Advisory opinion letter to Mr. DicKens

Re: Proposed use of designation “Diamond Flare” by Zale Corporation oo Dear Mr. DicKens:

Your letter dated October 30, 1970, addressed to the Commission has been referred to me for handling. .

I have been unable to identify the “Diamondaire” matter to which you referred. Please furnish any additional information you can with regard to the report that its use was approved by the Commission. The name of the major manufacturer using the designation might enable me to locate additional information in our files. As a matter of interest in connection with your request, a copy of the Commission’s Trade Practice Rules for the Jewelry Industry as amended November 17, 1959, is enclosed. Rules 26, 37(b), 38 and 39 particularly appear to be germane. _ Your request will be considered promptly, further, and you will be

advised as soon as possible. = 7
Very truly yours,
JosepH P. Durresne,
Attorney, Office of General Counsel.
1601

1602 FEDERAL TRADE COMMISSION DECISIONS
Letter of Request
Octosrr 30, 1970
GENTLEMEN :

I would like to have your advisory opinion as to the availability of the name “Diamonflare” for use in the marketing of a product which is not a natural diamond. It has come to our attention that the name “Diamondaire” is being used by a major manufacturer of this type of merchandise, and it is reported that their use is approved by the: Federal Trade Commission.

Your prompt response to this inquiry will be appreciated.

Very truly yours,
ZaLE CorPoRATION,
Joun P. Dickens,
Vice President and General Counsel.

Legality of a Promotional Plan Involving a Weekly Menu-Recipe-. Coupon Featuring Supplier Advertising. (File No. 713 7006)

Opinion Letter
JANvuary 11, 1971.
Desr Mr. CuLLen:

This is in further response to your request for an advisory opinion. in regard to the legality of the proposed promotional plan outlined. in your letters of August 14 and 28, 1970. The plan will involve a. weekly menu-recipe-coupon featuring supplier advertising to be offered to all food retailers in a given trading area for distribution totheir customers. The Commission has given careful consideration to your request. and has concluded that implementation of the promotional program in the manner described by your correspondence would not warrant a proceeding under the laws it administers, providing the following conditions and caveats are observed :

1. Since the proposed plan calls for your performance of certain obligations which are normally performed by the supplier, Guide 13: of the “Guides for Advertising Allowances” (see enclosed copy) must. be complied with by you and by all participating suppliers. 2. Since some products sold by retailers of food are also sold by non-grocery store outlets, the propesed plan must be made available to all retailers, including but not limited to drug and hardware retail-. ers, who may be competitive in the resale of a participating supplier’s products.

ee pe ew Se Re ee Se enero 3. Since it is unlikely that all retailers in a trading area will sell the products of all participating suppliers, product advertising on the menu-recipe-coupon must be so selected as to insure that only the products normally sold by a participating retailer are advertised on those allocated to him for distribution.

4, Since the Commission cannot now know how the proposed plan will operate in fact, you are directed to submit a written report to the ‘Commission within six months from the receipt of this letter, and every six months thereafter, indicating the manner and extent to which your plan is being implemented.

You are further advised it is the Commission’s view that as the promoter of the subject promotional plan you must make it clear to each supplier and each retailer that even though Mealtime Masterpieces, Inc., has been employed to implement the plan, it remains the supplier’s responsibility to take all reasonable steps so that each of his customers who compete with one another in reselling his products is offered either an opportunity to participate in your plan on proportionally equal terms or a suitable alternative if the customer is unable as a practical matter to participate in the primary plan; if not, the supplier, the retailer and Mealtime Masterpieces, Inc., may be acting in violation of Sections 2(d) or 2(e) of the amended Clayton Act and/or Section 5 of the Federal Trade Commission Act.

By direction of the Commission.
Supplemental Letier of Request
Aveust 28, 1970
‘Dear Mr. McManiuy:

In response to your telephone call, you will receive within the next day or two a package containing the following materials: 1. Booklet, “All About MEALTIME MASTERPIECES” 11

copies
2. Bag Stuffers 10 copies
3. Main Course Organizers 10 copies

4. Schedule B, Allocation of Masterpieces, Bag Stuffers and Dispensers. Schedule C, Allocation of Window Banners and Signs, Menu Posters and Guide for Launching MEALTIME MASTERPIECES. 10 copies each The booklet “All About MEALTIME MASTERPIECES” includes a brief description of our proposed service together with diagrams of . the various dispensers and a mockup in black and white of the MenuRecipe-Coupon. We hope the above material will give you the ammunition which you requested.

The food industry representatives which we have already approached agree that MEALTIME MASTERPIECES is a unique service which should be of genuine value to the consumer as well as. the supplier and the retailer. It appears that we are on the right track but we won’t know until the supplier decides that MEALTIME MASTERPIECES is a good investment for his advertising dollar. Needless to say, MEALTIME MASTERPIECES will not get, to. first base without a favorable opinion from the Federal Trade Commission so you can see why we are keeping our fingers crossed until we get the green light from your office. Very truly yours, (S) Max O. Cutten, | President.

