Zeiger & Green, Inc.

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF ZEIGER & GREEN, INC., ET AL.

CONSENT ORDER, ETC. , I/o REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COM).ISSJON Aid THE FUR PRODUCTS LABELING ACTS Docket C-1472. ComplrLint, Dec. 1968-Decion, Dec. , 1968 Consent order requiring anew Yark City manufacturing furrier to cease misbranding, falsely invoicing and deceptively guaranteeing its fur products.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and the Fur Products Labeling Act, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that Zeiger & Green, Inc. , a corporation, and Charles Mitnick and Jack Zeiger, individually and as offcers of said corporation, hereinafter referred to as respondents, have violated the provisions of said Acts and the Rules and Regulations promulgated under the Fur Products Labeling Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1, Respondent Zeiger & Green, Inc. , is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York.

Respondents Charles Mitnick and Jack Zeiger are offcers of the corporate respondent. They formulate, direct and control the acts, practices and policies of the said corporate respondent including those hereinafter set forth.

Respondents are manufacturers of fur products with their office and principal place of business located at 333 Seventh Avenue New York, New York.

PAR. 2. Respondents are now and for some time last past have been engaged in the introduction into commerce, and in the manufacture for introduction into commerce, and in the sale, advertising, and offering for sale in commerce, and in the transportation and distribution in commerce, of fur products; and have manufactured for sale, sold, advertised, offered for sale, transported and distributed fur products which have been made in whole or in part of furs which have been shipped and received in commerce, as the terms "commerce fur " and "fur product" 1566 FEDERAL TRADE CO).MISSION DECISIONS Complaint 74 F'.

are defined in the Fur Products Labeling Act. PAR. 3. Certain of said fur products were misbranded in that they were falsely and deceptively labeled to show that fur contained therein was natural, when in fact such fur was pointed bleached, dyed, tip-dyed, or otherwise artificially colored, in violation of Section 4 (1) of the Fur Products Labeling Act. PAR. 4. Certain of said fur products were misbranded in that they were not labeled as required under the provisions of Section 4 (2) of the Fur Products Labeling Act and in the manner and form prescribed by the Rules and Regulations promulgated thereunder.

Among such misbranded fur products, but not limited thereto were fur products with labels which failed to disclose that the fur contained in the fur products was bleached, dyed, or otherwise artificially colored, when such was the fact. PAR. 5. Certain of said fur products were falsely and deceptively invoiced by the respondents in that they were not invoiced as required by Section 5 (b) (1) of the Fur Products Labeling Act and the Rules and Regulations promulgated under such Act. Among such falsely and deceptively invoiced fur products, but not limited thereto, were fur products covered by invoices which failed to disclose that the fur contained in the fur products was bleached, dyed, or otherwise artificially colored when such was the fact.

PAR. 6, Certain of said fur products were falsely and deceptively invoiced in that said fur products were invoiced to show that the fur contained therein was natural, when in fact such fur was pointed, bleached, dyed, tip-dyed or otherwise artificially colored, in violation of Section 5 (b) (2) of the Fur Products Labeling Act.

PAR. 7. Respondents furnished false guaranties that certain of their fur products were not misbranded, falsely invoiced or falsely advertised when respondents in furnishing such guaranties had reason to believe that fur products so falsely guarantied would be introduced, sold, transported or distributed in commerce, in violation of Section 10 (b) of the Fur Products Labeling Act. PAR. 8. The aforesaid acts and practices of respondents, as herein alleged, are in violation of the Fur Products Labeling Act and the Rules and Regulations promulgated thereunder and constitute unfair methods of competition and unfair and deceptive acts and practices in commerce under the Federal Trade Commission Act.

ZEIGER & GREEN, INC" ET AL. 1567 1565 Decision and Order DECISIO:\ AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Bureau of Texties and Furs proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act and the Fur Products Labcling Act; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission s Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Acts, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agrecment and placed such agreement on the public record for a period of thirty (30) days, now in further conformity with the procedure prescribed in 92. 34 (b) of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order:

1. Respondent Zeiger & Green, Inc., is a corporation organized existing and doing business under and by virtue of the laws of the State of New York, with its offce and principal place of business located at 333 Seventh Avenue, New York, New York. Respondents Charles Mitnick and Jack Zeiger are offcers said corporation and their address is the same as that of said corporation.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is ordered That respondents Zeiger & Green, Inc. , a corporation, and its offcers, and Charles Mitnick and Jack Zeiger, individually and as offcers of said corporation, and respondents Order 74 F.

representatives, agents and employees, directly or through any corporate or other device, in connection with the introduction, or ad-manufacture for introduction, into commerce, or the sale, vertising or offering for sale in commerce, or the transportation or distribution in commerce, of any fur product; or in connection with the manufacture for sale, sale, advertising, offering for sale, transportation or distribution, of any fur product which is made in whole or in part of fur which has been shipped and received in commerce, as the terms "commerce fur" and "fur product" are defined in the Fur Products Labeling Act, do forthwith cease and desist from:

A. Misbranding any fur product by:

1. Representing directly or by implication on a label that the fur contained in such fur product is natural , tip-dyed, or when such fur is pointed, bleached, dyed otherwise artificially colored.

2. Failng to affx a label to such fur product showing in words and in figures plainly legible a1l of the information required to be disclosed by each of the subsections of Section 4 (2) of the Fur Products Labeling Act. B. Falsely or deceptively invoicing any fur product by: 1. Failng to furnish an invoice, as the term "invoice" is defined in the Fur Products Labeling Act, a1l the in- showing in words and figures plainly legible formation required to be disclosed by each of the subsections of Section 5 (b) (1) of the Fur Products Labeling Act.

2. Representing, directly or by implication, on an invoice that the fur contained in such fur product , tip- natural when such fur is pointed, bleached, dyed dyed, or otherwise artificially colored. It is turther ordered That respondents Zeiger & Green, Inc. a corporation, and its offcers, and Charles Mitnick and Jack Zeiger, individually and as offcers of said corporation, and respondents' representatives, agents and employees, directly or through any corporate or other device, do forthwith cease and desist from furnishing a false guaranty that any fur product is not misbranded, falsely invoiced or falsely advertised when the respondents have reason to believe that such fur product may be introduced, sold, transported, or distributed in commerce. shall It is turther ordered That the respondent corporation ZEIGER & GREEN , INC., ET AL. 1569 1565 Order forthwith distribute a copy of this order to each of its operating divisions.

It is turther ordered That the respondents herein shall, within sixty (60) days after service upon them of this order, file with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with this order.

I",TERLOCUTORY, VACATmG, AND MISCELLANEOUS ORDERS KOPPERS COMPANY, I",C.

Docket 8755. Ordet and Opinion, July, 1,968 Order remanding to hearing examiner his order of April 23 , 1968, denying respondent' s application for leave to take depositions from offcials of a third party.

OPINION:\ OF THE COMMISSION The Commission has before it respondent' s appeal from the hearing examiner s order of April 23, 1968, denying respondent' application for leave to take depositions 1 of six named offcials of United States Pipe and Foundry Company (hereafter U. Pipe). Complaint counsel has filed an answer opposing the appeal. The ruling below is based upon the examiner s finding that: all persons whose depositions are sought are expected to testify at formal hearings; taking of depositions wil unduly delay the proceedings; and may circumvent the orderly presentation of evidence at formal hearings. A brief review of the facts is necessary to place the examiner ruling in its proper perspective. The complaint herein charges respondent, Koppers Company Inc., with developing and maintaining a monopolistic control of the market in Resorcinol. After setting out this charge in broad terms, the complaint goes on to allege that a meeting took place, in March of 1965, between officials of respondent and representatives of U. S. Pipe, at which 1 Section 3. 33 of the Commission s Rules of Practice provides, in pertinent part, as follows: 33 Depositions.-(a) When ju tified. At liny time during the course of a proceeding, whether or not issue has been joined, the hearing examiner, in his discretion -may order the taking- of a deposition and the production of documents by the deponent. Such order may be entered upon a showing that the deposition is necessary for purposes of discovery, and that such discovery coulct not be accomplished by voluntary methods. Such order may also be entered in extraordinary circumstances to prese1've relevant evidence upon a showing- that there is substantial reason to believe that such evidence could not he presented through a witness at the hearing-. Insofar as consistent with considerations of fairness and the requirements of due process and the rules in this part, a deposition should not be ordered when it appears that it wil result in undue burden to any other party or in undue delay of the proceeding, and it should not be ordered to obtain evidence from a person relating to mattei' s with rer"ard to which he is expected to t€8tify at the hearing, or to obtain evidence which there is reason to believe can be PI'esented at a hearing without the need for deposition, or to circumvent the orderly presentation of evidence!' at the hearing. offcials of respondent urged that U. S. Pipe refrain from entering the Resorcinol market. The balance of the complaint deals with respondent's alleged reaction, by price cuts, restrictive agreements and long-term contracts, to U.S. Pipe s announcement that it was constructing a plant for the production of Resorcinol. It wi1 thus be observed that the entire thrust of the complaint is to respondent' s dealings with and reactions to its alleged potential competitor, U.S. Pipe, the cumulative effect of which, it is alleged, caused U.S. Pipe to fail in its attempt to enter the Resorcinol market. The complaint mentions no other competitors actual or potential, nor does it allege acts or practices directed against any other firm. Thus it is obvious that respondent, to answer these charges, must be prepared to meet the testimony of complaint counsel' s prime witnesses, offcials of U. S. Pipe. Respondent' s informal request to interview these offcials met with polite refusal. Thereafter, respondent moved for leave to take their depositions, pursuant to Section 3. 33 of the Commission s Rules of Practice. The denial of respondent's motion forms the basis of this appeal.

Section 3. 33 provides that an order for taking of depositions may issue "at any time during the course of a proceeding" upon a showing that it is "necessary for purposes of discovery, and that such discovery could not be accomplished by voluntary methods." A deposition may also issue to "preserve relevant evidence if it can be established that there is "substantial reason to believe that such evidence could not be presented through a witness at the hearing. " Section 3. 33 (f) (2) controls the use of depositions taken to preserve evidence. Like Federal Rule 26 (d) (3), it provides for the admission of depositions in evidence upon a finding that the witness is unable for reasons of age, infirmity, etc., to appear to give testimony.

Thus, Section 3.33 (a) provides for depositions "for purposes of discovery," and "to preserve relevant evidence/' and Section 33 (f) (2) controls the use of the latter type as evidence at the hearing. In conformity to this distinction, Section 3.33 (a) further provides that Insofar as consistent with considerations of fairness and the requirements of due process and the rules in this part, a deposition should not be ordered to obtain evidence from a person relating to matters with regard to which he is expected to testify at the hearing, or to obtain evidence which there is reason to believe can be presented at a hearing without the need for deposition or to circumvent the orrlerly presentation of evidence at the hearing. (Emphasis supplied. Since, under subsection (f) (2), the contents of a deposition can INTERLOCUTORY ORDERS, ETC. 1573 only constitute evidence in a narrow class of circumstances, it follows that subsection (a) prohibits the use of a deposition to preserve evidence when the would-be deponent is expected to present the same material testimonial1y, or the evidence can be presented at the hearing independently, without recourse to depositions. In both cases, depositions to preserve evidence would serve no useful purpose, since they would be inadmissable in evidence under subsection (f) (2). It is the purpose of this portion of subsection (a) to spare counsel and witnesses the harassment and delay of a "trial-by-deposition " whereby depositions are taken neither for purposes of discovery nor to preserve evidence but are attempts to secure information that is often marginal cumulative, already known to counselor of no substantial value to him, al1 as a device to clog the record and burden opposing counsel and witnesses with the attendant delay and disruption at the pretrial stage.

In denying respondent's motion on the ground that "al1 persons whose depositions are sought are expected to testify at formal hearings" the hearing examiner has plainly applied the standards of subsection (a) relating to depositions intended for later use as evidence. However, it is clear that respondent does not seek the requested depositions "to obtain evidence " but "for purposes of discovery," more specifically, for use in eross-examination. If such depositions were to be unavailable merely because the persons whose depositions are sought are expected to testify, respondent plausibly argues that effective cross-examination would be impossible.' It is not the purpose of subsection (a) to deny to respondent advance knowledge of the testimony of complaint counsel's witnesses. The right to effective cross-examination is embodied in the Administrative Procedure Act,' and is customarily protected by the use of depositions. Although this discovery mechanism, like others, is susceptible to abuse, this possibility is not suggested by the facts before the Commission at this juncture. It would appear that the testimony of the witnesses whose depositions are sought may be of substantial importance. In addition to the grounds previously mentioned, the hearing examiner premised his ruling upon his finding that the "taking of depositions wil unduly delay the proceedings, and may circumvent the orderly presentation of evidence at formal hearings. There is no indication in the record now before us, however, that In its brief on appeal. respondent expresses as its chief concern the diffculty of JJI'eparing for cross-examination without advance knowledge of the testimony to be presented by compl.aint counsel' s witnesses.

3 R.B.A., p. 16.

60 Stat. 241 (1946), 5 V. C. g 556(d) (1967). the granting of respondent's application would delay the opening of formal hearings. All the witnesses whose depositions are sought are located in the same city. Respondent asserts in its brief on appeal that all six could be deposed in a relatively few days. Formal hearings are not scheduled to begin for several weeks. Any possibility of delay might perhaps be avoided by the simple expedient of including in an order granting respondent' application a provision limiting its effect to such depositions as respondent is able to obtain by an agreed-upon date well in advance of formal hearings.

In the circumstances, we believe that this matter should be returned to the hearing examiner for further consideration in the light of this opinion and the other opinions in the discovery matters decided in this case today. Any order granting respondent' application should limit the scope of inquiry to matters necessary to prepare a defense, and should also contain such safeguards as may be necessary to prevent improper disclosures of trade secrets or other privileged or confidential information. Commissioner MacIntyre concurred in the result. ORDER OF REMAND TO HEARING EXAMINER Upon consideration of the appeal of respondent from the hearing examiner s ruling of April 23, 1968, and for the reasons stated in the accompanying opinion It is ordered That the matter be remanded to the hearing examiner for further consideration.

Commissioner MacIntyre concurred in the result. KOPPERS COMPANY, INC.

Docket 8755. Order and Opinion, July, 1968 Order denying appeal to produce certain documents and request for oral argument and remanding case to hearing examiner fO-I' further proceedings.

OPINION OF THE COMMISSION We have before us the appeal of United States Pipe and Foundry Company (hereafter referred to as U. S. Pipe), a corporation not a party to this proceeding, from the ruling of the hearing examiner embodied in orders filed respectively April 11 , 1968, and April 15 , 1968 (Prehearing Order No. 2 and an amendment 5 In its reply memorandum on appeal, respondent has indicated its wilingness to comply with any reasonable order which would enable it to take these depositions and stil ensure that no delay will come about, " Respondent's Memorandum in RepJy, p. 2. IJ-TERLOCUTORY ORDERS , ETC. 1575 thereto), which, among other things, denied in part and granted in part the motion of U. S. Pipe to limit or quash subpoena duces tecum issued on the application of counsel for respondent. Respondent, on April 29 , 1968, filed a brief in opposition to the appeal.

The hearing examiner, in amended Prehearing Order X o. 2 directed the production of the subpoenaed documents on April 22 1968, under conditions set forth in such order. Under S 3.35 of the Commission s Rules of Practice it is provided that an appeal from a ruling such as that here involved shall not operate to suspend the hearing unless otherwise ordered by the hearing examiner or the Commission. U. S. Pipe, on or prior to April 22, 1968, made no motion to stay the matter pending the appeal, and made no appearance on April 22, 1968, in compliance with the examiner order. Accordingly, the examiner, on April 23, 1968, certified to the Commission the failure of U.S. Pipe to comply with the subpoena. The examiner, in his certification, noted that no claim was made concerning the breadth of the disputed paragraph of the subpoena in the written motion submitted to him. Thereafter, on April 26, 1968, U.S. Pipe belatedly sought a stay of the subpoena pending decision by the Commission on the appeal. The examiner certified this request to the Commission on April 29 , 1968, with a recommendation that the return date of the subpoena involved be extended to and including the tenth day after the decision of the Commission on the appeal, if the Commission sustains the examiner in the issuance of the subpoena as limited. Tbe portion of the subpoena in dispute reads as follows: 4. All documents including any graphs, charts, tables, tabulatiom, and compilations prepared by your company, any offcer or employee of your company, or by any other person or organization: (a) which concern, discuss, study or project the contemplated entry of United States Pipe and Foundry Company into the business of production and sale of commercial resorcinol and resorcinol products including, among others, the following matters: (i) the costs of production, (ii) the contemplated volumes of production, (iii) any relationship of the-- cost of production with volume, (iv) and profitability of production, (v) price levels and (vi) competition but specifically excluding references to specific actual customers;

(b) those documents which reflect or relate to the actual implementation of the plans and studies for the entry of United States Pipe and Foundry Company into the market for resorcinol production and sale, including those matters referred to in Paragraph 4 (a) above, but excluding specific sales to specific customers.

The hearing examiner, in amended Prehearing Order No. , included protective provisions dealt with hereinafter. S. Pipe, on the merits of its appeal, makes three arguments: first, that the documents sought are irrelevant; secondly, that the subpoena is too sweeping; and, finally, that the subpoena seeks trade secrets, the disclosure of which, it is contended, would be injurious to the public interest and to U.S. Pipe. On this last point S. Pipe additional1ly argues that the order of the hearing examiner does not afford it suffcient protection. The appellant finaIJy requests oral argument on its appeal. We are not persuaded that the hearing examiner has clearly abused his discretion, but our consideration of this matter leads us to believe that one of the three bases for objection advanced by U. S. Pipe, the protection of U. S. Pipe s trade secrets, may warrant reconsideration by him. Moreover, U.S. Pipe s objection to the breadth of the subpoena, the third basis cited in its appeal has not been considered by the hearing examiner. Since we are remanding for reconsideration of the question of protection of trade secrets, he wil have an opportunity to consider the question of breadth.

With regard to relevancy, we think the hearing examiner ruled properly. The allegations of the complaint with respect to the Respondent' s alleged contacts with U. S. Pipe and the effects of Respondent' s alleged activities to exclude U. S. Pipe may, or may not, have been a necessary concomitant to the charge of monopolization by Koppers, but the allegations in the complaint establish the relevancy of the documents sought in a discovery proceeding. The ultimate issues of the materiality and relevancy of material sought should be ruled upon at the time they arc sought to be introduced. Any questions with respect to those rulings may be presented to the Commission upon review, if any is sought, of the entire record.

We feel constrained to point out that unless there is a clear showing of an abuse of discretion the Commission, in the absence of unusual circumstances, will not disturb a ruling of a hearing examiner in matters involving procedure and-- discovery. See Topps Chewing Gum, Inc. Docket No. 8463 (order issued July 2 1963) (63 F. C. 2196j; Associated Merchandising Corporation Docket No. 8651 (order issued September 23 , 1965 (68 F. 1175j, and order issued November 13, 1967 (72 F. C. 1015j); and American Brake Shoe Docket No. 8622 (order issued September 1, 1965) (68 F. C. 1169j.

The second basis for U. S. Pipe s appeal is that the subpoena is too sweeping. We are not persuaded that U. S. Pipe s documents which "concern, discuss, study or project" its contemplated entry into the resorcinol market must necessarily extend to the details INTERLOCUTORY ORDERS, ETC. 1577 of U. S. Pipe s "costs of production contemplated volume of production relationship of the cost of production with volume profitability of production " or "price levels." If Koppers wishes to defend this law suit by showing that U. S. Pipe decided not to enter the market for reasons unrelated to any activities of Koppers, then it might be able to do so with the documents sought under Item 4 (a) and (b) without the specific data enumerated in subparagraphs (i)- (v).

Obviously, it may be diffcult to separate out some of this raw data which would fall into the area of trade secrets from memoranda and other" documents which would relatc to its reasons for not entering this market.

This brings us to the third basis for appeal: the argument that the material sought by Koppers constitutes trade secrets which S. Pipe should not be compelled to disclose. The hearing examiner is in the best position to determine how this can best be accomplished. In his Prehearing Order NO. ordering the production of the subpoenaed documents the hearing examiner ordered protective provisions as follows:

3. The motion of United States Pipe and Foundry Company is granted to the extent that all papers called for by Paragraph 4 of said subpoena shall be produced at the prehearing conference to be held April 22 , 1968, and shall be exhibited to and placed in the custody of William Simon and Paul d'Hedouvile, counsel for respondent, provided, ho\vever, that said William Simon and Paul d' Hedouville as counsel for respondent shall first undertake and agree that all such documents shall be retained in their personal custody, shall not be copies or abstracted, and that no information contained in any of them shall be disclosed to any other person except ' on 10 d.ays notice to Thad G. Long, counsel for intervenors, who may then arrange with all counsel and. the hearing examiner for a suitable date to offer testimony and other evidence seeking in Ca1ne?' treatment in compliance with Rule 3.45 and may secure a ruling thereon by the hearing examiner before any disclosure may be made. And, on the further condition that said Willam Simon and Paul d'Hedouvile further undertake and agree to return all such documents not admitted in evidence to said Thad G. Long at the conclusion of the testimony of witnesses from United States Pipe "imd Foundry Company.

We are still not wholly satisfied at this point that the protective provisions which he has proposed are adequate. At least we think that before adopting those provisions he should give consideration to the procedures adopted in Mississippi Rivet Fuel Corp. Docket No. 8657, Order June 8, 1966 (69 F. C" 1186J, Here again, however, he is closer to the case and is in a better position than the Commission to consider in the flrst instance what protective provisions would be most appropriate. He should be satisfied that Koppers have the material which is necessary, but, to the extent 1578 FEDERAL TRADE COMMISSIO:\ DECISIONS possible, in a form which provides the adequate protection of the trade secrets of U. S. Pipe.

S. Pipe has requested permission to present oral argument to the Commission in this matter. We think in view of our disposition of the appeal that the oral argument should more properly be addressed to the hearing examiner.

Finally, U. S. Pipe having failed to make timely request and receive a stay in the effective date of the hearing examiner s order and having failed to comply with the subpoena as directed is now technically in violation of the examiner s order. The hearing examiner, in his second certification of April 29, 1968 (made upon receipt of U.S. Pipe s belated request for a stay), by recommending an extension of time for the return date of the subpoena, in the event the Commission denies the appeal, has apparently concluded that the failure to comply with his order was inadvertent and not willful. Accordingly, we wil not press further on this deficiency.

An appropriate order is issued herewith. Commissioner MacIntyre concurred in the result. ORDER DENYING Appeal FROM EXAMINER S ORDER AND REQUEST FOR ORAL ARGUMENT AND REMA:\DING TO HEARING EXAMINER FOR FLRTHER PROCEEDING United States Pipe and Foundry Company appealed from the examiner s ruling requiring it to produce certain documents in response to a subpoena duces tecum issued upon the application of respondent herein and requested oral argument on the appeal; and The Commission having determined for the reasons stated in the accompanying opinion that such appeal and request for oral argument should be denied and that this matter should be remanded to the hearing examiner for further proceedings in accordance with such opinion:

It is ordered That the appeal of the Lnited States Pipe and Foundry Company from the hearing examiner s ruling and its request for oral argument of its appeal is denied. It is furthe?' ordered That the hearing examiner s order of compliance with the subpoena duces tecum issued against United States Pipe and Foundry Company on March 12, 1968, be vacated and that the hearing examiner consider the arguments of the United States Pipe and Foundry Company and those of respondent in accordance with the accompanying opinion, make such determinations as the hearing examiner deems appropriate, and enter such further orders as may be justified and appropriate in light of such arguments.

INTERLOCUTORY ORDERS, ETC. 1579 Commissioner Maclntyre concurred in the result. KOPPERS COMPANY INC.

Docket 8755. Ordel' , July, 1.968 Order granting respondent's request to file interlocutory appeal and vacating hearing examiner s order directing hearings in more than one city by restricting hearings to Pittsburgh only. ORDER GRANTIKG RESPOKDENT S I)lTERLOCTORY Appeal AND V ACATIKG EXAMINER S ORDER FOR HEARINGS IN MORE THAN ONE PLACE This matter having come before the Commission on the request by respondent Koppers Company, Inc., pursuant to Rule 3. 23 (a) for permission to file an interlocutory appeal from the order of the examiner dated May 17, 1968 , granting the motion of complaint counsel to hold hearings in three cities, New York, Pittsburgh and Birmingham, Alabama; and The Commission having (. considered said request, the order of the examiner dated May 17, 1%8, and all of the memoranda directed to the examiner by the parties including complaint counsel's motion of April 29 and affdavit of May 10 and respondent' s opposition memorandum of May 6 and answer of May 16; and The Commission believing that counsel supporting the complaint has clearly failed to carry the burden of establishing the presence of "unusual and exceptional circumstances" required to justify the holding of hearings in more than onc place under Section 3.41 (b) of the Commission s Rules in accordance with the Commission s order of April 9, 1968 , in Universe Chwrnicals Docket 8752 (73 F. C. 1259J :

It is ordered That the respondent' s interlocutory appeal be granted.

It is further ordered That the bearing examiner s order granting complaint counsel's motion for hearings in more than one place be vacated and that the hearings be held only in Pittsburgh. Commissioner MacIntyre did not concur.

KOPPERS COMPANY, I",C.

Docket 8755. O?' de1' and Opinion, July 2, 1.9G8 Order denying application of respondent for subpoena duces tecum and for the release of confidential information. 1580 FEDERAL TRADE COMMISSION DECISIOKS OPINION OF THE COMMISSION Respondent herein, charged with violating Section 5 of the Federal Trade Commission Act, on :varch 28, 1968 applied to the hearing examiner, under 34 (b) of the Commission s Rules of Practice, for a subpoena duces tecum directed to complaint counsel to produce the records which it listed contained in the Commission files, or, in the alternative, for the production of such records pursuant to 36 of the Commission s Rules of Practice. The examiner, on March 28, 1968, certified the application (which he treated as a motion) to the Commission, holding that he was without power to grant or deny the request under 22 (a) of the Commission s rules. The examiner recommends that the application be denied on a number of grounds: first, because it has not been shown that there has been a refusal by complaint counsel to exhibit the documents sought; secondly, it has not been shown that there are documents of the kind desired; thirdly, the subpoena, if issued, would be so broad as to be unreasonable; and, finally, that the application might better await the disclosure of complaint counsel' s evidence, which would permit a more limited request based on the facts that respondent would be required to meet.

Simultaneously with the filing of the qpplication, respondent through its attorney, sent a letter to the Commission, requesting, pursuant to the provisions of the new public information law (81 Stat. 54 (1967); 5 L. C. 552 , as amended, referred to hereafter as the Public Information Act), that the Commission make available to Koppers Company, Inc., copies of listed documents. The specifications of this request essentially duplicate those in the application for subpoena duces tecum, although there are some differences.

Respondent, on April 3 , 1968, filed with the Commission a memorandum in connection with the certificatiol1- of the subpoena duces tecum. Complaint counsel filed a memorandum on April 17 1968, in opposition to both requests and respondent, on April 23, 1968, filed a further memorandum in reply. Before considering the merits of the request for information it is necessary to comment on the procedural aspects of seeking the 1 One main item' of information sought in the letter request which does not seem to be covered in the subpoena application is that which reads as follows; "Any opinion, order, statement of policy or directive by a Member or Members of the Federal Trade Commission which would state those reasons for the issuance of the complaint against this company (Dkt. 8755). On this request the Commission would make available to the respondent any documents coming within the terms of this speciflcation which are on the public record. However, rl"pondent has not identified any such documents, and an examination of the Commission s records reveals that there are none described on the public record INTERLOCUTORY ORDERS, ETC. 1581 documents directly from the Commission under the Public Information Act. The Commission s rules do not provide for a release of confidential information by direct request in an adiudicative case. Respondent concedes in its letter of March 28, 1968, that the information sought is for use by the respondent in preparation of its defense in the instant proceeding. In such circumstances the Commission s rule 36 is applicable. This rule requires that application be made in the form of a motion to the examiner, who must certify such to the Commission with his recommendation. This precludes a direct request under 11 of the Commission s rules. Nevertheless, in this instance, since the request under the Public Information Act largely duplicates the application to the hearing examiner, we wil not exclude it from our consideration because of the improper procedural approach but wil view it as a supplement to the application filed with the examiner.

The request for documents, as the examiner found, is extremely broad. The application covers all documents from January 1 , 1962 to the date of the application (March 28, 1968), in the following categories:

1. All documents of any nature, kind or description, including mechanical recordations, prepared by or otherwise received 'rom United States Pipe and Foundry Company relating or referring to the domestic production and sale of resorcinol or which in any way relate or refer to this respondent or any offcers or employees thereof;

2. All documents of any nature, kind or description prepared by or received from fifteen companies listed (including such as Goodyear Tire and Rubber Company, United States Rubber Company, Deering-iIilekin Company, and others), whose offcer, employees or representatives have been identified by complaint counsel as being persons who may be called to testify on behalf of the complaint;

3. All documents, including correspondence, of any nature, kind or description received by the Commission in connection with this matter from companies other than those referred to in specification number 2, above;

"Moreover, 93.22 of the rules states that during the time a proceeding is before a hearing examiner, all motions therein, except those filed under !i 3.42 (go) (Disqualification of hearing examiner'J shall be (lddre,9sed to the hearing examiner and if within his authority shall be ruled upon by him. Any motion upon which he has no authority to rule is to be ccrtifled to the Commission with his rccommendation.

3 In this co:nnedion, it should be pointed out that the materials which may be obtained by a party under 36 of the Rules (now and prior to the amendment of that Rule on May 1, 1968) is mote broad than the material which is available to the public under the Public Information Act.

1582 FEDERAL TRADE COM MISSION DECISIONS 4. An signed statements received from any individual which relate, refer to or otherwise concern the domestic production and sale of resorcinol and resorcinol products; 5. An documents, to the extent not produced in response to prior paragraphs, which reflect, refer to or otherwise concern the potential, contemplated or actual entry of a company into the market for the domestic production and sale of rcsorcinol ; 6. An documents, studies and surveys which reflect, refer to or otherwise concern competitive conditions '11' practices involving the domestic production and sale of chemicals other than resorcinol;

7. All documents of any nature, kind or description which reflect, refer to or otherwise concern the revisions by this respondent of an contracts for the sale of resorcinol in December 1966 whereby an customers were released from contractual1 obligations to purchase in excess of 50 percent of their resorcinol requirements from Koppers;

8. Such documents of any nature, kind, description or origin which would show that this proceeding is brought as a means of ensuring the competitive survival or prosperity of United States Pipe and Foundry Company."

Subsection (b) of Rule 3. 36 (unchanged by the May 1 , 1968 amendment), the rule here applicable, specifies as to a motion seeking confidential Commission materials or information as fo1lows:

The motion shall specify as exactly as possible the material to be produced, the nature of the information to be disclosed, or the expected testimony of the Commission offcial or employee, and shall contain a statement showing the general relevancy of the material, information, or testimony, and the reasonableness of the scope of the application, together with a showing that such material, information, or testimony is not available from other sources by voluntary methods or through other" provisions of the rules in this chapter.

