mr. john j....puge'l sol, d salmon canners, inc., et al. 1253 1251 complaint its principal...

PUGET SOUND SALMO:: CA.,'1ERS , INC., ET AL. 1251

Complaint

THE MATTR OF

PlJGET SOUND SALMON CANNERS, INC. , ET AL.

cm,"' SENT ORDER , ETC., IN REGARD TO THE ALLEGED VIOLATIOX OFTIlE FEDERAL TRAE COM::nSSION ACT

Docket 6876. Complaint , Jmte 1955-Deci. ion, May , 1956

Consent order requiring 13 corporate canners of salmon caught in Puget Soundand adjacent areas--harged in the complaint, along with their trade asciation , an organization of owners of Purse Seine vessels engaged in fishingfor salmon in that area, and a union of salmon fishermen including thoseon such vessels, with collectively controllng the prices at which the salmonwas purchased and sold , by means of agreements between and among them-selyes-to cease and desist from concerted price fixing; but

Providing that if the proceeding stil pending against the vessel owners ' asso-ciation and the fishermen s union is terminated in any other way than by asimilar desist order, then this order shall cease to be of any effect.

Before Mr. William L. Pack hearing examiner.

Mr. Lewis F. Depro , Mr. Fletcher G. Cohn and Mr. John J.McNally for the Commission.

Pillsbury, Madison

&;

Sutro of San Francisco , Calif. , for AlaskaPackers Ass

Peyser, Cartano , Botzer

&;

Chapman of Seattle , Wash. , for Ameri-can Packing Co.

Mr. IIerald A. O'Neill of Seattle, ",'Vash. , for Burk Canning Co.,Inc. , Dressel. Collins Fish Co. , Fishermen s Packing Corp. , FridayHarbor Canning Co. , Sebastian.Stuart Fish Co. and WashingtonFish & Oyster Co. , Inc.

N orb lad, Wyatt

&;

MacDonald of Astoria, Ore., for Colmnbia

River Packers Ass , Inc.Bogle , Bogle

&;

Gates of Seattle

, '

Wash. , for Farwest FishermenInc. and New England Fish Co.

Kerr, MeOord, Greenleaf

&;

Moen of Seattle , Wash., for PacificAmerican Fisheries, Inc.

Ryan, Askren

&;

Mathewson of Seattle , Wash., for \'iz FishProducts Co. , Inc.

COMPLAINT

Pursuant to the provisions of the Federal Trade Commission Actand by virtue of the authority vested in it by said Act, the FederalTrade Commission , having reason to believe that the parties herein-after referred to as respondents have violated the provisions of Sec-

12S2 FEDERAL TRADE C011MISSION DECISIONS

Cornplaint 32 F. '1' . C.

t.iol1 5 of the said Federal Trade Commission Act , and it appearing tothe Commission that a proceeding by it in respect thercof would be inthe public interest, hereby issues its complaint, stating its charges inthese respects as follows:

PARAGRAPH 1. Respondent Puget Sound Salmon Canners, Inc.

hereinafter referred to as respondent "Canners " is a membership

corporation organized and existing under the laws of the State of

vVashington , with its principal offce and place of business located at304 Spring Street, Seattle 4, vVashington. Respondent, its offcersdirectors , and members are herein named and made parties respondentto this proceeding.

The following corporations and individuals , with the possible ex.ceptions hereinafter set forth in Paragraph 3, were members of

respondent Canners as of December 1954 , and based on informationand belief , each has continued such membership. Therefore , becauseof that present or past status , and the acts , practices and policies inwhich they participated , either as members of saiel Canners , or incooperation or conjunction with the other respondents , as hereinafterset forth , each such respondent member is also named herein and madea party respondent inclividnal1y. :Each sl1ch respondent members ofrespondent Canners is described as fol1ows:

Respondent Alaska Packers Association is a corporation organizedand existing under the laws of the State of California , with its prin-cipal offce and place of business 10eater1 at 215 Fremont Street, SanFrancisco. California.

Respondent .American Packing Company is a corporation organ-ized and existing under the laws of the State of 'Vashington , with itsprincipal offce and place of business located at 711 Second AvenueBuilding, Seattle 4 , 'Vashington.

Respondent Burk Canning Company, Inc. , is a. corporation organ-ized and existing under the laws of the State of 'Vashington , with itsprincipal office and place of business located in I3cllingham , vVash-ington.Respondent Jay F. Carron is an individual

Anacortes Canning Company, ,vith his principalbusiness located at Anacortes , 'Vashington.

Respondent Columbia H.ivcr Packers Association, Inc., is a cor-

poration organized and existing under the laws of the State of

Oregon, with its principal offce and place of business located in

Astoria , Oregon.Respondent Dressel.Collins Fish Company is a corporation organ-

ized and exist.ing under the laY\s of the State of Washington , with

doing business asoffce and place of

PUGE'l SOl, D SALMON CANNERS, INC. , ET AL. 1253

1251 Complaint

its principal oflice and place of business located at Pier 67 , Seattle 1'Vashington.

Respondent Fal'west Fishermen , Inc., is a corporation organized

and existing under the laws of the State of Oregon , with its principaloffce and place of business located in the Central Building, ThirdAvenue at Columbia Street, Seatte 4 , "lVashington.Hespondent Fishermcn s Packing Corporation is a corporation

organized and existing under the laws of the State of vVashington

with its principal offce and place of business located at AnacortesWashington.

Respondent Fridity Harbor Canning Company is a corporationorganized and existing under the laws of the State of vVashingt.on

with its principal offee and pl LCe of business located at Friday

Harbor , vVashington.Respondent K ew England Fish Company is a corporation organ-

ized and existing under the Jaws of the State of Washington , with itsprincipal oflice and place of business located in the Exchange Build.ing, First Avenue and 1arion Street , Seattle 4 , "\Vashington.

Hespondent Pacific American Fisheries, Inc., is a corporationorganized under the laws of the State of "lVashington , with its prin.cipal oHice and place of business located at 401 J-Iarris AvenueEe.Ilingham

, .

vYashington.Respondent Sebastian- Stuart Fish Company is a corporation organ-

ized and existing under the la'\vs of the State of "\Vashingtoll , ,vith itsprincipal offce and place of business located at Pier 24, Seattle 4vVashington.

Respondent vVashington Fish & Oyster Company, Inc. , is a corpora-tion organized and existing under the laws of the State of vVash-

ington , with its principa.l offce and place of business located at Pier, Seattle 4 , Washington.Respondent vVhiz Fish Products Company is a corporation organ-

ized and existing under the laws of the State of vYashington , with itsprincipal offce and place of business located at 2000 Alaskan vVay,Seattle 1 , vVashington.

The other respondents are:Respondent Purse Seine Vessel Owners Association is a non-profit

membership corporation organized and existing under the laws of theState of "\Vashington , with its principal offce and pla.ce of businesslocated at 5:301 Xorth Ruby Street, Tacoma , vVashington.

Respondent Local X o. :3 , Fishermen & Allied VV orkers DivisionInternational Longshoremen & "\Varehousemen s Union is an lllincor-porated association , with its principal offce and place of business

located at 84 Union Street, Seattle 1 , vVashington.

1254 FEDERAL TRADE CO::L\IISSIOX DECI8IOKS

Complaint 52 F. T. C.

PAn. 2. llesponc1ent Canners \Y/lS organized in the year 1940 andis a trade association composed of packers , canners, and processorsof sahl10n caught in Puget Sound and adjacent areas of the State ofWashington. The membership of respondent Canners changes fromyear-to-year. On or about December 1 , 1954 , there were 14 membersof respondent Canners who represent a great majority, if not all , ofthe cOlllpanies engaged in the processing, canning and packing ofsalmon in the Puget Sound area.

Therefore , the respondent members of respondent Canners , actingin conjunction with respondent L"nion in the manner hereinafter setforth, have the ability to , and do, control the prices at which varioustypes and grades of raw salmon caught in the Puget Sound andadjacent areas in the State of l'Vashington are purchased and sold.

PAR. 3. All of the corporations and individuals , hereinbefore de-scribed in Paragraph 1 as "members" of respondent Canners, areengaged in the business of maintaining and operating canneries in thePuget Sound area of the State of IVashington , where salmon caughtin the waters of Puget Sound and adjacent areas are processed , canned

and packed by said respondent members of respondent Canners.Respondent American Packing Company claims it withdrew from

membership in respondent Canners in 1951; respondent Friday Har-bor Canning Company claims to have resigned in June 1954 andrespondent Pacific American Fisheries , Inc. , claims it hfls not been amember since 1950. l'Vith these three exceptions , aJl the other corpora-tions and individuals hereinbefore described as members of respondentCanners held such membership as of December 1954. RespondentsAmerican Packing Company, Friday IIarbor Canning Company a,nd

Pacific An1erican Fisheries , Inc. , were, members of respondent Can-ners during periods when said respondent Canners and its membersparticipated in the understandings, agreements, conspiracies and

planned common courses of action , as hereinafter set forth , and re-gardless of whether they were members or not in December 1954 theyhave nevertheless aided and abetted and participated in one or moreof the wrongful acts and practices hereinafter alleged.

Each of said respondents , incl1lc1ing respondents American PackingCompany, Friday Harbor Canning Company and Pacific AmericanFisheries , Inc. , has authorized , participated in, adopted, confirmed, orothenvise ratified , as members of respondent Canners and/or indi-vidually, one or more of the acts, practices and policies of saidrespondent Canners or of others of its members, as hereinafter set

forth.PAR. 4. Respondent Purse Seine Vessel Owners Association , here-

inafter referred to as " respondent Ownerst is an organization con.

