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

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