Sec. 15.77 Proportionally equal treatment for competing customers under promotional assistance programs. 15.78 Disapproval of merchandising plan involving a lottery. 15.79 Rejection of deceptive firm name for skip-tracing operation. 15.80 By-law prohibiting certain advertising claims by members of trade association. 15.81 Advertised satisfaction guarantee. 15.82 Disapproval of the marking "US Made" for items with substantial imported components. 15.83 Impropriety of labeling foreign-made machine with American-made parts added to it as "Made in U.S.A." Proper labeling of rebuilt fuses. Reference service for members of trade association. 15.84 15.85 15.86 Sales promotion plan involving a lottery rejected. 15.87 Sale of silverware through plan involving lottery rejected. 15.117 15.118 15.119 15.120 15.88 Three-way promotional plan set up by radio station and financed by participating retailers and their suppliers. 15.89 Proportionalized equal treatment for competing customers under threeway promotional program involving recipes for free distribution. 15.90 Legality of notice calling attention to page on which magazine publisher's promotional assistance program is located. 15.91 Supplying domestic markets from foreign plant operated by an export trade association member raises possibility of unlawful interference with domestic trade and commerce. 15.92 Cooperative advertising program must be made available to all competing customers. 15.93 Newspapers right to reject advertising. 15.94 Promotional assistance plans must be reasonable and nondiscriminatory. 15.121 Misrepresentation of hand cream. which new product may be de- Resale price maintenance of books held on consignment. 15.122 Propriety of publishing marketing area price lists. 15.123 Selling merchandise by lottery methods condemned by Commission. 15.124 Agricultural cooperatives may market their products through a common sales agent. 15.125 Agreement among retailers as to uniform store hours. 15.126 Proposed advertising for portable oxygen administrator. 15.127 Description of raised printing as embossing. 15.128 15.129 Trade association code of ethics. "Solid" and "karat" used together in describing articles composed of gold. Use of words "National" and "Association" in name of proposed trade association. Acceptance of free merchandise by grocery retailer. 15.132 Giving free merchandise to obtain new customers. 15.133 Agreement among members of trade association to comply with government ruling. 15.134 Proposed lease of patented industrial machine. 15.135 15.136 Tripartite promotional assistance plan featuring rewards to customers. Selective leasing of shopping center space. 15.137 Proposed trade association discussion seeking firm price guarantees from suppliers. 15.149 15.150 15.151 mable Fabrics Act. Payment for recruiting new students. Trade association publication of advertisements for use by members featuring range of prices to be charged consumers. Commission cannot approve substantial additional annual volume discount pricing program. 15.152 Product certification program. 15.153 Proposal to grant discounts for increased annual purchases. 15.154 Legality under antitrust laws of complying with State milk marketing orders. 15.155 Varying discount price scheduledistributor recruitment through grant of override. 15.156 Origin of toilet preparations. AUTHORITY: The provisions of this Part 15 issued under 38 Stat. 717, as amended, 49 Stat. 1526; 15 U.S.C. 41-58; 15 U.S.C. 13, unless otherwise noted. $ 15.1 Use of the word "chamois." Any use of the word "chamois" in conjunction with a product not made from (a) the skin of the Alpine antelope or (b) sheepskin fleshers which have been oiltanned after removal of the grain layer is unlawful and a deceptive act or practice in commerce. [30 F.R. 14201, Nov. 11, 1965] § 15.2 Toy catalog advertising payments. No objection will be raised to payments by a toy manufacturer for advertising in a toy catalog published by a firm not owned or controlled by or in any way affiliated with any toy jobber customer of the manufacturer if the catalogs are available, in a practical business sense, to all of the manufacturer's jobber customers. [30 F.R. 14317, Nov. 16, 1965] § 15.3 Three-party promotional assistance plans. (a) Since June 1962, when its Advisory Opinion procedure was established, the Commission has received many requests for opinions regarding promotional assistance plans which have been within the purview of section 2 (d) and (e) of the Robinson-Patman amendment to the Clayton Act and section 5 of the Federal Trade Commission Act. In this context, promotional assistance is defined as the payment of money or the furnishing of services or facilities by a supplier to a customer for the purpose of promoting the customer's resale of the supplier's products. Payments for or the furnishing of