ing technical assistance on a contract basis in the farm supply and commodity marketing area to help the company in continuing to be an important factor in a particular industry. Individual market shares of the cooperatives are reported to be small.

(c) The Commission advised the applicants it has no objection to the proposed acquisition of some of the assets of the financially-troubled competitor. [33 F.R. 12088, Aug. 27, 1968]

§ 15.280 Commission advised applicant it cannot approve a proposed partial acquisition of a direct competitor's business that may substantially increase applicant's market power.

(a) The Commission issued an advisory opinion to an applicant who sought premerger clearance to acquire a number of operating plants of a direct competitor.

(b) According to the information submitted by the applicant, both companies purchase an agricultural product from growers and resell the partially processed product to further processors and canners. Both companies appear to be among the top four firms in the market and to have substantial shares of the market.

(c) The Commission expressed the opinion that it cannot approve the proposed acquisition because such an acquisition may substantially increase applicant's market power and thereby tend to produce anticompetitive effects in violation of the Clayton Act, as amended. [33 F.R. 12088, Aug. 27, 1968]

§ 15.281 Trade association recommendations with respect to sales periods and services furnished by members and cash discounts by suppliers.

(a) The Commission rendered an advisory opinion to a trade association of clothing retailers that its proposal to hold discussions, conduct studies and make recommendations to its members and their suppliers with respect to three problems which confront the industry would probably be illegal.

(b) The association advised that competitive conditions have forced the retailers into longer and longer sales periods which squeeze profit margins in the stores and contribute to improper merchandise assortments for one-third of the year. Second, it was stated that the cost of alterations was creeping upward as labor costs increase, thus adding to

overhead expense and that only a limited number of stores charge for these alterations. Third, the association advised that manufacturers vary in the amounts of cash discounts they will give and in the time periods during which they will be allowed, thus confusing retailers and resulting in substantial clerical errors. The association felt that it would greatly simplify retailer record keeping if a uniform date of payment and uniform discount terms became an accepted practice in the industry.

(c) In an effort to find solutions to these problems, the association contemplated three steps concerning which an opinion was desired. First, it asked if it could include articles in its bulletins about the benefits of starting clearance sales at later dates and otherwise publishing information designed to show that stores better serve customers when they operate as a one price store for the maximum amount of time during the year. Second, it inquired as to whether it could include cost information on alterations showing the inequities of not applying reasonable charges for alterations and as to whether local merchants could discuss, without specifics as to price, the merit of charging for alterations and urge local cooperation. Third, the association inquired as to whether it could include in its publications information on the desirability of uniform cash discounts, pass resolutions and urge manufacturers to cooperate.

(d) The opinion advised that all three of these proposed courses of action would, in the Commission's view, be of questionable propriety under existing law. With respect to the passage of resolutions urging manufacturers to adopt uniform cash discount terms, it was the Commission's opinion that, even if unaccompanied by any intent to force the manufacturers to adopt the policies set forth therein, there was implicit in such resolutions by the retailers too grave a danger that they would serve as a device whereby the concerted power of the members of the association was brought to bear to coerce the manufacturers to conform their discount policies to the restrictive standards of the resolutions, or, at the very least, as an invitation to enter into agreements among themselves to do so.

(e) The other two proposals seemed to the Commission to involve activities by the association which would lead to suppression of competition among the mem

bers. In the Commission's view, the time and duration of sales and the furnishing of alterations without additional charge are methods of competition among the retailers. The natural and probable result of what the association proposed to do would be to limit competition in these areas and thus would constitute an unlawful restraint of trade. While the steps which the association contemplated may not be the equivalent of an agreement among the members to follow the recommended procedures, still if they had the effect of persuading substantial numbers of those members to do so, it would raise a serious inference of such an agreement and hence would be of questionable propriety under the antitrust laws. Therefore, any actions by the association which would have a tendency to bring about that result could not, the Commission stated, meet with its approval.

[33 F.R. 12088, Aug. 27, 1968]

§ 15.282 Marking requirements for shirts assembled in the United States from foreign components.

