that the proposed payment or services would be made available only to the larger supermarkets. See Guide 7 of the Commission's Guide for Advertising Allowances and Other Merchandising Payments and Services (May 29, 1969). The proposed plan makes no provision for retailers for whom the basic plan is not usable and suitable. (See Guide 9.) The plan makes inadequate provision for informing competing customers of the availability of the program. (See Guide

8.)

[34 F.R. 17265, Oct. 24, 1969]

§ 15.375 "Made in U.S.A." label on clock-radios containing an imported component.

(a) The Commission rendered an advisory opinion to a manufacturer of clock-radios which are partly domestic and partly of Japanese origin, and which the manufacturer wishes to label as "Made in U.S.A."

(b) The finished product, except for the radio chassis which is of Japanese origin, will be manufactured and assembled in the United States. Although the imported chassis will be marked with the country of origin at the time of importation, the mark will not be visible to prospective purchasers after the imported part is assembled into the finished product. The imported chassis will cost approximately $2 or 29 percent of total production cost, with the remaining 71 percent being of domestic parts and labor.

(c) Concluding that such a product could not be unqualifiedly marked as "Made in U.S.A..", the Commission said:

** it would be improper to use the 'Made in U.S.A.' mark on the clockradios without clearly disclosing the foreign country of origin of the imported radio chassis."

[34 F.R. 17329, Oct. 25, 1969]

§ 15.376 Disclosure of foreign labor services performed on domestically produced textile fiber products.

(a) The Commission advised a manufacturer of textile fiber products it would not be necessary to disclose that certain stitching and assembly operations were performed in Tijuana, Mexico, on domestically produced sportswear.

(b) The manufacturer will cut and otherwise prepare American-made fabrics together with such findings as buttons, zippers, and threads which will be sent to a contract factory in Mexico for

stitching and other assembly operations. The units will be then returned to the manufacturer's production facilities where final manufacturing procedures will occur. The manufacturer's foreign labor costs will represent between 15 percent and 20 percent of total production costs.

(c) The manufacturer was advised by the Commission that it would not be necessary to disclose in the labeling the nature and extent of the foreign operations performed on the garments in Mexico under the laws it is empowered to enforce.

[34 F.R. 17329, Oct. 25, 1969]

§ 15.377 Device for creasing cigarettes.

(a) The Commission rendered an advisory opinion in regard to the advertising claims to be made for a device which allegedly provides the "answer to safer smoking".

(b) Specifically, the manufacturer requested an advisory opinion in regard to the legality of the following proposed advertising:

(c) "The (name of device) is a revolutionary invention that provides the answer to safer smoking. It reduces gases as well as tar and nicotine. The device prevents formation of high temperature gases in cigarettes, thereby reducing the hazards of smoking. You can use the (name of device) on any popular brand of cigarette, including filter cigarettes. Independent laboratory tests substantiate the claim that the (name of device) significantly reduces tar, nicotine, and gases in the popular brands of cigarettes. The (name of device) re-engineers your cigarette to give a less harmful smoke. In addition, unsolicited testimonials state that the smoker enjoys a cooler and more flavorful cigarette, reduces smoker's cough and avoids harsh bite found in many brands of cigarettes."

(d) In the advisory opinion which was rendered to the requesting party, the Commission said:

(e) "The Commission has carefully considered your request along with the laboratory reports and other material submitted in connection therewith and has concluded that the data do not support the claims made in the proposed advertising. The conclusions offered on the basis of the laboratory tests cannot be accepted because such tests do not provide statistically valid data from which tar and nicotine reduction claims may be justifiably made. Nor do the tests

otherwise conform to the Commission's standards for cigarette testing described in the Commission's press release issued August 1, 1967. Moreover, tests by the Commission's Cigarette Testing Laboratory indicated that there are no statistically significant reductions in the tar or nicotine content of cigarettes decreased by means of the device.

(f) "In addition to the methodological infirmities of the submitted data, the Commission also notes that none of the reports submitted shows that the alleged reductions of tar, nicotine, and benzopyrene content result in a decrease in the incidence of cancer, coronary heart disease, bronchitis, pulmonary emphysema, or other diseases associated with cigarette smoking. Nor do the tests otherwise establish that the claimed reductions of tar, nicotine, or benzopyrene content obtained by means of your device significantly reduce the health hazards of smoking. In short, there appears to be no substantial scientific evidence in support of the claim that the device 'provides the answer to safer smoking"." [34 F.R. 17329, Oct. 25, 1969]

§ 15.378 Savings claims based upon comparison with comparable merchandise.

