will be imported from Japan. The fasteners either will be imported in bulk and repackaged in small cardboard cartons in this country or will be packaged in individual cartons in Japan.

(b) The opinion advised that in the Commission's view the country of origin of these fasteners must be disclosed in a clear and conspicuous manner on the package in which they are sold and that neither directly nor indirectly could the importer imply that they were made in the United States.

[33 F.R. 7488, May 21, 1968]

§ 15.252 Location of foreign origin disclosure.

(a) Responding to a request for an advisory opinion, the Commission said today that the disclosure of the foreign country of origin of imported fishing reels must be made in a location where it would be readily observed by prospective purchasers.

(b) Under the factual situation presented to it in the advisory opinion, the imported fishing reels are plainly marked as to their specific foreign country of origin. It is anticipated, however, that the reels will be packaged for resale in the United States in a vinyl zipper case and then placed inside a cardboard carton. Information as to the exact manner in which the reels will be displayed at the point of sale was not available.

(c) The question presented to the Commission was whether it would be necessary to make the foreign origin disclosure of the reels on the case or the outside of the cardboard carton, or on both.

(d) After pointing out that it could not give a specific answer as to the exact location of the foreign origin disclosure because it had not been advised of the exact manner in which the reels would be displayed at the point of sale, the Commission stated: "Whenever an affirmative disclosure of origin is required in order to prevent deception, the general rule is that the marking must be legible and must be placed in a location where it would be readily observed by prospective purchasers making a casual inspection of the merchandise prior to, and not after, the purchase thereof. This means, of course, that if the reels are displayed at the point of sale in a cardboard carton, a conspicuous disclosure would have to be made on the outside of the carton. A similar disclosure would be required on the vinyl case, if the reels are displayed

only in the case. On the other hand it follows that the disclosure on the reels would be sufficient: Provided, That the reels are displayed at the point of sale in such a manner that prospective purchasers could readily observe the disclosure thereon prior to the purchase of the merchandise."

[33 F.R. 7488, May 21, 1968]

§ 15.253 Extended credit terms for newly established stores in impoverished urban areas approved.

(a) The Commission advised an apparel manufacturer that under the circumstances described his proposed plan would not likely contravene laws administered by the Commission.

(b) The manufacturer proposes to give extended credit terms to one class of his customers, excluding other classes. Those to whom extended credit are to be given are described as follows:

(1) The business is a newly established business located within an urban, inner core, ghetto-type area,

(2) The proprietor or principal owner of the business is a resident of the urban, inner core, ghetto-type area within which the business is located.

(3) In light of its ownership, management, and location the business stands a reasonable chance of survival. (c) To such customers the following extended credit terms will be offered: (1) One year's credit on orders placed during the first month of operation,

(2) Six months credit on all orders placed thereafter.

(d) The extended credit given is to be limited to the first 5 years of a new store's operations. It was also proposed that such new firms be given on an introductory basis certain in-store and point-of-sale advertising materials, not to exceed in total value (i.e., cost to the requesting party), the sum of $500.

(e) The Commission felt that there would be little, if any substantial competition between the favored and disfavored customers.

(f) The Commission announced that it would not, currently at least, challenge the requesting party's proposal.

(g) The Commission noted further that if changed circumstances required a change in the Commission's present views, the requesting party would be given ample opportunity, as provided by the Commission's rules of practice, to modify or abandon, without penalty, the presently approved proposal.

(h) One year subsequent to the initiation of this program the requesting party was requested to submit to the Commission a report describing the details of the implementation of the plan together with any objections it may have received. [33 F.R. 7720, May 25, 1968]

§ 15.254 Operation of exclusive checkcashing concessions in retail stores. (a) The Commission rendered an advisory opinion to the effect that it would not be illegal for a company to operate a proposed check-cashing program pursuant to which it would function as the check-cashing concessionaire within subscribing retail establishments.

(b) Under the plan as presented, the company would charge check-cashing customers a 10-cent fee for all checks drawn for sums greater than the amount of the purchase and would pay to the subscribing retailers a portion of that fee as consideration for the grant of concession rights. The company would assume the entire burden of bad-check risks and collection efforts.