PUGET SOUND SALMON '"ERS IXC.) ET AL. 1255

)251 Complaint

sisting of the owners of about 150 Purse Seine vessels, engaged in thefishing for salmon in the waters of Puget Sound and areas adjacentthereto. The said owners own or control approximately 600/0 of all ofthe vessels engaged in such endeavors. Substantially all of the salmoncaught by the said vessels is sold to respondent members of respondentCanners for processing, canning and packing.

Some of respondent members of respondent Canners , directly orindirectly, own or have mortgages on some of the Purse Seine vesselsengaged in fishing for salmon in the Puget Sound area. But regard-less of such ownership or mortgage rights , the fishermen who formthe crews of such vessels are not considered , or dealt with , as

ployees of respondent members of respondent Canners , who generallymake no attempt to direct where or when such vessels shall fish , or tosupervise their operation.

PAR. 5. Respondent Local No. , Fishermen & Alled Workers Divi-sion , International Longshoremen & 1Varehousemen s Union , hereinreferred to as "respondent Union " is now and at all times herein1nentioned has been engaged in transacting busincss on behalf of itsmembers, including fishermen engaged in fishing for salmon in thePuget Sound and adjacent areas , on the vessels belonging to or con-trolled by members of respondent Owners; said Union , acting in con-junction with respondent Canners and/or respondent members ofrespondent Canners and/or members of respondent Owners , does , inthe manner herein set forth , control the prices at \vhich such rawsalmon is purchased and sold.PAR. 6. Each of the respondents herein named has, directly or

indirectly, participated in, approved or adopted one or more of thea,jleged illegal acts and practices hereinafter set forth.

PAR. 7. The fishing for, and the canning of, salmon caught in thePuget Sound area is one of the most important business enterprisesin that territory. In 1952 the value of the salmon pack from this areawas approximately $5 000 000. In 1954, approximately 400 000 cases(a case contains 48 one-pound cans) of salmon eaught in the PugetSound area, were packed and canned, having an estimated totalwhoJcsale vaJue of about $12 000 000.

PAR. 8. In the course and conduct of their respective businesses

respondent mcmbers of respondcnt Canners purchase, directly orindirectJy, the raw sahnon caught by the fishermen members ofrespondent Union in the waters of Puget Smmd and areas adjacentthereto, from said fishermen members of respondent Union and/orfrom members of respondent Owners; after such purchase saidrespondent members of respondent Calmers process , can and packsaid salmon and thereafter sell large quantities of same to purchasers

1256 FEDERAL TRADE lllISSIO:l'" DECISIONS

CompJaint 52 F.

thereof located throughout the United States, ltnd cause said salmonwhen thus sold , to be transported from the Puget Sound area of theStltte of "I'Vashington to purchasers located in States of the lJnited

States other than the State of 'Washington.Said respondent members of respondent Canners, as wen as the

fishermen members of the respondent Union and the members of

respondent Owners maintain , and at an times mentioned herein havemaintained, a regular course or current of trade in commerce insalmon between the Stltte of "I'Vashington and the various States of theUnited States , and among and between the several States of theUnited States.

The respondents , Canners; "Gnion and Owners, have bee.n and arcmedia by which respondent members of respondent Canners, fisher-men members of respondent -cnion and members of respondentOwners have committed and performed, and are committing and

performing, in commerce, the alleged illegal acts, practices and

policies hereinafter set forth.All of the respondents named herein have been , and are nmv , en-

gaged in commerce in the sale and distribution of salmon as "com-merce ' is defined in the Federal Trade Commission Act.

PAIL 9, R.espondent members of respondent Canners , in the courseand conduct of their respective businesses of purchasing salmon fromthe fishermen members of respondent "Gnion and/or members ofrespondent Owners, are in substantial competition, except as suchcompetition has been restrained , lessened or eliminated , as hereinafteralleged , with each other ltnd with others engaged in the same type ofbusiness , in so purchasing raw salmon caught in the Puget Sound area.

In the course and conduct of their respective businesses , the mem-bers of respondent Owners like,vise are in competition with eachother and with others engaged in the same type of business in nego-tiating for the sale and in selling to respondent members of respondentCanners salmon caught by fishermen members of respondent Unionin the waters of the Puget Sound area, except insofar as such com-petition has been lessened or eliminated , as hereinafter alleged.

The fishermen members of respondent Union would be in competi-tion one with the other and with fishermen who are not members ofrespondent linion in the sale of salmon caught in the Puget Soundarea, ,vere it not for the understandings, agreements , combinationsconspiracies and planned common courses of action herein set forth.

PAR. 10. The fishermen members of respondent Union who catchthe raw salmon in the Puget Sound area usually are employed by theskippers of the vessels , which, in turn , are owned by members ofrespondent Owners.

PUGET SOUND SALMON CANNERS, INC' ET AL. 1257

1251 Complaint

The respondent Union enters into contracts or agreements withrespondent Owners and/or members of respondent Owners whereinare specified the compensation , working conditions , etc. , of the mem-bers of respondent Union who fish in the Puget Sound area on theboats of l1mnbers of respondent OVlrners.

The com pensation provided for in any such contracts or agreementsis based upon the priees paid by respondent members of respondentCanners to members of respondent Owners in accordance with thecontracts or agreements entered into by and between respondentUnion and respondent Canners and/or respondent members ofrespondent Canners.

The members of respondent Owners enter into contracts, agree-ments, or arrangements 'with respondent members of respondentCanners , which are eit.her \vritten or oral , whereby said members ofrespondent O"'ne1's seU the fish caught by the fishermen members ofrespondent Union to said respondent members of respondent Canners.

Thus, there are involved three contrads or agreements: (1) betweenthe respondent Union and the respondent Owners and/or membersof respondent O\vners, which are known in the trade as "workingagreements ; (2) between respondent Union and respondent Cannersand/or respondent members of respondent Cn,nners , which are knownin the trade as "salmon agreements ; (3) bebveen members of re-spondent O\\'ners and respondent Canners and/ or respondent membersof respondent Canners.

Respondent Union also enters into contracts with respondent Canners and/or respondcnt members of respondent Canners wherein thereare fixed and set forth the wages and working conditions of the non-fishermen members of respondent Union who work in the canneriesof respondent Inembers of respondent Canners.

This arrangement has been in existence at least since 1949.PAR. 11. "I'Vorking agreements , which have been in effect for the

Jast several years or at least since 1950, provide in part as follows:

2. The shares for salmon purse seining for all fish caught arid delivered shallbe as follmvs:

A. Share for boat seine and gear aftcr deduction of gross stock expenses li '" 'I :

(1) For vessel having a crew of nine (9) men, including skipper, or less,

33%%.(2) For vessel baving it crew of ten (10) men , including skipper 30. 70/.B. The remaining portion shall be divided equally among- the crew, including

the Captain.

This contract also provides:

6. No contract wil be entered into by the owner. wlth any cannery or reduc-

tion plant regarding prices or sale of fish or any other manners affecting theworking conditions of the crew or their remuneration inconsistent with this

1258 FEDERAL TRADE COMMSSION DECISIONS

Complaint 52F.Agreement, unless said contract is approved by the Union and to which saidcontract the Union or its authorized agent becomes a contracting party illinterest.

The contract further provides:16 A. In the event that any Company or companies shall terminate the price

agreement by the submission of 48-hour notice to the Union , then the Union maycall special emergency mass meeting of the membership at the termination orsaid 48-hour notice. The Captain shall bring the vessel to port and release theentire crew in suffcient time for the members to attend said meeting.

B. 'l' l1ere shall be no work on a seine or gear by the crew until twenty (20)days prior to the date of embarkation nor until the Working Agreement hasbeen signed except with specific permission of the Union. No boat shall beallowed to leave for the fishing grounds nor shall any cre\v move any vesselfrom the home port of the vessel unti the Price Agrcement has been signed.Any vessel violating this section shall be declared unfair.

The contract fially provides that the contract shall remain in effectcontinuously unless terminated by either party by written notice.

PAR. 12. The salmon agreements which have been in eflect for thelast several years, at least since 1950 , fixes the minimum fish pricesfor the various types or species of salmon caught and sold in thePuget Sound area for the fishing season covered by the particularSaln10n Agreement.

PAR. 13. For many years last past, and more particularly since1949 , respondent members of respondent Canners , from the date oftheir affliation with respondent Canners, by means of and throughrespondent Canners, and also by and through their individual actshave entered into, maintained and effectuated an understanding,agreement, combination , conspiracy to pursue , and they have pur.sued, a planned common course of action between and among thenl.selves to adopt and adhere to certain acts , practices ancl policies tohinder and suppress competition between and among themselves andwith others in the purchase , sale and distribution of salmon caughtin the Puget SOlmd area , in commerce , between the State of Wash-ington and the several states of the United States.

PAR. 14. Pursuant to, and in furtherance of said understanding,

agreement , combination , conspiracy and planned common course ofaction, respondent members of respondent Canners have acted inconcert and in cooperation with each other, individually and throughand by means of respondent CanneTs , and also ,vith respondent lJ nionto do , among others, the following acts and practices:

(1) To determine and fix , and they have determined and fixed , andare stil determining and fixing, the minimmn purchase prices whicheach of said respondent members of respondent Canners , as well asthe entire Puget Sound sahnon industry, is to pay and has paid to

PUGET SOUND SALMOK CA1\""ERS, IKC. , ET AL.

