anything about the cents off? The use of "cents off" as an inducement? Since you represent independent business, I thought maybe you might have in this release said something about whether that is a special anathema. How do your businesses feel about "cents off" promotions? Mr. BURGER. I think the best way to answer your sentence is to read into the record the release of June 17, attached to the statement. Senator NEUBERGER. I will be glad to look ahead at it. Do you have a particular place there which refers to the cents off? Mr. BURGER. I don't get your question. Senator NEUBERGER. I was trying to find out if you made any explanation about the use of "cents off" promotions. Mr. BURGER. No; we did not. Senator NEUBERGER. This will become a part of the record. (The press release follows:) PRESS SERVICE, NATIONAL FEDERATION OF INDEPENDENT BUSINESS, INC., RELEASE, JUNE 17 (NOTE. All facts, any opinions herein based solely on majority result of individually voted ballots by national membership of more than 190,000 independent business proprietors. Documentary support is on file and open to inspection at headquarters.) The Nation's independent business proprietors, even though many of them are engaged in retailing and wholesaling, are in favor of regulations ending deceptive practices in packaging. This is reported by C. Wilson Harder, president of the National Federation of Independent Business, in announcing that in a just completed nationwide poll of the organization's membership, 79 percent favor the Hart bill, only 18 percent oppose, and 3 percent had no opinion on the matter. The proposed legislation introduced by Senator Philip A. Hart, of Michigan, would require packages, especially in food, soap, drug, and cosmetic items, to be plainly marked as to the exact weight of the contents. The proposal would also set up standards as to where this information would be displayed on the package, and the degree of prominence that it must be given. It would also establish standards of size terminology for terms such as "small," "medium," or "large." It would also prohibit the packer from stating on the package that the product is being offered below the normal retail price, or that a price concession is being made because of the size or quantity of the container. The measure would also outlaw "trick" packages that deceive the consumer through the use of unusual shapes, sizes, or proportions. Commenting on the vote among independent businessmen, Mr. Harder said, "When Senator Hart introduced this bill, it was considered primarily as protection for the consumer. However, since putting the issue up to a nationwide vote, we find that independent merchants are complaining about the loading tactics that often accompanies package changes. In other words, a packer will change his package to contain a part of an ounce more or less, or redesign the package to give the impression of great contents, and immediately this move obsoletes the merchandise which the independent stores have in inventory." Independent packers and processors also report that the constant change of packages by some big national concerns is causing them unwarranted competitive problems. A processor or packer marketing on a regional basis must amortize the cost of package redesign and production over a small number of unit sales than a big national operator who can spread the cost over much higher unit sales. "Thus," Harder comments, "when a big national marketer changes a package to give an illusion of greater value, or comes out with a giant economy container, in order to stay on the shelves the regional operator must go to extra expense to try to meet the competition." "This entire practice is resisted by the independent retailers and wholesalers as it requires finding room for new package sizes which only vary slightly from the normal sizes, as well as additional inventory capital," Harder states. In addition, the independent retailer, because he does meet customers face to face, takes the brunt of criticism from the consumers when they learn that they have been duped into paying more for less value. "And, above all." Harder commented, "there appears to be a feeling that merchandise should be sold on the basis that a pound is a pound, and the fact that a package contains, or does not contain, a full pound should be clearly established." Senator NEUBERGER. Are there any others here who have not been called upon, who wish to be heard or to submit testimony? (No response.) Senator NEUBERGER. The record will be held open until Wednesday of next week for any additional comments. The hearings are adjourned. (Whereupon, at 11:50 a.m., the committee was adjourned.) APPENDIX STATEMENT BY SENATOR PHILIP A. HART, Democrat, of MICHIGAN, ON S. 985; THE FAIR PACKAGING AND LABELING BILL INTRODUCTION Our Founding Fathers gave to Congress in article I, section 8, of the U.S. Constitution the power and responsibility: To coin money, regulate the value thereof, and of foreign coin, and fix the standards of weights and measures. They knew history taught the necessity in any civilized society for standards of weights and measures. The prepackaging revolution of the past two decades has made the package the modern-day weight and measure. This new proliferation of package weights, sizes, shapes, and their