and unused lubricating oil. In the absence of a clear and conspicuous disclosure of the fact of previous use, consumers have no means by which they can readily determine that such products are composed in whole or part of previously used oil, and are led to believe that such products are composed entirely of new and unused oil. (b) It has been urged that reclaimers of oil perform a public service in that they collect and remove used oil which is potentially harmful and dangerous, and which otherwise would constitute an industrial and sanitation problem. It has also been asserted that oil does not wear out and therefore properly re-refined used oil is as good as or better than many oils produced entirely from virgin stock. The value of the service rendered by the industry is not germane to this consideration, nor is the quality of reclaimed oil involved here. It is not necessary therefore for the Commission to pass upon the relative merits of new and reclaimed oil. It is well settled that substitution is unlawful, even if a qualitative equivalence could be shown and the consumer is prejudiced if he is led to expect one thing and is supplied with something else. The public interest requires that used oils be labeled and advertised as such to prevent deception of the public and to maintain fair competition. § 406.3 Necessity for front or face panel disclosure. (a) Lubricating oils, whether new, used, or blends thereof, are usually sold in round quart size cans or in larger cans, such as two gallon containers having an upright rectangular shape. Generally, these containers have a front or face panel on which the brand name is featured and which is designed to present a more attractive appearance than other parts of the container for display purposes. Some containers have more than one panel which is similarly designed. (b) It is common knowledge that in garages, filling stations, and other retail outlets where lubricating oils are sold, oil containers are customarily arranged on racks or shelves in such a manner that only the front or face panel is clearly exposed to the view of prospective purchasers. Thus, any printed material appearing on other parts of the container would not readily be seen by the casual observer. In the marketplace, many purchasers of lubricating oil identify and recognize products by viewing only the front or face panel of the container and it is unlikely that they would observe printed material appearing on other parts of the container which are not exposed to view. (c) In view of all the circumstances, the Commission concludes that in order for the disclosure required by this part to be clear and conspicuous, it should be placed on the front or face panel of each container. If the container has more than one panel similarly designed as a front or face panel the required disclosure should be placed on each such panel. § 406.4 Deceptive use of the term "re refined." (a) Some marketers of reclaimed lubricating oil have described their products as "re-refined" when in fact such oils have been subjected to but a simple reclaiming process. The reprocessing or reclaiming of previously used oil is accomplished by various processes. Simple reclaiming may involve only the removal of insoluble physical contaminants and sometimes a treatment to reduce chemical contaminants such as fuel fractions, water, combustion, and resinous oxidation products. These simple processes do not remove many of the contaminants acquired through previous use. Experts are not in uniform agreement as to what criteria should be met to justify the use of the term "re-refined" to describe previously used oil. Many technical persons understand "re-refining” to involve a complete and extensive processing under controlled conditions such as settling, filtration, dehydration, distillation, chemical treatment, clay treatment, and other processing, including selective solvent refining. There are variations in "re-refining" methods but the ultimate purpose of all of these is to remove physical and chemical contaminants acquired through use. (b) Contention has been made that use of the term "re-refined" alone constitutes adequate disclosure that oil so described has been previously used. Webster's New International Dictionary, Second Edition-Unabridged, defines "refine" as "To reduce to a fine, unmixed or pure state; to separate from extraneous matter, to free from dross or alloy as metals; to free or cleanse from impurities, as wine, sugar, etc." The same dictionary defines "re" as "again;-used * chiefly to form words, especially verbs of action, denoting in general repetition (of the action of the verb) * *." The combination of these two words, when used to describe oil, would mean, by dictionary definition, that the process of reducing oil to a fine, unmixed or pure state has been repeated. (c) To the consuming public the word "re-refined" as descriptive of lubricating oil is susceptible of more than one meaning. While members of the trade and more sophisticated consumers might understand that the oil so described had been previously used, to many consumer purchasers who are unaware that oil is reclaimed and resold to the public, "rerefined" could