BUL 4422 exam #3 or final

consists of substantive and procedural rules created by administrative agencies

any government body created by the legislative branch (eg., Congress, a state legislature, or a city council, etc.) to carry out specific duties

→ Agencies make rules for an entire industry, adjudicate individual cases, and investigate misconduct.
→ Administrative agencies are considered the unofficial "fourth branch of government" under the control of the other three branches of government

the first federal administrative agency, created to regulate the anticompetitive conduct of railroads

→ Congress saw need for additional agencies to regulate business in the public interest.
→ Congress believed an area required more intense regulation than Congress could provide.

- a statute that specifies the name, functions, and specific powers of an administrative agency and powers for the purpose of serving the "public interest, convenience and necessity

Rule Making
Investigation
Adjudication

→ Procedural - govern the internal operations of the agency
→ Interpretive - explain how the agency views the meaning of the statutes for
which it has administrative responsibility
→ Legislative - policy expressions that have the effect of law

→ Subpoena - an order to appear at a particular time and place and provide
testimony
→ Subpoena duces tecum - an order to appear and bring specified documents

After investigation, the agency will hold an administrative hearing before an
administrative law judge (ALJ)--a judge who presides over an administrative
hearing; may attempt to get the parties to settle but has the power to issue a binding
decision

a
statement in which a company agrees to stop disputed behavior but does not admit
that it broke the law

Agencies are either executive or independent

an agency that is typically located
within the executive branch, under one of the cabinet-level departments
→ The agency head is appointed by the president with the advice and consent of
the Senate and may be discharged by the president at any time, for any reason.
→ Can make rules covering a broad spectrum of industries and activities and tend
to focus on social regulation.

an agency that is typically not located within a government
department
→ It is governed by a board of commissioners appointed by the president with the
advice and consent of the Senate, but they serve fixed terms and cannot be removed
except for cause.
→ Serving fixed terms is said to make the commissioners less accountable to the
will of the executive, thus the term independent agency.focusing on such economic regulation activities as rate making and
licensing.

federal legislation that places limitations on how agencies
are run and contains very specific guidelines on rule making by agencies
→ Under APA, very specific guidelines govern rule making by agencies.
→ The two most common types of rule making are informal and formal; these, as well as
a third type known as hybrid and some exceptions.

a type of rule making in which an agency
publishes a proposed rule in the Federal Register, considers public comments, and then
publishes the final rule

a type of rule making that is used when legislation requires formal
hearing process with a complete transcript; consists of publication of the proposed rule in the
Federal Register, a public hearing, publication of formal findings, and publications the final
rule if adopted.

the government publication in which an agency publishes each
proposed rule, along with an explanation of the legal authority for issuing the rule and a
description of how the public can participate in the rule-making process, and later publishes the
final rule

an APA exemption from rule making that allows an agency to
decide whether public participation will be allowed (example: rule-making proceedings with
regard to military or foreign affairs, agency management or personnel, and public property,
loans, grants, benefits or contracts of an agency)

Interpretive Rules - a rule that does not create any new rights or duties but is
merely a detailed statement of an agency's interpretation of an existing law,
including the actions a party must take to be in compliance with the law.
2. Policy Statements - a general statement about the directions in which any agency
intends to proceed with respect to its rule-making or enforcement activities; has
no binding impact on anyone.

type of rule making in which representatives of concerned interest
groups and of the involved government agency participate in mediated bargaining sessions to
reach an agreement, which is forwarded to the agency

Political, Statutory
Judicial
Informational

the Senate must approve nominees for agency heads, and Congress has power
over agencies' budgets

Congress may create or eliminate agencies and amend enabling legislation;
Congress reviews and may override agency rules (Congress has 60 days to do so). APA
sets forth guidelines that all agencies must follow when engaged in rule making.

interested parties may challenge administrative rules in the courts, which may
review the agency's findings of facts, its interpretation of the rule, and the scope of the
agency's power in making the rule

The Freedom of Information Act, Government in Sunshine Act, and
Privacy Act of 1974 specify agencies' responsibilities regarding public access to
information

federal law passed in 1966 that mandates and facilitates public access
to government information and records, including records about oneself

federal law which requires that agency business
meetings be open to the public if the agency is headed by a collegiate body

two or more persons, the majority of whom are appointed by
the president with the advice and consent of the Senate. The law also requires that
agencies keep records of closed meetings.

federal law that mandates that a federal agency may not
disclose information about an individual to other agencies or organizations without
that individual's written consent
→ The Privacy Act applies only to records about individuals maintained by
agencies in the executive branch of the federal government.

Congress created the FTC through the Federal Trade
Commission Act (FTCA) of 1914
→ The purpose of the act was to prevent fraud, deception, and unfair business practices.
→ The FTC has responsibility for carrying out the act.
→ Independent federal agency with five commissioners appointed by the president and
confirmed by the Senate. Each commission serves a seven-year term. The president chooses on
commissioner to serve as chair of the FTC.

interpretations of consumer laws created by the FTC to encourage
businesses to stop unlawful behavior

1. FTC receives numerous complaints about a business
2. FTC begins a nonpublic investigation of the company
3. If FTC finds that a company violated the law, FTC sends a complaint to the business
4. Company enters a consent order (a statement in which a company agrees to stop
disputed behavior but does not admit that it broke the law) → If company violates the
order, it will be fined.
5. Company refuses to enter a concept order → FTC issues formal administrative complaint
→ If judge finds the company guilty, FTC issues a cease-and-desist order (an FTC
order requiring that a company stop its illegal behavior)

the practice of advertising with claims that mislead or
could mislead a reasonable consumer

the use of generalities and clear exaggerations

information that is true but not complete
→ The FTC decides whether an advertisement is deceptive on a case-by-case basis.
→ Deceptive claims have three elements: (1) material misrepresentation, omission, or
practice that is (2) likely to mislead a (3) reasonable consumer.
→ If the advertisement is a half-truth, the advertiser is deceiving.

