have had advisory opinion requests covering cooperatives and the CapperVolstead Act and establishing of a common sales agency under the CapperVolstead Act. We have had requests under the Clayton Act covering functional discounts, free merchandise, aggregate purchases and back-haul allowances, tripartite promotional plans. We have had advisory opinions under deceptive advertising and deceptive practices. We have had advisory opinions on the following products:

We have had advisory opinions involving the meaning and use of the following words:

The Commission has given advisory opinions to very little people, such as the man who wrote in and said he had advertised that for a $1.00 sent through the mail, he would by return mail advise his party about a cheap, safe

deodorant. For the $1.00 he would send the purchaser the recipe to mix baking soda and water and apply to the person. This was found to be all right, scientifically and legally, and the man got a favorable opinion. The Commission has given advisory opinions to an association of some of the largest corporations in the United States who applied for a code of ethics to regulate the conduct of their door to door salesmen.

The advisory opinions are widely quoted and increasingly sought. When it is remembered that a single trial attorney cannot handle more than four litigated cases during a year and an attorney-adviser on the Advisory Opinion staff can handle 30 to 50 advisory opinions in a year, the saving in time and money is quite obvious.

We don't want you to get into trouble. We don't want you to violate any of our acts. The Federal Trade Commission will keep you out of trouble if you will simply ask us for advice on matters under the laws we administer.

The voluntary compliance procedure is open to you at all times if you haven't been in trouble with us before. If you have been in trouble with us and have an order against you the compliance division will give you advice if you will apply to them. They can process an advisory opinion for you as to whether or not your proposed course of actions complies with the order outstanding against you.

Any business planning or contemplation of a new or changed course of action for the future can be passed on by the Commission through the advisory opinion procedure. We will tell whether or not it probably violates any of our statutes. The Commission will be bound by its opinion. This service is quick and it is free to all who comply with our rules on the subject. And I submit the price is right. Be safe; save your worry; save your time and save your money. Ask us in advance.

AUGUST 28, 1969, REPORT OF PROGRAM REVIEW OFFICE, FEDERAL TRADE COMMISSION, ON BUREAU OF INDUSTRY GUIDANCE: DIVISION OF ADVISORY OPINIONS, DIVISION OF INDUSTRY GUIDES, DIVISION OF TRADE REGULATION RULES

UNITED STATES GOVERNMENT MEMORANDUM

To: The Commission.

AUGUST 28, 1969.

From: Office of Program Review. Subject: Commission minute of July 21, 1969, on programs and methods relating to the Bureau of Industry Guidance.

This report is made pursuant to the subject Commission instruction which stated:

"The Office of Program Review was directed to submit a report to the Commission by September 1, 1969, of programs and techniques by which the Bureau of Industry Guidance's basic function might be accomplished in lieu of its present exclusive concern with drafting and administering guides, rules and advisory opinions.”

Premises and Perspective

The minute raises this initial issue: What is it basically that the Commission is trying to achieve through its industry guidance operations? The Commission as a whole has three primary objectives: to provide information and publicity on competitive conditions, to protect the consumer in the market place, and to maintain competition. To attain these fundamental ends, the Commission can choose among three principal means: education, guidance which would include voluntary compliance, and litigation. Through industry guidance used as a factfinding process, the Commission could provide industries and businessmen with clear and definite guidelines on the reach of the trade regulation laws.

The underlying industry guidance purpose is to get a greater degree of compliance with Commission-administered laws on an industry-wide basis. Guidance efforts are misdirected if geared simply to promote good public relations with industries or to collect business opinions on Commission policy directions. The industry guidance objective extends to preventing law violations that might otherwise take place. There exists, therefore, a continuing need in the Commission's enforcement matrix for industry guidance in order to narrow the field of uncertainty in the laws that the Commission enforces.

