PACKAGING AND LABELING LEGISLATION WEDNESDAY, MARCH 20, 1963 U.S. SENATE, SUBCOMMITTEE ON ANTITRUST AND MONOPOLY The subcommittee met, pursuant to recess, at 10:36 a.m., in room 2228, New Senate Office Building, Senator Philip A. Hart presiding. Present: Senators Kefauver (chairman) and Hart. Also present: S. Jerry Cohen, assistant counsel; Dorothy D. Goodwin, assistant counsel; George E. Clifford, assistant counsel; Peter N. Chumbris, counsel for the minority; Ronald D. Raitt, counsel for the minority; James E. Bailey, counsel for the minority; Gladys E. Montier, clerk, and Bernard Fensterwald, Jr., special counsel. Senator HART. The committee will be in order. This morning-and I am sorry the chairman of the subcommittee, Senator Kefauver, is not here to do it personally-we welcome back one who for many years gave counsel and guidance to this subcommittee, to the mixed reactions of the public, I should add, but always to the satisfaction of the subcommittee. We welcome him now in his role as the Chairman of the Federal Trade Commission. I think that the Commission and certainly the consumers of America are fortunate that he now serves in this role. We have anticipated your statement with increasing interest, Mr. Dixon, as witnesses have constantly told us that we don't need a new law, so please go ahead. STATEMENT OF HON. PAUL RAND DIXON, CHAIRMAN, FEDERAL TRADE COMMISSION; ACCOMPANIED BY JOHN N. WHEELOCK, EXECUTIVE DIRECTOR; J. V. BUFFINGTON, ASSISTANT TO THE CHAIRMAN; AND FLETCHER COHN, ASSISTANT GENERAL COUNSEL FOR LEGISLATION Mr. DIXON. Senator, thank you for those kind remarks. Before I begin let me introduce to you the gentlemen that accompany me. To my left is J. V. Buffington, my assistant, and to his left is John N. Wheelock, Executive Director of the Commission, and to my right, Mr. Fletcher Cohn, Assistant General Counsel in charge of legislation. On behalf of the Commission and myself I wish to express to you our appreciation for having this opportunity to present the views of the Commission on S. 387, which has for its purpose the protection of the consumer from the improper packaging and labeling of consumer commodities. About a year ago, I had the honor of appearing before this committee, which at that time was making inquiry as to possible legislation on this subject. I congratulate you upon your efforts to render valuable assistance to the Nation's consumers, which include all of us. When I appeared last year before this committee, no bill had been introduced and my remarks were more or less of a general nature. Now I shall attempt to state as succinctly as possible the Commission's views on the pending legislation. However, before doing that, I would like to refer briefly to the problems which S. 387 seeks to solve. The objective of the bill is to require that the consumer be given sufficient information on the packaged consumer commodity and the label attached thereto, to enable him to make an intelligent choice as to the products he purchases, both from a cost and a quantity standpoint. I shall not attempt to give the various reasons why in many instances consumer commodities fail to meet these requirements. I know the committee has heard much testimony on this subject. The first question I shall discuss with you is whether from the point of view of the Federal Trade Commission additional legislation is needed to accomplish this purpose. Under section 5 of the Federal Trade Commission Act, as amended by the Wheeler-Lea Act of 1938, "Unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce," are declared unlawful. The primary purpose of the amendment of our act was to counteract the decision in Federal Trade Commission v. Raladam, 283 U.S. 643 (1931), wherein the court held that the Commission could not proscribe false obesity cure advertising where no substantial competition, present or potential, was shown to have been injured or clearly threatened by the false advertising. Parenthetically, the Wheeler-Lea Act was, however, not limited to correction of this deficiency; it also added section 12 to the Federal Trade Commission Act, dealing specifically with false advertisements of food, drugs, devices, and cosmetics, and armed the Commission with additional procedural weapons to combat the forbidden practices. Even this, however, did not put the Commission in a position to reach everything. Thus, before the Commission can act to prohibit the continuance of any practice related to the packaging or labeling of a consumer commodity, the Commission must, based upon reliable, probative, and substantial evidence, find that the practice is likely to deceive the purchasing public. And this, of course, includes situations where the deception is the result of an omission of information on a package as well as cases of affirmative misstatements. Because of this burden the Commission has not found it feasible to issue orders requiring specific affirmative disclosures on packages of the amounts of the contents of consumer commodities expressed in such terms or figures as would enable a housewife to make a comparison of the cost of packages of different sizes or shapes of the same