(b) The manufacturer operates a single factory located in the Midwest and ships its products on a uniform delivered price basis to wholesale customers located throughout the continental United States. The manufacturer desires to pass on to its customers cost savings due to lower freight rates for full truckload-lot quantities, by means of a uniform discount applicable to all truckload orders. For a recent 6-month period, the manufacturer determined that its average freight saving on such orders was in excess of 5 percent. It thereupon requested an advisory opinion as to whether the Commission would approve a uniform 5 percent truckload discount.

(c) The Commission advised the manufacturer that it could not approve the proposed 5 percent discount for truckload-lot orders because, based or the submitted data, the proposed discount would not appear to be uniformly cost justified. Accordingly, the use of such a discount could result in violation of the order in question, by producing price discriminations between customers qualifying for the discount and competing customers not able to qualify for it. The Commission noted that the alleged cost savings depend upon averaging the savings in the freight rates for truckloadlot shipments to all of the manufacturer's truckload customers in the United States and that, although the freight savings increase with the distance of customers from the manufacturer's plant, the freight saving on sales to nearby truckload customers is considerably less than 5 percent.

[33 F.R. 4137, Mar. 5, 1968]

§ 15.199 Agreement by processors to sell at prices higher than minimums set by State regulation.

(a) The Commission recently rendered an advisory opinion advising a State official that it would be illegal to hold a meeting at which the processors of milk within the State would agree to sell at prices higher than the minimum prices set by the State milk control agency.

(b) The official pointed out that the State milk control agency had performed its function of setting minimum prices pursuant to State law, but that it was felt that it would be difficult for many processors to maintain a profitable operation at these minimums in the outlying areas and towns due to higher delivery costs. The official also advised that

this proposed action would not be taken pursuant to State law, but would instead be as a result of voluntary agreement among the processors involved.

(c) The opinion advised that it was the Commission's considered opinion that such an agreement among the processors would be subject to serious question under well-settled principles of antitrust law. The Commission stated the law is clear that a State may, in the exercise of its sovereign power, itself conduct such regulation of business activities within its borders as its own legislature shall properly deem necessary in the public interest. So long as the resulting regulation is a tSate as opposed to individual activity, those subject to the regulation would not be subject to a charge of violating the antitrust laws by reason of their compliance with the State's orders, including orders setting minimum prices for milk.

(d) Here it appeared that the State, speaking through its milk control agency, had already performed its regulatory function and set minimum prices for milk within its borders. While any individual processor may sell at higher prices if he so desires, for them to combine together to agree to sell at higher prices would, in the Commission's view, present an entirely different question and would be a situation which would enjoy no part of the immunity afforded by State regulation. The prices to be charged within the State may be raised or lowered only by the State itself, the opinion added. They may not be altered by agreement among those subject to the State's regulation without being fully subject to the antitrust laws, under which no principle is more firmly established than that which holds that any agreement among competitors as to the prices at which they will sell is illegal per se. [33 F.R. 4137, Mar. 5, 1968]

§ 15.200 Promotion and sponsorship of price catalogs by trade association. (a) The Commission was requested to render an opinion with respect to an outstanding order to cease and desist which, among other things, proscribed agreements to suggest resale prices. The issue involved the legality of a covered Trade Association's sponsorship of catalogs for its member-dealers, which catalogs would contain manufacturers' suggested resale price.

(b) The Commission advised that under an outstanding Commission order

covering the Trade Association and its members such sponsorship by the Association may well violate said order. [33 F.R. 4250, Mar. 7, 1968]

§ 15.201 Specialized automotive repair association wants to publish flat rate manual for its members.

(a) The Commission issued an advisory opinion stating that it cannot approve the publication by a specialized automotive repair association of a flat rate repair manual for use by its members in determining labor charges.

(b) The Commission commented that there is implicit too grave a danger that the association's manual would facilitate price fixing between competing repair shop operators. The Commission pointed out the well-established antitrust principle that price fixing by competitors is illegal per se. The public expects to derive benefits from different prices offered by competing service operators. [33 F.R. 4250, Mar. 7, 1968]

§ 15.202

Definition of jobbers and wholesalers for functional pricing purposes.

