The Line of Business Program—The FTC's New Tool

Supporting Statement, FTC Form LB, 1974 Survey Version, p. 1.

Master File Misc. No. 76-0116, pp. 27–30.

Discussions with FTC attorney, August 1977.

The approach to defining LBs in the fiscal year 1974 LB Form is somewhat more flexible than it was in the original 1973 form. The FTC moved away from a strict “establishment-oriented” method of defining LBs to the “basic component” idea after considerable discussion with reporting companies and others. Other improvements also were made in the 1974 form in attempts to lessen the burden of compliance.

Section 6 (b) is most relevant and states: The Commission shall also have power—(b) To require, by general or special orders, persons, partnerships, and corporations, engaged in or whose business affects commerce, excepting banks and common carriers subject to the Act to regulate commerce, or any class of them, or any of them, respectively, to file with the Commission in such form as the Commission may prescribe annual or special, or both annual and special, reports or answers in writing to specific questions furnish-as to the organization, business, conduct, practices, management, and relation to other corporations, partnerships, and individuals of the respective persons, partnerships, and corporations filing such reports or answers in writing. Such reports and answers shall be made under oath, or otherwise, as the Commission may prescribe, unless additional time be granted in any case by the Commission.

The Financial Accounting Standards Board, in its FAS No. 14, requires segment information on companies for the first time in 1977, and the SEC has required limited segment information on registered companies for several years. However, since management can largely determine the nature of its reporting for these two purposes, the sufficiency and comparability of this information is questionable.

Industry figures will be published by groupings of no less than four firms.

See “Will Energy Conservation Throttle Economic Growth?”, Business Week (25 April 1977), pp. 66–80, for an indication of the concern being given the labor-technology mix.

Business Week (27 June 1977), pp. 52–58.

Ibid.

See Items 9, 10 of Schedule III (A) of Form LB.

Review of Economics (February 1973), pp. 127–131.

Of course, these figures will also show those areas where greater growth by merger should be considered!.

Supporting Statement, FTC Form LB, 1974 Survey Version, July 1, 1975, p. 23.

For a dimension of the need for adequate information, see Goldschmid Harvey J. Mann H. Michael Weston J. Fred (eds.), Industrial Concentration (Boston: Little, Brown, 1974).

Accountants International Study Group, Series No. 5, Reporting by Diversified Companies (New York: AICPA, 1972), paragraph 33.

See Backer Morton McFarland W. B. , External Reporting for Segments of a Business (New York: National Association of Accountants, 1968); Mautz R. K. , Financial Reporting by Diversified Companies (New York: Financial Executives Research Foundation, 1968); and Accounting and Auditing Research Committee, “Financial Reporting of Diversified Operations,” Chartered Institute of Canadian Accountants Handbook, Section 1700.

Mautz , op. cit., p. 133.

Ibid., p. 358.

Bureau of Economics Staff Memorandum, 1974 Form LB Revision, p. 11.

Ibid., pp. 12, 13.

Bock Betty , “Line-of-Business Reporting: A Quest for the Snark,” The Conference Board Record (November 1975).

Bureau of Economics Staff Memorandum, p. 13.