1251 Complaint

1259

the members of respondent O-wners, or to the captains of the vesselsof such members of respondent Owners, or directly or indirectly tothe fishermen lllembers of respondent Union or to others, for thevarious types or species of salmon caught in the waters of PugetSound and adjacent areas , which together are sometimes referred toherein as the "Puget Sound area

(2) To prevent and eliminate, and they have prevented and elimi-nated , and are still preventing and eliminating, any and all pricecompetition between and among said respondent members of respond-ent Canners in the purchase of such salmon;

(3) To eliminate and prevent , and they have eliminated and pre-vented , and are still eliminating and preventing any and all competition as to the minimlil1 prices to be paid in the purchase of salmonbetween respondent members of respondent Canners and others whoalso purchase raw salmon in the Puget Sound area for processing,packing, canning and shipping same in commerce between and amongthe various States of the united States.

PAR. 15. For many years last past, and more particularly since1949, respondent CanncTs , respondent members of respondent Can-ners , acting individually and/or by or through respondent Cannersrespondent Owners and respondent Union have entered into , main-tained and effectuated an understanding, agreement, combination andconspiracy to pursue, and they have pursued, a planned commoncourse action to adopt, fix and adhere to certain acts , practices andpolicies to hinder and suppress competition in the purchase, sale anddistribution of salmon , caught in the Puget Sound area , in commercebetween the State of 'Washington and the several States of the UnitedStates.

PAR. 16. Pursuant to and in furtherance of said understanding,agreement, combination , conspiracy and planned common course ofaction , each of said respondents has acted in concert and cooperationwith one or more of the other respondents to do , among others , oneor more of the following acts and practices:

(1) To determine and fix , and they have determined and fixed , andarc still determining and fixing the minimum fish prices which thefishermen members of respondent "Cnion receive for the sale torespondent members of respondent Canners of the various species ofraw salmon caught by said iishermen in the Puget Sound area.

(2) To eliminate , ancl they have eliminated, and are stil elimi-

nating, any and a11 competition between and among the fishermenmembers of respondent Union in the saJe by them of the sahnon

which they catc.h in the Pnget Sound area;

1260 FEDERAL TRADE CO nlISSION DECISIONS


(3) To eliminate, and they have eliminated , and arc still elimi-nating, all competition in the sale to respondent members of respond-ent Canners of fresh or raw salmon caught in the Puget Sound area;

(4) To adopt and maintain , and they have adopted ancl maintainedand are still adopting and maintaining, an arrangement wherebyrespondent Union enters into contracts or agreements, known assalmon agreements " with respondent Canners and/or one or moreof respondent members of said respondent Canners, whereby theminimum fish prices for each type or species of raw salmon caught inthe Puget Sound area are fixed and determined for the fishing seasoncovered by such contract or agreement;

(5) To prevent, and they have prevented , and are stil1 preventing,fishermen from selling the salmon , which they have caught in thePuget Sound area, to respondent members of respondent Canners atpriess lower than those fixed and set by such salmon agreements,vhich are entered into by and between respondent Canners and/orrespondent members of respondent Canners and respondent Union;

(6) To enter into , and they have entered into , and are stil1 enteringinto , an arrangement or understanding whereby respondent O"\vnersand/or members of respondent Owners, acting individual1y orthrough and by means of respondent Owners , and rcspondent unionenter into agreements or contracts known as "working agreementswhereby and wherein are fixed and cletermined , in the manner andby the method herein described , the "wages" of fishermen membersof respondent Union for the period covered by such contracts oragreements;

(7) To enter into , and they have entered into, and arc still enteringinto , an arrangement or understanding whereby the result and effectof such w'orking agreements by and between respondent Owners

and lor members of respondent Owners and respondent Union havebeen , and are, that the members of respondent Owners arc restrainedand prohibited from using their vessels to fish for salmon in thePllget Sound area until and unless respondent Canners andlor re-spondent members of respondent Canners have agreed with respond-ent union , by means of executed salmon agreements , upon the priceswhich respondent members of respondent Canners will pay to mem-bers of respondent Owners for the various types of species of salmoneaught in the Puget Sound a.rea by fishermen members of respondentUnion;

(8) To prevent , and they han prevented , and are still preventing,a.ny raw salmon from being caught or sold in the Puget Sound areauntil and unless a ,yorking agreement or agreements between therespondent Union and respondent 0'1'ner8 and/or members of 1'0-

PUGET SOel\"'D SALMON CA- NERS, 11\C' ET AL. 1261

1251 Decision

spondent Owners have been duly executed for the then current

season , and also until there has been executed a salmon agreementor agreements bet\",een respondent Union and respondent Cannersand/or respondent members of respondent Canners for the then cur-rent season whereby the minimum - priees for the purchase and saleof all types or species of raw salmon caught in the Puget Sound areahave been fixed and established.

PAR. 17. The capacity, tendency and efIect of the aforesaid under-tanding-s , agreements , combinations, conspiracies and planned com-

mon courses of r"ction and the acts , policies , practices and things donet.hereunder and pursuant thercto by the respondents , as hereinbeforeset forth , have been , and are now , to unlavdully restrict, restrain andhinder the catching or production of salmon in the Puget Sound areaand have been , and are now to unlawfully restrict, restrain , hinder andprevent price competition between and among the respondent n1em

bel's of respondent Canners , between nncl among the fishermen l11em-

bers of the respondent 1;nion , and between rmc1 among the members

of respondent 0\Vne1' , in the purchase and sale of the various typesor species of salmon caught ill said area, in interstate commercewithin the intent and meaning of Section;) or t.he Fcclert\,l TradeCommission Act.

PAR. IS. In 1.1dclition to the eHeets hereinbefore set forth , the under-standings , agreements , combinations , conspiracies and planned com-mon courses of action of the respondents ancl the aets , practices andpolicies of the respondents likewise have the capac.it.y and tendencyto substant.ially incre,ase the cost. of iooa by their effect on the prices

which the public is required to pay for salmon caught in the PugetSonnd area and sold in commerce , as aforesaid.

PAIL lD. The acts and practices of the respondents , an and singu-larly, as llfreinbefore set forth are to the prejudice and injury ofthe public ilncl eonstitute unfair ncts and practices and unfair lnethodsof competttion within thc intent and meaning of Section 5 of theFedcral Trade Commission Act.

INlTL\L DECISION AS TO CEHTAIX RESPONDr: TS BY WILLL\?I L. PACK

HEARIXG EX \l\lINER

The complaint in this matter charges the respondents with enteringinto n combination in restraint of trade in violation of the FederalTrade Commission Act. An agreement has now been entered into bycounsel supporting the complaint and certain of the respondents

Alaska rackers Association , American Packing Company, Burk Can-ning Company, Inc., Columbia River Packers Association, Inc.Dressel- Collins Fish Company, Farwest Fishermen , Inc. , Fishermen

451524--59--

1262 FEDERAL 1'RADE COMMISSION DECISIONS

Decision 52 P. T. C.

Packing Corporation , Friday Harbor Canning Company, New Eng-land Fish Company, Pacific L\1nerican Fishe.ries, Inc. , Sebastian-Stuart Fish Company, "Washington Fish and Oyster Company, Inc.and "I'Vhiz Fish Products Company, Inc. (referred to in the complaintas "Whiz Fish Products Company), which agreement provides, amongother things, that saicJ respondents admit all of the jurisdictionalalleglttions in the complaint; that as to that part of this proceedingwhich is disposed of by the agreement the answer of each of said

respondents to the complaint shall be considered as having been with-drawn and that the record insofar as it pertains to said respondentson which the initial decision and the decision of the Commission shallbe based shall consist solely of the complaint and agreement; that asto that part of the proceeding which is disposed of by the agreementeach of said respondents waives any further procedural steps beforethe hearing examiner and the Commission , the making of findings offact or conclusions of la- , and all of the rights each of said respondentsmay have to challenge or contest the validity of the order entered inaccordance with the agreement; that the order hereinafter set forthmay be entercd in disposition of the proceeding a,s to said respondentsouch order to have the same force and effect as if entered after a fullhearing; that the order may be altered , modified or set aside in themanner provided for other orders of the Commission; and that theagreement is for settlement purposes only and does not constitute anadmission by any of said respondents that it has violated the law asalleged in the complaint.

The hearing examiner having c.onsidered the agreement and pro-posed order and being of the opinion that they provide an a,clequatebasis for an appropriate disposition of the proceeding as to saidrespondents, the agreement is hereby accepted , the following juris-dictionRI findings made , and the following order issued:

1. (a) Re,spondent Alaska Packers Association is a corporationorganized and existing under the laws of the State of California

with its principal offce and place of business located at 215 FremontStreet, San Francisco, California.

(b) Respondent American Packing Company is a corporationorganized and existing under the laws of the State of "Washingtonwith its principal offce and place of business located at 711 SecondAvenue Building, Seattle 4 , \Vashington.

(c) Respondent Burk Canning Company, Inc. , is a corporationorganized and existing under the laws of the State of Washingtonwith its principal offce and place of business located in Bellingham"I'Vashington.

