publisher in connection with the distribution of its publications.

(b) The publisher offers reference books to customers on lease (the publisher picks up the obsolete volumes upon the issuance of a new edition or upon the expiration of the lease) or for purchase.

(c) The Commission advised the publisher that no law administered by the Commission requires it to charge the same amount for the lease as for the sale of a book.

[34 F.R. 1648, Feb. 4, 1969]

§ 15.320

Disclosure of origin of imported components used in manufacture of firearms.

(a) The Commission rendered an advisory opinion in regard to the question of whether it is necessary to disclose the origin of certain imported components to be used in the manufacture of revolvers and automatic pistols. If such disclosure is required, a question is raised as to the proper location of that disclosure.

(b) Specifically, the advisory opinion involved the use of components imported from both Germany and Italy, such as barrels, cylinders, and hammers. The remaining components were of domestic origin.

(c) With respect to the question of whether a disclosure of the origin of the imported components would be required, the Commission said: "In the absence of any evidence to the contrary, the Commission believes that the question of foreign origin disclosure largely depends upon the importance which prospective purchasers would attach to the fact, if known, that a substantial number of the components of the finished product are of foreign origin. It is the Commission's judgment that the imported components in both factual situations, namely, the barrels, cylinders, and hammers, represent such an integral and essential part of the finished product that prospective purchasers would in all probability manifest a deep concern over their origin and manufacture. If such is the case, then the failure to reveal the origin of the imported components would play a vital, if not decisive, role in the customers' selection or purchase. Under these circumstances, the Commission is of the opinion that the failure to reveal the country of origin of the imported components in both factual situations would

likely result in deception to consumers and unfair injury to competitors."

(d) In regard to the question of whether the disclosure should be made on the product or the container, the Commission cited the well-established general rule that the disclosure should be clear and conspicuous. This means, the Commission said, that it must be placed in a location at the point of sale where it would be readily observed by prospective purchasers making a casual inspection of the merchandise prior to, not after, the purchase thereof. If the merchandise is displayed in such a manner that a disclosure on the product would not be seen prior to the purchase thereof, it would be necessary to place the disclosure on the container. On the other hand, if the merchandise is displayed in a manner which would permit purchasers to observe the disclosure on the product, it would not be necessary to make a disclosure on the container. [34 F.R. 1824, Feb. 7, 1969]

§ 15.321 Sale of unlabeled American made products.

(a) The Commission issued an advisory opinion to an American manufacturer in response to his request concerning sale of one of his products, with or without labels. He asked for the opinion because a dealer in another State has recently placed a substantial order for the product, specifying that it must be shipped in unlabeled containers. The supplier believes the dealer may intend to resell the product in export trade. The manufacturer does not enjoy a monopoly.

(b) The Commission advised the applicant that, under laws administered by the Commission,

"(1) You may legitimately refuse to sell a specific product to a customer who asks for it in an unlabeled container;

"(2) No labels are required on American made merchandise sold in export trade; however, an American exporter should determine what foreign laws govern the operations; and

"(3) Packaging and labeling of domestically sold consumer commodities are governed by the Fair Packaging and Labeling Act (Public Law 89-755) and the regulations issued thereunder. The product described in correspondence, is a consumer commodity as defined in section 10(a) of the Act, therefore packaging or labeling of this product must be in accordance with the regulations. However, § 500.2(d) of the regula

tions which defines the term 'package' contains several exceptions which appear to apply to the facts in your situation. In addition, your attention is invited to the exception contained in § 500.2(e) wherein the term 'label' is defined. Subsection (2) excepts, from application of the regulations, written, printed, or graphic matter affixed to or appearing upon commodities sold or distributed to industrial or institutional users."

[34 F.R. 1825, Feb. 7, 1969]

§ 15.322

Supplier advertising in an independently published periodical.

(a) The Federal Trade Commission was asked to express an opinion with respect to the publication and distribution of a monthly publication designed to supply wholesale and retail outlets, without cost to them, with information concerning promotional allowance programs instituted by manufacturers selling to such outlets, and with particular reference to two specific questions:

(1) Will a manufacturer who places in the publication a clear and timely description of the terms of a promotional program offer and the conditions upon which payments will be made be regarded as having notified a customer, who in fact receives the publication, of the availability of that promotional offer?

