Chapter 5- Agencies

Deregulation Criteria

1. Choice- are consumers given a choice? 2. Consumer Rights- are consumers given more rights or are the rights they already have upheld 3. Innovation: are better products offered? 4. Safety- have safety and security increased? 5. Savings- are consumers saving money, are prices lower? 6. Service- are consumers being served better?

What are the three questions that consumer groups are most concerned about?

1. Do consumers have full knowledge of what they are buying 2. Are products safe? 3. Are products environmentally sound?

What are the main areas of regulation? There are 5

1. pricing- a maximum price may be set for a product or service 2. licensing- may be required to be a barber 3. standard setting- ex safety standards in a factory 4.subsidies- govt can become involved in regulated supplies of imports 5. privacy- standards regarding privacy in financial transactions

5. Conglomerate Merger

A conglomerate merger. Combines companies with none of the above relationships or similarities.

Privatization

A form of deruglation ;turning over some of the functions of government to business

Merger

A merge refers to a combining of two or more companies into one single entity. There are 5 types of mergers

4. Product Extension Merger

A product extension merger combines companies selling different but related products in the same market. Example: a snack food company buys a soft drink company to expand their product line

2.Vertical Merger

A vertical merger combines supplier and company or customer and company.

3. Extension Merger

An extension merger combines companies selling the same product in different markets. Example a grocery store distribution company buys another to increase the area to which it distributes

What governmental agency is the FDA located?

Department of health and human services

Deregulation

Deregulation removes or reduces government intervention and allows the free market to operate

How does NHTSA protect the consumer?

It develops and enforces minimum performance standards on motor vehicles, including bicycles, motorcycles, automobiles, trucks, buses, mopeds, and recreational vehicles, and all accessories for these vehicles.

Federal Trade Commission (FTC)

It was created in 1914 to enforce anti-trust laws and unfair methods of competition. Its mission is to eliminate fraud, violations of consumer privacy, and deceptive marketing practices.

The Consumer Product Safety Commission (CPSC)

It was created in 1972. Its mission is to protect consumers against injuries and death associated with consumer products. It is an independent agency and does not report to any federal agency and has three main offices: New York City, Chicago, and Oakland, California

The Food and Drug Administration (FDA)

It was established in 1906. Its mission is to promote and protect the public health by helping safe and effective products reach the market in a timely manner, and by monitoring products for continued safety after they are in use.

The Securities and Exchange Commission (SEC)

It was established in 1934 to regulate the commerce in bonds, stocks, and other securities. Its primary mission is to protect investors and maintain the integrity of the securities (stocks and bonds) markets. The commission is bi-partisan and composed of five commissioners appointed the president for five-year terms.

The Federal Consumer Information Center (FCIC)

It was established to help federal agencies and departments develop, promote, and distribute useful consumer information to the public. • The center also informs consumers whom to contact for address issues, problems, and/or concerns.

The National Highway Traffic Safety Administration ( N H T S A )

Its goal is to reduce highway deaths, injuries, and property losses.

USDA responsibility change

Started under Lincoln and a lot of people were farmers and needed info to grow their crops, now includes all segments of the population. Now responsible for researching human nutrition, encourages stewardship of land, conservation and community development and monitors the safety of meat, poultry, egg

DOJ Anitrust Division

The antitrust division prosecutes serious and willful violations of antitrust laws by filing criminal suits. The antitrust division enforces: • The Sherman Anti-Trust Act. • The Clayton Act. • The Wilson Tariff Act.

Consumer Federation of America

The consumer federation of America (CFA), founded in 1968, is a large nationally recognized advocacy organization working to advance pro- consumer initiatives. CFA focuses much of its advocacy on several areas: • • • • • • Financial services. Utilities. Product safety . Transportation. Health care. Food safety.

Consumer Publications

The most reliable consumer publication is consumer reports (consumer reports online and consumer reports on TV in the united states and Canada). • It is published by consumers union (CU), an independent nonprofit product testing and information organization.

The Department of Justice (DOJ)

The part of the DOJ most connected to consumer economics is the antitrust division. It promotes and protects the competitive process through the enforcement of antitrust laws. These address price-fixing conspiracies; corporate mergers; and predatory acts designed aimed to achieve or maintain monopoly control.

