on proportionally equal terms or a suitable alternative if the customer is unable as a practical matter to participate in the plan; if not, the supplier, the retailer and the promoter participating in the plan may be acting in violation of section 2 (d) or (e) of the Clayton Act and/or section 5 of the Federal Trade Commission Act.

(2) "Second, with respect to this matter of notification, you have outlined five methods which you expect to utilize. The Commission is withholding judgment as to the adequacy of the fifth method, namely, the use of a statement printed on the back of each coupon. It is doing so because it does not know how the retailer will get possession of this coupon and it believes that the statement itself is not sufficiently informative to apprise prospective retailers about the plan. But regardless of whether the stated methods of notification or others are used, the ultimate test is whether the plan has been effectively communicated to all competing customers at or about the same time within the selected marketing area and to those who, geographically, are located on the periphery of that area and in fact compete with the favored retailers." [33 F.R. 15588, Oct. 22, 1968]

§ 15.303

Commission does not object to program employing data processing equipment to collect and disseminate actual production and sales information.

(a) The Commission issued an advisory opinion telling an applicant it does not object to a proposed program to employ data processing equipment for the collection and dissemination of actual production and sales information rapidly.

(b) The program is to be made available to poultry processors. Individual identity of participants will not be revealed to others except in long-and-short emergencies. It is understood that such a situation exists when a processor finds he has an insufficient supply of chickens (i.e., he is "short") to fill the contractual obligation under a sales contract he has made; another supplier may have a surplus (i.e., he is "long"); the proposed program, in these emergencies, would permit the short and long suppliers to communicate with each other through the data processing equipment. Only in such a situation would any participants learn each other's identity.

(c) The proposal involves the collection and reporting of actual production

and sales data rapidly; it will not deal with predictions by participants nor with asking, suggested or "future" prices.

(d) The service is to be made available solely to poultry processors on a daily basis; poultry distributors, applicant says, are not interested in participating. Other subscribers may receive weekly or monthly information summaries but not daily reports.

(e) The Commission advised that it would have no objection to the proposal if implemented in the manner outlined in applicant's letter, but that this opinion is conditioned upon the submission, within nine months, of a full report indicating the manner in which the plan has worked in actual practice.

[33 F.R. 15589, Oct. 22, 1968]

§ 15.305 Sales below cost provision in ethical advertising guide.

(a) In Advisory Opinion Digest No. 249 (§ 15.249), the Commission announced that a trade association's proposed "Guide to Ethical Advertising Practices" was unobjectionable save for its unqualified condemnation of advertising sales below cost.

(b) The following revised sales below cost provision was subsequently found unobjectionable: "Members will not use below cost advertising as bait advertising. However, either merchandise or services or a combination of both may be offered below a member's total cost for limited periods of time in close-out sales, stock reduction sales, promoting offers, provided such offers are truthfully and nondeceptively made and the member fully performs according to his offer." [33 F.R. 16496, Nov. 13, 1968]

§ 15.306 Commission does not object to computerized inventory control system to be furnished suppliers by third-party promoter subject to certain safeguards for nonparticipating retailers.

(a) The Commission issued an advisory opinion concerning a computerized inventory control system to be furnished suppliers by a third-party promoter.

(b) The promoter proposes to computerize sales data and project product inventory requirements for subscribing suppliers pursuant to information periodically obtained from participating retailers.

(c) The Commission advised the applicant (the promoter) that, on the basis of the information submitted, the Com

mission does not object to the proposal subject to two safeguards for nonparticipating dealers: First, that the promoter satisfy the Commission that its subscribing suppliers "will continue to provide personal salesman service or some noncomputerized equivalent to those dealers who do not participate," and second, that suppliers "make the results of the computer analyses of sales trends and other general market information available to nonparticipants if and as they desire it." [33 F.R. 17233, Nov. 21, 1968]

§ 15.307 Foreign origin of cloth made into tablecloths in U.S.A.-permissible labeling-proposed trade name and trademark; Commission warnings.

(a) The Commission issued an advisory opinion concerning permissible labeling of tablecloths converted, dyed and finished in the United States from cloth imported in the greige from Japan, and to be sold in interstate commerce.