(2) In the case of a promotional offer which extends over a 6-month period, will such manufacturer be regarded as having so notified a retailer, who in fact receives the publication each month, if the description is placed therein only once, prior to or at the beginning of the 6-month period? If not, how often must the notice be republished? At 3-month intervals? In each monthly issue?

(b) The advisory opinion noted that payments by a manufacturer for the purchase of advertising space in a periodical published by a firm which is not owned nor controlled by, or in any way directly or indirectly affiliated with, any customer of that manufacturer, or group or class of such customers, do not violate section 2 (d) or (e) of the amended Clayton Act where no discriminatory benefit is conferred by such payments on a particular customer, or class or group of customers, over competitors. The periodical will be given nationwide distribution and will be supplied and otherwise made available without cost to all industry wholesalers and retailers. The periodical is not designed to be usable

only by particular resellers, or classes or groups of resellers; every effort will be made to distribute the periodical as broadly as possible among industry resellers; and distribution will not be limited to any particular reseller, or group or class of industry resellers.

(c) The Commission advised that if the periodical is made available, in a practical business sense, to all competing industry resellers of a participating manufacturer's products, then no objection would be raised to payments by that manufacturer for advertising space therein.

(d) Regarding the two specific questions, the Commission advised that although a listing by a manufacturer of the details of his promotional allowance program in the publication would appear to be adequate and sufficient notification to recipients thereof that such programs are available and under what specific conditions, such listing does not, however, relieve any manufacturer-advertiser from his statutory obligation of informing those resellers who may not receive the publication regarding the availability of such program.

(e) And further, as to the second specific question, in view of the fact that the publisher will update the master mailing list every 3 months, the Commission required that notices of extended promotional offers be republished each calendar quarter. It was pointed out, however, that the quarterly notice republication requirement was being imposed to coincide with presented facts and that notice given at less frequent intervals may be adequate in other situations. If the required notice is in fact given it is immaterial whether it is republished at any particular interval of time so long as all those entitled to promotional assistance are made aware in timely fashion of any benefits to which they may be entitled under a published program. [34 F.R. 1825, Feb. 7, 1969]

§ 15.323 Disclosure of imported elec tronics equipment.

(a) Rather than labeling an imported product as "made" in a certain foreign country, the Commission said it would interpose no objection to a disclosure which stated that the merchandise was a "product" of a certain foreign country.

(b) The advisory opinion was rendered in response to a request from an importer of electronics equipment which enters the United States in a completely

finished state. Included in the equipment are radios, tape recorders, transceivers, etc.

[34 F.R. 2111, Feb. 13, 1969]

§ 15.324

"Free hosiery for life" offer to obtain sales representatives.

(a) The Commission rendered an advisory opinion in regard to the propriety of advertising which offers information for "free hosiery for life" in connection with the sale of hosiery.

(b) According to the proposed plan, one who responds to the advertisement will receive information offering the recipient a job selling hosiery, and for every certain number of hosiery which is sold the recipient will receive a free pair of hosiery.

(c) In the advisory opinion which was rendered, the Commission said that the use of the word "free" under the above circumstances would be deceptive and therefore in violation of section 5 of the Federal Trade Commission Act, unless the initial advertisement and any subsequent promotional material contains a clear and conspicuous disclosure of all of the conditions or prerequisites to the receipt and retention of the free merchandise.

[34 F.R. 2551, Feb. 25, 1969]

§ 15.325 Marketing 10-year-old unused equipment as new is deceptive.

(a) The Commission issued an advisory opinion concerning the marketing now as "new" of 10-year-old equipment which has never been used and is still in the original shipping cartons.

(b) The Commission wrote the applicant for the advisory opinion: “According to the information you submitted, your company is not the original manufacturer of the equipment you are interested in marketing as 'new'. Further, it is understood you have recently obtained a license to manufacture similar equipment. Also, you state there have been no model changes since the 10-yearold equipment was produced. Having considered the matter, the Commission hereby advises you that you would risk violating section 5 of the Federal Trade Commission Act if you marketed the 10-year-old equipment as 'new'; such an act would clearly be deceptive. Of course, you are free to describe the equipment accurately and disclose that it is 10 years old and has never been used." [34 F.R. 2551, Feb. 25, 1969]

§ 15.326 Country of origin marking requirements for product assembled in Puerto Rico of domestic and foreign components.

