with reference to the so-called "cents-off" labels. As now drawn, section 3(a) (5) of the bill would make mandatory the issuance of regulations prohibiting the use of such labels. It would appear preferable, as suggested in the letter from the Bureau of the Budget, that such labels be subject to discretionary regulation, under section 3(b).

We at the Federal Trade Commission know that "cents-off" and other claims of price reduction or price advantage can be and often are a potent form of competition, a form of competition that should be encouraged when the claimed advantage is true. Consumers like nothing better than a bona fide bargain. We at the Federal Trade Commission, different from the Food and Drug Administration, have ample investigative authority to make sure that the claimed bargains are bona fide.

We also concur in the suggestion of the Bureau of the Budget that a procedure be provided for giving advance clearance of specific packages and labels. The Federal Trade Commission has such a procedure now. But if such a procedure is incorporated into law, then sufficient time should be allowed for the administering agency to review such applications for clearance, and during this time the applicant should be required to refrain from using the proposed new package or label. I could anticipate if this law were passed, the agency getting it would be flooded without that suggestion. In addition, the agency's determination should be binding unless and until the applicant obtained a reversal after a formal hearing procedure. The bill as drawn could be violated only by persons engaged in packaging or labeling of consumer commodities for distribution in commerce and those engaged in distribution in commerce of packaged or labeled goods. It is suggested that the bill's coverage in this regard be made more consistent with that provided in the consumer labeling laws now administered by the Commission. For example, the Textile Fiber Products Identification Act extends to

The introduction, delivery for introduction, manufacture for introduction, sales, advertising, or offering for sale, in commerce, or the transportation or causing to be transported in commerce, or the importation into the United States of any textile fiber product which is misbranded or falsely advertised within the meaning of that act, and also

The sale, offering for sale, advertising, delivery, transportation, or causing to be transported, of any textile fiber products which has been advertised or offered for sale in commerce, and which is misbranded or falsely or deceptively advertised * **(15 U.S.C. 70).

And the "persons" subject to the Textile Act are defined as "an individual, partnership, corporation, association, or any other form of business enterprise" (15 U.S.C. 70(a)).

The Commission opposes inclusion in the bill of the limitation, in subsection 3 (c) (1), that no regulation establishing reasonable weights or quantities may be inconsistent with standards prescribed by the Secretary of Commerce before the effective date of the bill. Presumably this proviso would include voluntary commercial standards which are promulgated by the Secretary of Commerce at the instance of industry groups. If the agency charged with responsibility for administering this proposed legislation should determine, after due

notice, public hearings, and so forth, as set forth in the bill, that a certain type of labeling or packaging is deceptive or otherwise fails to comply with the intent and purpose of the bill, then it seems illogical to provide that the agency's finding would be superseded by some voluntary standard that might theretofore have been approved by the Secretary of Commerce at the instance of an interested industry group. It seems apparent that the interests of the public must prevail in such a situation.

We do not have basis for concluding that it would be justifiable to include in subsection 3 (c) (1) the limitation that no weight or measure could be established in amounts of less than 2 ounces. The initial statement in the subsection that only "reasonable" weights or quantities should be established, seems to provide adequate protection against any arbitrary action.

In subsection 3(c) (2) the limitation against regulations proscribing the

use of package shapes which have been designed to exploit the unique advantages of any material for use in the production of packages of distinctive appearance

might be so broad as to permit use of packages which are deceptive. It is suggested that the limitation should not go beyond permitting "nondeceptive use" of the distinctive packaging material.

It seems superfluous to declare in section 4(b) that no regulation should be promulgated except after public hearing and opportunity for review under sections 7 and 8 of the Administrative Procedure Act. Would it not suffice to stop after the declaration in the first sentence of the subsection that all regulations will be promulgated in conformity with the provisions of the Administrative Procedure Act.

The requirement in section 6 that annual report be rendered as of the first of January each year differs from the other reporting requirements now followed by the Trade Commission. The Commission now reports to the Congress on a fiscal-year basis.

On behalf of the Commission, may I compliment this committee for the service it is rendering to the consuming public and to our competitive free enterprise system in its consideration of a Fair Packaging and Labeling law.