well mean a virgin oil which has been refined more than once. Even when put on notice that the oil has been previously used, many consumers would be led to believe by the word "re-refined" that the oil had been reclaimed and restored to its original condition by a refining process. (d) The Commission concludes therefore that the word "re-refined" when used alone to describe previously used oil would not adequately inform prospective purchasers that oil so described has been previously used. The Commission further concludes that "re-refined" when coupled with a disclosure that the oil has been previously used would mean to a substantial portion of the consuming public that the oil so described has had the contaminants acquired through previous use removed therefrom by a refining process. (a) On the basis of the foregoing, the Commission concludes that, in connection with the sale in commerce of lubricating oil composed in whole or in part of previously used oil, the practices of (1) failing to disclose clearly and conspicuously the fact that such oil has been previously used; (2) representing directly or by implication that such oil is new or unused; and (3) representing that such oil has been "re-refined" when the physical and chemical contaminants acquired through use have not been removed by a refining process; have the capacity and tendency to mislead and receive purchasers and prospective purchasers and to divert business from competitors who truthfully and properly describe and label their products. The Commission further concludes that these practices are violative of section 5 of the Federal Trade Commission Act, and that the public interest in preventing their use is specific and substantial. (b) Accordingly, for the purpose of preventing such unlawful practices, the Commission hereby promulgates, as a Trade Regulation Rule, its conclusions and determination that in connection with the sale or offering for sale of lubricating oil composed in whole or in part of previously used lubricating oil, in commerce, as "commerce" is defined in the Federal Trade Commission Act, it constitutes an unfair method of competition and an unfair and deceptive act or practice to: (1) Represent in any manner that such used lubricating oil is new or unused; or (2) Fail to disclose clearly and conspicuously that such used lubricating oil has been previously used, in all advertising, sales promotional material and on each front or face panel of the container. For the purpose of this Part 406 the front or face panel means the part (or parts) of the container on which the brand name is usually featured and which is customarily exposed to the view of prospective purchasers when displayed at point of retail sales; or (3) Use the term "re-refined," or any other word or term of similar import, to describe previously used lubricating oil unless the physical and chemical contaminants acquired through previous use have been removed by a refining process. (As used in this part, the term "lubricating oil" refers to any oil used for lubricating purposes including but not limited to, motor and transmission oil.) AUTHORITY: The provisions of this Part 410 issued under 38 Stat. 717, as amended; 15 U.S.C. 41-58. SOURCE: The provisions of this Part 410 appear at 31 F.R. 3342, Mar. 3, 1966, unless otherwise noted. § 410.1 The practice involved. Marketers of television receiving sets engaged in the sale of such products in commerce, as "commerce" is defined in the Federal Trade Commission Act, have represented, directly or by implication, the sizes of the pictures shown by such sets in various ways. Some have described such sizes in terms of the overall diagonal dimensions of rectangular picture tubes by the use of such phrases as "19 inch set," "16 incher," etc. Others have described the sizes of the pictures shown by their products in a similar fashion but with explanation that the measurements are diagonal, e.g., "19 inch set diagonal measure." Yet others have used similar size designations but with added disclosure that the dimensions are diagonal and additionally, that said dimensions represent the overall measurements, e.g., "19 inch set-overall diagonal measure." Still others have represented the sizes of the pictures shown by their sets in terms of the actual viewable areas of such pictures together with a statement of at least one of the above methods of size description, e.g., "21 inch overall diagonal-262 square inch picture." § 410.2 Deceptive character of the prac tice. (a) It is a practice in the industry, when installing a picture tube in a television receiving set, to mask or cover the walls of such tube and a minimal amount of the actual picture area thereof. The overall size of a picture tube as installed in a television receiving set includes measurements of the actual picture area of the tube plus the thickness of the tube walls which does not display a picture. Thus, the overall dimensions are invariably larger than the dimensions of the picture shown. (b) Some marketers have argued that deception does not result from the use of unqualified size representations solely in terms of the overall diagonal dimension of the picture tube. The