advertising, demonstrators, displays, special packaging, prizes for contests, special handling of the supplier's products are typical examples. (b) In brief, the laws administered by the Commission provide that a supplier in commerce furnishing promotional assistance must offer it to each of his competing customers so that it is realistically available to them on proportionally equal terms. The basic test for a customer's eligibility under the law is whether, in reselling the supplier's product, he competes against any of those customers to whom the assistance is offered. If he does compete in its resale, the supplier's offer must be made to him, whether he operates a grocery, drug, variety or other type of store. In addition, a reasonable alternative means of participation must be included in such plans for eligible customers who are unable to use the basic plan. (c) From the standpoint of a supplier's customer, if he accepts such assistance with knowledge, actual or reasonably imputable, that his competitors selling the supplier's products have not been offered proportionally equal assistance by the supplier, he may be engaging in an unfair trade practice violative of section 5 of the Federal Trade Commission Act. In this connection, the Commission's Guides for Advertising Allowances set forth information in greater detail as to the legal responsibilities of suppliers and their customers with regard to their joint promotional activities. (d) A number of the plans submitted for an Advisory Opinion, however, have been devised by a requesting party who is neither a supplier nor a customer but a hopeful intermediary who had approached both suppliers and customers to interest them in his plan. Examples of some of the plans submitted include furnishing in-store music with commercials, in-store projection or display of advertising messages, outdoor advertising, instore display and distribution of recipe cards and the like. (e) In the Advisory Opinions rendered in response to such requests the Commission has pointed out that the fact that an intermediary is positioned between the supplier and the supplier's customers the retailers-does not affect applicability of the law to the promoter's plan. Even though an intermediary is employed, it remains the supplier's responsibility to make certain that each of the supplier's customers who compete with one another in reselling his products is offered either an opportunity to participate in the promotional assistance plan on proportionally equal terms or a suitable alternative if the customer is unable as a practical matter to participate in the plan; if not, the supplier, the retailer and the promoter participating in the plan may be acting in violation of section 2 (d) or (e) of the amended Clayton Act and/or section 5 of the Federal Trade Commission Act. [30 F.R. 14490, Nov. 19, 1965] § 15.4 Publication of product standards by a trade association as an industry goal. (a) The Federal Trade Commission rendered an advisory opinion informing a trade association that no objection will be raised to its distribution of product standards as an industry goal. (b) The association had requested advice on whether it may legally distribute a booklet giving standards which represent the ideal of a top quality industry product. The booklet was prepared about 2 years ago but it was subsequently determined that the standards were so high as to make them impracticable as commodity standards for the whole industry. (c) The association is now interested in distributing the booklet merely as an ideal and as a goal for which the industry should be striving, and questioned whether or not this might be considered as acting in restraint of trade. (d) The Commission's advice was that there could be no objection to the distribution of this booklet under the circumstances and for the purpose stated in the letter from the association, provided it removes any procedure, practice or requirement that seals of approval be given to industry members who meet the standards. [30 F.R. 14490, Nov. 19, 1965] § 15.5 Manufacturer's setting of minimum resale price for dealers. (a) An advisory opinion by the Federal Trade Commission notified a manufacturer that, in the circumstances presented, its establishment of a minimum resale price for its dealers would constitute unlawful price-fixing. It (b) The facts related to the Commission by the manufacturer are these. has three dealers in one city who submit bids for the business of one large consumer. Initially there was enough margin between the manufacturer's list price and the net price to the dealer to allow them to submit competitive bids. However, as competition between the dealers increased, the bid price became lower and lower until now the situation is that none of the three dealers can realize a profit on this business. (c) They have asked the manufacturer