Respondent, seeking in the alternative to justify its request under, cites circumstances which it argues go to the relevancy of the documents. It makes no further showing. It does not meet, or even attempt to meet, the other requirements of Rule 36. There is no showing as to thc reasonableness of the scope of the application, nor is there a showing that such material or information is not available from other sources by voluntary meth- 4 The refuel made under the Public Information Act differs on some of the ,pecifications, as stated above, but in view of our disposition of the matter we will not discuss the IJl!.l'ticulars of such differences INTERLOCUTORY ORDERS, ETC. 1583 ods or through other provisions of the rules in the chapter. Respondent, in its reply of April 23, 1968, suggests, apparently for the first time, certain considerations which might bear on a claim of the unavailability from other sources of the documents sought under Specification 1. It mentions, for instance, that it has obtained discovery from United States Pipe and Foundry and having what it believes to be some reason to question the completeness of the material produced, is now pressing for discovery from complaint counsel. It cannot use its mere assumptions as to incompleteness as a basis for claiming that the requested documents are not available from other sources. In any event, any such justification, if that is what it is, should have been made in the first instance to the hearing examiner so that he would have had all the facts and circumstances necessary to an informed determination and recommendation under 36. We are, by separate Opinion and Order, remanding the appeal of U. S. Pipe from the Orders of the hearing examiner with respect to the Subpoena Duces Tecum directed to it by Koppers to the hearing examiner with directions to reconsider his orders the light of that opinion. In view of that determination, it is our conclusion that the respondent's request for U. S. Pipe documents from the Commission is premature.

Respondent, in its reply memorandum, further asserts that complaint counsel has been ordered to turn over to respondent by May 15 , 1968, all documents which he intends to use in his case and that" (tJ he subpoena is merely intended to procure any documents received by complaint counsel which he decides not to use in his own case " (p. 4, reply memorandum filed April 23 , 1968). This seems to be a different and more limited request from that contained in the specifications of the subpoena. However, the examiner construed the application as a "very broad discovery of all documents in the possession of the Federal Trade Commission dated January 1 , 1962, to date relating to the subject matter of the complaint." In any event, respondent cannot serve such a dragnet subpoena on the Commission and then attempt to defend its broad scope by claiming that in fact fewer documents are actually desired than are requested. It would appear that in fact respondent has alrcady received many of the documents which it . Respondent does no contend that any of the rnateria:s request.ed are tho e which respondent is entitled to by law . ':..IaTeo"e", the sweeping nature of the request and the general jmtification therefor will admit of no determination on such tjue.tion. To the extent, how""ver, that there arc id"ntifiablc documents in the Commission s files coming within this exception no further r"ference to the Commi sion is necessary. A )'equest for any such documents would be governed by 34 of the Commission s rules.

seeks under this subpoena.6 Respondent is under a duty to examine these documents and thereafter determine precisely what additional documents it believes it requires, and is entitled to. We agree with the examiner that on its face, the application for subpoena duces tecum is, for an adjudicative proceeding, unreasonably broad. The information sought covers a lengthy period (i. six years), comprehensively embraces whole files or categories of documents with Jittle or no differentiation or particularization, and the request by its nature seems to be designed to uncover numerous documents in the hope that something useful might turn up. Such a request, we believe, is unreasonable in scope and is not justified under the Commission s rules. See COTO Inc. v. Fedeml Tmde Commission 338 F. 2d 149 153 (1st Cir. 1964), ceTt. denied 380 U.S. 954 (1965). As the examiner pointed out in his certification, a more orderly procedure would be for respondent to wait for the disclosure of all of complaint counsel' evidence and on the basis of these documents frame an application for discovery based on the facts which respondent would be required to seek.

Rule 36 (b), which wil be applied by the hearing examiner under the May 1, 1968, amendment, requires that respondent . . . shall specify as exactly as possible the material to be produced . . . " (emphasis added). This is not to be interpreted to mean a particular identifiable document (the identity of which wil frequently not be known to respondent), but it does require greater specifici y than a general request for all documents of any nature, kind or description. . . " so that there can be no doubt exactly what materials must be furnished. In all the circumstances, we conclude that the request here made is one that has not been presented to the examiner with a reasonable effort to accord with the requirements of 36. The Commission, through amendments of its rules and otherwise, is making serious efforts to expedite the determination and disposition of both adjudicative and non-adjudicative matters. If these ends are to be achieved, it requires that diligent efforts be made by both the Commission staff and counsel representing respondents and proposed respondents, to initially comply with the letter and spirit of the Commission rules. The Commission wil look with o Complaint wunseJ , in his memorandum of April 17 , 196R , asserts that almost all of the documents in Specification 2 have been furnished Ilnd that the remaining documents wiJ he furnished; that the statements covered by paragraph 4 are already in respondent' s possession: that all spedfications under para raph 5 have been, to the best of complaint counsel's knowledge, delivered to respondent; that documents in paragraph 6 , known to complaint couTIsel. Were either ' obtained from respondent or have already been furnished respondent: and, finally, that complaint counsel has no such documents as those referred to under paraJlraph 7 other than such already furnighed by respondent to the Commission s staff. INTERLOCUTORY ORDERS, ETC. 1585 disfavor upon any efforts to use its processes of expedition as devices for delay.

Respondent' s application for a subpoena duces tecum, including its supplemental request by Jetter of March 28, 1968, and, in the alternative, its request under S 3. 36 for the production of documents win be denied. This, however, wil be without prej udice to the respondent to apply for a subpoena duces tecum which it can justify under the Commission s rules. In view of the amendment of Rule S 3. 36 on May 1, 1968, any new application win be governed by that Rule, as amended.

An appropriate order win be issued to accompany this opinion. ORDER DENYING ApPICATION FOR SUBPOENA DUCES TECTUM A:\D REQUEST FOR RELEASE OF CONFIDE:\TIAL RECORDS This matter is before the Commission upon the application of Koppers Company, Inc. , for subpoena duces tecum or, in the alternative, for the production of confidential records; and The Commission having considered said application, which was treated by the hearing examiner as a motion and certified to the Commission with recommendation that it be denied, the memorandum in opposition thereto submitted by counsel supporting the complaint and the memorandum by respondent in reply to complaint counsel's opposition; and The Commission being of the opinion that respondent has not made a showing which would warrant issuance of the subpoena or granting of the request for release of confidential information; therefore, for the reasons set fortb in the accompanying opinion It is ordered That the application of Koppers Company, Inc. for subpoena duces tecum and for release of confidential records be and it hereby is denied.

LEHIGH PORTLAND CEMENT COMPANY'.

Docket 8680. Ordel' and Opinion, Aug. , 1.968 Ord.er remanding to the hearing examiner the question of subpoenas directed to third- party concrete companies.

OPINION OF THE COMMISSION This matter is before the Commission upon the appeals of respondent and fourteen third parties. On January 11, 1968 , subpoenas duces tecum were .issued to eighty-one ready-mixed concrete companies on behalf of respondent. On January 25 , 1968 thirty-six additional subpoenas duces tecum were issued to portland cement manufacturers on behalf of respondent. Subsequently, forty-seven ready-mix firms and twenty-two portland cement manufacturers complied with the subpoenas. :l10tions to quash were filed by twenty-nine ready-mix firms and thirteen portland cement firms.

All third-party motions to quash claimed that some of the information sought by various subpocna specifications was highly confidential and should not be divulged to respondent or respondent' s counsel but only to an independent accounting firm in accordance with the procedure utilized in Mississippi Rive,. Fuel Corpor' ation Docket No. 8657 (orders issued June 8, 1966 (69 C. 11861, and July 15, 1966 (70 F. C. 1759J). The portland cement firms also claimed that the subpoenas were unduly broad as to geographic scope.

On May 29, 1968, the examiner ruled on the motions to quash the January 11 , 1968, subpoenas, and on June 14 , 1968, he ruled on the motions to quash the January 25 , 1968 , subpoenas. The examiner ruled that the subpoenas should be modified and that much of the sales and pricing data called for by various specifications should be submitted to a disinterested accounting firm which would compile and present the material to respondent' s counsel in such a manner that no individual company s confidential arrangements or data would be revealed. The examiner also ordered that the georgraphic scope of the subpoenas directed to the portland cement manufacturers should be restricted. Respondent filed two appeals from these rulings on the primary ground that the restrictive Mississippi Rive,. confidentiality procedure impairs respondent's right to prepare adequately for crossexamination and needlessly prejudiccs respondent' s ability to conduct an effective defense, especially when suffcient protection can be afforded by other, less prejudicial means. Many third parties filed answers defending the examiner s ruling. Additionally, fourteen third parties also filed appeals on the ground that the examiner should have included even more subpoena specifications in the Mississippi River treatment ordered. The examiner stated .in his orders that inasmuch as some of the specifications in this proceeding are similar to those at issue in the Mississippi Kiver case, and despite some misgivings as to the propriety of this treatment in this instance, he nevertheless was bound by Commission precedent to order the use of the same procedures.

, Six firms receiving subpoenas had neither filed motions nor fully complied with the subpoenas as uf the dates of the examiner s rulings on the motions to quash. Order Modifying Subpoenas Duces Tecum, p. 4 (May 29 , 1968), p. 5 (June 14 1968). (j.

INTERLOCUTORY ORDERS, ETC. 1587 We believe that the examiner has incorrectly interpreted our decisions in the 111ississippi Rive?' case. The Commission in that case neither stated nor implied that henceforth such treatment was to be mandatory. We merely held that under the facts of that proceeding the treatment ordered was appropriate. The Commission was, and is, loath to substitute its judgment for the examiner s judgment on such matters. This requires, however, that the examiner must actively and independently evaluate all of the countervailing factors in reaching his decision. The examiner, because of his proximity to the case, is, in the first instance in a far better position to assess the multitude of variables inherent in the delicate balancing of interests between the respondent' s need to know sensitive information and the third party s need to protect the same valuable information from his competitor. It is indeed conceivable that, depending on the particular facts, similar specifications may require dissimilar treatment in order to insure the most equitable resolution of these conflicting interests. Because of the examiner s misconstruction of the l11ississippi Rive!' opinions, \Ve are not convinced that such evaluation has been given to this matter.

Keither the Commission nor the courts have given recognition to an absolute trade secret privilege. 3 The revelation of a trade secret wil be compelled if it is indispensable to the proceeding. Nevertheless, the Commission and the courts have hesitated to order disclosure absent a clear showing of immediate need for the requested information. Once disclosure is deemed necessary, conditions have usually been imposed which limit the use of the information only to the litigation and which prevent disclosure to nonparty competitors.

The techniques by which protection has been provided vary as much as the subjects protected. The procedure adopted in j);ississippi River has been used on a number of occasions.!; Nevertheless, it is not the only available solution. At this juncture, we are uncertain that the examiner gave adequate consideration whether all the information at issue was entitled to protection and if so, whether the Mississippi Rive,' treatment provides the best available resolution to the opposing interests of the respondent and the third parties.

J See genendJy, E. Gd!hol'n The Treatment of Conf-dentiallnformation /;11 the Federal Trade Commission: The Hearing, 1)(i U. Pa. L. Rev. 401 (1%8). 'Federal Trade Cmnmission v. Frederick A. Clarke 3 S.&D. 406 (S,D. CaJ. 1941), aIf'd, 128 F. 2rJ 542 (9th Cjl' . 1942).

, E. GeJlhol'n supra note H , at 409. o Set' , Cities Senice Oil Co. v. Celancse Corpor(ltio-I! 10 F. . 458 (D. Del. 1950): Empire Rayon Yarn Co. v. American Viscose Corp. 160 F. Sl:pp. 334 (S. Y, 1958). The test to apply to requests for confidential protection of business records and trade secrets is whether public disclosure wil cause a clearly defined serious injury. It has been suggested that for a fair resolution of a business secret claim, an examiner should consider, in determining whether disclosure will cause serious injury, such factors as:

1. How many people have knowledge of the supposedly "secret" information? Wil disclosure increase that number significantly? 2. Does the contested information have any value to the possessor? To a competitor? Is that value substantial? 3. Did the party possessing the information incur any expense in this development? Has he had a suffcient opportunity to realize an adequate return on that investment? 4. What damage, if any, would the possessor of the secret suffer from its disclosure? What advantages would his competitors reap from disclosure? 5. What benefits are likely to flow from disclosure? To whom? Are they significant? In this connection, what is the public need" for disclosure? Can it be satisfied in any other way? 7 Because of the possibility that the examiner s impending mandatory retirement might have occurred prior to the completion of this litigation, the parties have recently agreed to the substitution of a new hearing examiner. Under the circumstances, we believe it appropriate to return this matter to the new examiner for reconsideration.' An appropriate order wil be entered. Commissioner MacIntyre did not participate. ORDER OF REMAND TO HEARING EXAMINER Upon consideration of the appeals of respondent and fourteen third party concrete companies from the hearing examiner s rulings of May 29 , 1968 , and June 14 , 1968 , and. for the reasons stated in the accompanying opinion:

It is OO"dered That this matter be remanded to the hearing examiner for further consideration.

By the Commission, with Commissioner MacIntyre not participating.

.. E . Gellhorn supra note 3, at 422-423. The intriguing suggestion has aJ80 been uffered that to protect the Commission s cuncern about an incomplete public J'accord, while also preventing unwfllTanted disclosure, the party seeking protectiun could be required t6 prepare a nOIJconfidential summary of the document 01" testimony for inclusion in the public recuru. Id. The e.-aminer appears tu have given adequate consideration to the geographic scope of the subpoenas addressed to portland cement companies. However, in light of our dispusition of the primary basis for tllese appeals, we bdieve it is appropriate to give the new e.-aminer an opportuntiy to make his own judgment on this aspect also. INTERLOCUTORY ORDERS, ETC. 1589 SUBliRBAN PROPANE GAS CORPORATION Docket 8672. 01' de1' , A1tg. 1968 Order granting leave to file appeal from hearing examiner s order and for Philips Petroleum to file comments.

ORDER GRAKTING PERMISSION TO FILE AN INTERLOCTORY Appeal This matter is before the Commission on respondent' s request for leave to file an interlocutory appeal from the hearing examiner s order of July 19, 1968, and for summary reversal of that order. The Commission has determined that the request for permission to file the interlocutory appeal should be granted and the request for summary reversal of the hearing examiner s order be denied. The Commission has further determined that the Phillips Petroleum Company should be granted an opportunity to file whatever comments it deems appropriate within five (5) days after service of respondent's appeal brief upon it. Accordingly, It is ordered That respondent's request for permission to file an interlocutory appeal from the order of the hearing examiner dated July 19, J 968, be, and it hereby is, granted. It is further ordered That respondent's request for the summary reversal of that order be, and it hereby is, denied. It is further ordered That Philips Petroleum Company be, and it hereby is, authorized to file whatever comments it deems appropriate in response to respondent's appeal within five (5) days after service upon it of the appeal brief. LEHIGH PORTLAND CEMENT COMPANY Docket 8680. 01"de?' and 01,iniou, Aug. , 1968 Order denyjng respondent' s appeal from hearing examiner s order refusing to quash subpoenas duces tecum.

OPINION OF THE CO:lIMISSION This matter is before the Commission upon the interlocutory appeal of respondent. This appeal, filed pursuant to 35 (b) of the Commission s rules of practice, is based upon the hearing examiner s order of March 21 , 1968, denying respondent' s motion to quash complaint counsel's subpoena duces tecum. The subpoena, directed to respondent, seeks specific evidentiary market data concerning five acquisitions. The hearing examiner concluded that the specifications are "utterly precise and specific and that "no suggestion to the contrary has been made (by p. p. 1590 FEDERAL TRADE COMMISSION DECISIOKS respondents or implied. " 1 Respondent's appeal is based upn the sole ground that the subpoena constitutes "a postcomplaint investigation in contravention of the Commission s Rules of Practice as articulated in the Commission s decision in All-State Industries of North Carolina, Inc. Docket 8738 (Nov. 13, 1967) (72 F. C. 1020J . '" Complaint counsel invoke the All- State decision in support of their assertion that the subpoena is properly within the bounds of reasonable postcomplaint discovery. Because of numerous questions which have risen as a result of the earlier All-State decision, wc have recently issued a supplemental clarifying opinion. Thc original opinion in All-State held that the hearing examiner s order requiring respondent to give complaint counsel access to certain files for examination and copying was in fact in the nature of an investigational subpoena. Wc then stated:

While there may be innumerable instances where such broad specifications may he generally relevant, reasonable in scope, and within the bounds of proper discovery, it is incumbent U7wn the moving PU1" ty, in e" plaining the easonableness of scope, to offe1' smne explanation 101" the fail1t1' C to specify the needed documents 1/101'e exactly and for the fails1"e to obtain the 'i' equested info'" ?nation by other less brwdenS01ne ?nean.s ',"''' In All-State the requisite showing was not made by complaint counsel. Hence, \ve granted the respondent' s motion to quash. 1n this matter, it is clear that complaint counsel and the hearing examiner considered the All-State guidelines. Further, the hearing examiner s March 21 , 1968, order specifically finds that complaint counsel convincingly made the necessary explanations. The order indicates that the examiner scrutinized the subpoena from every possible viewpoint. The examiner stated that with utmost care and diligence he read, analyzed, evaluated, and tabulated every scrap of respondent's memoranda and supporting affdavits." 4 The examiner also devoted an entire prehearing conference to a detailed discussion of complaint couns€l's subpoena request. 'Ve, therefore, conclude that the examiner was well aware of the Commission s rules of practice and precedents, and that he carefully applied them to the present situation. Respondent has failed to make a satisfactory showing that the examiner abused his discretion or acted in an arbitrary or capricious manner. :llore importantly, the Commission s policy (articulated in the : Order Denying Motion to QUa 5 (March 21 , 1968) "Appeal to the Commis ion, p. 2 (April 2 , 1968). All-Strate J"nd1l;tries of ."'orth Carolin" p. 7 (Novcmbe,' , 1967), (empha added) fn C. 1020 , 10251.

-I Order 'fl'. 205- 404.

INTERLOCUTORY ORDERS , ETC. 1591 All-State opinions), of requiring complaint counsel to have evidence suffcient to support a prima facie case before issuance of the complaint, is merely an internal "housekeeping" matter. It is not a matter of concern to a respondent or the hearing examiner in dealing with a request for discovery after complaint. In dealing with discovery requests, the sole criteria to be applied is that set forth in S S 3.31 through 3.37 of the rules of practice. "'0 legal right has been conferred upon a respondent, and no burden imposed upon the reviewing courts, to police the implementation of the Commission s internal policies concerning the conduct of its staff.

The examiner has held that complaint counsel's discovery request has met the reasonable objective standard set forth in the rules of practice- , the documents are relevant and the scope of the su bpoena is reasonable.

Since respondent has failed to demonstrate that these standards have been ig-nored or misapplied by the examiner, we deny the appeal. An appropriate order will be entered. Commissioner MacIntyre did not participate. ORDER DENYING INTERLOCTORY Appeal This matter is before the Commission upon the interlocutory appeal of respondent. This appeal, filed pursuant to S 3. 35 (b) of the Commission s rules of practice, is based upon the hearing examiner s order of :VI arch 21 , 1968 , denying respondent' s motion to quash complaint counsel's subpoena duces ,tecum. For the reasons stated in the accompanying opinion, the Commission has determined that the respondent's appeal should be denied. Accordingly, It is ordel' That the appeal of Lehigh Portland Cement Company from the March 21 , 1968, ruling of the hearing examiner on the motion to quash subpoenas duces tecum be, and it hereby is By the Commission, with Commissioner MacIntyre not partici-denied.pating. ALL-STATE I",m;STRIES OF NORTH CAROLl",A, I",C. ET AL.

Docket 8788. Supplemental Op'im:oll, Aug. , 1968 A supplemental opinion clarifying an interlocutory order dated November , 1967, 72 F. C. 1020 , as to the Commission s policy in ordering postcomplaint discovery.

SUPPLEMENTAL CLARIFYING OPINION OF THE COMMISSION On November 13, 1967 (72 F. C. 1020J, the Commission issued an order and opinion dealing with an interlocutory procedural matter in this proceeding. In view of questions that appear to have arisen as a result thereof, the Commission deems it appropriate to issue this supplemental clarifying opinion. In the previous opinion in this case, the Commission stated that its "rules are not intended to provide for comprehensive postcomplaint investigation, but only postcomplaint discovery. " 1n making this distinction the Commission did not intend to change the standards which the Rules of Practice establish for dealing with applications for discovery, whether at the instance of complaint counselor respondents. From the standpoint of avoiding delay in the disposition of adjudicative proceedings, every matter . should be adequately investigated before complaint issues. However, we must emphasize that nothing in Section 3. 34 nor in any other provision of the Commission s Rules of Practice gives a respondent in an adjudicative proceeding the right to put into litigation the adequacy of the precomplaint investigation conducted by the Commission or its staff. The administrative guidelines laid down by the Commission internally do not confer upon a respondent a legal right-and on the reviewing courts the burden-to police the implementation of the Commission s housekeeping rules in this regard.

Were it otherwise, the hearing examiner, the Commission, and a reviewing court would be confronted with the well-nigh impossible task of determining, not whether the allegations of the complaint are supported by evidence, but whether the precomplaint investigation was proper or suffcient. The proceeding would become converted into a trial of the scope and adequacy of the precomplaint investigation. To introduce such collateral matters into the hearing would invite inexcusable delay. The Commission s Rules, like the Federal Rules of Civil Procedure, establish objective standards for dealing with discovery matters in the light of the issues raised by tbe complaint. A discovery request made by complaint counsel is not open to objection on the ground that the materials sought should have been in hand at the time of issuance of the complaint. Such request should be ruled upon without inquiry into whether the materials sought should or could have been obtained in an earlier stage of the proceeding. We emphasize again that the purpose ofthe discovery provisions of the Rules of Practice is to avoid rather than create opportunities for delay.

INTERLOCUTORY ORDERS, ETC. 1593 KOPPERS COMPANY INC.

Docket 8755. Ot' de?' and Opinion, Ang. 14, 1968 Order remanding case to hearing examiner for further consideration of depositions to be taken from six offcials of a third party. OPINION OF THE COMMISSION By order and opinion of July 2, 1968 (p. 1571 herein), the Commission remanded to the hearing examiner respondent' s application to take depositions of six named offcials of Vnited States Pipe and Foundry Company (" S. Pipe ). On remand, the examiner on July 9 issued an order, which was modified by a subsequent order of July 18, in which the requested depositions were authorized subject to several conditions that, in the examiner view, would assure the continuing confidentiality of such information in the hands of U.S. Pipe as should be found to merit this protection. We now have before us another appeal by respondent in which certain of these procedural safeguards are challenged as improper or impractical. U.S. Pipe has filed a brief as a tbird party intervenor opposing the appeaJ. Complaint counsel has also filed a brief in opposition.

As a general rule, the Commission is reluctant to engage in interlocutory consideration of pretrial discovery orders issued by hearing examiners. It has been our experience that the procedures provided by the Commission s Rules of Practice offer practicable and effective discovery mecbanisms that depend for their effective administration upon the discretion of the examiner within proper limits, to fashion orders authorizing discovery on the basis of firsthand consideration of the particular facts and circumstances of each case.

We have recently had occasion to restate our views of the relative functions of the Commission and the hearing examiner in the process of pretrial discovery as it relates to the ql1estion of privilege:

The Commission was, and is, loath to substitute its judgment for the examiner s judgment on such matters. This requires, however, that the examiner must actively and independently evaluate all of the countervailing factors in reaching his decision. The examiner, because of his proximity to the case, is, in the first instance, in a far better position to assess the multitude of variables inherent in the delicate balancing of interests between the respondent' s need to know sensitive information and the third party s need to protect the same valuable information from his competitor. It is indeed conceivable that, depending on the particular facts, similar specifications 1 Also before us is n spondent 5 aPIJeli1 from the examjner s denial of its motion to stay the taking of del!ositiorJ5 pel1dil1g the dete!'minatiol1 of this appeal. may require dissimilar treatment in order to insure the most equitable resolution of these conflicting interests. ,""", Xeither the Commission nor the courts have given recognition to an absolute trade secret privilege. The revelation of a trade secret will compelled if it is indispensable to the proceeding. Nevertheless, the Commission and the courts have hestitated to order disclosure absent a clear showing of immediate need for the requested information. Once disclosure is deemed necessary, conditions have usually been imposed which limit the use of the information only to the litigation and which prevent disclosure to competitors.

Questions of necessity on the one hand and the importance of continuing secrecy on the other have been presented and argued before the hearing examiner. The order of July 18, 1968, reflects the examiner s resolution of these competing interests pro tern. We will briefly consider the points raised by respondent' s appeal. The examiner s order prohibits inquiry into the " details of S. Pipe s manufacturing processes" and inquiry "concerning privileged matters." The latter restriction is a primary tenet of the discovery process, and its inclusion in the order is entirely proper. The former limitation is merely an elaboration or application of the order s central limitation that witnesses may be deposed only upon such matters, for purposes of discovery, that are alleged in those paragraphs in the complaint in this matter concerning which, by prior designation of counsel supporting complaint, such witnesses wil testify at the trial of this matter; or upon matters reasonably relatcd thereto, Complaint counsel state in their brief in opposition to this appeal that they will not seek to elicit from offcials of U. S. Pipe any information relating to manufacturing processes of L. Pipe or patent licensing policies of respondent. This being so, the details" of U.S. Pipe s manufacturing processes do not appear to be necessary for cross-examination or reasonably related to any of the allegations of the complaint. We intend no final determination of the question at this juncture. At this interlocutory stage of the case, our determination is limited to the narrow question whether the examiner s preliminary decision to restrict inquiry into 'idetails" of - S, Pipe s manufacturing processes is so unreasonable as to constitute an abuse of discretion. On the facts before us, \ve do not so find.

Respondent challenges the examiner s determination to limit attendance at the taking of depositions to exclude offcials of the party respondent and to prohibit any disclosure of testimony Lehi(jh Portland CnnCJlt Company, Ducket:Ko S6RO, inter ocuto)"y opinion issued August 2 196 (p. 1587 hereina IKTERLOCUTORY ORDERS, ETC. 1595 elicited therein without prior notice to U. S. Pipe so that a motion for a protective order could be made. Regarding attendance at the taking of depositions, respondent' s desire to include an offcial of the party respondent is apparently based on its misapprehension that inquiry into the technical details of L.S. Pipe s manufacturing processes wil be permitted, thus requiring the presence of an offcial of the party respondent to render guidance and assistance in technical matters. Since the order prohibits this line of inquiry, we see no merit in respondent' s argument. \Ve are concerned, however, that the nondisclosure provisions of the order may unduly infringe upon the ability of counsel for respondent to prepare his defense. We find no fault with the basic prohibition of disclosure affecting all parties attending the depositions. However, it may be that a more flexible form of order may be devised by the examiner which would allow attorney-client discussions to the extent they are necessary to prepare for and assist in the defense of this action without jeopardizing the secrecy of information elicited from u. Pipe or permitting its use for purposes outside the scope of this litigation. See, Ames Co. v. Bostick, Inc. 235 F. Supp. 856 857 (1964). Accordingly, we are remanding the matter for further consideration in the light of this opinion. ORDER OF REMAND TO HEARI:\G EXAMINER Upon consideration of the appeal of respondent from the bear. ing examiner s ruling of July 18 , 1968 , and :for the reasons stated in the accomp"nying opinion It is or-dered That the matter be remanded to the hearing examiner for further consideration.

STAR OFFICE SLPPLY CO. ET AL.

Docket 8749. Oile?" and Opinions, Sept. 1968 Order granting complaint counsel's appeal ar.d vacating the hearing examiner s rulings to strike the testimony of 'witnesses when complaint counsel would not produce investigators ' field reports. Interprets Jen.cks doctrine.

OPINION OF THE Colli MISSION This matter is before the Commission upon complaint counsel' interlocutory appeal from certain rulings of the hearing examiner, of May 21 , 1968, relating to the production of interview reports as to witnesses. On such date the hearing examiner struck the direct testimony of witnesses Walter J. Kroll and Arthur C. 1596 FEDERAL TRADE COMMISSIOK DECISIONS Rochon upon complaint counsel' s refusal to release pretrial reports of interviews held with these witnesses. The Commission granted complaint counsel permission to appeal June 28, 1968 (73 F. C. 1288J. Complaint counsel filed their interlocutory appeal in the matter July 8, 1968, and respondents filed an answer thereto on July 18 1968.

The witnesses involved were called by complaint counsel to testify on May 21, 1968. Both had been interviewed previously by Commission investigators and reports as to these interviews were prepared. Mr. Kroll was interviewed by David W. DiNardi, Commission attorney, on October 15, 1965. The report was prepared some weeks later, on November 2, 1965. Arthur C. Rochon was interviewed by Commission attorney John J. McNally (one of counsel herein) on August 4, 1965. The report on Rochon indicates that it was dictated on ",ovember 1, 1965. Neither report is signed by the witness. The witnesses had not seen nor approved the reports and, specifically, they had not been shown the reports prior to their testimony to refresh their recollection. The hearing examiner, at the request of respondents' counsel ordered the production by complaint counsel 'of the interview reports with witnesses Kroll and Rochon prior to cross-examination. Complaint counsel, although having previously produced interview reports as to other witnesses, obj ected to this order of production on the grounds that such reports were not substantially verbatim but were mere summaries and that they had not been shown to or approved by the witnesses. The hearing examiner re ceived these interview reports and ordered that they be made available to respondents' counsel, with certain paragraphs deleted." When complaint counsel refused to release the reports, he granted motions to strike the testimony of the witnesses. The examiner indicated that if interview reports of further witnesses were of like import he would order that these also be turned over to respondents' counsel. The examiner seemed to wholly ignore the prior rulings of the Commission on the subject of production of pretrial interview reports with witnesses. He indicates the view that interview reports generally should be produced . by complaint counsel. While he queried the investigators who had conducted the interviews on the issue of whether or not they attempted to accurately report what the witness had said, he made no attempt, so far as the record discloses, to determine whether these reports contained the 1 On the KruJl !"eport he excepted fl"Om production the third and fourth pal' agraphs on pag-e 2 . 745), and in the Rochon report he excepted from production the first two paragraph" (tr.789).

INTERLOCUTORY ORDERS, ETC. 1597 witnesses' own statements as defined by the applicable law. His holding, rather, seemed to be on the general ground of his determination that production was necessary in "fairness" to respondent and his conclusion that the reports contain no confiden tial material.

The Commission has set down detailed instructions on the question of the production of interview reports in such prior cases as Inter-State Builden, Inc. Docket No. 8624 (order issued April , 1966) (69 F. C. 1152J, and L. G. Halfmo' COInpany, Docket No. 8435 (order issued April 22, 1966) (69 F. C. 1118J. These cases hold that interview reports are not to be released for inspection where the witness interviewed has testified on direct unless such reports satisfy the requirements of the so-called Jencks Act for the production of witnesses' prior statements (18 U. 3500 (1958)). Under Section (e) of such Act, a statement subject to production is defined to mean (1) a written statement made by said witness and signed or otherwise adopted or approved by him; or (2) a stenographic, mechanical, electrical, or other recording, or a transcription thereof, which is a substantially veJ'batim Tecital of an oral statement made by said witness to an aqent of the Government and 1' eco?'ded contemporaneously cith the making oj sHeh ond statement. (Emphasis supplied.

