's competition and consumer protection missions.