The Federal Trade Commission v. Winsted Hosiery Company case in 1921 revolved around the question of whether the Federal Trade Commission (FTC) had jurisdiction over unfair competition practices that did not directly affect other states, but only indirectly through a chain of commercial operations. The FTC accused Winsted Hosiery Company, a Connecticut-based corporation engaged in manufacturing and selling hosiery products, of using deceptive labels on their goods to mislead consumers about their quality and origin. The Supreme Court ruled in favor of the FTC stating that it indeed has authority over such matters as they fall under interstate commerce regulations. This decision reinforced the power and scope of federal regulatory agencies like FTC to regulate business practices even if their impact on interstate commerce is indirect.

In the dissenting opinion for Federal Trade Commission v. Winsted Hosiery Company, Justice McReynolds argued that the majority's decision was a misinterpretation of the Federal Trade Commission Act. He contended that Congress did not intend to give such broad powers to an administrative body like FTC without clear and specific language in the statute. According to him, FTC should only have authority over unfair methods of competition if they are defined as unlawful by other statutes or common law principles; it cannot define what constitutes "unfair" on its own discretion. Furthermore, he believed that allowing FTC to determine what is "unfair" would lead to arbitrary and inconsistent decisions because there were no standards or guidelines provided in the legislation for determining this term. This could potentially undermine businesses' confidence due their inability predict whether their actions will be deemed illegal by FTC.