PUGET SOUND SALMON C 'NERS , INC., ET AL. 1263

1251 Decision

(d) Respondent Colmnbia River Packers Association, Inc., is a

corporation organized and existing under the laws of the State of

Oregon, with its principal offce and place of business located in

Astoria , Oregon.(e) Respondent Dressel-Collns Fish Company is a corporation

organized and existing under the laws of the State of yVash:ingtonwith its principal offce and place of business located at Pier 67

Seattle 1

, "

Washington.(f) Respondent Fanvest Fishermen , Inc. , is a corporation organ-

ized and existing under thc laws of the State of Washington (incor-rectly stated in the complaint as the State of Oregon) with its prin-cipal offce and place of business located in the Central Building,Third Avenue at Columbia Street , Seattle 4, "I'Vashington.

(q)

Respondent Fishermen s Packing Corporation is a corporationorganized and existing under the laws of the State of

"\T ashingtonwith its principal offce and place of business located at Anacortes

Washington.(h) Respondent Friday Harbor Canning Company is a corporation

organized and existing under the laws of the State of \Vashington

with its principal offce and place of business located at Friday

Ha,rbor , ",Vashington.(i) Respondent New England Fish Company is a corporation

organized and existing under the laws of the State of Maine (incor-rectly stated in the complaint as the State of "lVashington), with itsprincipal offce and place of business located in the Exchange Build-ing, First Avenue and Iarion Street , Seattle 4

, "

Washington.

(j)

Respondent Pacific American Fisheries , Inc. , is a corporationorganized under the laws of the Statc of Delaware (incorrectly statedin the complaint as the State of "I'Vashington), with its principal offceand place of business located at 401 Harris Avenue , BellnghamWashington.

(1c) Respondent Sebastian -Stuart Fish Company is a corporationorganized and existing under the laws of the State of Washingtonwith its principal offce and place of business located at Pier 24

Seattle 4

, "

Washington.(I) Respondent "lVashington Fish & Oyster Company, Inc. , is a

corporation organized and existing under the la\vs of the StatB ofWashington , with its principal ofIce and place of business located

at Pier 54 , Seattle 4 , "lVashington.(m) Respondent "I:Yl1iz Fish Products Company, Inc. (incorrectly

designated in the complaint as 'iVhiz Fish Products Company) is acorporation organized and existing under the laws of the State of

1264 FEDERAL TRADE co:::-nSSION DECISIONS

Order 52 F.

Washington with its principal offce and place of business located at2000 Alaskan Way, Seattle 1 , Washington.

2. The Federal Trade Commission has jurisdiction of the subjectmatter of this proceeding and of said respondents, and the proceed-ing is in the public interest.

ORDER

It is ordered That respondent.s Alaska Packers Association , American Packing Company, Burk Canning Company, Inc., ColmnbiaRiver Packers Association , Inc. , Dressel-Collins Fish Company,Farwest Fishermen , Inc. , Fishermen s Packing Corporation : FridayIlarbor Canning Company, Ne,v England Fish Company, PacificAmerican Fisheries, Inc. , Sebastian-Stuart Fish Company, Wash-ington Fish and Oyster Company, Inc., and "lVhiz Fish ProductsCompany, Inc. , who shall be deemed herein to be parties respondenttheir respective offcers , agents , representatives and employees , directlyor through any corporate or other device, in connection \vith thepurchase , or off'ering to purchase, in commerce, as "commerce" isdefined in the Federal Trade Commission Act , of ran' or fresh salmoncaught in the fishing area of Puget Sound, do forthwith cea,se anddesist from ent.ering into , continuing, cooperating in or carrying outany planned common and concerted course of action , understandingor agreement bet"Iecn any two or mol'C of said respondents, orbet"\veen anyone or more of said re,sponc1ents and others not partieshereto , to do or perform any of the follo"Iing acts:

1. Entering into or carrying out, or attcmpting to enter into orca,rry 011t any "salnlon agreement" as defined and explained in the

complaillt herein , or lLn)' other contract , agreement or understandinghaying the same or sirniJar provisions:

2. Fixing, establishing, adopting, maintaining or a.dhering to , orattempting to fix , establish , adopt , ma.intain or cause adherence toby any me U1S or method any price at which raw or fresh salmon isto be purchased or sold;

3. Jointly or col1ec6veJy negotiating, bargaining or agreeing byany means or method as to the price or prices at which said nnv orfresh salmon is proposed to be , or is, purchased or sold;

4. Authorizing or empowering any association , group, corporationor union to negotiate , bargain or agree as to t.he prices to be paid inthe purchase or sa1e of any sllch raw or fresh salmon;

Provided: lwwe'ver That nothing herein containcd shalJ be eonstrueel or interpreted as preventing or prohibiting any respondentnamed herein , individually, from purchasing or selling, or bargaining

PUGET SOUND SALMON CANNERS, INC. ) ET AL. 1265

1251 Decision

for the purchase or sale of such salmon with any boat owner , boatcaptain , or any other single seller or buyer.

Pr01,ided further That nothing herein contained shall prevent anyassociation of bona fide salmon fishermen , acting pursuant to or inaccordance with the provisions of the Fisheries Cooperative Market-ing Act (15 U. A. Sections 5m and 522) from performing any ofthe Rcts and practices permitted by said Act; and

Pr01,ided further That nothing herein contained shall be deemed

to prohibit one or more of the respondents herein from entering intoor continuing a bona fide partnership, joint operation , or venture, orconsolidation , for the purpose of operating one or nlore canneries andin which the prices of raw salmon are deternlined by said partner-ship, joint operation or venture, or consolidation, and where suchdetermination is under the contract establishing such partnership,joint, operation , or venture or consolidation , binding upon all mem-bers thereof. This proviso shall not be construed as either an approvalor disa.pproval of any specific partnership, joint operation , or ventureor eonsolidation , nor as permitting any such partnership, joint opera-tion , or venture or consolidation , to be continued or formed for thepurpose of or with the effect , directly or indirectly, of renderingineffective or unenforceable the inhibitions of this order and thepurposes thereof.

Provided f'lU'thel" That if the pending proceeding against respond-

ents Purse Seine Vessel OiVn8r5 Association and Local No. , Fisher-men &. Allied ,Yorkers Division , International Longshoremen &,VarehOllscmcn s 1Jnion -is finally terminated in any manner except.by the issuance of an order to cease and desist, either (a) by consentor (b) by final order of the Commission not subject to further reviewor (c) by order of the Commission, which , although subject to,further review , continues eflective , re,quiring said respondents Uniona.nd boat O'wners Association to cease and desist from the same orsimilar acts or practices provided by the order contained herein , thenthis order shal1 termimlte and cease to be of any effect.

DECISIOX OF THE COJ\IJIISSION AND ORDER TO FILE REPORT OF co rPLIANCE

1rsnant to Section 3.21 of the Commission s Rules of Practice, theinitial decision of the hearing cxarnincr shalL on the 8th day of Iay,1956 , become the decision of the Commission; and , accordingly:

1 t is ordered That respondents Alaska Packers Association , Ameri-can Packing Company, Burk Canning Company, Inc., ColumbiaRiver Packers Association , Inc., Dressel-Col1ins Fish Company,Farwest Fishermen , Inc. , Fishermen s Packing Corporation , FridayHarbor Canning Company, Kew England Fish Company, Pacific

1266 FEDERAL TRADE COM.'-ISSIO:' DECISIONS

Decision 52 F.

American Fisheries, Inc. , Sebastian-Stuart Fish Company, 'Wash-ington Fish and Oyster Company, Inc. , and "lVhiz Fish ProductsCompany, Inc. , shall within sixty (60) days after service upon themof this order, file with the Commission a report in writing settingforth in detail the manner and form in which they have compliedwith the order to cease and desist.

HELE A RUBI STEIN, INC. 1267

Complaint

IN THE J\IATTRH OF

HELENA RUBINSTEIN , INC.

CONSENT OIliER , ETC., IN REGARD TO TIlE ALLEGED VIOLATION OFSEeS. 2 (d) AND (e) OF THE' CLAYTO ACT

Docket 6441. Complaint, Nov. 1955-Decision, May , 1956

Consent order requiring a manufacturer of cosmetics , beauty aids, and toiletpreparations, ''lith principal place of business in New York City, to ceaseviolating Secs. 2 (d) and 2 (e) of the Clayton Act, as amended, by payingdemonstrator allowallces , cooperative advertising materials and allowancesand promotional allowances to competing customers in amounts not pro.portionally equal as required by the statnte bnt determined on the basis of

individual negotiations which resulted in different and arbitrary terms todifferent customers.

Before Lllr. Hobert L. Pipe?' hearing examiner.

Jlh. Donald K. King for the Commission.

Sherman

&;

Goldring, of New York City, for respondent.

COJIPLAIXT

The Federal Trade Commission , having reason to believe thatI-Ielena Rubinstein, Inc. , hereinaft.er designated as respondent , hasviolated and is now violating the provisions of sub sections (d) and(e) of Section 2 of the Clayton Act as amended by the RobinsOJ:l-Patman Act , approved June 19 , 1936 (U. , Title 15 , Section 13),hereby issues its complaint, stating its charges with respect theretoas follows:

PARAGHAPI- 1. Helena n,ubinstein , Inc. , is a corporation organizedand doing business under and by virtue of the laws of the State ofN ew York , with its ofIce and principal place of business located atEast Hils , Long Island , New York.PAR. 2. The respondent is now, and for a number of ye,ars has

been , engaged in the business of manufacturing and selling cosmeticsbeauty aids , a.nd t.oilet preparations. Said products are sold to cus-tomers with places of business located throughout the several statesof the "United States and in the District of Columbia for resaJe toconsumers within the united States.

