practice to misrepresent approval or endorsement of products by medical associations, doctors, dentists, and related professional groups.

[32 F.R. 4308, Mar. 21, 1967]

§ 15.118

Reduced price on shopper's guide advertising for radio advertisers.

(a) The Federal Trade Commission advised a radio station that it might properly give reduced advertising rates in a printed shopper's guide which it plans to publish to those advertisers buying radio time at regular station rates.

(b) The Commission was informed that radio advertisers would not be required to buy shopper's guide space, and that shopper's guide space could be purchased at regular shopper's guide rates by those not buying radio time.

(c) Three other radio stations and two newspapers are available to advertisers within the market area in question. [32 F.R. 4569, Mar. 28, 1967] § 15.119

ethics.

Trade association

code of

(a) The Commission advised a trade association that the objectives sought by its proposed code of ethics appeared to be unobjectionable and that adherence to the code should not operate to effect an unreasonable restraint of trade. Accordingly it is the Commission's view that the mere act of becoming a member of the association and joining in its activities for the purposes outlined will not in itself violate any statute administered by the Commission.

(b) The association was advised, however, that if enforcement of the code operated so as to effect an unreasonable restraint of trade, serious questions would be raised as to the plan's validity. The general test, the Commission stated, is whether concerted action by competitors unreasonably affects a businessman's ability to compete. Thus, if association membership is an important comretitive factor, arbitrary or discriminatory refusal of membership to a qualified applicant because of alleged failure to abide by the code would raise serious questions under Commission-administered law, as would arbitrary or discriminatory expulsion of association members.

(c) In conclusion, the Commission noted that it confined itself in its answer to so much of the question as falls within Commission jurisdiction. The extent, if

any, to which another Government agency may be concerned with the association's activity is a matter to be determined by reference to that agency. [32 F.R. 5620, Apr. 6, 1967]

§ 15.120 Permissible period of time during which new product may be described as "new".

(a) The Commission was requested to render an advisory opinion as to the permissible period of time during which an advertiser could continue to describe a new product as being "new".

(b) The Commission pointed out that the word "new" may be properly used only when the product so described is either entirely new or has been changed in a functionally significant and substantial respect. A product may not be called "new" when only the package has been altered or some other change made which is functionally insignificant or insubstantial.

(c) Assuming that a particular product could truthfully be described as "new" in the first instance, the opinion noted that there is little precedent for determining how long an advertiser may truthfully continue to describe it as "new". The Commission stated it was aware, of course, that the word has been frequently abused and that it is in the interest of all advertisers to have established ground rules for its use. However, the time period during which a particular product may be called "new" will depend upon the circumstances and is not subject to precise limitations; any selection of a fixed period of time or a rigid cut-off date would have to be arbitrary in nature. Further, any such attempt would not only fence in all advertisers without regard to the circumstances, but would fence in the Commission as well, and deprive it of all flexibility in dealing with individual situations.

(d) Instead, the Commission felt it would be preferable, considering the absence of precedents, to establish a tentative outer limit for use of the claim, while leaving itself free to take into consideration unusual situations which may arise. Thus, the Commission's position was that until such a time as later developments may show the need for a different rule, it would be inclined to question use of any claim that a product is "new" for a period of time longer than 6 months. This general rule would apply unless exceptional circumstances warranting a period either shorter or

longer than 6 months were shown to exist.

[32 F.R. 6023, Apr. 15, 1967]

§ 15.121 Resale price maintenance of books held on consignment.

(a) The Commission was requested to render an advisory opinion concerning the legality of an agreement between a university press and a scholarly association that the press would not sell the annual publication of the association, which it held on consignment, at less than the minimum resale price stipulated by the association. The book normally sells by mail order for the same amount as is charged by the association for annual dues. Members of the association are entitled to receive a copy of the book at no extra charge. The association wishes to include a provision in the contract prohibiting the press from selling to educational institutions, mainly libraries, at any discount below the usual retail price, its purpose being to prevent such buyers from obtaining the book at a lower price than they could by joining the association. This would mean that the press could not give libraries the normal trade discount.

