[Federal Register Volume 59, Number 184 (Friday, September 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: X94-10923]


[[Page Unknown]]

[Federal Register: September 23, 1994]


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FEDERAL TRADE COMMISSION
[File No. 922 3236]

 

Hyde Athletic Industries, Inc.; Proposed Consent Agreement With 
Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting 
unfair acts and practices and unfair methods of competition, this 
consent agreement, accepted subject to final Commission approval, would 
prohibit, among other things, a Massachusetts footwear marketer from 
misrepresenting the extent to which any footwear is made in the United 
States, and would require the respondent to maintain materials relied 
upon for any country of origin representations and to distribute copies 
of the Commission order to its operating divisions and certain company 
officials.

DATES: Comments must be received on or before November 22, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:
C. Steven Baker, Chicago Regional Office, Federal Trade Commission, 55 
East Monroe St., Suite 1437, Chicago, IL. 60603. (312) 353-8156.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of 
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby 
given that the following consent agreement containing a consent order 
to cease and desist, having been filed with the accepted, subject to 
final approval, by the Commission, has been placed on the public record 
for a period of sixty (60) days. Public comment is invited. Such 
comments or views will be considered by the Commission and will be 
available for inspection and copying at its principal office in 
accordance with Sec. 4.9(b)(6)(ii) of the Commission's Rules of 
Practice (16 CFR 4.9(b)(6)(ii)).

Agreement Containing Consent Order to Cease and Desist

    The Federal Trade Commission having initiated an investigation of 
certain acts and practices of Hyde Athletic Industries, Inc., a 
corporation (``proposed respondent''), and it now appearing that 
proposed respondent is willing to enter into an agreement containing an 
order to cease and desist from the acts and practices being 
investigated,
    It is hereby agreed by and between Hyde Athletic Industries, Inc., 
by its duly authorized officer, and its attorney, and counsel for the 
Federal Trade Commission that:
    1. Proposed respondent Hyde Athletic Industries, Inc., is a 
corporation organized, existing and doing business under and by virtue 
of the laws of the State of Massachusetts, with its principal office or 
place of business at 13 Centennial Industrial Park Drive, Peabody, 
Massachusetts 01960.
    2. Proposed respondent admits all the jurisdictional facts set 
forth in the draft of complaint here attached.
    3. Proposed respondent waives:
    (a) Any further procedural steps;
    (b) The requirement that the Commission's decision contain a 
statement of findings of fact and conclusions of law;
    (c) All rights to seek judicial review or otherwise to challenge or 
contest the validity of the order entered pursuant to this agreement; 
and
    (d) All claims under the Equal Access to Justice Act.
    4. This agreement shall not become a part of the public record of 
the proceeding unless and until it is accepted by the Commission. If 
this agreement is accepted by the Commission, it, together with the 
draft of the complaint contemplated hereby, will be placed on the 
public record for a period of sixty (60) days and information in 
respect thereto publicly released. The Commission thereafter may either 
withdraw its acceptance of this agreement and so notify proposed 
respondent, in which event it will take such action as it may consider 
appropriate, or issue and serve its complaint (in such form as the 
circumstances may require) and decision, in disposition of the 
proceeding.
    5. This agreement is for settlement purposes only and does not 
constitute an admission by proposed respondent that the law has been 
violated as alleged in the attached draft complaint or that the facts 
as alleged in the attached draft complaint, other than the 
jurisdictional facts, are true.
    6. This agreement contemplates that, if it is accepted by the 
Commission, and if such acceptance is not subsequently withdrawn by the 
Commission pursuant to the provisions of Sec. 2.34 of the Commission's 
Rules the Commission may without further notice to proposed respondent, 
(1) issue its complaint corresponding in form and substance with the 
draft of complaint here attached and its decision containing the 
following order to cease and desist in disposition of the proceeding, 
and (2) make information public in respect thereto. When so entered, 
the order to cease and desist shall have the same force and effect and 
may be altered, modified or set aside in the same manner and within the 
same time provided by statute for other orders. The order shall become 
final upon service. Delivery by the U.S. Postal Service of the decision 
containing the agreed-to order to proposed respondent's address as 
stated in this agreement shall constitute service. Proposed respondent 
waives any right it might have to any other manner of service. The 
complaint may be used in construing the terms of the order, and no 
agreement, understanding, representation, or interpretation not 
contained in the order or in the agreement may be used to vary or 
contradict the terms of the order.
    7. Proposed respondent has read the complaint and the order 
contemplated hereby. It understands that once the order has been 
issued, it will be required to file one or more compliance reports 
showing it has fully complied with the order. Proposed respondent 
further understands that it may be liable for civil penalties in the 
amount provided by law for each violation of the order after it becomes 
final.