(a) The Commission issued an advisory opinion to an applicant who (1) asked for a defintion of the words "jobber" and "wholesaler", and (2) asked the Commission's views as to the propriety of a proposed revision in price lists.

(b) In response the Commission stated: "As a working rule, one might suppose that, in a three level system wholesalers are closer to producers and jobbers are closer to retailers in the distribution of a producer's goods. Traditionally, producers sell to wholesalers who sell at a higher price to jobbers who sell at a higher price to retailers.

(c) "The controlling element in your problem, however, as in similar problems arising under the amended Clayton Act, is whether or not resale competition actually exists as between and among these various resellers rather than the names they use to describe themselves. If in fact a so-called wholesaler competes with a so-called jobber in the redistribution of goods, the difference in names is of no consequence; the fact of competition is.

regard of 'ambiguous labels, which might be used to cloak discriminatory discounts to favored customers.'

(e) "What you plan, as we understand it, is to sell your middlemen, whether 'wholesalers' or 'jobbers', at one price, while selling certain selected retailers at a higher price.

(f) "In the circumstances you present, you may properly do this provided the 'wholesalers' and 'jobbers' are functioning at the same distribution level and are not themselves engaged in retail operations competitive with the selected retailers."

[33 F.R. 4511, Mar. 14, 1968]

§ 15.203 Common selling organization.

(a) The Commission advised a group of geographically scattered, relatively small public warehousemen that it would not object if they were to establish a jointly owned selling agency under the conditions described.

(b) The Commission understands that the identified public warehousemen propose to establish, as a separate corporation, a single service organization, nationwide in scope. Each participating public warehouseman would periodically provide the service organization with information about the kind of storage space he has available, where such space is available, the times at which such space might be available and the terms and conditions under which such space would be available. The information provided is to be processed by electronic data processing equipment for use by storage space salesmen employed by the service organization. Only generalized information developed by the service organization will be made available to participants jointly.

(c) Each participating public warehouseman is to retain and affirmatively maintain local autonomy in administration, storage, rates, and customers to be serviced. The Commission notes that, under the statutes it administers, each participating public warehouseman is required independently to set his own rates and his own terms and conditions of sale. Any use of the service organization to effect concert of action as to rates, terms, or conditions of sale would expose participants to a charged violation of section 5 of the Federal Trade

(d) The Commission would not object to the establishment of a cooperative enterprise, as above described, operating as above set forth.

(e) The following proviso, however, was added to the opinion: "Unless the Commission has previously rescinded this approval, you are directed that at the end of 3 years from the date of this opinion to submit to the Commission a complete report on your membership, terms and conditions under which the cooperative is operating, including a statement for each member on the sales territory of such member, the volume of business and percentage of such members business."

[33 F.R. 4511, Mar. 14, 1968]

§ 15.204

Use of terms "unconditional"

and "lifetime" guarantee.

(a) In an advisory opinion rendered to a watch manufacturer, the Commission ruled that a guarantee which has conditions and limitations, other than as to time, may not be represented as an "unconditional" guarantee. It also advised the requesting party that a guarantee which lasts for only 3 years cannot be described as a "lifetime" guarantee. Moreover, the Commission objected to the guarantee being described as "4Ever".

(b) With respect to the claim "unconditional", the Commission said that it would be proper to claim that a product is "Unconditionally guaranteed for 3 years" if in fact no other conditions existed. However, where there are conditions other than time, such as were present in the case presented for review, the Commission said that it would be improper under section 5 of the FTC Act to claim that the guarantee is "unconditional". The reason for this, it was concluded, is that the term "unconditional" means there are no conditions attached, and it is a contradiction in terms rather than an attempt at modification to permit use of the claim "unconditional" provided the conditions are disclosed.

(c) Under the terms of the guarantee which was the subject of the Commission's opinion, the purchaser of the watch had the option to renew the original guarantee which expired at the end of 3 years by paying a service fee of $5 on an annual basis. By having to pay the $5 service fee, the Commission said, the purchaser no longer has a "lifetime guarantee" but a service or insurance policy which is renewable at his expense on an annual basis.

