object of the project is to insure that viable independent bakeries will survive by being given a fair opportunity to compete. Estimated dollar cost: $40,000. Estimated manpower cost: 3,600 man hours. Target date of completion: continuing commitment. Department Stores: Industry sales approximate $33 billion. This Division has reappraised the department store files as directed by Commission minute of December 12, 1968. Continued concentration resulting from mergers, acquisi tions and internal expansion has tended to repose in a number of department store chains unprecedented buying power and influence through sheer volume. The department store files contain information to indicate that the stores are inducing and receiving preferential treatment in the areas of advertising allowances and price, the latter more in the form of rebates, pre-paid freight and credits, presumably for merchandise returns. The problems of attempting to proceed on the basis of the existing evidence in the files were outlined in this Division's memorandum to the Commission dated February 17, 1969. The memorandum and the recommendations contained therein are now under study by the Bureau both as to substance and planning and further comments will be submitted in the future. It is anticipated that recommendation will be made that the industry be reinvestigated by use of subpoenas and investigaional hearings. Esimated dollar cost: $80,000. Estimated manpower cost: 72,000. Target date of completion: Mid FY 1973. Drug Industry: The Commission's activities in the Drug Industry, in particular the pricing and distribution of prescription-legend and ethically-promoted pharmaceuticals, comprise investigation into institutional and professional purchase and resale to the potential derogation of private markets, diversion by exempt or non-competitive sources into regular commercial channels with attendant dis. location, arbitrary and inimical offering and pricing on bulk purchases and non-standard package sizes, straight price and purchasing concessions traditionally cognizable under the Robinson-Patman Amendment, and "Dual Distribution"-which as herein used means the question whether the customer selection, selling criteria and distribution patterns of individual manufacturers of highly-differentiated drug products are not unduly in themselves restraining or restrictive under one or more statutes administered by the Commission. Investigation of certain other aspects of the drug industry, in line with the recommendations pertaining to this Agency that were made by Subcommittee No. 5 to the Select Committee on Small Business, contained in House Report No. 1983, 90th Congress, 2d Session, at page 83, will require additional manpower commitments in FY 1971. Estimated dollar cost: $40,000. Estimated manpower cost · 3,600 man hours. Target date of completion: Mid FY 1973. Publishing Industry: Industry sales approximate $1.1 billion. The educational and advisory phase of this program was designed to eliminate payment of discriminatory allowances by publishers of hardback and prestige softback books to large retailers. The Division now plans to recommend that orders be served on approximately 50 publishers pursuant to Section 6(b) of the Federal Trade Commission Act, requiring the filing of Special Reports setting forth the terms and conditions under which advertising and promotional allowances are made available to customers. The Division reasonably anticipates that many of the Reports will disclose violations of Section 2(d) of the Clayton Act, as amended. The goal of this project is to bring about industry-wide compliance with the Commission's Guides for Advertising Allowances and other Merchandising Payments and Services. Estimated dollar cost: $40,000. Estimated manpower cost 3,600 man hours. Target date of completion: End of FY 1973. Automotive Replacement Parts: Industry sales total 1.7 billion. A continuing program of surveillance of discriminatory pricing in this industry is necessary because of the many complaints received from competing manufacturers, warehouse distributors and jobbers with regard to manufacturers granting volume discounts and functional discounts to buyers who do not perform the function for which the discounts are granted. Our continuing activities in this industry are in large part dictated by the Commission's past formal actions in this industry. Estimated dollar cost: $40,000. Estimated manpower cost: 3,600 man hours. Target date of completion: continuing commitment. Drapery Hardware: Industry sales are approximately $63 million. This project arose out of a proceeding in which the Commission issued a cease and desist order enjoining a competing manufacturer from discriminating in price in favor of large retail stores and against small competing retail outlets in violation of Section 2(a) of the amended Clayton Act. The investigations against the remaining four (4) leading firms have been completed: the files are being reviewed with a view of determining whether complaints should be recommended. If a determination is made to recommend closing, no additional manpower will be required in FY 1971. Should one or more complaints issue, professional manpower will be required in FY 1971. Estimated dollar cost: $40,000. Estimated manpower cost: 3,600 man hours. Target date of completion: End FY 1972. Miscellaneous: A great number of man hours are devoted to matters in varying stages of development which involve isolated industry transactions. We cite the following as examples: frozen foods distribution, dry cleaning fluid, household aluminum foil, wrapping film, scales, plastics, shoes, coffee, ornamental light fixtures, citrus products, furniture, mens' and boys' leisure hats, shower curtains. cellophane, photographic