To Amend the Federal Trade Commission Act

The committee met, pursuant to call, at 10:30 a. m. in room 412, Senate Office Building, Senator Burton K. Wheeler presiding. Present: Senators Wheeler (chairman), Neely, Lonergan, Donahey, Moore, Truman, Benson, Couzens, Hastings, White, and Davis. Present also: Ewin L. Davis and Robert E. Freer, members of the Federal Trade Commission; and William T. Kelley, chief counsel of the Federal Trade Commission.

The CHAIRMAN. We will now take up for consideration the bill S. 3744, containing suggested amendments to the Federal Trade Commission Act, which bill is as follows:

[S. 3744, 74th Cong., 2d sess.]

A BILL To amend the Act creating the Federal Trade Commission, to define its powers and duties, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 4 of the Act entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes", approved September 26, 1914, as amended, constituting section 44 of chapter 2, title 15, of the Code of Laws of the United States of America, be, and the same is hereby, amended to read as follows:

SEC. 4. The words defined in this section shall have the following meaning when found in this Act, to wit:

"Commerce' means commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation.

"Corporation' shall be deemed to include any company, trust, so-called Massachusetts trust, or association, incorporated or unincorporated, which is organized to carry on business for its own profit or that of its members, and has shares of capital or capital stock or certificates of interest, and any company, trust, so-called Massachusetts trust, or association, incorporated or unincorporated, without shares of capital or capital stock or certificates of interest, except partnerships, which is organized to carry on business for its own profit or that of its members.

'Documentary evidence' includes all documents, papers, correspondence, books of account, and financial and corporate records.

"Acts to regulate commerce' means the Act entitled 'An Act to regulate commerce', approved February 14, 1887, and all Acts amendatory thereof and supplementary thereto.

"Antitrust Acts' means the Act entitled 'An Act to protect trade and commerce against unlawful restraints and monopolies', approved July 2, 1890; also sections 73 to 77, inclusive, of an Act entitled 'An Act to reduce taxation, to provide revenue for the Government, and for other purposes', approved August 27, 1894; also the Act entitled 'An Act to amend sections 73 and 76

of the Act of August 27, 1894, entitled “An Act to reduce taxation, to provide revenue for the Government, and for other purposes", approved February 12, 1913; and also the Act entitled 'An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes', approved October 15, 1914."

SEC. 2. That section 5 of said Act be, and the same is hereby, amended to read as follows:

"SEC. 5. That unfair methods of competition in commerce, and unfair or deceptive acts and practices in commerce, are hereby declared unlawful.

"The Commission is hereby empowered and directed to prevent persons, partnerships, or corporations, except banks, and common carriers subject to the Acts to regulate commerce, from using unfair methods of competition in commerce and unfair or deceptive acts and practices in commerce.

"Whenever the Commission shall have reason to believe that any such person, partnership, or corporation has been or is using any unfair method of competition or unfair or deceptive act or practice in commerce, and if it shall appear to the Commission that a proceeding by it in respect thereof would be to the interest of the public, it shall issue and serve upon such person, partnership, or corporation a complaint stating its charges in that respect, and containing a notice of a hearing upon a day and at a place therein fixed at least thirty days after the service of said complaint. The person, partnership, or corporation so complained of shall have the right to appear at the place and time so fixed and show cause why an order should not be entered by the Commission requiring such person, partnership, or corporation to cease and desist from the violation of the law so charged in said complaint. Any person, partnership, or corporation may make application, and upon good cause shown may be allowed by the Commission to intervene and appear in said proceeding by counsel or in person. The testimony in any such proceeding shall be reduced to writing and filed in the office of the Commission. If upon such hearing the Commission shall be of the opinion that the method of competition or the act or practice in question is prohibited by this Act, it shall make a report in writing in which it shall state its findings as to the facts and shall issue and cause to be served on such person, partnership, or corporation an order requiring such person, partnership, or corporation to cease and desist from using such method of competition or such act or practice. Until a transcript of the record in such hearings shall have been filed in a Circuit Court of Appeals of the United States, as hereinafter provided, the Commission may at any time, upon such notice and in such manner as it shall deem proper, modify or set aside, in whole or in part, any report or any order made or issued by it under this section.