(b) Submitted for Commission consideration was a label containing a proposed trade name and trademark. The trade name is a newly coined word composed of the term for the nationality of a particular European country, with a suffix. The trademark looks like a European heraldic design.

(c) The Commission advised the applicant that, in its opinion, use in commerce of the proposed trade name and trademark for the tablecloths in question would probably amount to a deceptive act or practice in violation of section 5 of the Federal Trade Commission Act. The deception appears to be so pronounced, the Commission added, that it cannot be abated by qualifying words, "Made in U.S.A. of cloth imported from Japan".

(d) Further, in the opinion of the Commission, Rule 34 (b), § 303.34(b) of this chapter, under the Textile Fiber Products Identification Act, applies because the form of the cloth is basically changed and therefore the country of origin (Japan) need not be disclosed. [33 F.R. 17233, Nov. 21, 1968] § 15.308 Commission does not object to proposed acquisition by dairy products producer-processor - distributor of another processor-distributor. (a) The Commission issued an advisory opinion telling an applicant it does not object to a proposed merger on the basis of the information available at this time.

(b) The applicant (Company A) is a dairy farmer cooperative association whose members own cows producing raw milk; applicant operates processing plants in one State and sells dairy products principally to independent home deliverymen in two States. The company (Company B) to be acquired operates a processing plant in one State and sells dairy products to independent home deliverymen, grocery stores and institutions in two States. The processing plants of the two companies are not in the same State. Members of Company A presently supply about 50 percent of the raw milk needs of Company B and it is not anticipated that non-Company A members will be foreclosed as a result of the proposed merger.

(c) Company A and Company B contend that the proposed combination will result in a stronger regional business entity to compete more effectively with integrated chain stores (having their own dairy facilities) and large national dairy companies in selling dairy products to consumers.

[33 F.R. 17234, Nov. 21, 1968]

§ 15.309 Inclusion of provision in cooperative advertising agreements limit ing price advertising by retailers.

(a) The Commission rendered an advisory opinion regarding a proposal to include the following statement in cooperative advertising agreements to be drafted by the requesting party for use by manufacturer-clients for the purpose of placing a restriction on price advertising practices by their retailer-customers: "Dealer advertising will not qualify for cooperative reimbursement if it is featured at a price below the retailer's wholesale price (loss leader type) since such advertising tends to lower the quality image of the product in the consumer's mind."

(b) The requesting party explained that this provision is intended to assist manufacturer-clients to protect the quality of their brand image through providing them with the means for limiting the payment of promotional allowances to those retailer-customer advertisements which mention price at or above the retailer's wholesale price level. He took the position that such limitation would not affect any retailer's markup picture.

(c) The Commission advised that the question posed does not readily lend itself to a categorical answer which, necessarily, would be affected by the facts sur

rounding any manufacturer-client's use of the restriction. Considering the various possibilities which may arise, the Commission is of the opinion, however, that it cannot give its approval to the use of such provision in any advertising allowance program which may be used on a continuing, year-round basis. In such programs a manufacturer customarily offers to pay, on proportional terms, a fixed percentage of his customer's advertising costs at any time during the year. To incorporate such a restriction in that kind of promotional program would, in the Commission's view, have a tendency to fix or establish a permanent floor under resale prices which would be of questionable legality under the antitrust laws.

(d) The Commission further pointed out that it does not see the same objection to the use of such provision in situations where the promotional offer is made on an infrequent or intermittent basis during the year. In such instances the offer is usually made for a special purpose, such as to stimulate off-season sales or at times during the year to fit in with an overall marketing program. In these situations, the Commission advised, it does not foresee the same restrictive effects on resale prices when a manufacturer, who is otherwise complying with the law, provides that he will not pay any part of the cost of advertising featuring a price below the retailer's wholesale cost.

(e) It is, of course, assumed that the promotional advertising allowance offer will be made to all retailers irrespective of the prices that they have been charging at other times.

[33 F.R. 17626, Nov. 26, 1968]

§ 15.310 Disclosure of country of origin of imported watch bands.

(a) The Commission was requested to furnish an advisory opinion as to the necessity for the disclosure of the country of origin of a watch band or watchcase which was attached to a watch in a foreign country prior to importation into the United States.

