(d) The Commission advised that it would not proceed against the practices so long as they are implemented in the manner described. The requesting party was advised further that in giving its approval to this request the Commission is expressing no opinion with respect to product standards which may be or are now established and that the approval will be of no force and effect should the proposed program of accreditation be implemented in contravention of Commission-administered law. The Commission added that should the proposed program be adopted the Commission may, from time to time, wish to assure itself that it is being used for the limited purposes intended.

[34 F.R. 11140, July 2, 1969]

§ 15.351

Use of symbols and names having fur-bearing animal connotations in labeling textile fiber products. (a) The Commission was requested to render an opinion with respect to the labeling of textile fiber products manufactured so as to simulate a fur or fur product.

(b) The requesting party proposed to use a word closely resembling the name of a fur-bearing animal, the fur from which is commonly used in the manufacture of garments, in association with a fabric simulating that fur.

(c) In the Commission's view, the use of the proposed term to describe such a fabric would probably violate the Textile Fiber Products Identification Act and/or that part of section 5 of the Federal Trade Commission Act which makes deceptive acts or practices in commerce unlawful.

[34 F.R. 11199, July 3, 1969]

§ 15.352

Stereo tape cartridge club; consumer credit regulations will apply. (a) The Commission issued an advisory opinion in response to an application from a businessman who proposed to organize a stereo tape cartridge club. (b) The Commission wrote the applicant:

(1) "You state that the idea of the club is to allow club members to exchange ten tape cartridges per month. A membership will cost $480, to be paid in 30 monthly installments of $16 each. That meets the definition of consumer credit which is credit offered or extended to a person primarily for personal, family, household, or agricultural purposes and for which a finance charge is imposed or

which is repayable in more than four installments.

(2) "Enclosed for your guidance is a copy of the Federal Reserve press release of February 7, 1969, containing Regulation Z issued under the Truth In Lending Act. With some exceptions, the Federal Trade Commission has the principal enforcement duties. The Commission points out that all relevant provisions must be complied with by anyone extending or arranging for consumer credit. A potential club member in your program is entitled to full disclosure of all financial arrangements, including the fact that a third party may hold the promissory note for collection.

(3) “In addition to your straight retail memberships, you contemplate a 'cooperative' membership to be offered in return for certain promotional cooperation. The Commission invites your attention to the enclosed copy of the Commission's Guides Against Deceptive Pricing, effective since January 8, 1964. You will note that it might be an actionable deceptive practice prohibited by law to identify a commodity as having a certain retail value unless that is a price at which identical commodities have in fact been sold in substantial quantities. No conclusion of legality or illegality is possible in the instant matter on the basis of the brief information you have submitted.

(4) "Further, you are advised that it might also be an actionable deceptive practice prohibited by law to fail to fully inform a potential club member not only about all financial arrangements and the accurate retail value of the cartridge player but also about the nature and function of the player; e.g., is the player a self-contained playing machine or does it need an amplifier and speakers to render performance?

(5) "For postal regulations, you should consult your local postmaster."

[34 F.R. 11199, July 3, 1969]

§ 15.353 Use of the term "hand carved" to describe furniture.

(a) The Commission issued an advisory opinion with respect to the use of the term "hand carved" to describe certain furniture.

(b) The manufacturing procedure for the furniture calls for a prototype to be completely constructed and carved by hand. Then, the prototype becomes a pattern for an intricate machine which "rough cuts" the carvings on subsequent

pieces for assembly production. Each piece so manufactured then has intricate hand detailing, carving and finishing to the extent that each piece is, in fact, different in artistic detail from the one which follows it. Each piece is numbered and signed by the craftsman who completes it.

(c) The Commission expressed the view that using the term "hand carved" to describe furniture manufactured in the manner described would probably violate the Federal Trade Commission Act, section 5.

[34 F.R. 11418, July 10, 1969]

§ 15.354 Tripartite promotional plan in the grocery field.

(a) The Commission issued an advisory opinion with respect to a proposed tripartite promotional plan in the grocery field.