(d) The Commission also ruled that it is necessary to disclose the life being referred to whenever it is claimed that the duration of the guarantee is for a "lifetime". For example, is it the life of the original purchaser, the original user, or the life of the product, etc.? Thus, even if the requesting party resolved the first objection and offered a guarantee for life rather than for 3 years, it would still be necessary to disclose clearly and conspicuously the life to which reference was being made.

(e) In the opinion the Commission also objected to the term "4-Ever" because, contrary to fact, the product was not guaranteed forever.

(f) Finally, the Commission stated that it was not ruling upon the "waterproof" claim because it currently has under consideration a possible revision of trade practice rules relating to the term "Waterproofing" as applied to watches.

[33 F.R. 5293, Apr. 3, 1968]

§ 15.205 Use of a computer system to collect and disseminate marketing data.

(a) The Commission recently issued an advisory opinion concerning the legality of a proposal to employ computer and data processing equipment to collect and disseminate certain information in connection with marketing of ice-pack broilers. Sellers would feed into the system their asking prices and quantities available, and later report on actual sales, giving the prices and quantities sold. This information would be available to subscribers of the service, whether the subscribers are sellers, buyers, or members of the public. Subscribers would obtain the information by calling in to the central computer. Identity of all parties (sellers and buyers) would be kept secret from each other and from the public.

(b) The Commission advised the applicant that it has no objection to the proposed plan, provided it is not used for some illegal purpose. If the plan is used as a means for fixing or tampering with the price of poultry, or for some other illegal purpose, then the Commission would of course have serious objection to the plan.

(c) The Commission continued:

Statistical reporting plans which involve the collection and dissemination of data related to future prices are not illegal per se. However, experience in other cases indicates

that a price reporting plan which involves future or advance prices, particularly when that plan invites an industrywide pricing policy, may provide the basis for an inference of an agreement or combination to fix prices in violation of section 5 of the FTC Act. In essence, it is the potential danger inherent in the reporting plan which is related to future prices that prompts the Commission to suggest that it be used with extreme care.

Unless the Commission has previously rescinded this approval, you are directed, at the end of 3 years from the date of this opinion, to submit to the Commission a complete report on the actual operation of the program, describing how identity protection was maintained, and to include copies of your printed-out periodic reports and audits. [33 F.R. 5294, Apr. 3, 1968]

§ 15.206 Marking requirements for apparel of U.S. components assembled abroad.

(a) The Commission advised an apparel manufacturer that section 4(b) (4) of the Textile Fiber Products Identification Act would require an affirmative disclosure of the particulars of foreign origin under the following facts:

(b) The fabric of which the apparel will be made is entirely of domestic origin. This fabric will be cut into shapes and forms. The cut fabric, together with buttons, trimmings, threads, labels, in short all findings, also of domestic origin, will be shipped abroad to be assembled and sewn into the product. The assembled product will be returned to the United States where it will be finished, pressed, folded, and packaged.

(c) The Commission advised the requesting party that a label or other mark denoting the particulars of foreign origin would be required in the following terms: "Assembled and sewn in [name of foreign country where assembled and sewn] of American-made materials." [33 F.R. 5516, Apr. 9, 1968]

§ 15.207 "Made in U.S.A." label on answering machine composed of domestic and foreign made components. (a) The Commission rendered an advisory opinion in response to a question concerning the origin of a telephone answering machine which was composed of both domestic and foreign made components.

(b) The basic machine is manufactured in a foreign country, but modifications to be performed in the United States, including both labor and parts, will represent approximately 70 percent of the total cost of the finished product.

Numerically, approximately half of the components are domestic and the remaining half are imported.

(c) Concluding that such a product should not be unqualifiedly marked as "Made in U.S.A.", the Commission said:

* a 'Made in U.S.A.' mark would constitute an affirmative representation that the finished product was made in its entirety in the United States. Since the end product would in fact contain foreign made components of a substantial nature, it would be improper to describe the finished product as 'Made in U.S.A.' without a clear and conspicuous disclosure of the identity and foreign country of origin of the imported components."