The Commission, as always, is at the service of the committee for any assistance it can render with respect to the proposed legislation. Senator NEUBERGER. Thank you, Mr. Chairman. Senator Hart regrets that he is torn between two important meetings, but he will

return as soon as he can.

I thought you cited an interesting historical fact which I had almost forgotten-that was the Fur Products Labeling Act. I remember when the need for that was so great that it brought about this bill, so the public is now assured of the reliability of fur products and they accept this part of Government interference-as some people might call it. The same with the Wool Act and the Textile Fibers Act.

Would you say then that preventing deception in grocery items and cosmetics will be somewhat a continuation of that same philosophy? Mr. DIXON. Yes; I think so. But I believe, more important, in

the Wool Act and the Fur Products Labeling Act, history records. that when they were proposed in the Congress they were rather violently opposed by certain segments of that industry. Now that industry has learned from the experience of what it has brought to the industry, I think if you tried to abolish it or materially change it you would find that same group up here telling you, "Please, for God's sake don't do it. It has brought order out of chaos."

Senator NEUBERGER. I think the manufacturers have even turned, being able to claim 100 percent wool to an advantage. It is like sterling silver. This means something because we have a guarantee of the Government that it must be 100 percent.

Mr. DIXON. It means 100 percent wool and 100 percent wool products, usually more expensive products, and it means that the consumer expects to pay that for them. But if you had someone that had less than 100 percent or they had reused wool or they had a mixture of some synthetic fiber mixed with it that reduced the cost and they were advertising it as 100 percent wool at about half the price, the public would probably buy it, to the detriment of the competitor, and then get mad when the purchasers found out that they did not get what they thought they were getting.

Senator NEUBERGER. I thought you made such a good point that we have all noticed about the competition and the proliferation of this insidious "cents off" thing. That is, that it does not mean a thing. because when one person did it another had to in another product and another product. When we find a product on the grocery shelves that says "Free," "One Third Off," "Save up to 16 cents," and there is nothing free about this, is this deceptive?

Mr. DIXON. It could be.

Senator NEUBERGER. But at the present time you could not prosecute or forbid or cease and desist on this?

Mr. DIXON. You might do it on that if it was not free, but we would have to demonstrate the likelihood of deception. We would have to do it by a hearing within the climate of the exchange, and we would have to make a finding based upon substantial evidence that would withstand court review in each individual case.

What you have in your hand-if one producer of that type of product had it on the shelf and within a very short time all have the same thing on there, then the Federal Trade Commission decides that it has a problem. You take them one at a time, and I and the other Commissioners serving now would long be dead and in their grave before you got through.

There is an equitable way to do this. That is by an across-the-board approach, and I visualize this as what Congress is talking about here in this bill. It is an across-the-board approach.

"Cents off" is a troublesome thing. Cents off what? Who puts what the price is on a product in the store? If it is agreed to, it is illegal under the antitrust law. So you have got a problem coming that way. Ten cents off what?

Senator NEUBERGER. But the law is not strong enough right now so that you can prosecute a thing like that even when it is obvious to a layman that it isn't cents off anything and because

Mr. DIXON. It could be. What I am trying to say to you is, it could be perfectly legitimate-10 cents off. In other words, if you could

establish that historically that product had been selling for what is in your hand, at 50 cents, that is the price at which it had been sold, and this sign appears on there "10 cents off"-and as some of the supermarkets are now doing they are going right along and saying "Our price on this product was 40 cents. Now it is 30 cents to you." They are having to fill this in so as to keep themselves out of trouble. Senator NEUGERGER. I should think the retail merchants in these big supermarkets would welcome some legislation.

Mr. DIXON. I have an idea of what appeared in Supermarket News, kind of the bible of that industry, and they are beginning to get worried about their shelf space and are getting very interested in what you are doing here-the April 12 issue, if you refer to it. Senator NEUBERGER. The April 12 issue?

Mr. DIXON. Yes.

