PACKAGING AND LABELING LEGISLATION WEDNESDAY, MARCH 6, 1963 U.S. SENATE, SUBCOMMITTEE ON ANTITRUST AND MONOPOLY Washington, D.C. The subcommittee met, pursuant to notice, at 10:05 a.m., in room 2228, New Senate Office Building, Senator Philip A. Hart presiding. Present: Senators Hart, Long of Missouri, and Hruska. Also present: Senator Sam J. Ervin, Jr., Judiciary Committee. S. Jerry Cohen, assistant counsel; Peter N. Chumbris, counsel for the minority; Ronald D. Raitt, counsel for the minority; James E. Bailey, counsel for the minority; George E. Clifford, assistant counsel; Dorothy D. Goodwin, assistant counsel; Paul S. Green, editorial director; and Gladys E. Montier, clerk. Senator HART (presiding). The committee will be in order. Today we open hearings on S. 387, the truth-in-packaging bill. (S. 387 follows:) [S. 387, 88th Cong., 1st sess.] A BILL To amend the Clayton Act to prohibit restraints of trade carried into effect through the use of unfair and deceptive methods of packaging or labeling certain consumer commodities distributed in commerce, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) the Act entitled “An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes", approved October 15, 1914 (38 Stat. 730 et seq.; 15 U.S.C. 12 et seq.), commonly known as the Clayton Act, is amended by inserting therein, immediately after section 3 thereof, the following new section: "SEC. 3A. (a) It shall be unlawful for any person engaged in the packaging or labeling of any consumer commodity (as defined by this section) for distribution in commerce, or for any person (other than a common carrier for hire, a contract carrier for hire, or a freight forwarder for hire) engaged in the distribution in commerce of any packaged or labeled consumer commodity, to distribute or to cause to be distributed in commerce any such commodity if such commodity is contained in a package, or if there is affixed to that commodity a label, which does not conform to regulations promulgated pursuant to this section. "(b) The prohibition contained in this subsection shall not apply to persons engaged in business as wholesale or retail distributors of consumer commodities except to the extent that such persons (1) are engaged in the packaging or labeling of such commodities, or (2) determine by any means the nature, form, or content of packages in which such commodities are contained or labels affixed to such commodities. "(c) As soon as practicable after the effective date of this section, regulations shall be promulgated to "(1) require the net quantity of contents (in terms of weight, measure, or count, or any combination thereof) of consumer commodities to be stated upon the front panel of packages containing such commodities, and upon any labels affixed to such commodities; 1 "(2) establish minimum standards with respect to the location and prominence of statements of the net quantity of contents (including minimum standards as to the type size and face in which such statements shall be made) appearing upon packages containing any consumer commodity and upon labels affixed to any such commodity; "(3) prohibit the addition to such statements of net quantity of contents of any qualifying words or phrases; “(4) prohibit the placement upon any package containing such commodity, or upon any label affixed thereto, of any printed matter stating or representing by implication that such commodity is offered for retail sale at a price lower than the ordinary and customary retail sale price, or that a retail sale price advantage is accorded to retail purchasers thereof by reason of the size of that package or the quantity of its contents, except that no regulation promulgated under this section shall prevent any person engaged at any time in the sale of any consumer commodity at retail to ultimate purchasers thereof from placing upon any such commodity, or upon any package containing that commodity, any marking which states the true and correct retail sale price at which such person at that time is offering that commodity for sale to such purchasers; "(5) contain such exceptions to the foregoing requirements as the promulgating authority may determine to be required by the nature, form, or quantity of particular consumer commodities, except that no exception may be made if that exception would deprive consumers of reasonable opportunity to make rational comparisons between or among competing products; and "(6) prevent the placement, upon any package in which such commodity is distributed for retail sale, of any illustration or pictorial matter which may deceive retail purchasers in any respect as to the contents of that package. "(d) (1) Regulations under this section shall be promulgated by "(A) the Secretary of Health, Education, and Welfare, with respect to any consumer commodity which is a food, drug, device, or cosmetic, as each such term is defined by section 201 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321); and "(B) the Federal Trade Commission with respect to any other consumer commodity. "(2) Such regulations adopted by the Secretary and by the Commission shall be uniform in content and application to the greatest practicable extent, as determined by consultation between the Secretary and the Commission. "(e) Whenever the Secretary of Health, Education, and Welfare (as to any food, drug, device, or cosmetic), or the Federal Trade Commission as to any other consumer commodity, determines that additional regulations are necessary to establish or preserve fair competition between or among competing products by enabling consumers to make rational comparison with respect to price and other qualities, or to prevent the deception of consumers as to such product, the Secretary or the Commission, as the case may be shall promulgate under this subsection with respect to that commodity regulations effective to"(1) establish reasonable weights or quantities, or fractions or multiples thereof, in which that commodity shall be distributed for retail sale; "(2) prevent the distribution of that commodity for retail sale in packages of sizes, shapes, or dimensional proportions which may deceive retail purchasers as to the net quantity of the contents thereof (in terms of weight, measure, or count); "(3) establish and define standards of