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

(b) The manufacturer proposed to contract with or establish a plant in Hong Kong where foreign-made shirt cloth would be cut into parts and simple sewing would be done. The parts would then be shipped to a plant in the United States where, through a process of assembling, sewing, and finishing of the cut parts, individual shirts would be manufactured. From the cost data furnished it appeared that 60 percent of the cost of labor would be performed in this country and 40 percent in Hong Kong. The material and labor furnished in Hong Kong would account for 61.5 percent of the total cost of finished shirts and the labor performed in the United States would account for 38.5 percent of the total.

(c) The Commission advised that it was of the opinion that, under the laws it administers, textile products produced and processed in this manner must be labeled as "Assembled and sewn in the United States of materials imported from Hong Kong.”

[33 F.R. 12089, Aug. 27, 1968]

§ 15.283 Foreign origin-Container disclosure for contents of multiple foreign origin.

(a) The Commission advised a requesting party regarding information as to origin which should be set forth on a kit containing three domestic and eight foreign components from four different foreign countries.

(b) Although the individual components are separately marked as to origin, this information is not readily available to a prospective purchaser at the time of purchase.

(c) The Commission stated that a clear and conspicuous disclosure should be made on the container in the following terms, or in substantially equivalent terms:

"Some of the enclosed items are made in [countries] W, X, Y, and Z."

[33 F.R. 12306, Aug. 31, 1968]

§ 15.284 Location of foreign origin disclosure.

(a) In response to a request for an advisory opinion, the Commission announced it would be necessary to disclose the foreign country of origin of imported stainless steel flatware on the outer portion of the cover of the container.

(b) Under the facts presented to it, the flatware will be properly marked as to its foreign country of origin on the underside of the handle when it is imported. Because of the manner in which the flatware will be repackaged in the United States, the foreign origin marking will not be seen by prospective purchasers through the cover of the container. Moreover, each container will be sealed with a plastic film wrapper thus making it virtually impossible to inspect the merchandise prior to the purchase thereof.

(c) The specific question ruled upon by the Commission was whether it would be necessary to disclose the foreign origin on the outer portion of the container, in view of the fact that the disclosure on the flatware cannot be seen prior to the purchase of the merchandise.

(d) In ruling that a meaningful disclosure would be required, the Commission said: "Whenever an affirmative disclosure of the foreign country of origin is required in order to prevent deception, the general rule is that the marking must be clear and conspicuous. This means

that the disclosure must be placed in a location at the point of sale where it would be readily observed by prospective purchasers making a casual inspection of the merchandise prior to, not after, the purchase thereof. Under the facts described in your letter, the container normally would not be opened until after the purchase has been consummated. Since the disclosure of origin on the underside of the flatware cannot be seen through the cover of the container, the Commission is of the opinion that the disclosure will have to be made on the outer portion of the cover of the container in order to inform prospective purchasers of a material fact bearing upon their selection."

133 F R. 12306, Aug. 31, 1968]

§ 15.285 Formation of common

mar

keting association by agricultural cooperatives.

(a) The Commission rendered an advisory opinion to the effect that it could see no objection to the formation by three agricultural cooperatives of a nonprofit marketing association.

(b) While the marketing association was to be formed by the three cooperatives under State law, it was contemplated that any other producer of the same products could become a member. At the time, there were several other corporations which were not marketing cooperatives but which were engaged in the production of the same products.

(c) It was stated that the association would have no capital stock, would be a nonprofit cooperative organized for the mutual benefit of its members, membership would be restricted to producers who patronize the association, voting rights were to be equal and no member was to have more than one vote. Property rights were to be unequal and in proportion to the patronage of each member to the total patronage of all members with the association. It was further provided that the association would not market the products of nonmembers.

(d) The proposed contract with the producers provided that the association would be the exclusive sales agent of the producers for the purpose of marketing their products. The Association could, under the contract, market or direct the marketing of all products produced by the producers in such manner and under

such prices as it deems best. The association could designate authorized handlers to market the products of the members and the producers must market through these handlers. The producers themselves could execute a Handler's Contract and become authorized handlers.

