[Federal Register Volume 59, Number 36 (Wednesday, February 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4040]

[[Page Unknown]]

[Federal Register: February 23, 1994]


16 CFR Part 412


Trade Regulation Rule: Discriminatory Practices in Men's and 
Boys' Tailored Clothing Industry

AGENCY: Federal Trade Commission.

ACTION: Final rule; Notice of repeal of rule.


SUMMARY: The Federal Trade Commission announces the rescission of the 
rule concerning the need for a written plan to guide a seller's 
promotional allowances in the men's and boys' tailored clothing 
industry (hereinafter the ``Tailored Clothing Rule'' or the ``Rule''). 
The Commission has reviewed the provisions of the Rule, and has 
concluded that due to inconsistencies with and duplication by later-
adopted statements of policy of general application, the Tailored 
Clothing Rule is no longer in the public interest and should be 
repealed. This notice contains a Statement of Basis and Purpose for the 
repeal of the Rule, and incorporates a regulatory analysis.

EFFECTIVE DATE: March 25, 1994.

ADDRESSES: Requests for copies of the Statement of Basis and Purpose 
should be sent to the Public Reference Branch, Federal Trade 
Commission, 6th Street and Pennsylvania Avenue, NW., Washington, DC 

FOR FURTHER INFORMATION CONTACT:Neil W. Averitt, Esq., Office of Policy 
& Evaluation, Bureau of Competition, Federal Trade Commission, 
Washington, DC 20580. Telephone: (202) 326-2885.


Statement of Basis and Purpose


    The Tailored Clothing Rule, promulgated in 1967, was intended to 
clarify the way in which the Robinson-Patman Act, 15 U.S.C. 13, applies 
to that industry. Section 2(d) and (e) of the Act require that 
promotional allowances and services be made available to competing 
sellers on proportionately equal terms. The Rule established a 
presumption that allowances in the tailored clothing industry that were 
not provided in accordance with a written plan were not available on 
proportionately equal terms.
    The year after the Rule was promulgated, the Supreme Court decided 
the case of FTC v. Fred Meyer, Inc., 390 U.S. 341 (1968). In that 
option the Court suggested that the Commission might wish to expand on 
earlier guidance and issue detailed guidelines to promotional 
allowances under sections 2(d) and (e). The Commission accepted this 
invitation the following year by publishing the so-called ``Fred Meyer 
Guides.'' See 16 CFR part 240. These set out general standards for 
promotional allowances, applicable to all industries. The Fred Meyer 
Guides suggest that sellers ``would be well advised'' to put complex 
plans in writing, but they do not penalize the failure to have a 
written plan. The Fred Meyer Guides have been revised as needed to keep 
them current, most recently in 1990.
    With the Fred Meyer Guides in place, the Commission was concerned 
that the earlier, industry-specific Rule was unnecessary, and that its 
different substantive provisions could be a source of potential 
confusion. In July of 1993 the Commission therefore requested public 
comment on a proposal to repeal the Tailored Clothing Rule. No comments 
were received in response to this request.

The Rulemaking Record

    The rulemaking record in this proceeding consists of the Notice of 
Proposed Rulemaking and Request for Comment dated July 2, 1993 (58 FR 
35907), and a memorandum from the Office of the Secretary reporting 
that no comments were received in response to that request. In 
addition, the Commission takes notice of published court and agency 
decisions, and of the existence and provisions of the Fred Meyer 

Analysis of the Rulemaking Record

    The rulemaking record indicated that the Tailored Clothing Rule no 
longer appears to be useful or justified. Since the Rule was 
promulgated, it does not appear that the agency has ever relied on the 
Rule in a law enforcement matter, or that any litigant has ever made 
use of it in a reported private action. Moreover, no industry members 
responded to the Notice of Proposed Rulemaking to urge retention of the 
    Repeal would also resolve the inconsistency between the Rule and 
the Fred Meyer Guides. The Fred Meyer Guides encourage but do not 
require sellers to have a written plan for promotional allowances.\1\ 
The Robinson-Patman Act also does not require sellers to have a written 
plan. The Tailored Clothing Rule, on the other hand, states that 
promotional payments ``will be presumed not to have been made available 
on proportionately equal terms'' unless they are made available under a 
written plan.\2\

    \1\See 16 CFR 240.8 (``If there are many competing customers to 
be considered or if the plan is complex, the seller would be well 
advised to put the plan in writing.'')
    \2\16 CFR 412.6.

    Although this dichotomy creates no inconsistent legal obligations, 
there is a significant policy discrepancy in that the tailored clothing 
industry is treated differently from other industries. Since the 
Commission's post-enactment experience has not confirmed the relevance 
or utility of treating this industry differently, this is an additional 
reason for repeal of the Rule.

Final Regulatory Analysis

    The following discussion constitutes the Commission's Final 
Regulatory Analysis of the proposed repeal of the Rule, as called for 
by the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., and by section 
22 of the Federal Trade Commission Act, 15 U.S.C. 57b-3.
    A description of the reasons why action is being considered and the 
objectives of and legal basis for the repeal of the Rule have been 
explained in prior parts of this Statement of Basis and Purpose.
    Repeal of the Rule would appear to have little or no effect on 
small business. Because it does not appear that the Rule is currently 
relied upon, its repeal should not have significant effects on business 
in general, and therefore should not have any significant effects on 
small businesses in particular.
    The Tailored Clothing Rule contains no information collection or 
recordkeeping requirements as defined by the Paperwork Reduction Act, 
44 U.S.C. 3501-18. Repeal of the Rule would remove any other compliance 
requirements that are associated with the Rule, such as the costs 
associated with becoming familiar with its provisions.
    The only significant alternative to repeal of the Rule is to take 
no action and preserve the Rule in its present form. Due to the 
subsequent publication of the Fred Meyer Guides, however, the Rule no 
longer serves a meaningful purpose. Under these circumstances, 
retaining the Rule would run counter to the goal of achieving 
efficiencies by repealing rules that are no longer useful.
    The benefits of repealing this Rule include removal of an 
unnecessary provision from the Code of Federal Regulations, the 
increased efficiency of law enforcement when uniform standards are 
applicable, and the increased respect for the law that may be 
anticipated when regulations are current and relevant.
    The Commission believes that the above benefits are sufficient to 
support its determination to rescind this Rule.

List of Subjects in 16 CFR Part 412

    Advertising, Clothing, Promotional allowances, Trade practices, 
Unfair methods of competition.


    Accordingly, under the authority of 15 U.S.C. 41 et seq. and 15 
U.S.C. 13, title 16, chapter I, of the Code of Federal Regulations is 
amended by removing part 412.

    By direction of the Commission.
Donald S. Clark,
[FR Doc. 94-4040 Filed 2-22-94; 8:45 am]