Mrs. Peterson incidentally said those are the only questions she could ever recall on Scott Paper, too, because we had an afternoon with her and talked this all over. Senator SCOTT. Do you know of any complaints within your industry in recent years of misleading or deceptive practices which have been established to be misleading or deceptive? Mr. DUNNING. Senator Scott, I think you can find in any walk of life in this country somebody who wants to cut the corners, who wants to beat the game. We have even in our past history had dishonest Congressmen, and we have dishonest businessmen, and we have dishonest consumers. We have dishonest everything, a very small percentage of the public. I won't presume to say to you I haven't seen competitors do things in our business that we have felt weren't as completely honest as they should be, but the amazing part about it is that it never lasts long because the consumer gives them their comeuppance by not buying their products. Senator SCOTT. Were these practices of the kind which could be dealt with under the present statutes? Mr. DUNNING. As I understand the law, yes, sir. Mr. Dixon and Mr. Harrick both admitted that in the prior hearings. Mr. Cohen, who was there is the room, was in on those, as I was. They came out clearly in the testimony that they have the law today. It is just awkward and difficult and takes time and so forth. Senator SCOTT. That is all that I have. Senator NEUBERGER. Do you use cents-off procedure in your business? Mr. DUNNING. Senator Neuberger, we disapprove of cents off for a label as a merchandising activity on an established product which has not had any measurable, recognizable improvement, quality, or dispensing or some other kind of improvement. We tried this thing extensively for a year and half. We were told by Nielsen, who is the greatest mentor of what happens in this business that there is, if you run cents off on the label you will get a temporary advantage over your competitors, but it is not a permanent advantage unless you have in your product something new which will make the consumer stick with this, that they like it better. We feel cents off is an introductory merchandising technique, to get people to sample a new product where you need sampling so that they can know what you have to offer. We will use it on the introduction of new products. But after a product has been established in the marketplace, which is about 3 years, we will not use the cents-off label technique. So we announced publicly on July 1, 1961, and we have never done it since. On the other hand, I will sit here and defend until the day is done the right and privilege of American manufacturers who do believe in cents off on the label to use that as a merchandising technique. It is a perfectly proper technique. The only deception that can come, comes on the part of the retailer, not the manufacturer, because if he puts 5 cents off the label, he has done his part. He has announced to his consuming public that there is 5 cents off the label. If the retailer chooses not to pass that on, unfortunately the manufacturer can't do a darned thing about it because we simply are not allowed under the law to try and control the price at which products are sold in retail stores. We are very sensitive in business today to what we can do and cannot do. I didn't even dare say good morning to Mr. Halverstadt because he is a competitor. Somebody from the FTC might be in the the back of the room and figure we were colluding on prices. You can't tell, the way people look at us today. This is a very sensitive area that we are in. We will not go into a grocer-we will go to one grocer and say we think you ought to have a better profit on this product, but we can't go across the street to a competitor and say the same thing, or we are in violation of the law. Senator NEUBERGER. How can it be a cents off on the introduction of a new product? Mr. DUNNING. That is a darned good question. It is a little hard to do. We don't do it in the initial introduction. Senator NEUBERGER. It is pretty hard when there is no established price. How can you start off with a cents off? Mr. DUNNING. That's right. Senator NEUBERGER. This is what we would like to know. Mr. DUNNING. That is a good question. Some people do that. I don't think it is smart, but Senator NEUBERGER. It is not only not smart, it is deceptive. Senator NEUBERGER. It is not only not smart, it is deceptive. Senator NEUBERGER. They can't have if it is an introductory thing. How can they? It is just impossible. Mr. DUNNING. No, it is not impossible, Senator Neuberger. If you are going to put a new product on the market, you run your business on the basis of where, in order to stay in business, you have to have a certain spread between your manufacturing cost and your actual sales cost, and you establish that as to what you are going to sell this product for. Senator NEUBERGER. But your consumer doesn't know what the established price is if you are introducing a new product. Mr. DUNNING. She doesn't if it was never sold at its regular price before it goes in, under