often noninformative labels has played havoc with our traditional system of weights and measures. In effect, these packaging practices now fix the standard of weights and measures. The truth-in-packaging bill is a response to this condition. It is an opportunity for Congress to reassert its authority for the ultimate benefit of the consumer and the legitimate manufacturer. This legislation, therefore, is not primarily directed at preventing fraud in the common law sense. It makes little difference to the economy and consumer whether price comparisons are made difficult or impossible because of fraud, deception or only confusing practices. The seller's intent is not the important point-the practice and its effects are. Rather this legislation is aimed at bringing order out of the chaos of the modern marketplace as it pertains to consumable items-those most affected by the packaging revolution. PRACTICES That the practices with which the bill is concerned exist-if not proliferatein the marketplace is agreed by most witnesses. Volumes of hearings replete with exhibits representing some of our largest and most responsible manufacturers document irrefutably the condition of our marketplace. And if anyone believes that the exhibits are exceptions-"the few bad apples"-he need only visit any supermarket at any time to verify the record. These practices at which the bill is aimed are: 1. Inconspicuous or nonexistent quantity designations. 3. Imprinting on the package by the manufacturer of price information implying a retail bargain where the manufacturer has no control over retail price-such as "cents off" and "economy size" designations. 4. Use of adjectives to describe the net quantity that attempt to give the impression of a greater amount than the same quantity of a competitorsuch as "giant half quart" in place of “16 ounces" or "pint." 5. A proliferation of weights and measures expressed in odd amounts making price comparisons almost a mathematical impossibility; e.g., 71 quantities of potato chips under 31⁄2 pounds. Or, a consumer, to find the better bargain, must decide between 20 ounces for 35 cents or 241⁄2 ounces for 40 cents. 6. Use of containers of sizes, shapes, and dimensional proportions which give an exaggerated impression of the actual quantity within. This includes nonfunctional slack fill forcing the consumer to pay product prices for air. 7. The use of size designations that have no actual relation to the quantity in order to gain competitive advantage-one manufacturer's “king size" is another manufacturer's “large size" for an equivalent amount. toothpaste the smallest size often is marked "large." In 8. Meaningless "serving" designations. For the same quantity one package claims it "serves two"; another "serves four." 9. Lack of any useful method of price comparison where weight or count are meaningless. For example, perhaps "a unit of cleaning power" would be more meaningful than weights in detergents. 10. Lack of ingredient or composition information when this may be important, or presenting such information in an inconspicuous manner. 11. Reduction in content while masking the weight loss from the consumer by manipulation of package size and content markings. NEED FOR LEGISLATION The prepackaging revolution of the past two decades has seen the supermarket replace the neighborhood grocery store, the package replace the brown paper bag; the approximate 8,000 items on the store shelves replace the 1,500 available after World War II. Passing down the modern supermarket aisle, the consumer-buyer is confronted not by a seller, but by rows of packages and cans, each an inanimate salesman, carrying a message from a remote manufacturer. The package has, in effect, replaced the live salesman. It is with the unfair practices arising from the package's salesman role that this bill is concerned. The need arises from the fact that when marketing depends on prepackaging, the consumer cannot examine the product itself. He cannot look to the seller and get an assurance from him as to the product. Nor today can he readily compare products and their prices. Thus handicapped, the buyer has found it more difficult, if not impossible, to judge accurately the prices of competing products as a first step to making a rational choice between them. And, a rational choice does require as a first step the opportunity to compare prices. If two products are of similar quality, or if they are different in quality, price per unit is the initial basic determination that must be made. Is the additional quality, if any, worth the additional cost? This bill is directed at this first consideration for rational choice. There are three basic benefits flowing from this kind of informed and rational shopping decision. 