(e) The Handler's Contract between the association and all authorized handlers provided that the handler was to act as the hired sales agent for the association and was to be governed by the rules, regulations, orders and prices issued by the association. The handler agreed therein not to sell for less than the prices recommended by the association. The handlers could, under the contract, market other products for the producers and could handle products for nonmembers.

(f) The opinion pointed out that the purpose of the Capper-Volstead Act (7 U.S.C. 291, 292) is to permit persons engaged in agricultural pursuits to associate in the collective marketing of their products. Under its provisions cooperative associations may make contracts or agreements as will effect such purpose and may have marketing agents in common. It has been construed as a grant of immunity from the antitrust laws insofar as collaboration among members of the cooperative associations are concerned. This immunity ends, however, at the point where they act, either by themselves or with other persons or entities not in this category, to restrain trade or otherwise eliminate competition at successive stages in the marketing process.

(g) The opinion further advised that the Commission had considered the proposal and was of the opinion that formation of the proposed marketing association by the three cooperatives would not result in violation of Commission administered statutes if implemented in the manner outlined. The Commission cautioned, however, that the opinion was limited to the formation of the proposed marketing association and was not to be construed as approval for any practice which may be predatory in nature, may result in unlawful monopolization, may restrain commerce to the extent that prices are unduly enhanced thereby, nor to conspiracies or combinations between the association and persons or entities not in this category.

[33 F.R. 12307, Aug. 31, 1968]

§ 15.286 Foreign origin-Labeling requirements for tennis shoes made in Virgin Islands with foreign compo

nent.

(a) The Commission advised a requesting party that no disclosure need be made as to the presence of foreign made uppers used in the manufacture of tennis shoes in the Virgin Islands.

(b) The uppers account for less than 30 percent of the total product value of the shoes and the other components are of domestic origin.

[33 F.R. 12307, Aug. 31, 1968]

§ 15.287 Publication of advertising standards by private association.

(a) The Commission announced its approval of advertising standards proposed for publication by a private association.

(b) The association has come to believe that a particular commodity is, in some instances, being locally advertised to the deception of consumers and the unfair disadvantage of competitors.

(c) It therefore devised a statement setting forth a number of practices which have heretofore been found unlawful by the Commission and proposes to invite industry members voluntarily to agree to avoid such practices. It intends also to make its statement available to advertising media with a request that the media voluntarily use the standards set forth in the statement to screen proposed copy for acceptance.

(d) The Commission stated that: "As long as each signer of the document agrees to, and abides by, its provisions without coercion, expressed or implied, and as long as each advertising medium exercises its own independent judgment, without coercion expressed or implied as to what copy it will accept or reject, the Commission would have no objection to your proposed document as written, or its proposed use."

[33 F.R. 12646, Sept. 6, 1968]

§ 15.288 Receipt of promotional allowances prohibited by order.

(a) The Commission was requested to render an advisory opinion with respect to the legality of a respondent's proposed participation in a special promotion sponsored by one of its suppliers. The respondent, a retailer, is under an outstanding Commission order which prohibits it from inducing and receiving promotional allowances when it knows or should know that the allowances are

not made available on proportionally equal terms by the supplier to all its other customers in competition with the respondent.

(b) According to information provided by the respondent, the supplier essentially has offered to pay 50 percent of the respondent's advertising space and/or time costs up to a maxinum participation of $5,000. Further, the Commission understands that the supplier has at least two other retailer customers in the respondent's trading area, and that the supplier has represented to respondent that it will at some undisclosed future time offer the special promotion to each.

(c) On the basis of this information, the Commission advised that whether respondent's proposed participation in the subject promotion will be in compliance with the order to cease and desist depends in large part upon the general availability of the said promotion, a threshold determination which must be made by the respondent.

(d) The Commission advised that if the subject promotion is available to the other known customers of the supplier who compete with the respondent, no problem would seem to be presented by respondent's participation in the promotion. On the other hand, if respondent knows or, as a reasonable and prudent businessman, should know that the promotion is not available to such other known customers at such time as respondent would participate in the promotion (and the information before the Commission strongly suggests that this is the case), respondent's participation in the promotion would be in violation of the order.

