Agreement not to advertise prices

No. 268. Agreement not to advertise prices.

The Commission rendered an advisory opinion in which it stated that a joint agreement among competitors to refrain from price advertising would constitute a violation of Section 5 of the Federal Trade Commission Act. The request which prompted the Commission s opinion stemmed from a proposal to use the following language in an association standards of ethics: "Advertising of rates or comparison of competitor s rates or charges, is prohibited on the basis that such advertising demeans the profession. The present code now in effect uses the word "discouraged" in lieu of the word "prohibited.

In ruling that such a provision would be ilegal, the Commission said:

",*" since price difference and price comparison may be valuable stimulants to competition, any agreement to suppress the advertising of the two would constitute an agreement in restraint of trade violative of Section 5 of the Federal Trade Commission Act.

Moreover, as to the present use of the word " discouraged" in the code

now in effect, you are informed that any agreement to "discourage" advertising of rates or rate comparison would also be in restraint of trade and violative of Section 5 of the Federal Trade Commission Act. The Commission is aware that you have not requested this advice, and indeed under the Commission s Rules an advisory opinion j,g usually considered inappropriate because the practice is one which is already engaged in; however, since your adoption of this rule has come to the attention of the Commission , the Commission would be remiss in not suggesting its discontinuance. (File No. 683 7138, released July 17 1968.