1. To allow our free enterprise economy to function efficiently and without distortion The pivotal point on which the American free enterprise system is poised is a marketplace in which price comparisons can be readily and easily made between competing products. Only in this way can the consumer steer production toward the socially desirable goal of the greatest good for the greatest number. It is, in fact, upon the sum of myriad, tiny directional nudges given by the buyer exercising his consumer sovereignty that we all depend for insurance that our resources will be utilized with the best possible efficiency. However, when the buyer's ability to exercise a rational choice is inhibited, our economic directional sense is confused and the threat of waste and malpractice looms larger. Thus, when a buyer cannot or does not make such an informed choice as happens when the practices described occur—when he pays more than he need; when he chooses the worst, not the better part, the efficient producer is punished while the inefficient is rewarded. Certainly, if consumers are unable to compare prices, competition can exert no discipline on rivals to meet the lower prices of competitors, and competition provides no inducement to rivals to seek consumer favor through price reductions. In short, the free enterprise system fails to function as intended. This bill, by establishing a framework of competition in which it would be more difficult for deceptive and confusing practices to flourish, would: A. Enhance the integrity of markets in order that they may more accurately direct the productive activities of the economy. B. Make it more likely that profits will be channeled to the more efficient producer by promoting effective price competition. 2. Increase the effective spending power of the average family (which spends $80 billion yearly or approximately 25 percent of its income on “kitchen and bathroom" products covered by the bill) Various estimates have been made as to how much the consumer would save if this bill were passed. The most popular figure is $250 yearly. Admittedly such estimates can be little more than informed guesses. But no one can disagree that the ability to focus on the best buy will and can save money-no matter what the amount. If pennies saved over a long period of time were not so important, manufacturers would not be continually engaged in the "cents off" duel and "couponing" with their promises of money saved. And to a substantial share of our population, pennies saved are vital. Ernest Giddings, testifying for the National Retired Teachers Association and American Association of Retired Persons, said: "The population aged 65 and over reached 17.6 million at the end of 1963 and the proportion of persons aged 65 and over to the total population has more than doubled since 1900. Today 1 out of 11 persons has passed his 65th birthday. "The median income of families headed by persons aged 65 or over was $3,204 in 1962, just $200 over the "poverty line," and considerably lower than the median income for families headed by younger persons. Three million elderly families live on the wrong side of the poverty line with incomes of less than $3,000 a year. At least 1.9 million aged couples live on less than $2,500 a year. Over 5 million aged individuals live on less than $1,800 a year. "Seventy-two percent of the population aged 65 or over were receiving OASDI benefits at the end of 1963. The average monthly benefits paid to OASDI beneficiaries in 1962 were as follows: "Having just made a reference to the benefits received by a widowed mother and two children, this is an appropriate time to note that 1 out of 3 persons 65 or over is supporting an aged relative. "In 1963 over 2 million aged persons were receiving old-age assistance under the Federal-State public assistance programs and the average monthly payment received under those programs in 1963 was $77.” Esther Peterson, special assistant to the President for Consumer Affairs, testified: But "We are justly proud of the fact that 'food is a bargain' in the United States with less than 20 percent of the average workers paycheck spent for it. for the poor-and there are about 35 million of them-the percentages are significantly higher. Families with incomes under $3,000 spend around 30 percent for food, according to Bureau of Labor Statistics figures. For these families, particularly, every penny is important." The 35 million "poor," too, deserve our best efforts in their daily fight to keep their heads above the economic waters. 3. To assist the legitimate manufacturer The practices with which this bill are concerned do not generally reflect a desire to deceive on the part of the manufacturer. Rather, they are a reaction to competitive practices which have made the package the new salesman in the supermarket. If one manufacturer receives a temporary advantage by making his package look bigger while at the same time lowering the content, then the competitor feels he must follow the leader or lose sales. This process has resulted in the follow-the-leader approach to marketing, with the leader sometimes being the least scrupulous in the marketplace. Many manufacturers have said privately that they are on a merry-go-round on which they are not comfortable. But they do not know how to get off without losing sales. By establishing before-the-fact ground rules, this bill would allow the legitimate manufacturer to follow his personal ethical standards without being penalized in the marketplace. It would assist the vast majority of honest businessmen by upgrading the economic value of fair packaging and labeling practices. Another source of concern to businessmen is legal uncertainty. This uncertainty is written into present law with its vague concepts. Yet neither the FTC Act nor the FDA Act authorize the agency involved to draft substantive |