Of these acts passed since the FTC Act, by far the most important has been the Robinson-Patman Act passed in 1936 to amend the Clayton Act. The main purpose of this act was to protect small business from big business and its "deep pocket" by prohibiting discriminatory acts and practices having a probable substantial effect on competition if they could not be cost justified or were not for the purpose of meeting competition. Certain other acts and practices were made illegal per se by the Robinson-Patman Act, all to the purpose that small business would have a fair chance against the big resources of big business.

For forty-six years, the lawyers of the Federal Trade Commission were kept busy directing investigations, drawing complaints and prosecuting violations of the FTC Act. In 1936 the same procedure was put into effect enforcing the Robinson-Patman amendment to the Clayton Act. Lawsuits under these two statutes were our main business. We did a good job at it, and won most of our cases including those appealed. Today these two statutes are still the two main statutes enforced by the Federal Trade Commission. Most of our cases have been and are brought under these two statutes. Most of our business is transacted under their jurisdiction. These and the others listed previously are the statutes that confer jurisdiction to act on the Federal Trade Commission. All our activity proceeds under them, including Advisory Opinions. We can give an advisory opinion under any of these Acts.

In 1961, Paul Rand Dixon became Chairman of the Federal Trade Commission. At that time he reorganized the staff completely and it has functioned quite well ever since. Today. Mr. Dixon is still Chairman having been reappointed last year. He has now been Chairman longer than any other man in the history of the Federal Trade Commission.

The staff of the Federal Trade Commission is organized under the Executive Director. There are four special offices under him, Secretary, Program Review, General Counsel and Hearing Examiners. In addition there are six operating bureaus each under a Director. They are: Deceptive Practices, Economics, Field Operations, Industry Guidance, Restraint of Trade, Textiles and Furs. These bureaus are divided into divisions relevant to the mission of the bureau. An Organizational Chart is included at page 44 for your future convenience in dealing with the Federal Trade Commission.

One of the first things that Chairman Dixon changed after his first appointment was the emphasis and thrust at the Commission on litigation. This is somewhat strange, in a way, because Chairman Dixon had been one of the top trial lawyers at the Federal Trade Commission in his long career there. However, he changed the thrust from litigation and the emphasis from litigation-to consultation and advice on future courses of action and voluntary compliance on present courses of action where they violate statutes administered by the Federal Trade Commission.

The history of the Federal Trade Commission prior to Chairman Dixon can be read in one reported case after another. Some accepted the Commission's Order and went no further.

Others pursued their right of appeal to the Circuit Courts of the United States and even to the Supreme Court of the United States. The way was long, cumbersome and indeed expensive. One distinguished attorney at the Federal Trade Commission was 17 years in litigation on one case. Seventeen years to get the word "Liver" out of Carter's Little Liver Pills. This case of course was an exception, but it shows what a tough minded corporate litigant can do if they wish to tie up the Federal Trade Commission in expensive litigation. There comes to mind the Cement Institute case which was fought by some 40 law firms for the respondent members of the Cement Institute and its members for about eight years, with over 50,000 pages of oral testimony. The complete record with exhibits cost over $500,000. The three years of trying the record before the Commission cost the industry 5 million dollars. Commissioner Everette MacIntyre was one of the three FTC counsels in this case. He has just served one 7 year term and been reappointed for another seven years. Many, many others could be cited, although I would say the average litigated case could run the full course before the Commission and the Circuit Court on appeal and certiorari denied by the Supreme Court in about two years. Now think, not only how expensive this litigation is, but how disrupting to the business involved and how worrisome to the corporate executives who must manage and pursue this course of action. Think of what it can do to the corporate image with the public. More than this, think of the pitiful plight of the small businessman without vast corporate resources to wage this kind of battle.

As a trial attorney, Chairman Dixon experienced all of this and knew it well. And when he became Chairman, he did not forget it. Many people had said there ought to be an easier way to handle enforcement. There ought to be a fairer way to do this for those involved. There ought to be a less costly way to do this for the little fellow.

