[Federal Register Volume 61, Number 182 (Wednesday, September 18, 1996)]
[Notices]
[Pages 49141-49143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23922]


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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 or deceptive acts or practices and unfair methods of 
competition, this consent agreement, accepted subject to final 
Commission approval, would prohibit, among other things, the Peabody, 
Massachusetts-based athletic footwear manufacturer from 
misrepresenting, in any manner, that footwear made wholly abroad was 
made in the United States. The agreement resolves charges that Hyde 
misrepresented that all of its Saucony footwear is made in the United 
States when a substantial amount is made wholly abroad.

DATES: Comments must be received on or before November 18, 1996.

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: Elaine D. Kolish, Federal Trade 
Commission, S-4302, 6th & Pennsylvania Ave, NW, Washington, DC 20580. 
(202) 326-3042. C. Steven Baker, Chicago Regional Office, Federal Trade 
Commission, 55 East Monroe Street, Suite 1437, Chicago, Illinois 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 and 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 Section 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:

[[Page 49142]]

    1. Proposed respondent Hyde Athletic Industries, Inc., is a 
Massachusetts corporation with its principal office or place of 
business at 13 Centennial Industrial Park Drive, Peabody, Massachusetts 
01960. Proposed respondent is a U.S. manufacturer, importer, and seller 
of footwear, with manufacturing facilities in Bangor, Maine.
    2. Proposed respondent admits all the jurisdictional facts set 
forth in the draft of complaint.
    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 draft complaint or that the facts as alleged 
in the 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 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

Definition

    For purposes of this order, the term ``Clearly and prominently'' 
shall mean as follows:
    A. In a television or video advertisement, the disclosure shall be 
presented simultaneously in both the audio and video portions of the 
advertisement. The audio disclosure shall be delivered in a volume and 
cadence sufficient for an ordinary consumer to hear and comprehend it. 
The video disclosure shall be of a size and shade, and shall appear on 
the screen for a duration, sufficient for an ordinary consumer to read 
and comprehend it.
    B. In a radio advertisement, the disclosure shall be delivered in a 
volume and cadence sufficient for an ordinary consumer to hear and 
comprehend it.
    C. In a print advertisement, the disclosure shall be in a type 
size, and in a location, that is sufficiently noticeable so that an 
ordinary consumer will see and read it, in print that contrasts with 
the background against which it appears. In multipage documents, the 
disclosure shall appear on the cover or first page.
    D. On a product label, the disclosure shall be in a type size, and 
in a location on the principal display panel, that is sufficiently 
noticeable so that an ordinary consumer will see and read it, in print 
that contrasts with the background against which it appears.
    Nothing contrary to, inconsistent with, or in mitigation of the 
disclosure shall be used in any advertisement or on any label.

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, that footwear made wholly abroad is made in 
the United States.
    PROVIDED, however, that respondent will not be in violation of this 
Order, if, in connection with a truthful representation about domestic 
production of its footwear, it makes one of the following disclosures, 
if truthful, in a clear and prominent manner.

A. ``Most Saucony models are made in the USA''; or
B. ``Models ____ are not made in the USA''; or
C. ``Only models ____ are imported''; or
D. ``____% of Saucony footwear is made in the USA.''
    This proviso shall not apply to any advertising, labeling or 
promotional material containing any depiction of or other 
representation relating to footwear made wholly abroad.

II

    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.

III

    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

[[Page 49143]]

engaged in the preparation or placement of advertisements, promotional 
materials, product labels or other such sales materials covered by this 
Order.

IV

    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.

V

    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.

VI

    It is further ordered that this Order will terminate twenty (20) 
years from the date it becomes final, or twenty (20) years from the 
most recent date that the United States or the Federal Trade Commission 
files a complaint (with or without an accompanying consent decree) in 
federal court alleging any violation of the Order, whichever comes 
later;
    Provided, However, that the filing of such a complaint will not 
affect the duration of:
    A. Any paragraph in this Order that terminates in less than twenty 
(20) years;
    B. This Order's application to any respondent that is not named as 
a defendant in such complaint; and
    C. This Order if such complaint is filed after the Order has 
terminated pursuant to this paragraph.
    Provided Further, that if such complaint is dismissed or a federal 
court rules that the respondent did not violate any provision of the 
Order, and the dismissal or ruling is either not appealed or upheld on 
appeal, then the Order will terminate according to this paragraph as 
though the complaint was never filed, except that the Order will not 
terminate between the date such complaint is filed and the later of the 
deadline for appealing such dismissal or ruling and the date such 
dismissal or ruling is upheld on appeal.

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 advertising and promotional practices related 
to the sale of athletic shoes. The Commission's complaint charges that 
respondent falsely represented that all of its athletic shoes sold in 
the United States are made in the United States.
    The proposed consent order contains a provision which is designed 
to remedy the advertising violation charges 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 that footwear made wholly abroad is made in the United 
States. The proposed order would allow respondent, in connection with a 
truthful representation about domestic production of its footwear, to 
make one of the following disclosures, if truthful, in a clear and 
conspicuous manner: (a) ``Most Saucony products are made in the USA''; 
(b) ``Models ____ are not made in the USA''; (c) ``Only models ____ are 
imported''; or (d) ``____% of Saucony footwear is made in the USA.''
    This order provision provides that if Hyde chooses to make 
affirmative disclosures in its advertising it can do so if they are 
truthful and nondeceptive. Although several of the disclosures set out 
in Part I of the proposed order contain the phrase ``Made in USA,'' 
this provision is not intended to address the standard for when, if at 
all, a product that is made partly from domestic parts and labor and 
partly from foreign parts and labor may appropriately be labeled ``Made 
in USA''; that issue is the subject of a separate, ongoing review by 
the Commission. Rather, Part I is addressed to the circumstance in 
which some of the company's products are made entirely abroad.
    Part II of the proposed order requires the respondent to maintain 
materials relied upon in disseminating any representation covered by 
the order. Part III of the proposed order requires the respondent to 
distribute copies of the order to certain company officials and 
employees. Part IV of the proposed order requires the respondent to 
notify the Commission of any change in the corporation which may affect 
compliance obligations under the order. Part V of the proposed order 
requires the respondent to file one or more compliance reports. Part VI 
of the proposed order is a provision whereby the order, absent certain 
circumstances, terminates twenty years from the date of issuance.
    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.
Donald S. Clark,
Secretary.

Dissenting Statement of Commissioner Roscoe B. Starek III in the 
Matter of Hyde Athletic Industries, Inc.

    I would have preferred to have accepted the original consent 
agreement rejected by the Commission last fall. As I have consistently 
stated, case-by-case enforcement--rather than a regulatory proceeding--
is the appropriate means to evaluate the ``Made in USA'' 
standard.1 Since a majority of the Commission has opted to conduct 
a broad review of the ``Made in USA'' standard, however, it is 
premature for the Commission to condone use of the Made in USA claims 
set forth in the safe harbor until it proclaims what the standard is.
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    \1\ See Request for Public Comment in Preparation for Public 
Workshop Regarding ``Made in USA'' Claims in Product Advertising and 
Labeling, 60 FR 53923, 53930 (October 18, 1995) (Dissenting 
Statement of Commissioner Roscoe B. Starek III); Hyde Athletic 
Industries, Inc., File No. 922-3236 (Dissenting Statement of 
Commissioner Roscoe B. Starek III).
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[FR Doc. 96-23922 Filed 9-17-96; 8:45 am]
BILLING CODE 6750-01-P