posed agreement related to Fair Trade Prices. A Schedule of Fair Trade Prices was to be attached to and made a part of the agreement and the dealer must agree that he will not advertise, offer for sale, or sell any products at less than the fair trade prices, nor make any refunds, discounts, allowances, or concessions which will have the effect of decreasing those prices, nor offer any of the fair traded items in combination with other merchandise at a single, combination or joint price. The agreement further provided that this provision should be applicable only in those States where agreements of this character are lawful.

(c) The Commission advised that in view of the McGuire Act amendment to section 5 of the Federal Trade Commission Act it could see no objection to inclusion of the provision in the agreement as long as the seller does not fix dealer prices outside of fair trade States.

(d) The Commission further advised that, subject to the caveat above stated, it would not initiate action were the proposed course of action implemented in the manner described. [34 F.R. 17386, Oct. 28, 1969]

§ 15.383 Labeling of leather gloves partly domestic and partly of foreign origin.

(a) The Commission advised a manufacturer of industrial work gloves, which are partly domestic and partly of foreign origin, that it could not use representations which implied that the gloves were entirely of domestic origin. Specifically, permission was requested to use one of the following three representations on the plastic containers of the gloves:

Made from American Split Cowhide Made from American Split Leather American Leather Exclusively Used (b) According to the Commission's understanding of the facts, the company purchases semiprocessed split cowhide leather in America which is shipped to Taiwan where it is further processed, cut, and sewn into industrial work gloves. Foreign production costs represent approximately 371⁄2 percent of the finished gloves, with the remaining 622 percent representing the cost of the Americanmade leather. One dozen gloves will be packaged in each plastic container and each pair of gloves will be labeled as having been "Made in Taiwan". How

ever, this label will appear on the inside wrist of the gloves and will not be seen through the plastic container. Moreover, the container will not be opened until the sale has been consummated.

(c) The Commission said that it would not object to the use of the first two representations, provided they were qualified by a disclosure of equal prominence indicating the gloves were made in Taiwan. As qualified, the two representations would read:

Made in Taiwan from American Split
Cowhide

Made in Taiwan from American Split Leather

(d) Without the qualification, the Commission believes that a substantial number of prospective purchasers would misinterpret the two proposed statements to mean that the gloves were made in America from American-made split cowhide.

(e) Similar qualification would be required to the third proposed representation. In addition, it would also be necessary to qualify the word "leather" because that word standing alone means top grain leather. Since the leather in question is not top grain but split, it would be deceptive to make unqualified use of the word "leather" under these circumstances. Therefore, the Commission concluded that it would not object to the use of the third representation if it were revised to read as follows: Made in Taiwan-American Split Leather Exclusively Used.

[34 F.R. 17386, Oct. 28, 1969]

§ 15.384 Special discount package price to new dealers.

(a) The Commission issued an advisory opinion with respect to a proposed special discount package price to new dealers in the building materials industry.

(b) The applicant proposed to offer to new retail dealers a special discount package on certain building materials plus an in-store display. In addition to the in-store display facility the new dealer would be offered a price approximately one-third below the price at which the merchandise is offered to existing dealers. The proposal would be a one-time promotion.

(c) The Commission expressed the opinion that "it is unlikely that injury could result from this one shot offer in

view of its nature and the start up costs which new dealers are apt to experience." Therefore, the Commission would not object to the plan if implemented as described in paragraph (b) of this section. [34 F.R. 17622, Oct. 31, 1969, as amended at 34 F.R. 19800, Dec. 18, 1969]

§ 15.385 Disclosure of origin of imported locks.

(a) The Commission advised concerning locks imported from England and Italy that it would be necessary to make a clear and conspicuous disclosure of the foreign country of origin on the locks. If the locks are displayed at the point of sale in a container so that the disclosure of origin is not likely to be seen, it would also be necessary to make the same disclosure of foreign origin on the containers in which they are packaged.

(b) Under the facts involved in the ruling, the locks will be used for both residential and commercial purposes and some of them could be marketed under the trade name of a domestic company, which contains the name of a wellknown American city.

[34 F.R. 18243, Nov. 14, 1969]

§ 15.386 Origin of imported brush for hair roller.

(a) The Commission issued an advisory opinion with regard to the question of whether it is necessary to disclose the origin of the imported brush which is assembled with American made components to form a brush hair roller.