product. With the exception of a number of instances involving the improper labeling of goods of foreign origin and those relating to deceptive pricing of various commodities by means of preticketing and other devices, the Commission, under the limited authority applicable to these practices granted by section 5 of the Federal Trade Commission Act, has issued relatively few cease-and-desist orders prohibiting deceptive packaging and labeling of consumer commodities. There have been a few, however, one of which was in Trade Laboratories, Inc., et al., 25 F.T.C. 937 (1937). In this case respondents were engaged in the sale and distribution of various commodities; they were found to have been placing the tubes or containers of their products in cartons of a capacity and size greatly in excess of that required to house the articles. The Commission noted that when the purchasing public makes a purchase of a product of the type manufactured and packed by the respondent (not being able to see the inside of the carton or container or able to examine it before purchase), it expects and usually does receive a tube or an amount of the product commensurate with the size of the pasteboard carton or container in which the product is packed for sale. The Commission directed the respondents to cease and desist fromrepresenting, by the placing of any of said products in greatly oversized cartons or containers, or in any other manner that a substantially larger quantity or amount of such product is therein contained than is actually the case. (At this point, Senator Kefauver entered the hearing room.) Mr. DIXON. In 1962, the Commission issues a consent order against Superior Insulating Tape Co.; the respondents were mounting plastic tape on, or rolled around, a cardboard core or spool, part of which was the same color and of the same appearance as the tape, while the balance or center of the core or spool was of a contrasting color; the order prohibited the respondents from packaging the tape in such a manner as to misrepresent the quantity of the tape contained on a roll. In Pioneer Specialty Co., 39 F.T.C. 188 (1944), the Commission issued an order prohibiting the use of a container or package of candy which is substantially larger in size or capacity than that required for packaging the quantity contained therein. The Commission has also entered into stipulations with several soap and detergent manufacturers, whereby the involved parties have agreed to discontinue the use of containers or cartons which are substantially larger in size or capacity than are required for packaging the quantity of the product contained therein. The enactment of a proper truth in packaging law, granting the Commission authority to issue regulations pertaining to packaging and labeling, would enable the Commission to protect the consumer from acts and practices, which it may not be able, or it would be extremely difficult, to prevent under section 5 of the Federal Trade Commission Act. Frequently the problem relating to proper packaging and labeling, is, as Miss Caroline F. Ware testified before this committee on March 13, one of chaos and confusion rather than deception. Such a packaging law would dispel any doubt as to the ability of the Commission to prevent the continuation of such practices. In addition, such legislation would do much to clarify the responsibilities of the manufacturer and distributor for fair packaging and accurate and complete labeling. It would help protect the ethical producer and distributor from the predatory practices of competitors who stoop to unfair and misleading practices in packaging and labeling their products. The committee undoubtedly is familiar with the fact that the Federal Trade Commission has been given authority by Congress to administer four acts of consumer legislation, which have been in effect for a number of years. These are the Wool Products Labeling Act (1941), the Fur Products Labeling Act (1952), the Flammable Fabrics Act (1954), and the Textile Fiber Products Identification Act (1960). Gratifying results have been achieved from the enforcement of these acts in affording protection to honest merchants who sell these products and to the consumers who purchase them. The Wool Products Labeling Act covers the labeling of any product containing woolen fiber. It is the first act of this nature passed by Congress which provides for an affirmative act of labeling textile products. It covers both domestic and imported wool merchandise from the first manufacturing process applied to the wool until the wool is made into cloth and other end products. Notable among the products covered would be men's, women's, and children's outer clothing, overcoats, jackets, mackinaws, skirts, slacks, sweaters, hosiery, wool hats, and even wool house slippers. The Fur Products Labeling Act covers the labeling, invoicing, and advertising from the manufacturer of any fur product right on through to the consumer. The Flammable Fabrics Act, effective in 1954, prohibits the introduction or movement in interstate commerce of articles of wearing apparel and fabrics which are so highly flammable as to be dangerous