Practices Covered by Stipulations Some of the practices covered by stipulations approved during the fiscal year were: In four stipulations the parties agreed to stop advertising that their products offered protection against "Asian Flu." In 44 stipulations manufacturers or distributors of fur products agreed to discontinue practices violative of the Fur Products Labeling Act, including misbranding, false invoicing, and false and deceptive advertising. An automobile manufacturer agreed not to represent that certain. of its automobiles have the same engine or engines of the same horsepower, unless this is a fact. Two sellers of devices containing radioactive materials agreed to label their devices so as to warn users of the possible harmful effects of these materials. A baking company agreed to discontinue advertising claims that consumption of its bread will cause the consumer to lose weight or prevent him from gaining weight. In 14 stipulations advertisers of medicinal preparations, some to be taken orally and others to be applied externally, agreed to discontinue claims that their products have any beneficial effect on rheumatism, arthritis, neuritis or other arthritic or rheumatic conditions or their symptoms beyond temporarily relieving minor aches and pains. A radio station agreed not to misrepresent the length of time it had served a community. Eight manufacturers or distributors of wool products entered into agreements providing for the labeling of these products in accordance with the requirements of the Wool Products Labeling Act. Six companies engaged in the sale of watches agreed not to represent that their products are guaranteed unless the nature and extent of the guarantee and the manner in which the guarantor will perform thereunder are clearly and conspicuously disclosed. In 10 stipulations manufacturers or distributors agreed to stop misrepresenting the prices of their various products. Two truss manufacturers agreed not to advertise that their product will retain hernias or ruptures unless expressly limited to reducible hernias or ruptures. Twelve sellers of rugs, blankets, and various articles of wearing apparel agreed not to misrepresent the fiber content of these products. Four firms engaged in locating delinquent debtors agreed not to use any form, questionnaire, or other material which misrepresents or fails to reveal the purpose for which information is requested. Four publishers of paperback books agreed to disclose when a book is abridged or has been published previously under another title. Three manufacturers of cigars and other tobacco products agreed to disclose that certain of their products have paper binders. Four sellers of various products imported from foreign countries agreed to disclose the country of origin. Two manufacturers of water pumps agreed not to misrepresent the capacity of their pumps. Two manufacturers of juice extractors agreed to discontinue representations that fruit or vegetable juice extracted by their products will assure good health. Three manufacturers agreed not to represent their shoes as "hand sewn" except as to such parts that are. A vending machine manufacturer stipulated that he would not misrepresent the profits which may be realized by purchasers of his machine. A corporation offering correspondence courses agreed not to use the word "Institute" in its corporate name or otherwise. A directory publisher stipulated not to represent that his publication or business is connected with the United States Government. An advertiser of a hair-and-scalp preparation agreed to discontinue claims that use of this preparation will prevent loss of hair. Initial Compliance During the fiscal year 136 reports of compliance submitted by parties to recently approved stipulations were received and filed as showing satisfactory compliance. Sixteen reports not considered satisfactory or needing further investigation were referred to other Bureaus for appropriate attention. Two matters were reported to the Commission with recommendation for filing. Fifty-seven matters were pending at the close of the year. Stipulation Compliance Check The following is a summary of the program for checking compliance with older stipulations: Referred to the Bureau of Investigation for further attention... 2 37 Total On hand at end of period--- 295 85 DIVISION OF SMALL BUSINESS The purpose of this Division, which completed its fourth year of operation June 30, 1958, is to assist small business in obtaining the protection afforded by the laws administered by the Commission and to advise as to their requirements. Its principal functions are: 1. To give informal staff advice to small-business men on how to conduct their businesses within the statutes administered by the Commission; 2. To advise small-business men as to the proper method of preparing applications for complaint against illegal practices of competitors. 