Most businessmen big or small are honest and want to do the right thing. Nobody wants to get in trouble with the Federal Government-tax-wise, fraudwise or business-wise. It is too expensive and it is too time consuming. It is not good publicity for the business or the executive who finds himself or his business so involved. Nevertheless, there is a hard core of hard cases which can be treated no other way and the Federal Trade Commission, no more than any other Government agency is not about to dispense with litigation entirely. There will be trial attorneys at the Federal Trade Commission after we are all dead and gone, but 1 venture to predict that there will never be as many trials or as many people engaged in litigation again as the history of the Commission reveals prior to the appointment of Chairman Dixon because he found another way to obtain compliance and enforce our statutes. To accomplish this, two major programs were set up for business to approach on an individual basis.

The advisory opinion procedure was set up in 1962 and about the same time the voluntary compliance procedures were set up as they appear in the rules today. Let us examine the voluntary compliance procedures first.

If your business is already engaged upon a course of action and becomes in. volved with the Federal Trade Commission voluntarily or involuntarily, the vol untary compliance procedure is open to you, provided you are not a hard core violator with a prior record against you and provided you act in good faith. What does good faith mean? It means you cooperate fully with the Commission's people. You give them the information they ask for whether it is records or oral testimony when you apply to file an assurance of voluntary compliance.

If you have been in and out of the Commission's investigatory sights, off and on for the past years don't be surprised if the Commission's attorneys tell you it is not in the public interest to allow you to file an assurance of voluntary compliance. In such case you may have to take a consent order, which we will go into later.

The voluntary compliance procedure involves your contacting the Commission and asking whether or not your individual enterprise is now violating the law. If the appropriate operating division concludes you are violating one of our statutes, then you will want to file an assurance of voluntary compliance and receive a closing letter from the Commission. Authority to have issued such a letter by the Secretary for the Commission is given to the Director and Assistant Director of the following four operating bureaus if no Commissioner objects within five days:

1. Deceptive Practices

2. Restraint of Trade

3. Textiles and Furs

4. Industry Guidance

All four of these bureaus handle voluntary compliances. An assurance of voluntary compliance does not admit or deny you have violated any law; nor does it give immunity from Commission action in the future. As a practical matter a closing letter through one of the four bureaus signed by the Secretary for the Commission on an application for an assurance of voluntary compliance will ordinarily lay the matter to rest.

The file in a voluntary compliance matter is usually transmitted to the Office of Legal Records to be available for reading and copying by any member of the public interested in so doing. In unusual situations, the Commission may grant confidentiality to the applicant for good and sufficient reason presented to them on application.

The assurance of voluntary compliance should be the most often used procedure in the work of the Commission. It is simple and informal in method and practice. An applicant may apply to any of the divisions of the four operating bureaus as previously set forth. It is used where a recurrence of unlawful conduct appears unlikely and may be effectively prevented without a formal order to cease and desist. The sole test is whether "the public interest will be fully safeguarded" by informal nonadjudicatory disposition, and in every case informal nonadjudicatory disposition, and in every case informal information should mation should be fully developed so as to permit a comprehensive application of this test to the acts or practices involved.

Another nonadjudicatory procedure available to business is the Trade Regulation Rule. This is a handling of an industry-wide violation en masse or can even be handling of a statutory violation on a nationwide basis. This procedure is particularly apt when the Commission on investigation of a complaint is told by the respondent businessman that everybody is doing it. Not for an individual violation although an individual may be an applicant. A trade regulation rule will get it stopped by all at the same time. It can be likened in technique to a hearing on a show cause order, although it is not absolutely necessary to have a hearing. We have always found it important to have hearings. More teeth than Guides or old T.P.C. Rules. Due process must always be had and care taken to proceed according to the Commission's Rules and Statutes such as the Administrative Procedure Act.

The effect is not the same as an order, but violation of such a rule is an invitation to litigation. I'm afraid this procedure is not too well understood by business. If you are interested in a trade regulation rule or think the issuance of one should be explored for your industry, you should apply to the Division of Trade Regulation Rules, Bureau of Industry Guidance. They will be happy to work with you and advise you on your problem.

I will merely note in passing that there are also special rules which you will find set forth in the outline. They are:

(1) Wool and Fur

(2) Flammable Fabrics

(3) Textile Fiber Products

(4) Fair Packaging and Labeling Act.

The procedures are set out in the Rules of Practice and have been very effective in dealing with specialized matters. The Commission has also the power to issue Quantity Limit Rules under Section 1.13 as authorized by Section 2(a) of the Robinson-Patman Act. There is, and has been very little activity in this regard.