designations of size (other than statements of net quantity of contents) which may be used to characterize quantitatively the contents of packages containing that commodiy; "(4) establish and define the net quantity of any commodity (in terms of weight, measure, or count) which shall constitute a serving, if that commodity is distributed to retail purchasers in a package or with a label which bears a representation as to the number of servings provided by the net quantity of contents contained in that package or to which that label is affixed; "(5) establish and define standards for the quantitative designation of the contents of packages containing any consumer commodity of a kind the net quantity of contents of which cannot meaningfully be designated in terms of weight, measure, or count; and "(6) require (consistent with requirements imposed by or pursuant to the Federal Food, Drug, and Cosmetic Act, as amended) that sufficient information with respect to the ingredients and composition of any consumer commodity (other than information concerning proprietary trade secrets) be placed in a prominent position upon packages containing that commodity and upon labels affixed thereto. "(f) (1) Before promulgating any proposed regulation under subsection (e) with respect to any consumer commodity, the Secretary or the Commission, as the case may be, shall (A) consult with other agencies of the Government having special competence with respect to the subject of that regulation concerning the scope, application, form, and effect thereof, (B) publish in the Federal Register reasonable advance notice of intention to promulgate such regulation, and (C) accord to persons who would be affected thereby reasonable opportunity for consultation with respect to such proposed regulation. “(2) All regulations adopted under this section shall be promulgated in conformity with the provisions of the Administrative Procedure Act. "(3) Any regulation promulgated under this section may be modified by the promulgating authority, upon the initiative of that authority or upon application made by any person affected by that regulation, whenever such authority determines that such modification is necessary to conform to the requirements of this section or to any change occurring in the method of packaging, labeling, distributing, or marketing of any consumer commodity. "(g) Upon written request made, by the officer or agency authorized or directed by this section to establish packaging or labeling regulations as to any consumer commodity of any class or kind, to any producer or distributor thereof, such producer or distributor shall transmit promptly to that officer or agency a true and correct sample of each package and label used or to be used by that producer or distributor for or in connection with the distribution in commerce of any particularly described consumer commodity of that class or kind. Any person who, with intent to evade compliance with the requirement of this subsection (g), fails to transmit any such sample to such authority promptly upon receipt of such request shall be fined not more than $1,000, or imprisoned not more than one year, or both. “(h) (1) Any consumer commodity introduced or delivered for introduction into commerce in violation of any regulation promulgated by the Secretary of Health, Education, and Welfare under this section while that regulation is in force and in effect shall be deemed to be misbranded within the meaning of chapter III of the Federal Food, Drug, and Cosmetic Act. "(2) Any violation of any regulation promulgated under this section by the Federal Trade Commission while that regulation is in force and in effect shall constitute an unfair or deceptive act or practice in commerce in violation of section 5(a) of the Federal Trade Commission Act. "(3) The remedy provided by section 16 of this Act shall be available to any person threatened with loss or damage by any violation of any such regulation while that regulation is in force and in effect. "(i) Each officer or agency required or authorized by this section to promulgate regulations for the packaging or labeling of any consumer commodity shall transmit to the Congress in January of each year a report containing a full and complete description of the activities of that officer or agency for the administration and enforcement of this section during the preceding calendar year. "(j) A copy of each regulation promulgated under this section shall be transmitted promptly to the Director of the National Bureau of Standards, who shall (1) transmit copies thereof to all appropriate State officers and agencies, and (2) furnish to such State officers and agencies information and assistance to promote to the greatest practicable extent uniformity in State and Federal standards for the packaging and labeling of consumer commodities. Nothing contained in this subsection shall be construed to impair or otherwise interfere with any program carried into effect by the Secretary of Health, Education, and Welfare under other provisions of law in cooperation with State governments or agencies, instrumentalities, or political subdivisions thereof. "(k) As used in this section "(1) the term 'consumer commodity', except as otherwise specifically provided by this paragraph, means any food, drug, device or cosmetic (as those terms are defined by the Federal Food, Drug, and Cosmetic Act), and any other article or commodity of any kind or class which is customarily produced or distributed for sale through retail sales agencies or instrumentalities for consumption or use by individuals for purposes of personal care or in the performance of services ordinarily rendered within the household and which usually is consumed or expended in the course of such consumption or use. Such term does not include (A) any meat, meat product, poultry, or poultry product, or any commodity subject to packaging or labeling requirements imposed by the Secretary of Agriculture pursuant to the Federal Insecticide, Fungicide, and Rodenticide Act or the provisions of the eighth paragraph under the heading 'Bureau of Animal Industry' of the Act of March 4, 1913 (37 Stat. 832-833; 21 U.S.C. 151-157), commonly known as the Virus-Serum-Toxin Act; (B) any beverage subject to packaging or labeling requirements