record does not support the assertion that this method of measuring television sizes has acquired a secondary meaning and thus is not deceptive. (c) Other industry representatives have asserted that they have had no consumer complaints as a result of the use of size designations in terms of the overall diagonal dimensions of picture tubes when the size of the actual picture shown by the set is stated. In 1956, during the course of a compliance program initiated under the Trade Practice Rules for the Radio and Television Industry (Part 142 of this chapter), particularly with regard to Rule 9 thereof, entitled "Deception as to Size of Picture," the industry was advised that the staff would not object to size representations in terms of overall diagonal measurements of picture tubes provided disclosure also was made of the sizes of the actual picture areas and additional disclosure was made of the fact that such dimensions were overall and diagonal when so measured. However, the record of this proceeding is replete with television advertisements wherein the overall sizes of the advertised sets are emphasized in large figures or print. The record further shows that wherever the size of the actual picture shown by the set appears in such advertisements it is either inadequate or so inconspicuous as to be of no value in removing or curing the inherent deceptive tendency present when the overall dimensions are emphasized. The first impression gained by a casual reading of such advertisements is that such sets display a larger picture than is the fact. This is deceptive. (d) The consuming public customarily thinks of sizes of rectangular shaped objects in terms of the length or the length and width of such objects. The sizes of blankets, for example, are invariably stated in terms of the width and length, e.g., "76 x 107 inches." The sizes of rugs are generally stated in terms of the number of inches or feet in length and width, e.g., "9 ft. x 12 ft." Except in the matter under consideration, the Commission is not aware of any rectangular shaped object the size of which is stated in terms of the diagonal measurement. (e) On the basis of the entire record and the Commission's accumulated experience with television size representations, it is concluded that size representations in terms of overall measurements of picture tubes are misleading because such sizes are invariably larger than those of the actual pictures shown. The Commission further concludes that such representations in terms of diagonal dimensions of rectangular picture tubes, (a) On the basis of the foregoing, the Commission concludes that the practice of unqualifiedly representing, directly or by implication, the sizes of pictures shown by television receiving sets in terms of the diagonal (in the case of rectangular tubes) and/or the overall dimensions of the picture tubes in such sets, has the capacity and tendency to mislead and deceive purchasers and prospective purchasers as to the sizes of pictures shown by the sets so described and to divert business from competitors who do not represent the sizes of their products in such manner. The Commission further concludes that this practice is violative of section 5 of the Federal Trade Commission Act, and that the public interest in preventing its use is specific and substantial. (b) Accordingly, for the purpose of preventing such unlawful practice, the Commission hereby promulgates, as a Trade Regulation Rule, its conclusion and determination that in connection with the sale of television receiving sets in commerce, as "commerce" is defined in the Federal Trade Commission Act, it is an unfair method of competition and an unfair and deceptive act or practice to use any figure or size designation to refer to the size of the picture shown by a television receiving set or the picture tube contained therein unless such indicated size is the actual size of the viewable picture area measured on a single plane basis. If the indicated size is other than the horizontal dimension of the actual viewable picture area such size designation shall be accompanied by a statement, in close connection and conjunction therewith, clearly and conspicuously showing the manner of measurement. (c) Examples of proper size descriptions when a television receiving set shows a 20 inch picture measured diagonally, a 19 inch picture measured horizontally, a 15 inch picture measured vertically, and a picture area of 262 square inches include: "20 inch picture measured diagonally" or "19 inch" or "262 square inch picture." (d) Examples of improper size descriptions of a television set showing a picture of the size described above include: "21 inch set" or "21 inch diagonal set” or "21 inch over-all diagonal-262 square inch picture" or "Brand Name 21." PART 412-DISCRIMINATORY PRACTICES IN MEN'S AND BOYS' TAILORED CLOTHING INDUSTRY AUTHORITY: The provisions of this Part 412 issued under 38 Stat. 717, as amended; 15 U.S.C. 41-58; 49 Stat. 1526; 15 U.S.C. 12, et seq. SOURCE: The provisions of this Part 412 appear at 32 F.R. 15584, Nov. 9, 1967, unless otherwise noted. STATEMENT OF BASIS AND PURPOSE § 412.1 Basis of the proceeding. (a) The Commission focused