if it can do anything about the situation. One dealer suggested that the manufacturer should go on record as establishing a minimum price below which no dealer can quote. This limit would be in the form of a percentage below list or an actual dollar figure below list. The manufacturer stated to the Commission that this limit will assure the dealer receiving the order of a fair profit for his effort and would not destroy competition between the dealers, who would apparently be left free to compete above the minimum. The manufacturer asked if this can be done legally and if it would have the right to compel dealers to comply with this established limit. [30 F.R. 14554, Nov. 23, 1965] § 15.6 Three-way promotional program set up by outdoor advertiser and financed by participating grocery chains and their suppliers. (a) The Federal Trade Commission rendered an advisory opinion dealing with the legality of a proposal by an outdoor advertiser to set up advertising displays featuring food products which will be financed by payments from food suppliers and chain grocery and drug stores. (b) The Commission said it has accumulated considerable experience with similar tripartite promotional programs in which the promoter of the plan places himself between the supplier and the retailer, who indirectly receives the benefits of the payments made by the supplier to the promoter. (c) The fact that the promoter acts as middleman in the operation of the plan has been held to be of no legal significance, the Commission said. Instead, it views such plans as an integrated whole and treats them, under proper circumstances, as though the contracts or arrangements were made directly between the suppliers and the participating retailers. (d) Viewed in this light, the Commission advised, it would appear that the proposed program is expressly tailored to fit the needs of the participating suppliers' larger customers and therefore completely lacks the element of proportionally equal treatment of all those suppliers' competing customers which is required by section 2(d) of the RobinsonPatman amendment of the Clayton Act. (e) The Commission said that it is "safe to assume that each of the suppliers who will be asked to participate in this proposal have customers in the area other than grocery and drug chains. Such suppliers would risk liability under sections 2(d) and 2(e) of the Clayton Act by participating in any joint promotional venture which is not even offered to such customer or which, if offered, would be at a prohibitive cost to small retailers or which would be impractical for those retailers who may handle only a few of the products of the suppliers participating in the plan. The law requires that all of these customers must receive proportionally equal treatment." (f) "Thus, the suppliers who participate in * * [this] plan must make certain that the smaller retailers are offered a chance to participate and must offer a suitable alternative to those retailers for whom the plan is functionally unavaliable." * [30 F.R. 14554, Nov. 23, 1965] § 15.7 Resumption of advertising by a manufacturer in a trade buying guide formerly but no longer owned by a wholesaler customer. (a) The Federal Trade Commission has rendered an advisory opinion regard ing the proposed resumption of advertising by a manufacturer of drugs and cosmetics in a drug trade buying guide which was previously published by a wholesaler customer but whose present owner-publisher is not connected in any way with any customer of the manufacturer. (b) The Commission's advice was that no objection could be raised to payments by a manufacturer for advertising in buying guides if the guides are available, in a practical business sense, to all of his wholesaler customers. (c) The advisory opinion noted: "Payments for advertising in a buying guide published by a firm which is not owned or controlled by, or in any way directly or indirectly affiliated with, any customer of the advertiser or group or class of such customers do not violate section 2(d) 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 Commission has been informed that the present owner-publisher * has no connection whatsoever with * any * drug or cosmetic company or group thereof; that the buying guide is available at low cost to all drug wholesalers and is apparently not designed to be usable only by particular wholesalers, or classes or groups of wholesalers; that very effort is made to distribute the buying guide as broadly as possible among drug wholesalers; and that distribution is not limited to any particular wholesalers or group or class of wholesalers." * * ** * * [30 F.R. 14554, Nov. 23, 1965] § 15.8 Foreign origin disclosure. (a) An American manufacturer has been advised that the Federal Trade Commission would have no objection to its proposed manner of disclosing the origin of an office