(e) Accordingly, the respondent was directed to inform the Commission of any determination it makes to participate in this promotion.

[33 F.R. 12646, Sept. 6, 1968] § 15.289 Compost peat.

rendered an

(a) The Commission opinion to a company which sought permission to use the term "compost peat" as descriptive of organic, decomposed municipal refuse.

(b) Ruling that it had no objection to use of the word "compost" since the end product is the result of decomposed organic matter, nevertheless the Commission reached a different conclusion with respect to the use of the word "peat."

(c) In rejecting use of the word "peat" to describe the end product in question,

the opinion stated: "The Commission believes that the purchasing public would generally understand 'peat' to be a natural product, that is, one that is formed naturally where vegetable matter has decomposed over a long period of time under particular conditions. Peat moss is a common form of such natural product. The organic material produced in your decomposition process would not be ‘peat' as that term is so generally understood, and the Commission believes that to describe it as 'peat' would be misleading. Accordingly, you are advised that the Commission would find your proposed use of the term objectionable."

(d) Under the facts presented to it, the requesting party proposes to contract with various cities to handle their municipal refuse. All nonorganic material will be removed from such refuse and sold to various users thereof. The remaining organic material consisting of vegetable matter emanating from food and garden sources, grasses, leaves, trees, wood cellulose and other plants will then be processed under very high moisture conditions during the decomposition stage. Thereafter, the material will be held in large pits for seven days and then removed to storage sites for further decomposition.

[33 F.R. 12646, Sept. 6, 1968]

§ 15.290

Membership in trade association by manufacturer under Commission order.

(a) The Commission rendered an advisory opinion to a beverage manufacturer, currently subject to a cease and desist order, covering the legality of a proposed reorganization of an industry association to which the manufacturer belongs.

(b) Specifically the Commission was asked whether the manufacturer could properly sign the proposed articles of incorporation covering a state trade association, which is presently unincorporated and of which that manufacturer is now a member, where that manufacturer is covered by a Commission order prohibiting it from engaging in price fixing or engaging in any conversations with competitors regarding prices or terms of sale. The association's members are manufacturers and distributors of a product produced by the inquiring manufacturer. The proposed articles of incorporation state the purpose of the association to be to promote, represent and develop the industry within the state. In

light of the foregoing circumstances, the Commission stated that it had no objection to the signing of the proposed articles of incorporation by the inquiring manufacturer.

[33 F.R. 12647, Sept. 6, 1968]

§ 15.291

Commission refuses to grant blanket approval to small baking company to be acquired by anyone including corporations subject to Commission acquisition-prohibition orders.

(a) The Commission rendered an advisory opinion in response to a premerger clearance request from the owner of a small baking company who wants to sell the business to anyone including corporations subject to Commission cease and desist orders containing provisions prohibiting further acquisitions without prior Commission approval.

(b) The applicant was advised by the Commission that it cannot grant the blanket approval requested. The Commission pointed out that corporations covered by Commission acquisition-prohibition orders are free, of course, to apply for prior approval to acquire the applicant's company in compliance with the order against the particular corporation.

(c) From the data submitted by the applicant, it appears that, while the population has declined in its trading area and its sales have produced reduced revenues, the company has continued to operate profitably. No evidence was presented of any attempts to sell the business to any other independent baker or to anyone presently outside the baking industry.

[33 F.R. 14637, Oct. 1, 1968]

§ 15.292

Paua shell being described as "marine opal".

(a) The Commission rendered an advisory opinion in which it concluded that costume jewelry containing a centerpiece consisting of a small inset of paua shell could not be described as "marine opal". (b) According to the Commission's opinion:

opal is a gem which is well known generally among the purchasing public and the trade and has certain well-established characteristics and properties. It is an inorganic mineral found in Australia which is far more expensive and preferable than the paua shell, which is an organic substance found in the ocean. Under these circumstances, therefore, the Commission has concluded that it would be deceptive to label a