Under the present rules of the Federal Trade Commission, it means a public hearing. So by the time he has reassured himself under your generous provision here, he has informed every single competitor of his product in the entire country of his plan, his innovation, his progressive notion that he has thought out. They all have a chance to get in at the same time, and he has completely lost any legitimate competitive advantage, hasn't he? Secretary CONNOR. No, sir; Senator Cotton, we are not proposing anything like a public hearing with respect to the preclearance of packaging materials. What we are suggesting is a procedure that something like the procedure now followed by the Food and Drug Administration with respect to the labeling of prescription drugs, a subject about which I had some prior knowledge, but in that situation, you could submit your labeling as part of the new drug regulation procedure to the FDA without any public notice, or without letting your competitiors know exactly what was going to be on it. There would be clearance by the FDA of the packaged material. We think that can be administered in a way that is not time consuming. It becomes more or less routine once the provisions of the law and the regulations are understood. But it does give the manufacturer the safeguard if, after getting that clearance and investing in packaging machinery and promoting the product with this kind of a presentation, he won't then have to take it off the market. Senator COTTON. Doesn't it occur to you that if the Federal Trade Commission amends its procedure so that you have a kind of a heartto-heart, under-the-table, secret consideration by manufacturer A, that it opens up all kinds of abuses, and that is about as secret as a lot of other things around this country? Drew Pearson would have it in his column the next day, regardless of public hearing or no public hearing, that "X horrible corporation was polluting the Federal Trade Commission in getting the Commission to do something against its competitors that shouldn't be done." Isn't that a pretty dangerous field to get into the secret advance authority? I remember when I was a prosecuting attorney and we had certain laws about pintables, slot machines, gambling devices, and somebody would come into my office and say, I want to put into my store such and such a device. I thought I would find out from you, first, if it is legal-and I used to run. Isn't that a pretty dangerous field? Secretary CONNOR. I don't think so, Senator Cotton. I think this would be a very routine type of clearance. The law would be clear as to what the standard was. The regulations would be clear. The manufacturer would be wanting to comply with those requirements, and it is a commercial type of situation with which both the agency and the manufacturer would be well acquainted. There is nothing criminal in this type of problem, such as you suggest you had experience with. Senator COTTON. It is either a process precluded by law or not precluded by law. How are you going to enforce this, anyway? You say civilly. How do you visualize enforcement under this bill? How effective is it going to be? Secretary CONNOR. The enforcement provisions, of course, would be subject to administration by FTC and FDA. I would expect, and the indication is that they would set up the regulations which would define the procedure for a fair hearing, and so forth, complying with the Administrative Procedure Act. Senator COTTON. Then they enjoin further practice? Secretary CONNOR. I would think so. And they can fine up to $1,000 a day as a civil penalty. Senator COTTON. Whether I am fined $1,000 a day in a civil or criminal court doesn't make a lot of difference to my pocketbook. There are many small concerns and small business people who would come under this, wouldn't there? Secretary CONNOR. As you know, as I do, it is a more serious matter to have a criminal charge sustained. It prevents you from getting to be a Government employee and other privileges. [Laughter.] Senator COTTON. I wouldn't want to remove that privilege. Just one last question, Madam Chairman, and I apologize for the time taken. How much participation, in general, do you anticipate your Department will have in the enforcement of this act if it becomes law? Secretary CONNOR. Senator Cotton, we would have no jurisdiction except where there is a reference to this standardization procedure. As I indicated in my testimony, I think that a slight amendment of the wording is desirable because we have plans, and there are proposals for the increased use of standardization procedures. The present practice, and as we envision it for the future, these procedures would require the interested industry and consumer groups to talk together about the appropriate type of standard in any particular field under our guidance and with our participation. Once a consensus is developed as to what an appropriate standard would be, we would publish that so that it would become well known and subject to observance. We would