In this case, since the interview reports in question were not signed or otherwise adopted or approved by the witnesses, the issue turns on whether these can be construed to be substantially verbatim recitals of the oral statemcnts of the witnesses recorded contemporaneously. In Inter-State Bnilde1' , sup1"a held that "summaries" of witnesses' statements made by an attorney or investigator should not be produced. In the Balfour case supra we ruled that interview reports in the Commission files "ordinarily are agents' summarizations " and that "the examiner, if he orders an interview report produced, has the obligation of making concrete findings that the prerequis' items of Section (0) of the Jencks Act have been met." "'owhere in the examiner s statements is there a clear indication that he applied the Jencks Act standard.

-' Sorre of the hfOal'ing examiner" s shtpmt'nts on the s1.1bject fol:ow. Well s I s elr before' , J believe his information in fln' S to Respondent ougbt to be turr. ed (wer to R",sporHler. counser . " (Tr. 793. Of course I believe ' he mattl':' is not in the intl'rest of the Commission nor in the interest of the Respondent or in the interest of t1-e public to rdllse to turr. over the e reports, because as far as the hearillg examine!" Call see it, there is nothing in there that Sho\11d he confidential and I don t think it would m!ltel'iall ' af:ect the situation, but I would not refjuire the Respondent to proceed to Cass-,'examine the ""itne,ses without the opportunity to examine these repol-:s before he does cross-examine the witness. . " (Tl' 79. The examiner asserted the production \vas necessary in "fairness" to the respondents but the fact is that, to the contrary, it may be highly unfair to subject a witness to cross-examination on the basis of summaries by a third-party investigator of what the witness was supposed to have said. The Supreme Court of the united States, in Palenno v. United States 360 U. S. 343 350 (1959), in relating the motivating forces behind the enactment of the Jencks Act, stated that there was, among other things, the feeling it would be "grossly unfair to allow the defense to use statements to impeach a witness which could not fairly be said to be the witness' own rather than the product of the investigator s selections, interpretations and interpolations, We conclude, therefore, that the examiner improperly struck the direct testimony of witnesses Kroll and Rochon without first having expressly determined whether or not the interview reports in question were the witnesses' own statements falling within tbe terms of the ,Jencks Act. The examiner is instructed to follow the Commission s pertinent rulings on the production of interview reports not only as to the reports on witnesses KroJl and Rochon but also as to any interview reports relating to witnesses subsequently called in this proceeding. We wil grant the complaint counsel' s appeal, vacate the examiner s rulings striking the witnesses ' testimony and return the case to the hearing examiner for further proceedings in accordance with the Commission vieVl. s expressed herein. An appropriate order \vill be issued to accompany this opinion.

DISSENTING OPINION SEPTEMBER 18, 1968 By ELMAN C01mnisBionel':

The Commission again applies in this case what I regard as an of anerroneous and unfair test for determining the producibiJity interview report: not whether it accurately and -reliably records the substance of a witness ' statements but whether it is a substantially verbatim contemporaneously recorded" transcription of the witness own \words." My views are detailed in Inc.the two dissenting opinions filed in Inter-State Builders, Docket Ko. 8624 , April 22, 1966 l69 F. C. 1152) and July 28 1967 (72 F. C. 370, 407J. As I there predicted, the Commission opinions in these cases "in practical effect will serve as a manual on how to write interview reports so as to guarantee not having to produce them. " F. C. interview reports ordinarily are agent' s summarizations.' They are not usually cast in the form of INTERLOCUTORY ORDERS, ETC. 1599 substantially verbatim,' ' contemporaneously recorded' transcriptions of witnesses' oral statements. And it is safe to presume that after today s rulings by the Commission, interview reports are not likely to be cast in that form in the future. Conspicuous by its absence has been any direction by the Commission to its staff attorneys to draft interview reports in such a form that they will be producible, even under the majority test. It is just as easy for an investigator to prepare an interview report, not as a "mere summary, " but as a " substantially verbatim contemporaneously recorded" transcription of the witness own words." It should not make any difference whether the interview is conducted at an early or advanced stage of the investigation, or whether it is held in the field or in Washington. Whatever the circumstances, the only function of an interview report is to record, faithfully and objectively, the statements made by the witness. Of course, the Commission attorney should add his own subjective comments and evaluation, but this can and should be done in a separate memorandum which should remain confidential. The only reason which I can see for interspersing such comments and evaluation in an interview report is to make it unproducible under the majority s view of the Jencks rule.

Despite aJl its rationalizations, the Commission is quite content to allow its attorneys to continue drafting interview reports hl such a form that they will not be producible. The result, as I stated in Intet-State Builde?"s is that the J eueks rule is a dead letter as applied to F. C. interview reports. The Commission and its staff use and rely upon intervie\v reports; but, no matter how accurate and reliable they may be in recording a witness statements, they are not available to a respondent for use in cross-examination. This seems to reflect a singular indifference to considerations of fairness and justice, not to mention the spirit of the Freedom of Information Act.

CONCURRING OPINION:\ SEPTEMBER 18, 1968 BY lVIAcINTYRE COTJnr i;)sioner:

The decision of the maj ority is amply supported by acts of Congress and the decisions of this Commission and the courts. So is the position of the majority in applying the test of whether an interviev-,r report is a substantially verbatim and contemporaneously recorded transcription of the witness' own v,rrds as the basis for determining its producibility. 1600 FEDERAL TRADE COM IISSION DECISIONS "OW the further question has arisen as to whether it is unfair if the Commission should fail to direct its invcstigators "to draft interview reports in such form that they will be producible, even under the majority s test." For those of us who know the dangers inherent in such an idea and are otherwise informed suffciently to rendcr proper judgment, we reject such idea and the question therefore, ans\vers itself. However, for the less informed, perhaps it would be of some benefit to explain that it would be farfetched to require that all interview reports of investigators be made in such form as to be producible on the request of any interested party. This would be true whether the investigators be employees of tbe local, state or Federal government, and if employees of the Federal government, irrespective of whether they be FBI agents or investigators for the Internal Revenue Service or the Federal Trade Commission. I say that because many of these investigators conduct some interviews only for the purpose of getting leads to persons who may have some information and who may be appropriate as witnesses in proceedings. The persons to whom resort is made for such leads would in some instances not be regarded as appropriate subjects for witnesses. Should such persons who, although knowing nothing about the facts in the proposed proceeding, do nevertheless supply investigators with names of possible witnesses "who are believed to know' something about the facts, be exposed to the world through records made by investigators? As matters stand at this time, it has been concluded and so ruled by the Congress, the courts and this Commission, that public policy would not be served by such exposure. The teaching of the decision of the majority and the test the majority would apply conforms to that declared public policy. CONCURRINC OPI:\ION SEPTEMBER 18 1968 By NICHOLSO:\ Connnissioncr:

As pointed out by Commissioner Nlaclntyre in his concurring opinion, it would be unrealistic to expect or require field attorneys conducting an investigation pursuant to direction of the Federal Trade Commission to prepare substantially verbatim summaries of interviews conducted in such investigations, or even, in most instances, to request an intervie\vee to ratify any synopsis prepared by the investigating attorney. The reason should seem obvious: At this stage in the proceedings, the investigating attorney is concerned with only one thing; the investigation of a possible violation of the Jaws enforced by the Federal Trade Com- INTERLOCUTORY ORDERS, ETC. 1601 mission. In most instances the attorney wiu not know at that stage whether a complaint wil be issued, or even recommended and certainly wil have reached no conclusion as to whether the witness.particular interviewee wil or wil not be caUed as a Formalizing this stage of the investigation would likely inhibit the cooperation of the witness who may have direct knowledge of violation or who may serve only as a lead to other sources of evidence which might be used.

that the investiga- Commissioner MacIntyre fails to point out tion interview should be distinguished from later interviews by a trial counsel. After a complaint has been issued, he is preparing interviewec as ahis case for trial with the plan of callng the witness. In this situation the witness should surely be aware that the detailed statement by the trial attorney wil be used for purposes of refreshing the witness' recoUection at the hearing and should be asked to review any summary or substantiaUy verbatim record which the trial attorney prepares. In this latter instance the interview reports should not be interspersed with the conclusions and opinions of the trial attorney. Any such observations should be made by the trial attorney in a scparatc memorandum. Therefore, statements thus prepared by the trial attorney should be made available to respondent' s counsel, to comply with the Jetter and the spirit of the Jencks Act, the Jencks decision and the Freedom of Information Act. ORDER RULING ON INTERLOCTORY Appeal This matter is before the Commission upon complaint counsel' interlocutory appeal, filed July 8 , 1968, from the hearing extesti- aminer s rulings of May 21 , 1968, striking the direct mony of two witnesses called by complaint counsel, and upon respondents' answer thereto filed July 18, 1968; and The Commission, for the reasons appearing in the accompanying opinion, having determined that the appeal should ne granted the examiner s rulings striking the witnesses' testimony vacated and the matter returned to the hearing examiner for a continuation of the proceeding in accordance with the views of the Commission expressed in its opinion:

It is o1"dered That the ir.terlocutory appeal of complaint counsel be, and it hereby is, granted.

It is fw.thel' o,"dered That the examiner s rulings of :llay 21 , be 1968, striking the testimony of witnesses Kroll and Rochon and they hereby are, vacated.

It is fw"thel' onlered That the hearing examiner continue this proceeding in accordance with the views expressed in the Commission s accompanying opinion.

Commissioner Elman dissenting and has filed a statement. SUBL'RBAN PROPANE GAS CORPORATION Docket 8672. Order and Opinions, Sept. 20, 1968 Order denying respondent' s appeal from hearing examiner s denial of respondent' s motion to subpoena certain disfavored customers and to limit 01' quash other subpoenas relating to proof of cost justification. OPINION OF THE COMMISSION This matter is before the Commission upon respondent' s interlocutory appeal, filed August 23, 1968 , from portions of the hearing examiner s order filed July 19, 1968, which inter alia schedules the hearing in this proceeding to commence October 7 1968 , and otherwise rules on prehearing issues before the examiner. Complaint counsel, on August 30 , 1968, filed an answer opposing respondent's appeal. Philips Petroleum Company, thc subject of certain subpoenas in contention, filed on September 12 1968 a brief commenting on respondent' s appeal. In addition to the interlocutory appeal, respondent has filed two separate requests for permission to file interlocutory appeal from other orders of the examiner. The first, filed August 30 1968, is a request for leave to file an appeal from the denial of Suburban s application for issuance of subpoenas duces tecum to thirteen alleged disfavored competitors of Suburban that had been noticed as witnesses for complaint counsel in this proceeding. Complaint counsel, on September 4, 1968, filed a brief opposing such request. Respondent filed a further petition for leave to file an interlocutory appeal on September 10 , 1968. This last request is for permission to appeal from the hearing examiner order dated August 30 , 1968 , extending the time for Phillips Petroleum Company to move to quash or limit a subpoena duces tecum served upon it on June 27, 1968, at the instance of Suburban, to and including September 16, 1968. Respondent, in its interlocutory appeal filed August 23 , 1968 challenges certain portions of the hearing examiner s order of July 19, 1968, as foJ1ows: that part which orders the commencement of the formal hearing on October 7, 1968; that part which continues the motion of Philips Petroleum Company to limit the subpoena duces tecum served upon it on March 10 , 1967, to October 28, 1968, and ordering PhiJ1ips to continue to respond to INTERLOCUTORY ORDERS, ETC. 1603 the subpoena in a manner previously agreed to by counsel; that part which denies Suburban s motion to shorten the time within which Philips Petroleum Company may move to quash or limit the subpoena duces tecum served on it on June 27, 1968 (now set for September 30, 1968); and, finally, that part which denies Suburban s motion to defer cross-examination of complaint counsel's witnesses at the hearing scheduled for October 7, 1968. The points which respondent raises on its interlocutory appeal as well as the issues contained in its separate requests for permission to file interlocutory appeal, all concern the hearing examiner s prehearing rulings relating to discovery and discovery procedures. The Commission s policy in such matters, frequently stated in Commission opinions, is that the hearing examiner has a broad discretion therein and the Commission will Hot interfere with his rulings short of a showing of an abuse of such discretion.1 Respondent' s first contention is that the examiner s order, by setting the hearing to commence on October 7 , 1968, deprives it of "effective" cross-examination. It argues that the hearing wil occur in thc absence of the production of Phillips Petroleum Company s documents relating to the issues of cost justification and other material and the files of alleged disfavored competitor witnesses (on this latter item respondent, as above indicated, on August 20, 1968 filed a separate request for permission to file an appeal from the examiner s denial of its request for subpoenas to such witnesses). Tbus, respondent claims it will be obliged to proceed to hearing without benefit of adequate discovcry relating to critical issues in the case. In this connection we refer to the hearing examiner s order of August 15, 1968. In this order the hearing examiner asserts that respondent, under a broad discovery subpoena duces tecum served March 10 , 1968, on Philips Petroleum Company, has had substantial discovery from that company and that such discovery is continuing. In addi ion to this the hearing examiner recites the extent of the opportunity, seemingly considerable, which respondent has had in the approximately three years since the issuance of the complaint herein to prepare itself for its defense in this proceeding. More explicitly, respondent has had complaint counsel' s brief since September 30, 1966, which sets forth the substance of the testimony of complaint counsel's witnesses. In addition, the hearing examiner asserts that after complaint counsel have completed their case-in- Associated ,\leTchandising COTj)OTat;oH Docket o, 8661 (order issued )roverubel" 13 , 1967) (72 F. C. 1015J and case- cited therein; The Scebiirg ConJuration Docket Nu. HGHZ (order issued October 25 1966) rio F, T.c. 1809J. 1604 FEDERAL TRADE COMMISSIOJ' DECISIONS chief, respondent wi1 be afforded a reasonable time consonant with the Commission s rules to prepare its defense. Thus, we do not believe that the hearing examiner has abused his discretion in thus setting the date on which the trial herein is to commence on October 7, 1968. Nor do we believe a showing has been made that respondent's opportunity for discovery has been inadequate in the circumstances of this case.

Respondent, in its second point, asserts that the hearing examiner s order offends due process in that such order applies Commission Rule 3.41 (b) retroactively, and, in its third point, that if such new rule is applicable the hearing examiner has failed to justify its use in this proceeding. The respondent, under these two points, appears to be challenging the hearing examiner comments or a ruling to the effect that he would provide an interval at the end of complaint counsel' s case-in-chief to permit respondent further time to prepare its defense. The order of July 19, 1968, from which the appeal is made, contains no such statement by the examiner. However, the examiner, in his later order of August 15, 1968, includes the comment that he would provide an appropriate interval.

Under the Commission s rule in effect at the time the complaint herein was issued (Section 3. 16 (d) of the Commission s rules effective August 1, 1963), all hearings were to be held at one place and continue without suspension until concluded, unless the Commission otherwise ordered upon a certificate of necessity. The Commission s current rule permits the hear.ing examiner, in unusual and exceptional circumstances and for good cause stated on the record, to order hearings at more than one place and " order brief intervals to permit discovery necessarily deferred during the prehearing procedures" (Section 3.41 (b)). Respondent's contention is that the hearing examiner has improperly applied the new rule, to respondent' s prejudice, and that even if the new rule does apply the hearing examiner has failed to make a showing of unusual and exceptional circumstances to justify its use. The hearing examiner has not referred explicitly to Commission Rule 3.41 (b) of the Commission s current rules either in his order of July 19, 1968, or his later order of August 15, 1968. No reference is made by the respondent to any part of the record in which the examiner has expressly stated he would follow the new rule Section 3.41 (b). It might be that the examiner, in his statement in the order of August 15, 1968, that he would afford a reasonable time after complaint counsel' s completion of their case for respondent to prepare its defense, is therein referring to his INTERLOCUTORY ORDERS, ETC. 1605 authority under the new rule. This is by no means clear. It is possible that he could so provide even under the old rules by certification to the Commission. In the drcumstances we believe it is premature to challenge the hearing examiner on an action which he has not yet taken. The examiner stated in this regard that his order would be in conformity with the Commission s rules. 1\0 showing has been made either that he would apply the wrong rules or apply the rules incorrectly. Moreover, we do not believe the respondent has made a showing that it would be prejudiced in any way by the new rule if such were applied by the examiner. I n fact, this would seem to be to respondent' s advantage. Finally, respondent argues, in its fourth point, that the order of the hearing examiner assertedly relieving Philips of its obligation to comply with the subpoenas duces tecum served upon it denies respondent a fair hearing. The reference in this connection is to a subpoena served on Philips Petroleum Company March 10, 1967, on which the examiner continued Philips' motion to limit to October 28, J 968, although providing for continuing production by Phillips, and the subpoena served on Phillips on June 27, 1968, relating to cost justification, on which the time for production apparently has been set to take place at an early date. We note, as indicated previously, that the hearing examiner states substantial discovery has been had under the first subpoena and that it is continuing. Furthermore, the statement filed by Philips Petroleum Company in this appeal indicates that considerable information and materials have been supplied or made available. Production under the second subpoena has been scheduled. It does not appear likely that this production wil be completed before the hearing date on October 7, 1968. Respondent, however has failed to show it will be prejudiced by such delay in obtaining this particular material, if this does happen. Accordingly, we believe that respondent' s objections are premature and that no sufficient showing has been made that respondent has .been foreclosed from adequate discovery from Phillips. In summary, it appears that the respondent's appeal and its separate requests for pcrmission to file other appeals all concern issues relating to procedural details, that is, the scheduling of hearings or the setting of dates for compliance with subpoenas the issuance of subpoenas, actions on motions to limit or quash subpoenas and like matters. Some of the issues are premature in that the examiner has not finally ruled in the matter or in that respondent is not able to show an exhaustion of opportunities for satisfaction of its requests. The questions all concern prehearing discovery or procedure and thus are subject to the wide discretion of the hearing examiner in such matters. We do not believe that a showing has been made that the hearing examiner has abused his discretion or otherwise that the circumstances are so unusual or exceptional that the Commission should overrule the hearing examiner. Moreover, we do not believe that the respondent has made any showing that it has been prejudiced or that it wil under tbe circumstances, fail to receive a fair hearing. There has been no showing as far as the requests for permission to appeal are concerned that the rulings complained of involve substantial rights and wil materially affect the final decision, and that a determination of their correctness before conclusion of the hearing is essential to serve the interests of justice. Accordingly, we wil deny respondent' s appeal and its requests for permission to file interlocutory appeals in two separate instances. An appropriate order wil be entered.

Commissioner Elman dissented and filed a statement. DISSENTING OPINION SEPTEMBER 20, 1968 BY EL:vAK Com'(rtiSsioney:

, as I have previously stated in this case, it was error for the Commission to shift to respondent the heavy burden of proving that the prices it was charged were cost justified, that error is compounded by the instant order which denies respondent a reasonable opportunity to prepare its defense. ORDER DENYING I:\TERLOCUTORY Appeal A:\D REQUESTS FOR PERMISSION TO Appeal Upon consideration of respondent' s interlocutory appeal, filed August 23, 1968, from the hearing examiner s order of July 19 1968, and its requests fied on August 30, 1968, and on September , 1968, for permission to file interlocutory appeals from other orders of the hearing examiner, the Commission, for the reasons appearing in the accompanying opinion, has determined that the appeal and the requests should be denied. Accordingly, It is onZeo-ed That respondent's interlocutory appeal, filed August 23, 1968, from the hearing examiner s order of July 19, 1968 , and it hereby is, denied.

It is further OJ'dered That respondent's request filed August , 1968, for permission to appeal from the examiner s denial of its application for the issuance of subpoenas duces tecum to alleged disfavored customers, and its request filed September 10 INTERLOCUTORY ORDERS, ETC. 1607 1968, for leave to file an appeal from the examiner s order extending the time for Philips Petroleum Company to move to quash or limit a subpoena be, and they hereby are, denied. Commissioner Elman dissented and has filed a statement. LAKELAND NURSERIES SALES CORP. FORMERLY KKOWK AS LAKELAND-DEERI",G N"CRSERIES SALES ET AL.

Docket 6666. Order, Sept. , 1968 Order denying respondents' petition to set aside a consent order of June 25 1957 53 F. C. 1189, on ground of changed conditions of fact. ORDER DEKYING PETITION TO SET ASIDE ORDER TO CEASE AKD DESIST Respondents, by petition filed pursuant to Rule 3.72 (b) (2) on August 14, 1968, rcquest that the Commission set aside the consent order to cease and desist entered herein on June 25 , 1957 (53 F. C. 1189-91), on the ground that changed conditions of fact require such action.

The specific changes of fact principally underlying respondents motion are that (1) tbe individual respondents Lillian Zogheb and Allan Lekus have not been offcers or directors of the corporate respondent for approximately thc last ten years; (2) the corporate respondent, on July 1 , 1968, sold all of its interest in the nursery business theretofore concluded by it and, having changed its name to B.C. Nurseries Sales Corp., exists only to facilitate liquidation of the corporation; (3) both the corporate and the remaining individual respondents, Henry L. Hoffman and Chester Carity, as well as the corporation s other offcer, have entered into covenants with the purchaser of the nursery business not to engage in any manner or degree in the nursery business for a period of five years from July 1 , 1968, and respondents Hoffman and --Carity, individually and on behalf of the corporation, are not now engaged in the nursery business and have no present intention of reentering the nursery business during the five-year term of the above-described restrictive covenant or at anytime thereafter. The Commission is of the opinion that the foregoing averments assuming their accuracy, do not provide a suffcient guarantee that none of the respondents will ever enter the nursery business. Moreover, while respondents are not engaged in the nursery business, the order wii1 impose no burden on any party, and should a respondent or respondents, contrary to present intention, rcenter the nursery business at some future date, then the order would continue to protect the public interest against the deception to which it is directed.

Accordingly, the Commission having carefully considered the petition and the answer thereto and being of the opinion that the allegations in respondents' motion do not provide suffcient grounds to support the conclusion that conditions of fact have so changed since the issuance of the order to cease and desist as to require the setting aside of said order or that the public interest may now require such action:

It is Q)'dered That respondents' petition be, and it here is denied.

SUBURBAN PROPANE GAS CORPORATIO", Docket 8672. 01' der and Opinion' , Sept. , 1.968 Order denying respondent' s motion to withdraw proceeding from adjudication for the purpose of considering voluntary compliance. DISSENTI:\C OPINION:\ SEPTEMBER 23, 1968 BY ELMAN Commissioner:

I would accept respondent' s assurance of voluntary compliance and terminate this proceeding.

This case arose out of an investigation begun almost a decade ago and involves transactions dating to 1957. The complaint alleges that respondent, a purchaser of liquefied petroleum gas (LP gas), violated Section 2 (f) of the Clayton Act, as amended, by knowingly inducing and receiving price concessions from Philips Petroleum Company that were not available to respondent' s competitors, Respondent, in a formal affdavit signed by its president now promises that it wil not again engage in this practice. There are numerous reasons for crediting this -promise and accepting the assurance. Respondent has severed its long-term contract with Philips, and the latter has largely withdrawn from the "'northeast market where the alleged violations occurred. There is also reason to believe that sellers of LP gas are now at a bargaining advantage vis- vis buyers like respondent, making it difficult if not impossible for buyers to induce unlawful price concessions.

While compliance with the assurance is therefore likely, other factors also weigh in favor of its acceptance. Most important is that rejection of the assurance will prolong this proceeding at least INTERLOCUTORY ORDERS, ETC. 1609 into the 1970' , and quite possibly for another decade, with the very real possibility that at the end of that time no order wil be entered. This proceeding has already been tainted, in my view, by the Commission s erroneous allocation of the burden of proof shifting to respondent the heavy burden and considerable expense of proving cost justification in disregard of the Supreme Court' decision in Automatic Canteen Co. v. Federal Trade Commission.' Should respondent' s position on this question ultimately be vindicated, a not unlikely result, this costly litigation, which is now almost three years old with respondent having barely begun to exercise its right to discovery, will have served no useful purpose. At a time when the Commission should be tightening .is belt and allocating its limited resources on the basis of a clearly perceived, rational set of priorities, rejection of this assurance seems to make little sense.

ORDER DENYING RESPONDENT S :l10TION TO WITHDRAW PROCEEDING FROM ADJUDICA TION This matter is before the Commission upon the hearing examiner s certification, without recommendation, filed August 26 1968, of respondent' motion to withdraw this matter from adjudication for the purpose of considering its "assurance of voluntary compliance" filed August 23, 1968. Complaint counsel filed directly with the Commission, on August 29, 1968, a brief in opposition to respondent' s motion.

The Commission has determined that Section 2.21 of its Rules of Practice, pursuant to which respondent has requested consideration of its motion, does not provide for disposition of a matter by the submission of an assurance of voluntary compliance subsequent to the issuance of the complaint. Section 2. is limited to the disposition of matters which have not yet reached the adjudicative stage. For this reason respondent's motion for withdrawal wiJ be denied. If the provisions of the proposed assurance of voluntary compliance were contained in a proposed consent order, they would constitute the requisite predicate for the Commission s granting of a motion under section 2.34 (d). Nevertheless, respondent has brought its motion under section , and has not made a suffcient showing to justify the form of relief requested in this motion. Accordingly, It is ordered That respondent's motion for an order withdrawing this proceeding from adjudication on the basis of its : 346 v. s. 61 (1953): see S1/bllrban Propane Gas Corp.. Docket No. 8672 (June 3 , 1968) (7: F. C. 1269J.

1610 FEDERAL TRADE COMMISSION DECISIOJ\S assurance of voluntary compliance be, and it hereby is denied. Commissioner Elman dissented and has filed a statement. S. COMPANY Docket 86'46'. O)'de,' , Sept. , 1.968 Order denying motion by respondent to stay the filing of compliance report. ORDER DENYING MOTION TO STAY FILING OF COMPLIANCE REPORT Upon consideration of the motion filed on September 17, 1968 by respondents to stay the filing of a compliance report pending final judicial determination of the validity of the order entered by the Commission in this proceeding, and It appearing that the motion is based on the mistaken premise that Section 3.61 (a) of the Commission s Rules of Practice does not operate to effect such a stay, and It further appearing that Section 3.61 (a), which implements Section 5 (g) of the Federal Trade Commission Act, 15 U. 45 (g), by its terms suspends time for filing a report of compliance ""vhen court review of an order of the Commission is pending" and provides:

Thereafter, the time for filing report of compliance shall begin to run novo from the final judicial determination, except that if no petition for certiorari has been fied following affrmance of the order of the Commission by a court of appeals, the compliance report shall be due the day follo"\ving the date on which the time expires for the filing of such petition. It is therefore onlered That the motion be, and it hereby is denied.

SUBURBAN PROPANE GAS CORPORATE10", Docket 8072. Order and Op,:union, Oct. DDS Order granting respondent leave to file response to comments filed by Philips Petroleum Company (involving extension of time to respond to subpoena for cost justification documents) and denying respondent' request and Phillips Petroleum Company ," request to file interlocutory appeals.

ORDER AND OPIJ\ION RECEIVI:\G RESPONSE INTO RECORD AND DENYING REQcESTS FOR INTERLOCTORY Appeal This matter is before the Commission upon the motion of respondent, fied September 19 , 1968, requesting leave to submit a INTERLOCUTORY ORDERS, ETC. 1611 response to comments filed by Philips Petroleum Company herein or for alternative relief, and upon respondent' s request for leave to file an interlocutory appeal, filed September 23, 1968, from the hearing examiner s order dated September 13, 1968 , extending the time within which Phillips Petroleum Company has to move to quash or limit the subpoena duces tecum served upon it June 27 1968, and extending the time within which it may comply therewith. This matter is also before the Commission on a request by Phillips Petroleum Company, filed September 25, 1968, to file an interlocutory appeal from the same order of the examiner of September 13, 1968.

Respondent' s motion of September 19, 1968, concerns the comments filed by Philips Petroleum Company with respect to respondent' s interlocutory appeal from the hearing examiner order of July 19, 1968. Philips Petroleum Company filed its comments pursuant to permission granted by the Commission in its order of August 8 , 1968. The Commission, on September 13 1968, denied a request by the respondent to file a reply to Philips Petroleum Company s comments. Respondent now seeks the following relief: it requests an order granting it leave to file a response to Phillips Petroleum Company s comments, a copy of which it has attached to its request, or, in the alternative, leave to reargue its cross-motion, filed September 12, 1968, for permission to submit a reply; and upon such reargument, to permit the attached response to be filed.

The Commission has determined, in the circumstances and considering that respondent has attached to its motion its response to Phillips Petroleum s comments, such response should be received into the record. The Commission, hovvever, has already ruled upon respondent's interlocutory appeal filed August 23, 1968, and its order and opinion therein were issued on September 20 1968 (p. 1602 hereina. Our consideration of respondent' s response wil be to determine if anything therein might alter the Commission s views as expressed in its order and opinion issued September 20, 1968.

Respondent' s first point in its response is that the hearing examiner failed to follow the direction of the Commission as set forth in Texas Indush'ies, Inc. Docket Ko. 8656 (order issued October 8, 1965) (68 F. C. 1195J, and that the examiner presently has before him al1 of the materials necessary to narrow the issues and rule upon Suburban s asserted rights to discovery from Phillips Petroleum Company and other parties. It is claimed that Philips Petroleum Company embraces a view calling for delay in 1612 FEDERAL TRADE COMMISSION DECISIO compliance with respondent' s discovery requests. The Commission, in its opinion and order, made no ruling one way or the other on the proper times for production under subpoenas or for for theother responses. These were determined to be matters examiner s discretion. Our vie\v on this is not changed. In its second point Suburban argues that Phillips Petroleum Company suggests it has been unreasonable in the drafting of .is subpoenas and other related actions, and it submitf, that this is unjustified. Su.,h an argument seems to present an issue which was not involved in the Commission s prior determination. In its third point respondent contends that Phillips Petroleum Company suggests that Suburban will not succeed in establishing facts as to a cost-justification defense and it submits that it is entitled to the facts to prove such a defense. The question, so far as Phillips Petroleum Company allegedly suggests-whether respondent mayor may not succeed in establishing facts as to its defense-likewise concerns an issue which was not before the Commission. Respondent' s assertion as to its rights is a reargument of points it previously made to the Commission. We do not believe that these arguments present adequate grounds for revising our views.

Finally, respondent argues that the hearing examiner has abrogated his responsibility by bis rulings on the two Philips subpoenas and denying respondent's application for subpoenas to alleged disfavored competitors and in other respects. Such point in the response seems not to be connected with the comments made by Phillips. Accordingly, no further consideration will be given to it.

