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Federal Trade Commission (FTC)

Written By
Paul Tracy
Updated January 16, 2021

What is the Federal Trade Commission (FTC)?

The Federal Trade Commission (FTC) protects consumers and businesses from practices that can cause markets to become unfair and anti-competitive.

How Does the Federal Trade Commission (FTC) Work?

The Federal Trade Commission is divided into three bureaus that have different regulation and protection responsibilities. The first is the Bureau of Consumer Protection. This bureau focuses on the protection of individuals by investigating and sometimes prosecuting companies that are in violation of federal laws relating to consumer affairs. The focuses of this bureau are mainly on areas of advertising, fraud and consumer identity protection.

The Bureau of Competition enforces many anti-trust laws born during the early 20th century. It is responsible for reviewing potential mergers and whether they impair competition in the firms' industry, as well as investigating relationships among firms at different levels of the same industry. For example, the FTC might investigate whether a retail company has special agreements with a supplier that violates anti-trust law and gives them an unfair advantage over their competitors.

The third bureau within the FTC is the Bureau of Economics, which acts in support of the other two bureaus by providing expert economic research and knowledge about the actions and legislation of the FTC.

Why Does the Federal Trade Commission (FTC) Matter?

The FTC protects the rights of both firms and consumers in an economy. It enforces legislation that is essential in promoting fairness and competition among economic participants. The FTC's role in the U.S. economy cannot be understated, because it maintains the competition that ensures firms can enter and exit the marketplace more freely, and ensures that individual consumers get the best prices on goods and services.

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