(a) A manufacturer of combination color television, radio, and phonograph sets requested an opinion from the Commission in regard to the legality of savings claims based upon the sale of comparable merchandise.

manufacturer

(b) Specifically, the wanted an opinion in regard to the legality of the alleged savings claim of $300. The manufacturer also wanted to know whether he should identify the three specific competitive manufacturers with which the comparison was being made, or should they be identified merely by referring to them as brand A, B, and C.

(c) In response to the first question the Commission said that because it did not have the facts upon which to base a judgment, it cannot pass upon the legality of the alleged savings claim of $300. The Commission noted that it has laid down rather definitive guidelines for those who wish to utilize savings claims in their advertising which are based upon the sale of comparable merchandise. The Commission directed the manufacturer's attention to Guide 2 of the Guides Against Deceptive Pricing and noted that advertising meeting the

requirements outlined in Guide 2 would not be objected to by the Commission. Commenting further upon this question, the Commission said:

Basically, Guide 2 outlines two fundamental requirements for determining the validity of savings claims based upon the sale of comparable merchandise. First, the other merchandise must be of essentially similar quality in all material respects to the advertiser's product. Second, the advertiser should be reasonably certain that the price advertised as being the price of comparable merchandise does not exceed the price at which such merchandise is being offered by representative retail outlets in the area.

(d) In regard to the second question, the Commission said that it could express no opinion as to whether the manufacturer should identify the three specific competing manufacturers by name or merely identify them by referring to Brand A, B, and C. Its primary concern here, the Commission added, is to make certain that the advertising clearly discloses the basis for the comparison and that the statement is factually true. [34 F.R. 173 5, Oct. 28, 1969]

§ 15.379 Refusal of alternatives in tripartite promotional assistance plan. (a) The Commission advised the requesting party herein that it would not object if a proposed tripartite promotional assistance plan were to be implemented as described.

(b) The requesting party proposes to enter into agreements with grocery stores for use of the space immediately above store gondolas (oblong fixtures in a row, on the shelves of which products are displayed for sale). The space is to be used for display fixtures which will hold, back to back, 20" x 24" placards advertising supplier goods.

(c) Smaller stores not possessing space to display these large placards will be given the option of obtaining smaller placards or shelf talkers (small signs suitable for being affixed to shelf edges).

(d) Stores will be reimbursed for use of the space by being given a fixed percentage of the dollar value of purchases of the advertised products from suppliers during a specified period.

(e) Notice to entitled customers and checking of customer performance will be as set forth in the Commission's Advertising Allowances Guides promulgated May 29, 1969. The requesting party will offer to perform seller obligations as provided by Guide 13.

(f) In question was the requesting party's right to refuse an alternate plan to those outlets functionally able to use the larger sign. To this the Commission had no objection.

[34 F.R. 17385, Oct. 28, 1969]

§ 15.380

Use of order cards in packages of merchandise or in direct mailing material.

(a) The Commission issued an advisory opinion with respect to the insertion of order cards in packages of merchandise or in direct mailings of advertising material.

(b) The applicant, a distributor of various office supplies and general merchandise proposed to enclose an order card in the packages prepared for shipment of merchandise to customers, suggesting that they place these cards in the Key-Operator's manual. Also occasionally the cards would be included with some direct-mail literature sent to prospective customers.

(c) The Commission expressed the view that it would not initiate action against the applicant were the proposed course of action implemented in the manner described.

[34 F.R. 17386, Oct. 28, 1969]

§ 15.381 Disclosure of origin of imported ignition coil parts.

(a) Manufacturers of automotive ignition coils sold as replacement parts were advised it would not be necessary to disclose the Japanese origin of the coil windings used in the production of such products.

(b) In the factual situation involved, the imported coil windings will cost about 84 cents each which represents approximately 45 percent of total production costs. The remaining parts, such as the voltage terminal insulating tower, etc., and labor will be of domestic origin and will cost about $1.04, representing approximately 55 percent of total production costs.

(c) Advising that the country of origin disclosure would not be required under these circumstances, the Commission said: "In the absence of any affirmative representation that the automotive ignition coils are made in their entirety in the United Sates, or any other representation that might mislead purchasers as to the country of origin, the Commission is of the opinion that, under the facts as presented, the failure to mark the origin of the imported coil windings

will not be regarded by the Commission as deceptive."

