The Federal Trade Commission, often referred to as the FTC, is an independent agency of the United States federal government. It is responsible for
- maintaining fair and free competition
- enforcing federal antitrust laws
- educating the public about identity theft
The Federal Trade Commission was created in 1914, with the purpose of preventing unfair methods of competition in commerce. This was part of the battle to “bust the trusts.” Over the years, Congress passed additional laws giving the agency greater authority to police anticompetitive practices. In 1938, Congress passed a broad prohibition against “unfair and deceptive acts or practices.” Since then, the Commission also has been directed to administer a wide variety of other consumer protection laws. These include the Telemarketing Sales Rule, the Pay-Per-Call Rule and the Equal Credit Opportunity Act. In 1975, Congress gave the FTC the authority to adopt industry-wide trade regulation rules.
From the FTC’s “about us” page, the FTC states its mission and objectives as
As a consumer or business person, you may be more familiar with the work of the Federal Trade Commission than you think. The FTC deals with issues that touch the economic life of every American.
The FTC is the only federal agency with both consumer protection and competition jurisdiction in broad sectors of the economy. The FTC pursues vigorous and effective law enforcement; advances consumers’ interests by sharing its expertise with federal and state legislatures and U.S. and international government agencies; develops policy and research tools through hearings, workshops, and conferences; and creates practical and plain-language educational programs for consumers and businesses in a global marketplace with constantly changing technologies. FTC’s work is performed by the Bureaus of Consumer Protection, Competition and Economics. That work is aided by the Office of General Counsel and seven regional offices.
Federal Trade Commission in Action
However, traders are naturally more concerned with the role the Federal Trade Commission plays in mergers and acquisitions. Specifically, how they can affect the outcome of such as business transaction.
On February 18, 2020 Legg Mason (LM) made a DEFA14A filing with the SEC in relation to the proposed acquisition by Franklin Resources. Contained within are references to the FTC in relations to the HSR filing
(c) HSR Act. The waiting period (and any extension thereof) under the HSR Act and any commitments by the parties to any Governmental Entity not to close before a certain date under a timing agreement entered into with the DOJ, FTC or other applicable Governmental Entity applicable to the Merger and the other transactions contemplated pursuant to this Agreement shall have been terminated or shall have expired.
Thus demonstrating one of the areas of control for which the Federal Trade Commission is responsible. Merger Arbitrage Limited produces a dedicated page with live updates of all HSR early termination notices. When these are issued, the firms are able to proceed and consummate the deal. Traders are advised to be aware of these updates as the target stock price can be affected dramatically.
