(c) Another association representing retail establishments selling men's wear referred to a survey made among its members which showed that of approximately 100 retailers of apparel polled, half believed that their suppliers discriminated among their customers in granting advertising allowances. Thirty expressed no opinion and 20 did not believe that manufacturers discriminated. It was stated that the ratio-50 believed yes and 20 no-fairly reflected the opinion of the entire membership of more than 3,000 members of the retail organization.

(d) According to both written and oral statements received in the proceeding many retailers, especially the larger ones, exert pressure on their suppliers for special treatment and even in the absence of such pressure oral arrangements by their nature are subject to deviations in an industry where many salesmen serve numerous customers. Industry representatives also expressed the opinion that the use of written plans cupplied to all competing customers would enable a manufacturer to resist more successfully pressures for preferred treatment brought by retailers, and thus better assure lawful treatment to all of the seller's competing customers.

(e) In summary, information received during the proceeding from attorneys, businessmen and association executives representing the manufacturing segment of the Men's and Boys' Tailored Clothing Industry fully supports the conclusion that the granting or furnishing of discriminatory advertising allowances or services in violation of section 2(d) of the amended Clayton Act is widespread in the Men's and Boys' Tailored Clothing Industry, and the further conclusion that such violations have occurred usually when sellers have failed to furnish their competing customers with written promotional plans.

(f) The information developed in this Trade Regulation Rule proceeding accords with the Commission's experience in the enforcement of section 2 (d) and (e) of the Clayton Act, as amended, particularly in the application of these statutory provisions to practices in the wearing apparel industry. It is not by coincidence that oral plans were involved in all of the litigated cases arising out of the 1961 investigation of the apparel indus

Rabiner & Jontow, Inc., Docket No. 8629 (Sept. 19, 1966), Gladstone-Arcuni, Inc., Initial Decision, Docket No. 8664 (Feb. 10, 1967), House of Lord's, Inc., Docket No. 8631 (Jan. 18, 1966), and Best & Co., Inc., Docket No. 8669 (Sept. 7, 1967).

5 House of Lord's, Inc., supra at p. 18; see also: Vanity Fair Paper Mills, Inc. v. Federal Trade Commission, 311 F. 2d 480, 485-486 (2d Cir. 1962).

tion or organization engaged in the sale of products for resale with or without further processing.

(c) Customer or purchaser. Persons, firms, corporations or organizations engaged in the purchase of products for resale.

(d) Customers competing in the resale and competing customers. Mean those customers who compete with each other in the distribution of a seller's products. § 412.6 The Rule.

The Commission hereby promulgates as a Trade Regulation Rule its conclusions and determination that the granting or furnishing, in whole or in part, of any advertising payment or promotional allowance, service or facility, by any seller of men's, youths' and boys' suits, coats, overcoats, topcoats, jackets, dress trousers and uniforms to a customer engaged in the resale of such products, will be presumed not to have been made available on proportionally equal terms to all the seller's customers competing in the resale of such products within the purview of section 2 (d) and (e) of the amended Clayton Act, unless such payments or allowances, services or facilities, have been made available pursuant to and in accordance with all the terms and conditions of a written plan supplied to all such competing customers.

APPENDIX

Set forth below are subsections (d) and (e) of section 2 of the Clayton Act, as amended: "(d) That it shall be unlawful for any person engaged in commerce to pay or contract for the payment of anything of value to or for the benefit of a customer of such person in the course of such commerce as compensation or in consideration for any services or facilities furnished by or through such customer in connection with the processing, handling, sale, or offering for sale of any products or commodities manufactured, sold, or offered for sale by such person, unless such payment or consideration is available on proportionally equal terms to all other customers competing in the distribution of such products or commodities.

"(e) That it shall be unlawful for any person to discriminate in favor of one purchaser against another purchaser or purchasers of a commodity bought for resale, with or without processing, by contracting to furnish or furnishing, or by contributing to the furnishing of, any services or facilities connected with the processing, handling, sale, or offering for sale of such commodity so purchased upon terms not accorded to all purchasers on proportionally equal terms."

§ 413.2

The practice involved.

