customer relationship would not exist, the Act's prohibitions are not applicable.

(d) The Commission advised, because the proposed program contemplates that some of the advertisers would be suppliers to a sponsoring retailer, implementation and production of the television game show "Your Name's a Winner" in the manner outlined would raise serious questions under sections 2(d) and 2(e) of the amended Clayton Act and section 5, of the Federal Trade Commission Act.

[35 F.R. 10269, June 24, 1970]

§ 15.420 Multiple foreign origin of parts disclosure on partially imported toys. (a) The Commission rendered an advisory opinion concerning a proposed country of origin labeling on the containers of sets of toy racing cars and tracks. The labeling would include the following language:

Contents made in Great Britain and/or U.S.A. and/or Canada, as specified therein. Box printed in Great Britain.

(b) Seven different sets of toy racing cars would be sold through retail stores to the general public, with the most expensive set retailing at $22.50. At present, it is not known what percentage of the parts would originate in Great Britain, Canada or the United States. The plastic track would be made either in the United States or Canada, and the metal cars would originate in Great Britain. The paper container would also be made in Great Britain. The imported parts will be clearly and conspicuously marked as to their foreign country of origin. The cars and tracks will be packaged in a container which can, and normally would be opened for inspection by prospective purchasers prior to the purchase thereof.

(c) On the basis of the presentation, the Commission advised that it would interpose no objection to the proposed language being printed on the toy containers.

[35 F.R. 10269, June 24, 1970]

§ 15.421 Origin disclosure on imported (9 percent to 15 percent) air filter parts.

(a) The Commission responded to a request for an advisory opinion regarding a foreign country of origin marking on aquarium valves and filters.

(b) According to the presentation merchandise in question is a t three-, or four-outlet gang valve c nected by a plastic tubing to an air fil The entire device is mounted on a plas bracket designed to be hung over the edge of an aquarium. All parts of assembly are manufactured in United States except for the bracket £ filter which are produced in and ported from Hong Kong. These parts & identical and represent about 15 perce of the total cost of the two-way ga valve, about 11 percent of the total c of the three-way gang valve, and abc. 9 percent of the total cost of the for way gang valve. The filter, including filteration material with which it filled, is designed for use for the life the gang valve and in ordinary use it. not replaced.

(c) The Commission expressed t view that in the absence of any affirms tive representation that the product. made in the United States or any m representation that might mislead th purchasing public as to the country c origin of the bracket and filter, under t facts presented, the failure to mark th origin of the products would not b regarded as deceptive.

[35 F.R. 10269, June 24, 1970] § 15.422 Preticketing

candles.

of imported

(a) The Commission responded to i request for an advisory opinion with respect to the legality of importers affixing preprinted labels bearing a retailer's dis count selling price on packages of prepriced imported candles.

(b) It was proposed that importers d packaged and prepriced candles would affix onto each individual package a pressure-sensitive label printed with a retail customer's discount selling price. For ex ample, the package as imported may bes a preprinted retail price of 41 cents and a retailer's discount selling price of 34 cents. Two questions were asked on the basis of this presentation:

(1) Is it permissible for importers of record to affix a discount operator's price label on the packages?

(2) If so, may this be done in the country of origin?

(c) The Commission expressed the view that the affixing by importers of a retailer's price on the package would not

and of itself be violative of the laws iministered by this agency and that the lace where this operation is performed ould not be determinative of its legality. -he

Commission cautioned, however, hat the contemplated arrangement is a reticketing scheme which must comply With the requirements of section 5, Fedral Trade Commission Act. (See Comnission's Guides Against Deceptive Pricng (16 CFR part 233).) Should the ontemplated price saving claim as repesented by the retailer's discount price abel have the tendency and capacity to eceive and mislead the consuming pubic, then the importers as knowing paricipants in the preticketing arrangement would share responsibility for such deception.

1(d) Further, if the service of affixing in individual customer's pricing labels on packages is not generally available on proportionally equal terms to all other of an importer's customers competing in the resale of imported candles, the providing of such a service to one customer may constitute a violation of section 2(e) of the amended Clayton Act. [35 F.R. 10949, July 8, 1970]

§ 15.423 Availability of tripartite promotional advertising on shopping

carts.

