lows: the 'Made in USA' mark would constitute an affirmative representation that the bearings are made in their entirety in the United States. If the bearings did in fact contain foreign made components of a substantial nature, it would be improper to mark the finished product as 'Made in USA' without a clear and conspicuous disclosure indicating the foreign country of origin of the imported components."

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

$ 15.296 "Failing company" theory applied in Commission approval of sale of assets to a competitor.

(a) The Commission issued an advisory opinion granting premerger clearance for a company in imminent danger of dissolution to sell all or part of its assets to a direct competitor.

(b) The selling company's financial affairs were in such state that it obviously would have ceased to be a competitive factor in its market in a matter of days. This being so, the Commission approved a sale to the only purchaser willing to, or in a position to, immediately salvage the assets.

[33 F.R. 15021, Oct. 8, 1968]

§ 15.297 Premerger clearance-"Failing company"-portion of fixed assets to be sold to keep company in business. The Commission advised an applicant that it has no present intention to take any action if the proposed sale of certain fixed assets to a direct competitor should be made, in view of the information submitted that:

(a) The (applicant) company is in critical financial condition and failing;

(b) Efforts to find other purchasers have been unsuccessful, except that one other purchaser was found who wished to buy a smaller amount of the assets than originally stated but who is not now in any position to buy any of the properties;

(c) The proposed sale is expected to generate sufficient funds to meet outstanding debts and provide necessary working capital to continue the company as a going concern and an active competitor.

[33 F.R. 15021, Oct. 8, 1968]

glass filter lenses used on welding helmet could be described as "Made in U.S.A."

(b) Under the facts presented to the Commission, the glass out of which the lenses are made is imported and upon arrival in the United States it is subject to further processing, such as cutting into special sizes, grinding of the edges, cleaning, polishing, and labeling as to different shades of intensity and packaging.

(c) In denying use of the "Made in U.S.A." mark on such a product, the Commission said: * * a 'Made in U.S.A.' mark on the finished product would constitute an affirmative representation that the lenses are made in their entirety in the United States. Since the lenses are composed of imported glass, it would be improper to mark the finished product as 'Made in U.S.A.' without a clear and conspicuous disclosure indicating the foreign country of origin of the imported glass."

[33 F.R. 15021, Oct. 8, 1968]

§ 15.299 Disclosure of country of origin of repackaged goods imported in bulk.

The Commission advised a requesting party that a product imported in bulk into the United States and thereafter broken and wrapped into a number of smaller packages and offered for sale to the general public should be clearly and conspicuously marked as to country of origin in such way as to be readily observable to a prospective purchaser on casual inspection.

(38 Stat. 717, as amended; 15 U.S.C. 41-58) [35 F.R. 15199, Oct. 11, 1968]

§ 15.300 Contest and its advertising by retailer deemed objectionable.

(a) The Commission was requested to furnish an advisory opinion concerning a proposed contest and advertising pertaining to it.

(b) The Commission observed that the proposed advertising is deceptive. Statements of the nature and value of the prizes are misleading. The proposed advertisement discloses little of the nature of the contest in which readers are invited to participate. The contest might expire at any moment.

(c) On the basis of the facts as presented, the Commission concluded that the proposed advertising, if circulated, would be in violation of section 5 of the Federal Trade Commission Act.

In amplification of Rule 7-Deception as to Origin-set forth in its Trade Practice Rules for the Household Furniture Industry, the Commission advised the requesting party as follows:

(a) "Danish," "Danish Modern," and like terms should be used only as to furniture produced entirely within the Kingdom of Denmark;

(b) "Danish designed" and like terms should be used only as to furniture entirely designed or styled within the Kingdom of Denmark;

(c) "Danish style," "in the Danish manner," "after the Danish style," and like terms may be used to describe furniture manufactured other than in the Kingdom of Denmark provided such furniture has the characteristics of Danish design as understood by the general public.

[33 F.R. 15588, Oct. 22, 1968]

§ 15.302 Promotional plan involving "cents off" coupons and demonstra

tors.