(b) The applicant proposed to lease space at a fixed fee in each of all competing food stores in the top 50 markets in the country. On this leased space the applicant will install a display of 15 stillcolor illustrations of special food dishes. The applicant would sell advertising space to food packagers. The applicant would advertise the availability of his plan in the trade press and notify each store in a direct-mail program. Real estate brokers would also be used in an effort to secure participation by all competing retailers. Retailers with no floor space available for applicant's proposed display could participate by permitting the applicant to install 15 single modular units on shelves for which the retailers would receive the same compensation as retailers having applicant's displays.

(c) The Commission advised the applicant 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. The Commission also told the applicant: "The promoter must make it clear to each supplier and each retailer that even though an intermediary is employed in this plan, it remains the supplier's responsibility to take all reasonable steps so that each of the supplier's customers, including those who do not purchase directly from the supplier, who compete with one another in

reselling his products is offered an opportunity to participate in the promotional assistance plan on proportionally equal terms, which plan should include suitable alternatives if there are customers who may be unable as a practical matter to participate in the primary program; 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 Clayton Act and/or section 5 of the Federal Trade Commission Act."

[34 F.R. 11418, July 10, 1969]

§ 15.355

Disclosure of origin of partly foreign-made textile products.

(a) The Commission advised a manufacturer of men's and boys' slacks that it would not be necessary to disclose the fact that certain assembly and sewing operations are performed in a specified foreign country.

(b) Under the facts presented to the Commission, the slacks consist of cotton and synthetic Woven fabrics and threads, and steel hooks and eye enclosures, all of which are made in the United States. Said materials are inspected and cut to pattern in the United States and certain assembly steps, such as the sewing of belt loops and the attachment of zipper chains, are also performed domestically. Thereafter, they are shipped to the company's plant in a foreign country where they are further assembled and sewn. Finally, they are returned to the United States were the buttonholes are sewn, the buttons attached, and the pants are pressed, inspected, cured, and prepared for shipment to customers.

(c) The cost of the foreign assembly and sewing operations is approximately 13.5 percent of total production costs, and the company wanted to know whether it would be necessary to disclose the nature and extent of the foreign operations either under section 5 of the FTC Act or section 4(b) (4) of the Textile Fiber Products Identification Act. It was further understood that the company does not intend to label the slacks as "Made in U.S.A." or use any other words of similar import.

[34 F.R. 11418, July 10, 1969]

§ 15.356 Tripartite promotional plan in the grocery industry.

(a) The Commission issued an advisory opinion with respect to a tripartite promotional plan in the grocery field.

(b) The applicant proposed to rent space to advertisers on a mechanical device containing a moving message, the purpose of which is to advertise products at the shelf level in retail grocery stores. The applicant would offer retail stores having weekly gross sales of $30,000 or more $3 per 2-week period per device for at least five devices (with an option to install up to 20 devices) as rent for the area necessary for the installation of the advertising devices. Stores having weekly gross sales of less than $30,000 would be furnished signs for them to attach to their shelves or other suitable pointof-sale area of similar size to the mechanical device offered to the larger stores. Stores with weekly gross sales of less than $30,000 would also be furnished display materials such as aisle indicators and generic product ads. Stores with weekly gross sales of $20,000 to $30,000 would be paid $1.50 per 2-week period per sign; stores with weekly gross sales of less than $20,000 would be paid 19 cents per 2-week period per sign.

(c) The Commission expressed the view that were the proposed promotional assistance plan implemented, the Clayton Act, section 2 (d) and/or (e), as amended, and/or the Federal Trade Commission Act, section 5 would probably be violated because neither the payments nor the services under the plan are offered on proportionally equal terms and the "alternatives" are not all made available to each competing customer. [34 F.R. 11492, July 11, 1969]

§ 15.357 Supplier services

through third party.

furnished

(a) The Commission advised a requesting party that his proposed plan would be governed by the provisions of section 2(e) of the amended Clayton Act, as interpreted by the Commission's recently issued Guides for Advertising Allowances and Other Merchandising Payments and Services.

(b) In return for chain officials' time in considering supplier proposals, a third party intermediary proposed to provide merchandising advice of a perhaps general nature. The requesting party considered his proposed action to be outside the scope of section 2(e).