(b) The Commission advised that in its view the fact that the watchcases are imported need not be disclosed and that the country of origin of a watchcase with a watch band permanently affixed thereto need not be disclosed, but

that the country of origin of a metallic watch band of the detachable type must be disclosed.

[33 F.R. 17626, Nov. 26, 1968]

§ 15.311

Origin disclosure of imported upper material used in shoes.

(a) The Commission rendered an advisory opinion to the supplier of certain synthetic fabric which is to be used in footwear as an upper material. The opinion dealt with various questions relating to the necessity to disclose the origin of the fabric, which is made wholly or in part in a foreign country.

(b) Sold directly to shoe manufacturers, the material will be used in the manufacture of dress and casual shoes, including playtime or tennis shoes, but not work shoes or work boots. Under one method of production, the yarn would be extruded domestically but would be woven, dyed, and backed in a foreign country. Such upper material made abroad would represent approximately 25 percent of total material costs for women's shoes and approximately 28 percent for men's shoes. Under the second contemplated method of production, the fabric will be made abroad in its entirety. Where the upper material is completely of foreign origin, it will represent approximately 35 to 40 percent of total material costs for a pair of women's shoes and approximately 40 percent of total material costs for men's shoes.

*

(c) In responding to the request for an advisory opinion, the Commission made the following general observations: (1) “* * First, the Commission construes any affirmative representation that products are made in the U.S.A., as constituting an affirmative representation that the products are made in their entirety in this country unless there is a clear and conspicuous disclosure of the origin of the imported part or parts.

(2) "Further, in the absence of any affirmative misrepresentation as to origin, the Commission is of the opinion that, under the facts as presented, it will not be necessary to disclose the country of origin of the imported upper material.

(3) "Lastly, you have inquired as to whether disclosure would be required if the shoes are manufactured by a wellknown American concern or bear a wellknown American trademark. The answer to this question would depend upon

whether, as a practical matter, the use of such name or trademark constitutes a representation of domestic origin. The Commission believes that each such case must be judged on its own merits in view of the surrounding facts and circumstances, and that no rule of general application can be announced." [33 F.R. 17627, Nov. 26, 1968]

§ 15.312 Commission declined to

ap

prove proposed three party promotional plan in the food industry.

(a) The Commission issued an advisory opinion informing an applicant that his proposed three-party promotional plan in the food industry would violate statutes administered by the Commission.

(b) Under the plan, the promoter proposes to solicit sales of TV advertising time to suppliers of products retailed principally through grocery stores. The rates charged suppliers would be based exclusively on the television time furnished the supplier. In addition, each such supplier would receive the right to have its products promoted in the establishment of participating retailers.

(c) Retail participation in the plan would be solicited by the promoter through invitations published in trade journals of general circulation to the retail trades. Retailers would participate in the plan by providing special in-store displays of products specified by suppliers who purchase advertising time on the promoter's programs and by agreeing with such suppliers to maintain during the period of the promotion a reasonable inventory of the products involved in the in-store promotion. The display obligation of each participating retailer would be geared to the participating retailer's facilities and the product or products to be displayed by that retailer. In return, participating retailers would obtain advertising on the promoter's television programs in accordance with a formula giving each participating retailer a minimum 10-second advertising spot on a television program during the specified period of promotion. Addition 1 10second spots would be allowed on the basis of the retailer's purchases during an immediate prior period of suppliers' products covered by the promotional plan.

(d) On the basis of the information submitted in connection with the application for an advisory opinion, it

appeared to the Commission that the proposed arrangements for individual negotiations between suppliers and retailers with respect to display obligations of the retailers would probably violate section 2(d) of the Clayton Act, as amended, and possibly section 5 of the Federal Trade Commission Act. Furthermore, the plan made inadequate provision for informing the retailers of their opportunity to participate.

[33 F.R. 18990, Dec. 20, 1968]

§ 15.313 Marking of 18 karat white gold ring with platinum baguette prongs. (a) The Commission rendered an advisory opinion in which it advised a ring manufacturer that it would be improper to place the following mark on rings composed of 18 karat white gold with platinum baguette prongs: "18K-Plat".