(a) The Commission rendered an advisory opinion to the promoter of a promotional plan involving the use of "cents off" coupons which are to be given out by girl demonstrators in connection with the sale of items sold only in grocery stores.

(b) Offered to all competing retailers in a selected trading area, irrespective of whether they buy directly or through wholesalers, the coupons will be valid only for the week that the promotion is in effect. Supplying as many demonstrators and coupons as may be necessary to meet the demand therefor, larger stores will have as many as three girl demonstrators giving out coupons in attendance for 3 days and smaller stores will have one or two girls in attendance for 1 or 2 days. Participating manufacturers will pay the promoter a certain sum per each demonstrator, plus the amount of the value of the redeemed coupons. Participating retailers will receive nothing of value other than demonstrator services, except reimbursement for the exact value of the coupons which

they have redeemed. In addition to being given out by the demonstrators the "cents off" coupons will also be attached to the shelf in front of the product that is being promoted.

(c) For those stores which find the basic plan is not suitable or usable in a practical business sense, the promoter will furnish without charge an alternate plan consisting of a prominent bulletin board announcing the plan to consumers. Placed in the most advantageous position in the store by the owner, the bulletin board will also have an adequate supply of "cents off" coupons attached thereto. In addition, coupons will also be attached to the shelf in front of each product being promoted, as in the case of the basic plan involving the use of demonstrators. If the retailer does not wish to use the bulletin board, he will be permitted to hand out the coupons as the customer passes by the cash register.

(d) Notice of the availability of the basic and alternate plans will be made by (1) letter every 6 months to all wholesalers requesting them to notify their retail customers, (2) working with various trade associations on a continuous basis so that the associations will inform their members, (3) publishing ads every 3 months in two newspapers widely circulated among the trade, (4) letters sent to the buying offices of cooperatives and chain stores, and (5) use of the following statement printed on the back of each coupon: "For detailed information about this coupon call (promoter's name and telephone number)".

(e) In the opinion, the Commission stated that the proposed promotional plan would not be in conformity with the law for the following two reasons:

(1) "First, section 2(e) of the amended Clayton Act requires that promotional services be furnished to all competing purchasers on proportionally equal terms, if a promotional service is furnished to one purchaser. If the length of time for which the service is being furnished varies as between competing customers, the end result will be that some customers will be furnished services in a greater proportion than others. In essence, the law requires that the services which are being furnished must be offered for a specified period of time which is uniformly applicable to all competing customers. Under your proposed plan, some stores may be furnished the services of demonstrators for up to 3 days, whereas some competing stores will be

supplied with such services for only 1 or 2 days. Because of this disparity in the amount of time during which demonstrator services will be furnished, the Commission believes that the plan does not comply with the required statutory proportionally equal treatment.

(2) "The second defect in the proposed plan relates to the following statement which appears on the face of 'cents off' coupon: 'Good Today Only-During Demonstration.' According to the terms of the proposed plan, each coupon will be valid for 1 week. Therefore, the aforementioned statement which appears on the face of the coupon is misleading because it misrepresents the period of time during which one may take advantage of the alleged savings."

(f) The opinion then pointed out that if the promoter decided to correct the two above-mentioned deficiencies, the Commission would withdraw its objection to the plan, provided the following two conditions are met.

(1) "First, as the promoter of this plan, you must make it clear to each supplier and each retailer that even though an intermediary is employed, it remains the supplier's responsibility to take all reasonable steps so that each of the supplier's customers who compete with one another in reselling his products is offered either an opportunity to participate in the promotional assistance plan on proportionally equal terms or a suitable alternative if the customer is unable as a practical matter to participate in the plan; 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.

(2) "Second, with respect to this matter of notification, you have outlined five methods which you expect to utilize. The Commission is withholding judgment as to the adequacy of the fifth method, namely, the use of a statement printed on the back of each coupon. It is doing so because it does not know how the retailer will get possession of this coupon and it believes that the statement itself is not sufficiently informative to apprise prospective retailers about the plan. But regardless of whether the stated methods of notification or others are used, the ultimate test is whether the plan has been effectively communicated to all competing customers at or about the same time within the selected marketing area and

to those who, geographically, are located on the periphery of that area and in fact compete with the favored retailers." [33 F.R. 15588, Oct. 22, 1968]

§ 15.303

Commission does not object to program employing data processing equipment to collect and disseminate actual production and sales information.

