"rough cuts" the carvings on subsequent pieces for assembly production. Each piece so manufactured then has intricate hand detailing, carving, and finishing, to the extent that each piece is, in fact, different in artistic detail from the one which follows it. Each piece is numbered and signed by the craftsman who completes it.

(c) The Commission expressed the view that using a descriptive phrase such as "[Trade Name] furniture combines modern production methods with handcarving and finishing" to refer to furniture manufactured in the manner described probably would not violate the Federal Trade Commission Act, section 5.

(34 F.R. 12824, Aug. 7, 1969]

§ 15.361

Credit reporting plan by trade association.

(a) In response to a request for an advisory opinion, the Commission ruled that it would interpose no objection to a credit reporting plan by a trade association, as long as five conditions are met.

(b) The proposed plan would cover only past due accounts in three categories: (1) Where legal suit has been filed, (2) those accounts which have been turned over to a bona fide collection agency, and (3) where the debtor has gone into bankruptcy. The secretary of the association would keep a list of such accounts reported to her by the active members. In response to an inquiry from an active member concerning a particular customer, the secretary would, without disclosing the name of the reporting member, advise the inquiring member whether or not any one of the three aforementioned adverse credit actions had been reported. Available only upon the specific request of an active member, the credit information would not be for broad publication to all members of the association.

(c) In addition, a reporting member would have to submit evidence in support of any one of the three adverse credit actions being reported. Absent such evidence, the reporting member would have to refer the secretary of the association to a reliable source where this information could be confirmed. The purpose of this requirement is to prevent the reporting of any rumors with respect to a customer's credit rating.

(d) The Commission advised that the exchange of credit information concern

ing delinquent debtors through a trade association is not unlawful under section 5 of the FTC Act provided:

(1) The members of the association are left free to determine on the basis of their individual judgment whether or not to sell to delinquent debtors and on what terms;

(2) There is no agreement among members in regard to credit terms, prices, or any other joint action which illegally restrains trade;

(3) That the reporting member indicates that a debt turned over to a collection agency was treated by the debtor as offset or was otherwise disputed, where that is the case;

(4) The association furnishes to the debtor the same credit information reported by a member at the time the request is answered; and

(5) In order for the debtor to have the opportunity to correct his credit record, if he believes it needs correcting, the association must pass on to the inquiring member any explanatory statements which the debtor may submit; the identity of the inquiring member need not be revealed to the debtor. As long as the proposed plan meets these five requirements in actual operation, the Commission would interpose no objection with respect thereto.

[34 F.R. 13272, Aug. 15, 1969]

§ 15.362 Full disclosure of facts necessary when seller of one product makes gift of another product to purchaser in exchange for names of prospective purchasers.

In response to a request for an advisory opinion, the Commission advised a manufacturer under an order prohibiting it from representing, directly or indirectly, that its products can be had at no cost to the purchaser or that such products can be had in exchange for the names of a given number of prospective purchasers, unless a full and complete disclosure is made of the facts and circumstances surrounding the offer, that it considered the following to constitute sufficient disclosure:

(a) Purchaser to furnish, at time of purchase, the names and addresses of six prospective purchasers.

(b) Prospects must reside in the sales area of manufacturer's distributor making the original sale.

(c) For voluntarily furnishing such names and addresses purchaser will receive, without charge, another specifi

(d) The additional product will be presented immediately upon completion by the purchaser of the names and addresses of the six prospective purchasers requested.

(e) Any representation or arrangement not contained in this disclosure shall not be binding upon the manufacturer or its distributor.

(f) No purchaser is required to participate in the program. Participation is strictly voluntary on the part of the purchaser.

[34 F.R. 13272, Aug. 15, 1969]

§ 15.363 Pricing of replacement glass for automobiles.

(a) The Commission issued an advisory opinion with respect to the pricing system of a dealer in replacement glass for automobiles.

(b) The dealer would grant discounts from the list price of automobile window glass to all customers. If an individual purchases a window, he would receive a discount of 20 percent from list price. If an insurance company sends the individual in, the discount would be 30 percent. (In this case, the bill would be sent to the insurance company and the individual.) If an automobile garage purchases the glass, the discount would be 50 percent. All sales are made within one State.

(c) The Commission expressed the view that implementation of the proposal in the manner described and under the circumstances stated probably would not violate any law administered by the Commission.