cents off. Senator NEUBERGER. This proves the point. Mr. DUNNING. But you can achieve the same result, and if you are going to outlaw one you should outlaw the other, probably, by saying our regular price on this product will be $10 a case to the grocer, but for an introductory period we will offer it at $9 a case. Then he can either sell it at what he considers to be a standard markup, using the $10 base, or he can say for introductory purposes I will use the $9 base before I make my markup. Senator NEUBERGER. The bill doesn't prohibit that. Mr. DUNNING. No, but it ought to prohibit that if it prohibits cents off. It is the same ball of wax. Senator NEUBERGER. I have no further questions. The next witness will be Mr. E. Scott Pattison, manager of the Soap & Detergent Association, 295 Madison Avenue, New York, N.Y. STATEMENT OF E. SCOTT PATTISON, SECRETARY AND MANAGER, THE SOAP & DETERGENT ASSOCIATION; ACCOMPANIED BY JOHN P. MOSER, VICE PRESIDENT, LEVER BROS. CO., NEW YORK, N.Y. Mr. PATTISON. Madam Chairman, I hate at this late hour to take very much time. But in view of all the publicity Procter & Gamble had this morning, as we have 30 other members in this field, I think they deserve about a half a minute per member. So I will guarantee to stick to this point. Senator NEUBERGER. In addition to that, I think Procter & Gamble are members of the Grocery Manufacturers. Mr. PATTISON. Yes; they are a member of GMA, I believe, and also à member of our association. Senator NEUBERGER. So they have had that additional publicity. You go right ahead and take as much time as you want. Mr. PATTISON. It just so happens that the vice president of the association, who is also in the room, Mr. John Moser of Lever Bros., is here. He is my boss, too. So I will have to carry water on both sides. Senator NEUBERGER. Would you like to have him come up and join you at the table? We have had Procter & Gamble. Let's have Lever Bros. Maybe we can find out what is in detergent soaps, when we get all of you together here. Senator SCOTT. Who makes “All”? Mr. MOSER. We do. Mr. PATTISON. The Soap & Detergent Association, which I represent, has 120 members. About 30 of these firms make packaged cleaning products for personal or household use, and these member firms produce 90 percent or so of all such products. In addition to those making the well-known national brands, others pack soaps and detergents to be marketed by chainstores under private label. The big names you hear on TV are balanced by small firms having one or two specialized products, or localized areas of sale. Both large and small are represented on our board of directors, on a onecompany, one-vote basis. In the last Congress, our members opposed S. 387, and we are equally sure that S. 985 is a needless bill from the standpoint of consumer protection. We believe it will result in increased costs that will more than offset for the consumer any supposed gains from shopping comparisons, which may or may not be more rational. We believe the bill is a potential threat to innovation, particularly damaging to the small company which must depend on the package as its primary means of promotion. We feel that the grants of authority to the Secretary of Health, Education, and Welfare, and to the Federal Trade Commission are ill-defined and would permit regulation of many legitimate competitive practices which are not in fact deceptive or unfair. In the interest of saving time, I shall skip over those general objections to this bill that apply to all kinds of packaged merchandise. We support the position that existing State and Federal laws are fully adequate to cope with real, deliberate deception, and falsehood. But there is good reason to discuss soap and detergent packages specifically in relation to S. 985 because people are very conscious of our highly competitive sales methods. Admittedly, there is more visual vying-for-favor among detergent packages on the supermarket shelf than, say, among cans of beans. This competition makes for a certain amount of consumer puzzlement, though far less-I would contend-than among the competing covers of paperback books. The main point that I wish to develop is simply this: As a consumer protection measure-as a supposed means of helping the shopperthis bill sacrifices the important for the unimportant. Its passage would be likely to interfere with positive services to the consumer that offer much greater opportunity for savings than helping her avoid a few misguided buying decisions. The most important, positive, money saving support for the consumer, deserving top priority, is the encouragement of policies that will maintain the pace of product improvement. We know that the actual cleaning accomplishment per dollar of today's packaged products is greater than back in the days of the nickel bar of laundry soap. Many products and formulas of only 10 years ago are obsolete today the housewife wouldn't buy them, even at yesterday's prices. Furthermore, when a newly developed cleaning products is keyed to the needs of the new fabric or floor covering, indirect savings result in