SEC Fraud and Deception

The securities and exchange commission lookouts for fraud and deception in the securities market and provides investor education.

Special Interest Groups

These are two or more persons who have a common interest and seek to influence government policy and enforcement. These groups influence the government through lobbying.

Enlightened companies

They encourage their managers to look beyond the rules are and do the right thing- self regulate. They actively seeks ways to protect the interests of consumers and the enviornment

Top 5 ranked Lobbyists in the United States

US Chamber of Commerce National Association of Realtors Blue Cross/Blue Shield American Hospital Association American Medical Association

Federal Trade Commission Power

acts on behalf of consumers through a series of rules, regulations and legislation. They provide recall info, perform products tests, conduct research studies and enforce safety regulations. Includes several divisions: 1. advertising 2. marketing 3. credit 4. enforcement 5. service industries

Corrective Advertising

advertisement that disclaims previous false advertising claims and is run by a firm to cause consumers to unlearn innaccrate information.

Lobbyists

are the people who represent special interest groups and engage in lobbying the government and its representatives.

1.Horizontal Merger

combines direct competitors in the same product lines and markets in the same geographical area. Example would be two department stores in the same area merging

Wilson Tariff Act

emcompasses imports and fairness of trade. There are also codes and statements regarding falsifying, concealing or covering up by any trick, scheme or device, a material fact or by any way using fraud by mail, wire, radio or tv

What is a rule or regulation?

it is an attempt by government to control the workings of the marketplace. Agencies have the ability to develop rules and regulations

Who influences the government

lobbyists and special interest groups

Social Marketing

marketing strategies and tactics are applied to alter or create behaviors that have a positive effect or try to reverse a negative outcome for individuals, society and the environment. An example would be marketing to encourage recycling .

SEC- What are public companies required to do?

requires public companies to disclose meaningful financial and other information to the public

Sherman Anti trust act

restraint of trade and monopolies, wants to maintain a competitive enconomy. First case tried under this act was US Verse E.C Knight company where the American Sugar Refining company controlled 98% of the US sugar refining industry.

Clayton Act

statements about discrimination in price, service or facilities, discusses coroporate mergers and other processes that lessen competition

Examples of Deregulation

• Airlines. • Banking. • Cable television. • Electricity. • Telephone.

What ways do states and local governments ensure consumer protection?

• Counties, cities, small towns, and military bases have their own consumer affairs, financial, or police departments that investigate consumer complaints, hear tenant-landlord disputes, conduct investigations, prosecute offenders of consumer laws, and advocate in the consumers' interest.

Responsiblites for CPSC

• Develop voluntary standards with industry. • Issue and enforce mandatory standards for consumer products. • Obtain the recall of products or arrange for their repair. • Conduct research on potential product hazards. • Inform and educate consumers.

Federal Trade Commission 7 Divisons

• Division of privacy and identity protection • Division of advertising practices • Division of consumer & business education • Division of enforcement • Division of marketing practices • Division of planning & information • Division of financial practices

Rules and Regulations relevant to consumer economics

• Educate consumers. • Protect consumers. • Regulate sellers. -Discourage unfair, deceptive, or dangerous business practices. • Change the relationship between buyers and sellers, making certain products or practices illegal

FDA Regulations

• Food (foodborne illness, nutrition information, dietary supplements). • Drugs (prescription, over-the-counter, and generic drugs). • Medical devices (pacemakers, contact lenses, hearing aids). • Biologics (vaccines and blood products). • Animal feed and drugs. • Cosmetics (safety and labeling). • Radiation-emitting products (cell phones, lasers, microwaves).

USDA Organizations

• Natural resources and environment. • Farm and foreign agricultural services. • Rural development. • Food, nutrition, and consumer services. • Food safety. • Research, education, and economics. • Marketing and regulatory programs.

State and Local Consumer Protection

• State governments provide consumer protection through several agencies, commissions, boards, attorney generals' offices, departments of insurance, and offices of consumer affairs. • Some states have better protection measures than those of federal government agencies (e.g., California and NY), and in some cases, states handle the same sort of complaints and cases as the federal government.