OFFICE OF EXPORT TRADE

The Office of Export Trade administers the Webb-Pomerene (Export Trade) Act (15 U.S.C. § 61-65).

The legislative purpose of the act was to confer immunity from civil and criminal prosecution under the Sherman antitrust law, with proper safeguards to restraints of trade within the United States, in order to facilitate the movement of American products to foreign countries and to enable exporters to compete successfully in foreign markets.

The law sanctions U.S. business competitors to organize an export trade association for the purpose of engaging exclusively in export trade. Each such association is obliged to file with the Commission a statement giving information concerning its officers, its stockholders or members, and its place of business. It must also furnish a copy of its articles of incorporation or its contract of association.

Traditionally associations which have registered under the statute have reported a broad range of trading advantages derived from the act's permissive features. The chief benefits are realized from the absence of competition; greater economies in the profit potential of marketing; improved skills and less expense in the exploitation and expansion of foreign markets; stronger ability to negotiate foreign trade impediments and other advantages which accrue through cooperative action.

408 U.S. corporations have organized 35 export trade associations. These associations have a variety of functions. They may purchase the members' products and sell them to foreign buyers at terms agreed upon by the members. Others serve as central selling agents for their members. Some associations direct the exports of members solicited by agents established by the members abroad.

These associations export a wide variety of products, including machine tools, motion pictures, rubber tires and tubes, raw materials, ores, lumber, and agricultural products, textiles, and paperboard.

Section 4 of the act is an amendment to the Federal Trade Commission Act. It extends the jurisdiction of the Commission to unfair methods of competition in export trade even though the acts constituting such unfair practices are done overseas.

The Office of Export Trade acts as the guardian of export trade associations, always watchful that the activities, practices, and policies of the association are conducted according to law. The Office also advises American businessmen as to the formal and operational standards of the act and cooperates with and assists other bureaus of the Commission and Departments of Justice, State, and Commerce on international trade problems.

The approximate value of American products shipped abroad by export trade associations during the last 2 years is as follows:

As principal legal adviser to the Commission, the General Counsel, with the primary assistance of an Assistant General Counsel who specializes in this field, advises the Commission upon legislative matters.

Of primary importance to the Commission was the enactment of Public Law 86-107, the Sparkman-Celler Act, approved July 23, 1959, which amended the Clayton Act to make orders to cease and desist under that act final in the same manner as orders issued by the Commission under section 5 of the Federal Trade Commission Act. The Commission had been seeking such legislation for over 20 years.

Prior to the amendment, an order issued under the Clayton Act had no finality. If such an order was violated, the Commission then, but only then, could petition to a U.S. court of appeals for a decree of enforcement. After enforcement by the court, a further violation could subject the violator to contempt-of-court proceeding. The amendment now makes possible faster and more effective enforcement of orders issued under the Clayton Act since a violation of such an order which has become final by operation of law may be proceeded against by civil penalty suit.

Another major legislative objective failed of enactment. This was the proposal to require that notification of proposed mergers be made to the Commission by corporations of significant size engaged in interstate commerce. An important corollary provision was that of authorizing the Commission to apply to the Federal district courts for preliminary injunctions against proposed mergers or to maintain the status quo in instances where mergers have already been accomplished, pending completion of the litigation as to violation of section 7 of the Clayton Act.

While it is true that corporations contemplating mergers have the privilege of obtaining opinions from the Federal Trade Commission and the Department of Justice on the legality of such actions, this premerger consultation is not mandatory and is relatively infrequently sought. This means that the Commission must, to a large extent, rely on financial newspapers, trade journals, investment manuals, and the like for the first news of mergers.

The need for the legislation arises from the fact that, by the time the Commission can institute antimerger proceedings and effectuate appropriate orders, the merging companies may have become so intermingled that the problem of "unscrambling eggs" is encountered, or respondent corporations may divest themselves of assets acquired through merger, thus complicating the efforts of the Commission to restore premerger competitive conditions.

The Textile Fiber Products Identification Act, Public Law 85897, enacted September 2, 1958, became effective 18 months thereafter on March 3, 1960. The act, in general, takes up where the Wool Products Labeling Act of 1939 left off, being designed to cover the field of textile fiber content labeling and advertising, except as already covered by the Wool Products Labeling Act. Although primarily for the benefit of the consumer in providing truthful disclosure of fiber content, other objectives are to provide protection to textile producers, manufacturers, and distributors from the unrevealed presence of substitutes and mixtures.