In summary, we will hereby receive respondent's response to tbe comments filed by Phillips Petroleum Company into the record. \Ve have considered respondent's arguments in its response and it is our holding that nothing therein changes our views set forth in our order and opinion denying interlocutory appeal and requests for permission to appeal, issued September 20, 1968 in which we sustained the hearing examiner in challenged prehearing discovery and precedural rulings. Respondent is not prejudiced from presenting its arguments to the hearing examiner for his further consideration in the matter. Respondent, as above indicated, has also filed a request for leave to file an interlocutory appeal from the examiner s order dated September 13 , 1968. ' This order extends thc time within l While it is of little signif.cance in the cirCuffstanceR hel' , it seems that the e.,aminer order frum which both respondent and Phillips Petroleum Company have reql1e ted permit sion to me appeaJs suffciently concerns a subpoena matter to come within the provisions of 35(b) INTERLOCUTORY ORDERS, ETC. 1613 which Philips Petroleum Company may move to quash or limit the subpoena duces tecum served upon it on June 27, 1968 , to fifteen business days after the Commission has disposed of the matters on appeal and extends the time within which Philips Petroleum Company may comply with the subpoena to sixty days after the Commission disposes of such matters. Respondent asserts that this order prejudices it in deferring once more the time for Phillips to move with respect to, or comply with, the cost-justification subpoena. We believe that any issue raised by this request has been covered in the Commission s recent order and opinion issued herein on September 20, 1968 (p. 1602 hereina. No showing has been made that the ruling complained of involves substantial rights and wil materially affect the final decision and that a determination of its correctness before the completion of the hearing is essential to serve the interests of justice.

Philips Petroleum Company also has applied for leave to file an interlocutory appeal from the hearing examiner s order of September 13, 1968, claiming, among other things, that it is not certain whether the order was issued with or without prejudice to its right to reapply for the relief requested in its motion filed September 12, 1968, and if it is with prejudice it seeks a reversal; otherwise, a clarification. Philips Petroleum Company s request borders on the frivolous. If it did not understand the order, it should have sought clarification from the hearing examiner who issued the order and who, furthermore, is responsiblc for the proceeding. Its request will be denied. Accordingly, It is o1'dn' That respondent's motion for leave to submit a response to comments filed by Philips Petroleum Company, which response is attached to its motion, be, and it hereby is, granted. It is fu;. ther ordered That respondent's response filed September 19 1968, be, and it hereby is, received into the record. It is furthe?' ordered That respondent's request filed- September , 1968 for leave to file an interlocutory appeal from the hearing examiner s order dated September 13 , 1968, be, and it hereby is denied.

It is fw-ther on1e1'ed That the request of Phillips Petroleum Company, filed September 25, 1968, for permission to file an interlocutory appeal be, and it hereby is, denied. Commissioner Elman not participating. of the Commission s rules dealing with appeals on rulings l erating to applications fol" compl;)SOJ'Y process rather than 23 co,,€r;ng interlocutory appeals, under which the twu hav," proceeded.

1614 FEDERAL TRADE COMMISSIO:\ DECISIONS MAREMONT CORPORATION Docket 8763. Onim' and Opinion, Oct. , 1968 Order denying respondent' s request to file an appeal from hearing examiner denial of its motion to dismiss proceeding on grounds that Commission is currently conducting an industry-wide survey of the automotive parts industry.

OPINION OF THE COMMISSION This matter is before the Commission upon respondent's request filed September 11 , 1968, for permission to file an interlocutory appeal from that part of the hearing examiner s order of August , 1968, denying its motion to dismiss the complaint or stay the proceeding. Complaint counsel filed a statement on September 17 1968, opposing the request. Respondent, on September 23 , 1968 filed a reply memorandum.

Respondent, on August 19 , 1968, filed a motion, accompanied by a supporting memorandum, with the hearing examiner, requesting (a) that the complaint be dismissed or (b), in the alternative, that all proceedings be stayed until further direction of the Commission upon completion of an investigation into the acts and practices of companies manufacturing automotive parts, accessories and equipment pursuant to its resolution of May 14, 1968 and " the formulation of an appropriate Trade Regulation Rule or other objective standards of general applicability." The respondent, further in the aHernative, requested the examiner to certify its motion to thc Commission pursuant to 93. 22 (a) and 93.42 (c) (9) of the Commission s rules if he concluded that the relief sought, as outlined above, was beyond his authority to grant. Complaint counsel, on August 21 , 1968, filed a response opposing respondent's request. The hearing examiner, in his order dated August 26, 1968, denied respondent's motion in the respects here in controversy.

Respondent argues first that the examiner erred in ruling on the motion, which it asserts to be beyond his jurisdiction, and secondly, that its request is justified on the merits. We agree that the hearing examiner erroneously ruled on the request to dismiss the complaint or stay the proceeding. The motion clearly is addressed to the Commission s administrative discretion and does not concern adjudicative factflnding functions delegated to hearing examiners, Grabe?' lVlanufacturiTl,gCornpany, Inc. Docket No. 8038 (order issued October 15, 1964) (66 F. C. 1548j. The hearing examiner should properly have certified this part of re- 1 Respondent, in its motion, also asked fo!' an extension of time within which to answer. The hearing- examiner, in his A,lgust 2G, 19G8 , OJ'del' , extended such timlO to September 11 , 1968. INTERLOCUTORY ORDERS, ETC. 1615 spondent' s motion to the Commission for the Commission s determination and action. Nevertheless, in view of respondent' application for permission to file an interlocutory appeal, thc matter is now before the Commission in the same posture as it would have been had the examiner certified it. Accordingly, while our holding is that the hearing examiner erred in failing to certify the motion, this in the circumstances was not to respondent' prejudice, and the motion wil now be treated as though it had been properly certified. Since we are treating this as a certification, it is respondent's motion that, in effect, is before us, although our consideration wil include respondent's request for permission to appeal.

The hearing examiner, in ruling on respondent's motion, construed its essence as follows:

The basis of respondent's motion is, es.sentially, that (1) the Commission having initiated an investigation of the automotive parts industry in May 1968, for the purpose of determining whether acquisitions made therein may be illegal, it was an arbitrary abuse of its discretion tt)issue a complaint against respondent in July 1968, without proceeding against other more important competitors, and (2) the problems of the industry, including the matter of acquisitions, can be dealt with more effectively through the issuance of a rule of general applicability. . .

Respondent appears to agree that these are the issues presented. On page 2 of its request it observes that the basic grounds of its motion were (1) thc preceeding against respondent is discriminatory and (2) the matter should be dealt with on an industryvvide basis.

Concerning the first point, it is clear that the Commission has a wide and essential discretion on the question of proceeding against an individual respondent. Moog Industries v. Federal Trade Commission 355 U. S. 411 (1958) ; Fedentl Trade Commission v. Uni1!er8l1 R,male CO?'jJ. 387 L".S. 244 (1967). Beyond that respondent has failed to show that the Commission has abused its discretion. If it is assumed, as respondent asserts, that one or more competitors of respondent engaged in actions similar to those which form the basis of the complaint against the respondent-that is, acquisitions of other concerns-this alone would not mean that the Commission has been unfair and discriminatory .in issuing a complaint against respondent and not the others. '" ot every acquisition violates statutes administered by the Commission. Under Section 7 of the amended Clayton Act, for instance there must be, among other things, a showing that the merger might substantially lessen competition. Thus, each case must be looked at on its own individual facts.

Even where there is more than one alleged violator among competitors the circumstances do not in every case dictate simulin Moog Industriestaneous and similar actions. The Court, Fedeml T1'ade Commission, s"pm touched on the administrative problems involved in correcting industrywide unlawful practices. It stated that there must be a determination as to whether and to what extent there is a relevant "industry" within which the particular respondent competes and "whether or not the nature of that competition is such as to indicate identical treatment of the entire industry. ., . " The Court added that although an allegedly ilegal practice may appear to be operative throughout an industry, whether such appearances reflect that fact, and whether all firms in the industry should be dealt with in a single proceeding or should receive individualized treatment are questions that call for discretionary determination by the administrative agency (355 U.S. 413).

Furthermore, respondent itself states that it was served with an order to file a special report pursuant to a Commission resolution of May 14, 1968, authorizing an investigation of the market structure, sale and distribution of automotive parts, accessories and eauipment for use in determining whether the acquisition of any company by any other company manufacturing automotive parts and equipment may be in violation of Section 7 of the amended Clayton Act or any other statute administered by the Federal Trade Commission. Complaint counsel, in their opposition briefs, concede that a merger investigation is now pending specifically against another firm in the industry-Genuine Parts Company. This matter, they point out, has become public as a result of a declaratory judgment action filed in the Korthern District of Georgia on August 14 , 1968 (Genuine Pa?"ts Company v. Fedeml Tmde Commission, et al. Civ. ,"0. 12030). Such public disclosures, while they do not indicate one way or the other that the Commission wil in the future issue a complaint or take any kind of administrative action against any competitor of respondent, suggest at least general consideration by the Commission of the automotive replacement parts field. Finally, the complaint was issued in this proceeding because the Commission had reason to believe that the law as charged had been violated. Some of the points which respondent raises appear to go to the merits of the charges in the complaint. Certain others possibly concern matters bearing on the remedy, if any. It is our belief that in the circumstances the proper time to raise such arguments and issues is at the trial in this proceeding not on a motion to dismiss.

INTERLOCUTORY ORDERS, ETC. 1617 Respondent' s further point that tbe Commission deal with the matter on an industrywide basis is rej ected. Respondent has made no substantial showing that the practice with which it is charged is an industrywide problem or that, assuming .it is industrywide, the best course of action would be by the promulgation of rules of general applicability. Cf. Lehigh POTtland Cement Company, Docket "'0. 8680 (order issued February 6 , 1967) (71 C. 1618), and General Transmissions C01'poration of Washington Docket No. 8713 (order issued December 1 , 1966) (70 C. 1833). General rules would not afford a remedy for past acquisitions if the charges in the complaint are sustained. Cj. Texas In dust Ties, Inc. Docket 1\0. 8656 (order issued April 14 1965) (67 F. C. 1363).

Accordingly, respondent's request for permission to file an interlocutory appeal and motion to dismiss the complaint or stay proceedings win be denied. An appropriate order win be entered. Commissioner Elman did not concur.

ORDER DENYI:\G RESPONDENT S REQUEST TO FILE INTERLOCUTORY Appeal AND MOTION TO DISMISS THE COMPLAINT OR STA Y PROCEEDING Upon consideration of respondent' s request for permission to file interlocutory appeal filed September 11 , 1968, and its motion to dismiss the complaint or stay the proceeding, filed August 19 1968, treated as a motion certified, and for the reasons stated in the accompanying opinion:

It is ordered That respondent's request for permission to file an interlocutory appeal filed September 11 , 1968 , and its motion to dismiss the complaint or stay the proceeding, treated as certified, be, and they hereby are, denied. Commissioner Elman not concurring.

SA V-COTE CHEMICAL LABORATORIES, I",C., ET AL. Docket C-716. Order, Oct. 1968 Order denying respondent' s request to modify decision and order. ORDER DENYING PETITION:\ TO MODIFY DECISION AND ORDER This matter is before the Commission upon respondents ' petition to modify decision and order, filed September 6, 1968, and complaint counsel's answer in opposition thereto, filed October 4 1968.

1618 FEDERAL TRADE COMMISSION DECISIO Pursuant to the terms of a consent agreement, the Commission on February 19, 1964 (64 F. C. 892J, issued an order to cease and desist in this matter, dealing with false and misleading advertising by petitioners of their paint and coating products.' Subsequent to a compliance investigation resulting in a finding that petitioners have violated the terms of the order to cease and desist, the matter was certified to the Attorney General of the L"united States on July 12, 1967, for the purpose of requesting the recovery of civil penalties from petitioners. On May 9, 1968 the L"united States Attorney for the District of "'ew Jersey filed a complaint against defendants (petitioners herein) in the United States District Court for the District of New Jersey, among others to recover civil penalties for violations of the Commission s cease and desist order. Defendants (petitioners) obtained an adjournment of the penalty proceeding until Kovember 18 for the reason that defendants (petitioners) had filed this Petition to Modify Decision and Order presently before the Commission.

Petitioners did not file their petition for modification with the Commission until almost a full four months after the complaint in the civil penalty proceeding for violation of the order had been filed. Furthermore, petitioners had every opportunity between May 9 , 1964 , the date the cease and desist order became effective, and May 9, 1968, the date the complaint in the civil penalty proceeding was filed, during which to petition the Commission for modification of the order. Coming at the present time thc petition for modification is inopportune and does not present an adequate showing on the merits. For those reasons it wil be denied. The correct time to file such a petition is before the Commission has asked the Attorney General to seek the recovery of civil penalties and not four months after the complaint in such a proceeding has been filed.

Furthermore, although it is not necessary to deal with this question at this time, it is pointed out that 93. 72 (b) (2) of the Commission s Rules of Practice provides that the modification of an order to cease and desist requires either changed conditions of fact or law or that the requested modification be in the public interest. A review of the exhibits attached to the petition persuades us that neither of these requirements has been met. The information contained in these exhibits is substantially the same , and does nqt add anything to, the information before the Com- : On June 1:-1 , 1962 , petitione)'s submitted a letter of di!'continuance invo:ving the same practices, the terms of which petitioners failed to adhere to. INTERLOCUTORY ORDERS, ETC. 1619 mission at the time it determined to issue its decision and order. Accordingly, It is ordered That respondents' petition to modify the decision and order be, and it hereby is, denied.

AVON PUBLICATIONS, INC., ET AL.

Docket. 6911. On181" Oct. , 1968 Order reopening proceedings for purpose of determining whether The Hearst Corporation is successor t.o respondents in this case. The Commission on August 17, 1967, having issued its order to show cause why its order to cease and desist dated October 21 1958 (55 F. C. 619J, should not be reopened and modified, and having caused said show cause order to be served upon The Hearst Corporation, and The Hearst Corporation by its counsel on September 27 , 1967 having filed its special answer moving that such service be set aside as invalid on the ground that movant is not a respondent in nor a party to the proceeding, and counsel for the Commission on December 15 , 1967, having filed their :\lotion to Vacate Show Cause Order, and The Commission being informed by the pleadings that all of the assets of the corporate respondents were acquired and operated by movant Hearst and being of the opinion that the record is insufficient to support any conclusion as to whether said movant is the successor to respondents, and It therefore appearing that the pleadings raise a substantial factual issue requiring hearings for the receipt of evidence in support of and in opposition to that issue, pursuant to S 3.72(b) (3) of the Commission s Rules of Practice for Adjudicative Proceedings It is ordered That said proceedings be, and they hereby are reopened and this matter be assigned to a hearing examiner for the receipt of such testimony and evidence as may be offered in support of and in opposition to the factual issue as to whether The Hearst Corporation is the successor to any of the corporate respondents in these proceedings.

Commissioner :v acIntyre abstained from this action of the Commission but without prejudice to his participation in future actions and decisions of the Commission regarding this matter. THE J. B. WILLIAMS COMPANY, INC. , ET AL. Docket 85.47. OTde1", Oct. , 1968 Order directing a public hearing on the question whether the advertising of Geritol" by respondents is violating the cease and desist order. ORDER DIRECTING PUBLIC HEARING CO CERNING COMPLIANCE WITH ORDER TO CEASE AND DESIST Respondents, J. B. Wiliams Company, Inc., and Parkson Advertising Agency, Inc., have filed a report purporting to show their compliance with the order to cease and desist entered in Docket No. 8547 (68 F. C. 481). A review of that report indicates that advertising for the product Geritol, principally television commercials, prepared by respondents and shown or published since the cease and desist order became final, may not comply with the order. In particular, such review raises the question whether in such commercials the affrmative disclosures required by the Commission s order have been obscured and their purpose thwarted, and whether the overall impression created by respondents' advertising continues to be the false and misleading one that Geritol is a remedy for tiredness in more than a small minority of persons, that relief will be experienced ' in a very short time, and that tiredness is a generally reliable indication of iron deficiency or iron deficiency anemia. Compliance with the Commission s order requires that respondents ' advertising not mislead the viewer or reader; in essence, jf Geritol is advertised as a remedy for tiredness, the overall impact of the advertisement must be to convey to the consumer accurately, succinctly, and unequivocally the facts that tiredness is not a reliable symptom of iron deficiency or iron deficiency anemia, that even if he is tired his tiredness is probably not attributable to iron deficiency or iron deficiency anemia, and that Geritol wi1 probably not help or be of any value to him. The Commission, having reviewed the report of- compliance and having tentatively concluded therefrom that respondents may not be acting in compliance with the order entered in Docket No. 8547 (68 F. C. 4811. believes that it should resolve this matter by viewing and considering in a hearing the television commercials in question. Accordingly, It is ordered That respondents deliver to the Secretary of the Commission, as soon as practicable, the films of all advertisements shown on local or national television since the effective date of the final order to cease and desist; and It is tUTther OJ'dated That a public hearing be held at 10 a. , .

INTERLOCUTORY ORDERS, ETC. 1621 on November 7, 1968, in Room 532, Federal Trade Commission Building, Washington, D. , at which time the television commercials wi1 be viewed by the Commission in the presence of respondents' counsel and their chief executive offcers. Immediately thereafter, the Commission wi1 hear argument dir.ected to the question whether respondents, by disseminating any of such commercials, have violated the order to cease and desist. KOPPERS COMPANY, INC.

Docket 8755. Order and Opinion Nov. , 1968 Order denying respondent's appeals from hearing examiner s orders relating to subpoenas duces tecum directed to a third party. OPINION OF THE COMMISSION Before the Commission are two appeals by respondent, dated respectively, August 28 , 1968 , and September 25, 1968 , each raising a number of separate issues.! Since the issues posed by these several grounds for appeal are in large part interrelated we believe that aD should be resolved jointly in a single opinion. The ultimate issue of privilege for certain categories of documents sought by discovery herein cannot be determined until they have been reviewed in detail by the hearing examiner. Accordingly, questions with respect to rulings on this issue may be presented to the Commission upon review of the entire record. By opinion and order of July 2, 1968 (p. 1574 hereina, we remanded to the hearing examiner his grant of respondent' s application for subpoena duces tecum directed to The United States Pipe and Foundry Company (hereafter U. S. Pipe). .In passing upon the problems raised by respondent's intended inquiry into the business records of intervenor V.S. Pipe, we acknowledged that Obviously, it may be diffcult to separate out some of this raw data which would fall into the area of trade secrets from memoranda and other 1 To date, four interlocutory opinions have issued herein, in which the chronology of the instant proceeding, which has yet to reach formal hearings, is amply descriued: Opinion and Order Denying Application for Subpoena Duces Tecum and Request for Release of Confidential Records, dated July 2, 1968 (p. 1579 hereina; Opinion and Oj'der DenyinJl A1,peal from Ex" aminer s Order and Request for Oral Argument, dated July 2, 1968 (p. 1574 hereina; Opinion and Order of Remand to Hearing Examiner, dated July 2, 1968(p. 1571 hereina; Opinion and Order of Remand to Hearing Examiner, dated August 14 , 1968 (p, 1593 hereina, 1622 FEDERAL TRADE COMMISSIO:\ DECISIONS documents which would relate to its (U. S. Pipe s) reasons for not entering this market.

At the same time, it was suggested that the breadth of the subpoena would warrant the examiner s consideration on remand. The examiner s post-remand limitation of the subpoena to include only studies and surveys " (excluding, for example, a report of sales performance upon which a more generalized "study" or "survey might be based) is responsive to the considerations raised in our opinion.

As amended on remand, the subpoena required production of two classes of documents relating, respectively, to the pre- and post-entry segments of U. S. Pipe s venture into the resorcinol market. Respondent's objections to U.S. Pipe s return on the preentry portion relate in the main to the allegedly inadequate volume of information submitted. Respondent urges that U. Pipe possesses additional relevant documentary data relating to the pre-entry period, but does not claim that such data would fail within tbe terms of the subpoena as construed by the examiner. U.S. Pipe submitted no documents in response to the post-entry segment of the subpoena for the asserted reason that it possessed no "study" or 'Isurvey, directly related to the continuance or discontinuance" of its resorcinol production. Here again, it is not argued that U. S. Pipe does in fact possess documents returnable under this portion of the subpoena, as construed. Return on the subpoena was made on August 5 , 1968. Respondent subsequently moved that the examiner either certify to the Commission that U. S. Pipe had failed to comply with the subpoena or, in the alternative, order further production thereunder. Respondent also moved for the issuance of a wholly new subpoena covering matters which, in respondent' s view, had been excluded from the scope of the first subpoena by the examiner s erroneous construction thereof. These motions were denied by order entered August 19 , 1968, from which respondent nowappeals.

The suggestion to restrict the post-remand scope of the subpoena to "studies and surveys" originated with the respondent. This phraseology was adopted by the examiner after careful consideration and discussion on remand. We can neither credit, nor "Opinion and Order Denying Application for Subpoena Duces Tecum and Request for Release f Confidential Information, datcd Juiy 2 , 1968 , p. 4 lpp. 1621, 16221. Rpspondent s Brief On Appeal, dated August 28 , 1968, indicates that it is filed " (pJursuant to Sedions ::.35(b) and 3. 23(a) of the Commission s Rules of Practice," without indication of which of its three separate gl"found fol" appeal are filed under each . Upon examination, the first and third ground for appeal prove to he of the class for which application for permission to appeal must be sought pursuant to Section 3.2:-!(a) while the remaining issue is subject to direct appeal under Section 3. 35 (b).

), INTERLOCUTORY ORDERS, ETC. 1623 indeed, could we possibly evaluate respondent's present contention that the phrase "studies and surveys" was given an unexpected or overly technical interpretation by the examiner in judging tbe adequacy of U.S. Pipe s return. We find no fault in the examiner s construction of thc subpoena or with his finding of compliance thereunder. Accordingly, respondent' s application for leave to appeal from the examiner finding of compliance is denied.

It is apparent, at the same time, that respondent's second application for subpoena duces tecum was not spurious. The examiner denied this application without prejudice upon his finding that:

. . . it would be improvident to issue a new subpoena covering a broader field than that previously issued while the Federal Trade Commission had under consideration an appeal from the protective order of the undersigned . . limiting the scope of depositions. . , , As sole support for its appeal from this ruling, respondent urges that discovery of documentary material must precede the taking of depositions. Lpon the issuance of this opinion, questions of procedural priority among currently pending discovery orders and applications therefor wil necessarily be raised and considered de novo in proceedings before the examiner. Accordingly, respondent' s appeal is now moot, and wil be denied. However, it is evident that the inability of U.S. Pipe to make a return on the post-entry portion of respondent's original subpoena duces tecum raises some doubt whether the purposes of pre-hearing discovery under the Commission s Rules of Practice may be fulfilled herein without a grant, in some form, of respondent' s second application for subpoena duces tecum.

Objections to such disclosure on the part of L.S. Pipe are well taken. Cost, price, production and similar data are of a kind traditionally protected against compulsory disclosure in judicial proceedings. However, the often confidential nature of such material is not equivalent to an absolute privilege against its disclosure. ' Even assuming that each item requested by respondent' s second application for subpoena duces tecum is of a kind for which strict secrecy would be justified as a matter of sound business practice, a claim of privilege for sucb material cannot succeed if the need for its continued secrecy is found to be outweighed by its importance to the party seeking production in j Order Denying Application for Subpoena. Duces Tecum, issued August 19 , 1968. Covey Oil Co. v. C07tinental Oil Co. 340 F. 2d 993, 999 (10th Gir. east. denied 380 U. 964 (1965). Communist Patty of the U.S. v. Subversive Activities Control Board, 254 F. 2d314 321. (D.C. Cir. 1958).

maintaining or refuting issues raised in litigation. In the present context, respondent seeks disclosure of the confidential business records of "C.S. Pipe to assist in its preparation of a defense to the charge contained in complaint paragraph seven, which reads, in pertinent part, as follows:

Among the effects of respondent' s acts and practices as above alleged in attempting to discourage and/or foreclose the entry of actual or potential rival producers into the resorcinol market, but not limited thereto, has been the failure of United States Pipe and Foundry Company to establish itself in the commercial resorcinol market as an alternate producer and/or viable competitor.

While we venture no opinion as to the kind or quality of evidence that would constitute a prima facie showing under this section, it would be patently improper to accept into evidence testimony of offcers of U. S. Pipe, or documents from .its files, in support of paragraph seven while at the same time honoring li. S. Pipe s assertion of a privilege against disclosing documents that might contradict such a showing. Moreover, without inquiry into contemporaneous business records, it would be diffcult or impossible to establish whether U. S. Pipe s resorcinol venture was commercially viable and thus that it would have succeeded in the commercial resorcinol market had the alleged acts and practices of the respondent not taken place. In the absence of a generalized "study " or "survey" of U. Pipe s post-entry experiences, it seems certain that respondent would be denied an adequate opportunity to prepare a defense under paragraph seven without some form of access to the very "raw data" that we suggested in our previous opinion might not in fact be needed.

Upon a renewed application for subpoena duces tecum, the examiner is of course free to consider alternative methods whereby the conflicting considerations of secrecy on the one hand and disclosure on the other may be reconciled. There is, for example, the procedure adopted in Commission hearings in the matter of Mississippi River Fuel Corpomtion Docket No. 8657 (Order issued June 8, 1966 (69 F. C. 1186J and July 15, 1966 (70 F. 1759J ), whereby sensitive trade information can be submitted to an independent third party for analysis. Possibly suitable would be a procedure as yet untried in Commission hearings by which the party seeking protection could be required to prepare a non-confidential summary of the sought-for documents for inclusion in the record, 7 The examiner may also conduct an ex parte GSu)Jra n. 2.

7 See K Gellhorn The Treatment of ConfidentWl Information By The Federal Trade Comm!8,""nl The Hearing, 116 U. Pa. L. Rev, 401 , 422-423 (1968). INTERLOCUTORY ORDERS, ETC. 1625 in camera examination of documents for the purpose of excising portions thereof before disclosure is made to the respondent. See, e. Machin v. ZuclceTt 316 F. 2d 336, 341 (D.C. Cir. cert. denied 375 U. S. 896 (1963).

Each of these proposed discovery techniques contains inherent drawbacks, however, and may in some instances impair substantially the value of information sought by respondent. The examiner must consider, in any given instance, whether the ends of justice would be better served by disclosure directly to the respondent, with such reasonable safeguards against misuse as have alrcady been utilized in this proceeding with reference to in camem materials and the use of materials obtained by deposition.

In the third, and last, portion of respondent's appeal dated August 28, 1968, permission is sought to appeal from an order of the examiner !J denying respondent' s motion, pursuant to Section 3. 36 of the Commission s Rules of Practice, for the production of documents in the possession of the Commission. Docudis-ments sought by this motion fail into two groups. First, closure was sought of all documents received by complaint counsel in response to a survey of manufacturing firms undertaken for purposes of investigation relative to this proceeding. Section 36 of the Commission s Rules of Practice provides that motions for the production of documents in the confidential records of the Commission:

. . . shall specify as exactly as possible the material to be produced, the nature of the information to be disclosed. . . and shall contain a statement showing the general relevancy of the material. . together "\with a showing that such material. . . is not available from other sources by voluntary methods or throug-h other provisions of the rules in this chapter. Denial of the first part of respondent' s motion was based upon the examiner s view that respondent should be required to seck direct voluntary production of the survey responses - from the companies surveyed. Respondent argues that such efforts, if attempted, would probably be unavailing, and urges that the examiner s application of the "other sources" requirement of Section 3. 36 was thus arbitrary and unjust. It was the examiner s view in denying respondent's motion that "Such an in camera examination would be advisable as an initial matter in any event. Westinghouse Electr;c CorporrLtion City of Burlington 351 F. 2d 762 , no (D. C. Cir. 1965) : BOIJinrJ Air1)lane Co. v. Coggeshall 280 F. 2d 654 , 6(i2 (1960): Frccman v. Seligson C. Gir. No. 20 478 June 28. 1968.

Order Denying Production of Confidential Records of Federal Trade Commis"ion, dated August 19 , 1968.

no determination of the protection, if any, to be afforded to portions of the survey responses containing possibly privileged matter could be made unless, upon a refusal of voluntary disclosure, the companies surveyed were allowed to appear herein in response to compulsory process.

As an initial matter, it may be possible to determine the intentions of the surveyed companies regarding the contents of their submissions by inquiry into the conditions upon which such documents were received by complaint counsel. If information obtained by survey was received upon the understanding that it could be divulged as necessary in Commission proceedings lO it would be clear that confidential treatment was neither sought nor desired, and data received on this basis could be reached by motion to produce with no risk of inadvertently divulging the trade secrets of third parties. To the extent that complaint counsel would not be free, without more, to place survey documents on the record herein, the necessity, if any, for their protection may best be raised by the firms from which they were received, and production should be sought from this quarter, as suggested by the examiner s ruling.

The second group of documents sought by motion to produce consist of "al1" documents received by complaint counsel from S. Pipe that are relevant to this proceeding. Respondent' s original motion for production of such documents was denied by opinion and order of July 2, 1968. " At that time, we held respondent' s motion to be premature, as respondent had yet to exhaust its opportunities to obtain discovery directly from U. Pipe by subpoena duces tecum. This situation has not been altered. Moreover, respondent argued before the hearing examiner that, in seeking disclosure of documents received by complaint 12 by its de-counsel from U. S. Pipe, it was motivated "solely" sire to determine the adequacy of U. S. Pipe s return on a prior subpoena demanding copies of all documents supplied by CS. Pipe to complaint counsel. It is evident that respondent' s efforts to uncover U. S. Pipe s putative noncompliance with process would, at this time, be better directed toward further discovery in preparation for formal hearings. Accordingly, we find that respondent' s motion for the production of confidential documents in the possession of complaint counsel was properly denied, and '" \"';e note in this connection that several documents received in response to the su!"vey hav" been listed by complaint counsel for introduction as Commission exhibits 10pinion and Order Denying AIJplinltion fol" Subpoena Duces Tecum and RCQu.,st for Release of Confidential Records, dated July 2 , 1968 (p. 1579 hereina. Motion for the Production of Confidential Document! , dated August g, 1\)68, P. 6 , INTERLOCUTORY ORDERS, ETC. 1627 respondent' application for leave to appeal from this ruling is denied.

By opinion and order of July 2, 1968 (p. 1571 herein), we remanded to the hearing examiner his initial denial of respondent' application for leave to take depositions of six named offcials of T.. S. Pipe. In a subsequcnt actionl3 we upheld, in all respects save one, a post-remand order of the examiner in which the requested depositions we!"e granted subject to several conditions designed to assure the confidentiality of such material as might merit this protection. In particular, we affrmed the examiner decision to exclude offcials of the party respondent from the taking of depositions. In subsequent proceedings before the examiner, U.S. Pipe voluntarily withdrew its objection to the attendance of one of respondent's offcers, its Secretary and General Counsel This concession was adopted by the examiner in his order authorizing the taking of depositions. Respondent now with great regret " again raises the issue of attendance by its offcers. It is urged that all offcers of the party respondent must be permitted to attend as a matter of right. We have previously affirmed the examiner s exclusion of al1 offcers of the respondent on the basis that their assistance in technical matters would not under the terms of the order authorizing depositions be required. The instant appeal merely reargues questions previously raised, and will accordingly be denied.