(c) The Commission concluded that implementation of the plan would be likely to result in a violation of section 2(e) if the plan were to be offered only to chains and if usable and suitable al

ternatives were not offered to those competing customers who could not use the basic plan.

[34 F.R. 11492, July 11, 1969]

§ 15.358

Disclosure of foreign country where textile products are assembled.

(a) The Commission advised two manufacturers of textile fiber products that it would not be necessary to disclose the name of the foreign country where certain finishing operations are performed.

(b) In both cases, the fabric is of domestic origin. In one case, the company will ship its American-made fabric and findings to the Dominican Republic where the fabric will be cut, sewn, finished, and returned for resale to the industrial rental laundry industry. Labor services performed in the foreign country will represent approximately 30 percent of total production costs.

(c) The other company, which is engaged in the manufacture and sale of ladies' undergarments, will cut the material in the United States and then ship it to Haiti where it will be sewn and finished. The company's foreign labor costs will represent approximately 20 percent of total production costs.

(d) Both companies were advised by the Commission that it would not be necessary to disclose in the labeling the nature and extent of the foreign operations performed on the textile products either under section 5 of the FTC Act or section 4(b) (4) of the Textile Fiber Products Indentification Act. [34 F.R. 11492, July 11, 1969]

§ 15.359 Trade association's proposed compilation and publication of certain financial data.

(a) The Commission issued an advisory opinion in response to a request from a trade association concerning a proposed survey to be conducted among its members.

(b) The proposed survey seeks industry data for 1966, 1967, and 1968 confined solely to the following items:

(1) Percent return on total investment;

(2) Percent net profits (after taxes) to total sales;

(3) Percent advertising cost to gross sales;

(4) Percent direct labor cost to gross sales;

(5) Ratio current assets to current liabilities;

(6) Ratio net sales to inventory; and (7) Ratio net sales to net working capital.

(c) The association proposes to obtain the information from its members on a confidential basis, to tabulate the data without identifying any company, and then to publish the results.

as

(d) The Commission advised the applicant that it does not object to the proposed survey, compilation and publication of industry financial data outlined above and on the basis stated i.e., that there will be no disclosure of the name of any company participating. It is to be understood that this advisory opinion is necessarily limited to this particular program. However, the Commission invites submittal of any other proposed financial surveys in definite form for Commission advisory opinions. [34 F.R. 11492, July 11, 1969]

§ 15.360 Use of descriptive phrase to describe furniture.

(a) The Commission issued an advisory opinion with respect to the use of a descriptive phrase such as "[Trade Name] furniture combines modern production methods with hand-carving and finishing" to refer to certain furniture.

(b) The manufacturing procedure for the furniture calls for a prototype to be completely constructed and carved by hand. Then, the prototype becomes a pattern for an intricate machine which "rough cuts" the carvings on subsequent pieces for assembly production. Each piece so manufactured then has intricate hand detailing, carving, and finishing, to the extent that each piece is, in fact, different in artistic detail from the one which follows it. Each piece is numbered and signed by the craftsman who completes it.

(c) The Commission expressed the view that using a descriptive phrase such as "[Trade Name] furniture combines modern production methods with handcarving and finishing" to refer to furniture manufactured in the manner described probably would not violate the Federal Trade Commission Act, section 5.

[34 F.R. 12824, Aug. 7, 1969]

§ 15.361 Credit reporting plan by trade association.

(a) In response to a request for an advisory opinion, the Commission ruled that it would interpose no objection to

a credit reporting plan by a trade association, as long as five conditions are met.

(b) The proposed plan would cover only past due accounts in three categories: (1) Where legal suit has been filed, (2) those accounts which have been turned over to a bona fide collection agency, and (3) where the debtor has gone into bankruptcy. The secretary of the association would keep a list of such accounts reported to her by the active members. In response to an inquiry from an active member concerning a particular customer, the secretary would, without disclosing the name of the reporting member, advise the inquiring member whether or not any one of the three aforementioned adverse credit actions had been reported. Available only upon the specific request of an active member, the credit information would not be for broad publication to all members of the association.