Order

I

    It is ordered that respondent, Hyde Athletic Industries, Inc., a 
corporation, its successors and assigns, and its officers, agents, 
representatives, and employees, directly or through any corporation, 
subsidiary, division, or other device, in connection with the 
manufacturing, labeling, advertising, promotion, offering for sale, 
sale, or distribution of any footwear in or affecting commerce, as 
``commerce'' is defined in the Federal Trade Commission Act, do 
forthwith cease and desist from misrepresenting, in any manner, 
directly or by implication, the extent to which any such footwear is 
made in the United States.
    Provided, however, that a representation that any such footwear is 
made in the United States will not be in violation of this Order so 
long as all, or virtually all, of the component parts of the footwear 
are made in the United States and all, or virtually all, of the labor 
in assembling the footwear is performed in the United States.
    Provided further, however, respondent will not be in violation of 
this Order in connection with the manufacturing, labeling, advertising, 
promotion, offering for sale, sale, or distribution of any such 
footwear, where such footwear is made or assembled in one country in 
whole or in part of materials made in another country, if the country 
of origin representation for such footwear is made through any of the 
following truthful representations:
    A. ``Made (or assembled) in `X' (country) of `Y' (country) 
components''; or
    B. ``Made (or assembled) in `X' (country) of domestic and foreign 
components''; or
    C. ``Made (or assembled) in `X' (country) of primarily (or mostly) 
foreign and some domestic components''; or
    D. ``Made (or assembled) in `X' (country) of primarily (or mostly) 
domestic and some foreign components''; or
    E. ``Made (or assembled) in `X' (country) of foreign components;''
    F. ``Built in `X' (country) of imported components.''
    For purposes of this provision, where the unqualified term 
``domestic'' is used to indicate components made in the United States, 
such components shall comprise a significant portion of the production 
costs of the footwear.

II

    It is further ordered that respondent may continue to deplete its 
existing inventory of footwear and footwear packaging printed or 
labeled prior to the date of service of this Order without violating 
the terms of this Order, provided that respondent itself does not sell 
or distribute any such inventory more than ninety (90) days after the 
date of service of this Order.

III

    It is further ordered that for five (5) years after the last date 
of dissemination of any representation covered by this Order, 
respondent, or its successors and assigns, shall maintain and upon 
request make available to the Federal Trade Commission for inspection 
and copying:
    A. All materials that were relied upon in disseminating such 
representations; and
    B. All tests, reports, studies, surveys, demonstrations, or other 
evidence in its possession or control that contradict, qualify, or call 
into question such representation, or the basis relied upon for such 
representation, including complaints from consumers.

IV

    It is further ordered that the respondent shall distribute a copy 
of this Order to each of its operating divisions and to each of its 
officers, agents, representatives, or employees engaged in the 
preparation or placement of advertisements, promotional materials, 
product labels or other such sales materials covered by this Order.

V

    It is further ordered that respondent shall notify the Commission 
at least thirty (30) days prior to any proposed change in the 
corporation such as a dissolution, assignment, or sale resulting in the 
emergence of a successor corporation, the creation or dissolution of 
subsidiaries, or any other change in the corporation which may affect 
compliance obligations under this Order.