Another very important nonadjudicatory procedure is the issuance of guides. This is done by the Division of Industry Guides in the Bureau of Industry Guidance. As the rules say, the industry guides are administrative interpretations of laws administered by the Commission for the guidance of the public in conducting its affairs in conformity with legal requirements. A guide is in effect an advisory opinion on a present course of action issued to a whole industry or many, many businessmen dealing with the interpretation of a portion of the Commission's statute. The Commission has full power to investigate the desirability or the possible need for issuance of a guide. Further, the guide may be issued on the Commission's own motion, on being convinced of the need for it or on application of an industry or an industry individual. Some 500 individual interpretives are issued by the Division and Bureau each year.

So far, assurances of voluntary compliance, trade regulation rules, special rules and guides have all been short of an order-they are nonadjudicatory. We come now to a type of voluntary compliance which goes beyond any of these and involves the issuance of a complaint and order. This is the consent order procedure. Where a business does not qualify because of its past record for an assurance of voluntary compliance, it can still take a consent order which is issued by the Commission following a consent order agreement entered into between the respondent business and the Commission's attorney. This procedure has the advantage of saving time and money of a trial and the publicity incident thereto. The Commission maintains a consent order staff in the form of a special division headed by an Assistant General Counsel. If they won't let you file an assurance of voluntary compliance, they will nearly always let you take a consent order.

If your business is about to embark upon a proposed or new course of action not now in operation, you may seek advice and approval from the Federal Trade Commission by filing a request with the Secretary for an advisory opinion. This is true even if you are already under an adjudicative order of the Commission. If you are already under an order, you will file for an advisory opinion under 3.61 (c) of the Rules. This application is filed with the Compliance Division, Bureau of Restraint of Trade or the Compliance Division, Bureau of Deceptive Practices, depending upon the nature of your previous violation. Otherwise, you will inquire about an advisory opinion from the Division of Advisory Opinions, Bureau of Industry Guidance. Applications for advisory opinions under 1.1 or 3.61 (c) may be filed with the Secretary of the Commission.

Years ago, President Wilson in his own words had sounded the need for the advisory opinion procedure:

"It is of capital importance that the businessmen of this country should be relieved of all uncertainties of law with regard to their enterprises and investments and a clear path indicated which they can travel without anxiety." Now what is an advisory opinion? Rule 1.1 of the Commission Rules of Practice states:

"Any person, partnership, or corporation may request advice from the Commission with respect to a course of action which the requesting party proposes to pursue. It is the Commission's policy to consider requests for such advice and, where practicable, to inform the requesting party of the Commission's views. A request ordinarily will be considered inappropriate for such advice: (a) where the course of action is already being followed by the requesting party; (b) where the same or substantially the same course of action is under investigation or is or has been the subject of a current proceeding, order, or decree initiated by the Commission or another governmental agency; (c) where the proposed course of action or its effects may be such that an informed decision thereon cannot be made or could be made only after extensive investigation, clinical study, testing, or collateral inquiry.” Rule 1.3 states:

"(a) Where the course of action is already being followed by the requesting party; able to the Commission, and if practicable, the Commission will inform the requesting party of its views and may take such other action as may be appropriate.

"(b) Any advice given is without prejudice to the right of the Commission to reconsider the questions involved and, where the public interest requires, to rescind or revoke the advice. Notice of such rescission or revocation will be given to the requesting party so that he may discontinue the course of action taken pursuant to the Commission's advice. The Commission will not proceed against the requesting party, with respect to any action taken in good faith reliance upon the Commission's advice under this section, where all relevant facts were fully, completely, and accurately presented to the Commission and where such action was promptly discontinued upon notification of rescission or revocation of the Commission's approval."

Thus we see that an advisory opinion is a written opinion voted by all five or a majority of the five Commissioners participating on a proposed or future course of action presented to them in writing by a requesting party not under investigation and not under order of the Commission or another governmental agency as to the proposed or similar course of action.

It is not an opinion by the staff.

It is by the Commission.

It is not on a present course of action, that is a matter of voluntary compliance or consent order.

It is not an opinion on a past course of action or a future course of action covered by an order. That is an advisory opinion to be obtained through the proper compliance section because it involves an outstanding order. This action is governed by Rule 3.61 of the Commission's Rules of Practice, as hitherto noted.

It is not a declaratory judgment although some lawyers confuse an advisory opinion with a declaratory judgment.