[34 F.R. 13273, Aug. 15, 1969]

§ 15.364

Origin disclosure of imported thread guides.

(a) The Commission issued an advisory opinion relative to the disclosure of the forign origin of imported ceramic textile and thread guides.

(b) The Commission understood that the guides are the size of a dime and that it is difficult, if not impossible to mark the country of origin on each guide during production. Markings after production is completed would be very difficult and very expensive. The guides are not sold to the general public, but are used in industry for the manufacture of other products.

(c) The Commission expressed the view that conspicuously marking on the

package or container in which the guides would be shipped to their ultimate user the words "Made in [name of country] exclusively for [name of importer]" would be an adequate disclosure of the country of origin provided the guides were made exclusively for the applicant. [34 F.R. 13988, Sept. 3, 1969]

§ 15.365 Request denied for approval to sell dairy company to any dairy company under Commission order.

(a) The Commission rendered an advisory opinion denying a request of a medium-sized dairy company for blanket approval to sell to any company under a Commission order.

(b) The company was the largest independent dairy company in its large marketing area, had the largest sales volume of dairy products in the area, had sales in excess of $5 million, was profitable, no other hardships were demonstrated, and efforts to sell to companies not under order had not been adequately explored.

(c) The Commission advised that it cannot give blanket approval to sell the company in question to any company under Commission order. It further advised that the denial of such request is without prejudice to the submission to the Commission by any company under order of a request to purchase such dairy. In such event, any such submission will be duly considered by the Commission, and it will then decide upon the basis of the facts then presented. [34 F.R. 13988, Sept. 3, 1969]

§ 15.366 Labeling of imported magnetic recording tape.

(a) The Commission issued an advisory opinion with respect to the labeling of imported magnetic recording tape.

(b) In commenting upon the proposed labels as submitted, the Commission expressed the view that (1) the words indicating the foreign country of origin should appear on the front or principal display panel; (2) the term "recording tape" should be used as the specification of the identity of the commodity and that it should comprise a princpial feature of the principal display panel; (3) in view of its understanding that recording tape is of uniform width, the length of the tape should be expressed in terms of feet followed in parentheses by a declaration of yards and common or decimal fractions of the

yard, or in terms of feet followed in parentheses by a declaration of yards with any remainder in terms of feet and inches; and (4) the place of business of the manufacturer, packer, or distributor should include the street address, city, State, and ZIP code; however the street address may be omitted if it is shown in a current city directory or telephone directory.

(c) The Commission invited the applicant's attention to its regulations under section 4 of the Fair Packaging and Labeling Act for additional

information.

[34 F.R. 13988, Sept. 3, 1969]

§ 15.367

Tripartite promotional assistance plan.

The Commission advised a requesting party that the Commission would not proceed against it or its customers, or suppliers if the following described promotional assistance plan were implemented under the following circumstances:

(a) "The requesting party has two plans for displaying advertising signs to be attached to grocery store shelves. Suppliers of grocery store products will pay the requesting party for the advertising of their products on these signs. Signs will be of two kinds. One sign will be a back-lighted moving color transparency; the other will be a fixed sign of approximately the same dimensions. The moving sign will be used as part of the requesting party's Plan A; the fixed sign as part of the requesting party's Plan B. Both fixed and moving signs will advertise one product and the same product during any give 2-week period.

(b) "All customers competing in the resale of the advertised product may elect to adopt Plan A, if they will. All such customers having an outlet doing in excess of $25,000 per week average gross business may have Plan A and Plan A only. Smaller customers may elect Plan B.

(c) "Outlets will be paid for the use of their space in one of two ways as they initially elect: (1) A percentage of the dollar value of the advertised product purchased during the 2 weeks in which the advertisement runs; (2) a fixed sum per 2-week period determined as a percentage of average weekly gross sales during the preceding fiscal year.

(d) "Those customers electing to have the moving display will be charged a service charge for each 2-week period.

This will be computed at 2 dollars per display per period. There will be no service charge for those electing to have the fixed display.

(e) "The requesting party will, as third party intermediary, enter into written agreement with suppliers, if suppliers so desire, to undertake supplier obligations under sections 2 (d) and (e) of the amended Clayton Act as provided in Guide 13 of the Commission's Guides for Advertising Allowances and Other Merchandising Payments and Services. If there is a supplier-third party agreement that the requesting party will undertake supplier obligations, suppliers will perform as set forth in paragraph (b) of Guide 13."