(a) The Commission rendered an advisory opinion concerning the advertising of food and nonfood products on shopping carts in retail grocery stores.

(b) The program submitted for Commission consideration involved two plans. Plan A related only to the advertising of food items. Seller-advertisers would be charged a rate commensurate with the number and length of time shopping carts are used to display his advertising and the estimated number of in-store shoppers exposed to such advertising. Participating retail grocers would be paid for the use of his shopping carts based on the number and length of time his equipment is used for supplier advertising and the estimated number of shoppers exposed to such advertising. Stores without shopping carts will be offered placards or shelf-markers without cost and will be paid on the basis of the number of customers exposed to the advertising. All competing retail grocers would be informed of this plan by personal solicitation, advertisements in trade journals and direct mailing to all in busi

ness at least 6 months prior to the start of the plan.

(c) Under Plan B nongrocery items not available for resale by participating retail grocers would be advertised only in those stores which have shopping carts. The rates and payments to advertisers and participating retailers would be the same as in Plan A.

(d) The Commission advised it would interpose no objection to the implementation of Plan A provided the following conditions were met:

(1) If the advertised grocery products are being handled by other than grocery stores, the other stores must also be notified of their right to participate in the plan, provided they compete with the favored retail grocery stores. Moreover, all competing customers must be notified of the plan, regardless of whether they purchase direct from the supplier or through some intermediary.

(2) Payments to smaller participating stores with shopping carts should be made on the same terms as those to the smaller stores without shopping carts.

(3) Since the plan calls for performance of certain obligations which are normally performed by a supplier, Guide 13 of the Commission's Guides for Advertising consulted.

Allowances should be

(e) The Commission advised further that section 2(d) or 2(e) of the amended Clayton Act would not be applicable to that part of the program described as Plan B. This conclusion is based upon the statement that the nongrocery items, which are to be advertised only in retail grocery stores with shopping carts, would not be available for resale in such stores. However, the Commission cautioned, if the advertising on the shopping carts indicate the name of any particular dealer where the advertised products may be purchased, then the advertising should also indicate the names of all competing dealers.

[35 F.R. 10950, July 8, 1970]

§ 15.424 Tripartite promotional program using trash receptacle panels for advertising.

(a) The Commission responded to a request for an advisory opinion con. cerning a proposal to offer advertising panels on trash receptacles to advertisers of products and services.

(b) Under the program trash recep

66-033-72-16

tacles would be placed in public service areas where permission is obtained from the property owner, city government, or the person who controls the premises. Advertising thereon would be sold to producers on a yearly contract basis, the rates to be determined by the location and pedestrian traffic in the area. Product advertising will only advertise the product and will not indicate where it is available, however, service advertising will probably direct potential customers to the service.

(c) Physical servicing of the receptacles would be handled in many ways. Where they are placed on city streets, arrangements would be made with the city government to empty them and to report their condition. Where the receptacles are placed at motels, hotels, service stations, and like locations, arrangements would be made with persons who normally service such areas. Where the receptacles are placed in shopping centers or shopping malls, arrangements would be made with merchants within such areas to empty them and report on their condition. A fee would be paid to those rendering these services.

(d) The Commission expressed the view that payments to a merchant to service trash receptacles which may display advertising of products that he sells would be objectionable under section 2(d) of the amended Clayton Act. The proposed program would be unobjectionable under this Act where payments for servicing the receptacles are made to anyone other than merchants engaged in the sale of the advertiser's products. [35 F.R. 10950, July 8, 1970]

§ 15.425 Combining advertising for mailing purposes.

(a) The Commission rendered an advisory opinion concerning a proposal to combine manufacturer and retailer advertising into one mailing piece. The intended program involves the attaching of packets containing direct-to-consumer redeemable coupons and other advertising material prepared for various manufacturers and service organizations to the tabloid or booklet type mail advertising of national or regional retailing organizations. The purpose of the proposed program is to minimize mailing costs for the participating organizations. As each party to the arrangement would pay a proportionate share of the preparation, postage and other mailing costs,

the mailing expenses for each would be i reduced about one-half.