Marketers of glass fiber curtains and draperies and glass fiber curtain and drapery fabrics usually furnish washing instructions for such products in the form of package inserts, labels, or tags. Normally these instructions, among other things, advise the purchaser to hand wash the products separately and rinse the container thoroughly after each washing. Purchasers are not cautioned, however, that skin irritation may result when the products are handled without protective covering, as by washing, sewing or hanging, or that such irritation may also occur when the skin is exposed to articles, such as clothing or bed sheets, which have been washed with glass fiber products, or in a container previously used for washing glass fiber products unless such container has been thoroughly cleansed of glass particles which may remain in the container.

§ 413.3 Deceptive character of the practice.

(a) Most glass fibers currently used in weaving fabrics for producing curtains and draperies become increasingly brittle with enlargement of the denier of such fibers. When such fabrics are handled, as by washing, sewing, or hanging, minute glass particles may break off and become lodged in the exposed skin of persons handling them. Likewise when certain articles, such as garments or bed sheets, are washed with glass fiber curtain or drapery fabrics, or washed in a container previously used for washing such fabrics, minute glass particles may become embedded in such articles and transmitted to the exposed skin of the user or wearer thereof. In either event, skin irritation may result.

(b) Although some washing instructions advise purchasers to hand wash glass fiber fabrics separately and rinse the container thoroughly after each washing, such purchasers are not warned as to the consequences of the failure to observe this advice. Such washing instructions may serve as warnings for the care of the fabric but do not serve as warnings that skin irritation may result.

(c) The Commission concludes therefore that the failure to disclose that skin irritation may result from body contact with glass fiber drapery and curtain fabrics, and clothing or other articles which have been washed with such glass fiber products or in containers previously used for washing such products when that container has not been cleansed of glass particles, has the capacity and tendency to mislead and deceive purchasers and prospective purchasers and to divert business from competitors whose products may washed or handled without the resulting irritation. The Commission further concludes that such practice is violative of section 5 of the Federal Trade Commission Act, and that the public interest in preventing this practice is specific and substantial.

be

§ 413.4 Data, views and arguments concerning the rule.

(a) Some interested parties claimed that the record in this proceeding has not established that severe skin irritation results from the handling of glass fiber curtains, draperies, and fabrics and argued that no rule in the matter is justified. Although the factual information

does not show that the handling of, or exposure to the products involved will generally result in immediate severe skin irritation, nevertheless such information is to the effect that exposure to the products involved may cause varying degrees of skin irritation. For example, some industry members and other affected parties, and doctors who presented statements on their behalf, concede that some skin reaction or discomfort may occur when the products in question are washed or handled. Further, the record is replete with consumer statements relating their experiences with varying degrees of irritation resulting from the exposure of their skin to particles from glass fiber curtains, draperies, and fabrics. The Commission was urged to disregard such consumer statements on the basis that such statements are medically unconfirmed self-diagnoses and hearsay, and thus of little probative value. However, the Commission is of the opinion that these statements, particularly when coupled with the concession of industry members and affected parties that the products involved may cause skin reaction or discomfort, should be given consideration. Such weight as the Commission has given to expressions of consumer experiences in this proceeding is not counter to or mitigated by medical statements in the record since the consumer statements related the varying degrees of irritation experienced by the writers, while the medical statements were primarily directed to showing that the glass particles did not cause severe skin irritation.

(b) It is concluded, therefore, that skin irritation may result from the handling, as by washing, sewing or hanging, of glass fiber draperies, curtains and yard goods and from body contact with clothing or other articles which have been washed with such glass fiber products or in a container previously used for washing such products when that container has not been cleansed of glass particles.

The Commission hereby promulgates, as a Trade Regulation Rule, its conclusions and determination that in connection with the sale or offering for sale of glass fiber curtains and draperies and glass fiber curtain and drapery fabrics 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 fail to disclose, clearly and conspicuously, by tag or label affixed to the products with such permanence as to remain thereon until sale to purchasers, and on containers in which the products are delivered to purchasers, that skin irritation may result:

(a) To the exposed skin of persons handling such glass fiber products; and (b) From body contact with clothins or other articles, such as bed sheets, which have been washed (1) with such glass fiber products, or (2) in a container previously used for washing such glass fiber products unless the glass particles have been removed from such container by cleaning.

The purpose of this rule is to inform all members of the industry and other interested or affected parties of the Commission's position with respect to the practices in question and to aid the Commission in the prevention of practices violative of section 5 of the Federal Trade Commission Act on an equitable and industrywide basis.