imposed under the Federal Alcohol Administration Act (27 U.S.C. 201 et seq.); (C) any household appliance, equipment, furniture, furnishing, or other durable article or commodity; or (D) any article or commodity intended for use in the maintenance of the exterior, or for the repair of any part, of any structure, or for use in the maintenance or repair of any article or commodity described by clause (C) of this sentence; "(2) the term 'package' means any container or wrapping in which any consumer commodity is enclosed for use in the delivery or display of that commodity to retail purchasers thereof, but does not include (A) shipping containers or wrappings used solely for the transportation of such commodity in bulk or in quantity to wholesale or retail distributors thereof or (B) containers subject to the provisions of the Act of August 3, 1912 (37 Stat. 250, as amended; 15 U.S.C. 231-233), the Act of March 4, 1915 (38 Stat. 1186, as amended; 15 U.S.C. 234-236), the Act of August 31, 1916 (39 Stat. 673, as amended; 15 U.S.C. 251-256), or the Act of May 21, 1928 (45 Stat. 685, as amended; 15 U.S.C. 257-257i); "(3) the term 'label' means any written, printed, or graphic matter affixed to any consumer commodity; and "(4) the term 'person' includes any firm, corporation, or association." (b) The amendment made by this section shall take effect on the first day of the sixth month beginning after the date of enactment of this Act. SEC. 2. No amendment made by this Act shall be construed to repeal, invalidate, supersede, or otherwise adversely affect (a) the Federal Trade Commission Act or any statute defined therein as an Antitrust Act; (b) the Federal Food, Drug, and Cosmetic Act; (c) the Hazardous Substance Act; or (d) any provision of State law which would be valid in the absence of such amendment unless there is a direct and positive conflict between such amendment and such provision of State law. Senator HART. This measure is the result of extensive hearings and of responsible reaction from business and consumers to a similar bill introduced in the closing days of the 87th Congress. The survival of our society cannot depend on strength of arms alone. We must also be concerned with values and standards upon which our civilization is based. Rapid social and technological advances of the last several decades have brought new pressures and tensions, as well as new techniques of marketing. To meet these new conditions it is necessary that the members of our society be able to distinguish fact from fiction, true values from false values. They must be able to rely upon the truthfulness of the labels our society employs. Mindful of the record made in the hearings conducted by this subcommittee, I say it is essential for the health of our society that we correct some of the packaging and labeling practices which have been disclosed. Ar Dr. Carroll Quigley, eminent American historian, testified in this same room a year ago: For 5,000 years, down to the present time, the truthfulness of written labels has been a fair indication of the moral health of our society. He observed that it is from the marketplace that values and standards percolate into other phases of our daily lives. He said: Training in ambiguity and dishonesty in the use of terms (on packages and labels) leads to a confusion of thought, and confusion of thought leads to a slow attrition of general social honesty and clear thinking. What does this bill attempt to do? It is an effort to bring up to date the antitrust laws by recognizing the emergence of a relatively new form of nonprice competition, packaging, and labeling. The bill does this by facing up to the realities of present-day marketing conditions, naming as restraints of trade those practices brought about by unfair and deceptive methods of packaging and labeling certain consumer commodities. We do this by amending the Clayton Act to provide a procedure by which guides can be established to prevent such restraints. The bill is an effort to make the new salesman for the product-the package and label-fairly represent the product it is selling. It is an effort to increase the effective spending power of the average family by reducing needless waste in market basket expenditures resulting from those marketplace practices which this bill seeks to arrest. It is an effort to invigorate the economy by making it more likely that profits will be channeled to the more efficient and honest manufacturer. The bill is an effort to assist the honest businessman by upgrading the economic value of fair packaging and labeling practices. The industries affected by the bill have combined sales which are equal to those of automobiles and steel combined. Some persons in these industries have told me of their qualified opposition. They will be given every opportunity to present their views. Some of these persons approve, in the main, the objectives of the bill, but are concerned over specific sections. They can be of immense aid, not only to their own companies, but to the committee by the testimony they will present here. Some have flatly announced their opposition without qualification to any measure designed to meet the objectives of this bill. Among those opponents are individuals who consider any Government attempt to act in matters affecting the public interest as an unwarranted assault on free enterprise. This seems to me to be the voice of Rip Van Winkle in the 20th century. The record is clear that industry has not been able to correct these conditions itself, although almost 2 years have passed since these hearings first began. And this failure to act is no reflection on those involved. Rather, it reflects the complexity, diversity, and intense competition in the economic sector involved. But the health of our society and our economic structure depends on honest, truthful practices in the marketplace. If these practices are allowed to break down, then clearly it is the responsibility of Government to repair them by filling a void in the law. We believe these unfair competitive practices can be corrected with the minimum of Government direction that this bill provides. The ground swell of public support for remedial legislation indicates that the people of this country want measures taken to correct the abuses. |