(a) The Commission issued an advisory opinion telling an applicant it does not object to a proposed program to employ data processing equipment for the collection and dissemination of actual production and sales information rapidly.

(b) The program is to be made available to poultry processors. Individual identity of participants will not be revealed to others except in long-and-short emergencies. It is understood that such a situation exists when a processor finds he has an insufficient supply of chickens (i.e., he is "short") to fill the contractual obligation under a sales contract he has made; another supplier may have a surplus (i.e., he is "long"); the proposed program, in these emergencies, would permit the short and long suppliers to communicate with each other through the data processing equipment. Only in such a situation would any participants learn each other's identity.

(c) The proposal involves the collection and reporting of actual production and sales data rapidly; it will not deal with predictions by participants nor with asking, suggested or "future" prices.

(d) The service is to be made available solely to poultry processors on a daily basis; poultry distributors, applicant says, are not interested in participating. Other subscribers may receive weekly or monthly information summaries but not daily reports.

(e) The Commission advised that it would have no objection to the proposal if implemented in the manner outlined in applicant's letter, but that this opinion is conditioned upon the submission, within nine months, of a full report indicating the manner in which the plan has worked in actual practice.

[33 F.R. 15589, Oct. 22, 1968]

§ 15.305 Sales below cost provision in ethical advertising guide.

(a) In Advisory Opinion Digest No. 249 (§ 15.249), the Commission announced that a trade association's proposed "Guide to Ethical Advertising Practices" was unobjectionable save for

its unqualified condemnation of advertising sales below cost.

(b) The following revised sales below cost provision was subsequently found unobjectionable: "Members will not use below cost advertising as bait advertising. However, either merchandise or services or a combination of both may be offered below a member's total cost for limited periods of time in close-out sales, stock reduction sales, promoting offers, provided such offers are truthfully and nondeceptively made and the member fully performs according to his offer." [33 F.R. 16496, Nov. 13, 1968]

§ 15.306 Commission does not object to computerized inventory control system to be furnished suppliers by third-party promoter subject to certain safeguards for nonparticipating retailers.

(a) The Commission issued an advisory opinion concerning a computerized inventory control system to be furnished suppliers by a third-party promoter.

(b) The promoter proposes to computerize sales data and project product inventory requirements for subscribing suppliers pursuant to information periodicals obtained from participating retailers.

(c) The Commission advised the applicant (the promoter) that, on the basis of the information submitted, the Commission does not object to the proposal subject to two safeguards for nonparticipating dealers: First, that the promoter satisfy the Commission that its subscribing suppliers "will continue to provide personal salesman service or some noncomputerized equivalent to those dealers who do not participate," and second, that suppliers "make the results of the computer analyses of sales trends and other general market information available to nonparticipants if and as they desire it." [33 F.R. 17233, Nov. 21, 1968]

posed trade name and trademark. The trade name is a newly coined word composed of the term for the nationality of a particular European country, with a suffix. The trademark looks like a European heraldic design.

(c) The Commission advised the applicant that, in its opinion, use in commerce of the proposed trade name and trademark for the tablecloths in question would probably amount to a deceptive act or practice in violation of section 5 of the Federal Trade Commission Act. The deception appears to be so pronounced, the Commission added, that it cannot be abated by qualifying words, "Made in U.S.A. of cloth imported from Japan".

(d) Further, in the opinion of the Commission, Rule 34 (b), § 303.34(b) of this chapter, under the Textile Fiber Products Identification Act, applies because the form of the cloth is basically changed and therefore the country of origin (Japan) need not be disclosed. [33 F.R. 17233, Nov. 21, 1968]

§ 15.308 Commission does not object to proposed acquisition by dairy prodproducer-processor-distributor

ucts

of another processor-distributor.

(a) The Commission issued an advisory opinion telling an applicant it does not object to a proposed merger on the basis of the information available at this time.