(b) In rejecting the proposed mark, the Commission cited the following two reasons: "First, since the prongs of the center stone are made out of white gold which resembles the color of the platinum baguette prongs, prospective purchasers might believe that the center prongs as well as the baguette prongs are also made of platinum. Second, to the uninitiated prospective purchaser, the proposed mark, coupled with the similarity in color of the entire ring, might mean that the ring is made in its entirety out of platinum consisting of 18 karat fineness."

(c) Similarly, the Commission also rejected two other proposed markings ("18K-10% Plat" and "90% 18K-10% Plat.") because they leave the consumer to speculate as to the exact part of the ring which is composed of platinum. Concluding that these two alternative suggestions are unacceptable, the Commission said: "Here, again, because of the similarity in color of the white gold and platinum the consumer might conclude that all of the prongs, including those for the center stone, are of platinum composition. Under these circumstances, it is not enough to merely say that the ring contains 10 percent platinum and 90 percent gold without disclosing the true composition of the various parts of the ring. In short, the Commission believes that the mark should clearly limit the platinum content to the baguette prongs and one possible suggestion would be as follows: '18K-baguette prongs Plat'. Any other language of equal clarity would, of course, be acceptable."

[33 F.R. 18990, Dec. 20, 1968]

PART 16-INDUSTRY COMMITTEE UNDER TRADE PRACTICE RULES

§ 16.1

Industry committee under trade practice rules.

The industry may, at its option, form a trade practice committee, which shall be fairly representative of the industry, to cooperate with the Federal Trade Commission in the following respects:

(a) To assist in keeping the rules of the industry active by periodically bringing to the attention of industry members the provisions thereof;

(b) To publicize and disseminate among all members of the industry Commission stipulations, orders, and opinions or administrative interpretations relating to practices covered by the rules;

(c) To meet periodically with Commission personnel for the purpose of discussing the rules, the need for their revision, and the administration thereof, the committee's function in connection with such meetings being informative only, with decisions as to any action to be taken being left solely in the hands of government officials. All such meetings shall be:

(1) Called and chairmanned by a fulltime Commission official; and

(2) Limited to a discussion of matters outlined in an agenda prepared by a fulltime Commission official.

Full and complete minutes of each such meeting shall be prepared and filed with the Commission.

(d) It is not the function of the committee to:

(1) Interpret the rules;

(2) Attempt to correct alleged rules violations;

(3) Make determinations or express opinions as to whether practices are violative of the rules;

(4) Receive or screen complaints of violations of the rules; or

(5) Perform any other act or acts within the authority of the Federal Trade Commission or any other governmental Agency or Department.

(e) All complaints of industry members and other parties respecting rule violations should be made directly to the Commission. In the event any complaint is received by the committee, or any information is brought to its atten

tion indicating a probable violation of a rule, all relevant information with respect thereto shall be promptly transmitted by the committee to the Commission without the committee contacting the party or parties alleged to have violated the rule.

(f) Immediately after its formation the committee shall inform the Commission of the identity of the members thereof, the names and addresses of the companies or concerns represented by such members, and shall supply the Commission with information showing that the membership of the committee is fairly representative of the industry. Changes in composition of the committee shall be reported to the Commission as soon as they may occur.

(g) Full and complete minutes of all meetings of the committee, identifying the members in attendance and informative of the matters discussed and actions taken, shall be kept. The minutes of the meetings falling under paragraph (c) of this section shall be filed with the Commission, and the minutes of all other meetings shall be kept by the committee and be made available to the Commission on request.

(Sec. 6, 38 Stat. 721; 15 U. S. C. 46) [21 F. R. 1174, Feb. 21, 1956]

PART 17-APPLICATION AND DEFINITIONS

Sec.

17.1

17.2

Definition of "commerce."

Application of guides and trade practice rules in preventing unlawful competitive restraints.

17.3 Definition of Group I rules. 17.4 Definition of Group II rules.

AUTHORITY: The provisions of this Part 17 issued under sec. 6(g), 38 Stat. 722; 15 U.S.C. 46(g).

SOURCE: The provisions of this Part 17 are derived from the Trade Practice Conference rules in this subchapter.

§ 17.1 Application of guides and trade practice rules in preventing unlawful competitive restraints.

(a) Industry guides are administrative interpretations of laws administered by the Commission for the guidance of the public in conducting its affairs in conformity with legal requirements. They