not, however, prescribe the standards because that would be Government control of the situation, and we think that the type of voluntary cooperation and compliance is much more appropriate. So that we would participate in the working out of appropriate standards for appropriate products in the various industries. Once the consensus is reached, which is acceptable to all those concerned, we would publish it. Senator COTTON. Most of the field of new cases and general orders and passing on general practices would be (1) by the Federal Trade Commission, and (2) by the Department of Welfare, or Secretary CONNOR. The Food and Drug Administration of HEW. Senator COTTON. Before you came up to advocate this bill on behalf of the Department, the administration, had you taken into consideration about how much added personnel and added appropriations would be necessary for the Department of Commerce, the Federal Trade Commission, and the force of the Pure Food and Drug Administration? Secretary CONNOR. Senator Cotton, we have looked at the situation as it would affect the Department of Commerce. We think that a slight increase in appropriation would be necessary. We think that the addi tion of several people in the Department would be needed to carry out the responsibilities that Commerce would get under the bill. We have not looked at the situation as it affects FTC and FDA. Senator COTTON. The distinguished chairman of this committee, Senator Magnuson, is also a chairman of the Independent Offices Subcommittee of the Appropriations Committee, and handles the Federal Trade Commission. I am a member of that committee, too. I am naturally curious about when we open up the new field in this bill, how much of a jolt we are going to get when the President's budget comes up for additional employees. You say in your Department you envision several means 15 or 20? Or 40 or 50? Secretary CONNOR. No. We are thinking in terms of three or four additional employees. Senator COTTON. Have you, before representing the administration on this bill, considered with anybody, either the Bureau of the Budget, or the Federal Trade Commission, or the Pure Food and Drug Administration, how many more employees they are going to need to cover the new activities? Secretary CONNOR. No, I have not gone into that, Senator. Senator COTTON. Thank you. Thank you, Madam Chairman. Senator HART. Senator Cotton has engaged in an exchange with you covering certain aspects of the bill. Before you leave, I would like you to state for the record whether any of the difficulties has changed your opinion stated earlier, namely, that the bill, with the amendments you suggest, is desirable. Secretary CONNOR. No, sir. The Department of Commerce endorses the bill with the modifications that we suggest. Senator HART. Thank you very much. Senator COTTON. I would like to say to my dear friend from Michigan, I didn't have the slightest idea of changing the opinion of a Cabinet officer of the United States, representing the administration. I was seeking to find out if he could illuminate me and change my opinion. [Laughter.] He has responded to you that I haven't changed his opinion, and in order that you may have a complete picture, he hasn't changed mine. [Laughter.] Senator HART. As the only self-admitted, open-minded participant, let me ask you again: Would it be your opinion that by making more precise and clear, in advance, what is and what is not within the bounds of law, that there might be need for fewer people rather than more people out in the field? This bill does have the effect of making clear in advance, in far more precise language than the statute that says that something must have conspicuousness-what the law requires. Would, in fact, this call for fewer people rather than more? Secretary CONNOR. That is quite possible. Senator NEUBERGER. If there are no further questions, we will call the next witness. Secretary CONNOR. Thank you very much, Madam Chairman. Senator NEUBERGER. The next witnesses are Mr. Halverstadt and Mr. Chaloud, of the Procter & Gamble Manufacturing Co. Mr. Halverstadt, would you identify yourself, and Mr. Chaloud. And how do you intend to proceed? STATEMENT OF A. N. HALVERSTADT, VICE PRESIDENT FOR ADVERTISING, AND J. H. CHALOUD, ASSOCIATE DIRECTOR, SOAP PRODUCTS DEVELOPMENT, THE IVORYDALE TECHNICAL CENTER, CINCINNATI, OHIO, THE PROCTER & GAMBLE MANUFACTURING CO., WASHINGTON, D.C. Mr. HALVERSTADT. I shall give the testimony. There may be questions raised in which Mr. Chaloud can be helpful, in which case I will call on him, if I may. Senator NEUBERGER. Fine. You may proceed. Mr. HALVERSTADT. Thank you. My name is Albert N. Halverstadt. I am vice president-advertising of the Procter & Gamble Co. I am pleased to represent my company before you today, and to add our views regarding bill S. 985 to those of other witnesses appearing before your committee. I have with me Mr. J. H. Chaloud, associate director of soap product development for Procter & Gamble. Before going further with my prepared statement I would