Publication by trade association of suggested resale price schedule for materials

No. 273. Publication by trade association of suggested resale price schedule for materials.

The Commission rendered an advisory opinion advising a trade association of independent shops engaged in rendering repair service that its proposal to disseminate a suggested resale price schedule for materials used would be likely to result in a violation of law.

The schedule in question consisted of two tables, one of which gave the shop owner a quick reference to suggested resale prices for materials and the other of which gave him an explanation of the total by itemization of each resaleable product. The schedule explained that after hours of study it was found that computing labor and materials charges by allowing a price for each hour of labor was very unfair to the shops and far below their cost of materials. Hence the schedule gave the shop a quick method of computing the price of materials to which would be added the cost of labor.

The Commission advised that implementation of this proposal by the association would be likely to result in a violation of law. Even though couched in the form of a suggestion, the natural and probable result of such an action by the association would be to persuade substantial numbers of the members to charge the prices suggested, thus leaving an almost inescapable inference of an agreement among competitors to charge a uniform price for materials. Such an agreement, the Commission stated, would be a clear restraint of trade under existing law. ADVISORY OPINIOX DIGESTS 1659 It was the opinion of the Commission that the prices charged by the members for materials should be determined by the natural forces of competition, not by concerted activity on the part of the members acting through their trade association or otherwise. (File No. 683 7148, rei cased Aug. 17, 1968.

,,0. 274. Proposal to reduce discounts granted smalJ voJume purchasers.

The Commission rendered an advisory opinion in which a distributor of leather specialty goods was informed that a proposed merchandising plan under which those customers whole annual purchase volume is less than an arbitrary and fixed amount would be granted a smaller discount than would be granted those whose purchases exceed such amount cannot be approved because it appears on its face to violate Section 2 (a) of the amended Clayton Act if it were put into operation.

The proposed merchandising program wil continue the current discount of 50 percent off list to those whose annual purchase volume exceeds S250. All other accounts will be granted 40 percent discount on orders of less than $200 list and 50 percent discount on orders over this amount until their cumulative purchase volume reaches $500 list at which time each wil receive a rctroactive rebate adjustment on past purchases and the current discount on subsequent purchases. A service charge of 32 is to be charged on orders of less than $20 net.

The Commission further pointed out that price discriminations to customers who in fact compete with each other in the resale of commoditics of like grade and quality would violate Section 2 (a) Df the amended Clayton Act unless cost justified or unless the lower price is a good faith meeting of a competitor s equally low price. (File No. 683 7146, released Aug. 17, 1968.

:No. 275. Necessity for disclosing country of origin of imported watchbands.

The Commission was requested to furnish an advisory opinion as to the necessity for disclosing the country or origin of watchbands which will be assembled in the Virgin Islands wholly from parts importcd from Hong Kong.

The opinion advised that in the Commission s vie\v the country of origin of these watchbands must be disclosed in a clear and conspicuous manner either on the bands themselves or on the packages in which they are sold. (FiJe No. 683 7113 , released Aug. 17, 1968.