3. To expedite through the Commission those matters involving practices which adversely affect small business; 4. To perform liaison functions with the House and Senate Select Committees on Small Business, the Small Business Administration and other agencies dealing with the problems of small business; 5. To inform small-business men of the functions and jurisdiction of other governmental agencies concerned with their interests. Description of Work The Division handles problems pertaining to both unfair and deceptive acts and practices and those falling within the antitrust laws. In general, these problems involve questions relating to proposed courses of business practices in which the inquirer is engaging or intends to engage or which are being engaged in by a competitor, as well as discriminatory practices of suppliers. Informal advice is provided regarding the applicability of statutes administered by the Commission to the particular practice involved following the necessary research, consultation, or liaison work required. That advice is supported by case citations, Commission releases, and other official papers, when appropriate. ECONOMICS Chapter Nine The functions of this Bureau are to give economic and statistical assistance to the Commission in its investigative and trial work, to make economic studies for publication in response to requests by the Commission, by Congress, or by the President, and to compile and publish quarterly financial reports covering manufacturing corporations. The first two functions are performed by the Division of Economic Evidence and Reports and the third by the Division of Financial Statistics. DIVISION OF ECONOMIC EVIDENCE AND REPORTS The Commission's Economic Report on Antibiotics Manufacture was completed and sent to the Government Printing Office in June 1958, publication being scheduled for late July. This study, begun by direction of the Commission in 1956, relied primarily on data requests sent to the manufacturers in July 1956 and May 1957. The fiscal year 1958 was occupied with analysis of the returns from the second and longer data request, drafting and revising the report, and a legal investigation which followed leads developed by the economic inquiry. The study covered only the manufacture of antibiotics. Funds and manpower were not available to extend it to the distribution of manufactured products through wholesaling and retailing channels, doctors, and hospitals, to the ultimate consumers. The intention of the study was to shed light on a branch of industry regarding which few facts were publicly known, partly because much of its development took place during World War II, when secrecy was required, and partly because manufacture of antibiotics is not a separate industry but a segment of the pharmaceutical industry. The economic report traces the industry's development from the discovery of penicillin in England in 1928, through the beginnings of manufacture in the United States between 1941 and 1943, to the flourishing industry of the present day. Net sales reached $344 million in 1951, and by 1956 had not passed that figure although the physical output had doubled. In 1956 twelve manufacturers were producing antibiotic substances, with almost half the product value being accounted for by the two largest producers. The industry was developed through the work of research laboratories and on the basis of patents. Sodium and potassium penicillin, the first products, were never patented. Streptomycin, the next important antibiotic developed, was patented by Rutgers University, which licensed the manufacturing rights to various companies. The later improvements on penicillin, streptomycin, and other antibiotics discovered since that time have been patented by private companies. Product improvement and the discovery of new products through organized research and testing are significant if not dominating factors in the industry's development. New products are then marketed under the trademarks of the patentees or of other companies licensed by the patentees to manufacture them. The most important group of these patented antibiotic substances consists of the four broad spectrum antibiotics, which have the capacity to attack a wide range of diseasecausing organisms and whose dollar sales in 1956 were about half of the grand total. As a result of declining production costs and competition among numerous producers, the prices of the older forms of penicillin and of the streptomycins had declined in 1956 by approximately 99 percent from their original levels. There has been a good deal less price competition in the broad spectrum antibiotics-whose prices have been identical and unchanged since 1951-and other recently found specialties. When the 1956 quoted prices of the tablet forms of these newer drugs are translated into terms of cents per gram, the range is from $1.12 to $1.51 a gram. The tablet forms of the older antibiotics were being quoted by the same manufacturers at prices equivalent to 91 cents per gram or less. Figures submitted by the companies indicated that profits on some of the newer antibiotics before taxes went as high as 35 to 40 cents on each dollar of sales, whereas profits on the older penicillins and streptomycin averaged nearly zero or reflected actual deficits. In the absence of significant price competition among these newer antibiotics, they have been marketed by aggressive promotional methods similar to those used in the sale of other ethical drugs. Such efforts are directed at the physician since consumers merely purchase the drugs prescribed by their doctors. This special situation for consumers is characteristic of the ethical drug industry and strongly influences its competitive pattern. The Division also rendered assistance to the Bureaus of Investigation and Litigation in their antimerger work. This consisted of compiling statistical data, analyzing economic evidence, and preparing |