PAIL 3. In the course and conduct of said business , respondent hasengaged in commerce as "commeI'ce ' is defined in the Clayton Actas amended by the Robinson-Patman Act, having shipped its productsor cansed them to be transported from its said place of business tosaid customers with places of business located in the several states ofthe United States and in District of Columbia.

1268 FEDERAL TRADE COMMISSION DECISIONS


PAn. 4. In the course of said business in commerce, respondent haspaid or contracted to pay, money, goods , or other things of value toor for the benefit of sorne of its customers as compensation in con-sideration for services and facilities furnished, or contracted to be

furnished, by or through such customers in connection with theprocessing, handling, sale or offering for sale of respondent' s productsand respondent has not made or contracted to make such payments orconsiderations (or in the alternative , equivalent services or facilities)available on proportionally equal terms to aU other of its customers

competing in the sale and distribution of said products.PAR. 5. In the course of said business in commerce, respondent has

furnished , contracted to furnish , or has contributed to the furnishingof certain services and facilities to some of its customers in connec-tion with the processing, handling, sale or offering for sale of respond-ent' s products by them; and respondent has not made such servicesand facilities (or in the alternative , equivalent payments or allow-ances) availabJe on proportlonally equal terms to an other of itscustomers competing in the sale and distribution or said products.

PAn. 6. Specifically, in dealing with its customers , respondent hasrurnished or paid demonstrator services or al1owance,s and/or adver-

tising facilities or allowances and/or paid promotional allowances tocertain competing customers in amounts (based on respondent:s costs)not equal to the same percentage of net purchases of respondenfs

prodncts by such customers (and not proportionally equal by anyother test) ; and respondent did not offer or otherwise make availablesuch services , facilities and allm,ances in amounts equal to the largestor such percentages to all snch competing customers (and not pro-portionally equal by any other test).

Illustrative or and included a,mong the practices rererred to abovewere respondent's rollowing described dealings with its 64 customerslocated in the 'IV ashington , D. C. , trade area during the year 1954.

1. Two large department stores received rrom respondent promo-tional and demonstrator allowances in amounts equal to a higherpercentage or their net purchases than was granted by respondentto other compe6ng customers who furnished the same or greaterreciprocal services or racilities.

2. Six favored customers were furnished cooperative advertisingmaterials and allowances by respondent totaling in excess of 8% oftheir individual net purchases from respondent. Seventeen competingcustomers were not accorded cooperative advertising materials or

allowances by respondent. 1\1any other competing customers wererurnished cooperative advertising materials or allowances by respond

HELENA RUBINSTEIN, INC. 1269

1267 Decision

ent equal to approximately 2% of their individual net purchasesfrom respondent.

3. Ce.rtain of respondent' s customers in that sales area whose netpurchases from respondent total less than $8 000 per year received

promotional allowances equal to 9% of their individual net purchasesfrom respondent while other competing customers purchasing ap-

proximately the same quantities from respondcnt rcceived promo-tional allowances of 5% of net purchases from respondent.

In determining the services and allowances granted to these com.

peting customers, respondent did not use any proportionally equal

basis. On the contrary, they were determined on the basis of indi-vidual uegotiations between respondent and different customers whichresulted in different and arbitrary terms.

PAR. 7. The acts and practices of the respondent as above alleged

violate Subsections (d) and (e) of Section 2 of the Clayton Act asamended by the Robinson.Patman Act (U.S. C. , Title 15 , Section 13).

INITIAL DECISIOX BY ROBERT L. PIPER, HEAilXG EXA nNER

The Federal Trade Commission issued its complaint against theabove. named respondent on November 8 , 1955, charging it with

having violated Section 2 (d) and (e) of the Clayton Act , as amendedby the Robinson-Patman Act. After being served with said com.plaint, respondent appeared by counsel and entered into an agree.ment, elated JYlarch 6, 1956 , containing a consent order to cea,se anddesist, disposing of all the issues in this proceeding without hearing.Said agreement has been submitted to the undersigned , heretoforeduly designated to act as hearing examiner herein , for his considera-tion in accordance with Section 3.25 of the Rules of Practice of theCommission.

Respondent , pursua,nt to the a.foresaid agreement, has admitted allof the jurisdictional allegations of the complaint and agreed that therecord may be taken as if findings of jurisdictional facts had beenduly made in accordance with such allegations. Said agreement fur-ther provides that respondent waives all further procedural steps

before the hearing examiner or the Commission , including the makingof findings of fact or conclusions of law and the right to challengeor contest the validity of the order to cease and desist entered in

accordance with such agreement. It has also been agreed that the

record herein shall consist solely of the complaint and said agreementthat the agreement shaJl not become a part of the offcial record unlessand until it becomes a part of the decision of the Commission , thatsaid agreement is for settlement purposes only and does not constitutean admission by respondent that it has violated the law as alleged


Order 52F.in the complaint, that said order to cease and desist shall have thesame force and effect as if entered after a full hearing and may bealtered , modified , or set aside in the manner provided for other ordersand that the complaint ancl Trade Pmctice Rule 16 C. R. 221.1 (g)shall be used in construing the terms of the order.

This proceeding having now come on for final consideration on thecomplaint and the aforesaid agreement containing the consent orderand it appearing that the order and agreement cover all of the allega-tions of the complaint ancl provide for appropriate disposition of thisproceeding, the same arc hereby accepteel and ordered filed uponbecoming part of the Commission s decision pursuant to Sections 3.and 3.25 of the Rules of Practice , and the heaTing examiner accord-ingly makes the follmving findings , for jurisdictional purposes , andorder:

1. Respondent IIelcna Rubillstein Inc. , is a corporation existingand doing business under and by virtue of the laws of the State ofNew York , with its offce ancl principal place of business located at65:, Fifth Avenue , in the City of N ew York , State of X ew York.

2. The Federal Trade Commission has jurisdiction of the subjectmatter of this proceeding and of the respondent above named. Thecomplaint states a cause of action against said respondent under theClayton Act as amended by the Robinson-Patman Act , and thisproceeding is in the interest of the public.

ORDER

1 t is OJ-doTed That respondent Ilele.lU n,ubinstein , Inc. , a corpora-tion , its offcers, employees, agents and representatives, directly or

through U1y corporate or other device , in connection with the sale orcffeTing for sale , of cosmetics , beauty aids, and toilet preparations incommerce , as "commerce" is deIlned in the Clayton Act as amendeddo fOl'tJnvith cease and desist from:

1. Paying, or contracting to pay to, or for the benefit of, any cus-tomer, anything of value as compensation or in consideration forservices or facilities furnished by or through such customer in con-nection with the handling, processing, sale or offering for sale of

respondent's products unless such payment or consideration is madevailable on proportionally equal terms to all other customers com-

peting in the distribution or resa,le of such products.2. Furnishing or contributing to the furnishing of services or

facilities in connection with the handling, processing, sale or offeringfor sale of respondent's products to any purchaser from respondentof such products bought for resale , when such services or facilitiesaTe not accorded on proportionally equal terms to all other purchasers

HELENA RUBINSTEIN, INC. 1271

1267 Decision

from respondent who resell such products in competition with suchpurchasers who receive such servjces or fa.cilities.

DECISIOX OF THE CO:.D:ISSION AND ORDJm TO FILE REPOHT OF CO)IPLIAXCE

Pursuant to Section 3.21 of thc Commission s Rules of Practice , theinitial decision of the hearing examiner shan , on the 9th day of :May,ID56 become the decision of the Commission; and , accordingly;

It is ordel'ed That the respondent herein shall within sixty (60)days after service upon it of this order , file with the Commission areport in writing setting forth in detail the manncr and form inwhich it has compliecl with the order to cease and desist.


Complaint 52 F.

IN THE MATTER OF

DAVID BECKER ET AL. TRADIKG ASBECKER & BuRNS FURRIERS

CONSEXT ORDER, ETC., IN REGARD TO THE ALLEGED YIOLATIOXS OF THEFEDER.i\, TRDE COMMISSION AND 'rilE :FUR PRODUCTS LABELIXG ACTS

Docket 64.83. Complaint . Jan. 10 , 1956-Decision, May , 1956

Consent order requiring furriers in Philadelphia, Pa. , to cease violating the

Fur Products Labeling Act by advertisements in circulars , handbils, etc.,

which failed to disclose the names of animals producing the furs in ccrtainproducts; misrepresented prices as wholesale and less and reduced frompurported regular prices which were in fact fictitious, and misrepresentedsa vings possible to purchasers.

Before Mr. Earl J. Kolb hearing examiner.

11h. Floyd O. Oollins for the Cmmnission.

Fox, Rothschild, O'Brien

&;

Frankel of Philadelphia

respondents.Pa. , for

COl\IPLAINT

Pursuant to the provisions of the Federal Trade Commission Actand the Fur Products Labeling Act and by virtue of the authorityvested in it by said Acts , the Federal Trade Commission havingreason to believe that David Becker and Abraham Burns , individuallyand as c.opartners trading and doing business as Becker & BurnsFurriers, hereinafter referred to as respondents , have violated theprovisions of said Acts and the Rules and Regulations promulgatedunder the Fur Products Labeling Act , and it appearing to the Com.mission that a proceeding by it in respect thereof would be in thepublic interest , hereby issues its complaint stating its charges in thatrespect as follows:

PARAGRAPH 1. Respondents David Becker and Abraham Burns areindividuals and copartners trading and doing business under the firm

name of Beeker & Burns Furriers , with their offce and principal placeof business located at 1211 Chestnut Street , Philadelphia , Pennsyl.vania. Said individual responde,nts formulate , direct , and control theacts, practices and policies of the said business.

