Advisory opinion letter to Mr. Langston

ADVISORY OPINION DIGESTS 1713 the preticketing arrangement would share responsibility for such ‘deception. ;

Further, if the service of affixing an individual customer’s pricing labels on packages is not generally availabie on proportionally equal terms to all other of an importer’s customers competing in the resale of imported candles, the providing of such a service to one customer may constitute a violation of Section 2(e) of the amended Clayton Act. (File No. 703 7098, released June 8, 1970.) No. 423. Availability of Tripartite Promotional Advertising on Shopping Carts.

The Commission rendered an advisory opinion concerning the advertising of food and nonfood products on shopping carts in retail grocery stores.

The program submitted for Commission consideration involved two plans. Plan A related only to the advertising of food items. Selleradvertisers would be charged a rate commensurate with the number and length of time shopping carts are used to display his advertising and the estimated number of in-store shoppers exposed to such adyertising. Participating retail grocers would be paid for the use of his shopping carts based on the number and length of time his equipment is used for supplier advertising and the estimated number of shoppers exposed to such advertising. Stores without shopping carts will be offered placards or shelf-markers without cost and will be paid on the basis of the number of customers exposed to the advertising. All competing retail grocers would be informed of this plan by personal solicitation, advertisements in trade journals and direct mailing to all in business at Jeast. 6 months prior to the start of the plan. Under Plan B nongrocery items not available for resale by participating retail grocers would be advertised only in those stores which have shopping carts. The rates and payments to advertisers and participating retailers would be the same as in Plan A. The Commission advised it would interpose no objection to the implementation of Plan A provided the following conditions were met:

(1) If the advertised grocery products are being handled by other than grocery stores, the other stores must also be notified of their ri ght to participate in the plan, provided they compete with the favored retail grocery stores. Moreorer, all competing customers must be notified of the plan, regardless of whether they purchase direct from the ‘supplier or through some intermediary.

(2) Payments to smaller participating stores with shopping carts should be made on the same terms as those to the smaller stores withcut shopping carts.

(8) Since the plan calls for performance of certain obligations which . are normally performed by a supplier, Guide 13 of the Commission's Guides for Advertising Allowances should be consulted. The Commission advised further that Section 2(d) or 2(e) of the amended Clayton Act would not be applicable to that part of the program described as Plan B. This conclusion is based upon the statement that the nongrocer y items, which are to be advertised only in retail grocery stores with shopping carts, would not be available for resale in such stores. However, the Commission cautioned, if the advertising on the shopping carts indicate the name of any particular dealer where the advertised products may be purchased, then the adverti sing should also indicate the names of all competing dealers. (File No. 703 7097, released June 8, 1970.) . 424. Tripartite Promotional Program Using Trash Recep** Sacle Panels for Advertising. The Commission responded to a request for an advisory opinion concerning a proposal to offer advertising panels on trash receptacles to advertisers of products and services.

Under the program trash receptacles would be placed in public service areas where permission is obtained from the property owner, city government, or the person who controls the premises. Advertising thereon would be sold to producers on a yearly contract basis, the rates to be determined by the location and pedestrian traffic in the area. Product advertising will only advertise the product and will not indicate where it is available, however, service adv ertising will probably direct potential customers to the service. Physical servicing of the receptacles would be handled in many ways. Where they are placed on city strects, arrangements would be made with the city government to empty them and to report their condition. Where the receptacles are placed at motels, hotels, service stations, and like locations, arrangements would be made with persons who normally service such areas. Where the receptacles are placed in shopping centers or shopping malls, ary ‘angements would be made with merchants within such areas to empty them and report on their condition. A fee would be paid to those rendering these services. The Commission expressed the view that payments to a merchant to service trash receptacles which may display advertising of products that he sells would be objectionable under Section 2 (d) of the amended Clayton Act. The proposed program would be unobjectionable under this Act where payments for servicing the receptables are made to anyone other than merchants engaged in the sale of the advertiser's products. (File No. 703 7089, released June 8, 1970.) ADVISORY OPINION DIGESTS 1715 No. 425. Combining Advertising for Mailing Purposes. The Commission rendered an advisory opinion concerning a proposal to combine manufacturer and retailer advertising into one mailing pieee. The intended program involves the attaching of packets containing direct-to-consumer redeemable coupons and other advertising material prepared for various manufacturers and service organizations to the tabloid or booklet type mail advertising of national or regional retailing organizations. The purpose of the proposed program is to minimize mailing costs for the participating organizations. As each party to the arrangement would pay a proportonate share of the preparation, postage and other mailing costs, the mailing expenses for each would be reduced about one-half.