The Federal Trade Commission is authorized to enforce the act through administrative procedures provided under the Federal Trade Commission Act. Violators are subject to orders to cease and desist, and, under specified circumstances, temporary injunctions pending Commission proceedings may be sought in U.S. district courts. Misdemeanor provisions are provided for willful violations.

In the course of legislative work during fiscal 1959, the Commission reported on 103 bills and legislative proposals. In addition, oral presentation and participation was made with regard to 19 bills or items of congressional committee consideration.

CONSULTATION

Chapter Eight

This Bureau is responsible for executing the Commission program to secure voluntary compliance with the laws that it administers. Emphasized in this program are the prevention and correction of violations of law through education, advice, and informal negotiation. The principal general educational tools are Trade Practice Rules and Guides. Individualized advice to business is provided through interpretations of Rules and Guides and answers to inquiries of small businessmen. Alleged law violations are corrected informally and expeditiously through the Stipulation program and Trade Practice Rule and Guide provisions.

During the year, the Commission issued Guides Against Bait Advertising and Guides Against Deceptive Advertising of Guarantees, two principal areas of consumer deception.

The Bureau, through simultaneous negotiations with major cigarette manufacturers, secured agreement to eliminate tar and nicotine claims from their advertising-a noteworthy example of industry-government cooperation to eliminate alleged deceptive advertising. This industrywide treatment avoided competitive inequities.

The same purpose eliminating alleged misleading advertising simultaneously among competitors-prompted invitations to a group of District of Columbia furniture retailers to discuss comparative price advertising. This meeting resulted in commitments from those in attendance and several others to comply with the Guides Against Deceptive Pricing.

An effort was made to extend beyond the jewel industry the prophylactic effect of the Trade Practice Rules for Jewelry against false advertising. Representatives of leading retailers selling jewelry— department stores, chain variety stores, and chain drugstores in the eastern part of the country-were invited to a New York City meeting where the Rules and applicable Guides were discussed.

GUIDE PROGRAM

The guide program is designed to accomplish two principal objectives: (1) To spell out in readable, easily understood language the requirements of the law applicable to different types of advertising

practices under the Federal Trade Commission Act and discriminatory practices under the Robinson-Patman Act and (2) by diligent administration of the former, to see that a maximum degree of voluntary compliance with the law is obtained. Where voluntary compliance cannot be obtained, the Guides serve the additional purpose of spotlighting persistent violations which warrant formal action. The program had its beginning on September 15, 1955, with the issuance of the Cigarette Advertising Guides. During the year, administration of these Guides was responsible for eliminating some 62 questionable claims involving 30 different brands of cigarettes. In the most important achievement under this program the seven major manufacturers agreed to delete all tar and nicotine claims from cigarette advertising-a noteworthy example of industry-government cooperation to eliminate a practice considered deceptive and confusing to the public.

During the year, administration of the Tire Advertising Guides, which became operative August 27, 1958, continued with the handling of 204 cases, 50 of which were closed upon receipt of adequate assurances of discontinuance and revised advertising. The Guides were particularly successful in obtaining compliance with the requirement that advertisers of used tires clearly disclose that they are not new products, especially regarding retreaded tires, where confusing language had been the rule rather than the exception. Also, efforts were continued to insure that all advertisers of tires nondeceptively disclose all material terms and conditions of their guarantees.

Compliance work under the Guides Against Deceptive Pricing, adopted October 2, 1958, continued at a rapidly expanding rate. Compliance matters handled during fiscal 1960 doubled those handled during the preceding year. With the workload increasing at such a pace, it became imperative that means be devised to obtain swifter and wider compliance on an industry- and area-wide basis. This was necessary both for the effectiveness of the Guides and to minimize competitive inequities which sometimes result from the initiation of formal cases on an individual basis.

The first step in this direction occurred when a group of furniture retailers in the District of Columbia were invited to meet with our staff to discuss comparative price advertising. Without reaching any conclusions as to the legality of their past advertising, the staff invited questions about the proper use of comparative price claims, explained the requirements of the Guides, and then solicited voluntary agreements to comply with the Guides. The results of this meeting have been such that we are now considering plans for continued use of the same procedure in the District of Columbia and other areas of the country which appear to offer similar opportunities for success.