its attention on the wearing apparel industry after having received numerous complaints from small apparel retailers, small manufacturers and apparel salesmen. These complainants asserted that many manufacturers of apparel, particularly in the outerwear categories of women's and misses' dresses, suits, coats, sweaters and blouses, and men's and boys' suits, coats, slacks, shirts and sweaters, had discriminated in the granting of advertising allowances to their competing customers, in violation of section 2(d) of the Clayton Act, as amended. In order to obtain further information concerning the practices alleged in these complaints, the Commis sion in 1961 issued orders requiring approximately 230 of the leading buying offices, including the large department store chains, to file special reports, pursuant to section 6(b) of the Federal Trade Commission Act. Subsequently, additional orders were issued requiring over 400 sellers or suppliers of apparel, including approximately 35 suppliers of men's and boys' tailored clothing, to file similar reports. An examination of the data furnished in these reports indicated that violations of section 2(d) of the amended Clayton Act were widespread in the wearing apparel industry.1 Moreover, it appeared that such violations usually occurred in situations where sellers failed to furnish competing customers with written promotional plans. (b) On the basis of the information developed by this inquiry, the Commission afforded those manufacturers or suppliers which it had reason to believe were engaged in practices violative of section 2(d) of the amended Clayton Act opportunity to enter into consent agreements which included orders to cease and desist from engaging in such unlawful practices. Of the more than 300 manufacturers or suppliers of apparel which were the subject of cease and desist orders subsequently issued, approximately 25 were manufacturers of men's and boys' tailored clothing. (c) The Men's and Boys' Tailored Clothing Industry, a sizable segment of the apparel trade, comprised some 635 establishments according to the 1963 Census of Manufacturers published by the Bureau of the Census. In 1964 the net value of shipments by manufacturers amounted to almost two billion dollars. Representatives of this industry petitioned the Commission to initiate an informal enforcement program for obtaining industrywide compliance with section 2 (d) and (e) of the amended Clayton Act. In connection with this petition a preliminary inquiry into industry practices was conducted in the course of which interviews were had with knowledgeable sources, including other government agencies, trade associations and retail organizations. After giving consideration to the industry petition in the 1 Rabiner & Jontow, Inc., Docket No. 8629 (Sept. 19, 1966) p. 3. 2 Abby Kent Co., Inc., et al., Docket No. C-328 et al. (Aug. 9, 1967). 3 Subsecs. (d) and (e) of sec. 2 of the Clayton Act, as amended, are set forth in an appendix to the rule. light of the information developed in this inquiry, together with that obtained in the earlier investigations, the Commission initiated a Trade Regulation Rule proceeding in the Men's and Boys' Tailored Clothing Industry. Before deciding upon this course of action, the Commission considered alternative methods of obtaining correction of the practices in question, including the caseby-case approach. It was concluded, however, that this purpose could be accomplished most expeditiously and equitably through the initiation of a Trade Regulation Rule proceeding. § 412.2 ceeding. The Trade Regulation Rule pro (a) A notice of proposed rule making, including a proposed rule, was published in the FEDERAL REGISTER on November 9, 1966, affording all interested or affected parties an opportunity to submit data, views or arguments concerning the proposed rule, in writing or orally at a public hearing which was held on January 18, 1967. The proposed rule provided in substance that the granting or furnishing of advertising allowances or special services or facilities would be presumed to be unlawful unless made pursuant to a written plan furnished by the supplier to all of his competing customers. (b) In the course of the public hearing, industry representatives asserted that violations of section 2 (d) and (e) of the amended Clayton Act were widespread in the industry and attributed this primarily to the absence of written promotional plans. In support of this assertion a representative of a men's and boys' clothing manufacturers association who estimated that considerably more than 60 percent of this industry's production is covered by cooperative advertising plans, introduced a summary of a survey conducted among some of its members representing a cross-section of the industry. This survey showed that out of 48 manufacturers, 36 believed that their competitors deviated from their oral plans and granted discriminatory allowances, whereas significantly fewer manufacturers felt that their competitors discriminated when written plans were involved. Of the manufacturers polled, approximately 77 percent were of the opinion that retailers pressured manufacturers to deviate from their plans. |