VI

    It is further ordered that respondent shall, within sixty (60) days 
after service of this Order upon it, and at such other times as the 
Commission may require, file with the Commission a report, in writing, 
setting forth in detail the manner and form in which it has complied 
with this Order.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted an agreement, subject to 
final approval, to a proposed consent order from respondent Hyde 
Athletic Industries, Inc.
    The proposed consent order has been placed on the public record for 
sixty (60) days for reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After sixty (60) days, the Commission will again review the 
agreement and the comments received and will decide whether it should 
withdraw from the agreement and take other appropriate action or make 
final the agreement's proposed order.
    This matter concerns country of origin claims made by the 
respondent for its ``Saucony'' brand footwear, which appeared in 
respondent's advertising and on labeling for certain of its footwear. 
The Commission's complaint charges that respondent represented that 
Saucony footwear is made in the United States, that is, that all, or 
virtually all, of the component parts of the footwear are made in the 
United States, and all, or virtually all, of the labor in assembling 
the footwear is performed in the United States. The complaint alleges 
that this claim is false and misleading because a substantial amount of 
Saucony footwear is assembled in foreign countries of foreign component 
parts, and a substantial amount of Saucony footwear assembled in the 
United States consists largely of foreign component parts.
    The proposed consent order contains provisions designed to remedy 
the violations charged and to prevent the respondent from engaging in 
similar acts and practices in the future. Part I of the proposed order 
prohibits the respondent from misrepresenting, directly or by 
implication, the extent to which any footwear is made in the United 
States. Part I provides, however, that a made in the USA claim will not 
violate the order if all or virtually all of the parts and labor are of 
domestic origin. It also contains a safe harbor provision that 
specifies language respondent can use when making a country or origin 
disclosure for footwear that is made or assembled in one country in 
whole or in part of materials made in another country.
    Part II of the proposed consent order provides that the respondent 
may continue to deplete its existing inventory of footwear and footwear 
packaging printed or labeled prior to the date of service of this 
order, provided that the respondent itself does not sell or distribute 
that inventory more than ninety (90) days after the date of service of 
the order.
    The remaining parts of the proposed consent order require the 
respondent to maintain materials relied upon in disseminating any 
country of origin representations, to distribute copies of the order of 
each of its operating divisions and to certain company officials, to 
notify the Commission of certain changes in corporate structure, and to 
file one or more compliance reports.
    The standard set forth in the complaint and proposed order for an 
unqualified ``Made in the USA'' (or the like) claim is that all or 
virtually all of the parts and labor used in the manufacture of the 
product must be of domestic origin. This standard is consistent with 
Commission case precedent,\1\ certain other statutes enforced by the 
Commission,\2\ and extrinsic evidence obtained by the Commission 
regarding consumer perceptions of ``Made in the USA'' claims.\3\ The 
Commission would be interested in receiving any information relevant to 
its current standard for ``Made in USA'' claims, including information 
on the competitive and other effects of this standard and on consumer 
perceptions of country of origin claims.
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    \1\See, e.g., Windsor Pen Corp., 64 F.T.C. 454 (1964); Joseph H. 
Meyer Bros., 47 F.T.C. 49 (1950); Vulcan Lamp Works, Inc., 32 F.T.C. 
7 (1940). The Commission's advisory opinions have also set forth 
this standard. See, e.g., Advisory Opinion No. 215, Misrepresenting 
Hoist as ``Made in U.S.A., '' 73 F.T.C. 1321 (1968).
    \2\Wool Products Labeling Act, 15 U.S.C. 68-68j (1973 & Supp. 
1994); Textile Fiber Products Identification Act, 15 U.S.C. 
Secs. 70-70k (1972 & Supp. 1994).
    \3\Study on Country of Origin Advertising (Feb. 1991). The 
Commission has determined to place this study on the public record 
for review by interested parties.
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    The purpose of this analysis is to facilitate public comment on the 
proposed consent order. It is not intended to constitute an official 
interpretation of the agreement and proposed order or to modify in any 
way their terms.
Benjamin I. Berman,
Acting Secretary.
[FR Doc. 23582 Filed 9-22-94; 8:45 am]
BILING CODE 6750-01-M