However, the trial judge found that the construction of the container was efficacious to a degree for protective purposes and was not adopted or used for the purpose of deceiving the consuming public. We appealed this case to the court of appeals where we won a remand (United States v. 174 Cases, et cetera *** 287 F. 2d 246 [3d Cir. 1961]).

The appellate court held that the trial judge should have found either that the container was not deceptive; or if it were deceptive because larger than necessary for the contents, that its form and filling were justified protective measures and were reasonable in the light of alternative methods of protective packaging.

The court stated that the Government's showing that the package was larger than necessary to accommodate the contents was not conclusive of the issue when the claimant justifies the packaging on grounds of necessity.

On remand, the trial judge again found that the container was not made, formed, or filled so as to deceive the average consumer, and even if it were, alternative methods of packaging were not less deceptive than those actually used and the protective advantages of the package outweighed its alleged deceptive qualities (United States v. 174 Cases, et cetera *** 195 F. Supp. 329 [D.N.J. 1962]).

We again appealed. This time the court of appeals affirmed the decision of the trial court (United States v. 174 Cases, et cetera * * * 302 F.2d 724 [3d Cir. 1962]).

This case illustrates some of the problems which face us in this area of economic deception. This is the package as it appears on the grocery shelf. This is what you get on the inside. And if you take the candy out, and put it in here, is occupies about half of the box.

Senator MORTON. Do you reckon anybody would repeat on that, and buy a second?

Mr. LARRICK. Yes, sir. Some of the competitors-it is still on sale, Senator Morton. It is on sale here in town, and it does repeat.

Competitors of this man had designed packages which were much smaller. They came to see me and they said either you will have to have this package fixed or will have to adopt this package.

When we lost the case in the courts, the competitors did adopt the package, and that is the competitive situation in this particular industry today.

There are plenty of honest ones I shouldn't say that, there are plenty of businessmen-who would prefer to have a smaller package. Competitively they can't do it.

S. 985 would give the Secretary statutory authority to promulgate industrywide rules and guidelines for the industry to follow. Consumers, industry, and interested Government agencies would participate in the rulemaking.

These guidelines would permit the enforcement agencies to concentrate their regulatory activities against those who disregard the rules that have been developed for the industry as a whole. Thus it should decrease litigation and encourage self-regulation and voluntary compliance.

S. 985 would make it unlawful for the packer or distributor of a consumer commodity to distribute the commodity in packages or with labels that are in violation of regulations.

The Department would be authorized to promulgate regulations covering foods, drugs, devices, and cosmetics while the Federal Trade Commission would be given authority over other

commodities.

consumer

All regulations would need to be promulgated in accordance with the provisions of the Administrative Procedure Act. The Department of Health, Education, and Welfare and the Federal Trade Commission would of necessity maintain close liaison to insure uniformity of regulations to the extent practicable.

Basically, the regulations would cover two areas, labeling and packaging.

I would like to take up, first, those provisions under which the issuance of regulations would be mandatory:

1. To require net contents to be stated on the front panel of packages and on any labels (sec. 3(a) (1)); and

2. To establish minimum standards with respect to the prominence of such statements, including type size and face (sec. 3 (a) (2)).

This would strongly reinforce the Food, Drug, and Cosmetic Act which requires that packaged articles covered by it bear a label containing an accurate statement of the quantity of contents in terms of weight, measure, or numerical count, and that mandatory information such as the quantity of contents appear conspicuously on the label.

Regulations promulgated under present law provide in general terms that lack of conspicuousness may be due to failure of the required information to appear on the principal display panels. They also deal in general terms with smallness of type, insufficient contrast, crowding, obscuring designs, or vignettes, et cetera.

While legal actions have been taken against products which violated the provisions of these regulations, in each case it has been necessary to charge violation of the act itself rather than in terms of the regulations and to satisfy the court that the label in question is inconspicuous.

It is impossible to duplicate actual conditions of purchase and use in the courtroom, where extraordinary attention is drawn to the label declaration because its adequacy is the central point at issue, and is frequently under discussion for hours if not days.