(c) The subscribing retailers and their employees would act as agents of the company by performing the actual check-cashing function, following procedures required by the company and utilizing the company's information system. Money used in cashing checks for sums greater than the amount of the purchase would be the retailers' money and the retailers would deposit all checks and fees collected by them in their own banks. Out of the fees so collected and deposited, the subscribers would remit to the company 7 cents per check cashed, including checks drawn in the amount of the purchase, although no fee would be charged the customer for such checks. The company would pay the subscriber the full amount of all bad checks and would assume the function and risks of attempting to collect on such checks.

(d) The subscribing retailers would retain the difference between the amount paid the company and the aggregate fees collected as their basic consideration for granting the concession rights and could realize additional consideration from a reserve to be maintained by the company. The company would run its own credit check of all applicants for and holders of checkcashing courtesy cards, issue cards inscribed with the retailer's name, keep the credit information up to date and

operate, using moneys and employees of the subscriber and at locations within subscriber's outlets, check-cashing concessions which would be furnished with on-line telephone reports of information contained in the company's records.

(e) The agreements to be executed with the subscribers would give the company the exclusive check-cashing concession rights within the stores for a period of 24 months, subject to an initial right of cancellation by the subscriber at the end of the first 5 months. The only cost to the subscriber in exercising this latter privilege would be the loss of the initial set-up charge paid upon installation of the concession in the store. After the expiration of the 24month period, the agreements would be renewable for 1-year periods at the option of the parties. The company also advised that to its knowledge no one else is presently engaged in operating such check-cashing concessions.

(f) The company expressed primary concern with two legal issues created by this proposed plan. The first had to do with whether the company's separate agreements with subscribers, each providing for the collection of a 10-cent fee, would be deemed a horizontal pricefixing conspiracy. Second, the company inquired as to whether the exclusive aspect of the agreements makes them objectionable under section 5 of the Federal Trade Commission Act.

(g) With respect to the first question, the opinion advised that in the Commission's view, based upon the facts presented, the only price involved is the company's own price for the service rendered and hence no question of a price-fixing agreement should arise. With regard to the second question, the Commission was of the opinion that the time periods involved in these exclusive agreements should not result in unreasonable restraints of trade considering the fact that this is a small company seeking to establish itself in a new field of endeavor where there are no existing competitors and where a substantial outlay of capital and the assumption of considerable risk will be required. Here, the Commission was influenced by the fact that subscribers have the opportunity to terminate the arrangement at the end of the first 5 months and again at the expiration of the 24-month period and that renewals will be for 1-year periods only.

(a) The Commission rendered an advisory opinion in regard to the proper marking of the origin of flatware which is imported in substantial part. Specifically, the following three questions were ruled upon by the Commission.

(b) First, can flatware which is gold plated in the United States be marketed without disclosing the foreign origin of the imported stainless steel blanks, if it is sold under a trade name consisting of a company name suggesting domestic origin hyphenated with the word "American"? (The gold plating will cost from 30 percent to 50 percent of the total cost of the finished product.)

(c) Second, if the trade name referred to above in the first question is not used, will it then be necessary to disclose the foreign origin of the imported stainless steel blanks?

(d) Third, if a disclosure is required, must it be stamped on the flatware itself or can it be placed on a string tag attached to the flatware or on the container?

(e) In response to the first question, the Commission said that the use of the proposed trade name would constitute an affirmative respresentation, contrary to fact, that the entire product was made in the United States. Since a substantial portion originates in a foreign country, it will then be necessary to clearly disclose the country or origin of the imported stainless steel blanks in immediate connection with the trade name wherever it is used, both in advertising and labeling.

(f) In response to the second and third questions, the Commission said that disclosure of the origin of the imported components would be required even though the company elected not to market the flatware under the proposed

trade name. The Commission also stated that the disclosure may be made on the flatware itself, or on a string attached thereto, or on the container, provided the disclosure is of that degree of conspicuity and permanency as will likely be observed by prospective purchasers making a casual inspection of the merchandise prior to, not after, the purchase thereof.