prolonging the life of the material, and coming on the market all the time. Indirect savings result in prolonging the life of the new material because of a cleaning product adapted to that particular material. Suppose the first detergent producer to introduce a fluffy product, instead of a dense one, or a soap-impregnated steel wool, faced packaging regulations on weights and shapes and sizes such as might be set up under this bill? Would he have ben able to test-market these items promptly? Or, particularly, if he were a small manufacturer with limited resources, would he have looked at the regulations and let the opportunity pass promptly? Let me digress for a second. A few days ago a man brought to my attention a need for a little domino detergent which he intended to weld inside two layers of plastic sponge. The reason he wanted to do this was to produce a little item that you could use to clean pans and the detergent would be right in the middle. This would bring up the question of what do you show on the outside of the package? Do you show the weight of the detergent, do you show the weight of the sponge, do you show the weight of both? If we had had this procedure that has been mentioned here, this advance clearance, before he could make a sales test of that product, he would have to go down to Washington and get advance clearance of what kind of a label he should put on that particular package. I am sure that somewhere along the line all his plans for a test market, which involved going into a city and making arrangements for local spot radio and all the rest of it, would have communicated this fact to his competitor long before he got his clearance, or by the time. he got his clearance. So this small manufacture starting out with his new product would be in a hopeless position if he had to get clearance on his label before he could even make a sales test in one city of this particular material. Sales tests are very valuable for the consumer. If a company doesn't make a sales test, and they put out a product that the consumer doesn't like, there are 5 or 6 or 7 or more million dollars gone down the drain which that company has to try to make back on some other product. But if they can run a sales test in one community, they can save those mistakes and pass the savings on to the consumer. Please understand, I am not contending that this bill, in itself, would stagnate product improvement. But I think it can be proved the customer's best chance for greater value in our field comes from encouraging innovation, and the use of the package to persuade the customer to give it a trial. What is next after you do your best to save the customer money by introducing a new product? I think the next No. 2 priority area for the economic protection of the customer is the more skillful, wastefree application of the right type of product at the point of use. We are strong for having the housewife read and follow the instructions on the label. The savings that arise from proper use involve not only product cost, but timesaving and better results from laundry equipment. If the average housewife followed instructions carefully, she could save far more in efficiency of cleaning than she can ever hope to save by slide rule calculations of cost per ounce of detergents in the store. More often than not, she just pours in a slug. There are great opportunities entirely aside from instructions on the package, and we know there are great opportunities for protecting the consumer by instruction and training in efficient, waste-free cleaning techniques. Mention was made by Senator Scott a moment ago of foreign people, people who can't read very well. I am happy to say that our industry has worked out a number of display sheets. These are simple instruction sheets on how to wash the bathroom floor, how to wash baby furniture, how to wash walls. These sheets have now been taken over by various groups in the antipoverty program and the Federal Housing Authority is having these sheets printed by the Government Printing Office to do exactly what you were pointing out, Senator Scott. These are edited for people who are school dropouts and can only read very simple words. The opportunity for saving and the efficient use of the product, any product, whether they buy brand A or brand B, is far greater than the opportunity for saving by buying a giant size box against a king size box. Senator SCOTT. Madam Chairman, if I may comment right there, I would feel that that is probably almost exactly the same kind of risk that you would also be getting from a government which is being sup plied by an institute, and I think it is a good idea. When a government agency sees a need for its perpetuation, expansion, and indefinite existence, which is the normal rule of thumb they would have to show some reason for being, aside from just bringing lawsuits and wagging monetary fingers. I would assume they would get out a great deal of this material. It seems to me that what you are doing is a far less expensive way of doing it from a consumer standpoint. I think the greatest liability |