The Commission expressed the view that to the extent a participating retailer will realize a saving in mailing costs because the advertising material of one or more of his suppliers is inserted in the packets prepared by the other participant who is under contract with such suppliers, a discriminatory promotional allowance will have been accorded by such supplier to that retailer. However, the same result will not pertain where the packet contents are limited to those products and services not available from the participating retailer. The Commission advised that so long as precautionary measures are taken as will insure that the packet contents are limited to the advertising of those products and services which are not available from or through a participating retail organization, implementation of the proposed program in the manner outlined will raise no questions under Section 2 (d) or (e) of the amended Clayton Act. (File No. 703 7095, released June 8, 1970.) No. 426. Quality Designation on Jewelry of Identical Construction. The Commission responded to a request for an advisory opinion concerning a proposal to use the quality designation “Yellow Gold or White Rhodium Electroplated” on jewelry of identical construction which may be electroplated with either metal. The view was expressed by the Commission that although there may be some instances where a consumer might be able to properly interpret such a quality designation, the vast majority of consumers would be confused through use of any dual designation. Moreover, if the the use of such a dual designation were to be approved, it would logically follow that approval would have to be given to the use of triple, quadruple, etc., designations. The end result would be utter chaos for the vast majority of consumers who would be thrown into a jungle of quality designations from which they could not intelligently extricate themselves. 1716 FEDERAL TRADE ‘COMMISSION DECISIONS Under these circumstances, the Commission advised that it cannot give its approval to such dual quality designation because the use thereof would probably serve to confuse and deceive prospective purchasers in regard to the quality of the products being bought. (File No. 703 7071, released June 8, 1970.) No. 427. Guarantee Advertising for Refrigerator Compressors. ‘The Commission rendered an advisory opinion regarding the proposed advertising of a 10-year guarantee for compressors used in refrigerators.

The proposed advertising, which would appear as a 80-second television commercial, would guarantee the compressors for 10 years in writing and if they do not last that long a new compressor will be given the customer free, and further, for the first 5 years the manufacturer will pay labor charges and the customer will pay for pickup and delivery.

The Commission advised that the proposed advertising is not in harmony with the language used in the submitted guarantee or with Guide 1 of the Commission's Guides Against Deceptive Advertising of Guarantees in three important aspects.

(1) The advertising offers a replacement for any compressor found to be defective, whereas the guarantee provides that any defect will be repaired or replaced. Thus, the advertising is inconsistent with the actual provisions of the guarantee. Either the advertising should be revised to conform with the guarantee and include the disclosure of ‘a possible repair job or replacement, or the guarantee should be changed and made consistent with the proposed advertising. If an election is made to change the advertising, it should also disclose whether the guarantor or the purchaser has the option of repairing or replacing.

(2) The guarantee provides that the manufacturer will repair or replace any parts he finds defective. The fact that the manufacturer alone makes the determination as to whether or not a part is defective is a material limitation and should be disclosed in advertising. (8) The guarantee provides that the customer will pay an “analysis charge for determining defects.” This is a material limitation on the 10-vear guarantee which could be a significant factor in the purchaser’s selection of a refrigerator, and therefore the fact that an analysis charge is imposed should be disclosed in the advertising. (File No. 708 7094, released June 8, 1970.) ADVISORY OPINIONS WITH REQUESTS THEREFOR* Use of word “jewel” in connection with the sale and advertisement

of asynthetie stone. (File No. 703 7098)
Opinion Letter
May 19, 1970
Dear Mr. Langston:

This is in response to your request in behalf of Zale Corporation for an advisory opinion.

The Commission understands that the applicant proposes to advertise and sell a synthetic diamond under the name “F'lare-Jewel.” The applicant wishes to know whether the use of the word “jewel” in connection with the sale and advertisement of a synthetic stone would be in violation of any law administered by the Federal Trade Commission. The Commission is of the view that the use of the term “FlareJewel” to refer to synthetic stones without clearly disclosing that such stones are not natural stones or natural jewels would be in violation of

the Federal Trade Commission Act, Section 5.
By direction of the Commission.
Letter of Request
March 18, 1970

Gentlemen:

I represent a jewelry concern who in the very near future intends to manufacture and sell various synthetic stones. My client anticipates advertising and selling one of the stones, a synthetic diamond, under the name “Flare-Jewel.” It is my understanding that it is an unfair trade practice to use the word “gem” in reference to a synthetic diamond.

I would very much appreciate receiving your advice and opinion as to whether the word “jewel” falls into the same category as the word “oem” and whether the use of the word “jewel” in connection with the sale and advert

isement of a synthetic stone would put my client in vio*See footnote on page 1696 herein. lation of any rule or regulation of the Federal Trade Commission. I

shall await your reply.
Yours truly,
/s/
H. A. Langston, Jr.
Attorney at Law

Obligation of FTC to enforce the standard of flammability in DOC FF-1-70 for carpets and rugs, as applied to rental mats.

(File No. 703 7105)
Opinion Letter
June 2, 1970
Dear Mr. Ehrlich:

Reference is made to your letters of April 21 and May 19. 1970, requesting an opinion as to whether or not the Commission will be obligated to enforce the standard of flammability in DOC FF-1-70 for carpets and rugs, as applied to rental mats, which form the basis of services rendered by the Institute of Industrial Launderers and the Kex National Association.

The Commission has given careful consideration to this matter. It has concluded that the mats in question come within the scope of Sec. 3(a) of the Flammable Fabrics Act and must therefore conform to the applicable flammability standard. The Commission is also of the opinion that the practice in question would come within the provision

of Sec. 5 of the FTC Act.
By direction of the Commission.
Supplemental Letter of Request
May 19, 1970