(b) In addition, the Commission was assured that the relationship between the press and the association was strictly one of agency. The press does not print the books for the association, which subcontracts the printing and simply wishes to use the selling facilities of the press to handle sales to nonmembers. Legal title to the books remains in the association, which owns the copyrights, and the books are being handled by the press on a consignment basis.

(c) The Commission advised that it could see no objection to the inclusion of this provision under the precise factual situation presented. In arriving at this conclusion, the Commission stated that it was mindful of the fact that consignment agreements can, under certain circumstances, be used as a device for illegal resale price maintenance, even where patented or copyrighted articles are involved. However, it was of the opinion that this proposal would not fall within that category in view of the fact that the contemplated consignment agreement containing the clause in question will be with only one consignee and there will be no other outlets competing in the distribution of these books. This view of the law was limited solely to the factual

situation involved. Hence, generalizations from this opinion or its extension to other factual situations would not be warranted.

[32 F.R. 6362, Apr. 22, 1967] § 15.122

Propriety of publishing marketing area price lists.

(a) The Federal Trade Commission advised a manufacturer who had requested an advisory opinion that there is nothing inherently illegal about area price lists which make only due allowance for differences in the cost of shipment and delivery.

(b) The Commission advised the manufacturer further that price discriminations in sales to customers located in different areas who in fact compete with each other could amount to conduct in violation of section 2(a) of the Clayton Act, unless cost justified or unless the lower price is a good faith meeting of a competitor's equally low price.

(c) The Commission also pointed out that it could be unlawful if area price lists permitted sales producing monopoly profits in one area to subsidize sales at much lower prices in another area or to a particular customer or group of customers to the competitive injury of a competitor of the seller.

[32 F.R. 6362, Apr. 22, 1967]

§ 15.123 Selling merchandise by lottery methods condemned by Commission. (a) The Commission issued an advisory opinion in which it ruled that a proposed plan calling for the sale of merchandise by means of a lottery would be contrary to the provisions of section 5 of the FTC Act.

(b) "Moreover," the Commission said, "the fact that the purchaser receives something of value for his consideration does not negate the existence of a lottery."

(c) Under the terms of the proposed plan which was the subject of the advisory opinion, the promotion would consist of a store display carton containing 36 $1 plastic scale model kits, with a different number to be marked on the end of each kit box. The display header would announce to prospective purchasers they could win a $2 chrome plated model if the number on the end of the box corresponds with the number to be posted by the store manager in 4 weeks.

[32 F.R. 6929, May 5, 1967]

§ 15.124 Agricultural cooperatives may market their products through a common sales agent.

(a) In an advisory opinion the Commission stated that agricultural cooperatives formed under pertinent provisions of the Capper-Volstead Act may establish and market their member's products through a common sales agent.

(b) Counsel for the requesting parties described his clients as cooperative associations of milk producers representing some 361 farmers and dairymen who produce about 2 million pounds of milk per month in excess of that consumed in their trading area. Counsel said that formation of the sales agency by his clients will enable them to dispose of this excess through bidding on Government contracts to supply milk to military bases in competition with milk now imported from other milk marketing areas for that purpose.

(c) The Capper-Volstead Act (7 U.S.C. 291, 292) permits persons engaged in agricultural pursuits to associate in the collective marketing of their products. Under its provisions cooperative associations formed thereunder may make contracts or agreements as will effect such purpose, and they may have marketing agents in common. The Act has been construed as a grant of immunity from the antitrust laws insofar as collaboration among members of 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.

(d) In approving the formation of a common sales agency by cooperative associations of milk producers to market the products of their members the Commission advised Counsel for the requesting parties that its action "is 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 milk prices are unduly enhanced thereby, nor to conspiracies or combinations between your" clients "and persons or entities not in this category."

[32 F.R. 6929, May 5, 1967]

§ 15.125 Agreement among retailers as to uniform store hours.

(a) The Commission was asked to render an advisory opinion as to whether

it would be lawful for a trade association, after making a survey of retailer preferences as to store hours, to recommend that all stores observe the same hours, but that no sanctions would be imposed upon nonconforming retailers. The request was prompted by Advisory Opinion Digest No. 110, 32 F.R. 788, which the Association interpreted as having stated that the Commission found nothing unlawful in an agreement among retailers to observe uniform hours of business.