In connection with this appeal, respondent urges that the affidavits it is required to file with the Secretary of the Commission indicating portions of the deposition transcript disclosed to corporate management personnel infringe upon the confidentiality of attorney-client communications. Respondent omits to mention that the filing procedure complaint of actually l'eTmits attorney-client communications disclosure of the deposition transcript, by allowing disclosure during the time in which U. Pipe must determine whether portions of the transcript warrant '" Opinion and Order of Remand to Heal"ing Examiner, dated August 14 , 1968 lp. 1593 hereinj.

:. We are aware that Rule 30(b) of the Federal Rult" of Civil Procedure has been held to PI' event a District Court from exchHJing bona fide offcers of a party from the taking of depositions. Queen City Bre".'inu Co. Duncan 42 F. R.D , 32, 33 (D. C. D. 1d. 1966). Section 3. of the Commission s Rules of Prart:ee contains Jang-uage that parallels the pertinent provisions of Fede1'al Rule 30 (b). 1'' evertheless, the taking of depositions i5 not equivalent to a judicial1 tl' ial, with the attendant chal'acteristics of a public hearing, Dunlap v. H.eadin G Co. 30 F. 129 130- 3:: (D, D Pa. 1962), and we do not view Federal Rule 30(b), as construed. to embody a eonstitutionally compeJkrJ requirement of due process affecting deposition proceedings undf'r Seelio!1 3.-\3 of the Commission s Rules. 1628 FEDERAL TRADE COMMISSIOK DECISIONS protection by motion for a protective order. IVloreover, disclosure of the contents of the required affdavits would be available only for the purpose of determining compliance with the restrictions of the examiner s order against improper disclosure by respondent of material obtained by deposition. Lastly, we reject respondent' s blanket assumption that disclosure by the affant of the portion of the deposition transcript shown to him necessarily "forces disclosure of the consultation." Such a possibility seems remote. In any event, a resolution of this issue would depend upon the facts involved, and, accordingly, none wil be attempted at this time.

Jointly with the above appeal, respondent has applied for leave to appeal, pursuant to Section 3. 23 of the Commission s Rules of Practice, from an order of the examiner dated September 17 1968 , placing in camem certain documents produced by U. Pipe. Initially, respondent argues that the examiner has exceeded his authority in entering this order.

Section 3.45 (a) of the Commission s Rules of Practice specifies that access to in camem material "shall" be limited to "respondents, their counsel, authorized Commission personnel, and court personnel concerned with judicial review. . . . In essence, respondent contends that the word "respondents as it appears above, must pe read as requiring that access to in cart. era material must in all cases be granted to as many persons as can qualify as a legal representative, however defined of a "respondent. n The limitations imposed by the examiner on access to and use of ill. ca1ncra documents do not exceed those controlling disclosure of the deposition transcript. Clearly, the examiner s authority to create protective provisions based on the facts and circumstances of each case would bc severely limited 1.,by respondent' s construction of Section 3.45 (a) . Additionally, respondent questions the adequacy of the showing upon \which the examiner determined that docum nts of U.S. Pipe were deserving of in camel' treatment. We need not consider this contention, for, even assuming that the showing was inadequate, the effect upon respondent could hardly be of such a magnitude that, pursuant to Section 3.23 (a) of thc Commission s Rules a determination of its correctness before conclusion of the hearing is essential to serve the interests of justice." Accordingly, respondent' s application for leave to appeal is denied. Commissioner IVTaclntyre concurred in the result. , Tn District Court proceedings, it is established tha: acce$s to material obtained by subpoena may be denied to the parties themselves C01f3)j 01 / Co. Conti-nental Oil Co. , 811pra, n. 5 at \)99.

INTERLOCUTORY ORDERS, ETC. 1629 ORDER DENYING INTERLOCUTORY Appeals AND REQUESTS FOR PERMISSION TO FILE INTERLOCUTORY Appeals Upon consideration of respondent' s appeals dated August 28 1968, and September 25 1968, and for the reasons stated in the accompanying opinion It is ordel' That the appeals of respondent from the hearing examiner s orders of August 19 , 1968 , and September 17 , 1968 , and they hereby are, denied, and It is JUTther ordered That respondent's applications for leave to appeal from the hearing examiner s orders of August 19, 1968 and September 17, 1968, be, and they hereby are, denied. Commissioner MacIntyre concurred in the result. LEHIGH PORTLAND CEME",T COMPANY Docket 8680. Q1'del' and Opinion, lv ov. , 1968 Order denying appeals from 38 third parties from a hearing examiner s order direding parties to comply \.,ith subpoenas duces tecum. OPINION OF THE COMMISSION This matter is before the Commission upon the appeals of numerous third parties.

On January 11, 1968, subpoenas duces tecum were issued to 81' ready-mixed concrete companies on behalf of respondent. On J anuary 25, 1968, 36 additional subpoenas duces tecum were issued to portland cement manufacturers on behalf of respondent. Subsequently, 47 ready-mix firms and 22 portland cement manufacturers complied with the subpoenas. Motions to quash were filed by 29 ready-mix firms and 13 portland cement firms. All third-party motions to quash claimed that some of the information sought by various subpoena specifications was highly confidential and should not be divulged to respondent or respond- 'The following interlocutory appeals from the hearing examiner 8 ordel' have been filed: (a) Memorandum in Support of Appeal by Ready-Mix Companies from the Hearing Examiner s Order of September 2.4 1%8 (Odober 21, 1%8) (14 fl1"ff8); (b) M"morandum in Support of Appeal to Commission flom Hearing Examiner s Order of September 24 , 19Eifj (October 21 1968) (15 1'11m13); (c) Memorandum in Support of Appeal by Six Cement Companies from the Hearing Examiner s Order of Septemuer 24 , 1968 (October 21 , 1968); (d) ::emorandum in SUPP01"' of Appeal of Marquette Cement Manufacturing Company from the Hearing Examiner s Oroer of September 24 1968 (October 21 1968), (e) Appeal by ::ational Gypsum Company from Order Directing Third-Party Cement and Ready-::ixed Concrete Manufacturers to Comply with the Examiner s Orders Modifying Subpoenas Issued in Respondent s Behalf (October 7 1968); and (f) Appeal of Dundee Cement in Response to Order Directing Third- Party Cement and Re:;dy-Mix Concrete Manufacturers to Comply with the Examiner s Orders MOdifying Subpoenas Issued in Respondent s Behalf in this Proceeding (October 7 , 1968). ent' s counsel but only to an independent accounting firm in accordance with the procedure utilzed in Mississippi Rive?' Fuel Cm'paration Docket No. 8657 (orders issued June 8, 1966 (69 C. 1186), and July 15, 1966 (70 F. C. 1759J). The portland cement firms also claimed that the subpoenas were unduly broad as to geographic scope.

On May 29, 1968, the original hearing examiner ruled on the motions to quash the January 11, 1968, subpoenas, and on June 14 1968, he ruled on the motions to quash the January 25, J 968, subpoenas. The examiner ruled that the subpoenas should be modified and that much of the sales and pricing data called for by various specifications should be submitted to a disinterested accounting firm which would compile and present the material to respondent' s counsel in such a manner that no individual company s confidential arrangements or data would be revealed. The examiner also ordered that the geographic scope of the subpoenas directed to the portland cement manufacturers should be restricted. Respondent filed two appeals from these rulings on the primary ground that the restrictive Mississippi Rive?' 2 confidentiality procedure impairs respondent's right to prepare adequately for crossexamination and needlessly prejudices respondent' s ability to conduct an effective defense, especially when suffcient protection can be afforded by other, less prejudicial, means. Many third parties filed answers defending the examiner s ruling. Additionally, 14 third parties also filed appeals on the ground that the examiner should have included even more subpoena specifications in the IWississipp-i Rive7' treatment ordered. The examiner stated in his orders that inasmuch as some of the specifications in this proceeding are similar to those at issue in the l'vississippi River case and despite some misgivings as to the propriety of this treatment in this instance, he nevertheless was bound by Commission precedent to order tbe use of the same procedures.

The Commission on August 2, 1968, issued an order remanding the matter to the new examiner for reconsideration. In our opinion remanding this matter, we stated intet' a.lia: We believe that the examiner has incorrectly interpreted our decisions in the Mississippi Rc;ve case. The Commission in that case neither stated nor implied that henceforth such treatment was to be mandatory. V'le merely held that under the i' acts of that proceeding the treatment ordcrcd was appropriate- The Commission \vas, and is, loath to substitute its judgment for the examiner s judgment or such matters, This requircs, however, that the examiner must actively and independently evaluate all of the counter- 2Missisliippi River F"d Coropration Dockc'. HG57 (OJ-del" issued June 8, 19GG), pp. 1,- lG9 C. 1186, 1,89).

INTERLOCUTORY ORDERS, ETC. 1631 vailing factors in reaching his decision. The examiner, because of his proximity to the case, is, in the first instance, in a far better position to assess the multitude of variables inherent in the delicate balancing of interests between the respondent' s need to know sensitive information and the third party s need to protect the same valuable information from his competitor. It is indeed conceivable that, depending on the particular facts similar specifications may require dissimilar treatment in order to insure the most equitable resolution of these conflicting interests. Because of the examiner s misconstruction of the Mississippi Rive?' opinions, we are not convinced that such evaluation has been given to this matter, Following the Order of Remand, appellants cited no additional facts and filed no further briefs with the hearing examiner. On September 24, 1968, after having "careful11y reviewed a11 the documents " pleadings and rulings pertaining to these discovery questions, the examiner ordered appellants to comply with the subpoenas duces tecum.

Although the examiner declined to order the requested Missippi River treatment for the third-party data, the examiner did fashion a protective order which restricted disclosure of the information at issue to respondent's trial attorneys. Furthermore to assure against any possibility that the particular information sought in this case would be used for any competitive purpose the examiner ordered that the data could only be made available to complaint counsel to the extent that the information is to be used in respondent' s defense; that no copies shall be made of the materials except those to be used as exhibits in the hearing; that a11 materials which do not become a part of the offcial record wil be returned to the third parties; and that no information wil be made public until further order of the examiner.. Appellants ' objections to this order of thc examiner are the same as those raised against the previous examiner s orders. In essence, the appellants assert that requested information dealing with final,cial relationships between cement manufacturers and l."eady-mixed concrete firms is trade secret information whose disclosure to respondent Lehigh or to the trade at large would cause irreparable injury to appellants.

Lehigh Portland Cement Company, Docket 8680 (order issued August 2 1968), p, 3 !p, 1587 hercinJ.

; Order Directing Third-Party Cement and Ready-Mixed Concrete Manufacturers to Comply with the Examiner s Ordel's Modifying- Subpoenas issued in Respondent's Behalf in this Proceeding (September 24 , 1968).

C,ld. at p. 3.

G Appellants also asserted that the examiner failed to order in camera treatment for any information introduced" in evidence by respondent. See Memorandum in Support of Appeal by Ready-Mix Companies from the Hearing- Examiner s Ol"der of September 24 , 1968 5 (October, 1968). This assertion is obviously premature. The)'e is a possibility that none of the information wil be offered into evidence. If respondent docs offer any of the information into evidence, appellants will have every opportunity to urge in camera treatment for the information. Until such time, the examiner specifically prohibited respondent' s counsel from disclosing any such information to Lehigh, to the trade at large, or to the public. . This Commission can appreciate the serious consequences of unwarranted disclosure of sensitive business information. However it seems clear to us that the examiner has carefully considered our previous opinion (quoted in part above) remanding the prior appeals on the identical issues. The examiner s order indicates a thoughtful and workable balancing of the conflicting interests inherent in any such situation. On the one hand, the September , 1968, order has provided for the preservation of the requested pretrial discovery information in a manner which respondent finds useful and satisfactory in preparing for crossexamination and for preparation of defense. On the other hand the order carefully prevents the alleged injuries which might flow from disclosure of the data to Lehigh or to the trade at large by restricting its availability to respondent' s counsel alone. We find that the examiner has carefully attempted to consider the particular facts of this discovery dispute and has tailored a protective order which attempts to fully and fairly balance the potentially conflicting needs of respondent and the third parties. Inasmuch as appellants have failed to present any convincing evidence that the examiner has abused his discretion, we deny the appeals. An appropriate order will be entered. Commissioner MacIntyre did not participate. ORDER DENYING INTERLOCUTORY Appeals Upon consideration of the appeals of 38 third parties from the hearing examiner s order of September 24 , 1968, and for the reasons stated in the accompanying opinion: It is ordered That the third-party appeals from the September , 1968, order of the hearing examiner directing third-party cement and ready-mixed concrete manufacturers to comply with the examiner s order modifying subpoenas duces tecum issued in respondent' s behalf be, and they hereby are, denied. It is tw.ther ordered That this matter be, and it hereby is remanded to the hearing examiner in order that he may set a new effective date for his order of September 24 , 1968, and for such other further proceedings as may be appropriate. Commissioner MacIntyre not participating. THE J. B. WILLIAMS COMPANY, INC., ET AL. Docket 8547. Findings and Opinion, Dec. , 1968 Findings of Commission that respondents have failed to comply with order inhibiting them from misrepresenting the effectiveness of " Geritol" liquid and tablets.

, INTERLOCUTORY ORDERS, ETC. 1633 FINDINGS AND OPINIONS OF THE COMMISSION CONCERNING COMPLIANCE WITH ORDER TO CEASE AND DESIST The Commission, after reviewing the report of compliance in this matter, tentatively concluded therefrom that respondents might not be acting in compliance with the final order entered herein. Therefore, at the direction of the Commission, a public hearing was held on November 14 , 1968, at which eight of the television commercials prepared by respondents and shown or published since the cease and desist order became final were viewed by the Commission in the presence of respondents' counsel and their chief executive offcers viz. Mr. Matthew Rosenhaus, chairman of the board, The J. B. Wiliams Company, Mr. Henry E. Shultz, vice-president and general counsel, The J. B. Wiliams Company, and Mr. Edward Kletter, chairman of the board, Parkson Advertising Agency. The Commission heard argument directed to the question whether respondents, by disseminating these commercials, have violated the order to cease and desist. The eight television commercials viewed at this hearing were agreed by counsel to be fairly representative of all commercials for Geritol shown on television from December 31 , 1967, the date when the order of the Commission became final, and October 28 , 1968. In addition, the scripts and films of the twenty-one other television commercials for Geritol broadcast during this period of time have been furnished to the Commission.

We conclude that respondents, in the preparation and dissemination of the television commercials in question, have failed to comply with the final order of the Commission in this matter. As was clearly stated in our original opinion in this case, the major vice of the previous advertising for Geritol was that it created the overall impression that Geritol is a remedy for tircdness in more than a small minority of persons, an impression which is false and misleading. 1 This was recognized by the Court of Appeals for ihe Sixth Circuit in affrming the Commission s order;, after first modifying it by deleting one paragraph therefrom.' See 381 F. 2d at 889-90. The Court of Appeals stated at page 891: The Commission has found, and we have agreed, that the advertisements create the impression that iron deficiency anemia causes most tiredness. . . . 1 It is the overall impact of th", entire commel'ciaJ to whi h our attention is directed when considering possible deception therein. Carter Products, Inc. v. Feder,,( Trade Commission 323 F. 2d .523 , 528 (5th Cir. 1963); J. B. Wiliams Co. v. Federal Trade Commission, 381 F. 2d RS4 , 889 (6th Cir. H167) (judicial! review of the Commission s order in this matter)" The Court of Appeals deleted :from the Commission s order original pal"agraph 1 (f) which prohibited representations that i)'on deficiency anemia can be self-diagnosed. The Court stated: Tbe danger to be remedied he)"e has been fully and adequately taken care of in the utber requirements of the Order " 381 F. 2d at 891. , 1634 FEDERAL TRADE COM2\ISSIO:\ DECISIONS It is this representation that Geritol is good fat most tindness which is the inhc1' ent vice of the advertisements, (Emphasis added. The commercials broadcast for Geritol since the order in this matter became final not only fail to comply with the order but in many instances, have so forceful1y left the viewer with the overall impression- , that Geritol is a generally effective remedy for tiredness-that they are no less objectionable than the commercials denounced by the Commission when it issued the original order herein. For example, five of the eight commercials viewed at the hearing of November 14, 1968, depict the transformation of a wan, lackadaisical housewife into a veritable tigress. Typical of these five is the commercial entitled "Man Coming Home" (CX G-537-30-MA-REV. # 2). This depicts a smiJng husband entering his home, where he is dismayed by the sight of his wife. She is in curlers, tired looking and leaning against the doorway. Moreover, the kitchen appears to have been untouched for some time, being strewn with unwashed pots and pans. The husband, feigning anger, draws a pistol from his jacket and fires it at his now apprehensive wife. From the pistol emerges a flag reading "Iron-poor tired blood? Try Geritol." A card readfollowed by the ing "later" appears on the television screen, same setting but with remarkable differences. The household is spotless. The haggard-looking woman seen at the beginning of the commercial now is attractively coiffured and made up, and in the wording of the script for this commercial garbed in a sJinky gown." Her husband enters to find her so attired and posing " and a rose against the piano with "a 'come hither' expression in her mouth. She literally sweeps her husband off his feet by embracing him passionately and enthusiastically, as the commercial ends with the words "Feel stronger fast" appearing on advising the the screen, and the audio portion of the commercial viewer that " If you re tired because of iron-poor blood, Geritol can help you feel stronger fast. Maybe not this fast. But fast. (Emphasis in script.

Respondents, in their advertising and in their defense of the propriety of that advertising, continue to treat that portion of the population suffering from tiredness as equal to that portion of the population which experiences tiredness due to iron deficiency anemia. As stated in our original opinion, there is no basis for equating iron deficiency or iron deficiency anemia with tiredness. people with 7idld iron deficiency anemia We found that many, that many people \with severe iron exhibit no tiredness symptoms deficiency anemia do not exhibit the symptoms of tiredness dis- , INTERLOCL"TORY ORDERS , ETC. 1635 played in the advertisements for Geritol 3 and that the number of people experiencing tiredness symptoms as a result of deficiency of the ingredients of Geritol is "infinitesimal1y small" (P. 13) (68 F. C. at 545).

In paragraph 1 (d) of our order, we prohibited any advertisment representing that the use of Geritol will be beneficial in the treatment of tiredness unless the claim of effectiveness was expressly limited to those persons whose symptoms were due to iron deficiency, iron deficiency anemia, or deficiency of vitamins contained in the product and further, unless the advertisement also discloses clearly and conspicuously that: (1) in the great majority of persons who experience such symptoms, these symptoms are not caused by a deficiency of one or more of the vitamins contained in the preparation or by iron deficiency or iron deficiency anemia and (2) for such persons the preparation wil be of no benefit." Counsel for respondents contended at the hearing on November 14, 1968, that this provision of the order was being complied with by the following statement which is announced in the audio portion of a11 Geritol commercials telecast during the time in question: "The great majority of tired people don t feel that way because of iron-poor blood and Geritol won help them " which is immediately followed by such phrases as but it is a medical fact that many of the milions of people who have iron- poor blood are tired and need Geritol" (e. CX G-537- 45-MA-REV # 2, emphasis in script), or "but millions do have iron-poor blood and you could be one of the many who are tired for that reason and need Geritol" (e. CX G-208-40). vV' e reject respondents' contention that the announced disclosure complies with the order. We find that the disclosure is negated and rendered meaningless when it is viewed in the whole context of the advertising, and further, that the disclosure itself is made insuffcient by the use of such general terms as "millions " and many" immediately following it. Moreover, in obscuring and negating tbe disclosure, respondents have not only failed to comply with paragraph 1 (d) of the order, but have also contravened the provisions of 1 (c) and 1 (e). These paragraphs prohibit, respectively, any representation that Geritol wil be of benefit in relieving tiredness in more than a small minority of persons and any representation that tiredness is a generally reliable indication of iron deficiency or iron deficiency anemia. 3 The primary symptoms of !'E'were iJ'on deficiency include such things as cracks at the cornCl" of the mouth, brittle 01" spoon-shaped fingernails, early graying of hail' , and fl mooth, 1;or" tong-ue (opinion, p. 10 , n. 7 r68 F. C. 481 , 543J: See 381 F. 2d at 888-89). . And see 381 F. 2d at 888-90 where the C01JJt of Appeals upheld these findings. Respondents should have been aware of the requirements surrounding the use of the aflrmative disclosure in any advertisement recommending Geritol as a remedy for tiredness. We informed them in the opinion accompanying our order that the mere recitation of the words of paragraph 1 (d) of the order would not be in compliance with the order if the disclosure was negated or obscured by the overall impression created by the advertisement in which the disclosure was contained. At p. 15 (68 F. C. at 547J of the opinion, it was stated:

This affrmative disclosure is necessary in every instance in which Geritol is advertised a,s a treatment for the relief of the tiredness symptoms. The purpose of such disclosure is to remove the likelihood of deception inherent in any claim of effectiveness for Geritol on the tiredness symptoms, even though such claim be limited to tiredness symptoms due to iron or vitamin deficiency. It seems obvious, however, that the likelihood of the public being deceived into believing that other than a small minority of tired persons will find relief for these symptoms by taking Geritol wil continue to exist if in any advertisement the other representations are inconsistent .with the facts affrmatively disclosed. Such other claims can only serve to confuse and thereby deceive, thus nullifying the purpose of the required disclosure. Therefore in advertising in which an affrmative disclosure is nqui1' , respondents may make no representations, directly m' by implication, which in any way negate or conb'adict the facts which are affrmatively disclosed. In other w01' , if despite the affrmative d1.'wlosure, any advertising conveys the impression that Geritol 'will be of benefit in relieving tiredness generally 01' in other1' than a small minority oj persons with such symptoms such advertising will be deceptive and in violation of the m"der to be entered herein. Emphasis added.

We do not believe that any prospective consumer viewing the commercials in question would consider that the disclaimer limits the claim's of relief from tiredness in the manner required by our order. Indeed, the visual impact of several of these commercials in the primarily visual medium of television, is so strong that it is doubtful that any audio disclaimer run in conjunction with the visual images would be sufficient to protect the viewing public from being left with the erroneous overall impression that Geritol is a generally effective remedy for tiredness. The presentation of these commercials is such that the viewer is left not only with an erroneous impression as to the capabili- "Commi sion s footnote: " ender this order, as ullder similar order; requirill affrmative disclosure of fact. necessary to prevent an otherwise unqualified claim from being false or misleading, the disclosure must be made in immediate or close proximity with the claim and with equal J))'ominence. The advertisement, regarded as a whole, should not leave any impression negating- or obscuring the necessary affrmative disclosure, for otherwise the order would be rendered nugatory.

"'Ve arc not swayed by the argument of respondents that the Commission could not judge satisfactorily the impact of these commercials on the viewillg public because they were shown to the Commission at 8. public hearing in 8. different setting than that involving the "average , , , INTERLOCUTORY ORDERS, ETC. 1637 ties of Geritol in providing relief from tiredness, but also with an erroneous impression as to the length of time in which Geritol wiil provide relief. Use of such terms as "later" and "Feel stronger fast " while perhaps not objectionable in themselves cannot be considered in compliance with the order when these phrases are presented in conjunction with visual presentations such as that described in the 'j Man Coming Home" commercial. Viewing of such commercials leaves the clear impression that Geritol wiil be effective in relieving tiredness almost instantly, certainly within a very short period of time. Such an impression violates the provisions of paragraph 1 (f) of tbe order which prohibits the representation that the use of Geritol wil increase the strength and energy of the body in any time less than that in which the consumer may actually experience improvement. Although the precise time in which relief wil be experienced is not readily determined, it is clear that the time is considerably longer than that indicated by the commercials. (See p. 4 of our original opinion in this matter (68 F. T.C. at 538).) Respondents have contended that the Commission wil, in effect destroy their right to advertise Geritol if such commercials as those in question are not permitted. However, as was noted in our original opinion (p. 14) (68 F. C. at 546J, there were two courses by which we could have prevented the deception inherent in the advertising for Geritol: (1) by requiring the omission from such advertising of all reference to the effectiveness of Geritol on tiredness symptoms, or (2) by requiring an express statement of the limitations of the effectiveness of Geritol on such symptoms any claim of effectiveness on these symptoms is made. Respondents plainly have no right to convey to the public the false and misleading impression that Geritol is a generally effective ::remedy for tiredness.

viewer of the commercial.Js. V;'e have given such factors due consideratioIl, which is the case in each of the many instances where we are called upon to use OUl' expertise in det rminjng whether a television commercial is false and misleading. Although the fuJl impact of the cummercials here under review can be appreciated only upon viewing them some indiclition of their1" tone may be gained from study of the scripts. Attached hereto are the scripts of three of the fims shown at the hearing of Novmbcr 14, 1968 (CX G-537- 30-::lrREV :# 2 Man Coming Home; CX G-543-40-ALT-REV. Judl1e-Book" ; ex 206- Answer Is Yes ), Cumparison of these scripts with the scripts for earlier Geritol comme!' cials which Wel' e appended to the opinion accompanying the Commission s original order and appended tu the cuurt s opinion (381 Y. 2d at S9,1) demonstrates the continuation of the message that Geritol is a generally effective remedy for tiredness. Cf, Murra)J Space Shoe Corp. v, Federal Trade Commission 304 F, 2d 2iO , 2i2 (2d Cir. 1862) (no constitutional right tu disseminate faJ!;", and misleading advertisements); Slough Federal Trade Commission 396 F, 2d 8iO , 8i2 (5th Cir. 1968), Slough' s petition for certiorari pending, Sup. Ct. :r'o. 550 (no right to engage in btlsiness which can operate only by the use of deceptive practices).

Another argument of respondents is that the commercials are directed toward a specific segment of the population viz. women of the child-bearing years. The commercials in question, like earlier advertisements for Geritol, are directed to the general population. A listing of the broad range of programs on which these commercials were shown supports our judgment. The message of these commercials was presented on literally every type of program available to a television advertiser, including daytime soap operas, evening news programs, western series, comedy series, network motion picture presentations, and special events such as national political conventions.

As to the argument of respondents that this order is not clear we reply that not only the members of this Commission but the panel of the Court of Appeals for the Sixth Circuit which reviewed our decision considered this order to fairly apprise respondents of what is required of them. " 381 F. 2d at 891. The Commission concludes that the commercials in question failed to comply with its order. We hereby advise respondents that, in order to avoid future enforcement proceedings, they discontinue immediately the broadcast of any of the television commercials furnished the Commission at the hearing of November 14 1968, or any similar commercials. By producing and disseminating these commercials, respondents have ignored the clear terms of the final order.

Respondents are directed to fie with the Commission no later than January 31 , 1969 , a report of compliance showing that such commercials are no longer being broadcast and that respondents are in full compliance with thc order to cease and desist. If no such report is filed by that date, or if it is found to be unsatisfactory, the Commission wil take such enforcement actions as may be necessary to assure that its order and the decree of enforcement entered by the Court of Appeals do not continue to be flouted by respondents, including certification of the matter to the Court of Appeals with the recommendation thiit civil contempt proceedings be promptly commenced.

TITLE: "MAN COMING HOME"

COPY CODE: GER-TV-594 GERITOL COLOR FILM :30 #G-537-30-MA-REV #2TIME: WORD COcNT:65 TV SCRIPT PARKSON ADVERTISING AGENCY, I:-C. 1. OPEN ON HUSBAND CLOS- 1. (MUSIC: GAY INTRO, BUT ING DOOR. HE GLANCES CHANGIKG MOODS TO FIT SADLY AHEAD OF HIM. SCENES THROUGHOUT) .... .... .... . .. . . . .).. . . INTERLOCUTORY ORDERS, ETC. 1639 2. CUT TO HIS WIFE IN CURL- 2. ANNCR. (V. Now, the great ERS. SHE IS TIRED-LOOKING majority of tired people don t feel AND LEA:'ING AGAINST that way DOOR.

3. because of iron-poor blood. 3. CUT TO HUSBAND AP- PROACHING HER.

but it is 4. CeTHETOKISSESREVERSEHERANGLEANDAS 4. and Geritol won t help them, STARES AHEAD IN HORROR.

5. CUT TO 1!ESSED-eP KITCH- 5. . . . a medical fact that many of EN. the milions. 6. CUT TO HUSBAND, WHO 6. of people who have iron-poor STARTS TO DRAW PISTOL blood. FROM HIS JACKET. HE POINTS IT.

7. CUT TO WIFE WITH GUN 7. are tired and need Gerito!. AGAINST HER NOSE. AS HIS FINGER PULLS TRIGGER FLAG DROPS FROM IT READ- IKG: "IRON-POOR TIRED BLOOD? TRY GERITOL."

SHE READS IT.

8. CUT TO CARD: "LATER"

9. CUT TO INTERIOR SHOT OF HUSBAKD E:\TERING FRONT DOOR. HE IS DEJECTED. HE LOOKS FORWARD IN Ser- PRISE.

10. CUT TO KITCHEN, WHICH IS 10.

NOW CLEAN AND NEAT.

11. Cet BACK TO HUSBAKD 11.- WHO LOOKS AHEAD AND REGISTERS GREAT SHOCK.

12. CUT TO WIFE, WHO 12. (MUSIC: FADE BEHIND) GARBED IK A SLIKKY GOWN. ANNCR. (VOICE OVER).. SHE IS POSING AGAINST you re tired bec'Ruse of iron-poor THE PIANO AND WEARS A blood, Geritol can help you feel COME HITHER" EXPRES- stronger fast. SION. SHE HAS A ROSE IN HER MOUTH AND LOOKS BEA UTIFUL.

13. CUT TO HUSBAND AS HE AP- 13. (MUSIC.. UP) PROACHES HE RUBS HANDS TOGETHER EXPECTANTLY.

14. CUT TO TWO-SHOT AS HE 14. (MUSIC.. FADE BEHIND) APPROACHES HIS WIFE. ANNCR. (VOICE OVER).. May- SHE GRABS HIM A:\D OVER- be not this fast. POWERS HIM WITH A KISS.

15. CUT TO PRODUCT SHOT. 15. But fast. SUPER "FEEL STRONGER (MUSIC: PLAYOFF) FAST"

.. .. .. . .. .. ): . . . . . 1640 FEDERAL TRADE COMMISSIO:\ DECISIO:oS TITLE: "BOOK" GERITOL COLOR TAPE TIME: 40 Seconds #G-543-40-ALT-REV. (ANNOUNCE RE-RECORDING) AT NATIONAL STUDIO-7/23/68 TV SCRIPT PARKS ON ADVERTISI:\G AGE:oCY, INC. I. WIFE (ON CAMERA).' Judge I. OPEN CLOSEUP OF TIRED WIFE LOOKING DES- my husband doesn t pay any at- PERATELY UP TOW ARD tention to me anymore! JVDGE.

2. JUDGE (ON CAMERA).' Poor 2. CUT TO CLOSEUP OF JUDGE lady! LEANING FORWARD, PART- LY IN SURPRISE, PARTLY IN (To Husband) Wen? SY',PATHY.