Letter of Request
Aveust 14, 1976
Dear Mr. Trney:

We respectfully request an advisory opinion with respect to a new service we intend to initiate. The program will involve a weekly menurecipe-coupon to be offered to all food retailers in a given trade area. for distribution to their customers. Each menu-recipe-coupon (hereinafter referred to as “Mealtime Masterpiece”) has a printed menu and a photograph of a cooked dish on the front. The back includes cooking instructions for the pictured dish, a shopping list for the menu, and advertising space for several food products. A detachable cash discount coupon featuring one food product would be attached to each _ recipe. There would be no charge to the retailer or to the retailer’s customers for this service. The suppliers of the products featured on the coupon and the advertising spaces would provide the revenue necessary for production and distribution expenses. Indexed envelopes, without any advertising or promotional material for products, designed solely for customer convenience in filing the Mealtime Masterpiece would be sold to participating retailers for resale to their customers. The Mealtime Masterpiece and the indexed envelope will be dispensed in retail food stores from display devices which will be furnished without charge to the retailers. We recognize that Mealtime Masterpieces, Inc. and the suppliers of the products advertised on the menu-recipe portion of the Mealtime Masterpiece and the supplier whose product is the subject of the cash discount coupon portion of the Mealtime Masterpiece are subject to laws enforced by the Federal Trade Commission. In designing our program and its implementation, we have sought to follow the euidance with respect to those laws furnished to the business community:

ADVISORY OPINIONS WITH REQUESTS THEREFOR 1605 in the Guides for Advertising Allowances and Other Merchandising Payments and Services. :

We shall notify all retailers in a trade area and its periphery at least sixty (60) days prior to initiation of the program in their area to provide ample time for each to make an informed judgment about participation. A letter describing the program will be sent to all corporate chains and to all cooperative, voluntary, and independent wholesaler warehouses serving food retailers within the trade area and its periphery. Envelope stuffers, describing the program, will be provided for forwarding to the retailers. Prior to initiation of the pro: gram, announcements also will be made describing the program in publications which have a general distribution to the retailers within the trade area and its periphery. These announcements will also report that descriptions are being forwarded through warehouses servicing the retailers. The procedure for electing to participate will be simple and not burdensome to the retailer.

After the program has been launched, announcements about the program will be made at regular intervals (of at least every ninety (90) days) in these same publications. There will also be spot checks of a representative cross-section of retailers with at least such frequency, to verify that the suppliers’ customers are receiving proportionally equal treatment to which they are entitled under the program. The participating suppliers will be notified of Guide 13 of the Guides for Advertising Allowances and Other Merchandising Payments and Services.

Mealtime Masterpieces, and the dispensers will be allocated to all food retailers, large and small, on the basis of their average cash register transactions. For each Mealtime Masterpiece allocated, the participating retailer will be paid a nominal amount for handling. This amount plus the usual 3-cent coupon handling charge, and the profit from the sale of the indexed envelopes will be more than adequate to cover the retailer’s expenses in connection with our program. This program of cash register allocation will not favor the large retail food store over his smaller competitor. Studies have shown that . the large supermarket has an average transaction of something in excess of $7 while the smaller stores transactions average substantially less, frequently as low as $1.00, so that there are more transactions in the smaller stores for a given dollar volume of sales. The items featured on the cash discount coupon will be available in the retail (food) stores and in the grocery products section of multifunction stores. Furthermore, the individual items advertised will not be selected in a manner which would require a retailer to purchase or promote products of supphers which he does not carry as a condition to partcipating in the program.

To acquaint their customers with the Mealtime Masterpiece program prior to its institution, all participating food retailers will be furnished with bag stuffers describing the program. Allocation of bag stuffers also will be based on cash register transactions. Homemakers in some areas will be more interested in menu-recipes than homemakers in other areas, and some retailers will be more aggressive than others in promoting their distribution so it can be expected that some retailers will need more menu-recipes than the cash transactions formula would.indicate. It is our plan to provide each retailer with additional Mealtime Masterpieces if they are needed. Care will be taken, however, to see that retailers do not appropriate the coupons for redemption. Record keeping of product pur. chases and coupons redeemed will be audited on a spot basis in the event of any question so that there will not be an opportunity for misuse. In the event a participating retailer is appropriating coupons for his own use, the service will be terminated in accordance with Guide 11(a) of the Guides for Advertising Allowances and Other Merchandising Payments and Services. Undistributed menu-recipes will be picked up by us, the coupon will be removed and the menurecipe will be offered to the home economics departments in the public and parochial high schools.

To assist in supplier compliance with the principles embodied in the recent proposed FTC and FDA “cents-off” regulations, we will maintain supporting records for the suppliers whose products are used in the coupons. Spot checks will also be made to be assured that retailers do not raise their prices on products for which the coupon is being used. No more than three promotions a year, including ours, will be accepted by us for any one product. Our menu-recipe-coupon service is available and is functionally suitable and useable by all food retailers, regardless of size. No alternate plan is required. We believe our proposed program as outlined herein conforms with the Guides for Advertising Allowances and Other Payments and Services. While problems may arise, we believe we can handle them in a manner which will be fair and equitable and comport with those Guides.

If our program requires any changes to make it fully acceptable to the Federal Trade Commission, it will be appreciated if you will give us your recommendations and we’ll be glad to modify the program accordingly. We respectfully request that this matter be given as expeditious consideration as may be reasonably possible. As you are aware, great care is being taken by suppliers and retailers to comply with the Commission’s Guides in this area and an Advisory Opinion is essen