equipment, fishing equipment, sporting goods, cement. bicycle tires, industrial bleach and fertilizer. It is anticipated that this type of activity will recur in FY 1971. Estimated dollar cost: $200,000. Estimated manpower cost: 18,000 man hours. Target date of completion: continuing commitment. Additional Division activity is concerned with obtaining compliance with voluntary assurances, work on proposed guides and comments received concerning the Guides, review of advisory opinions (30 thus far this fiscal year), and obtaining compliance with the Fred Meyer decision. Twelve (12) cases in the latter category involving toiletries are now being processed. It is anticipated that this activity will continue in FY 1971. No manpower is budgeted for this activity. Respectfully submitted, FRANCIS C. MAYER, Chief, Division of Discriminatory Practices. MEMORANDUM Subject: Plans for fiscal 1971 budget. APRIL 15, 1969. To: Director, Bureau of Restraint of Trade, Att: Bartley T. Garvey, Program Officer. From: Chief, Compliance Division, Bureau of Restraint of Trade. Attached hereto is a chart containing the project breakdown for fiscal 1971 for the Compliance Division. Several observations are pertinent : 1. Save in very few instances, Compliance projections do not readily admit of being categorized by industry classificaions; 2. In the main, the projects covered are those to which this Division, insofar as presently can be predicted, stands committed through fiscal 1971; 3. With respect to the Chairman's observation contained in page 2 of his memorandum to the effect that "Compliance investigations of significant orders could be planned in important product lines" it will be remembered that this Division, several years ago, selected what in our opinion constituted the 50 most significant orders involving Section 5 of the Commission Act and from time to time sent them to the field for investigation. This project is relatively complete, although several of these matters are still in process. In the RobinsonPatman area, for example, we could select, admitting the availability for personnel, certain "industry" orders for spot check, such as those in the publishing and carpet industries. In the main, however, Robinson-Patman orders do not cover all industry factors in a given product line. Respectfully submitted, JOSEPH J. GERCKE, COMPLIANCE DIVISION, BUREAU OF RESTRAINT OF TRADE FISCAL 1971, SEC. 5, FEDERAL TRADE COMMISSION ACT AND SECS. 2 (a), (c), (d), (e), (f) OF CLAYTON ACT AS NOTE Could do more of if manpower available: (a) Cutdown time lag by holding investigational hearings instead of referring selected cases to field offices-especially section 7, price fixing; food and petroleum product orders; (b) check compliance with about 20 orders proscribing vertical price fixing; (c) study economic effect of orders in selected industries as a guide to future planning, e.g., tobacco, automotive parts, dairy industry; (d) make-on site interviews and inspections to cut down reliance on respondent information in section 7 matters. MEMORANDUM APRIL 25, 1969. Subject: Proposals for assessment preliminary to preparation of the fiscal year 1971 budget. To: Paul Rand Dixon, Chairman. From: Frank C. Hale, Director, Bureau of Deceptive Practices. Reference is made to your memorandum, subject: Your ideas and basic plans for the Fiscal 1971 budget, dated March 20, 1969 which requests information in order to make preliminary assessment as to the Bureau plans and needs for Fiscal 1971. The attached memoranda indicates clearly that the major concern of this Bureau is the need to reorient both our identification and work capability in the direction of consumer affairs. With respect to the additional powers leading towards greater Bureau independence I believe this could well prove very effective and useful to the Commission. It would place the Bureau in a position of being on the front line instead of the Commission and would thereby assume the risks inherent in innovation and aggressive action. The plan of course presupposes capabilities that do not yet exist due to limitations in manpower. Respectfully submitted, FRANK C. HALE, Director, Bureau of Deceptive Practices. I. Introduction. BASIC PLANNING DOCUMENT FOR 1971 BUDGET PART I.-BUREAU OF DECEPTIVE PRACTICES The responses to the Merch 20, 1969 query of the Chairman ("What should you be doing that you are not doing?") must be substantial and several because of the demands of the times. Demands which carry a pervasive insistence that government be responsive. Demands which assert that there have to be solutions to problems. Demands which if unmet, result in new directions, new laws, and new agencies to cope with problems unsolved by yesterday's machinery. This paper attempts to deal with how some of the public needs can be met by the Bureau of Deceptive Practices. II. Consumerism. Clearly, the most obvious and challenging role that must be undertaken in the Bureau of Deceptive Practices is an effective program of consumer affairs. FTC consumer activities should be so labeled and equipped with adequate manpower and additional statutory authority as may be needed to achieve the level of performance in the consumer spectrum apparently expected by the Congress and the public. In any case, the Federal Trade Commission must speak to all consumer issues, be prepared to make recommendations as to solutions and if it appears that the remedy should be achieved elsewhere than in the Commission or at the Federal level, a convincing case must be made in the interest of not only good government and smart public relations, but to maintain a viable role in the scheme of government for this agency. This new performance obligation is going to require expertise