when worn by individuals, and for other purposes. The Textile Fiber Products Identification Act became effective in 1960 and it has by far the greatest coverage of any of the labeling acts. It covers items made of natural fibers other than wool, reprocessed wool, and reused wool, as well as products which are composed of synthetic fibers or blends of synthetic or natural fibers. The labeling requirements mentioned above with respect to the Fur Products Labeling Act are also present here in substantially the same general fashion. These acts are important because their objective, like the objective of S. 387, is to protect the consuming public by requiring that it be informed as to what is being offered for purchase, what it is made of, how to care for it, et cetera. Not only have these labeling acts been of inestimable help to consumers, but also they have met with widespread approval from the manufacturers of the commodities to which they pertain. I have referred to these labeling acts because, in my opinion, they have provided an approach to regulations which, after our experience with them, is worth the committee's serious consideration in its effort to draft effective legislation pertaining to the packaging and labeling of consumer commodities. I believe that it would be most feasible, for example, for a truth in packaging law to provide, as do the labeling acts, that it is an adjunct, so to speak, to section 5 of the Federal Trade Commission Act. That is, it would spell out the acts and practices related to the packaging and labeling of consumer commodities which would constitute violations of section 5 of the Federal Trade Commission Act. Further, such a law might contain provisions, expressed in general terms, as to what would constitute deceptive packaging and labeling and then authorize the Commission to issue the necessary regulations to make effective these provisions. As is provided in the existing labeling acts, the truth-in-packaging law should provide that when such regulations are adopted in accordance with the provisions of the law, that they have the same effect as specific laws enacted by Congress. The rules and regulations which the Commission has issued under the labeling acts are clear and definitive so as to aid those who come within the coverage of the acts to understand and comply with them without any difficulty. One of the paramount duties of the Commission is to attempt to secure voluntary compliance by those affected by these laws. These efforts have met with success. And in carrying out this objective the Commission has adopted the practice of attempting to have a period of education where the duties and responsibilities of persons affected by these acts are explained by the personnel of the Commission. It is suggested also any truth-in-packaging law would be much more effective if the scope of its coverage is broadened somewhat over that contemplated by S. 387. As now drawn, S. 387 could be violated only by the accused party being "engaged in the packaging or labeling of any consumer commodity for distribution in commerce." Under the labeling acts the practices dealt with are much more inclusive. For example, the Textile Fiber Products Identification Act covers "the introduction, delivery for introduction, manufacture for introduction, sale, advertising, or offering for sale, in commerce, or the transportation or causing to be transported in commerce," of the misbranded or falsely or deceptively advertised textile-fiber products. This might well serve as a model for the coverage of a consumerproducts packaging and labeling act. The Commission endorses the principles and objectives of S. 387, but, in addition to the views I have expressed as to what an effective law should contain, I have certain further comments which I trust will be of benefit to the committee. This proposed legislation gives to the Department of Health, Education, and Welfare sole jurisdiction over the promulgating of both the compulsory and discretionary regulations authorized by the bill, when they apply to food, drugs, devices, and cosmetics and to the Federal Trade Commission for all other "consumer commodities," as defined in the bill. This means, I believe, that the Commission is to issue regulation only as to a limited number of consumer products. It is fairly obvious that under this division of responsibilities practical difficulties will arise between the Department of Health, Education, and Welfare and the Federal Trade Commission in the exercise of their respective authority. In spite of the provisions of the bill to the effect that mandatory regulations adopted by the Secretary and the Federal Trade Commission shall be "uniform in content and application to the greatest practical extent" and other provisions requiring consultation by the Secretary and the Commission and with other Government agencies, it is almost inevitable that the form and nature of the regulations issued by one will differ from those promulgated by the other. This could easily result in confusion in the mind of the housewife when she purchases, in the same store or supermarket, commodities covered by reg |