(a) The Commission's opinion was requested as to the legality of marking as "Made in the U.S.A." a Puerto Rican produced product composed for the most part of domestic components but containing some components originating in the United Kingdom.

(b) In the Commission's view, the unmodified marking "Made in U.S.A.", or equivalent, would be an affirmative representation that the product in question is in its entirety of domestic origin.

(c) Since in the situation described, the product in question is not wholly of domestic origin the Commission is of the opinion that the marking "Made in U.S.A.", or equivalent, would be improper, unless additional and accurate disclosure is made of the presence of the imported components.

(d) The requesting party was further advised that the Commission would not object if the product in question were to be marketed with no accompanying identification of, or claim as to, country of origin.

[34 F.R. 2552, Feb. 25, 1969]

§ 15.327

Disclosure not required of origin of imported upper material used in shoes.

(a) The Commission rendered an advisory opinion to a manufacturer of athletic shoes stating that it would not be necessary to disclose the country of origin of the imported upper material.

(b) The imported upper material will represent approximately one-third of total material costs, and the remaining two-thirds will be composed of material made either in the United States or Puerto Rico. Concluding that a disclosure of the imported upper material would not be required, the Commission said: "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."

[34 F.R. 3742, Mar. 4, 1969]

§ 15.328 Organization of warehouse distribution center for a jobber buying group.

(a) The Commission issued an advisory opinion warning of probable violations of law in the proposed organiza

tion by an automotive replacement parts manufacturers' representative of a warehouse distribution center buying group of jobbers.

(b) According to the information submitted, the applicant is now, and intends to continue to be, a sales agent for several automotive parts manufacturers. He proposes to organize and operate a warehouse distribution center for automotive parts, obtaining quantity discounts on purchases from suppliers and then reselling at a 5 percent to 7 percent markup to "member" jobbers. The quantities will be the result of pooled orders from the jobbers. Jobbers will be "members" only in the sense that they will contribute $1,000 each to the applicant in return for the privilege of sharing some of the quantity discounts on purchases from suppliers. The applicant and his wife will be the sole owners, operators, and employees of the warehouse distribution center. Drop shipments will be used when orders are large enough to obtain quantity discounts for the particular orders. The applicant intends to organize only one jobber in each of the smaller towns and perhaps two or more in larger towns "where they would not be competing for the same customers." The center will place orders with manufacturers, receive goods not otherwise drop-shipped and distribute them, bill jobber-customers (i.e., "members"), and slowly accumulate an inventory in its warehouse.

(c) The Commission is of the opinion that the applicant would probably violate section 2(c) of the amended Clayton Act if he receives commissions from manufacturers whom he represents as a sales agent on purchases for his own account for resale to jobbers.

(d) The Commission also pointed out that, while buying groups of jobbers are not illegal per se, they may function in ways to violate section 2(f) of the amended Clayton Act if they refuse membership to jobbers who compete with each other and thereafter obtain unjustified price discriminations.

[34 F.R. 3742, Mar. 4, 1969]

mission administered laws. The warranty in question, applicable within 100 miles of a dealer's store, provides:

(1) The extent of the liability of this firm to service merchandise purchased from us is limited to this policy and it is in addition to any written guarantee included from the manufacturer involved.

(2) Under conditions of normal usage, our store warrantees (sic) our (products) to be free from defects in workmanship and structural materials for a period of 1 year from the date of purchase. This guarantee does not apply to damages resulting from negligence, misuse, or accidents.

(3) We will repair or replace at our option any defective item, or part, at absolutely no charge. In determining the cause or nature of the defect, and the manner of repair; the judgement of this firm will be final.

(b) The Commission concluded that it could not render advice with respect to that portion limiting retailer liability to the warranty terms nor to the comment that the warranty is in addition to any manufacturer's written guarantee. This position was taken for the reason that the question of warranties is being currently examined, specifically as they relate to the automotive industry, and any Commission statement along these lines at this time would be premature.