PAR. 2. Subsequent to the effective date of the Fur Products Label-ing Act on August 9 , 1952, respondents have been, and are now I

engaged in the introduction into commerce! and in the sale , adver-tising and offering for sale in commerce, and in the transportation

and distribution in commerce , of fur products , and have sold , adver-

BECKER & BURNS FURRIERS 1273

1272 Complaint

tised , offered for sale , transported and distributed fur products whichhave been made in whole or in part of fur which had been shippedand received in commerce , as "commerce

, "

fur ' and " fur productsare defined in the Fur Produets Labeling Act.

PAR. B. Certain of said products were falsely and deceptively adver-

tised in violation of the Fur Products Labeling Act in that therespondents caused the dissemination in commerce , as "commerce" isdefined in said Act of certain advertisements concerning said fur

prod ncts by means of circulars, handbills, letters, and by variousother means which advertisements were not in accordance with theprovisions of Section 5 (a) of the Fur Products Labeling Act andRules and H.egulations promulgated thereunder and which adver-tisements were intended to and did aid , promote and assist in thesale and offering for sa.1e of said fur products.

PAn. 4. Among and included in the adver6sements as aforesaidbut not limited thereto , were handbills , circulars and letters whichthe respondents caused to be disseminated through the United States

mails to a substantial number of the general public.By means of the aforesaid advertisements , and through others of

similar import and meaning not specifically referred to herein , therespondents falsely and deceptively:

(a) Failed to disclose the name or names of the animal or animalsthat produced the fur contained in the fur products , as set forth inthe Fur Products Kame Guide, in violation of Section 5 (a) (1)

the Fur Products Labeling Act.

(b) Misrepresented the prices of fur products as wholesale and

less than wholesale costs , in violation of Rule 44 (a) of the saidRules and Regu lations.

(c) ::fisrepresentec1 prices of fur products a,s having been reducedfrom regular or usual prices , when such regu1ar or usual prices werein fact fictitious , in that they were not the prices at which said furproducts were usually sold by respondents in the recent regular courseof their business , in violation of Rule 44 (a) of said Rnles andR.egulations.

(d) Misrepresented , by means of comparative prices not based oncurrent market values and not giving the time of such compared

prices , the amount of savings to be effectuated by purchasers of saidfur products, in violation of Hule 44 (b) of said Rules anelRegulations.

PAIL t5. Responc1ent-s , in making the pricing claims and representa-tions set forth in subparagraphs (b), (c) and (d) of Paragraph Fourhereof, failed to ma.intain fun and adequate records disclosing thefacts upon which such claims and representations were purportedly

1274 FEDERAL TRADE COCdCdISSION DECISIONS

Decision 52 F. T. C.

based, in violation of Rule 44 (e) of the said Rules and Regulations.PAR. 6. Certain of said products were misbranded in that they

were falsely and deceptively labeled or otherwise falsely and decep.tively identified with respect to the name or names of the animal oranimals that produced the fur from which said fur products had beenmanufactured , in violation of Section 4 (1) of the Fur ProductsLabeling Act.

PAR. 7. Certain of said fur products were misbranded in that theywere not labeled as required under the provisions of Section 4 (2) of

the Fur Products Labeling Act and in the manner and form pre-scribed by the Rules and Regulations promulgated thereunder.PAR. 8. Certain of said fur products were misbranded in that

respondents, on labels attached thereto , set forth the name of ananimal other than the name of the animal that produced the furcontained in the fur product in violation of Section 4 (3) of the FurProducts Labeling Act and the Rules and Regulations promulgated

thereunder.PAR. 8. Certain of said fur products were misbranded , in violation

of the Fnr Products Labeling Act, in that they were not labeled inaccordance "with the li.ules and Regulatjons pr0l11ulgated thereunderin that required information was mingled ,vith non-required informa-tion in violation of Rule 28 (a) of the said Rules and Regulations.

PAR. 10. The aforesaid acts and practices of respondents were inviolation of the Fur Products Labeling Act and of the Rules andRegulations promulgat.ed thereunder , and as such constitute unfairand deceptive acts and practices in commerce under the Federal TradeCommission Act.

INITIAL DECISION BY EARL J. KOLE , REAm.KG EXA:ifINER

The complaint in this proceeding issued January 10 , 1956 , chargedthe respondents David Becker and Abraham Burns (also known asAl Burns), individually and as copartners trading as Becker & BurnsFurriers , located at 1211 Chestnut Street , Philadelphia , Pennsylvaniawith the use of unfair and deceptive acts and practices in interstatecommerce in violation of the provisions of the Federal Trade Com-mission Act and the Fur Products LabeJing Act and the rules andregulations pro111ulgated the.reunder.

After the issuance of said complaint and before the filing of theiranswer t.hereto , the re.spondents David Becker and Abraham Burns(also known as Al Burns), individual1y and as copartners tradingas Becker & Burns Furriers, entered into an agreelnent for conse,order with counsel in support of the complaint disposing of all theissues in this proceeding, \vhich agreement was duly approved by the

BECKER & BUR1\"'S FURRIERS 1275

1272 Order

Director and Assistant Director of the Bureau of Litigation. It was

expressly provided in said agreement that the signing thereof is forsettlement purposes only and does not constitute an admission by re-spondents that they have violated the law as alleged in the complaint.

By the terms of said agreement , the said respondents admitted allthe jurisdictional facts alleged in the complaint and agreed that therecord herein may be taken as if the Commission had made fidingsof jurisdictional facts in accordance with such allegations.

By said agreement the parties expressly waived any further pro-cedural steps before the hearing examiner and the Commission; themaking of findings of fact or conclusions of law; and all the rightsthey may have to challenge or contest the validity of the order tocease and desist entereel in accorclmlce with the agreement.

Respondents further agreed that the order to cease and desistissued in accordance with said agreement , shall have the same forceancl enect as if made after a full hearing.

It '-ras further provided that said agreement, together with thet'omplaint , shall constitute the entire record herein , that the complaintherein may be used in construing the terms of the order issued pur-suant to said agreement, and that said order may be alt.ereel , modifiedor set aside in the manner prescribed by the statute for orders of theCommission.

The he.a.ring examiner has considered such agreement and the ordertherein contained , and , it appearing that said agreement and orderprovides for an appropriate disposition of this proceeding, the same

is hereby accepted and is ordered filed upon becoming part of theCornmission s decision in accordance with Sections 3.21 and 3. 25

the Rules of Practice , and, in consonance with the terms of said

agreement , the hearing examiner finds that the Federal Trade Com-mission has jurisdiction of the subject matter of this proceeding andof the respondents named herein , a.nd that this proceeding is in theinterest of the pubJic , and issues the following order:

ORDER

It 1S ordeJ' ecl That respondents David Becker and Abraham Burns(also known as Al Burns), individually and as copartners tradingas Becker & Burns Furriers , or under any ot.hrT tnulc name , andresponelenis representatives, agents and ernployees , direct 1y

through R,ny corporate or other device in connection with the iptl'duction into commerce, or the sale" advertising, or offering for snJein commerce, or the transportation or distribution in C011merce, of

ny fur prodncts, or in connection with the sa.1e , advertising, oHeringfor sale , transportAtion , or distribution of any fur product ,vhich is


Order 52 J", T. C.

made in whole or in part of fur which had been shipped and receivedin commerce , as "commerce

:' "

fur" and " fur product:' are defined inthe Fur Products Labeling Act , do forthwith cease and desist from:

A. Misbranding fur products by:1. Fa.1sely or deceptively labeling or otherwise identifying any such

product as to the name or names of the animal or animals thatproduced the fur from which such garment was manufactured.

2. Failing to affx labels to fur products showing:(a) The name or names of the animal or animals producing the

fur products as set forth in the Fur Products Name Guide and asprescribed under the R.ules and R.egulations.

(b) That the fur product contains or is composed of used furswhen such is a fact.

(c) That the fur product contains or is composed of bleached

dyed , or artificially colored fur when such is a fact.(d) That the fur product is composed in whole or in substantial

part of paws, tails , bellies or waste fur when such is a fact.(e) The name or other identification issued and registered by the

Commission of one or more persons who manufactured such furproduct for introduction into commerce , introduced it into commercesold it in commerce, advertised or offered for sale in commerce ortransported or distributed it in commerce.

(f) The name of the country of origin of any imported furs usedin the fur product.

3. Setting forth on labels attached to fur products the name ornames of any animal or animals other than the name or names pro-vided for in paragraph A (2) (a) above.

4. Setting forth on labels attached to fur products non requiredinformat.ion mingled 'wit.h required information.

B. Falsely or deceptively advertising fur products through the useof any advertisement , representation , public announcement , or noticewhich is int.ended to aid , promote 01' assist , directly or indirectly inthe sale or offering for sale of fur products , and ,,,hich:

1. Fails to disclose the name or names of the animal or animalsproducing the fur or furs contained in the fur products as set forthin the Fur Products Name Guide and as prescribed by the Hules andRegulations.