§ 414.3 The practice involved.

Marketers of radio receiving sets, especially the less expensive imported sets, have represented that their products contain a specified number or count of transistors when in fact one or more of such transistors are either dummy transistors (nonfunctioning), or perform some function other than the detection, amplification, and reception of radio signals. Often included in the computation of transistor count are transistors which are utilized as diodes or which perform auxiliary or other functions none of which serve to detect, amplify and receive radio signals. Also included in the transistor count computation may be transistors used in parallel or cascade applications which do not improve the performance capabilities of a radio in the detection, amplification and reception of radio signals.

§ 414.4 Deceptive character of the practice.

(a) With the advent of the radio receiving set, the purchasing public acquired a belief that the greater the number of functioning tubes in a radio the better it performs. Great emphasis in advertising and otherwise was placed on tube count. As early as 1942 the Commission found in a litigated case1 that a substantial portion of the purchasing public believes that the greater the number of tubes in a receiving set, the greater will be its power of detecting, amplifying, and receiving signals. The record of this proceeding shows that transistors are now used in place of vacuum tubes in many radio receiving sets. Great emphasis has now been placed on transistor count. The Commission is of the view

1 In re Zenith Radio Corp., Docket 4174, 35 FTC 579. Petition to review denied 143 F. (2d) 29.

that the purchasing public's belief that the greater the number of tubes in a radio the better and more powerful the radio has shifted to a similar belief with respect to the number of transistors.

(b) On the basis of its accumulated knowledge and experience and the record in this proceeding the Commission concludes that the practice of including in the transistor count computation of a radio, transistors which are dummies or which perform a function other than the detection, amplification, and reception of radio signals or which are used in parallel or cascade applications which do not improve the performance capabilities of the radio in the reception, detection, and amplification of radio signals, is deceptive and tends to divert business from competitors who do not misrepresent the transistor count of their products. The Commission further concludes that such practice is violative of section 5 of the Federal Trade Commission Act, and that the public interest in preventing this practice is specific and substantial.

§ 414.5 Data, views, and arguments concerning the rule.

(a) Some interested parties argue that the adoption of a rule prohibiting the inclusion in the transistor count of transistors which are not used for detection, amplification, and reception of radio signals is too restrictive; that it excludes from such count transistors which perform a multiplicity of other functions not directly related to detection, amplification, and reception of signals but which are nevertheless necessary to the performance of the set; and that this will discourage development of additional functions in transistor electronic equipment. Transistors are versatile devices, capable of performing various functions in a radio. Their functions include, but are not limited to, use as diodes and rectifiers, and in audio amplification, automatic frequency control, power supply, voltage regulation, and switching from monophonic to stereophonic operations. None of the transistors so utilized, however, perform the functions of detection, amplification, and reception of radio signals.

(b) The Commission would not regard it as deceptive for an advertisement stating the actual number of transistors in a radio set (computed without the inclusion of transistors which function as diodes or which perform functions not

directly related to detection, amplification, and reception of radio signals) to contain a further statement to the effect that the set, in addition, contains a stated number of transistors acting as diodes or performing such other functions. The Commission however regards it as deceptive (and thus improper) to include in the transistor count computation, transistors which are paralleled or cascaded and which perform no function in the detection, amplification, and reception of radio signals or dummy transistors which serve no useful purpose. THE RULE

§ 414.6 The rule.

The Commission hereby promulgates, as a Trade Regulation Rule, its conclusions and determination that in connection with the sale or offering for sale of radio receiving sets (including transceivers), 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 represent directly or by implication, that any such radio sets contain a specified number of transistors when one or more of such transistors: (a) Are dummy transistors, (b) do not perform the recognized and customary functions of radio set transistors in the detection, amplification, and reception of radio signals, or (c) are used in parallel or cascade applications which do not improve the performance capabilities of such sets in the reception, detection, and amplification of radio signals: Provided, however, That nothing in this rule should be construed to prohibit, in connection with a statement as to the actual transistor count (computed without inclusion of transistors which do not perform the functions of detection, amplification, and reception of radio signals), a further statement to the effect that the sets in addition contain one or more transistors acting as diodes or performing auxiliary or other functions when such is the fact (e.g., "6 transistors plus one diode").