[34 F.R. 14467, Sept. 17, 1969]

§ 15.368

Disclosure of origin of imported plastic vinegar bottles.

(a) The Commission had rendered an advisory opinion to a manufacturer of domestically-made vinegar that it would not be necessary to disclose the origin of its imported plastic vinegar bottles.

(b) In the absence of any affirmative representation that the imported plastic bottles are made in the United States, the Commission said that it will not be necessary to disclose the Canadian origin of the containers.

[34 F.R. 14467, Sept. 17, 1969]

§ 15.369 Disclosure of foreign origin required in mail order advertising.

(a) The Commission rendered an advisory opinion to an importer of women's panty hose that it would be necessary to make a clear and conspicuous disclosure of the foreign origin of the hose in all mail order promotional material.

(b) Under the factual situation presented to the Commission, the importer proposes to purchase the wearing apparel in West Germany for resale in the United States through the mail. The hose will be plainly marked with a "Made in Free West Germany” tab sewn into the back of the garment, and the same disclosure will also be made on a paper sticker attached to the front of each cellophane bag containing the hose.

(c) Concluding that a disclosure would be required, the Commission said: "The underlying reason for the disclosure requirement is that mail order purchasers do not have the opportunity to inspect the merchandise prior to the purchase thereof and be apprised

of a material fact bearing upon their selection."

[34 F.R. 14517, Sept. 18, 1969]

§ 15.370 Origin of cashmere sweaters.

(a) The Commission advised an importer of cashmere sweaters that it would not be necessary, under section 5 of the FTC Act, to disclose they were knitted in Hong Kong or that the yarn was spun in Japan, in the absence of an affirmative representation that the sweaters are entirely of domestic origin.

(b) Under the factual situation presented to it, the sweaters will be knitted in Hong Kong from yarn which is spun in Japan. Thereafter, the sweaters will be shipped to a plant in the United States where they will be scoured, dyed, zippers added, steamed, and pressed.

[34 F.R. 14518, Sept. 18, 1969]

§ 15.371

Use of "12 karet gold filled" to describe earrings.

(a) The Commission issued an advisory opinion to a company, denying permission to apply the designation “12 karat gold filled" unqualifiedly to an earring where all the metallic parts, except the steel spring base, are composed of 20 12karat-gold-filled precious metal.

(b) It was alleged by the company seeking the opinion that the spring base performed a "spring" or tension function and is a spring within the meaning of that word in trade practice rules for the Jewelry Industry. Being a spring, it was further contended, exempts it in any assay for quality and permits unqualified use of the designation "12 karat gold filled."

(c) In rejecting the company's position, the Commission said: "Even if we assume that the allegation of performing a spring or tension function is correct, this is not the primary purpose or function of the spring base. As we view the situation, the spring base serves primarily as a connecting link or arm between the clip, which is attached to the top, and the ornament which is attached to the bottom. Thus, simply because the spring base may perform a tension function, this does not mean that the component is a spring within the meaning of that word in Rule 22D of trade practice rules for the Jewelry Industry. Stated differently, performing a dual function does not necessarily make the component a spring. Accordingly, the Commission is of the opinion that the spring base is not a spring as that term is contemplated

within the meaning of the rules and the component therefore is not exempt in assay for quality. Since the component is not a spring, it would therefore be improper under Rule 22B(4) and Rule 25(a) of the trade practice rules to unqualifiedly designate the earring as '12 karat gold filled'. As you know, these two rule provisions prohibit the use of a quality mark, such as the one contemplated, in a manner which would misrepresent the metallic composition of the product or any part thereof. Since the spring base is composed of steel rather than the quality indicated in the proposed designation, it would therefore be deceptive to use such a quality mark unqualifiedly."

[34 F.R. 15643, Oct. 9, 1969]

§ 15.372 Use of "Made in U.S.A." label.

(a) The Commission rendered an advisory opinion to a manufacturer of optical lens systems in regard to the labeling of its products as "Made in U.S.A.”

(b) Specifically, the company wanted to know what percentage of imported components a product could contain and still be properly labeled as "Made in U.S.A."