(b) It is proposed to produce a hair roller in the United States. The roller consists of three components: spiral spring, netting, and brush insert. The brush insert is manufactured in a foreign country. The spiral spring and netting are manufactured in the United States. All assembling is done in the United States. The cost of the brush accounts for less than 25 percent of the total cost of the hair roller as marketed. The question involved is whether the foreign origin of the brush must be marked on the printed card which will be used in packaging the roller.

(c) The Commission expressed the opinion that, in the absence of any affirmative representation that the product is made in the United States, or any other representation that might mislead the public as to the country of origin, and in the absence of other facts indicat

ing actual deception, the failure to mark the origin of the imported component would not be regarded by the Commission as deceptive.

[34 F.R. 18353, Nov. 18, 1969]

§ 15.387 Tripartite promotional plan in the grocery field.

(a) The Commission issued an advisory opinion with respect to a proposed tripartite promotional plan which proposed to secure advertising from packagers of food and grocery products and place ads in retail stores. The display ad will measure 22" x 21" and can be located in the middle of the store with or without aisle directory information or it can be divided in half and placed on the wall of the store. Payments to stores would be calculated in terms of the number of ads installed, the rate per ad to vary with the monthly traffic in the store, the minimum payment to be $4.25 per month per ad, and the smaller grocery stores will be paid more proportionally than larger stores. Competing retailers would be informed of the opportunity to participate in the plant through personal solicitations, advertisements in trade journals, and direct mailings to every grocery retailer in the country which has been in business for a period of at least 6 months.

(b) The Commission stated that the proposed method of calculating payments to stores, if implemented as stated, would not violate the requirements of proportionally equal terms in Guide 7 of the Commission's Guides for Advertising Allowances and Other Merchandising Payments and Services (May 29, 1969). The proposed method of informing competing retailers of the opportunity to participate in the plan, if implemented in good faith, seems to satisfy the requirements of Guide 13(a) (1). As long as nonfood items and food items likely to be sold in stores other than supermarkets are not advertised a plan to provide availability to all grocery stores of all sizes would meet the requirements of availability to all competing customers as required by Guide 9. The proposed ad which can be used in an aisle or on the wall of a store would appear to be “usable in a practical business sense" in a store of any size. Thus the plan satisfies the requirements of Guide 9 that the plan

should in its terms be usable in a practical business sense by all competing customers." Therefore, no alter

native plan seems to be required in the absence of proof that some customers cannot in fact make use of the proposed ads.

(c) The Commission advised that were the plan implemented as proposed, the Commission would have no objection to it. The Commission pointed out that were the plan implemented in a different manner, the promoter, the supplier, and the retailer might be acting in violation of section 2(d) or (e) of the Clayton Act, as amended, and/or section 5 of the Federal Trade Commission Act.

[34 F.R. 18353, Nov. 18, 1969]

§ 15.388 "Bonus" portable typewriter offer.

(a) The Commission issued an advisory opinion relative to proposed advertising of "bonus" typewriters. The proposed advertisement would offer a portable typewriter as a "bonus" to any one accepted for enrollment in a correspondence course. Readers were invited "to write for information," but the prerequisites to the receipt of the "bonus" typewriter were not disclosed.

(b) The Commission advised that it ** is of the view that the advertisement in the circumstances described would be misleading and deceptive and in possible violation of section 5 of the Federal Trade Commission Act in several respects. For one thing, the "bonus" offer is to be a continuing offer, which means that the regular price for the training course of $595 includes the typewriter; the typewriter would not, therefore, be a "bonus". Also, the proposed advertisement does not make clear that what is being sold for a fee is a training course in motel management and that the so-called "bonus" typewriter is offered only in connection with such course.

(c) "Moreover, even were the typewriter to be given as a true bonus, as, for example, if a time-limited offer was made without a change in tuition, the proposed advertisement would still be deceptive and misleading because the terms and conditions for the receipt of the typewriter are not disclosed, including, it appears, an advance payment of $595 tuition for a motel training course.

(d) "Furthermore, the proposed advertisement is deceptive because, taken as a whole, it tends to convey the impression that service is not being sold but, rather, that a gift is to be given to spe

cially qualified persons who are willing to consider a career in motel management."

[34 F.R. 18353, Nov. 18, 1969]

§ 15.389

Disclosure of foreign assembly operations on ladies' blouses.