(c) In addition, a reporting member would have to submit evidence in support of any one of the three adverse credit actions being reported. Absent such evidence, the reporting member would have to refer the secretary of the association to a reliable source where this information could be confirmed. The purpose of this requirement is to prevent the reporting of any rumors with respect to a customer's credit rating.

(d) The Commission advised that the exchange of credit information concerning delinquent debtors through a trade association is not unlawful under section 5 of the FTC Act provided:

(1) The members of the association are left free to determine on the basis of their individual judgment whether or not to sell to delinquent debtors and on what terms;

(2) There is no agreement among members in regard to credit terms, prices, or any other joint action which illegally restrains trade;

(3) That the reporting member indicates that a debt turned over to a collection agency was treated by the debtor as offset or was otherwise disputed, where that is the case;

(4) The association furnishes to the debtor the same credit information reported by a member at the time the request is answered; and

(5) In order for the debtor to have the opportunity to correct his credit record, if he believes it needs correcting, the association must pass on to the inquiring member any explanatory statements

which the debtor may submit; the identity of the inquiring member need not be revealed to the debtor. As long as the proposed plan meets these five requirements in actual operation, the Commission would interpose no objection with respect thereto.

[34 F.R. 13272, Aug. 15, 1969]

§ 15.362

Full disclosure of facts necessary when seller of one product makes gift of another product to purchaser in exchange for names of prospective purchasers.

In response to a request for an advisory opinion, the Commission advised a manufacturer under an order prohibiting it from representing, directly or indirectly, that its products can be had at no cost to the purchaser or that such products can be had in exchange for the names of a given number of prospective purchasers, unless a full and complete disclosure is made of the facts and circumstances surrounding the offer, that it considered the following to constitute sufficient disclosure:

(a) Purchaser to furnish, at time of purchase, the names and addresses of six prospective purchasers.

(b) Prospects must reside in the sales area of manufacturer's distributor making the original sale.

(c) For voluntarily furnishing such names and addresses purchaser will receive, without charge, another specifically designated product of the

manufacturer.

(d) The additional product will be presented immediately upon completion by the purchaser of the names and addresses of the six prospective purchasers requested.

(e) Any representation or arrangement not contained in this disclosure shall not be binding upon the manufacturer or its distributor.

(f) No purchaser is required to participate in the program. Participation is strictly voluntary on the part of the purchaser.

[34 F.R. 13272, Aug. 15, 1969]

§ 15.363 Pricing of replacement glass for automobiles.

(a) The Commission issued an advisory opinion with respect to the pricing system of a dealer in replacement glass for automobiles.

(b) The dealer would grant discounts from the list price of automobile window

glass to all customers. If an individual purchases a window, he would receive a discount of 20 percent from list price. If an insurance company sends the individual in, the discount would be 30 percent. (In this case, the bill would be sent to the insurance company and the individual.) If an automobile garage purchases the glass, the discount would be 50 percent. All sales are made within one State.

(c) The Commission expressed the view that implementation of the proposal in the manner described and under the circumstances stated probably would not violate any law administered by the Commission.

[34 F.R. 13273, Aug. 15, 1969]

§ 15.364

Origin disclosure of imported thread guides.

(a) The Commission issued an advisory opinion relative to the disclosure of the foreign origin of imported ceramic textile and thread guides.

(b) The Commission understood that the guides are the size of a dime and that it is difficult, if not impossible to mark the country of origin on each guide during production. Markings after production is completed would be very difficult and very expensive. The guides are not sold to the general public, but are used in industry for the manufacture of other products.

(c) The Commission expressed the view that conspicuously marking on the package or container in which the guides would be shipped to their ultimate user the words "Made in [name of country] exclusively for [name of importer]" would be an adequate disclosure of the country of origin provided the guides were made exclusively for the applicant. [34 F.R. 13988, Sept. 3, 1969]

§ 15.365 Request denied for approval to sell dairy company to any dairy com pany under Commission order.

(a) The Commission rendered an advisory opinion denying a request of a medium-sized dairy company for blanket approval to sell to any company under a Commission order.

(b) The company was the largest independent dairy company in its large marketing area, had the largest sales volume of dairy products in the area, had sales in excess of $5 million, was profitable, no other hardships were demon