in consumer affairs and a concomitant knack of communicating and relating to the consumer. Consumer problems are broad and complex. They range from intangible concerns such as social and economic cost of inferior products and the definition of consumer environmental rights, to tangible difficulties such as inadequate information, ineffective consumer representation in decision making. imbalance of buyer-seller legal rights and ineffective grievance procedures. Many of these problems are not of the consumer's own making, are not within his powers to solve, and are not problems with the marketplace alone but also with government. The causes are numerous: A rapid transition in this century, particularly since World War II, from a simplistic to a complex marketplace, impersonalized and further aggravated by insufficient provision for objective information: a plethora of new materials and products, often complex, with infinite differentia tion; growing specialization of the individual's own training and experience, hence his increasing inability to evaluate products and services; rapid development of a sophisticated consumer credit industry producing radical changes and business practices; growing centralization of business and the present degree to which corporate liability is immunized from legal accountability; lack of corporate disclosure in some instances, and the substitution of corporate planning, regulation, and marketing practices for true competition based on price; the prevalence at all governmental levels of a patchwork of laws passed in ad hoc fashion to meet specific problems, as well as continuation of antiquated laws which no longer reflect actual marketplace practices. Consumer problems also have important implications for the nation's social well-being. Acute manifestations of consumer discontent, even anger, are evidenced by the report of the National Advisory Commission on Civil Disorders that consumer frustrations were among the twelve most deeply held grievances which led to the disorders of American cities. The scattered housewives' boycotts and the rapid increase in the number of consumer organizations are also manifestations of consumer unrest. The individual complaints received by the Federal Trade Commission about the marketplace are appalling. Since the Congress has discovered the consumer at the Federal level it is indeed timely that the regulatory agencies and the executive branch of the government also recognize the potency of his force as well and tool-up to meet him beyond the doorstep and not behind the barricades. The answers of course do not rest in any one area or any one agency of government. But the Government's responsibility is implicit, not only to guarantee a sound economy but, to assure social well-being. To construe government involvement with consumer problems as "anti-business" is to miss entirely the thrust of consumer economics. Elimination of marketplace malfunctions ultimately serves both consumers and producers by insuring the economics of stability and growth. Government responsibility for the financial well-being of its citizens by a promotion of full employment and economic growth has been established policy since the passage of the Employment Act of 1946. There is a reasonable corollary between government protection of consumer rights in the marketplace and its long accepted role as the protector of the ethical businessman against those who compete unfairly. Government involvement in consumer problems is also founded in its duty to assure equality of rights and the protection of those rights for every citizen-be they Civil Rights, Property Rights, or rights in the marketplace. Thus it is argued that the redrafting of the charter of the Bureau of Deceptive Practices to fully identify it with the cause of the consumer would be a step fully compatible with the historic mission of the Federal Trade Commission. The Bureau of Deceptive Practices should be recognized as the consumer voice in the Federal Trade Commission and act as the ear for the Commission for input reflecting general problems as received from individual consumers. Moreover, the Bureau should be making recommendations to the Commission on consumer policies; studying the plans and programs of other Federal agencies affecting consumer interest. The Bureau should be planning, developing, and proposing legislation necessary to implement the consumer objectives of the Commission and should have the responsibility for proposing to the Assisttant General Counsel for Legislation all positions to be taken on consumer legislation proposed by, or referred for comment to the Commission by Congress or the Executive branch. Additionally, the Bureau should be given the role of acting in a consultative capacity when requested by the states, local governments, or private groups for supplying comments or assistance concerning consumer legislation and ordinances. The Bureau of Deceptive Practices should provide input to the Office of Information concerning: all consumer activities in the Federal Trade Commission and to recommend policies and provide appropriate guidance and assistance to assure fulfillment of the requirement to keep the public adequately informed as to the Federal Trade Commission's consumer activities; review of press releases and other information originating within the Federal Trade Commission for public release with respect to comments and positions taken which sound on consumer affairs to insure consistency with established consumer policies or programs of the Commission; planning, developing and implementing comprehensive public relations programs and to campaigns to inform and educate the general public, the business community, and special interest groups, concern |