3. HUSBAND (ON CAMERA).' I 3. CUT TO HUSBAND PLEAD- G WITH JUDGE. have Tired Wife! 4. CUT BACK TO JVDGE WHO 4. JUDGE (ON CAMERA).' Tired IS HORRIFIED AND SHOWS Wife! IT. HE LEANS FORWARD TO REPEAT THE LINE IN UT- TER DISMAY.

5. CDT TO TIRED WIFE A:\D 5. (SOUND.' GONG) ANNCR. (V. ECHO).' Tired SUPER.' "TIRED WIFE" Wife! 6. CUT BACK TO JDDGE AS HE 6. JUDGE (ON CAMERA).' Madame, I'm going to OPENS A LARGE BOOK TVRNS IT AROU:\D AND HOLDS IT TOWARD THEM. IN IT IS LETTERED.' "TIRED DUE TO IRON-POOR BLOOD? TAKE GERITOL"

7. MOVE IN TO TIGHTER SHOT 7. JUDGE (V. G.).' throw the OF MESSAGE AS WIFE ALSO book at you. ',OVES IN AND READS IT. WOMAN.' GERITOL?! 8. CUT TO WOMAN'S FEET GO- 8. ANNCR. (V. The great ma- ING INTO STORE. jority of tired- people don t feel that way because of iron-poor blood and Geritol won t help them.

9. CUT TO HEAD SHOT OF 9. but it's a medical fact milions of blood. WIFE AT GERITOL DISPLAY. people have iron-poor 10. and you could be one of the 10. MOVE IN TIGHTER AS SHE POURS" TWO GERITOL TAB- many who are tired for that rea- LETS INTO HER HAND. son and need Geritol. Two Geritol tablets give you twice the iron in a pound of calf' s liver plus seven vitamins.

. . . . . . .. . ): ):.. ... .

INTERLOCUTORY ORDERS, ETC. 1641 11. CUT BACK TO HAPPY HUS- 11. ANNCR. (V. Geritol-iron BAND AND WIFE WALKING enters your bloodstream fast, carrying strength. BRISKLY DOWN AISLE OF COURTROOM TOWARD CAM- ERA. "LATER" IS SUPERED OVER.

12. CUT TO WOMAN AS SHE AP- 12. throughout your body PROACHES JUDGE , STARTS TO OVERWHELM HIM WITH A KISS.

13. ANNCR. (V. ECHO): No . . .13. SHE KISSES JUDGE. SUPER: more. Tired. 'Vife! NO MORE TIRED WIFE. 14. JUDGE (ON CAMERA) : Maybe14. MOVE IN ON JUDGE WHO my wife should take Geritol LOOKS AT CAMERA AS IF AN IDEA JUST STRUCK HIM.

O.): Take Geritol-15. CUT TO PACKAGE SHOT. 15. ANNCR. (V. SUPER: "FEEL STRONGER and feel stronger fast! FAST.

TITLE: "ANSWER IS YES"

TIME: :30 Seconds AS TAPED: 6/12/68 GERITOL COLOR TAPE AT VIDEOTAPE CENTER #G-206- TV SCRIPT PARKSON ADVERTISING AGENCY, INC. 1. BELLAMY: Have you ever asked1. CLOSE UP OF RALPH BEL- LAMY. yourself. 2. DISSOLVE TO TIRED LOOK- 2. WOMAN (D. Can iron-poor ING WOMAN. blood make me tired 3. BELLAMY: Yes! 3. CUT TO CT. BELLAMY 4. CUT TO GERITOL BOTTLE 4. You may need Geritol. 5. CUT TO BELLAMY STARTING 5. The great majority of tired people TO WALK. don t feel that way because of iron-poor blood and Geritol won help them.

6. but it' s a medical tact, many of 6. CONTIKUES WALK AND STANDS NEXT TO GERITOL the milions of people who have blood. arc tired. DISPLAY. HE INDICATES iron-poor PRODUCTS.

7. CUT TO GERITOL BOTTLES 7. and need Geritol. It could be why you re tired.

8. CUT TO BELLAMY 8. Geritol-iron enters your bloodstream carrying strength throughout your body.

9. So, for iron-poor tired blood take 9. CUT TO PRODUCT SHOT. Gcritol MATTE SUPER: FEEL Fast! STRONGER FAST" Feel Sb.onger 1642 FEDERAL TRADE COMMISSIO DECISIONS MARE MONT CORPORATION Docket 8763. Order, Dec. 20, 1968 Order denying respondent' s request to appeal from hearing examiner s order relative to the release of certain third-party documents. ORDER DEr-YI G REQUEST FOR PER'IIISSION TO FILE Interlocutory Appeal This matter is before the Commission upon respondent's request for leave to file an interlocutory appeal from the hearing examiner s order filed November 21 , 1968, granting in part and denying in part respondent's motion for the release of confidential documents.

On October 21 , 1968 , after a prehearing conference, the hearing examiner filed an order which prohibited the release of certain third-party documents in the possession of complaint counsel to persons other than independent counsel for respondents. The examiner provided for the granting of relief from this ruling upon a proper showing by respondent' s counsel. On October 23 , 1968 respondent filed a motion requesting permission to release the third-party documents to four of its named employees. The hearing examiner s order of November 21, 1968, amended his order of October 21 , 1968 , in certain respects, but denied that part of respondent' s motion which requested permission to release thirdparty data disclosing sales figures for certain automotive parts to respondent's four employees. It is this order which is the subject of the present motion.

At the outset, it is important to note that the examiner s orders do not purport to deal with the question of whether the thirdparty documents should be accorded in camera treatment. In his October 21 , 1968, order, the examiner expressly denied thirdparty motions insofar as they sought to confer in camera status on their documents when offered in evidence. . The third-party data in issue consists of confidential business information which the third parties would not customarily make public. In this preliminary stage, the examiner was faced with the question whether the need for respondent's four employees to know this sensitive information outweighed the third parties need for protection. In making his determination, the examiner made it clear on the record that this was not a final ruling but was an interim decision. Specifically, he suggested to respondent' counsel that he consult with complaint counselor the third parties to resolve any difficulties in the comprehension or interpretation of the data. If diffculties could not be resolved, the examiner INTERLOCUTORY ORDERS, ETC. 1643 order of October 21 , 1968, provides for further relief upon such showing by respondent. As pointed out in the examiner s order of November 21 , 1968, respondent has failed to show that any effort has been made to establish the need for access to the data by respondent' s four employees.

The fact that the examiner s rulings were not intended to foreclose this matter is further ilustrated by his November 21, 1968, ruling in which he expressly provided for the disclosure to the four named employees of respondent, of any data, information or documents supplied by complaint counsel which reflect the methodology used in compiling statistics as to sales or in making adjustments in reported sales figures by the third parties. In our interlocutory opinion in the Koppe1' case l we reiterated our position that the hearing examiner has authority to create protective provisions based on the facts and circumstances of each case. The fact that the examiner has denied the third parties requests for in camel' treatment and has, in fact, modified his original position on the third-party data, establishes that in this posture of the case, the examiner s rulings were on an interim basis in an attempt to reach an equitable decision, and that such rulings are subject to further modification. Under these circumstances, we find that the examiner, who is in close proximity to this case, has not abused his decretion. ' It is our conclusion that a determination of the correctness of the examiner s rulings at the present stage, particularly because they are of such a tentative nature, is not essential to serve the interests of justice. " Accordingly, It is ordered That respondent's request for permission to file an interlocutory appeal, filed December 3, 1968, be, and it hereby , denied.

By the Commission, with Commissioner MacIntyre concurring in the result.

KOPPERS COMPANY, INC.

Docket 8755. Orde?' and Opinion, Dec. 24, 1968 Order extending time for third party to comply with subpoena and denying motion to qua.sh.

OPINION OF THE COMMISSIO:\ This matter is before the Commission upon the motion of 'KOJJPCTR C01npanll. Inc. Docket 1\' . fi755 ovember 1, 1968 (p. 1621 hereina. 2 Lehigh Port/,md Cement Co. Docket o. 8680. August 2 , 1968 fp, 1585 hereinl. ;J Section 3. 23 Commission s Rules of Practice. United States Pipe and Foundry Company to extend the return date on the subpoena duces tecum issued at respondent' s request, to a date no earlier than ten business days following receipt by S. Pipe of the Commission s order and opinion on its appeal from the examiner s order of December 3, 1968, modifying the subpoena and otherwise denying the motion to quash. In the same order, the examiner denied U.S. Pipe s motion for a stay of the return of the aforesaid subpoena except to the extent of postponing the return date to December 10, 1968. The record reveals that on December 9, 1968, counsel for U. Pipe advised the examiner by phone that he had filed an appeal by mail from the examiner s order and would not appear at the December 10, 1968, prehearing conference. On December 10 1968, the examiner certified the failure to respond to the subpoena as modified with the recommendation to the Commission that prompt action be taken to compel production under the subpoena. On December 11 , 1968, the examiner certified the motion of L"S. Pipe to extend the return date of the subpoena with the recommendation that it be denied because it was for substantially the same relief previously denied by order dated Decemher 4 1968.

The record further reveals that on December 10 , 1968, U. Pipe filed with the Commission (1) its application to extend the return date as described above and (2) its appeal and brief from the examiner s order denying the motion to quash. The Commission is reluctant to intervene in this matter once again but feels that there are certain aspects of the proceeding which require it so to do. While the question of respondent' subpoena of the records of U. S. Pipe has been before the examiner and the Commission a number of times, what is of concern here is a new subpoena issued by the examiner pursuant to the Commission s opinion dated November 1 1968 (p. 1621 hereina. Taking into account a1l the time factors involved:lhe subpoena in question was originally dated November 20, 1968, and was modified by oral order of the examiner dated December 3, 1968 , at which time the date of return was extended until December 10 1968.

Since the examiner also otherwise denied the motion to quash on the same date, it can thus be construed that the return date was set within the time during which Rule 3. , as that time is computed under Rule 4. , permits U. S. Pipe to appeal to the Commission from denial of the motion. The Commission has no wish to see this sort of cloud descend on these proceedings at INTERLOCUTORY ORDERS, ETC. 1645 this stage, for if it denied U.S. Pipe s motion and took action at this time to compel production under the subpoena, a very real question would exist as to whether U.S. Pipe had, by construction of the Rules, been effectively denied its right of appeal. While the Commission is, by the accompanying order, granting the motion by U.S. Pipe for an extension of time to respond to the subpoena, it does not agree that U.S. Pipe will need as much as ten days from the date of receipt of the Commission s order and opinion on its appeal from the denial of its motion to quash to do so. In view of all that has gone before, the Commission feels that S. Pipe should be prepared to proceed within five days following the Commission s action in the event the Commission decides to deny the appeal. The question would, of course, become moot if the Commission s decision was to grant the motion to quash. Commissioner :l1acIntyre concurred in the result. ORDER EXTE:\DING RETURN DATE Q:\ SUBPOENA DUCES TECTUM The Commission has given consideration to the application by united States Pipe and Foundry Company, filed December 10 J 968, to extend the return date on the subpoena duces tecum to a date no earlier than ten business days following receipt by the company of the Commission s order and opinion on the company appeal, filed on the same day, from the hearing examiner s dcnial of the motion to quash sad subpoena.

It appearing, for reasons stated in the accompanying opinion that adequate justification exists for granting said motion in view of the time factors involved It is o?' de?' That the time allowed for thc company to make return on the subpoena dated November 20, 1968 , as modified December 3, J968, be, and it hereby is, extended until five business days fo1Jowing receipt by the company of the Commission s order and opinion on the appeal from the examiner s order modifying the subpoena and otherwise denying the motion to quash- By direction of the Commission with Commissioner MacIntyre concurring inthe result.

ADVISORY OPINION DIGESTS* No. 261. Promotional assistance based on percentage of purchases during a fixed time period.

The Commission was requested to render an advisory opinion with respect to the legality of a supplier s proposed promotional program under an outstanding Commission order which, in pertinent part, prohibits the supplier from making promotional payments to its customers in a discriminatory manner. According to information provided by the supplier, all its sales are made to retaHer customers-distributors or other intermediaries are not utiized in the distribution of the supplier s products. l.nder the proposed program as set forth and explained by the supplier, promotional allowances would be made available to all customers of the supplier and could be applied by the' customers to the costs incurred by them in three categories of advertising and promotional activity: Point-of-sale materials, cooperative advertising in daily and Sunday newspaper listed in Standard Rate and Data; and so-called other store promotions, including advert;sij,g in newspapers not listed in Standard Rate and Data catalog and local radio and T.V. advertising, envelope stuffers and sales incentive programs and contests. Further, the amounts of such allowances would be determined at the rate of 7 percent of each participating customer s net purchases from the supplier in a six-month period, although this figure could be adjusted within any given trading area (defined by Management Survey of Metropolitan County Areas) as operating experience requires. In the case of Standard Rate and Data newspapers, the allowances could be applied to two-thirds the cost of such advertising, and for all other forms of eligible advertising and promotional activity, allowances could be applied to the full cost of the activity. In all cases, and whether any customer chooses to participate in any or all of said categories of advertising and promotional activity, the supplier s total contribution to the customer s cost would be subject to the 7 percent of purchases limit. Allowances earned but not used by any customer in a . In conformity with policy of the Commission, advisory opinimu\ lue confidential and are not available to the public, only digests of advisory opiniuns arc of public recanL Digests of advisory opinions are cUlTently published in the Federal Register. six-month period could not be carried forward to the following such period.

Regarding the poing of-sale materials, the supplier would mail or deliver quantities of these materials to all customers, and each customer would be advised in advance that such point-of-sale materials would be charged against his available promotional and advertising allowances, unless returned to the supplier within 10 (ten) days of receipt, by mail or delivery to the supplier s salesman.

The supplier was advised that the proposed promotional program, if implemented in a nondiscriminatory manner, would not be in violation of the Commission s order or Section 2 (d) of the Clayton Act.

The Commission cautioned that its opinion was predicated upon the supplier s assurance that all provisions of the proposed program, particularly that concerning the availability of cooperative advertising allowances for advertising in non-Standard Rate and Data newspapers, providing only that such newspapers have verifiable costs and circulation, and that concerning the return privilege regarding point-of-sale materials which would be mailed or delivered to the supplier s customers, would be effectively communicated to all customers of the supplier. The Commission further cautioned that a customer who is located on the periphery of a particular trading area and who competes in fact with a customer located within such trading area, should be offered the particular promotional plan available to the customer within the trading area so as to preclude discrimination between customers competing in the resale of the supplier s products. (File No. C-ll78, released July 2 1968. ) Issued under authority of Section 3.61 (c) of the Commission s Rules of Practice (I967).

No. 262. Use of manufacturers' suggested retail prices accompanied by a disclaimer.

The Commission was requested to render an advisory opinion as to the propriety of an advertisement referring to a product as "$1.09 size, for 696" accompanied by a statement that "All regular prices are the manufacturers' suggested retaij prices and are furnished here to help you identify the size being offered for sale, The opinion advised that the answer to this question depended wholly upon whether or not the prices used as the basis for comparison complied with Guide III of the Guides Against Deceptive , ADVISORY OPINJO" DIGESTS 1649 Pricing, since, in the Commission s view, the use of the phrase $1.09 size" in the body of the advertisment and the reference to manufacturers' suggested retail prices " in the statement place the representation in the category of a trade area price comparison. Therefore, the opinion added, unless the higher prices used do in fact represent the prices at which substantial sales are made by the principal retail outlets in the area, their use would be deceptive.

The Commission further stated that it was of the opinion that the capacity of such advertisements to deceive would not be relieved or removed by the statement or disclaimer proposed in situations where the prices used do not meet the test of the guides. At best, such a statement would simply render the advertisement ambiguous and leave it subject to two interpretations one of which is false. It would stil leave substantial numbers of consumers under the impression that the higher prices used were in fact the actual trade area prices within the meaning of the guides. (File /' o. 683 7136 , released July 2, 1968. o. 263. Lower price to "stocking" dea)ers. The Commission rendered an advisory opinion in which it said that it could not give its approval to a plan whereby manufacturers would give a lower price to "stocking" dealers who compete with 'Inan-stocking" dealers. The opinion was given to a trade association which represents manufacturers of a household product.

As justification for the variance in the proposed pricing schedules, the association pointed out that "stocking" dealers experience a higher cost of doing business and therefore must sell at higher prices than their competing "non-stocking" dealers. It was also contended that such a price differential would stimulate the purchase of the product in question for inventory. Expressing the view that it could not give its approval to such two price schedules if the "stocking" and "non-stocking" dealers compete and if the pricing differentials are of suffcient magnitude to adversely affect competition, the Commission concluded that the proposed plan could result in illegal price discrimination under Sec. 2 (a) of the Clayton Act, as amended. In its opinion, the Commission went on to point out that such price differences would be illegal unless they could be justified on the basis of one of the specific defenses provided in Sections 2 (a) and (b) of the statute. For example " the Commission said the law permits price differences which can be justified by provable cost differences in the manufacture, sale or delivery of such products resulting from the differing methods or quantities in which the products are sold or delivered. Accordingly, Section 2 (a) does not preclude prices refiecting less costly and, therefore, more effcient methods of distribution provided that the standards inherent in the statute s cost justification proviso are met. Although the party seeking the advisory opinion did not raise the question, the Commission s opinion touched upon another point of interest in this type of a situation. Specifically, the Commission said:

it is conceivable that certain members may wish to compensate their customers for services which the customers may render for them in connection with the handling or resale of products manufactured by such members. The law provides a means by which this may be done, but if it is done, the manufacturer must comply the requirements of Section 2(d) of the Act. This requirement is simply that compensation for such services, if made by a manufacturer to one customer, must be made available on proportionally equal terms to other customers of that manufacturer who compete with the favored customer in the sale of the manufacturer s products. This means, among other things, that any plan or program, under which the payments are made must, if necessary, provide for alternative services or facilities which, as a practical matter, can be provided by all competing customers. Concluding its opinion, the Commission cautioned as follows: It should be noted, however, that payments by manufacturers to their customers "to stimulate the purchase of their goods for inventory," are not payments of the type contemplated by Section 2 (d). Such a payment would merely be a reduction in price to induce the purchase of the manufacturer s customersgoods and, if given to some but not aU of the manufacturer might be unlawful price discrimination within the meaning of Section 2 (a). DISSENTING OPINION JliLY 9, 1968 BY ELMAN Commissioner:

What is proposed here is that manufacturer members of a trade association will furnish compensation, in the form of a lower price, to those dealers who perform "stocking" services. A supplier may lawfully compensate his customers for services which promote more effcient distribution, so long as he satisfies the requirement of Section 2 (d) of the Clayton Act that such compensation be available on a nondiscriminatory basis to other competing customers. The Commission s Guides for Compliance with Sections 2 (d) and (e) (adopted May 19, 1960) indicate that the services or facilities" covered by the statute are not limited to advertising and similar promotional activities but also include the furnishing of warehouse, showroom, and "stocking" services and facilities. It is also clear that compensation lawfully paid a cus- ADVISORY OPINION DIGESTS 1651 tomer under Section 2(d) may, to simplify bookkeeping, be expressed in the form of a discount from invoice price. In such a , there is neithercase, if we look at substance rather than form a price discrimination nor probable injury to competition, the two essential elements of a Section 2 (a) violation. If the lower price to dealers performing "stocking)' serv.ices is bona fide compensation for the performance of distribution services desired by the manufacturer, and is available to all competing customers on a nondiscriminatory basis, it is lawful under Section 2 (a) as well as 2 (d) of the Clayton Act. In my view, the statute was not intended to prevent a manufacturer from obtaining distribution through as many functionally distinct channels as his business needs require. A bona fide functional discount or allowance to customers, offered and paid on a proportionally equal servicesbasis as compensation for warehousing and similar rendered to the manufacturer, may increase effciency, decrease and reduce prices. Suchcosts, expand serv.ice to the consumer, nondiscriminatory distribution methods promote competition, encourage innovation, benefit the consuming public, and thus advance the basic goals of the antitrust laws. To require identity of treatment of customers trading on different functional levels or rendering different distribution services is to foster economic discrimination-the very antithesis of "the central purpose of 9 2 (d) and the economic realities with which its framers were v. Fred Meyer, Inc.concerned. (Fedeml Tmde Commission 390 l.. S. 341, 349 (1968).

The Commission here imposes an unreasonable and impossible burden on suppliers in meeting the requirement of "availabilty. It declares that compensation may be given only for services or facilities which all competing customers can provide. In other for any reasonwords, if some of a supplier s customers cannot including their own ineffciency-provide services or facilties which a supplier needs to promote more economical distribution he is barred from compensating other customers who are ready, wiling, and able to furnish such services or facilties. By thus reading into the statute something which is not there, the Com- , in effect, thatmission turns it topsy-turvy. The Commission says a manufacturer may not grant functional compensation to customers who earn it by rendering services he needs, unless he also gives the same compensation to other customers who do not earn it and render no services at all. Here again, neither Congress nor the courts can be blamed if, through administrative interpretation, the Robinson-Patman Act is converted into an anticompeti- %).

tion, antieffciency, anticonsumer statute. I agree with Commissioner Nicholson that the time has come for the majority of the Commission to reexamine its position. DISSEKTING OPINION JULY 9 1968 BY XICHOLSON Commissioner:

I would not issue an advisory opinion in this matter since the Commission does not have suffcient facts to determine whether the applicant' s proposed compensation of dealers, who provide stocking services, is inimical to the purposes of the Robinson-Patman Act.

The majority follows on a long line of Commission interpretations under which eligibility for functional discounts was solely related to the functional level of the buyer. ' In all of these cases it could be said that a seller s reimbursement of a buyer for services also benefited him .in the resale of the seller s product. However, whatever competitive disadvantage may be experienced by another buyer s failure to receive such compensation may, be due not to a subterfuge by the seller to avoid the purposes of the Robinson-Patman Act but merely to the unpaid buyer s reluctance to innovate, to attempt marketing effciencies, to engage in business risks, or to move with the times.

In none of these cases did the Commission carefully consider that its failure to permit compensation of the buyer for particular functions as a purchaser might hamper competition and effciency in marketing, nor did it consider the possibility that its sole concern with the resale functional level of the buyer "compels affirmative discrimination against a substantial class of distributors, and hence serves as a penalty on integration. " 2 In none of these matters did the Commission fully recognize that whiJe, at one time, distinctions between the various distribution levels American marketing had been clear-cut and the duties assigned to each level were rigidly defined, modern-day consumer needs and business response to such needs have resulted in a "proliferation of modern marketing units (whichJ defies neat nonmenclature " 3and descriptive labels.

1 See g., Agric1llt1lral Laboratories, Inc. 26 F. C. 296 (1938): Albert L. Whitin I1, Zfj G. 31Z (1938); General Foods CO'p. 2 F. G 798 (1956): Mueller Co. v. 323 F. 2d 44 (7th Gir. 1963); Vational Parts Warehouse 346 F. 2d 311 (7th Gir. 19G5): Monrul' Auto Eq1dpment v. 347 F. 2d 401 (7th Gir . 1965) : Pllrolator Products, Inc. :1,52 F. 2d 874 (7th Cir. 1965).

Report of the Attorney General' s National Committee to Study the Antitrust Laws, 207 (19.

31d. at 204.

, _ .

ADVISORY OPINION DIGESTS 1653 The majority assumes that the proposed discount wil amount to a violation of law. Commissioner Elman is certain that it wil not. I will not make either assumption. We lack the facts necessary to make the analysis suggested above-an analysis so necessary to the proper application of a statute not meant to "penaJize, shackJe or discourage effciency, or to reward ineffciency. '" (File No. 683 7086, released July 9, 1968.

No. 264. Stocking, quantity, and cumulative discounts. The Commission rendered an advisory opinion to a manufacturer of food serving equipment which involved a proposal to use stocking, quantity and cumulative price discounts. Under the first category, a discount of 50 percent and 15 percent would be given to stocking dealers who continually order in large quantities and maintain a regular stock of the product in question for local delivery to restaurants, hospitals, etc. The second category involves the following quantity discount schedule to dealers based upon each order: Amount pw'chased: Discount, pe1'cent 11 dozen -- - 50 11-24 dozen - and 5 25 and more dozen -- - 50 an-d 10 Each dealer will receive the following additional cumulative volume discount at the end of each year based upon the total dollar volume of purchases for that year:

, pel'centAmount p1.tTChased: Discount $1- 499 . - n ' -- nn - 500-$5,999 n $6,000- 499 -- 500-$10,499 - $11 000-$14999 n $15, OOO-Up - - n - Stocking dealers wil be in competition with nonstocking dealers and nonstocking dealers wil also compete with each other. Under the terms of the proposed pricing schedules, stocking dealers could get a price advantage of as much as 15 percent over nonstocking dealers, and nonstocking dealers could also receive up to a 15 percent price advantage over their nonstocking competitors. After making a brief explanation of the requirements of Sec. j H. R. Rep. No. 2287 , 74th Cong.. 2d Sess. 3 (1936). 1654 FEDERAL TRADE COMMISSION DECISIO 2 (a) of the amended Clayton Act, the Commission advised the requesting party as follows:

It is, of course, impossible to reach a definitive conclusion as to the economic impact of such a pricing proposal without an investigation. However, the Commission has given your request careful consideration, and it has concluded that it cannot give its approval to the proposal because it believes that the necessary ingredients arc present from which it can reasonably infer that such a proposal would likely result in the anti competitive effects proscribed by the statute. A pricing schedule which results in a price advantage of as much as 15 percent under the facts outlined in this case would therefore probably be illegal, unless it can be justified by provable cost differences in the manufacture, sale or delivery of such products or unless the lower price is made in good faith to meet an equally low price of a competitor. Commissioners EL'\AK and ;oICHOLSO dissent from that part of the advisory opinion relating to discounts for stocking dealers. (File "0. 683 7Il9, released July 9, 1968. 1'0. 265. Personal deodorant spray.

The Commission rendered an advisory opinion to a manufacturer of a personal deodorant spray concerning thc legality of some proposcd advertising.

Specifically, the Commission advised the requesting party that the product was not a drug but a cosmetic, nor had it been cleared, approved or endorsed by the Food and Drug Administration. Therefore, any claims which represent the product as a drug, or that it has been clem' , approved or endorsed by the government agency in question would be improper. Based upon all the facts and scientific information available to , the Commission also advised the requesting party that any advertising representations which go beyond the claim that the product inhibits the growth of body odor causing bacteria would violate Sections 5 and 12 of the FTC Act.

Finally, the Commission stated that, as a general rule, it would be inclined to question the use of any claim that a product is new" for a period of time longer than six months. (File ;00. 683 7004, released July 9 1968.

No. 266. Magazine sponsored contest to win a house. The Commission rendered an advisory opinion advising a magazine publishcr that there would be no objection to a proposal to give purchasers or readcrs thc opportunity to participate in a contest to win a house if implemented in the manner outlined below.

The plan as presented was to give the reader, whether a pur- , ADVISORY OPINION DIGESTS 1655 chaser or not, the opportunity to participate in a competitive contest to win a house. The contestant was to send in a numbered coupon clipped from the magazine with a written answer of fifty words or less to a question as, for example Why do I believe in democracy?" The answer was to be judged by an independent panel, with the best essay being declared the winner. The contest was to take place every three months, at a prefixed date, in a public community event. The purpose of the number was to identify the contestant, with the judges knowing only the numbers of the participants and not their names. (File No. 683 7094 , released July 17 1968.

No. 267. Legality of describing green tourmaline as "Emerald Green Tourmaline" or "Precious Tourmaline. The Commission was requested to render an advisory opinion as to the legality of describing green tourmaline as "Emerald Green Tourmaline" or as " Precious Tourmaline." The stone involved in the request was said to contain chromium, the same coloring agent which produces emerald when it occurs in beryl and the stone resembled emerald .in appearance. The Commission advised that it was of the opinion that the words "emerald" and "precious" may not be used in connection with the \'.ord "tourmaline" to describe the stone in question. (File No. 683 7124, released July 17 1968. No. 268. Agreement not to advertise prices. The Commission rendered an advisory opinion in which it stated that a joint agreement among competitors to refrain from price advertising would constitute a violation of Section 5 of the Federal Trade Commission Act.

The request which prompted the Commission s opinion stemmed from a proposal to use the following language in an association standards of ethics: "Advertising of rates or comparison of competitor s rates or charges, is prohibited on the basis that such advertising demeans the profession.

The present code now in effect uses the word "discouraged" in lieu of the word "prohibited.

In ruling that such a provision would be ilegal, the Commission said:

",*" since price difference and price comparison may be valuable stimulants to competition, any agreement to suppress the advertising of the two would constitute an agreement in restraint of trade violative of Section 5 of the Federal Trade Commission Act.

Moreover, as to the present use of the word " discouraged" in the code now in effect, you are informed that any agreement to "discourage" advertising of rates or rate comparison would also be in restraint of trade and violative of Section 5 of the Federal Trade Commission Act. The Commission is aware that you have not requested this advice, and indeed under the Commission s Rules an advisory opinion j,g usually considered inappropriate because the practice is one which is already engaged in; however, since your adoption of this rule has come to the attention of the Commission, the Commission would be remiss in not suggesting its discontinuance. (File No. 683 7138, released July 17 1968. No. 269. Pooling of allowances for purposes of joint advertising. The Commission was requested to render an advisory opinion concerning the legality of a proposal by a group of independent retailers to pool the advertising allowances due the members for purposes of joint advertising.

Under the proposal, a1l money earned by the members under the suppliers' cooperative advertising programs would be assigned to the group in a collective advertising effort for the suppliers. Each supplier would receive, on the basis of the amount of money earned from him by all members of the group, radio advertising through the medium of three minute programs, each of which would have one minute of time available for the suppliers' commercial messages. The content of the one minute commercial would be governed by the suppliers themselves and would not be connected in any way with the retailers' advertising. As part of the proposal, for each program a supplier receives the retailers would receive broadcast time on the same stations for their message, which would be institutional in nature and would extol the advantages of dealing with independent retailers. Under this type of advertising program, it would not be possible to mention indiv.idual dealers nor will prices be mentioned in such advertising.

The opinion advised that the Commission could see no objection to the proposal on the understanding that the fund used by or on behalf of the participating group to purchase advertising space wi1 consist only of the aggregate of advertising allowances properly available to the members individually under the terms of Section 2 (d) of the Clayton Act, as amended by the Robinson- Patman Act. In brief, that Section prohibits the payment by sellers of allowances to some customers which are not made available on proportionally equal terms to all competing customers. In this connection, the opinion further advised that it would unlawful if the combined power of the group was used to induce from the suppliers allowances greater than those to which the ADVISORY OPINION DIGESTS 1657 individual members were entitled under this Section. (File No. 6837147, released July 17 1968.

:-0. 270. Necessity for disclosing country of origin of imported ski.

