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.

[33 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 proopsed 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

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 allow ances 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 maximum 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.

(a) The Commission rendered an 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 muunicipal 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 manaufacturer 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 arti

cles 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 paua shell as "opal" on the well-established principle that the consumer is prejudiced if, upon giving an order for one thing, he is supplied with something else."

(c) Commenting upon the inadequacy of the word "marine" to remove the deceptive nature of the word "opal," the Commission said that the word "marine" would only serve to enhance that deception. It reached this conclusion because the word "marine" would convey the impression, contrary to fact, that this is a variety of opal found in the ocean, when in fact, just the reverse is true, i.e., opal is an inorganic mineral found in the ground.

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

§ 15.293 Commission declines ruling on use of term "humus", and states Peat Industry Trade Practice Rules apply if material comes within certain definitions.

(a) The Commission responded to a request for an advisory opinion (1) concerning the use of the term "humus" in proposed marketing of certain topsoil material, and (2) whether there is anything in the proposed operation which is subject to Commission rules or regulations.

(b) The application was made by a company which wants to market certain soil material as humus. The company submitted a partial analysis of the material as follows:

The Commission noted that the analysis presented above does not indicate the amount or degree of decomposition of organic matter that may have taken place, nor the mineral content of the soil.

(c) The Commission invited attention to this definition of humus in Soil: The Yearbook of Agriculture (1957), prepared by the U.S. Department of Agriculture and published by the U.S. Government Printing Office (at page 759): "Humus-The well-decomposed, more or less stable part of the organic matter in mineral soils."

(d) The Commission declined to express an opinion on the marketing of the material as humus because an informed decision on the proposed course of action or its effects could be made only after extensive investigation or testing; requests for opinions in this category are ordinarily considered inappropriate for Commission advice under § 1.1(c) of the Commission's procedures and rules of practice. Applicant also asked whether there is anything in the proposed operation which comes under Commission rules or regulations.

(e) Applicant was advised that the Commission's Trade Practice Rules for the Peat Industry, as promulgated January 13, 1950 (16 CFR 185), apply to proposed operations if the material to be sold comes within the following definitions under such rules: As used in these rules, the terms "industry product" and "peat" shall be understood as having the following meanings:

Industry Product: Any product marketed for use as a soil conditioner, or for any agricultural or horticultural purpose, which is composed, or is represented as being composed, wholly or in part of peat; also, any product marketed for any such purpose which is composed, or is represented as being composed, wholly or in part of a humus or muck derived from peat.

Peat: Any partly decomposed vegetable matter which is accumulated under water or in a water-saturated environment through decomposition of mosses, sedges, reeds, tule, trees, or other plants.

(f) The Commission invited attention to the note appended to Rule 3, calling for the voluntary nondeceptive disclosure of the degree of decomposition and principal uses of the product, as well as the acid and ash content, and moisture holding capacity. If this practice is observed, the likelihood of de

ception should be much reduced, the Commission commented.

(g) With regard to the second question, the Commission again invoked § 1.1(c) of its procedures and rules of practice. An informed decision by the Commission on the presence of any peat, or of any humus or muck derived from peat, could not be made without extensive investigation or testing. Normal advisory opinion procedures do not provide for such testing or investigation. [33 F.R. 14637, Oct. 1, 1968]

§ 15.294 Advertising on food product

wrapper.

(a) The Commission advised a food product manufacturer that it would not object to advertising proposed to be placed on the wrapper for the food product.

(b) The advertising would offer to those who respond a money making opportunity in the form of premiums or payments for the sale of a specified product. An inquirer would incur no obligation upon receipt of the plan, or thereafter, and would be free to accept or reject it at will. Anyone performing under the offer would be recompensed according to a clearly disclosed scale for services rendered. No monetary investment would be required.

[33 F.R. 15020, Oct. 8, 1968] § 15.295

Domestic origin marking on product containing foreign made components.

(a) The Commission responded to a request for an advisory opinion in regard to the following two questions:

(1) What percentage of imported components may be used in the finished product (bearings) without the necessity of disclosing the foreign country of origin thereof?

(2) Would it be proper to stamp the two types of bearings, which are partly made in a foreign country, as "Made in USA"?

(b) Because the party seeking the opinion did not know the cost of the imported components in relation to the total cost of the finished product, the Commission said that the first question appeared to be somewhat hypothetical in that it does not involve a specific proposed course of action. Under these circumstances, the Commission concluded that the question was not the proper subject of an advisory opinion.

(c) With respect to the second question, the Commission concluded as fol