The main proposition advanced in this report is that the Commission and its Bureau of Industry Guidance take a broad approach to guiding industries, rather than apply limited rules and guides resources to particular companies and to fragmented industries. Instead of developing narrow and specific rules in the main, the thrust of industry guidance would concentrate on industry factfinding and formulating broad standards by which the Commission would live and act. Achieving a better definition of Commission standards can result in the same impartial treatment to respondents under like circumstances. Crystallizing standards may also contribute to maintaining the Commission's independence from outside pressure, since diffuse decisions and lack of definite standards create a legal vacuum for external influences on an administrative agency.1

Rulemaking in this broad sense becomes in essence a method of factual inquiry on the Commission's own motion. It is not merely another ad hoc process to make rules or guides in response to outside petitions that include requests from firms or industries facing competition from producers of substitute products. To obtain and appraise facts for designing important and reliable rules and guides, the basic technique is internal Commission-initiated industry analysis of key industries.

1 Friendly, The Federal Administrative Agencies 19-26 (1962). A recent case in point is Occidental Petroleum Corp., FTC Docket No. C-1450, decision and dissents (1969).

The selection of industries for Commission examination could be made rationally through an inter-bureau task force device. This legal-economic panel would start the industry-selection process by looking over the 400 manufacturing industries in the economy, and chart and rank industries in descending order by industry size, concentration ratios, and other structural industry features.' The task force could then produce a concise list and legal-economic analyses of target industries whose main structural characteristics (concentration, product differentiation, barriers to entry) disclose a proneness to trade practices that rules, guides or other sanctions could restrain or contain. Program plans that emerge would rest on a constructed analytical scheme.

Commission-generated industry analysis of strategic industries would enrich the economic significance of Commission activities and industry guidance commitments. The economic analysis of the kind indicated would attempt to penetrate all the outcroppings of monopoly and market deception in the industry, rather than deal solely with reported large-scale industry involvement in a single practice. On the policy-making level, "the enforcement agencies cannot develop policy or intelligently allocate their limited resources except on the basis of knowledge of economic structure and competitive conditions in particular industries and markets."3 (Emphasis supplied)

Programs

The proposed projects outlined below, if implemented, could materially strenghen the industry guidance mission and move the Commission toward the central goal of precise articulated standards:

1. Hazardous products inquiry.

Rulemaking expanded and applied as a method of inquiry can supply the Commission with an alternative means for gathering facts to frame major policies. There is, for example, neither a discernible government-wide stance nor a stated Commission policy dealing with the potential hazards of all the products the consumer ingests or uses. The Commission has an opportunity to take the lead in this major consumer area and develop the Commission's policy position on hazardous consumer goods.

Much of the industry guidance work in this vital consumer area is hanging fire awaiting the policy report, slow in coming, of the National Commission on Product Safety. More than enough time has elapsed and we should not wait any longer for that Commission's recommendations, if any. We should move out in front now and use the rulemaking process to prohibit the sale of inherently dangerous consumer products. Rules are potent instruments to extend Commission-enforced laws to the limits.

The industry guidance bureau could take hold of the dangerous products problem and try to establish and direct an inter-agency group to ascertain the magnitude of this problem and devise concerted multi-agency solutions. If such an inter-agency panel cannot be formed, then at least the industry guidance staff could maintain continual liaison with agencies and commissions assigned product safety resopnsibilities. The liaison arrangement could uncover for Commission attention on a regular basis those consumer products whose product advertising exceed the claims allowed in the product labeling.

As an alternative or supplement to an inter-agency task force or liaison on product safety, the industry guidance force could set up and chair an interbureau committee within the Commission to survey and determine the range of hazardous products-the ten product lines most in need of rulemaking—that are unsafe for the consumer. This panel would also identify the principal products that require more disclosure to the consumer on performance characteristics. In terms of techniques this inquiry might be organized around related problems, such as product safety and product performance. The program planning process would be thought of in terms of problem-solving, using the investigational resources of various professional disicplines (economics, law, medicine, engineering and chemistry). This multidiscipline unified approach to developing programs characterizes the technique of "systems-oriented" planning.

2 Industries can be ranked by concentration ratios using U.S. Department of Commerce, Bureau of the Census, Annual Survey of Manufactures 1966, Value-of-Shipment Concentration Ratios by Industry (1968).

3 Elman, Rulemaking Procedures in the FTC's Enforcement of the Merger Law, reprinted from 78 Harv. L. Rev. 387 (1964).