The Commission was requested to render an advisory opinion as to the marking requirements applicable to a ski which is imported from abroad in an unfinished state and which would have to have the decal and the top finish applied in this country, as weil as the final process for finishing the bottom or the running surface. The opinion advised that in the Commission s view it wiil be necessary to disclose the country of origin of this ski in a clear and conspicuous manner to prospective purchasers at the point of sale. (FiJe No. 683 7135, released July 17 1968. No. 271. Adoption of penalty clause which inhibits competitors. The Commission advised a requesting party that his proposal if adopted, would violate Section 5 of the Federal Trade Commission Act.

The plan and its background were described as follows: It is customary in the specified market for sellers of components furnished by a single supplier to offer free design services to architects and engineers engaged in planning new .construction. When the contracts arc let, however, that seiler of components who has provided the free design services is not always the successful biJder.

It was proposed, therefore, that the supplier contract and agree with all whom he supplies that a money penalty be imposed on any successful bidder who had not provided the free design services. The prescribed penalty would be paid over to that unsuccessful bidder who in fact provided free design services, failing which the supplier might at his option, cut the offending bidder off. The Commission noted that any direct, or indirect, agreement between competitors which interferes with the free establishment of a market price whether that price be expressed in money, service, or in any other manner, is unlawful. (File No. 683 7137 relcased Aug. 17, 1968.

No. 272. Sales promotion plan-opportunity to buy at a savings. The Commission approved a proposed sales promotion plan described as follows:

The requesting party proposes to offer major oil companies its services in the promotion of the retail sale of gasoline. Partici- 1658 FEDERAL TRADE COM2IISSION DECISIONS pating gasoline stations wi1 be provided with 3 x 4 cards picturing some product, most probably a nationally advertised appliance. These cards wi1 be distributed gratis to those who wish to have them. No purchase of any kind will be required. The appliance pictured on the card wi1 be offered for sale at a price substantially less than the price at which it is ordinarily available through customary retail outlets. The holder of the card may obtain the appliance by sending the card with remittance to a designated Post Offce box. His purchase will be mailed to him. A purchase may be made without a card if remittance is accompanied either by a fascimile of the appliance or a word description thereof.

The plan was approved on the assumption that the offered savings would in fact be available as prescribed in the Commission Guides Against Deceptive Pricing. (File No. 683 7134 , released Aug. 17, 1968.

No. 273. Publication by trade association of suggested resale price schedule for materials.

The Commission rendered an advisory opinion advising a trade association of independent shops engaged in rendering repair service that its proposal to disseminate a suggested resale price schedule for materials used would be likely to result in a violation of law.

The schedule in question consisted of two tables, one of which gave the shop owner a quick reference to suggested resale prices for materials and the other of which gave him an explanation of the total by itemization of each resaleable product. The schedule explained that after hours of study it was found that computing labor and materials charges by allowing a price for each hour of labor was very unfair to the shops and far below their cost of materials. Hence the schedule gave the shop a quick method of computing the price of materials to which would be added the cost of labor.

The Commission advised that implementation of this proposal by the association would be likely to result in a violation of law. Even though couched in the form of a suggestion, the natural and probable result of such an action by the association would be to persuade substantial numbers of the members to charge the prices suggested, thus leaving an almost inescapable inference of an agreement among competitors to charge a uniform price for materials. Such an agreement, the Commission stated, would be a clear restraint of trade under existing law. ADVISORY OPINION DIGESTS 1659 It was the opinion of the Commission that the prices charged by the members for materials should be determined by the natural forces of competition, not by concerted activity on the part of the members acting through their trade association or otherwise. (File No. 683 7148, rei cased Aug. 17, 1968. ,,0. 274. Proposal to reduce discounts granted small volume purchasers.

The Commission rendered an advisory opinion in which a distributor of leather specialty goods was informed that a proposed merchandising plan under which those customers whole annual purchase volume is less than an arbitrary and fixed amount would be granted a smaller discount than would be granted those whose purchases exceed such amount cannot be approved because it appears on its face to violate Section 2 (a) of the amended Clayton Act if it were put into operation.

The proposed merchandising program wil continue the current discount of 50 percent off list to those whose annual purchase volume exceeds S250. All other accounts will be granted 40 percent discount on orders of less than $200 list and 50 percent discount on orders over this amount until their cumulative purchase volume reaches $500 list at which time each wil receive a rctroactive rebate adjustment on past purchases and the current discount on subsequent purchases. A service charge of 32 is to be charged on orders of less than $20 net.

The Commission further pointed out that price discriminations to customers who in fact compete with each other in the resale of commoditics of like grade and quality would violate Section 2 (a) Df the amended Clayton Act unless cost justified or unless the lower price is a good faith meeting of a competitor s equally low price. (File No. 683 7146, released Aug. 17, 1968. :No. 275. Necessity for disclosing country of origin of imported watchbands.

The Commission was requested to furnish an advisory opinion as to the necessity for disclosing the country or origin of watchbands which will be assembled in the Virgin Islands wholly from parts imported from Hong Kong.

The opinion advised that in the Commission s vie\v the country of origin of these watchbands must be disclosed in a clear and conspicuous manner either on the bands themselves or on the packages in which they are sold. (FiJe No. 683 7113 , released Aug. 17, 1968.

No. 276. Disciosure of foreign assembly not required for product made of domestic components.

The Commission advised a requesting party that in the absence of facts indicating actual deception disclosure of the foreign assembly of a product made of domestic components would not be required.

The domestic components accounted for approximately 90 percent of the manufacturing cost of the finished product; foreign assembly accounted for approximately 10 percent of the cost of the finished product. (File No. 683 7140, released Aug. 23, 1968. No. 277. Formation of consumers savings group. The Commission was requested to render an advisory opinion as to the legality of a proposed method of organizing and operating a consumers savings group.

Under the facts as presented, certain select merchants in a town would agree to give designated cash savings to the members of the group upon the purchase of merchandise for cash, which would be a percentage of the purchase price. This savings would not be paid directly to the consumer at the time of purchase but would be remitted to the group and held in reserve to be disbursed on a cyclical basis. The group would retain no portion of the member s savings, but would earn its profits solely from the fee charged for the consumer s membership in the group and from interest earned on the funds while they were being held for the consumers.

The Commission advised that it could see no objection to the operation of the gTOUp in the manner stated provided the purchase prices to be charged the consumer on which his percentage savings were to be computed were in fact the retailers ' own former prices for the articles sold within the meaning of Guide I of the Guides Against Deceptive Pricing. In the Commission view, the entire proposal was based on an assurance to consumers that they would save a stated percentage of the purchase prices actually paid and that those prices would be the regular prices customarily charged by the retailers or the prices at which the articles were openly and actively offered for sale in good faith for a reasonably substantial period of time in the recent, regular course of business. (File No. 6837143, released Aug. 23, 1968. No. 278. Commission approves proposed franchise agreement for chain of pizza and sandwich restaurant-carryout shops. The Commission issued an advisory opinion approving a pro- ADVISORY OPINION DIGESTS 1661 posed franchise agreement between a trademark-trade name owner and individual operators of pizza and sandwich restaurantcarry-out shops.

Some of the important provisions of the agreement are the following:

1. Either the licensee or the licensor may submit to arbitration any question concerning agreement termination rights and obligations, including return to the licensee of all or any portion of the initial fee.

2. Licensor must make available for sale to licensee the foods paper products and supplies necessary for conducting the business but licensee is not required to purchase them from licensor. 3. Licensor will prepare and place advertising directed to ultimate consumers in the general area of licensee s shop; licensee wm provide the funds for such advertising; licensor will give licensee a quarterly accounting of the use of such funds. 4. Licensor may direct information other than price to go into signs and advertising.

5. The food sold and service provided must meet standards of quality set by licensor.

6. Licensee is not to operate a similar business for 2 years after termination of the agreement within 2 miles of his former shop. (File No. 6837150, released Aug. 23 1968. No. 279. Commission advises agricultural cooperatives it has no objection to proposed purchase of country elevators of financially-troubled direct competitor.

The Commission issued an advisory opinion to agricultural cooperative applicants who wish to acquire several country elevators of a financially-troubled direct competitor. The applicants are a statewide federated agricultural association and affliated local farmer cooperatives. Applicants, and the company with the operating plants sought to be acquired, purchase farm products from growers and resell the partially processed products to further processors, canners and other intermediate distributors. The state organization offers to help the financially-troubled company by furnishing technical assistance on a contract basis in the farm supply and commodity marketing area to help the company in continuing to be an important factor in a particular industry. Individual market shares of the cooperatives are reported to be small.

The Commission advised the applicants it has no objection the proposed acquisition of some of the assets of the financially- 1662 FEDERAL TRADE COMMISSION DECISIO!,S troubled competitor. (File No. 683 7154, released Aug. 27 , 1968. No. 280. Commission advised applicant it cannot approve a pro, posed partial acquisition of a direct competitor s business that may substantially increase applicant' s market power. The Commission issued an advisory opinion to an applicant who sought premerger clearance to acquire a number of operating plants of a direct competitor.

According to the information submitted by the applicant, both companies purchase an agricultural product from growers and resell the partially processed product to further processors and canners. Both companies appear to be among the top four firms in the market and to have substantial shares of the market. The Commission expressed the opinion that it cannot approve the proposed acquisition because such an acquisition may substantially increase applicant's market power and thereby tend to produce anticompetitive effects in violation of the Clayton Act as amended. (File No. 683 7151, released Aug. 27, 1968. )10. 281. Trade association recommendations with respect sales periods and services furnished by members and cash discounts by suppliers.

The Commission rendered an advisory opinion to a trade association of elothing retailers that its proposal to hold discussions conduct studies and make recommendations to its members and their suppliers with respect to three problems which confront the industry would probably be ilegal.

The association advised that competitive conditions have forced the retailers into longer and longer sales periods which squeeze profit margins in the stores and contribute to improper merchandise assortments for one-third of the year. Second, it was stated that the cost of alterations was creeping upward as labor costs increase, thus adding to overhead expense and that only a limited number of stores charge for these alterations. Third the association advised that manufacturers vary in the amounts of cash discounts they wil give and in the time periods during which they wjJ be allowed, thus confusing retailers and resulting in substantial clerical errors. The association felt that it would greatly simplify retailer record keeping if a uniform date of payment and uniform discount terms became an accepted practice in the industry.

In an effort to find solutions to these problems, the association contemplated three steps concerning which an opinion was de- ADVISORY OPINION DIGESTS 1663 sired. First, it asked if it could include articles in its bulletins about the benefits of starting clearance sales at later dates and otherwise publishing information designed to show that stores better serve customers when they operate as a one price store for the maximum amount of time during the year. Second, it inquired as to whether it could include cost information on alterations showing the inequities of not applying reasonable charges for alterations and as to whether local merchants could discuss without specifics as to price, the merit of charging for alterations and urge local cooperation. Third, the association inquired as to whether it could include in its publications information on the desirability of uniform cash discounts, pass resolutions and urge manufacturers to cooperate.

The opinion advised that all three of these proposed courses of action would, in the Commission s view, be of questionable propriety under existing law. With respect to the passage of resolutions urging manufacturers to adopt uniform cash discount terms, it was the Commission s opinion that, even if unaccompanied by any intent to force the manufacturers to adopt the policies set forth therein, there was implicit in such resolutions by the retailers too grave a danger that they would serve as a device whereby the concerted power of the members of the association was brought to bear to coerce the manufacturers to conform their discount policies to the restrictive standards of the resolutions, or, at the very least, as an invitation to enter into agreements among themselves to do so.

The other two proposals seemed to the Commission to .involve activities by the association which would lead to suppression of competition among the members. In the Commission s view, the time and duration of sales and the furnishing of alterations without additional charge are methods of competition among the retailers. The natural and probable result of what the association proposed to do would be to limit competition in these areas and thus would constitute an unlawful restraint of trade. While the steps which the association contemplated may not be the equivalent of an agreement among the members to follow the recommended procedures, still if they had the effect of persuading substantial numbers of those members to do so, it would raise a serious inference of such an agreement and hence would be of questionable propriety under the antitrust laws. Therefore, any actions by the association which would have a tendency to bring about that result could not, the Commission stated, meet with its approval1. (File o. 683 7141, released Aug. 27, 1968. 1664 FEDERAL TRADE COM MISSION DECISIONS No. 282. Marking requirements for shirts assembled in the l.united States from foreign components. The Commission advised an apparel manufacturer that the Textile Fiber Products Identification Act would require an affirmative disclosure of the particulars of foreign origin under the following facts:

The manufacturer proposed to contract with or establish a plant in Hong Kong where foreign-made shirt cloth would be cut into parts and simple sewing would be done. The parts would then be shipped to a plant in the United States where, through a process of assembling, sewing and finishing of the cut parts individual shirts would be manufactured. From the cost data furnished it appeared that 60 percent of the cost of labor would be performed in this country and 40 percent in Hong Kong. The material and labor furnished in Hong Kong would account for 61. percent of the total cost of finished shirts and the labor performed in the United States would account for 38.5 percent of the total. The Commission advised that it was of the opinion that, under the laws it administers, textile products produced and processed in this manner must be labeled as "Assembled and sewn in the l.united States of materials imported from Hong Kong. " (File No. 683 7158, released Aug. 27, 1968.

No. 283. Foreign origin-Container disclosure for contents of multiple foreign origin.

The Commission advised a requesting party regarding information as to origin which should be set forth on a kit containing three domestic and eight foreign components from four different fore.ign countries.

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.

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 r countriesJ W, X , and Z, DISSENTING OPINION Al'Gl'ST 31 , 1968 BY ELMAN Commissioner:

I would have granted the applicant' request that it be per- ADVISORY OPINION DIGESTS 1665 mitted to mark the kit to read "domestic and foreign items enclosed. " (File No. 683 7156, released Aug. 31, 1968. 1'0. 284. Location of foreign origin disclosure. 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.

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. 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.

In ruling that a meaningful disclosure would be required, the Commission said:

\Vhenevcr an affrmative 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 \vauld not be opened until after the pun hase has been consummated. Since the disclosure of origin on the underside of the flahvare cannot be seen through the cover of the container, the Commission is of the opinion that the disclosure \Vie 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. (File )/0. 6837155, released Aug. 31, 1968. o. 285. Formation of common marketing association by agricultural cooperatives.

The Commission rendered an advisory opinion to the effect that it could see no objection to the formation by three ag-ricultural cooperatives of a nonprofit marketing association. While the marketing association was to be formed by the three cooperatives under state Jaw, 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.

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 a1l members with the association. It was further provided that the association would not market the products of nonmembers.

The proposed 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 a1l 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.

The Handler s Contract between the association and a1l authorized handlers provided that the handler was to act as the hired sales agent for the association and was to bc 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.

The opinion pointed out that the purpose of the Capper-Volstead Act (7 D. 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 wil 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 .3tages in the marketing process. The opinion further advised that the Commission had considered the proposal and was of the opinion that formation of the ADVISORY OPINION DIGESTS 1667 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. (File No. 683 7129, released Aug. 31 1968.

"'0. 286. Foreign origin- Labeling requirements for tennis shoes made in Virgin Islands with foreign component. 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. The uppers accounts for less than 30 percent of the total product value of the shoes and the other components are of domestic origin. (File 1'0. 683 7139, released Aug. 31 , 1968. No. 287. Publication of advertising standards by private association.

The Commission announced its approval of advertising standards proposed for publication by a private association. 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. It therefore devised a statement setting forth a number of practices which have heretofore been found unlawful by the Commission and proposed 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.

Thc 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 objcction to your proposed document as written, or its proposed usc. (File No. 683 7159, released Sept. 6, 1968. 1668 FEDERAL TRADE COMMISSIO DECISIONS No. 288. Receipt of promotional allowances prohibited by order. 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. According to information provided by the respondent, the supplier essentially has offered to pay 50 percent of the respondent' 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 wil at some undisclosed future time offer thc special promotion to each.

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.

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 secm 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 \vould participate 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. Accordingly, the respondent was directed to inform the Commission of any determination it makes to participate in this promotion. (File ",0. C-1053, released Sept. 6 , 1968. ) (Issued under authority of Section 3.61 (c) of the Commission s Rules of Practice (1967).

No. 289. Compost peat.

The Commission rendered an opinion to a company which sought permission to use the term "compost peat" as descriptive of organic, decomposed municipal refuse. ADVISORY OPINION DIGESTS 1669 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.

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.

Under the facts presented to it, the requesting party proposes to contract with various cities to handle their municipal refuse. All non organic material wil be removed from such refuse and sold to various users therof. 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. (File No. 6937010, released Sept. 6, 1968. No. 290. Membership in trade association by manufacturer under Commission order.

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. 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 manufacturer 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 ,,,,,, 1670 FEDERAL TRADE COMMISSIOK DECISIONS it had no objection to the signing of the proposed articles of incorporation by the inquiring manufacturer. (File No. D-86I8 released Sept. 6, 1968. ) (Issued under authority of Section 3. 61 (c) of the Commission s Rules of Practice (1967). No. 291. Commission refuses to grant blanket approval to small baking company to be acquired by anyone including corporations subject to Commission acquisition-prohibition orders. The Commission rendered an advisory opinion in response to a premerger clearance request from the owner of a small baking company who wants to selI the business to anyone including corporations subject to Commission cease and desist orders containing provisions prohibiting further acquisitions without prior Commission approval.

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.

From the data submitted by the applicant, it appears that, while the population had declined in its trading area and its sales have produced reduced revenues, the company has continued to operate profitably. "'0 evidence was presented of any attempts to sell the business to any other independent baker or to anyone presently outside the baking industry. (File No. 693 7003 , released Oct. 1, 1968.

No. 292. Paua shell being described as "marine opal." 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 opa1."

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 jn Australia which is far more expensive and preferable than the paua shell, which is an organic substance found in the ocean. "Cnder 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. Commenting upon the inadequacy of the word "marinc " to remove the deceptive nature of the word "opal " the Commission ADVISORY OPINION DIGESTS 1671 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 opal is an inorganic mineral found in the ground. (File No. 693 7015, released Oct. 1, 1968. No. 293. Commission declines ruling on use of term "humus and states Peat Industry Trade Practice Rules apply if material comes within certain definitions. The Commission responded to a request for an advisory opinion (i) concerning the use of the term "humus" in proposed marketing of certain top soil material, and (ii) where there is anything in the proposed operation which is subject to Commission rules or regulations.

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:

Marked- Top Water Holding capacity (percent) of its dry weight - 950 90G 91G pH -- :Joisture (percent) -- 82. 87. 83. Ash (percent dry basis) -- 12.4 Organic Content (percent dry basis) -- 93. 87. 91.0 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. The Commission invited attention to this definition of humus in Soil: The YeuTbook of Agriculture (1957), prepared by the United States Department of Agriculture and published by the S. Government Printing Offce (at page 759) : HUMUS-The \vell-decomposed, more or less stable part of the organic matter in mineral soils.

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 Section 1.1 (c) of the Commission s Procedures and Rules of Practice. Applicant also asked whether there is anything 1672 FEDERAL TRADE COM).ISSJON DECISIONS in the proposed operation which comes under Commission rules or regulations.

Applicant was advised that the Commission s Trade Practice Rules for the Peat Industry, as promulgated January 13, 1950 (a copy of which was enclosed), 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 P1"oduct: 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. The Commission invited attention to the note appended to Rule , 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 deception should be much reduced, the Commission commented.

With regard to the second question, the Commission again invoked Section 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. )Jormal advisory opinion procedures do not provide for such testing or investigation. (File No. 693 7004, released Oct. 1 , 1968. 1'0. 294. Advertising on food product wrapper. The Commission advised a food product manufacturer that would not obj ect to advertising proposed to be placed on the wrapper for the food product.

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 rej ect 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. (File No. 6937011, released Oct. 8, 1968.

: , ADVISORY OPINION DIGESTS 1673 No. 295. Domestic origin marking on product containing foreign made components.

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 or 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" 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.

With respect to the second question, the Commission concluded as follows:

::'* the "Made in esa" mark ,vould constitute an affrmative 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 " Jadc in USA" without a clear and conspicuous disclosure indicating the foreign country of origin of the imported components.

(File No. 693 7001, released Oct. 8, 1968. No. 296. "Failing company " theory applied in Commission proval of sale of assets to a competitor. 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. The sellng 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. (File 1\0. 693 7023 , released Oct. 8, 1968.

No. 297. Premerger clearance- Failng 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:

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

(ii) 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 ordinarily stated but who is not now in any position to buy any of the properties; (Iii) The proposed sale is expected to generate suffcient funds to meet outstanding debts and provide necessary working capital to continue the company as a going concern and an active competitor. (File No. 693 7030, released Oct. 8, 1968. No. 298. Disclosure of origin of imported lenses finished domestically.

The Commission rendered an advisory opinion as to whether certain glass filter lenses used on welding helmets could be described as "Made in U.

l.nder 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. In denying use of the "Made in U. " mark on such a product, the Commission said:

,** a "Made in U. " mark on the finished product would constitute an affrmative 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. " without a clear and conspicuous disclosure indicating the foreign country of origin of the imported glass.

(File No. 693 7026, released Oct. 8, 1968. No. 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 small 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. ADVISORY OPINION DIGESTS 1675 CONCURRING OPINION OCTOBER 11, 1968 BY MACINTYRE Commissione1':

The Commission s advice herein is in conformity with the public policy declared by Congress in 19 l..S. Code Sec. 1304. There it is required that any imported article or the container in which it is packed shall be marked in such manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of such article. The provision of law does not excuse the imported from penalties for violation thereof simply because the importer removed the imported article or articles from the original package and repacked the article or articles in new packages which failed to disclose the country of origin. The penalties for violation include fines of $5000 or imprisonment for not more than one year, or both. It would be tragic for the Commission to issue any findings which would mislead any businessman regarding these requirements of the law. DISSENTING OPINION OCTOBER 11, 1968 By ELMAN and JONES Commissioners:

The Commission, in disregard of prior decisions and announced Statement of Policy, is applying a pe1' se rule requiring disclosure of foreign origin of imported products. (File No. 693 7009, released Oct. 11, 1968.

)10. 300. Contest and its advertising by retailer deemed objectionable.

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

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. The Commission noted that the proposed contest is so intertwined with the proposed advertising that the plan as a whole, if implemented, would be in violation of law. (File No. 693 7031 released Oct. 11 , 1968.

1676 FEDERAL TRADE COMMISSIOK DECISIONS No. 301. "Danish" as applied to furniture. 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: (I) "Danish Danish Modern" and like terms should be used only as to furniture produced entirely within the Kingdom of Denmark;

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

(3) "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. (File No. 693 7034, released Oct. 22, 1968. No. 302. Promotional plan involving "cents off" coupons and demonstrators.

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. Offered to all competing retailers in a selected trading area irrespective of whether they buy directly or through wholesalers the coupons wil 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 3 girl demonstrators giving out coupons in attendance for 3 days and smaller stores wil have 1 or 2 girls in attendance for 1 or 2 days. Participating manufacturers wil 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 wil also be attached to the shelf in front of the product that is being promoted.

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 ADVISORY OPINION DIGESTS 1677 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 wil be permitted to hand out the coupons as the customer passes by the cash register. ;ootice of the availabilty of the basic and alternative plans wil be made by (I) Jetter every six 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 wi1 inform their members, (3) publishing ads every three months in two newspapers widely circulated among the trade, (4) letters sent to the buying offces 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). In the opinion, the Commission stated that the proposed promotional plan would not bc in conformity with the law for the following two reasons:

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 wil 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 a11 competing customers. "Cnder your proposed plan, some stores may be furnished the services of demonstrators for up to three days, whereas some competing stores wil be supplied with such services for only one or t\VO days. Because of this disparity in the amount of time during which demonstrators services wil be furnished, the Commission believes that the plan does not comply with the required statutory proportionally equal treatment.

The second defect in the proposed plan relates to the following statement which appears on the face of the " cents-off" coupon: " Good Today Only- During Demonstration." According to the terms of the proposed plan, each coupon wil be valid for one 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.

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.

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 rese1lng 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. 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 suffciently informative to apprise prospective retailers about the plan. But regardless of whether, the stated methods of notification or other 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.

(File No. 693 7018, released Oct. 22, 1968. :'0. 303. Commission does not object to program employing data processing equipment to collect and disseminate actual production and sales information. * The Commission issued an advisory opinion telling an applicant it does not object to a proposed program to employ data processing equipment for the rapid collection and dissemination of actual prodution and sales information.

The program is to be made available to poultry processors. Individual identity of participants wil not be revealed to others except in long-and-short emergenices. It is understood that such a situation exists when a processor finds he has insuffcient supply of chickens (i. he is "short") to fill the contractual obligation under a sales contract he has made; another supplier may have a surplus (i. he is "Iong ); 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.

The proposal involves the collection and reporting of actual production and sales data rapidly; it wil not deal with predictions by participants nor with asking, suggested or "future" prices. 'Jhe service is to be made available solely to poultry processors on a daily basis; poultry distributors, applicant says, are not in- .. The Commission reconsidered this matter in light of United States v. Container CorjJoration 39, S. 333 (1969), withdrawn by the Commission on January 22, H170. ADVISORY OPINION DIGESTS 1679 terested in participating. Other subscribers may receive weekly or monthly information summaries but not daily reports. 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 fuji report indicating the manner in which the plan has worked in actual practice. (File No. 693 7042 released Oct. 22, 1968.

No. 304. Three-party promotional program under investigation. The Commission has been requested to render an advisory opinion to a supplier regarding the use of a tripartite promotion plan. The requesting party is subj ect to an outstanding cease and desist order prohibiting it from making promotional payments to its customers in a discriminatory manner. The supplier seJ1s its product through grocery, department discount, hardware and other retail stores. The Commission advised the requesting supplier that it had instituted an investigation of the operation of the promoter s program and therefore was of the opinion that the request was inappropriate at this time. (FiJe No. D-8175, released Oct. 22 , 1968. ) (Issued under authority of Section 3.61 (c) of the Commission s Rules of Practice (1967).

No. :105. Sales below cost provision in ethical advertising guide. In Advisory Opinion Digest No. 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.

The foJ1owing revised sales below cost provision was subsequently found unobjectionable:

Members wil not use below cost advertising as bait advertising. However either merchandise or servicss or a combination of both may be offered below a member s total cost for limited period of time in clos€MQut sales, stock reduction sales, promoting offers, provided such offers are truthfully and non deceptively made and the member fuBy performs according to his offer.

(File No. 683 7097, released Nov. 18, 1968. No. 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.

, 1680 FEDERAL TRADE COMMISSIO:\ DECISIONS The Commission issued an advisory opinion concerning a computerized inventory control system to be furnished suppliers by a third-party promoter.

The promoter proposed to computerize sales data and project product inventory requirements for subscribing suppliers pursuant to information periodically obtained from participating retailers.

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 "wil 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. " (File No. 693 7025, released Nov. 25, 1968. No. 307. Foreign origin of cloth made into tablecloths in U. permissible labeling-proposed trade name and trademark; Commission warnings.

The Commission issued an advisory opinion concerning permissible labeling of tablecloths converted, dyed and finished in the United States from cloth imported in the greige from Japan, and to be sold in interstate commerce.

Submitted for Commission consideration was a label containing a proposed 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 suffx. The trademark looks like a European heraldic design.

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. A. of cloth imported from Japan.

Further, in the opinion of the Commission, Rule 34 (b), 16 CFR 9303. 34 (b), of the Commission s Rules and Regulations 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. Commissioners Dixon and :VIacIntyre do not concur for the reason that this ADVISORY OPINIOK DIGESTS 1681 advice appears to them to be erroneous. (File No. 693 7021 released Nov. 25, 1968.

No. 308. Commission does not object to proposed acquisition by dairy products producer-processor- distributor of another processor-distributor.

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.

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 fifty percent of the raw milk needs of Company B and it is not anticipated that non-Company A members wi1 be foreclosed as a result of the proposed merger.

Company A and Company B contend that the proposed combination wiil 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.

Commissioner MacIntyre did not participate in this matter. (File No. 693 7046, released Nov. 25, 1968. No. 309. Inclusion of provision in cooperative advertising agreements limiting price advertising by retailers. 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 wil not qualify for cooperative reimbursement jf 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.

The requesting party explained that this provision is intended to assist manufacturer-clients to protect the qualiy 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. 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, yearround basis. In such program a manufacturer customarily offers to pay, on proportional terms, a fixed percentage of his customer 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.

The Commission further pointed out that it does not sec 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.

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. DISSENTI!,G OPINION NOVEMBER 27, 1968 BY ELMAN Commissioner:

In this advisory opinion the Commission holds that it is illegal pet se for a manufacturer to include in a regular cooperative advertising program a provision that he wil not reimburse a retailer for any advertisement featuring a loss-leader price below the wholesale price paid by the retailer. I emphasize the per se character of the ruling because these are the only facts before us. There is no indication whatsoever that the provision is part of a ADVISORY OPL',ION DIGESTS 1683 scheme whereby the manufacturer seeks to fix prices or place a floor under resale prices, or restrict price competition at the retail level. On the contrary, it is clear that each retailer remains entirely free to sell, and to advertise, the product at as Iowa price as he wishes, including below cost.

The question is whether a manufacturer who believes that advertisements featuring below-cost retail prices damage him and degrade his product is nonetheless compelled to subsidize such advertisements by retailers. The manufacturer s position, simply stated, is that a retailer may sell and advertise the product at any price he wishes, but that if he chooses to advertise the product at a below-cost price, the manufacturer should not be required to pay for the ad. Is this an unreasonable position ? The Commission s answer is that it is illegal pcr se \vithout more. The implications of the Commission s ruling are startling. While below-cost selling is not in all circumstances illegal, it is not merely an unfair method of competition, it is a crime under Section 3 of the Robinson-Patman Act, to sell goods at below-cost prices for the purpose of destroying competition or eliminating a competitor. United States v. National Dairy Corp. 372 U. S. 29 (1963).

The Commission holds today, however, that a retailer who engages in such illegal below-cost selling may require one of his principal victims, the manufacturer, to become an involuntary accessory to the crime. It holds that a manufacturer cannot engage in a regular cooperative advertising program unless he also agrees to subsidize the advertisements of even those retailers whose only interest in his product is to advertise it, for selfishly predatory purposes, as a below-cost "traffc builder. " That such a ruling should emanate in 1968 from an agency of government supposedly concerned with the protection of competition and small business-and which continually disavows any hostiity to cooperative advertising-is disconcerting, to say the least. Commissioner MacIntyre did not participate for the reason that he considers both the advisory opinion and the dissent thereto to bc so confusing as to render them not only valueless but also perhaps troublesome to the business community. (File No. 693 7045, released Nov. 27, 1968.

1'0. 310. Disclosure of country of origin of imported watchbands. The Commission was requested to furnish an advisory opinion as to the necessity for the disclosure of the country of origin of a watchband or watchcase which was attached to a watch in foreign country prior to importation into the United States. The Commission advised that in its view the fact that watchcases are imported need not be disclosed and that the country of origin of a watchcase with a watchband permanently affxed thereto need not be disclosed, but that the country of origin of a metallic watchband of the detachable type must be disclosed. (File No. 6937022, released Nov. 27, 1968.

