the minimum yardage of ribbons; as to the true functions of radio parts and accessories; as to the quality, quantity, and size of ripe olives as packed in cans and other opaque containers; and many other unfair methods of competition and unfair or deceptive acts or practices in commerce.

GROUP I AND GROUP II RULES DEFINED

Trade practice rules, as finally promulgated, are classified by the Commission as group I and group II rules, respectively.

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

Group II rules embrace the wholly voluntary or recommended industry practices as distinguished from compulsory requirements. No such industry rule is received by the Commission unless the provision is in harmony with law and the public interest, and is constructively in support of the maintenance of fair competitive conditions in the industry.

TRADE PRACTICE RULES IN EFFECT AND THEIR ADMINISTRATION

Rules in effect.-Trade practice rules which are in effect for various industries number many hundreds. For example, the last 50 industries for which trade practice conference proceedings had been held have a total of 858 rules, of which 730 are in group I and 128 in group II. The types of trade practices hereinabove listed are indicative of the different kinds covered in the rules for these 50 industries.1

Administration of rules.-This work covers the necessary compliance activities, interpretation of rules, and their application to specific situations arising from time to time in different industries, and the general administrative duties in respect to such activities. Such work concerns not only those rules promulgated during the current fiscal year, but also those promulgated in prior years and remaining in effect. A large volume of correspondence was conducted throughout the year in regard to existing rules, particularly as affecting com

1 Rules, when promulgated for an industry, are issued in pamphlet form. A 1-volume compilation of the various sets of rules promulgated for different industries from Sept. 1, 1935, to Aug. 31, 1939, is available for purchase from the Superintendent of Documents, Washington, D. C. (287 pp.)

pliance with the provisions, and in general assisting industry members in the proper application and observance of rules in order to promote the use of fair practices and the protection of the public interest. Numerous informal conferences were had with members of industries and with other interested parties or groups. In a great majority of matters received during the fiscal year involving objectionable practices under the rules, correction or adjustment was brought about through the cooperation of the various parties concerned. Compliance with approved rules was general on the part of members of the industries, and this constructive and cooperative attitude has greatly lessened the need for resorting to the compulsory processes of the law in the prevention of unfair trade practices. The results demonstrated a primary objective of trade practice rules, namely, the wholesale elimination of unfair competitive practices without the expense of litigation. In cases where the compulsory procedure of the Commission appeared necessary to protect the public interest, action to that end was initiated.

Regarding the observance of trade practice conference rules, periodic surveys are conducted by the Commission, and those made during the fiscal year revealed marked improvement in competitive conditions in different industries operating under rules. It was apparent that the best interests of the public and of business were being served with substantial benefit as a consequence of the operation of fair trade practice rules.

PART IV. RADIO AND PERIODICAL ADVERTISING

SPECIAL PROCEDURE PROVIDES CONTINUOUS SURVEY OF

PUBLISHED AND BROADCAST MATTER

PART IV. RADIO AND PERIODICAL ADVERTISING

SPECIAL PROCEDURE PROVIDES CONTINUOUS SURVEY OF PUBLISHED AND

BROADCAST MATTER

Advertising matter as published in newspapers, magazines, catalogs, and almanacs and as broadcast over the radio is surveyed and scrutinized for false and misleading representations by the Commission through its radio and periodical examining staff on a continuing current basis. This work includes duties devolving upon the Commission with the enactment of the Wheeler-Lea amendment to the Federal Trade Commission Act.

The survey of magazine and newspaper advertising was inaugurated by the Commission in 1929, and the surveying of commercial advertising continuities broadcast by radio was started in 1934. As expanded in 1939, this survey includes mail-order catalogs and domestic newspapers published in foreign languages.

Apparent and probable misrepresentations detected through this survey are carefully investigated, and where it appears from the facts developed that the advertising is false or misleading and circumstances warrant, the advertisers are extended the privilege of disposing of the matters through an informal procedure, more fully explained at page 123, which permits their executing stipulations in which they agree to cease and desist from the use of the acts and practices involved. A large majority of the cases are adjusted in this manner. In those cases where this informal procedure is not applicable or does not result in the elimination of the misleading claims, and the facts so warrant, formal procedure is instituted.

In cases of advertising involving food, drugs, devices, and cosmetics, the Commission has directed the negotiation of stipulations with the advertising agencies which have disseminated those advertisements as well as with the advertisers in whose behalf the agencies acted.

In its examination of advertising, the Commission's only purpose is to prevent false and misleading advertisements. It does not undertake to dictate what an advertiser shall say, but rather indicates what he may not say under the law.

The Commission believes that its work in this field contributes substantially to the improvement that has been evident in recent years in the character of all advertising.