[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] ----------------------------------------------------------------------- FEDERAL TRADE COMMISSION 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of policy of general application, the Tailored Clothing Rule is no longer in the public interest and should be repealed.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 20580. 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. SUPPLEMENTARY INFORMATION: Statement of Basis and Purpose Background 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 Guides. 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 Rule. 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. PART 412--[REMOVED] 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, Secretary. [FR Doc. 94-4040 Filed 2-22-94; 8:45 am] BILLING CODE 6750-01-M