(b) The Commission expressed the view that to the extent a participatin retailer will realize a saving in mailin costs because the advertising material c one or more of his suppliers is inserte: in the packets prepared by the other par ticipant who is under contract with suc suppliers, a discriminatory promotiona allowance will have been accorded b such supplier to that retailer. Howeve the same result will not pertain where the packet contents are limited to thos products and services not available from the participating retailer.

(c) The Commission advised that s long as precautionary measures are take as will insure that the packet content are limited to the advertising of those products and services which are not available from or through a participating. retail organization, implementation d the proposed program in the manner out. lined will raise no questions under sec tion 2 (d) or (e) of the amended Clayto Act.

[35 F.R. 10950, July 8, 1970]

§ 15.426 Quality designation on jewelry of identical construction.

(a) The Commission responded to s request for an advisory opinion concern. ing a proposal to use the quality desig nation "Yellow Gold or White Rhodium Electroplated" on jewelry of identics. construction which may be electroplated with either metal.

(b) The view was expressed by the Commission that although there may be some instances where a consumer might be able to properly interpret such & quality designation, the vast majority of consumers would be confused through use of any dual designation. Moreover, if the use of such a dual designation were to be approved, it would logically follow that approval would have to be given to the use of triple, quadruple, etc., designstions. The end result would be utter chaos for the vast majority of consumers who would be thrown into a jungle of quality designations from which they could not intelligently extricate themselves.

(c) Under these circumstances, the Commission advised that it cannot give its approval to such dual quality designation because the use thereof would probably serve to confuse and deceive prospective purchasers in regard to the quality of the products being bought. [35 F.R. 10951, July 8, 1970]

5.427 Guarantee advertising for refrigerator compressors.

(a) The Commission rendered an adsory opinion regarding the proposed vertising of a 10-year guarantee for mpressors used in refrigerators.

(b) The proposed advertising, which ould appear as a 30-second television mmercial, would guarantee the comessors for 10 years in writing and if ey do not last that long a new comressor will be given the customer free, nd further, for the first 5 years the anufacturer will pay labor charges and he customer will pay for pickup and elivery.

(c) The Commission advised that the roposed advertising is not in harmony ith the language used in the submitted uarantee or with Guide 1 of the Comnission's Guides Against Deceptive Advertising of Guarantees in three mportant aspects.

(1) The advertising offers a replacenent for any compressor found to be Flefective, whereas the guarantee provides that any defect will be repaired or replaced. Thus, the advertising is incon

Sec. 17.1

sistent with the actual provisions of the guarantee. Either the advertising should be revised to conform with the guarantee and include the disclosure of a possible repair job or replacement, or the guarantee should be changed and made consistent with the proposed advertising. If an election is made to change the advertising, it should also disclose whether the guarantor or the purchaser has the option of repairing or replacing.

(2) The guarantee provides that the manufacturer will repair or replace any parts he finds defective. The fact that the manufacturer alone makes the determination as to whether or not a part is defective is a material limitation and should be disclosed in advertising.

(3) The guarantee provides that the customer will pay an "analysis charge for determining defects." This is a material limitation on the 10-year guarantee which could be a significant factor in the purchaser's selection of a refrigerator, and therefore the fact that an analysis charge is imposed should be disclosed in the advertising. [35 F.R. 10951, July 8, 1970]

PART 17-APPLICATION AND DEFINITIONS

Application of guides and trade practice rules in preventing unlawful competitive restraints.

17.2 Definition of "commerce." 17.3 Definition of Group I rules. 17.4

Definition of Group II rules.

AUTHORITY: The provisions of this Part 17 issued under sec. 6(g), 38 Stat. 722; 15 U.S.C. 46(g), unless otherwise noted.

SOURCE: The provisions of this Part 17 are derived from the Trade Practice Conference rules in this subchapter.

§ 17.1 Application of guides and trade practice rules in preventing unlawful competitive restraints.