[33 F.R. 7882, May 30, 1968]

§ 15.256

Use of unqualified word "Diamond" to describe abrasive discs containing other materials.

(a) The Commission was requested to render an advisory opinion concerning the legality of describing abrasive discs or laps containing diamond and other abrasives as "Diamond Discs".

(b) The manufacturer presently produces diamond coating laps which are a single layer of diamond held in a plated nickel bond and uses only diamond as the abrasive. It now plans to produce a companion product line and add another abrasive particle as a filler. For example, it would mix aluminum oxide with the diamond, with the ratio of diamond to aluminum oxide being as low as one to ten and, in any event, the filler would be more than 50 percent.

(c) The opinion advised that in the Commission's view such an abrasive disc or lap could not truthfully be described as simply a "Diamond Disc." The opinion further advised that nothing in the law would prevent use of the word "Diamond" as part of a truthful description of the product, but that if the manufacturer did elect to use it, considering the low percentages of diamond which were contemplated, it should only be used as a part of a full disclosure of all the abrasive materials used, including the percentages of each.

[33 F.R. 8539, June 11, 1968]

§ 15.257 Legality of trade association suggesting rental rate for containers in which industry products are sold. (a) The Commission was requested to render an advisory opinion concerning the legality of a trade association suggesting a rental rate for the containers in which the product of the industry is sold if such rate is lower than the standard charge now being made.

(b) The members of the association are engaged in the sale of a product in returnable containers many times the value of the product itself. The practice

in the industry today is to charge a daily or monthly rental for the time during which the containers are held beyond 30 days. Some of the members would now like to go to a straight rental and feel the best way to do this would be through the association.

(c) The Commission advised that implementation of this proposal by the association would be likely to result in a violation of law without regard to the ultimate rental set, whether higher or lower than the existing rate. Even though couched in the form of a suggestion, the natural and probable result of such an action would, the opinion stated, be to persuade substantial numbers of the members to charge the rate suggested, thus leaving an almost inescapable inference of an agreement among competitors to charge a common rate. Such an agreement would be a clear restraint of trade under existing law, the Commission added.

(d) It was the Commission's opinion that the rental rates to be charged by the members should be determined by the natural forces of competition, not by concerted activity on the part of the members acting through their trade association or otherwise.

[33 F.R. 8539, June 11, 1968]

§ 15.258 Promotional assistance plan limited in value to percentage of purchases.

(a) The Commission approved, with modifications, a proposed promotional assistance plan.

(b) The requesting party will be offering cooperative advertising allowances under the program in question for a limited period of time. The dollar value of the allowance offered is to be measured at 12 percent of the dollar value of a particular account's purchases for the calendar year 1967. Certain new counts will also be able to participate, if they will. The 12 percent limitation for new accounts will be based on an estimate of the annual dollar volume of business reasonably to be expected from such new accounts.

ac

(c) The offer specifically provides for an allowance of 60 cents per unit purchased.

(d) The requesting party will require the following performance from those accepting its offer:

(1) The product must be promoted with an advertised price that is below normal shelf price.

(2) The ad must be at least 3 column inches.

(3) The advertisement must run in all paid circulation newspapers normally used by the Account, and in no event may those newspapers cover less than 75 percent of the Account's marketing area.

(4) Eligible advertising must be an integral part of the Account's omnibus advertisement and not set apart from the regular advertisement.

(5) Advertisement must run before a specified date.

(6) Advertising placed under this agreement will not be accepted as performance under any other cooperative advertising program for the same period.

(7) If the account is unable to utilize newspaper advertising, a representative should be contacted to arrange for an alternative proportionately equal method of performance.

(e) Proof of performance under the offer will be required from participants.

(f) Notwithstanding the statement of the requesting party that the offer will be made to "certain" new accounts, the Commission understands that the offer I will in fact be made to all entitled customers. Furthermore all customers who in fact compete on the same functional level will be afforded an opportunity to participate whether they buy direct from the requesting party or through an intermediary.