No. 311. Origin disclosure of imported upper material used in shoes.

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. 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 second contemplated method of production, the fabric will be made abroad in its entirety. Where the upper material is completely of foreign origin it wil represent approximately 35 percent-40 percent of total material costs for a pair of \vomen s shoes and approximately 40 percent of total material costs for men s shoes. In responding to the request for an advisory opinion, the Commission made the following general observations: First, the Commission construes any affrmative representation that products are made in the U. , as constituting an affrmative reprsentation that the products are made in their entirety in this country unless there is a clear and conspicuous disclosure of the origin of the imported part or parts. Further, in the absence of any affrmative misrepresentation as to origin, the Commission is of the opinion that, under the facts as presented, it wil not be necessary to disclose the country of origin of the imported upper material.

Lastly, you have inquired as to whether disclosure would be required if the shoes are manufactured by a well-known American concern or bear a well-known American trademark. The answer to this question would depend upon whether, as a practical matter, the use of such name or trademark constitutes a representation of domestic origin. The Commission believes that each such case must be judged on its own merits in view of the surrounding facts and circumstances, and that no rule of general application can be announced.

ADVISORY OPINJOX DIGESTS 1685 (File No. 693 7033, released :'ov. 27, 1968. No. 312. Commission declined to approve proposed three party promotional plan in the food industry. The Commission issued an advisory opinion informing an applicant that his proposed three party promotional plan in the food industry would violate statutes administered by the Commission.

Under the plan, the promoter proposes to solicit sales of TV advertising time to suppliers of products retailed principally through grocery stores. The rates charged suppliers would be based exclusively on the television time furnished the supplier. In addition, each such supplier would receive the right to have .its products promoted in the establishment of participating retailers. Retail participation in the plan would be solicited by the promoter through invitations published in trade journals of general circulation to the retail trades. Retailers would participate in the plan by providing special in-store displays of products specified by suppliers who purchase advertising time on the promoter programs and by agreeing with such suppliers to maintain during the period of the promotion a reasonable inventory of the products involved in the in-store promotion. The display obligation of each participating retailer would be geared to the participating retailer s facilities and the product or products to be displayed by that retailer. In return, participating retailers would obtain advertising on the promoter s television programs in accordance with a formula giving each participating retailer a minimum 10second advertising spot on a television program during the specified period of promotion. Additional 10 second spots would bc allowed on the basis of the retailer s purchases during an immediate prior period of suppliers' products covered by the promotional plan.

On the basis of the information submitted in connection with the application for an advisory opinion, it appeared to the Commission that the proposed arrangements for individual negotiations between suppliers and retailers with respect to display obligations of the retailers would probably violate Section 2 (d) of the Clayton Act, as amended, and possibly Section 5 of the Federal Trade Commission Act. Furthermore, the plan made inadequate provision for informing the retailers of their opportunity to partici pate.

Commissioner Elman did not concur in the Commission s opinion. (File No. 693 7029, released Dec. 20, 1968. No. 313. Marking of 18 karat white gold ring with platinum baguette prongs.

The Commission rendered an advisory opinion in which it advised a ring manufacturer that it would be improper to place the following mark on rings composed of 18 karat white gold with platinum baguette prongs: "18K-Plat."

In rej acting the proposed mark, the Commission cited the following two reasons:

First, since the prongs of the center stone are made out of white gold which resembles the color of the platinum baguette prongs, prospective purchasers might believe that the center prongs as well as the baguette prongs are also made of platinum. Second, to the uninitiated prospective purchaser, the proposed mark, coupled with the similarity in color of the entire ring, might mean that the ring is made in its entirety out of platinum consisting of 18 karat fineness.

Similarly, the Commission also rejected two other proposed markings ("18K- IO% Plat" and 90;70 18K-I0;7o Plat." ) because they leave the consumer to speculate as to the exact part of the ring which is composed of platinum. Concluding that these two alternative suggestions are unacceptable, the Commission said: Here, again, because of the similarity in color of the white gold and platinum the consumer might conclude that all of the prongs, including those for the center stone, are of platinum composition. Under these circumstances, it is not enough to merely say that the ring contains 10 percent platinum and 90 percent gold without disclosing the true composition of the various parts of the ring. In short, the Commission believes that the mark should clearly limit the platinum content to the baguette prongs and one possible suggestion would be as follows: ' 18K-baguette prongs Plat.' Any other language of equal clarity would, of course, be acceptable. (File No. 6937041, released Dec. 20 1968. _ ___ _ ______ _ ____.__ __ _. , ___. .. . . _ . . _.. ___ TABLE OF COMMODITIES 1 DECISIONS AND ORDERS Page Aluminum siding, residential n 887 Apartment complexes -- 861 Appliances, household - - 1 056 1093 Automobile transmissions - 875 , 894 1182 Baseball uniforms, men s -- --.- 716 Batteries, dry cell - M - -- 548 Bedspreads -- -- --- 185 Eed.wetting, eliminating device n - 539 Blankets - - - 185 Blenders - 0 - ___-'0 _0 - 1105 Books -- - 1093 Children s _ - 1209 Bufferin " drug preparation - 780 Carpeting - 663 , 1160, 1470 Cement, portland - - -- - 1270 Charcoal Quartz Cook Outs " electric broilers - 1205 Chemical sealers -- __ 0-- Chinchilas - 569 , 706 , 727 , 736, 1117 Clothing - - - 0_- - 1430 Coats -- - - --- - 1546 Fur - - _0_- -- - 171 Wool - 149 , 171, 757, 1238, 1438 Collars and trim, fur _ 1152 Concrete, ready-mixed -- 628, 1270 Construction aggregates - - - 628 Contact lens - - 1475 Corn chips - - 688 Correspondence courses - - 866 Custom-built residential houses -- -_u_---- - 1174 Dairy products - Debt collection forms - H__ - 306 Department stores - -- _0 -- - 1555 Dresses -- 319, 590, 1116 Drug preparation, u Buffcrin 780 Electrical:

Appliances - 744, 1430 Broilers Charcoal Quartz Cook-Outs 1205 1 Commodities involved in dismissing or vacating orders are indicated by italicized page rderence . . _. _____...._.. ___ _______ .. ____ ___..____.. ____ . _ ___._.____._.__ . Page Electronic equipment -- - 548 Encyclopedias, children s - -- 1209 Eyeglasses -- -- - - 1361 Fabric:

Textile fiber -- --_u_----- -- -- on --__ 1249 , 1462 Quilted n n'n - 1043 Wool _ --__n _--__n, 69 , 1249 Quilted - n - - - - __n n n- - n - - n n n n - n -- - - - - n911 , 1043 Fertilizers ---- - 1191 Flammable products:

Dresses, ladies - 590 Lcis - 604 Novelty items - ----- 329 Scarves, ladies 332 , 566 , 607, 1090 , 1451 Wearing apparel -- -- 669 VVood fiber chips - Flashlights nn n - n __--_n - n 548 Food products - 154, 1129 Foundation garments n ____n n _n n __n- n - 324, 770 Fraternity products - 345 Freezer-food plan - - 154 Freezers - - 154 Fruits, canned _ _n n n n- n _- n - 776 Furniture products _ - - _n 637, 870 Fur products n, 89 , 93, 97, 101 , 105 109 , 113 , 117 , 120 , 125 , 129 134, 178 , 213 , 298 , 624 , 681, 723 , 749 , 757 , 765 , 1048 1083 1135 , 1187 , 1202 , 1244 1234 1238 , 1254 , 1442 , 1446, 1454 1458, 1561 , 1565 Coats - 171 , 1546 Collars and trim n __n____n _- 1152 Jackets -- .. 578 Sportswear _ n - _.H__._ n _ n _ - 578 Girdles, textile fiber n ______n ___n__ _- 136 Grocery stores - 640 Health publications - - 1429 Hosiery:

Men, textile fiber n _______n 649 Women s - - 914 Wool _ ____--_n n _ ____"n _ n n - 649 Household appliances - 1056 LUBE Houses:

Custom-built residential - n-- - 1174 Leisure shell n ___n n" 1174 Hunting apparel n 610 Instruction courses - --- _n._ 920 , 1219 . . _ .____ __. _..__. __.._____ _. _ . _______..______._____ __ ___._ _. .. __. _ . TABLE OF COMMODITIES 1689 Page Insulated apparel 610 Insurance -- 1258 1822 Interlining material, wool 72, 162 Jackets 578 Boys - - -- - 753 Wool --- -- 1155 Jewelry - 1056 , 1361 , 1430 Leis, flammable 536, 604 Leisure shell houses 1174 Lingerie, women n- -- 324 Mail order insurance 1258 Metal crowns 251 Neckties 656 Novelty items, flammable 329 Nursery products _n- __ - n Paint, water repellent _____M_ 880 Photograph album plan 616 Polypropylene 141 Portland cemen t - 1270 Potato chips 688 Power tools 595 Pretzels 688 Publications -- 166, 1109, 1111, 1112 1113, 1114 , 1115 , 1116, 1429 Quilts 185 Radios 595, 744 Tube testing devices 1146, 1227 Railroad specialty products 217 221, 225, 231 237 , 240, 246 Ready-mixed concrete 628 1270 Refrigerators 744 Scarves, ladies Flammable _. 332 , 566 , 607, 1090, 1451 Textile fiber 332 Schools 920 Sealers, chemical Sewing machines 603 Siding, Aluminum 887 Sportswear 578 1432 Stage equipment 556 Sweaters, wool 674 Television:

Sets -- ---. 744 Tube testing devices 1146 1227 Textile fiber products l71, 337 , 669, 674 757 , 1083, 1155 _._______________________ ____,.___.._______ .______ .____ . . . ,_ ___ , . _ _______________ _.___ _.. Page Baseball uniforms, men s - u - " 716 Carpeting - 663, 1160, 1470 Dresses - 319, 590, 1166 Fabric - - 1043, 1249, 1462 Foundation garments, ladies - 770 Girdles - - 136 Hosiery- Men s - 649 Women s - 914 Hunting apparel -- 610 Insulated apparel -- -- - 610 Jackets - - 578 Men s garments - -- 563 Neckties - - n n n - n n -- 656 Scarves, ladies -- 332 Sportswear - 578, 1432 Ties, men s -- - - 314 Trousers, ladies - -- 1140 Ties, men s - - - 314 Tools - - 1093 Power - - 595 Transmissions, automobile .- 875, 894 , 1182 Trousers, ladies, textile fiber, _ - 1140 Tube testing devices:

Radio -- u -- _1146 , 1227 Television n 1146 , 1227 Una-trim " weight reducing product -_ -- 1466 Uniforms, baseball, men s -- n - 716 Vegetables, canned - 776 Watches _ - - n 595, 1105, 1361 Water repellent paint _. n --_ - 880 Wearing apparel, flammable n -- 669 Weight reducing product Una-trim - 1466 Wood fiber chips, flammable n Wool products _ 337, 544 , 610 , 716 , 749, 1140 Coats -- 149, 17I, 757 , 1238 , 1438 , 1249 Fabric -- - n, 69 Quilted - 911 , 1043 Hosiery, men s _ - - 649 Interlining materials n 72, 162 Jackets - - - n - n 753 , 1155 Neckties - - 656 Sweaters - - 674 __ _____ _ _ ______._ . ___. __. _ __ . __,, __ TABLE OF COMMODITIES ADVISORY OPINION DIGESTS * Page Advertising program .,- - (309) 1681 Advertising standards -- -- (284) 1665 Architect-engineer services - - (271) 1657 Automotive equipment - -- (273) 1658 Bakery products - - - (291) 1670 Bearings . -- - (295) 1673 Beverages - -- - (290) 1669 Clothing _ - (281) 1662 Code of ethies __ - (268) 1655 , (305) 1679 Compost peat -n - -- Un -- n ' -- (289) 1668 Computerized control system u (306) 1679 Consumers savings group - o u (2'77) 1660 Containers, packaging n _- _n - (283) 1664 , (299) 1674 Contest - (300) 1675 un -- - 'u Dairy products - - (308) 1681 Deodorant spray - - n - u - (265) 1654 - _n Drugs _ _u u n n n - - (269) 1656 Electrical machinery (276) 1660 Elevators, country (279) 1661 Flatware, stainless steel_n - n _ (284) 1665 Food products - - (280) 1662, (294) 1672, (312) 1685 Food serving equipment _ '"n (265) 1654 Furniture n (301) 1676 Gasoline - n (272) 1657 General merchandise n - n - (262) 1648 , (304) 1679 Glass filter lenses n . n (298) 1674 Grocery products _n - (297) 1673 , (302) 1676 Household products -- -- n - --- (263) 1649 Jewclry - - (292) 1670 Leather - - (274) 1659 Lenses, glass filter n _ - n _ (298) 1674 :\machinery, electrical n (276) 1660 Magazines - - (266) 1655 :.larkebng association _ - (285) 1665 * The numbers in parentheses indicate digest numbers. _ _ __________. _____ _____ _ __ .__________. ________ _.. _ .____ _ Page Milkn n n n n -. n - _n _- n - n - - (296) 1673 Packaging containers ____n (299) 1674 Poultry products __n (303) 1678 Promotional program (261) 1647 Restaurant - -- n (278) 1660 Rings - n __n - (313) 1686 Shirt. - - (282) 1664 Shoes - - - - - (311) 1684 Skis __ __n ___n - (270) 1657 Soil - n - __n (293) 1671 Tablecloths n - -- n (307) 1680 Tennis shoes (286) 1667 Tourmaline, green (267) 1655 Watchbands _n (275) 1659, (310) 1683 Watches (288) 1668 .._ .___.._____. ___._..__ ._ _ __ . INDEX I DECISIONS AND ORDERS Page Accreditation or approval of school, misrepresenting as to -- - 1219 Accredited institution, falsely representing - - 866 Acquiring corporate stock or assets:

Clayton Act.) Sec. 7 -- 141 , 251 , 628, 640, 688, 1129, 1191 , 1270 Federal Trade Commissi.on Act -- 345, 628, 640, 1129 Advertisers Agency," individual or private business falsely represented self as --- ---.---- 616 Advertising and promotional expenses, discriminating in price through. See Discriminating in price. Advertising falsely or misleadingly;

Accreditation or approval of school -- - 1219 Accredited institution - ------- 866 Apartment availability, unrestricted n 861 Business status, advantages, or connections- Concealed subsidiary, fictitious collection agency -- n 1209 Connections or arrangements with others _ - 1219 Dealer being- Guild" - - -- - 569 Manufacturer - 298 Photograph processor -- _ 616 Individual or private business being- Advertisers Agency" n _n_n 616 Alled Liquidators - 595 American Education Center" _n 866 Associated Chinchila Breeders, Inc. - n - 1117 Marathon Battery Company of Wausau" _n 548 Location n __n 1227, 1475 :\nationally publicized, watches - _ - n n 1056 Personnel or staff- Educational consultants -- ." __n n 1209 Field registrars n __'___n "-- 1219 Psychologist "--.. n ___n_._- - --" 539 Retailer as wholesaler, jobber, factory distributor - n - 1430 Size or extent n --__n - ___n 548, 1056 Time in business n _n 736 Climatic conditions for nursery products n Completeness of house -- - n - 1174 ) Covering practices and matters in Commission ordern. For index of commodities see Table of Commodities. Reference to matters involved in vacating or dismissing orders are indicated by italics.

. ._. .. _._____..____.._. . __ __... ...____ . _. Decisions and Orders Page Composition of product- Fur Products Labeling Act ------ 178, 298, 578 , 681 1048, 1083 , 1546 Textile Fiber Products Identification Act __ 337, 578, 610, 649 663 , 716 , 770, 1083, 1155 1160 , 1166 , 1432 1470 Dealer or seller assistance -- 539 , 548, 706 , 727 , 736 1117 , 1146 , 1227 Earnings and profits 548 , 569 , 706 , 727 , 736 1117, 1146, 1219 , 1227 Endorsement or approval- American Institute of Science - Better Business Bureau - -- 616 Franchises, exclusive - "- - 548 Free goods or services -- 616 , 744 , 866, 894 , 1209 Freezer.food plan -- -- 154 Government approval, connections or endorsement, 920, 1258, 1322 Guarantees - 298 569 595 616 , 706 , 727 736 , 875 , 887 , 894 , 1056 1117 1174, 1182, 1475 Individual' s special selection - - - - - 548, 616 Jobs and employment -- 920; 1219 Old or used product being new ---- - 1475 Opportunities in product-1146 Prices Additional charges unmentioned -- u-- - 875, 894, 1056 , 1182 Bait" offers -- 744 , 887 , 894 , 1056, 1105 1174 , 1361 Comparative -- 595 , 870 Exaggerated, fictitious as regular and customary 178, 185, 569, 595 , 616 , 765, 870 1083 , 1361 1430 Piggybacking - 688 Price list -- 154 Retail as wholesale -- - 1430 Savings - 185 , 298, 681 , 870 Terms and conditions -- 875 , 1056 , 1174 , 1182 , 1361 Usual as reduced or special - 178 , 616, 681 , 765 887, 1083 , 1209 Qualities or results of product- Durability or permanence_ - 887 Educational training - -- 1219 Medicinal, therapeutic, healthful, etc.

Bed-wetting, device for eliminating -- -- 539 Bufferin " relieves arthritic pain - 780 Health publications -- 1429 Nursery products -- Quality of product 706 , 727, 736 Food -- -- -- - - -- -- 154 . . . , _. p . . . _ INDEX 1695 Decisions and Orders Page Quantity in stock -- - . - - 1105 Repairs, adjustments, or replacements -- 894 , 1475 Reproductive potentials of chinchilas 706, 727 , 736 , 1117 Scholarships - - -- 866 Services - 154 , 894 , 1227, 1475 Special or limited offers -- 595 , 887 1209 Statutory rcquirements- Fur Products Labeling Act -- 178 298 , 578, 681 1048 , 1546 Textile Products Identification Act - 337, 578 , 610 , 649, 663 , 716 , 770 1083 1155, 1160 , 1166 , 1432 Surveys - - 1209 Terms and conditions - 548 , 706 Insurance coverage - u - 1258 , 1322 Loans, educational - - 920 Rental, free - -- 539 Sales contracts -- 154 , 894 Unauthorized -- -- 1466 Advertising matter, supplying false and misleading -- , 548 , 569 1174 , 1219 Allied Liquidators, " individual or private business falsely represented as - 595 Allowances for services and facilities, discriminating in price through. See Discriminating in price. American Education Center " individual or private business falsely represented as -- 866 American Institute of Science, falsely claiming endorsements by - Apartment availability, misrepresenting as unrestricted -- 861 Associated Chinchila Breeders, Inc. " individual or private business falsely represented as - - -- 1117 Assuming or using misleading trade or corporate name: Dealer being- Mil" -- -- - 674 , 914 Individual or private business being- Advertisers Agency -- 616 Allied Liquidators 595 American Education Center 866 Associated Chinchila Breeders, Inc. - 1117 Marathon Battery Company of Wausau - 548 Bait" offers, using to obtain leads to prospects - 744 , 887 , 894 1056 , 1105 , 1174 , 1361 Bed-wetting, misrepresenting as to qualities of device for eliminating -- 539 Better Business Bureau, falsely claiming endorsements by -- 616 Brokerage payments and acceptances, discriminating in price through. See Discriminating in price. Bufferin " relieves arthritic pain, misrepresenting through medicinal or therapeutic qualities -- 780 Business methods, policies and practice, misrepresenting as to .- - 603 Business status, advantages, or connections, misrepresenting as to. . _ . .__ __,._, .._ .. ... , _ Decisions and Orders Page See Advertising falsely, etc. ; Assuming, etc. ; Misrepresenting business, etc. ; ::isrepresenting directly, etc. Clayton Act:

Sec. 2 Discrjminating in price- Sec. 2 (a)-Illegal price dHferentials- Customer classification u-- 637 Quantity rebates, discounts and schedules - Trade areas - Sec. 2 (c)-Illegal brokerage payments and acceptances- Lowered price to buyers -- 225 , 231 , 240 , 246 Sec. 2 (d)-Allowances for services and facilities- Advertising and promotional expenses - ------.-- 776 Sec. 2 (f) -Inducing and receiving discriminations- Discounts, rebates - - - 1555 Sec. 7-Acquiring corporate stock or assets-- 141 , 251 , 628 640 , 688 , 1129 , 1191 , 1270 Climatic conditions, misrepresenting nursery products through --.-- Coercing and intimidating:

Competitors -- h -- 345 Suppliers of competitors -- - 166 Collection agency, fictitious -- 306 , 1209 Combining or conspiring to:

Control allocation and solicitation of customers -- 556 Control marketing practices and conditions - 556 Cut of competitor s supplies - 166 Fix prices and hinder competition through-fixing and maintaining prices - 324 , 556 Maintain monopoly - -- 166 Comparative prices, misrepresenting as to - 595, 870 Competitors:

Coercing and intimidating - 345 Disparaging -- 345 Composition of product, misrepresenting as to: Fur Products Labeling Act -- , 89 , 93, 97 , 101 , 105 117 , 120 , 125 , 132 , 178 , 213 298 , 578 , 624, 681 , 757 , 765 1048 , 1083 , 1135 , 1152 1187 1202 , 1234, 1238 , 1244, 1254 1446 , 1454 , 1458 , 1546 , 1561 , 1565 Textile Fiber Products Identification Act -- 136 , 314 , 319, 337 563, 578 , 610 , 649 , 656 , 663 669 , 716 , 770 , 1043 , 1083 , 1140 1155, 1160 , 1166 , 1432 , 1462 , 1470 \Vool Products Labeling Act, 69 , 72 , 149, 162 , 171 , 337, 544 , 610 , 649 , 674 , 749 . 753 757 , 911 , 1043 , 1155 , 1238 , 1249 , 1438 Connections or arrangements with others, misrepresenting as to -- - 1219 union Carbide Company -- -- 880 Content of product, misrepresenting as to -- -- 880 . ___ _ _ . .. __. _ .

INDEX 1697 Decisions and Orders Page Control allocation and solicitation of customers, combining or conspiring to - --- -- 556 Control marking practices and conditions, combining or conspiring to -- -- 556 Court documents, simulating as -- M - 306 , 1209 Customer classification, discriminating in price through. '. -- 637 Cut off competitor s supplies, combining or conspiring to - -- 166 Cutting off supplies or services-exclusive contracts with suppliers - - 166 Dealer falsely representing self as:

Guild" -.-- - - 569 Manufacturer - 298, 314 Mil" - 674, 914 Photograph processor -- -- 616 Dealer or seller assistance, misrepresenting as to - 539, 548 , 706 727, 736 , 1117 , 1146 , 1227 Discounts, discriminating in price through - , 1555 Discriminating in price in violation of: Sec. 2, Clayton Act- Sec. 2 (a) -Illegal price differentials- Customer classification -- 637 Quantity rebates, discounts and schedules -- Trade areas -- Sec. 2 (c)-Illegal brokerage payments and acceptances- Lowered price to buyers -- 225 , 231 , 240, 246 Sec. 2(d)-Allowances for services and facilities- Advertising and promotional expenses -- - 776 Sec. 2(f)- Inducing and receiving discriminations- Discounts, rebates -- -- -- 1555 Sec. 5 , Federal Trade Commission Act- Rebates, confidential-- 217 , 221 , 225 , 231 , 237 , 240 , 246 Dismissal orders:

Amended complaint dismissed against a seller of nursery stock charging it with misrepresenting the growth potentials of its products - Complaint dismissed against a manufacturer of contact lens charged with misrepresenting the nature and extent of services offered by its franchised distributors -- -- 1475 Complaint against a Sec. 7 proceeding dismissed due to change in Commission s policy - - 1129 Complaint charging a department store with knowingly ind-Jcing discriminatory prices in violation of Sec. 2 (f) of the Clayton Act, dismissed -- - 1555 Complaint charging a distributor of electric broilers with deceptive means to recruit franchised dealers, dismissed -- - -- 1205 Complaint charging a large manufacturing drug firm with deceptively advertising a pain relieving drug -- 780 Complaint charging a mail-order insurance company with using deceptive means of selling insurance, dismissed -- -- 1322 ____. __.__ _ _ . . _ ._ . _ _ .. 1698 FEDERAL TRADE COMMISSION DECISJOXS Decisions and Orders Page Complaint charging a publisher of health books with misrepresenting the therapeutic benefits of its publications, dismissed - -- 1429 Complaint charging discrimination in selling or leasing of houses or apartments, dismissed --- -- 861 Complaint dismissed against a producer of metal caps for bottled beverages charged with violating the antimerger law by acquiring a competitor - __n 251 Disparaging competitors - 345 Divestiture orders. See Acquiring corporate stock or assets. Domestic products, misrepresenting as foreign -- -- 656 Durability or permanence of product, misrepresenting qualities or results of - 887 Earnings and profits, misrepresenting as to n 548 , 569 , 706 , 727, 736 , 880 , 1117, 1146 1219 , 1227 Earnings, securing n - __n 1205 Educational training, misrepresenting qualities or results of n 1219 Endorsement of product, misrepresenting as to: American Institute of Science _ . _n Better Business Bureau _n 616 Enticing away competitors' employees _ _"n 345 Exclusive contracts with suppliers, hindering competition through n 166 Federal Trade Commission Act:

Acquiring corporate stock or assets n 345 , 628, 640, 1129 False invoicing under _ , 162 Sec. 5-Discriminating in price- Rebates, confidential n 217 , 221 , 225 , 231 237 , 240, 246 Fictitious collection agency _ 306 , 1209 Fictitious pricing n 178 , 185 , 569 , 595 , 616 , 765 870, 1083 , 1093, 1361 , 14:JO Fixing prices concertedly. See Combining or conspiring. Flammable Fabrics Act:

Furnishing false guaranties under n 669 Importing, selling, or transporting flammable ,year - - 75, 329, 332 , 536 , 566 , 590 , 604 607 , 1090, 1451 Food, misrepresenting as to quality n - 154 Foreign origin of product, misrepresenting as to - 1187 Franchises, exclusive n n _ _"- __n - n .- 548 Free goods or services, misrepresenting as to _ 539 , 616 , 744 866 , 894 , 1093 , 1209 Freezer-food plan, falsely representing - 154 Furnishing false guarantees. See Guaranties. Furnishing means and instrumentalities of misrepresentation or deception:

Advertising matter - - n 78, 548, 569, 1174 , 1219 Nondisclosure of-domestic origin of product _ 656 . ____ .. _ INDEX 1699 Decisions and Orders Page Fur Products Labeling Act:

Failing to reveal information required by -_u-- , 89, 93, 97, 101 , 105 , 109 , 113 , 117, 120 , 125, 132 , 171 , 178, 213 , 298 , 578, 624 681 , 723 , 749 , 757, 765 1048 1083 , 1135 , 1152 , 1187 1202 1234 1238, 1244 , 1254, 1442 , 1446 1454 1458 , 1546, 1561 , 1565 False advertising under -- 178 , 298, 578, 681 1048, 1083, 1546 False invoicing under, 89, 93 , 97 , 101 , 105 109, 113 117, 120, 125 , 129 , 132 , 171 , 178 213 , 298 , 578, 624 , 681 , 723 , 749 757, 765, 1048 , 1135 , 1152 1187, 1202, 1234, 1238, 1244, 1254, 1442 1446, 1454, 1458 , 1546, 1561 1565 Furnishing false guaranties under -- , 89 , 93, 97 , 105 . 109 113, 120 , 125 , 129, 132, 171 1187, 1234 , 1238 , 1254, 1442, 1458 , 1565 Misbranding under -- , 89, 93, 101 , 105 , 117 120, 125, 132 , 213 , 298, 578 , 624 681 , 757, 765 , 1048 , 1083 , 1135 1187 1234 , 1238, 1244 , 1254, 1446, 1454 1458 , 1546 , 1561 , 1565 Mutilating or removing law-required labels - - 1048 Substituting non-conforming labels - - 1546 Government documents, simulating as -- - 1056 Government, misrepresenting as to:

Approval, connections or endoresments --- --- 78 , 920, 1258, 1322 Standards or specifications -- 880 Guarantees, misleading - - n 78 , 298 , 569 , 595, 616 , 706 727, 736, 875, 880 , 887 , 894 1056, 1117, 1174, 1182 1475 Guaranties, furnishing false:

Flammable Fabrics Act - - _m_ -- 669 Fur Products Labeling Act -- 84, 89, 93, 97, 105 , 109 , 113, 120, 125 , 129 , 132 , 171 1187 1234 , 1238 , 1254 , 1442 , 1458 , 1565 Textile Fiber Products Identification Act -- _0 136, 171, 656 663 , 770, 1166 Wool Products Labeling Act - --n n - -- 149 , 1140 , 1438 Guild," dealer falsely representing self as -- - 569 Harassing competitors -- 345 Health publications, misrepresenting medicinal or therapeutic benefits - - - - OU -- 1.429 Houses, misrepresenting completeness of -- - 1174 Imported products, misrepresenting as domestic - 1442 _ __ ._. . . _ ..

1700 FEDERAL TRADE COMMISSIOK DECISIONS Decisions and Orders Page Importing, selling, or transporting flammable wear: Flammable Fabrics Act - 75, 329 , 332 , 536, 566, 590, 604 , 607, 1090 , 1451 Individual or private business falsely represented self as: Advertisers Agency -- 616 Alled Liquidators -- - nU- 595 American Education Center" n 866 Associated Chinchilla Breeders, Inc. . - 1117 ::arathon Battery Company of Wausau u.. - -- 548 Individual' s special selection, misrepresenting as to -- 548 , 616, 1093 Inducing and receiving discriminations in violation of Clayton Act, Sec. 2 (f) n n 284 Institution, accredited, falsely representing -- -- 866 Insurance coverage, misrepresenting through terms and conditions u -- 1258 Interfering with competitors or their goods-harassing competitors -- - 345 Interlocutory orders: See also Interlocutory orders with opinions. Denying- Appeals of 38 third parties from an examiner s order direcing parties to comply with subpoenas duces tecum -- -- 1629 Petition to set aside consent order of June 25, 1957, on grounds of changed conditions of fact, - -- - 1607 Request to appeal from hearing examiner s order relative to the release of certain third-party documents -- -- - 1642 Respondents 1\Iotion to stay filing of compliance report - :1610 Request to modify decision and order - - :1617 Granting appeal from examiner s order and for Philips Petroleum Co. to file comments - - -- - 1589 Public hearing ordered to determine whether advertising of Geritol" is violating the cease and desist order -- 1620 Reopening case to determine whether The Hearst Corp. is successor to respondents in this ca e -- 1619 Interlocutory orders with opinions:

Denying- Appeal to produce certain documents and request for oral argument, remanded to hearing examiner -- - 1574 Application for subpoena duces tecum and release of confidential information -- n 1579 Respondent' Appeal from examiner Denial to subpoena certain disfavored customers involving proof of cost justification -- 1602 Orders relating to subpoenas directed to third parties - 1621 Refusal to quash subpoenas duces tecum -- - 1589 Motion to withdraw from adjudication to consider voluntary compliance -- . n 1608