Senator NEUBERGER (holding up exhibit). I would think that Tender Leaf Tea would be made an object of ridicule by home economics teachers and housewives just walking around with this thing in their hand. There is nothing free about it. In fact, I hope to show later in the day something even more deceptive about it, but if I sent my husband to the grocery store and said, "On your way home pick up two or three things," he might say, "Well, this is free. I will take this." You wonder what kind of advantage they expect to gain in the long run. I would think it would be a disadvantage to their selling practices.

I am more interested particularly in your suggestions and recommendations about the FTC being the administering agency. The industry insists that you already have all the authority that you need to police packaging and labeling practices.

Mr. DIXON. We have rather broad authority, but I have tried to delineate that broad area where I thought we do have authority. In that area that was developed in the beginning by Senator Hart's hearings and is in this bill, it seems to me is another area in which it was quite doubtful whether there may be any deception-was an area in which he could still make what was characterized as a rational choice.

Senator NEUBERGER. You have brought up some points that I had not thought about.

Mr. Dixon. Mr. Chairman, the point I was trying to point out here is that historically I think there is some division between Food and Drug Administration's authority and the Federal Trade Commission's authority. This is very clear if one would read the legislative history. I think this is properly so, Congress has placed the major thrust of the burden in that agency when you are dealing with health and safety problems, but when you get beyond that stage and you go into the market to sell it you are in another area. You are in an area of economics. To place that burden in the Federal Trade Commission, and the expertise that has grown up there in its staff particularly and in the Commissioners as they come and go, is in a completely different area. This is where this bill lies-in that area. It does not lie in the health and safety. It lies in economics.

Now, all of their actions in the ultimate must be taken to the court, and I point out to you I have the highest respect for our courts,

but every day I hear reference to a 2-year backlog, and there is no chance for a judge of the land to acquire what has been referred to as the expertise in an agency in an overall marketing problem. He may get a few of these things in his lifetime, but he would not live with them. I merely point that out.

This is an election for the Congress. You could place it where you please, but I think it is our duty to point these facts out to you.

Senator NEUBERGER. I know what you mean by that delay. I have an Oregonian who has a product which has come under your scrutiny, and I think rightfully. But because of the delay in his appealing the cease and desist, with all his machinery budget and employees tied up, he is crying to me because he is losing money every day. But he brought it upon himself because he made a false claim for his product. So I could not be to sympathetic with him.

Yesterday in the querying of the representative of the National Association of Manufacturers, Senator Morton asked him, "Wasn't there sufficient authority in the law?" And the industry representative said, "Yes, there was." It seems to me that you are an expert in this area, and your agency is dealing with it, and your experience would refute that testimony. It was made very generally.

Mr. DIXON. This is a very broad bill. This bill goes beyond deception or something that might be called unfair practice. It has some affirmative requirements that are nondeceptive, you might say, Senator. Senator NEUBERGER. Well, I remember so well your language on page 11, where you refer to a very specific thing that I think the industry should take note of in light of the discussion we had yesterday. That's where you referred to the Bureau of the Budget and the centsoff labels, and that we obviously need this bill to make mandatory the issuance of regulations prohibiting the use of such labels.

Mr. DIXON. We suggest you leave that discretionary, because there can be an advantage to the system if it in fact is true, and we state to you that we at the Commission are amply provided with statutory authority to make investigations and make this determination. I do not think we should remove anything that has been an advantage to the system.

Senator NEUBERGER. Well, this worries the industry, as the representative stated yesterday. They do not want one man to make a decision. But that is, of course, the value of our regulatory agencies, that they are bipartisan, that they are career people and supposedly outside the influence of politics, and we certainly would like them to practice discretion in every case.

Mr. DIXON. I might point out to you that the Congress has required whatever is done by the administering authority here that it be done in accordance with the Administrative Procedure Act. You do not do this from the top of your head. You do it after announcing a public hearing, offering all interested parties a chance to appear and have their say and offer their evidence. Then you must issue a statement of basis and purpose, and should that be arbitrary and capricious it could be attacked in any district court in the United States and would be slammed down very quickly.

Senator NEUBERGER. Well, then, so far we have brought out the fact that the present law is not sufficient to protect the consumer against