(a) The Commission advised that it would not be necessary to disclose the foreign country of origin where certain assembly operations are performed on ladies' blouses.

(b) Under the factual situation involved in the ruling, the synthetic fabric, buttons and thread will all be of domestic origin. The fabric will be cut in the United States and thereafter shipped to Trinidad where it will be assembled. Assembly operations in Trinidad will consist of sewing, pressing and trimming. Approximately 26.4 percent of total production costs will be of foreign origin, with the remaining 73.6 percent representing domestic costs.

(c) Concluding that a disclosure would not be required under section 4(b) (4) of the Textile Fiber Products Identification Act or section 5 of the FTC Act, the Commission said: "In the absence of any affirmative representation that the finished product is made entirely in the United States, the Commission has concluded that it will not be necessary to disclose the nature and extent of the foreign operations performed on the ladies' blouses."

[34 F.R. 18353, Nov. 18, 1969]

§ 15.390 Offer of incentive bonus to

customers.

(a) The Commission advised that to offer an incentive bonus to open credit account customers to encourage the payment of invoices within established terms and conditions of sale would not be objectionable.

(b) Most sales are made to open credit account purchasers of plumbing supplies and it was proposed to offer all such customers, as well as all new accounts, a bonus of 1 percent based on the aggregate total of monthly purchases to be given in the form of a credit certificate. This certificate will be honored by a selected local travel agency to apply toward vacation travel, and to be issued to those who adhere to established credit terms. Customers will present their certificates to the travel agency as partial or complete payment of their vacation expenses within 18 months from date of issuance.

(c) The Commission expressed the view that the proposed program, as stated, should be considered as a proposal to increase established credit terms and conditions of sale by 1 percent and as such the program probably would not be unlawful except to the extent, if any, the additional discount may effect unlawful price discriminations within the meaning of section 2(a), amended Clayton Act. However, because the program will be offered and made available to all open credit account customers and because the single qualifying requirement is adherence to established credit terms and conditions of sale it is not likely that implementation of proposed program would result in any adverse competitive effects.

(d) The Commission advised it would initiate no proceedings so long as the proposed program is implemented in the manner and for the purpose intended. [34 F.R. 19072, Dec. 1, 1969]

§ 15.391 Labeling of products composed of ground leather and fabric.

(a) The Commission is of the opinion that a product which consists of reconstituted leather applied to a fabric base may not be described as "leather" without proper qualification and may not be described as "genuine milled leather."

(b) This product may not be described as "leather" unless the word is accompanied by a clear statement as to the product's true composition. The term "leather" used alone means top grain leather and the product referred to, composed of ground leather on a fabric backing, does not come within such a definition. The use of the unqualified term "leather" to describe such product would tend to deceive prospective customers and possibly violate section 5 of the Federal Trade Commission Act.

(c) The product may not be described as "genuine milled leather" with or without qualification. It is not clear what is intended by the word "milled" but the phrase as a whole suggests top grain leather in a manner which would make any attempted qualification a contradiction in terms. Use of this phrase would tend to mislead and deceive prospective customers as to the true composition of the product and might violate the Federal Trade Commission Act.

(d) The close resemblance of the product to leather may tend to mislead prospective purchasers into the belief that the product is top grain leather.

Accordingly, the product should be labeled to indicate its true composition or, optionally, that it is imitation or simulated leather or nonleather.

(e) Finally, the backing of the product appears to be a textile fiber product subject to the Textile Fiber Products Identification Act, and, accordingly, certain information must be disclosed as to the composition of such fabric.

(f) The product may be described appropriately in a number of ways, among which are the following:

Ground leather laminated to fabric (60 percent polyester, 40 percent rayon). Shredded leather laminated to fabric (60 percent polyester, 40 percent rayon). Pulverized leather laminated to fabric (60 percent polyester, 40 percent rayon). Imitation leather laminated to fabric (60 percent polyester, 40 percent rayon). Simulated leather laminated to fabric (60 percent polyester, 40 percent rayon). Nonleather. Fabric backing 60 percent polyester, 40 percent rayon.

[34 F.R. 19072, Dec. 1, 1969]

§ 15.392 Disclosure of origin of partly foreign-made foundation garments. (a) The Commission expressed an opinion that it would not be necessary to disclose the name of the foreign country where certain finishing operations are performed on ladies' foundation garments.