like to make a comment or two. Our company has the deepest respect for Secretary Connor. I feel, however, that he may not have had an opportunity as yet to review with companies their attitudes toward this proposed legislation. I say this because the recommendations made by Secretary Connor are not typical of industry. Among those who have requested to appear in opposition to the bill are such companies as General Foods, Purex, Scott Paper, Kellogg, Corn Products, National Biscuit, Campbell Soup, Armstrong Cork, Pet Milk, General Mills. There are numerous cosmetic firms which have asked to appear. There are various associations which have asked to be heard. I mention the National Small Businessmen's Association, the Grocery Manufacturers Association, the Soap & Detergent Association, the Toilet Goods Association, the National Canners Association, the Glass Container Manufacturers Industry, the National Association of Frozen Food Packers. Therefore, I feel that the proposals made by Secretary Connor do not reflect the attitude of industry. For more than 125 years Proctor & Gamble has developed, manufactured, and sold a variety of household products to consumers. Today they range from soap to cake mixes, toothpaste to paper napkins. My company, like most others, pays a great deal of attention to providing good packages which protect the product, are convenient to use, and are attractive in shape and appearance. We recognize the important role that labeling pays in informing consumers. Fair packaging and labeling practices are essential to the continuation of a healthy, competitive marketplace. They therefore are of vital concern to a manufacturer like Proctor & Gamble. If the consumer finds our packages unsatisfactory, or if our products do not meet the expectations generated in the consumer by our labeling, she will remember us unfavorably the next time she is shopping. We just cannot afford to lose her business through misrepresentation. Neither can any other manufacturer who, like Procter & Gamble, depends on a high volume of repeat sales for survival. Therefore, we share your interest in good packaging and labeling. We feel strongly, however, that new legislation is not needed to assure fair packaging and labeling. We would like now to summarize the principal reasons leading to this conviction. We believe: First, consumers are quite satisfied with today's packaging and labeling practices. The so-called consumer dissatisfaction which has been offered in justification of S. 985 has been grossly exaggerated. Second, to the extent that fraud and deception in packaging and labeling exist today, the Federal Government already has power to take action and to enforce correction. Third, if this bill is enacted, consumers would pay more for their groceries and receive less value in their purchases than they do now. Fourth, if enacted this bill will grant Federal officials extraordinary powers to impose their preferences on the marketplace. Not only would this endanger the freedom of choice traditionally enjoyed by American consumers, but it would also hamper industry's efforts to meet consumer needs. I would like to expand a bit on each of these points: First, we have been able to find no evidence of widespread consumer dissatisfaction with packaging and labeling. In our kind of business, we must keep in close touch with the consumer and be responsive to her likes and dislikes. We conduct a very extensive and we think-effective program of consumer research and testing. In this program we send skilled people to make hundreds of thousands of calls yearly upon the Nation's consumers to interview them in their homes. In addition we have an extensive program of comparing performance, packaging, and overall acceptance of our brands, competitive brands, and our experimental products through consumer home-usage tests. The information gathered in this comprehensive program of consumer research is put to work in our packaging, product improvement, and development of new products. Of particular interest to this committee, however, is the fact that in these interviews we find no evidence of widespread consumer dissatisfaction with packaging and labeling. There is an additional point of contact which Procter & Gamble has with consumers. Last year our company received and answered 87,092 unsolicited letters from consumers an average of 343 each working day. Of these, less than two-tenths of 1 percent-actually only 132 letters were critical of our packaging, labeling, and cents-off offers. This kind of feedback from consumers is additional evidence that there is no widespread consumer dissatisfaction. In line with what we've just said, our conclusions are reinforced by what we saw and heard at the four regional consumer conferences conducted by the President's Special Assistant for Consumer Affairs. Our company attended each of these conferences. In advance publicity and in the course of each meeting people were encouraged to voice their complaints. From our observations, these meetings did |