[33 F.R. 5517, Apr. 9, 1968]

§ 15.208 Disclosure of origin of golf clubs made in this country from imported parts.

(a) The Commission was requested to render an advisory opinion concerning the proper labeling as to origin of golf clubs made in this country using imported component parts. The cost of materials and labor in this country with respect to the four clubs in question will range from a low of 63 percent to a high of 92 percent.

(b) The opinion advised that in the absence of any affirmative representation that the products are 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 any other facts indicating actual deception, the Commission was of the opinion that, under the facts as presented, the failure to mark the origin of these golf clubs will not be regarded by the Commission as deceptive. Accordingly, no marking is required on these clubs with reference to the country of origin.

[33 F.R. 5517, Apr. 9, 1968]

§ 15.209 Disclosure of foreign origin of component used in drawer slide assembly.

(a) The Commission was asked to render an advisory opinion as to the labeling requirements applicable to a slide asssembly for cabinet and desk drawers which will be made in this country using an imported rail member. The importer component will make up less than half the cost of the completed assembly.

(b) The opinion advised that in the absence of any affirmative representation

that the product is made in the United States, or any other representation that might mislead customers as to the country of origin, the Commission was of the opinion that, under the facts as presented, the failure to mark the origin of the product would not be regarded as deceptive.

(c) However, the Commission was also of the opinion that it would not be proper to describe the completed slide assembly as "Made in U.S.A." since that would constitute an affirmative representation that the entire assembly was made in this country, which is not the fact, unless, of course, the fact is also disclosed in a clear and conspicuous manner that the rail member is imported.

[33 FR. 5517, Apr. 9, 1968]

§ 15.210 Disclosure of foreign origin of imported mechanical pencil action. (a) The Commission rendered an advisory opinion in regard to the question of whether it is necessary to disclose the origin of imported mechanical pencil actions which are to be assembled with an American made barrel and clip.

(b) 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 indicating actual deception, the Commission expressed the opinion that, under the facts as presented, the failure to mark the origin of these goods will not be regarded by the Commission as deceptive.

[33 F.R. 5517, Apr. 9, 1968]

§ 15.211 Disclosure of country of origin of imported FM tuners.

(a) The Commission was requested to render an advisory opinion concerning the proper marking of small FM tuners imported from a foreign country. The tuners are disassembled in this country and a number of domestic components are installed to replace their foreign counterparts to change the tuning frequency and narrow the bandpass.

(b) With regard to the proposal to omit any statement on the label concerning the origin of the product, and instead to include a brochure with each unit that would accurately explain its origin, the Commission believes that such proposal would not violate any of the laws administered by it. [33 F.R. 5517, Apr. 9, 1968]

§ 15.212 No foreign origin disclosure required of imported shower head components.

(a) The Commission rendered an advisory opinion concerning the proper labeling as to the origin of shower head components to be imported from a foreign country. Under the terms of the proposal the imported components will represent approximately 40 percent of the total cost of the completed unit, with American labor and material representing the remaining 60 percent.

(b) 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, the Commission expressed the opinion that, under the facts as presented, the failure to mark the origin of these goods will not be regarded by the Commission as deceptive. Accordingly, the Commission ruled that no marking is required on the imported shower head components beyond what is imposed by the Bureau of Customs.

[33 F.R. 5660, Apr. 12, 1968]

§ 15.213 Country of origin disclosure on bicycles assembled with some imported parts.

(a) The Commission was requested to render an advisory opinion concerning the proper labeling as to origin of bicycles which were to be produced in the Virgin Islands using parts to be imported from a foreign country together with other parts from the United States. The value of the imported parts in relation to the total value of the finished bicycle will be around 35 percent.

(b) The opinion advised 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, the Commission is of the opinion that, under the facts as presented, the failure to mark the origin of these bicycles will not be regarded by the Commission as deceptive.

[33 F.R. 5660, Apr. 12, 1968] § 15.214

Country of origin labeling on lamp containing an imported wooden base.

(a) The Commission rendered an advisory opinion concerning the proper labeling as to the origin of lamps containing a wooden base imported from