(b) The fabric, which is of domestic origin, will be cut to shape in the United States and shipped to Mexico where it will be sewn and finished. The foreign labor costs of producing the finished garment will represent approximately 20 percent of total production costs.

(c) The Commission is of the opinion that it will not be necessary to disclose in the labeling the nature and extent of the foreign operations performed on the foundation garments, either under section 5 of the Federal Trade Commission Act or section 4(b) (4) of the Textile Fiber Products Identification Act. The Commission noted, however, that inquiry should be made of the Bureau of Customs as to any marking requirements under section 304 of the Tariff Act of 1930.

[34 F.R. 19072, Dec. 1, 1969]

§ 15.393 Request for reconsideration of Advisory Opinion 333 (§ 15.333) pertaining to wholesaler-manufacturer relationship; Freight saving as cost justification.

(a) The Commission was requested to reconsider the advice given in Advisory

Opinion Digest No. 333 (§ 15.333) concerning manufacturers' selling relationships with wholesalers. The Commission also considered the question of passing along freight savings to customers.

(b) After concluding that it would adhere to the advice given in the earlier Advisory Opinion the Commission noted that the issue of potential price discrimination between competing wholesalers, some receiving 40 percent and others 25 percent discounts off list prices, no longer existed since only one discount rate is now involved.

(c) Negative advice was given in connection with the following three factual situations because, in the Commission's opinion, applicable antitrust law prohibits suppliers from taking certain punitive action against wholesalers with whom they have been dealing:

(1) A manufacturer refuses to deal further with a wholesaler who has changed his method of doing business and has undertaken to franchise subjobbers whom he prohibits from buying directly from the manufacturer and requires that they purchase all the manufacturer's products through the wholesaler.

(2) A manufacturer discontinues sales to a wholesaler who ceases to maintain salesmen at all times who regularly call upon beauty salons and advise licensed professional hairdressers "on the safe and proper methods of applying the manufacturer's products and who keep sufficient supplies" on hand for current needs of their beauty salon customers.

(3) A manufacturer refuses to deal further with a wholesaler who, without the manufacturer's authorization, resells to independent subjobbers and other wholesalers.

(d) With respect to the problem of cost justification the Commission advised that applicable provisions of section 2(a) of the amended Clayton Act permit a supplier to pass along freight savings to customers but only to the extent of such savings and only if available to all customers competing in the resale of his products.

[34 F.R. 20333, Dec. 30, 1969]

§ 15.394 Approval for merger of privately owned tufting machinery and equipment manufacturers.

(a) The Federal Trade Commission granted clearance to privately owned manufacturers of carpet tufting machin

ery and related equipment to merge their operations into one corporation whose voting stock will be offered for sale to the general public.

(b) The merging companies manufacture machinery and related equipment used by textile mill operators in the production of rugs, carpets, and other textiles. Some of the companies have a common ownership and are competitors; another is not a competitor but manufactures machinery used by customers of the others. Some have about the same market shares in an industry of five manufacturers, about one-fifth of the market share of the dominant company, a substantial national conglomerate enterprise. One firm to be merged competes with ten others in its related industry.

(c) After having considered all available information the Commission concluded that the effect of the proposed merger is not likely to result in any lessening of competition nor the creation of a monopoly in the manufacturing of tufting machinery and equipment. The Commission is of the opinion that the beneficial competitive effects flowing from the amalgam of the privately owned enterprises into a publicly owned corporation will be to give greater competition to its giant rival.

[34 F.R. 20333, Dec. 30, 1969] § 15.395

Retailer price reporting plan.

(a) The Commission issued an advisory opinion governing a proposed price checking service designed to publicize various current retail prices for grocery store products. Underlying data would be obtained in part by direct observation of posted prices and in part by reference to information supplied by wholesalers and retailers. The service would be available, for a fee, to anyone interested.

(b) In the Commission's view, exchange of price data may lend itself to price fixing and may result in the elimination of price competition and the legality of the proposed course of action would depend on its implementation. [34 F.R. 20334, Dec. 30, 1969] § 15.396

Use of term "Peat Moss-Pifine and Sedge".

(a) The Commission rendered an advisory opinion concerning a proposal to describe peat with the following terminology:

Peat Moss Pifine and Sedge