We lost a case in the Rhode Island District Court involving a statement of net contents and ingredients which were printed in silver on aluminum foil (United States v. 46 Cases, et cetera * Welch's Nut Caramels *** 204 F. Supp. 321 [D.R.I. 1962]).

When the package was turned to the right light, contrast was achieved, but in other circumstances it could not be read. Nonetheless, the package was declared not misbranded. The general terms of existing law regarding inconspicuousness have been impossible to enforce with uniformity.

Regulations issued under S. 985 would themselves have the force and effect of law. Everyone would know what was required, and proof of violations should not be difficult because the regulations will be far more specific than the generalized provisions of the act.

3. S. 985 would require us to issue regulations prohibiting the additional qualifying words to net quantity or weight statements such as giant quart.

4. And we would be required to issue regulations prohibiting statements implying that a price advantage is being offered although the retailer could add any such statement.

The Budget Bureau in its report on the bill, and Mrs. Peterson, in her comments on the bill, have indicated that the administration would prefer that these regulations be placed in the discretionary rather than the mandatory category. If that is done, we shall need authority to require the production of necessary cost and pricing information. We feel that these provisions of the bill would aid in preventing consumers from being misled into believing they are getting some advantage which they are not.

5. Finally, we would be required to issue regulations preventing illustrations or vignettes that may deceive purchasers in any material respect as to the contents of a package.

This provision would facilitate enforcement by providing for the establishment of binding guidelines in the area of deceptive illustrations and pictorial matter.

The preceding provisions, except those concerning illustrations or other pictorial matter that may be misleading and the prohibition of cents-off labeling, would be made subject to such exceptions as may be required by the nature, form, or quantity of particular products or customary mode of display, unless such an exception would deprive consumers of the opportunity to make rational comparisons among competing products. This would permit the exercise of good judgment in promulgating required regulations.

I would like to speak now to the discretionary provisions of the bill which would authorize the Secretary to issue regulations upon determining that additional requirements are necessary to establish or preserve fair competition among competing products by enabling consumers to make a rational comparison as to price and other factors, or to prevent deception. These discretionary regulations would cover:

1. Establishment of reasonable weights or quantities in which particular commodities shall be distributed for retail sale. There is now no comparable provision in the Food, Drug, and Cosmetic Act. We would exercise this authority only where marketing in odd sizes could lead to consumer confusion or deception.

2. Preventing packaging in sizes, shapes, or dimensions which may mislead purchasers as to quantity.

The authorized regulations would spell out and proscribe specific deceptive packaging practices and thus remove the uncertainties of present law. This would benefit consumers. And under the second of these provisions we could issue regulations to deal effectively with the situation we encountered in the Delson Thin Mints case.

Mr. Chairman, we feel that the exception clause to this latter provision should be deleted. It prevents the Secretary from proscribing the use of package shapes "designed to exploit the unique advantages of any material for use in the production of packages of distinctive appearance."

This clause of that particular provision is vague and uncertain, and we feel that its inclusion may largely negate any salutary effect of that particular provision.

3. Establishment of designations of size (other than net quantity of contents) which may be used to describe quantitatively the contents of packages.

This provision would authorize us to regulate size designations on packages, such as small, medium, large, or family size in such a way as to permit a ready unit price comparison between differently sized packages of the same brand and similar sizes of competitive products. Thus, for example, one manufacturer's family size toothpaste could not be smaller than another's large size.

4. The bill would provide for the establishment of the amount of a commodity which constitutes a serving if it is a product represented to purchasers as containing a specific number of servings. This provision would lead to more informative labeling and permit the housewife to make a more informed choice.

5. Establishment of quantitative designations of the contents of packages for which the net quantity of contents cannot be meaningfully stated in terms of weight, measure, or count.

Regulations promulgated under this section will more likely apply to products subject to the Federal Trade Commission's jurisdiction, since a statement of net quantity of contents for most foods, drugs, and cosmetics is in our opinion more meaningful.