To combat deception,
the FTC mandates ad substantiation (advertisers must have a reasonable basis for the claims in
the advertisements)

a deceptive practice in which a seller advertises a
low-priced item, generally unavailable to the consumer, and then pushes the consumer to buy a
more expensive item

If the FTC takes action against a company and proves the advertising is deceptive, the FTC
may issue a cease-and-desist order.
• The FTC may also issue multiple-product orders - a form of cease-and-desist order issued by
the FTC that applies not only to a specified product but also to other products produced by the
same firm.
• The FTC may require that the company engage in corrective advertising - advertising in
which a company explicitly states that formerly advertised claims were untrue

The FTC created the Cooling-Off Rule, giving consumers three days to cancel purchases they
make from salespeople who come to their homes.
• The salesperson must notify the consumer, both verbally and in writing, that the sales
transaction may be canceled.

1. Sellers must ship items within the time promised.
2. Seller cannot ship the item within the promised time, the seller must notify the
customer in writing and offer an opportunity to cancel.
3. If a costumer decides to cancel the order, the seller must refund the customer's
money within a specified period of time.

any unsolicited merchandise sent by mail is free to be used by the
recipient as he or she sees fit with no obligation by the recipient to the sender

(1) a business arrangement in which stock owners appoint beneficiaries and place their
securities with a trustee, who manages the company and pays a share of the earnings to the
stockholders; (2) an estate-planning arrangement whereby a person transfers property to another
person and the property is used for the benefit of a third person

1. To foster competition, a few powerful sellers should not dominate the economy; there
should be many buyers and sellers in the market.
2. An accumulation of economic power leads to an accumulation of political power, which
leads to political consequences for consumers.
3. Efficiency should not be the only or most important goal of antitrust law.

1. Concentrated economic power does not necessarily lead to political consequences.
2. If a company held great economic power and if the power led to efficiency, then the
company should be left alone.
3. The purpose of antitrust law is to encourage economic efficiency

stop trusts from unfairly restricting market competition.

an inquiry into the competitive effects of a company's
anticompetitive behavior to determine whether the benefits of the behavior
outweigh the harm

1. Nature and purpose of the restraint on trade
2. Scope of the restraint
3. Effect of the restraint on business and competition
4. Intent of the restraint

an action by its very existence carries with it liability, as
opposed to an action that violates a rule of reason

if the defendant can provide justification for the per se
violation, the court then engage in rule-of-reason analysis

an agreement between two competitors in the
same market to engage in a practice that restrains trade

a restraint of trade in which two or more competitors agree to set
prices for a product or service
→ Horizontal price fixing is a per se violation of the Sherman Act.
→ Consists of raising, lowering fixing, or stabilizing the price of a good or
service.

an agreement between two or more competitors
to divide markets among themselves by geography, customers, or products

an agreement between two parties at different levels
in the manufacturing-distribution system to engage in a practice that restraints trade

that restrain trade or commerce "among
the several States, or with foreign nations." It regulates interstate commerce.

the ability to control price and drive competitors out of the
market

the use of certain business practices with the intent to
gain market share by excluding competitors and thereby gain monopoly power.

the practice in which a company prices one
product below normal cost until competitors are eliminated and then it sharply increases the price

identifies price discrimination (section 2), exclusionary practices (section 3),
mergers (section 7), interlocking directorates (section 8)

The Clayton Act prohibits price discrimination - the practice of selling the same
goods to different buyers at different prices
Defense to price discrimination is called the meeting-the-competition defense - a
defense to the Clayton Act in which a firm engages in price discrimination to
compete in good faith with another seller's low price

Exclusive dealing - an agreement in which a seller requires that a buyer buy
products supplied only by that seller

does not apply to the Clayton
Act, but the Sherman Act.

• Prohibits anticompetitive mergers or acquisitions.

a combination of two or more corporations in which only one of the
corporations continues to exist
Horizontal, Vertical , Conglomerate

a merger between two or more competitors producing the
same or similar products; usually eliminates a competitor from the market.

a merger in which a company at one level of the
manufacturing-distributing system acquires a company at another level of the
system; do not lead to concentration in the market; can cause harm to competition
and may permit on firm to foreclose competition

Conglomerate - a merger in which a company merges with another
company that is not a competitor or buyer or seller to the company

1. Product Extension - when a firm merges with another firm
procuring a related product; enable the acquiring company to
obtain the production of the related product and add it to the
acquiring company's production of its current product
2. Market Extension - involve a firm attempting to extend the
market for one of its current products by merging with a firm
already active in the target market

A person may not serve as the director of two or more horizontally related
companies.

→ Consent Decree - an agreement that binds the violating party to cease his or her
illegal behavior
• Private Enforcement
→ If a party is harmed by a company's anticompetitive behavior, the party can bring a
private suit under the Sherman Act or the Clayton Act.