Annual Report of the FEDERAL TRADE COMMISSION For the Fiscal Year Ended June 30, 1962 For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C., 20402 - Price 45 cents (paper cover) Federal Trade Commission PAUL RAND DIXON, Chairman SIGURD ANDERSON, Commissioner WILLIAM C. KERN, Commissioner PHILIP ELMAN, Commissioner EVERETTE MACINTYRE, Commissioner JOHN V. BUFFINGTON, Assistant to Chairman JOSEPH W. SHEA, Secretary JOHN N. WHEELOCK, Executive Director FRANK C. HALE, Program Review Officer JAMES MCI. HENDERSON, General Counsel EARL J. KOLB, Director of Hearing Examiners DANIEL J. MURPHY, Director Bureau of Deceptive Practices WILLIAM F. MUELLER, Director Bureau of Economics SAMUEL L. WILLIAMS, Director Bureau of Field Operations BRYAN H. JACQUES, Director Bureau of Industry Guidance JOSEPH E. SHEEHY, Director Bureau of Restraint of Trade HENRY D. STRINGER, Director Bureau of Textiles and Furs ii EXECUTIVE OFFICES OF THE FEDERAL TRADE COMMISSION Pennsylvania Avenue at Sixth Street Northwest, Washington 25, D.C. Field Offices 30 Church St., New York 7, N. Y. Room 10511, U.S. Courthouse and Federal Building, 515 Rusk Avenue, Houston, Tex. Room 1310, 226 West Jackson Boulevard, Chicago 6, Ill. Room 811, U. S. Courthouse, Seattle 4, Wash. Room 306, Pacific Building, San Francisco 3, Room 1128, Standard Building, Cleveland 13, Calif. Ohio. Room 405, 215 West Seventh Street, Los Angeles Room 2806, Federal Office Building, Kansas 14, Calif. City, Mo. Room 1001, 131 State Street, Boston 9, Mass. Room 915, Forsyth Building, Atlanta 3, Ga. Room 1000, Masonic Temple Building, New 958 North Monroe Street, Arlington 1, Va. Orleans 12, La. Field Stations for Textiles and Furs in Addition to the above Branch Offices Room 1003—c, U.S. Court and Custom House, St. Room 3030—A, U.S. Courthouse, Louis 1, Mo. Philadelphia, Pa. Room 1304, 1114 Commerce Street, Dallas 2, Tex. Room 936, Equitable Building, 730 17th Street, Denver, Colo. Room 204, 327 North Tryon Street, Charlotte, N.C. Room 918 Metropolitan Bank Building, 117 N.E. First Street, Miami, Fla. iii Letter of Transmittal FEDERAL TRADE COMMISSION, Washington, D. C. To the Congress of the United States: It is a pleasure to transmit herewith the Forty-eighth Annual Report of the Federal Trade Commission, covering its accomplishments during the fiscal year ended June 30, 1962. By direction of the Commission. PAUL RAND DIXON, Chairman. THE PRESIDENT OF THE SENATE. THE SPEAKER OF THE HOUSE OF REPRESENTATIVES. v CONTENTS Chapter Page 1. The Year's Highlights .....................................................1 2. Scope of Authority ......................................................9 3. Executive Director .....................................................18 4. Office of the Secretary ...................................................22 5. Office of the General Counsel .............................................23 Appellate Division ......................................................24 Division of Consent Orders ...............................................33 Legislation ............................................................33 6. Industry Guidance ......................................................35 Division of Trade Regulation Rules ........................................35 Division of Advisory Opinions and Guides ...................................36 Division of Trade Practice Conferences .....................................39 7. Hearing Examiners ......................................................42 8. Restraint of Trade .......................................................43 Division of Mergers .....................................................45 Division of General Trade Restraints ........................................46 Division of Discriminatory Practices ........................................48 Division of Accounting ..................................................51 Compliance Division ....................................................52 Export Trade ..........................................................54 9. Deceptive Practices ......................................................55 Investigation ...........................................................56 Litigation .............................................................58 Division of Compliance ..................................................61 Division of Scientific Opinions ............................................65 Monitoring of Advertising ................................................66 10. Textiles and Furs .......................................................68 Division of Enforcement .................................................69 Division of Regulation ...................................................72 11. Field Operations .......................................................74 12. Economics ............................................................75 Division of Economic Evidence ...........................................75 Division of Economic, Reports ............................................76 Division of Financial Statistics ............................................77 13. Appropriations and Financial Obligations ...................................78 vii Chapter Page 14. Appendixes ................................................................. 79 FTC Commissioners (1915-62) .............................................. 79 Statutes Pertaining to the FTC ............................................... 80 General Investigations by FTC since 1915 .................................... 137 viii Chapter One THE YEAR'S HIGHLIGHTS A determined effort to provide dependable guidance to American businessmen on how to avoid illegal methods of competition and consumer deception highlighted the work of the Federal Trade Commission during fiscal 1962. At the same time, the Commission issued an all-time record number of orders halting unlawful business practices. The year also witnessed the first results of major organizational and procedural changes the Commission made in order to cope with a mounting volume of work. With the Nation's economy expanding in size and complexity and building up heavier competitive pressures, necessity dictated that business evils be corrected faster and on a broader scale, even at the cost of a temporary slowdown while the Commission's reorganized staff became familiar with the new procedures. Thus, the performance pattern in casework was one of increasing momentum-not just in numbers but in effective and equitable law enforcement. Commencing with the advancement of many old cases (far enough along to warrant being completed under the former rules of practice), there followed at first a trickle, then t sharply increasing flow of casework freed from unwarranted delays. The new actions were, - wherever possible, initiated not to correct isolated violations but to stamp out industrywide disregard of the laws prohibiting favoritism to powerful sellers and buyers and deception of the public, principally through advertising. Of possibly even greater significance than the speedup of casework were two new procedures adopted late in the year. Both were designed to forestall rather than halt illegal business practices. One provides for the issuance of Trade Regulation Rules which spell out specifically and clearly what the Commission believes is illegal about particular business practices. The other provides for the Commission-not just the staff, as in the past-to give businessmen advisory opinions, whenever practicable, on whether the proposed actions would be illegal and hence would invite adversary action by the Commission. These two procedures (discussed in more detail in Chapter Six) emphasize the Commission's deep concern with expanding its function to guide businessmen away from illegal methods of competition, rather than simply to exert the menace of the law against trans- 1 gressors. Such a guidance role for the Commission was envisioned by President Woodrow Wilson and the Congress in creating the Commission in 1914. In the years that followed, this basic objective was implemented almost entirely by assuming that the world of business would note and remember what adversary actions the Commission had brought, what inferences should be drawn from its rulings on particular sets of facts, and which of these rulings had been sustained in the courts. It is believed that Trade Regulation Rules and advisory opinions will offer a long needed and welcome addition to such previous guidance. The fiscal year began with the introduction of the new procedures for handling cases. It was not an easy transition. Members of the staff, long accustomed to a single phase of casework; namely, investigation or trial, found themselves facing responsibility for both functions. Moreover, instead of pursuing the investigation of a single law violation, the staff was called upon to learn if competing business might not be engaged in the same illegal practices, and to recommend a broader and more equitable attack--designed to eliminate business evils instead of stopping single-law violations. To do this called for fuller -use of the Commission's heretofore charily employed powers, particularly the authority to demand information by mail from corporations, and if the occasion required, to hold investigational hearings, either public or closed. This combination of centering responsibility on particular attorneys for the prosecution of a case from inception to final order, plus broadening targets of illegality