(c) Nor could the Commission approve the remainder of the proposed warranty for the reason that it is not a simple, generalized guideline intended to assist the membership in drafting warranties embracing their own terms but is, in fact, an actual 1 year warranty incorporating predetermined and definite terms and conditions for use without change by members. For this reason the Commission advised that should the proposed warranty be selected by all or a substantial number of Association members the likely purpose and probable result would be the adoption of anticompetitive uniform terms and conditions by the membership and would, therefore, be objectionable.

[34 F.R. 5061, Mar. 11, 1969]

§ 15.330 Proposed advertising for orthopedic pillow.

(a) The Commission was requested to render an advisory opinion with respect to proposed advertising for a pillow intended for orthopedic and therapeutic purposes, which would represent that the device was designed for use in cervical spine, low back pain cases and by cardiac patients.

(b) The opinion advised the advertisers that while the Commission has no

objection to representations that the device might afford temporary relaxation and comfort under certain conditions, any representations in advertising that the pillow is a health device particularly useful for cervical spine, low back pain and cardiac cases would appear to have the capacity and tendency to deceive. [34 F.R. 5061, Mar. 11, 1969]

§ 15.331 Disclosure of origin of imported food product.

(a) The Commission rendered an advisory opinion to a trade association which involved the question of whether it is necessary to disclose the origin of an imported food product. Imported in its entirety, the product is later sliced and packed in containers in the United States for sale to the general public.

(b) Ruling that the product's origin must be disclosed, the Commission said:

as to this product, the country of origin may be a material fact to many consumers in deciding whether to make a purchase, and that it should therefore be disclosed to them in an appropriate manner at the point of sale." [34 FR. 5061, Mar. 11, 1969]

§ 15.333

re

Manufacturer-wholesaler relationships: different discounts; fusals to deal; termination of further sales.

(a) The Commission issued an advisory opinion in response to a request from a manufacturer concerning several courses of action he proposes to take in his sales relationships with wholesalers.

(b) The manufacturer now grants all wholesalers a 40 percent discount off the list price of his products. Proposed are new contracts, providing the 40 percent discount to a Full Service Dealer or Wholesaler who performs certain specified functions, and only 25 percent to a Part Service Dealer or Wholesaler "who does not fulfill all the functions set forth" in the definition provisions for a Full Service Dealer or Wholesaler.

(c) The Commission advised: (1) "To the extent that an additional discount is sought to be justified on the basis of functional services such as stocking and display performed by so-called Full Service Dealers or Wholesalers [function No. 4 of applicant's proposed wholesaler agreement], no advisory opinion can be provided at this time because the Commission contemplates an inquiry looking toward a rule-making

proceeding involving this question as it pertains to another industry.

(2) "Moreover, as to the other functional criteria for Full Service Dealers or Wholesalers set forth in applicant's proposed wholesaler agreement, the Commission will not approve any standards whereby a wholesaler's eligibility for added discounts is contingent upon the imposition of specified restrictions upon his customers by him.

(3) "You also ask if you may refuse to deal with a wholesaler in one town who is reselling your products to wholesalers in another town. The Commission is of the opinion that such refusal to deal could amount to a violation of section 5 of the Federal Trade Commission Act. Therefore, the Commission cannot approve the proposal.

(4) "Additionally, you ask if you may terminate further sales to a wholesaler who is establishing his own network of wholesale dealers, obligated by contract to purchase their supplies exclusively from him. This wholesaler, as does the one involved in your second request, is departing from the traditional role of the wholesaler in the beauty and barber supply business by refusing to confine his sales to beauty schools and salons and has, in effect, entered into competition with your company as a supplier of [your] products to wholesale dealers. The facts provided do not give any basis for viewing the wholesaler's exclusive dealing arrangements as violative of the antitrust laws. Without reaching the question of whether you might terminate further sales to the wholesaler if the exclusive dealing contracts were illegal, the Commission believes your proposed termination of the wholesaler would appear to be anticompetitive and thus con trary to the provisions of section 5 of the Federal Trade Commission Act. The proposal, therefore, cannot be approved." [34 F.R. 6654, Apr. 18, 1969]

§ 15.334 Location of foreign origin disclosure.

(a) The Commission advised an importer of candles and candle holders in regard to the proper location of the foreign country of origin disclosure thereof.

(b) After importation, the product will be assembled in a combination blister package of eight candles and eight holders on a display card for resale to the general public. The imported holders and candles will be marked with their