Business Glossary

legislation that forbids quoting different prices to competing customers unless such price discrimination is justified by differences in costs of manufacturing, sales, or delivery.

requirement by the Federal Trade Commission as well as various state and local government agencies, that advertisements not make misleading, false, or deceptive claims. An advertisement can be deceptive without being an outright lie depending upon the perception it creates in the mind of the consumer. For example, a product that calls itself "light" may be nothing more than a slightly lower calorie version of its regular formula but will be perceived to be a low-calorie product. Or a beverage called an "orange juice drink" may contain primarily sugar and water with a minuscule juice content. Deceptive advertising can be accomplished with pictures as well as with words. In one famous case, a soup manufacturer placed marbles in the bottom of the bowl so that the contents of the soup rose to the surface in a photograph taken for their advertisements. An advertisement can also be considered deceptive if it makes a claim that is true but also leads the consumer to believe falsely that the same claim could not be made by competitive brands. For example, using "fat free" claims on a bottle of maple syrup might lead consumers to believe that other syrups contain fat.

1914 federal consumer protection legislation that prohibits certain monopolistic practices and other impediments to free market competition, including price discrimination, mergers that may lessen competition, tying agreements and exclusive dealings. The Clayton Act also holds corporate officials personally liable for damages resulting from activities in violation of the Act's rulings. The Clayton Act was designed to be more effective in preventing threats or potential threats to competition than the 1890 Sherman Antitrust Act. The Sherman Act does not come into play until after a violation is committed and has impeded competition. The Clayton Act is enforced by the Federal Trade Commission in conjunction with the Department of Justice.