(g) The plan as above outlined was acceptable to the Commission provided promotional funds are not disbursed in excess of the actual cost of the advertising. Without such a limitation larger participants in the promotion, buying in larger quantity, might enjoy a cash overage not available to smaller competitors thereby occasioning possible violation of sections 2 (a) or (d) of the amended Clayton Act.

[33 F.R. 8539, June 11, 1968] § 15.259

Commission has no objection to proposed merger of two noncompeting quarry and building materials companies.

(a) The Commission issued an advisory opinion telling applicants it has no objection to their proposed merger.

(b) According to the information submitted in connection with the application for an advisory opinion, the two companies do not sell to the same customers nor do they sell in the same geographic

(a) Responding to a request for an advisory opinion, the Commission took the position that it would be improper to use the term "X Grown Emeralds" as descriptive of synthetic stones.

(b) In expressing the opinion that the proposed phrase would not constitute a proper disclosure of the nature of the product and the fact that it is not a natural stone, the Commission said: "This conclusion is based upon the belief that most consumers would probably ascribe to the word 'grown' its more commonly accepted meaning, namely, one of natural growth, and thus conclude, contrary to fact, that the product is a cultured stone. Under these circumstances, therefore, the Commission is of the opinion that use of the proposed term would not be in compliance with sec. 5 of the FTC Act because the stones are synthetic, not cultured."

[33 F.R. 9287, June 25, 1968] § 15.261

Promotional assistance based on percentage of purchases during a fixed time period.

(a) The Commission was requested to render an advisory opinion with respect to the legality of a supplier's proposed promotional program under an outstanding Commission order which, in pertinent part, prohibits the supplier from making promotional payments to its customers in a discriminatory manner. According to information provided by the supplier, all its sales are made to retailer customers-distributors or other intermediaries are not utilized in the the distribution of the supplier's products.

(b) Under the proposed program as set forth and explained by the supplier, promotional allowances would be made available to all customers of the supplier and could be applied by the customers to the costs incurred by them in three categories of advertising and promotional activity: Point-of-sale materials, cooperative advertising in daily and Sunday newspapers listed in Standard Rate and Data; and so-called other store promotions, including advertising in newspapers not listed in Standard Rate and Data, catalog and local radio

and T.V. advertising, envelope stuffers, and sales incentive programs and contests.

(c) Further, the amounts of such allowances would be determined at

the rate of 7 percent of each participating customer's net purchases from the supplier in a 6-month period, although this figure could be adjusted within any given trading area (defined by Management Survey of Metropolitan County Areas) as operating experience requires. In the case of Standard Rate and Data newspapers, the allowances could be applied to two-thirds the cost of such advertising, and for all other forms of eligible advertising and promotional activity, allowances could be applied to the full cost of the activity. In all cases, and whether any customer chooses to participate in any or all of said categories of advertising and promotional activity, the supplier's total contribution to the customer's costs would be subject to the 7 percent of purchases limit. Allowances earned but not used by any customer in a 6-month period could not be carried forward to the following such period.

(d) Regarding the point-of-sale materials, the supplier would mail or deliver quantities of these materials to all customers, and each customer would be advised in advance that such point-ofsale materials would be charged against his available promotional and advertising allowances, unless returned to the supplier within 10 (ten) days of receipt, by mail or delivery to the supplier's salesman.

(e) The supplier was advised that the proposed promotional program, if implemented in a nondiscriminatory manner, would not be in violation of the Commission's order or section 2(d) of the Clayton Act.

(f) The Commission cautioned that its opinion was predicated upon the supplier's assurance that all provisions of the proposed program, particularly that concerning the availability of cooperative advertising allowances for advertising in non-Standard Rate and Data newspapers, providing only that such newspapers have verifiable costs and circulation, and that concerning the return privilege regarding point-of-sale materials which would be mailed or delivered to the supplier's customers, would be effectively communicated to all customers of the supplier.