machinery unit containing a foreign-made part. (b) The label considered by the Commission identifies the foreign part and the country in which it was made and states that the manufacturer in question has manufactured the remainder of the unit and assembled it in this country. [30 F.R. 14555, Nov. 23, 1965] § 15.9 Labeling of containers for imported knives. (a) The Federal Trade Commission has rendered an advisory opinion regarding the labeling of containers for knives which are imported from Japan and to be stamped "Made in Japan" by an importer using the word "manufacturing" in his trade name. (b) The Commission's advice was that in the absence of any showing of material deception, a proceeding by it to require disclosure of Japanese origin of the knives on the containers would not appear to be warranted. (c) The Commission said the same advice would apply if the name of the importer is printed on the container provided the "Made in Japan" legend on the knives is readily visible upon casual inspection by prospective purchasers prior to purchase. However, if the disclosure does not meet this condition, it will be necessary to make a clear and conspicuous disclosure of Japanese origin on the box in close proximity to the name and address of the importer. (d) The Commission made the following comments with respect to use of the word "manufacturing" by an importer in his trade name but without in any way passing upon its propriety: The general rule is that a company may not use this word in its trade name unless it in fact owns, operates or controls a factory where the merchandise is manufactured. The reason is that there is a preference for dealing directly with the manufacturer, such preference being due in part to a belief that lower prices and other advantages may be obtained. [30 F.R. 14656, Nov. 25, 1965; 30 F.R. 16001, Dec. 23, 1965] § 15.10 Cooperative advertising allow ances. (a) A manufacturer was informed in an advisory opinion that the requirements of section 2(d) of the amended Clayton Act will be satisfied where the proposed advertising allowance program reflects that alternative methods of promotion are available to customers unable to use the preferred method of advertising in the regular course of their busi ness. (b) As explained by the manufacturer, all of its customers will be offered advertising allowances equal to 1 percent of net purchases to defray up to a maximum of 50 percent of the actual cost of advertising its branded, first-quality products in any ACB (Advertising Checking Bureau, Inc.) daily and Sunday newspaper. Where a retailer is unable in a practical business sense to advertise in such newspaper the program will pro vide him with adequate alternative methods of sales promotion such as, but not limited to, other newspapers, letter stuffers, or handbills as will enable him to earn the allowances specified. A retailer may use up to 30 percent of his allowance in Christmas catalog advertising where the brand name or label is prominently mentioned, payment for which is based on catalog circulation. New accounts and those with which the manufacturer has had less than 1 year's experience will be offered the same allowance, payment for which will be computed on the basis of purchases for the first full quarter year. All accounts will be notified of the program by first-class mail, by the manufacturer's sales representatives and by notices accompanying invoices. [30 F.R. 15210, Dec. 9, 1965] § 15.11 Labeling of truss plates manufactured from imported steel. (a) The Commission was requested to advise whether or not it would be permissible to label finished truss plates made from imported galvanized steel coils as a domestic product manufactured in the U.S.A. without any reference to the origin of the steel. The plates are cut and stamped to size in this country and further stamped to form tooth-like fastening devices as part of the finished plate. (b) The Commission advised that it would not be proper to label these plates as made in the U.S.A. since that would constitute an affirmative representation that they were entirely made in this country, which is not the fact unless, of course, the label also discloses in a clear and conspicuous manner the fact that the steel in said plates is imported. [30 F.R. 15584, Dec. 17, 1965; 30 F.R. 16001, Dec. 23, 1965] § 15.12 Promotional assistance-Publisher payments to a single reseller of the publisher's periodical. (a) The Federal Trade Commission advised a publisher of a periodical that the proposed promotional assistance plan described below would be violative of section 2(d) of the Robinson-Patman amendment to the Clayton Act. Section 2(d) provides in essence that it is unlawful for a supplier in interstate commerce to offer promotional assistance to his customer in reselling the supplier's product unless a proportionally equal |