A distinguished former member of our Advisory Opinion staff, Mr. William Denny Dixon, has defined an advisory opinion in an excellent law review article on FTC Advisory Opinions in Vol. 18 of the Administrative Law Review quoting from Page 71:

"An advisory opinion is a binding ruling by the legal or administrative body having lawful jurisdiction of the subject matter on the legality of a proposed future course of action contemplated by the party requesting the opinion."

This brings us to the most important feature of the advisory opinion. It is binding upon the Commission. Just like a cease and desist order in a litigated case. An advisory opinion is binding on the Commission until rescinded or overruled. It is not a mere “railroad release" good as of the time of issue only. It is good until revoked or rescinded. I might say here, that I know of only two advisory opinions out of some 563 handled by the Commission that have been rescinded. This particular instance involved bad faith on the part of the requesting party.

Commissioner Elman is fond of quoting Mr. Justice Brandeis on legal advice and I am very fond of hearing it. It is the best advice to the businessman involved in the modern complexities of law and government, I know. It goes like this:

"Now, I do not believe ** that the difficulty for the businessman is nearly as great as he imagines it to be. *** If you ask me how near you can walk to the edge of a precipice without going over, I can't tell you, for you may walk on the edge, and all of a sudden you may step on a smooth stone, or strike against a little bit of a root sticking out, and you may go over that precipice. But if you ask me, how near you can go to that precipice and still be safe, I can tell you, and I can guarantee that whatever mishap comes to you, you will not fall over that precipice. * * * You must not expect that you can go to the verge of [the] law without running any risks. Why should you? You do not in any other relation of life that I know of."

When you request an advisory opinion through the Division of Advisory Opinions, we may not precisely pinpoint the legal edge of the problem but we will get you an opinion from the Commission telling you where it is safe to tread. How do you get an advisory opinion? Rule 1.2 Procedures of the Commission and Rules of Practice states in part:

"The request for advice should be submitted in writing to the Secretary of the Commission and should include full and complete information regarding the proposed course of action. Conferences with members of the Commission's staff may be held before or after submittal of the request. Submittals of additional information may be required. The original submittal should affirmatively show that the proposed course of action is not currently being followed by the requesting party and is not the subject of a pending investigation or other proceeding by the Commission or any other governmental agency."

The procedure is as simple as we can make it. There is no special form or format. The requesting party simply submits his request in writing, usually in the form of a letter either to the Division of Advisory Opinions or to the Secretary of the Commission. This written request should contain enough information to enable the staff to prepare a memo to the Commission intelligently stating the proposed course of action and its predictable effects and the question or questions about its legality for which answers are desired. If you don't give enough information, the staff attorney to whom it is assigned wil liether write or call you for what he needs. If the information is not available, the Commission may not be able to give an opinion because of the necessity for an investigation, or the need for scientific tests.

However, the requesting party gnerally get an opinion within 30 to 60 days. In the case of an involved pre-merger clearance request, requiring extensive economic analysis, the time may be extended. Recently, when the Commission was reviewing the whole foreign origin question, the elapsed time was much longer. But all requesting parties were advised of the problem and their requests in effect suspended until the Commission thrashed the matter out in the public interest.

When you get an advisory opinion from the Federal Trade Commission what do you get?

The requesting party receives a letter signed by the Secretary of the Commission by order of the Commission. This letter is rarely over two pages in length and quite often only one page. It is the opinion and is not released to anyone else in order to preserve the identity of the requester in confidence. However, the text or a digest of the text is usually issued as a press release for the guidance of others throughout the nation. This is all in accordance with Rule 1.4 of the Commission's Rules of Practice and announced policy.

We occasionally have requests to see the memorandum of the staff transmitting the request for advisory opinion to the Commission with the staff recommendation. This is never released to anyone as it is an intra agency communication and therefore confidential.

How has the advisory opinion worked?

Has it been worthwhile? The answers are quite clear by now. The procedure has worked well indeed. It has been very worthwhile.

We have handled and processed some 563 advisory opinions to date and published about 300. Not only this, but hundreds and hundreds of voluntary compliance affidavits have been placed before the Commission for action without litigation.

We have had a good many advisory opinion requests by trade associations dealing with the selling practices, compliance of labeling rules, dealings with customers, conditions of membership, exchange of information, guaranteed pricing, product standards, range of prices in advertising and uniform hours. We