2. Hcprcsents direct1y or by implication:(a) That the prices at which said fnr products are being offered

for sale are as low or less than wholesale cost, when such is not. a fact;(b) That the regular or usual price of any fur product is any

amount which is in excess of the price at ,,,hich the respondents have

BECKER & BURNS FURRIERS 1277

1272 Decision

usually and customarily sold such products in the recent regularcourse of their business;

(c) That comparative prices are other than current market valuesunless the time of such compared price is given , as provided in Hule44 (b) of the Rules and Hegulations.

3. )\.fakes pricing claims or representations of the type referred toin paragraph B (2) above unless there are maintained by respondentsfull and adequate records disclosing the facts upon which such claimsand representations are based as required by Rule 44 (c) of the Rulesand Regulations.

DECISIO!\"- OF THE CO)DIISSION AKD ORDEn TO FILE REPOHT OF CO)IPLIA:r"-

Pursuant to Section 3.21 of the Commission s R.ules of Practice , theinitial decision of the hearing examiner shall , on the 9th day of May,1956 , become the decision of the Commission; and , accordingly:

It is ordered That respondents David Becker and Abraham Burns(also known as Al Burns) individually and as copartners herein , shallwithin sixty (60) days after service upon them of this order, file withthe Commission a report in writing setting forth in detail the mannerand form in which they have complied with the order to cease anddesist.

451524--5!J-- !o::

1278 FEDERAL TRADE COMMISSIOK DECISIO

Complaint 52 F.

IN THE iATTER OF

mnON BAG & PAPER COHPORATIO ET AL.

COKSENT ORDER, ETC., IN REGARD TO THE ALLEGED VTOJ ATION OF TIlEFEDEIL\L THADE CO \nIlSSlON ACT AXD OF SECS. -\XD 8 OF THE

CLAYTON ACT

Docket 6391. Complaint , June 30. 1955-Deci8ion , Mny 10 , 1956

Consent order requiring two manufacturers of ('orrugated boxes and sheets--nemanufacturing container board in excess of its o\vn requirements and theother mainly a converter and dependent on a limited number of manufac-turers for its supply, with sales ill 1954 of $105 000 000 and 824 000 000respectively-to ceaiSe violating the merger and interlocking directoratessections of the Clayton Act through entering into contracts whieh providedthat the larger. Cnion , buy a substantial amount of common stock in thesmaller, Hankins, and that Hankins' controllng stockholders vote forelection to its board of direetors of a director of Union; which providedfurther that Vnion not acquire stock of any substantial competltor oflIankins having plants in the latter s territory, and that Hankins restrictits production of container board and, with certain exceptions , confine itspurchases thereof to Union.

Before ill1'. John Lewis hearing examiner.

Mr. Fletcher G. Oohn and l1h. Paul Ii Dixon for the Commission.Mr. Walter O. Taylm' , Jr. and Mr. Oarney W. Mimms of Kew

York City, for Union Bag & Paper Corp.Mr. Philip E. Hoffman of New York City, for Hankins Con.

tainer Co.CO?IPLAINT

The Federal Trade Commission , having reason to believe that thecorporations named as respondents in the caption hereof, and herein-after more particularly designated and described , have vio1ated , andare now violating, the provisions of Section 5 of the Federal TradeCommission Act (15 U. S. C. Sec. 45), and the provisions of Section 7of the Clayton Act (15 U. S. C. Sec. 18) as amended and approvedDecember 29 , 1950 , and Section 8 of the Clayton Act (1" U. S. C.Sec. 19) as amended, and it appearing to the C011mission that a

proceeding by it in rcspect thereof would be in the public interesthereby issues its complaint, stating its charges in that respect asfol1ows:

COUNT I

\R\GRc\l'I- 1. Respondent - Union Bag 8: Paper Corporation : hcrc-illllftCl' l'efcrrccl to as " respondent Union is a corporation organized

UNION BAG & PAPER CORP. ET AL. 1279

1278 Complaint

and existing under the laws of the State of Kew Jersey, having anoffce and a place of business located at 233 Broadway, New York 7Kew York.

Respondent Hankins Container Company, hereinafter referred toas " respondent Hankins " is a corporation organized and existing

under the laws of the State of Ohio , with an offce and a place ofbusiness located at 14801 Emery Avenue , Cleveland , Ohio.

PAH. 2. Respondent Union is one of the oldest companies in thepapcr packaging field. The company ,vas originally a patent holdingcompany for paper bag machinery. It reorganized in 1874 to becomea manufacturer of paper bags , and subsequently acquired pulp andpaper mills to supply paper to its bag manufacturing plants. In itsearly days, when paper bags were made from sulphite paper , respond-ent Union owned and operated sulphite miD::. During the earlytwenties the introduction of kraft paper as a superior material for

bags forced respondent Union to abandon its sulphite Inills andchange its paper machines over to the production of kraft paper , andpurchase foreign pulp for such lilachines. By the ea.rly thirties , dueto the rapid expansion of respondent Union s bag business beyond theproductive capa,city of its paper machines, it was necessary for

respondent Union to rely on outside sources for pulp and in additionpurchase paper in the open market. By the year 1935 , respondentUnion was the largest producer of retail store and small industrialpaper bags and wrapping paper in the industry. In the year 1935respondent Union began the erection of a pulp and paper mill in

SavanlULh , Georgia , which would ,use southeTn pine as its raw mate-riaL The first paper machine came into production in July 1935 atthis plant. (The term "unit" designates a paper machine and suffcientpulp manufacturing facilities to supply that machine , each unit beingcomparable to a complete mill except that all units in the plant areunder one roof. ) At the end of 1937 a third unit came into produc.tion , so designed that it could produce container board as well aspaper. "lVith this addition , respondent Union added container boardto its sales of paper produets in 1938. At that time this board wassold to independent manufacturers of boxes.

In .June 19"16 respondent Union made the decision to build its ownbox factory, adjacent to its mill at Savannah, Georgia. This box

factory commenced operation in September 19.J7. This factory wasdesigned to convert only about one-half of the total board productionof respondent Union. In order to assure a market for the productionof its container board, in the latter half of H)47 respondent Unionnegotiated the purchase of t"\vo box factories , at Trenton , X ew .Tersey,and Chicago , Illinois, and the purchase of a 48112 percent interest in



a box factory at .J amestown orth Carolina. Since the purchase of

the plants at Trenton, New .Jerscy, and Chicago , Illnois , respondentUnion has subsequently made additions t.o these factories , including anew corrugator at the Trenton plant.

In 1945 respondent Union sold all of the container board which itInanufactured. In 1947 respondent union , in addition to selling con-tainer board as such , began t.o onvert substantial amounts of sameinto corrugated boxes and sheets in its own faciJities and. offer suchcorrugated boxes and sheets for sale. In the calendar ye,,, 1952

respondent Union sold 111 801 tons of container board and in thesame year sold 522 tons of such container board in the form ofcorrugated boxes and sheets which said respondent had converted atits own plant from the container board which it had produced. In thecalendar year 1953 it sold 160 682 tons of container board which ithad produced , and 108 846 tous in the form of couverted corrugawdboxes and sheets. In the calendar year 1954 , it sold 160 304 tons of

container board which it had produced , and 106 929 tons in the formof converted corrugated boxes and sheets.For the calendar year 1954 respondent Union had net sales of

$105 502 849 , which included its sales of container board as such, as

well as its converted corrugated boxes and sheets. At the end of thealendar year 1954 , respondent owned and operated both a paper and

a pulp mill at Savannah , Georgia. It owned and operated bag fac-tories at I-Iudson Falls , New York, Savannah , Georgia, and St. LouislVIissouri. It owned and operated corrugated container plants atSava,nnah , Georgia , Trenton e\V .Jersey, nnd Chicago , Illinois.

Respondent Union is now , and has been for many years last pastengaged in the sale of container board and corrugated boxes andsheets t.hroughout the Unit.ed States. However, its sales of theseproducts have been largely confined to that area of the United States

east of the Itocky yIountains, and principally in that section of theUnited States lyi.ng adjacent to and B,ast of the iississippi. River.

PAR. 3. Respondent I-Iankins is one of the oldest COllyerters ofcontainer board into corrugated boxes and sheets in the 1;nited States.In the year 1954 , respondent Hankins owned and operated plants atUnion , 1\ ew Jersey, Elmira , Kew York , Chicago, Illinois , I\liamis-burg, Ohio , and Little Rock , Arbtnsas , at which it converted containerboard into corrugated boxes and sheets. In addition to these plantsrespondent Hankins operated as a subsidiary corporation , under thename of I\lunl'oe Falls Paper Company, an Ohio corporation , a pulpmill wherein it manufactured liner board. Jlm,"ever , the capacity ofthis subsidiary pulp mil1 has neve.r been suffcient to satisfy respondentHankins requirements of liner bmtrd. Prior to June 1954 , when the


1278 Complaint

contracts and agreements hereinafter described were entered intobetween respondent Hankins and respondent Union , it was necessaryfor respondent Hankins to attempt to buy and purchase from thelimited number of manufacturers of container board the additionalamounts of that product needed for its manufacturing processes.

Respondent Hankins' operations in manufacturing corrugatedboxes and sheets require approximately 100 000 tons of container

board annually. The greater proportion of this had to be purchasedby respondent Hankins from the manufacturers of such board.

espondent Hankins ' annual total dollar volume of sales approxi.mates $24 000 000.

Respondent Hankins is now , and has been for many years last pastengaged in the sale of corrugated boxes and sheets throughout theunited States. However, its sales of these products have been largelyconfined to the arca of the United States east of the Rocky Moun.tains, and principally in that section of the United States lyingadjacent to and east of the j)iississippi River.