[34 F.R. 17386, Oct. 28, 1969]

§ 15.382

Franchise agreement with fair trade price schedule.

(a) The Commission issued an advisory opinion with respect to a franchise agreement in the recreational equipment industry.

(b) A significant provision of the proposed agreement related to Fair Trade Prices. A schedule of Fair Trade Prices was to be attached to and made a part of the agreement and the dealer must agree that he will not advertise, offer for sale, or sell any products at less than the fair trade prices, nor make any refunds, discounts, allowances, or concessions which will have the effect of decreasing those prices, nor offer any of the fair traded items in combination with other merchandise at a single, combination or joint price. The agreement further provided that this provision should be applicable only in those States where agreements of this character are lawful.

(c) The Commission advised that in view of the McGuire Act amendment to section 5 of the Federal Trade Commission Act it could see no objection to inclusion of the provision in the agreement as long as the seller does not fix dealer prices outside of fair trade States.

(d) The Commission further advised that, subject to the caveat above stated, it would not initiate action were the proposed course of action implemented in the manner described.

[34 F.R. 17386, Oct. 28, 1969]

§ 15.383 Labeling of leather gloves partly domestic and partly of foreign origin.

(a) The Commission advised a manufacturer of industrial work gloves, which are partly domestic and partly of foreign origin, that it could not use representations which implied that the gloves were entirely of domestic origin. Specifically, permission was requested to use one of the following three representations on the plastic containers of the gloves:

Made from American Split Cowhide
Made from American Split Leather
American Leather Exclusively Used

(b) According to the Commission's understanding of the facts, the company purchases semiprocessed split cowhide leather in America which is shipped to Taiwan where it is further processed, cut,

and sewn into industrial work gloves. Foreign production costs represent approximately 371⁄2 percent of the finished gloves, with the remaining 621⁄2 percent representing the cost of the Americanmade leather. One dozen gloves will be packaged in each plastic container and each pair of gloves will be labeled as having been "Made in Taiwan". However, this label will appear on the inside wrist of the gloves and will not be seen through the plastic container. Moreover, the container will not be opened until the sale has been consummated.

(c) The Commission said that it would not object to the use of the first two representations, provided they were qualified by a disclosure of equal prominence indicating the gloves were made in Taiwan. As qualified, the two representations would read:

Made in Taiwan from American Split
Cowhide

Made in Taiwan from American Split Leather (d) Without the qualification, the Commission believes that a substantial number of prospective purchasers would misinterpret the two proposed statements to mean that the gloves were made in America from American-made split cowhide.

(e) Similar qualification would be required to the third proposed representation. In addition, it would also be necessary to qualify the word "leather" because that word standing alone means top grain leather. Since the leather in question is not top grain but split, it would be deceptive to make unqualified use of the word "leather" under these circumstances. Therefore, the Commission concluded that it would not object to the use of the third representation if it were revised to read as follows: Made in Taiwan-American Split Leather Exclusively Used.

[34 F.R. 17386, Oct. 28, 1969]

§ 15.384 Special discount package price to new dealers.

(a) The Commission issued an advisory opinion with respect to a proposed special discount package price to new dealers in the building materials industry.

(b) The applicant proposed to offer to new retail dealers a special discount package on certain building materials plus an in-store display. In addition to the in-store display facility the new

dealer would be offered a price approximately one-third below the price at which the merchandise is offered to existing dealers. The proposal would be a one-time promotion.

(c) The Commission expressed the opinion that "it is unlikely that injury could result from this one shot offer in view of its nature and the start up costs which new dealers are apt to experience." Therefore, the Commission would not object to the plan if implemented as described in paragraph (b) of this section. [34 F.R. 17622, Oct. 31, 1969, as amended at 34 F.R. 19800, Dec. 18, 1969]

§ 15.385 Disclosure of origin of imported locks.

(a) The Commission advised concerning locks imported from England and Italy that it would be necessary to make a clear and conspicuous disclosure of the foreign country of origin on the locks. If the locks are displayed at the point of sale in a container so that the disclosure of origin is not likely to be seen, it would also be necessary to make the same disclosure of foreign origin on the containers in which they are packaged.