"Whenever the Commission shall have reason to believe that such person, partnership, or corporation has failed or neglected to obey, or intends or is about to disobey, such order of the Commission while the same is in effect, the Commission may apply to the Circuit Court of Appeals of the United States, within any circuit where the method of competition or the act or practice in question was used or where such person, partnership, or corporation resides or carries on business, for the enforcement of its order, and shall certify and file with its application a transcript of the entire record in the proceeding, including all the evidence taken and the report and order of the Commission. Upon such filing of the application and transcript the court shall cause notice thereof to be served upon such person, partnership, or corporation and thereupon shall have jurisdiction of the proceeding and of the question determined therein, and shall have power to make and enter upon the pleadings, evidence, and proceedings set forth in such transcript a decree affirming, modifying, or setting aside the order of the Commission, and enforcing the same to the extent that such order is affirmed, and to issue such writs as are ancillary to its jurisdiction or are necessary in its judgment to prevent injury to the public or to competitors pendente lite. The findings of the Commission as to the facts, if supported by evidence, shall be conclusive. To the extent that the order of the Commission is affirmed, the court shall thereupon issue its own order commanding obedience to the terms of such order of the Commission. If either party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the proceeding before the Commission, the court may order such additional evidence to be taken before the Commission and to be adduced upon the hearing in such manner and

upon such terms and conditions as to the court may seem proper. The Commission may modify its findings as to the facts, or make new findings, by reason of the additional evidence so taken, and it shall file such modified or new findings, which, if supported by evidence, shall be conclusive, and its recommendation, if any, for the modification or setting aside of its original order, with the return of such additional evidence. The judgment and decree of the court shall be final, except that the same shall be subject to review by the Supreme Court upon certiorari, as provided in section 240 of the Judicial Code.

"Any party required by such order of the Commission to cease and desist from using such method of competition or such act or practice may obtain a review of such order in said Circuit Court of Appeals by filing in the court, within sixty days from the date of the service of such order, a written petition praying that the order of the Commission be set aside. A copy of such petition shall be forthwith served upon the Commission, and thereupon the Commission forthwith shall certify and file in the court a transcript of the record as hereinbefore provided. Upon the filing of the transcript the court shall have the same jurisdiction to affirm, set aside, or modify the order of the Commission and to enforce same and to issue such writs as in the case of an application by the Commission for the enforcement of its order, and the findings of the Commission as to the facts, if supported by evidence, shall in like manner be conclusive. In no case shall it be necessary to establish a violation of the order of the Commission as a condition precedent to the affirmance, modification, or setting aside of the same or entering an order enforcing it.

"At the end of sixty days from the date of service of any order to cease and desist of the Commission, such order shall become final and conclusive against any person, partnership, or corporation subject thereto failing or neglecting during such sixty-day period to seek court review of such order as provided in this Act as amended; and in case any such person, partnership, or corporation shall fail or neglect to obey such order after the same shall have become final and conclusive and while the same is in effect, such person, partnership, or corporation shall be liable to a penalty of $500 for each such offense and of $25 for each day it continues, which shall accrue to the United States and may be recovered in a civil action brought by the United States.

"The jurisdiction of the Circuit Court of Appeals of the United States to affirm, enforce, modify, or set aside orders of the Commission shall be exclusive. "Such proceedings in the Circuit Court of Appeals shall be given precedence over other cases pending therein, and shall be in every way expedited. order of the Commission or judgment of court to enforce the same shall in any wise relieve or absolve any person, partnership, or corporation from any liability under the antitrust acts.

"Complaints, orders, and other processes of the Commission under this section may be served by anyone duly authorized by the Commission, either (a) by delivering a copy thereof to the person to be served, or to a member of the partnership to be served, or to the president, secretary, or other executive officer or a director of the corporation to be served; or (b) by leaving a copy thereof at the residence or the principal office or place of business of such person, partnership, or corporation; or (c) by registering and mailing a copy thereof addressed to such person, partnership, or corporation at his or its residence or principal office or place of business. The verified return by the person so serving said complaint, order, or other process setting forth the manner of said service shall be proof of the same, and the return post-office receipt for said complaint, order, or other process registered and mailed as aforesaid shall be proof of the service of the same."

SEC. 3. That section 6 of said Act be, and the same is hereby, amended to read as follows:

"SEC. 6. That the Commission shall have power

"(a) Upon the direction of the President or either House of Congress, or upon its own initiative, to gather and compile information concerning, and to investigate from time to time the organization, business conduct, business practices, and business management of any person, partnership, or corporation engaged in commerce, excepting banks, and common carriers subject to the Act to regulate commerce, and the relation of such person, partnership, or corporation to other individuals, partnerships, and corporations.

"(b) To require, by general or special orders, persons, partnerships, or corporations engaged in commerce, excepting banks, and common carriers subject to the Act to regulate commerce, or any class of them, or any of them,

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To Amend the Federal Trade Commission Act: Hearing...on S. 3744