(b) The Commission pointed out that its previous opinion advised merely that there would be nothing unlawful in a retail trade association conducting an informal survey intended to determine its members' individual preferences as to hours of business, followed by an announcement by the association of the results of the survey. The Commission emphasized that its opinion was based on the premise that any number of individual retailers may elect unilaterally to adopt common hours of business. The Commission did not intend to suggest that an agreement among competing retailers with respect to uniform hours of business would be lawful. On the contrary, it was the Commission's opinion that such an agreement among competitors, while perhaps not illegal per se, would be fraught with grave risks of illegality. Conceivably, there might be some rare and most unusual circumstances in which such an agreement among competing sellers could be justified as a reasonable restraint of trade, but this seems unlikely. The fact that no sanctions or coercion are imposed upon noncomplying retailers cannot legitimatize an otherwise unlawful agreement in restaint of trade.

(c) In sum, it was the Commission's opinion that the conduct of a survey as to its members' business hours and an announcement of the results of that survey by a trade association, would not be unlawful so long as no agreement among competing sellers was involved. [32 F.R. 7262, May 16, 1967]

§ 15.126 Proposed advertising for portable oxygen administrator.

(a) The Commission rendered an advisory opinion as to the legality of certain proposed advertising for a portable oxygen administrator designed for individual use.

(b) The advertising would represent that there are many emergencies that call for an immediate supply of oxygen,

such as sudden heart attacks, coronary occlusions, respiratory defections, gas and smoke poisoning, drowning, electric shock, asthmatic seizures, and more. Providing oxygen the instant it is needed can, according to the advertising, make the difference between prolonging life and losing it or between complete and partial recovery. When needed oxygen must be supplied within 5 to 8 minutes to prevent brain damage. Until recently, if an emergency oxygen deficiency occurred, one had to wait for professional medical assistance and there was no way of knowing how long that would take. Now one can have a low cost portable administrator so simple to operate that any one can administer it, even to themselves. While the literature would caution in some places that all heart and respiratory conditions are not alike and thus the need for oxygen may vary widely in its application so that your doctor will have to be your guide, it would also add that the advertiser knows of no emergency situation where oxygen can do harm and it may save a life under many circumstances.

(c) The opinion pointed out that the matter presented a difficult problem to treat under the advisory opinion procedure, for the Commission has not conducted its own tests of this particular unit and hence is not in a position to comment upon every question raised by the advertising. Hence, its opinion has to be based upon such general medical knowledge as is available and be directed at the main themes of this advertising rather than at specific details.

(d) Based upon what is known of the capabilities of similar devices, the Commission advised that it could not place its stamp of approval upon advertising which holds this device out to the general public as suitable for use and capable of saving lives under all conditions specified without its having been recommended for use by a doctor familar with the patient and without the individual for whom it has been prescribed, or his family, having been given instructions for its use. This is particularly true when it is considered that in some cases of asthma and emphysema there is a danger in the administration of oxygen without a doctor's prescription and instruction because an oversupply in these conditions can actually cause the patient to stop breathing.

(e) The opinion further added that aside from the question of danger in this

specific situation of use and the general fire hazard when oxygen is improperly used or stored, the scientific evidence available indicates that without a positive-pressure apparatus, this device will accomplish little more than will mouth-to-mouth resuscitation in situations where emergency oxygen is inIdicated. In fact, the emergency resuscitator attachment appears to require mouth-to-mouth techniques in conjunction with the device and the evidence indicates this would only increase the oxygen a patient would receive by an insignificant amount. Positive pressure, which can only be administered by trained personnel without grave danger to the patient, is indicated for use when a patient is not breathing. If the patient is breathing he will usually inhale sufficient oxygen from the air by himself until medical help can be obtained.

(f) The fault of this advertising, as the Commission views it, is that while beneficial results can be achieved by the skilled administration of the proper amounts of oxygen when that treatment is indicated, it is deceptive to hold out to the unskilled person that he can by himself properly diagnose the patient's condition and administer oxygen in the required amounts and in the proper manner through use of this device so as to achieve the results claimed in the advertising.