(a) Industry guides are administrative interpretations of laws administered by the Commission for the guidance of the public in conducting its affairs in conformity with legal requirements. They provide the basis for voluntary and simultaneous abandonment of unlawful practices by members of industry. Failure to comply with the guides may result in corrective action by the Commission under applicable statutory provisions. Guides may relate to a practice common

to many industries or to specific practices of a particular industry.

(b) Trade practice rules promulgated by the Commission are designed to foster and promote the maintenance of fair competitive conditions in the interest of protecting industry, trade, and the public. It is to this end, and to the exclusion of any act or practice which suppresses competition, restrains trade, fixes or controls price through combination or agreement, or which otherwise injures, destroys, or prevents competition, that the rules are to be applied.

[32 F.R. 15540, Nov. 8, 1967]

§ 17.2 Definition of "commerce."

As used in the sections of the rules on the subject of discrimination, the word "commerce" means "trade or commerce among the several States and with foreign nations, or between the District of Columbia or any Territory of the United States and any State, Territory, or foreign nation, or between any insular possessions or other places under the jurisdiction of the United States, or between any such possession or place and any State or Territory of the United States

or the District of Columbia or any foreign nation, or within the District of Columbia or any Territory or any insular possession or other place under the jurisdiction of the United States."

§ 17.3

Definition of Group I rules.

The unfair trade practices embraced in the Group I rules herein are considered to be unfair methods of competition, unfair or deceptive acts or practices, or other illegal practices, prohibited under laws administered by the Federal Trade Commission; and appropriate proceedings in the public interest will be taken by the Commission to prevent the use, by any person, partnership, corporation, or other organization subject to its jurisdiction, of such unlawful practices in commerce.

§ 17.4 Definition of Group II rules.

Compliance with trade practice provisions in Group II rules is considered to be conducive to sound business methods and is to be encouraged and promoted individually or through voluntary cooperation exercised in accordance with existing law. Nonobservance of such rules does not per se constitute violation of law. Where, however, the practice of not complying with any such Group II rules is followed in such manner as to result in unfair methods of competition, or unfair or deceptive acts or practices, corrective proceedings may be instituted by the Commission as in the case violation of Group I rules.

AUTHORITY: The provisions of Part Issued under secs. 6, 5, 38 Stat. 721, 719: U.S.C. 46, 45, unless otherwise noted.

SOURCE: The provisions of Part 18 apper at 20 F.R. 8282, Nov. 4, 1955, unless others noted.

§ 18.1 Deception (general).

It is an unfair trade practice to se offer for sale, or distribute any indust product, or promote the sale or distrib. tion thereof, under any representati or by any method or under any circu stance or condition which has the capa ity and tendency or effect of mislead or deceiving purchasers or prospect purchasers:

(a) With respect to a process or tec nique used in the preparation or fabr cation of any industry product; or

(b) With respect to the materials use in the fabrication of any industry proc uct; or

(c) Which is false, misleading, or & ceptive in any other material respect

NOTE: Nothing in this section, nor in a of the other rules for this industry, is be construed as relieving any industry me ber of the necessity of complying with requirements of the Federal Food, Drug £ Cosmetic Act, and regulations issued the under.

[22 F.R. 4192, June 14, 1957]
§ 18.2 Deceptive
claims.

demonstrations

(a) In the sale, offering for sale: distribution of industry products, or the promotion and distribution there it is an unfair trade practice to demo strate any of such products in a manne or under circumstances, having t capacity and tendency or effect of cres ing a false impression in the minds purchasers or prospective purchasers & to the actual benefits they will obtain & the result of their purchase and use said products.

(b) It is an unfair trade practice f a member of the industry to represer claim, or guarantee that his laborator has the skill, ability, equipment, or per sonnel to construct, fabricate, or proc ess a product of the industry under i specific technique or method, unless suc representation, claim, or guarantee > made with the knowledge that complete and satisfactory accomplishment can te furnished with the facilities and per sonnel of such member laboratory.

(c) It is an unfair trade practice for any member of the industry to represent