(b) Under the facts involved in the ruling, the locks will be used for both residential and commercial purposes and some of them could be marketed under the trade name of a domestic company, which contains the name of a wellknown American city.

[34 F.R. 18243, Nov. 14, 1969]

§ 15.386 Origin of imported brush_for hair roller.

(a) The Commission issued an advisory opinion with regard to the question of whether it is necessary to disclose the origin of the imported brush which is assembled with American made components to form a brush hair roller.

(b) It is proposed to produce a hair roller in the United States. The roller consists of three components: spiral spring, netting, and brush insert. The brush insert is manufactured in a foreign country. The spiral spring and netting are manufactured in the United States. All assembling is done in the United States. The cost of the brush accounts for less than 25 percent of the total cost of the hair roller as marketed. The question involved is whether the foreign origin of the brush must be marked on the printed card which will be used in packaging the roller.

(c) The Commission expressed the opinion that, in the absence of any affirmative representation that the product is made in the United States, or any other representation that might mislead the public as to the country of origin, and in the absence of other facts indicating actual deception, the failure to mark the origin of the imported component would not be regarded by the Commission as deceptive.

[34 F.R. 18353, Nov. 18, 1969]

§ 15.387 Tripartite promotional plan in the grocery field.

(a) The Commission issued an advisory opinion with respect to a proposed tripartite promotional plan which proposed to secure advertising from packagers of food and grocery products and place ads in retail stores. The display ad will measure 22" x 21" and can be located in the middle of the store with or without aisle directory information or it can be divided in half and placed on the wall of the store. Payments to stores would be calculated in terms of the number of ads installed, the rate per ad to vary with the monthly traffic in the store, the minimum payment to be $4.25 per month per ad, and the smaller grocery stores will be paid more proportionally than larger stores. Competing retailers would be informed of the opportunity to participate in the plant through personal solicitations, advertisements in trade journals, and direct mailings to every grocery retailer in the country which has been in business for a period of at least 6 months.

(b) The Commission stated that the proposed method of calculating payments to stores, if implemented as stated, would not violate the requirements of proportionally equal terms in Guide 7 of the Commission's Guides for Advertising Allowances and Other Merchandising Payments and Services (May 29, 1969). The proposed method of informing competing retailers of the opportunity to participate in the plan, if implemented in good faith, seems to satisfy the requirements of Guide 13 (a) (1). As long as nonfood items and food items likely to be sold in stores other than supermarkets are not advertised a plan to provide availability to all grocery stores of all sizes would meet the requirements of availability to all competing customers as required by Guide 9. The proposed ad which can be used in an aisle or on the wall of a store would appear to be "usable

in a practical business sense” in a store of any size. Thus the plan satisfies the requirements of Guide 9 that the plan

* should in its terms be usable in a practical business sense by all competing customers." Therefore, no alternative plan seems to be required in the absence of proof that some customers cannot in fact make use of the proposed ads.

(c) The Commission advised that were the plan implemented as proposed, the Commission would have no objection to it. The Commission pointed out that were the plan implemented in a different manner, the promoter, the supplier, and the retailer might be acting in violation of section 2 (d) or (e) of the Clayton Act, as amended, and/or section 5 of the Federal Trade Commission Act.

[34 F.R. 18353, Nov. 18, 1969]

§ 15.388 "Bonus" portable typewriter

offer.

(a) The Commission issued an advisory opinion relative to proposed advertising of "bonus" typewriters. The proposed advertisement would offer a portable typewriter as a "bonus" to any one accepted for enrollment in a correspondence course. Readers were invited to write for information," but the prerequisites to the receipt of the "bonus" typewriter were not disclosed.

(b) The Commission advised that it *is of the view that the advertisement in the circumstances described would be misleading and deceptive and in possible violation of section 5 of the Federal Trade Commission Act in several respects. For one thing, the "bonus" offer is to be a continuing offer, which means that the regular price for the training course of $595 includes the typewriter; the typewriter would not, therefore, be a "bonus". Also, the proposed advertisement does not make clear that what is being sold for a fee is a training course in motel management and that the so-called "bonus" typewriter is offered only in connection with such

course.

(c) "Moreover, even were the typewriter to be given as a true bonus, as, for example, if a time-limited offer was made without a change in tuition, the proposed advertisement would still be deceptive and misleading because the terms and conditions for the receipt of the typewriter are not disclosed, including, it appears, an advance payment of $595 tuition for a motel training course.