(c) In the advisory opinion which was rendered, the Commission stated that it would construe a "Made in U.S.A." mark as an affirmative representation that the product is entirely of domestic origin. Concluding its opinion, the Commission said that it would be improper to use such a mark where the finished product contains imported components without clearly disclosing the foreign country of origin of the imported parts. [34 F.R. 15792, Oct. 14, 1969]

§ 15.373 Trade association code of conduct found unobjectionable.

(a) The Commission advised a trade association of shippers' agents that the aims of its proposed Code of Conduct appear unobjectionable and that adherence by members to its provisions should not operate to effect any unreasonable restraints of trade so long as it is implemented in a fair and nondiscriminatory

manner.

(b) A "shippers' agent", as defined in the Interstate Commerce Act (49 U.S.C.A. 1002(c) (2)) and the proposed Code, is one whose operation consists solely of "consolidating or distributing pool care, [and] whose services and responsibilities to shippers in connection with such operations are confined to the terminal

area in which such operations are performed." Under this provision of law a shippers' agent's responsibility is confined to the consolidation of freight for proper shipment. He does not "break bulk" nor is he responsible for the ultimate distribution of freight. Were he to engage in this latter activity he would, by definition, no longer be a shippers' agent eligible for association membership. According to the requesting party the Code is intended primarily as a preventive measure to assure that members will conduct their business operations within the Act's limitations.

(c) One provision of the code requires that members indicate, in advertising and elsewhere, that their services and responsibilities to shippers are confined to the terminal area in which they operate. This follows the limitation of the Act and if adhered to by members, will serve to truthfully inform shipper-customers concerning this status.

(d) Another provision requires that a member shall avoid any action or statement which could be construed as imputing to him a common carrier status or a status other than that embodied in the Act. This assures that members do not falsely imply to shippers that they take a greater responsibility for the shipment and distribution of freight than is permitted by their status under the Act.

(e) Other provisions provide in general terms that the members conduct shall be characterized by "candor and fairness" in their relationships among themselves and with the public, and that they shall properly discharge their obligations and duties to the shippers who employ them.

(f) It is a condition to membership in the Association that a shippers' agent agrees to subscribe to and abide by the Code. Repeated failure to discharge his obligations thereunder will, upon notice and a probationary period, constitute cause for expulsion of an offending member by the Board of Directors of the Association. Such expelled member may, however, exercise his right of appeal before the full membership.

(g) While the Code contains provisions restricting the business operations of members, it appears from the materials submitted that the purpose of these restrictions is to insure that members remain within the Act's limitations and respect the confidential agency status created in their dealings with shippercustomers. The purpose is also to encour

age Association members voluntarily to refrain from unfair or deceptive practices. In this context there is a greater public interest in protecting shippers from dishonest shippers' agents than there is in condemning the minimal restraints that might result from application of the Code.

(h) Undoubtedly, unreasonable and therefore unlawful restraints might result if an Association member is arbitrarily or improperly expelled from membership, but the Commission believes that there is ample public interest in effectively encouraging Association members to refrain from the clearly pernicious practices condemned by the Code. On the assumption that the Code will be administered in such a way as to promote this end, and not so as to place unreasonable restraint on the ability of members to do business, the provision permitting the Association to expel nonconforming members is approved.

(i) The Commission also noted that it had confined itself in its opinion to so much of the request as falls within its jurisdiction. The extent, if any, to which another governmental agency may be concerned with the Association's activity is a matter to be determined by reference to that agency.

[34 F.R. 15792, Oct. 14, 1969]

§ 15.374 Tripartite promotional plan for larger supermarkets.

(a) The Commission issued an ad-. visory opinion concerning a proposed tripartite promotional plan for larger supermarkets.

(b) The applicant proposed to solicit. advertising from packagers of goods which are normally stocked in grocery stores. The applicant would arrange for the display of such advertising in its projector using a color sound film cartridge which would be installed in supermarkets that record an average of 7,500 transactions per week or have an annual sales. volume in excess of $1 million. Consideration to participating retailers for the permission to install the projector units would be one of the three commercial spots on each film cartridge provided while the units are in their stores.

(c) The Commission expressed the view that implementation of the proposed course of action in the manner described probably would violate the Clayton Act, section 2(d) or 2(e), as amended, and/or the Federal Trade Commission Act, section 5 for the reason.