Advisory opinion letter to Mr. Thomas

/s/ Arthur H. Silverman
Washington Counsel
Letter of Request
September 23, 1977
Dear Mr. Thomas:

Pursuant to 16 CFR 1.1 et. seqg., I am requesting an informal advisory

ADVISORY OPINIONS 1193 opinion whether the attached proposed voluntary Wine Institute Code -of Advertising Standards violates any statutes, rules or regulations administered by the Federal Trade Commission.* The proposed Code will not be adopted until receipt of a favorable Federal Trade Commision informal advisory opinion. To our knowledge, we are not the subject of a pending investigation or proceeding by the Federal Trade Commission or any other federal or state government agency. Wine Institute, the non-profit trade association of the California wine industry, represents 240 wineries whose members account for approximately 91% of the wineries in California. In 1976 Wine Institute members accounted for 72.5% of total California wine shipments. California, in turn, produced about 71.6% of the wine sold in the United States, while other states produced 12.7%. Imports accounted for 15.7% of the American wine market.

The proposed Code of Advertising Standards would apply to the advertising of all wines produced by member wineries. Thus, in addition to grape-table wine, the advertising of dessert wines, flavored wines, sparkling wines, wines produced from fruit other than grapes, and all other wines would be subject to the Code. The proposed course of action involves a program that is totally voluntary and carries no sanctions whatsoever against any member not in compliance. Each winery would determine if its own advertising is in conformity with the Code, and whether it desires to follow the Code. There are no enforcement provisions.

We believe the proposed Code to be absent of anti-competitive features at both the vertical and horizontal levels. The Code does not refer to, nor would it apply to, wholesalers or retailers. There are thus no problems at the vertical level. Similarly, at the horizontal level, the Code contains no provisions which could in any way imply price fixing, territorial allocation, or any other prohibited areas. In fact, there is no provision for any agreement among any member wineries as to whether they would (or would not) comply with the Code. In addition, we can discern no elimination of competitive prerogatives in other ways, such as if the provisions of the Code applied in an obviously restrictive manner to certain types of ‘producers while innocuous to most.

* Not reproduced herein.

Moreover, we cannot foresee any possible discrimination in advertising opportunities.

We ask that the Commission advise us on the substance of the Code and assure us that it is satisfactory in that it includes no anticompetitive measures. With regard to the substance of the proposed Code, please advise us on the following:

Do we address ourselves to the issues and types of concerns of interest to the Federal Trade Commission in wine advertising? With regard to the non anti-competitive area, please advise us on the following: , 1. May the members of Wine Institute agree to this totally voluntary Code which carries no sanctions whatsoever? 2. After approval by the members of Wine Institute, would it be a violation of the statutes, rules and regulations administered by the Federal Trade Commission to submit the Code to non-member wineries and other wine associations for their information? 3. After approval of the Code by the members of Wine Institute would it be a violation of the statutes, rules and regulations administered by the Federal Trade Commission to request various organizations, such as the National Association of Broadcasters, to adopt a code embodying the principles contained in the proposed Wine Institute Code of Standards? I would appreciate acknowledgement of the receipt of this request.

Thank you for your interest.
Very truly,
/s/ John A. De Luca
President