Advisory opinion letter: the legality of our client's proposal to co1lect certain statistics and disseminate…

Dec. , 1974 Dear Sir:

We are writing to you on behal of our client Printing Industries of America, Inc., 1730 North Lynn Street, Arlington, Virginia 2209, and ...u. V. .V. D ftl LI J'C,"(lJ!:H:JJ.': lr1r J\l' rVl\ 1In requesting an advisory opinion under Section 3.61(d) of the Commission s Rules of Practice regarding the legality of our client's proposal to co1lect certain statistics and disseminate the same to the industry it represents.

Iyinting. Industries of America, I'1c. (hereinafter referred to as P.I.A.) is the largest trade association in the graphic arts industry. In the United States there are an estimated 35 00 commercial printers of which more than 700 belong to P. LA. Industry gross volume annually exceeds 10 billion dollars.

This year P.l.A. celebrated its 87th annversary. In serving its industry for this period of time, P.l.A. has seen many dramatic changes occur. Computer age technology has had a revolutionar effect in the printing industry. Increased demands for specialty printing has created a large number of printing houses devoting themselves excllL'i vely to areas such as financial printing, label makng, computer typ settng, binding, business forms, etc.

Today the printing industry, encompassing all facets of the graphic arts, is facing a new challenge.

Eighty per cent of the commercial printers in the United States are sma1l businessmen with less than 20 employees. For these shops to compete against the larger printers, management must be able to fully utilize the new production machinery on the market from both a technical and economic standpoint.

l.A. is presently providing members With educational materials on new technical developments. P.l.A. tells its members that equipment is available and that such equipment is designed to function in a stated manner.

However, this information is not sufficient for the sma1l printer. He can review P.LA.'s material; he can evaluate material provided by the varous manufacturers; but he mlL,t be able to estimate the operating costs of the equipment in his own shop, and subsequent to purchase, he must have a way of developing cost figues to show wbether or not be is using his equipment effciently.

P. LA. does not provide its members with a means of makng this typ of cost analysis at present.

A management profie of the 28 00 printing shops havig less than 20 employees would show remarkably similar executive structure. Management would consist of one individual, the owner ofthe business. This manager is usually a traned technician in printing in contrast to an individual with an M.B.A.

In the grphic ars industry, the owner of a small shop staed he typically as a pressman or printing salesman. Over the year, . .

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acquires some good "seat of the pants" business knowledge but rarely becomes proficient in cost accounting.

This manager today is trying to compete against larger companies with highly sophisticated management teams. He is competing in a - marke,t place characterized - by many sellers, most of whom produce similar products. He is competing in an industry with a rapidly developing highly computerized technology placed in an economy attacked by rapidly rising infation and presently in a period of strong recession. Finally, there is a shortage of paper, his basic raw material. It is obvious that the small printer needs a quick, simple and yet thorough means of developing and analyzing information as to operational costs.

I.A. seeks to meet this need through its proposed "Budg-eted Hourly Cost Program.

Although we are of the opinion that the P.I.A. proposed program would not if instituted constitute a violation of the laws administered by the Commission; we request this advisory opinion because of the fact that P.I.A. is the successor to the United Typothetae of America I.A. was created 29 years ago and has not, to our knowledge been named as a party in any antitrust suit by the F. C. or the Department of Justice during its existence. However in 192.1, Idly-one years ago the F. C. entered an order against its predecessor, United Typothetae of America (See F. C. v. United Tyothetae of America, et. al, Docket 459 6 F. C. a45 (1923)).

Section 2 of the order entered into in that case limits certain statistical collection activities of the Association but not, we submit, the activities proposed herein.

The P.I.A. Budgeted Hourly Cost Progrm is designed to provide industry members with a method of accurately computing their own costs of operation and with a means of comparing an individual company s cost with an average of the costs that ha e been reported in the geographic reg-on in which the industry member competes. We emphasize that no information with reg-drd to prices will be par of this program. No statistics will be g-thered with reg-rd to profit profit ratios, prices, sales, cost ratios relating to gross sales volume or any other factor that would enable one to use this program to determine industry price levels.

The program will be available to both P.I.A. members and nonmembers. The progrm includes three basic features:

(I) Seminars (2) Collection and dissemination of information (3) Providing computeried data services.