6. Requiring sufficient information, other than trade secrets, about the ingredients of a product to be placed in a prominent position on labels and packages.

Under the bill the Government could require information about cosmetic ingredients where necessary to establish or preserve fair competition by enabling consumers to make rational comparisons with respect to price and other qualities or to prevent deception. The present law does not require composition labeling for cosmetics.

We believe it is as important that cosmetic labeling contain statements of ingredients as it is that many of the consumer commodities that would be controlled by the Federal Trade Commission's regulations under this bill give this information.

For example, some cosmetics contain ingredients that sensitize. This would justify a declaration of their presence on the label so that consumers who are sensitive to them may purchase other products less likely to cause rash or other more serious reactions.

But a number of cosmetic manufacturers regard the ingredients of their products as trade secrets, and as the provision is now written, we would, if the position of the manufacturers on this point is sustained, be barred from requiring cosmetics to bear a statement even of sensitizing ingredients. Thus, consumers with allergies would be prevented from making a rational comparison between competing products.

We suggest that the parenthetical clause exempting trade secrets be deleted, or that the Congress express its view that the presence in a cosmetic of an ingredient that may cause harm to some purchasers is not a trade secret which is entitled to protection.

The bill would require a public hearing in all cases before a discretionary regulation could be promulgated under section 3 (c). There are instances where everyone will be in agreement as to the need and scope of a regulation. In such instances in our opinion we should not be required to hold a public hearing.

We thus suggest the substitution of the procedure outlined in section 701 (e) of the Food, Drug, and Cosmetic Act for the compulsory

hearing provision of the bill. Section 701 (e) formerly required a public hearing in all cases, but this was changed several years ago to require the Secretary to hold a public hearing only if there are reasonable grounds for a hearing and one has been requested by someone adversely affected by the published order.

Producers and distributors of articles subject to the bill would be required to furnish upon request of the Secretary a true and correct sample of each package and label used or to be used in connection with the distribution in commerce of a particular class or kind of commodity. Failure to comply with such a request would be punishable by a civil penalty.

Mr. Chairman, I would now like to discuss the bill's enforcement provisions. Violation of regulations issued by the Secretary would constitute misbranding within the meaning of the Food, Drug, and Cosmetic Act. A misbranded article would be subject to seizure and responsible parties would be subject to restraining injunctive proceedings.

If the product were seized for failure to comply with the packaging and labeling regulations, it would simply have to be relabeled or repackaged to correct the violation.

Destruction would not follow in the ordinary case. And since this is a misbranding, the prohibition and limitations preventing multiple seizures would apply.

Criminal sanctions, though available under existing law since 1906, would be barred by S. 985 from being applied to violations of regulations issued under the bill however flagrant they may be.

Present law expressly permits us to refrain from reporting a case for prosecution when the violation is a minor one and the public interest would be served by a suitable notice or warning.

Inclusion of the criminal sanction in the law contributes a great deal to compliance. One not responsible for the misbranding can protect himself by obtaining a guarantee from his supplier.

Thus, we would prefer that the bill be amended to include all of the sanctions now available under the Food, Drug, and Cosmetic Act. Otherwise the bill is, to some extent, a rollback of existing law.

Section 5(b) applies the civil sanctions of the Food, Drug, and Cosmetic Act to foods, drugs, devices, and cosmetics introduced or delivered for introduction into commerce in violation of regulations issued by the Secretary under the bill.

This could be interpreted as not applying to substances that have moved across State lines but have come to rest at their destination before being misbranded.

To close this loophole we suggest that the language referring to introduction or delivery for introduction into commerce be deleted so that the bill will cover cases not only when an article is misbranded when introduced or delivered for introduction into interstate commerce, but also when misbranding occurs while the article is held for sale (whether or not the first sale) after shipment in interstate commerce. Such misbranding is now prohibited by sections 301 (k) and 394 (a) of the Food, Drug, and Cosmetic Act.

We would suggest that the committee, in appropriate places, broaden the language of the bill, which now applies only to labels, to include