[32 F.R. 7701, May 26, 1967]

§ 15.127 Description of raised printing as embossing.

(a) The Commission was requested to render an advisory opinion concerning the use of the terms "embossing" and "embossed" to describe raised printing or printing by the verkotype process.

(b) The process used would consist of printing the copy with a printing or lithographic press, placing it on a conveyor to send it through a verkotype machine that sprinkles powdered rosin on the wet ink and carries the copy under gas heaters which would fuse the rosin and ink, thereby creating a raised surface.

(c) The Commission advised that since embossing is generally understood to involve the distension of paper with the use of a die, the description of raised printing, including products of the verkotype printing process, as embossing would be inappropriate.

[32 F.R. 7702, May 26, 1967]

§ 15.128 Trade association code of ethics.

(a) A group of producers of products sold by door-to-door salesmen employed by independent sales agencies has requested a Commission opinion with respect to the legality of a proposed code of ethics to govern the practices of the agencies and the salesmen. The opinion was rendered following the second submittal of the code, which had been substantially modified as a result of conferences with the Commission's staff pursuant to Commission direction.

(b) The modified code provides for the appointment of an Administrator who will be empowered to impose fines against any of the agencies if he finds that they have authorized, condoned or in any way supported deceptive practices by their sales and collection representatives. The maximum amount of fines has been limited to an amount which in the Commission's judgment will not operate anticompetitively or in a confiscatory manner but sufficient to constitute a deterrent.

(c) Further, in the modified code the agreement between signatory agencies not to employ a person found to be a willful violator by the Administrator in a sales capacity for a period not to exceed 1 year was eliminated. In its place it is now provided that the Administrator, upon finding that a person has willfully violated the code, shall recommend that he not be employed in a sales capacity for a period not to exceed 1 year. However, it is further provided that an agency shall use its own discretion in deciding whether to follow such recommendation of the Administrator.

(d) In order for a person to be found to be a willful violator it must be determined that on three separate occasions he violated the code with knowledge that his representations were in violation of the code. Moreover, if an agency repeatedly condones or authorizes violations of the code, it may be subject to expulsion from participation in the code.

(e) Finally, in order to insure greater participation in the administration of the code by the agencies than was the case in connection with the original submittal, the code now provides that the Administrator will be responsible to a Board of Directors composed of six agencies and one producer. Of the six agencies, at least two must not be affiliated with any producer. Also, the one producer must not be affiliated with any agency. Appeals

from actions of the Administrator may be taken as a matter of right to a committee composed of representatives of at least three participating agencies, at least one of which is not to be affiliated with a producer. A new committee is to be appointed each month and its members are to be rotated from among signatory agencies.

(f) The Commission advised that it had given this matter very careful consideration in view of the magnitude of the problems which confront the industry and the obvious sincerity of the industry in attempting to devise ways to cope with those problems. Even taking all these factors into consideration, however, the Commission was unable to give its approval to those sections of the code which apply to the salesmen as those sections are now written. While the code now provides that the action to be taken with respect to the salesmen found to be in violation would be on the basis of a recommendation by the Administrator rather than by agreement among the signatory agencies, the Commission believes the probable result of that recommendation would be to substantially interfere with those individuals' right of employment and their right to have their fate decided by their individual employers uninfluenced by virtually mandatory recommendations from the Administra

tor.

(g) However, the Commission advised that it did not believe that this would call for outright rejection of the code, since it believed the code could be amended so as to achieve the legitimate objectives of the industry without running afoul of the antitrust laws. Thus the Commission stated it was prepared to advise the industry that it could see no objection to the maintaining by the Administrator of a public record of the names and circumstances respecting a finding of a willful violation. If this modification was agreeable to the industry, so that a provision to that effect could be inserted in the code in place of the present section applying to salesmen, the Commission would have no further objection on that score.

(h) The Commission was further of the opinion, now that greater participation of the agencies had been assured, that it was possible to apply the code as now written to the producers and agencies in such a manner as not to do violence to the antitrust laws, particularly if the element of coercion could be truly