(b) The applicant (Company A) is a dairy farmer cooperative association whose members own cows producing raw milk; applicant operates processing plants in one State and sells dairy products principally to independent home deliverymen in two States. The company (Company B) to be acquired operates a processing plant in one State and sells dairy products to independent home deliverymen, grocery stores and institutions in two States. The processing plants of the two companies are not in the same State. Members of Company A presently supply about 50 percent of the raw milk needs of Company B and it is not anticipated that non-Company A members will be foreclosed as a result of the proposed merger.

(c) Company A and Company B contend that the proposed combination will result in a stronger regional business entity to compete more effectively with integrated chain stores (having their own dairy facilities) and large national

dairy companies in selling dairy products to consumers.

[33 F.R. 17234, Nov. 21, 1968]

§ 15.309 Inclusion of provision in coop. erative advertising agreements limit, ing price advertising by retailers,

(a) The Commission rendered an advisory opinion regarding a proposal to include the following statement in cooperative advertising agreements to be drafted by the requesting party for use by manufacturer-clients for the purpose of placing a restriction on price advertising practices by their retailer-customers: "Dealer advertising will not qualify for cooperative reimbursement if it is featured at a price below the retailer's wholesale price (loss leader type) since such advertising tends to lower the quality image of the product in the consumer's mind."

(b) The requesting party explained that this provision is intended to assist manufacturer-clients to protect the quality of their brand image through providing them with the means for limiting the payment of promotional allowances to those retailer-customer advertisements which mention price at or above the retailer's wholesale price level. He took the position that such limitation would not affect any retailer's markup picture.

(c) The Commission advised that the question posed does not readily lend itself to a categorical answer which, necessarily, would be affected by the facts surrounding any manufacturer-client's use of the restriction. Considering the various possibilities which may arise, the Commission is of the opinion, however, that it cannot give its approval to the use of such provision in any advertising allowance program which may be used on a continuing, year-round basis. In such programs a manufacturer customarily offers to pay, on proportional terms, a fixed percentage of his customer's advertising costs at any time during the year. To incorporate such a restriction in that kind of promotional program would, in the Commission's view, have a tendency to fix or establish a permanent floor under resale prices which would be of questionable legality under the antitrust laws.

(d) The Commission further pointed out that it does not see the same objection to the use of such provision in situations where the promotional offer is made on an infrequent or intermittent basis during the year. In such instances

the offer is usually made for a special purpose, such as to stimulate off-season sales or at times during the year to fit in with an overall marketing program. In these situations, the Commission advised, it does not foresee the same restrictive effects on resale prices when a. manufacturer, who is otherwise complying with the law, provides that he will not pay any part of the cost of advertising featuring a price below the retailer's wholesale cost.

(e) It is, of course, assumed that the promotional advertising allowance offer will be made to all retailers irrespective of the prices that they have been charging at other times.

[33 F.R. 17626, Nov. 26, 1968]

§ 15.310

Disclosure of country of origin of imported watch bands.

(a) The Commission was requested to furnish an advisory opinion as to the necessity for the disclosure of the country of origin of a watch band or watchcase which was attached to a watch in a foreign country prior to importation into the United States.

(b) The Commission advised that in its view the fact that the watchcases are imported need not be disclosed and that the country of origin of a watchcase with a watch band permanently affixed thereto need not be disclosed, but that the country of origin of a metallic watch band of the detachable type must be disclosed.

[33 F.R. 17626, Nov. 26, 1968] § 15.311

Origin disclosure of imported upper material used in shoes.

(a) The Commission rendered an advisory opinion to the supplier of certain synthetic fabric which is to be used in footwear as an upper material. The opinion dealt with various questions relating to the necessity to disclose the origin of the fabric, which is made wholly or in part in a foreign country.

(b) Sold directly to shoe manufacturers, the material will be used in the manufacture of dress and casual shoes, including playtime or tennis shoes, but not work shoes or work boots. Under one method of production, the yarn would be extruded domestically but would be woven, dyed, and backed in a foreign country. Such upper material made abroad would represent approximately 25 percent of total material costs for women's shoes and approximately 28 percent for men's shoes. Under the sec