PAR. 4. In addition to respondent Union , there are but a limitednumber of manufacturers of container board in the United States.

vVithin the past several years there has been a tendency on the partof the manufacturers of container board to offer but a limited amountof container board for sale to the independent converters in the

United States. This trend has partially been caused by the fact thatseveral of the producers or manufacturers of conta iller DoaTel haveacquired or built their mvn conversion facilities wherein they manu-facture corrugated boxes and sheets, and in this process utilize mostof the board that they individually manufacture. However, as here-;nbefore set forth, in the year 1954 respondent L"nion produced

-offered for sale , and sold more container board tha,n it used in manu.facturing corrugated boxes and sheets.

PAR. 5. As used herein , container board collectively refers to linerboard and corrugating medium. It applies to a type of paper usedprimarily for the manufacture of sheets which , in turn , are manu-factured into boxes.

A sheet is a paperboard from which a box is made. It is producedby putting the corrugating medium through a machine , where it isfluted and formed into a corrugated materia,I. The corrugated mate-rial is then inserted between two sheets of liner board and run througha combining machinc , where thcy arc combined into a sheet or boardby the application of an adhesive. As the sheet passes through the

combining Inachine, it is cut into the desired widths and lengthsrea.dy for COllyersion into boxes.


CompJaint 52 F. T. O.

PAR. 6. In June ancl July 1954 , respondents Union ancl Hankinsentered into fl. series of contracts and agreements which , among otherthings , provided:

1. R.espondent I-Iankins was to increase its comDlon sharcs of stockfrom 2'18 725 to 300 000 and respondent Union was to buy 25 000shares of the authorized but unissued stock , in return for an estimatedpurchase price of $1 872 250;

2. The contract or agreenlent for the stock purchase was supple-

mented by a stockholders ' agreement whereby ten of the stockholdersof respondent I-Iankins, who represented a majority of such stock-holders both in number and amount, agreed, in order to inducerespondent 'Gnion to enter into the stock purchase agreeme,nt with

Hflnkins that, so long as the container board contract, hcrcina.fterdescribed , remained in effect, they would vote their stock for theelection of a director of the Board of Directors of respondent Unionto the Board of Directors of respondent Hankins;

3. The 25 000 shares of stock in respondent Hankins , \vhich wereto be purchased under the stock purchase agreement by respondent-Cnion, plus the 176 540 shares in respondent l-lankins which wereuwned by the stockholders who entered into the supplemental stock-holders : agreement , constituted 662h percent of the authorized a.neloutstanding stock of respondent I-Iankins;

4. R.espondent Hankins agreed not to sell or transfer any of itsstock to a competitor of respondent lJnion and respondent Unionagreed likevi,ise not to sell or transfer any of respondent IIankins

stock to a competitor of either respondent during the life of thecontainer board contract;

5. The stock purchase. contract gave respondent :Hankins an optionto purchase any stock of rcspondent Hankins which respondent Unionll1ight wish to sell or tra.nsfer during the life of the container boardcontract and for five years thereafter;

6. Respondent Union a.greed that it would not , without prior con-sult.ation with respondent IIankins , purchase or acquire any stock ofa. box manufacturer "which IULS plants located in the a.rea also servedby plants of respondent Hankins * * * L if) the competition betweenthe plant of B ankins and a plant of the other manufacturer * , * beof a substantial nature

7. Contemporaneous with the stock purchase agreement and to beconsidered as supplementing such agreement, the respondents enteredint.o a container board contract, hereinbefore referred to , for the salby respondent Union of minimull1 and maximum quantities of linerboard and corrugating medium. This agreement or contract was torun for a period of fifteen years commencing July 1 , 1954 , renewable


1278 Complaint

on a year-to-year basis after June 30 , 1969 , unless and until cancelledby either paTty s giving not less than 5 years ' prior written notice tothe other of sllch eanccnatioll effective as of June 30 , 1969 , or as ofany June 30 thereafter; however , no such notice of cancellation couldbe effective prior to June 30 , lOGO. The maximum amount involvedwas 16,000 tOllS for each calendar quarter- annual period , beginningwith the second half of 195'J and extending through 1969; the mini.-mum amOlmts range from 1 000 tons for each calendar qua.rtcr-anllual period, beginning with the second half of 195,1 to 16 000 tons

beginning with 1959 and extending through 1969;

8. Under said container board contra.ct agreement , it is providedthat as part of the container board to be purchased by respondent

I-Iankins from respondent Union , respondent Hankins agreed to buyfrom respondent Union any corrugating medium it lllay purchaseduring t.he t.erm of t.he container board cont.ract in excess of (a) 5 400tons in any calendar quarter-annual period; and (b) any amounts ofcorrugating medium purchased by respondent Hankins fronl 1VestVirginia Pulp & Paper Company and Green Bay Pulp & PaperCompany under existing contracts which provide for maximumaggregate purchases of 900 tons monthly;

9. The stock purchase agreement further provided that if the pur-chase of container board and corrugating medium by respondentI-Iankins from respondent Union under the container board contractshould amount in the aggregat.e to 65 000 tons in a calendar year , thenthe two respondents would meet and consider the purchase of addi-tional stock of respondent II Lnkins to a maximum amount that wouldbring respondent (-cnion s stock interest in rcspondent Hankins to 25peTcent in interest , on tenns and conditions to be then mutuallyagreed upon;

10. Respondent 1-1anki11s was allowcd , under the terms of the con-tainer board contract , to reducc its purchases for any calendRT qual'ter-annual period belo\v the maximum qlUlntity spccified in such agree-ment for such period, for an am01U1t not exceeding 15 percent of theaggregate quantity so provided to be purchased by respondent

Hankins for that period;11. LTnder the terms of the container board agreement, if respondent

I-1ankins should require more container board than the quantity whichit is obligated at any time to purchase from respondent Union , thenexcluding (a) any commitments of respondent :Hankins under itsthen existing contracts with 1Vest Virginia Pulp & Paper Company,International Paper Company, and Green Bay Pulp & Paper Com-pany; (b) liner board (not including chip) to a maximum amountof 2 500 tons in any calcndar quarter-annual pcriod from respondent


Complaint 52 F.

Hankins' Munroe Falls plant; and (c) corrugating medimn to amaximum of 5 400 tons in any calendar quarter.annual period, re-

spondent Hankins agreed that it would advise respondent Union ofsuch additional tonnage and would give said respondent the oppor-tunity for a period of 30 days to negotiate with it for the sale of suchadditional tonnage;

12. Respondent Hankins agreed that it would not consume morethan 2 500 tons of the liner board (not including chip) produced byit at its Munroe Falls plant in any calendar quarter-annual period;

13. The prices which respondent Hankins was to pay for the con-tainer board purchased from Union were not to "be higher on sellersfor principal grades. * * * than the market price tbcn in effect of thelargest suppliers in the domestic national market."

PAR. 7. Respondents have , since 1954 , performed , and are stil per-forming, their respective obligations and undertakings set forth inParagraph Six; furthermore , any and all parties who assumed anyobligations or undertakings lmcler said contracts or agreements havelikewise performed and are still performing same.

There has been elected to the Board of Dircctors of respondent

Hankins, Alexander Calder , Jr. , Executive Vice President and Gcn-eral Manager and a member of the Board of Directors of respondentUnion. Also , R. Carl Chandler , a Vice-President of respondent unionhas been elected as a member of the Board of Directors of therespondent Hankins.

PAR. 8. In the course and conduct of its business , respondent Unionhas engaged in commerce as "commerce" is defined in the FederalTrade Corrunission Act, having shipped its container board and cor-rugated boxes and sheets, or having caused them to be transportedfrom their p1aces of manufacture to purchasers thereof located in thesame and in other States of the United States and in other areassubject to the jurisdiction of the United States.

Hespondent Hankins , in the course and conduct of its business , hasengaged in commerce as commerce is defined in the Federal TradeCommission Act, having shipped its corrugated boxes and sheets , orhaving caused them to be transported , from their places of manufac-ture to purchasers thereof loeated in the same. and in other States of

the United States and in other areas subject to the jurisdiction of theunited States.

Each of the respondents maintains a constant course and currentof trade in their respective products in commerce bet\veen and amongthe various States of the United States.

PAR. 9. Except to the extent that competition has been hindered

frustrated , and lessened as set forth in this complaint, respondent

UNION, BAG & PAPER.. CORP. E'l AL. 1285

1278 Complaint

Union has been , and, is , in petition with other corporations , firmspartnerships , and individuals engaged.in the sale and distribution ofcontainer board , in commerce, as the term is defied in the FederalTrade Commission Act.

Except to the extent that competition has been hindered , frustratedand lessened, as set forth in this.-complaint, respondents Union andHankins have been , and are, in competition with each other and withother corporations , firms, partnerships, and individuals engaged inthe sale and distribution of corrugated boxes and sheets , in commerceas the term is defined in the Federal Trade Commission Act.

PAR. 10. The aforedescribed contracts and agreements as set forthin Paragraph 6, and the obligations and undertakings imposedthereby, as well as the fulfillment of such obligations and under-takings, and the acts and, practices likewise performed pursuantthereto , are a part of , and were entered into and fulfilled, maintainedand cffectuated in furtherance of , as part of, and pursuant to , anunderstanding, agreement, combination , conspiracy, and plannedcommon course of action entered into in the year 1954 by and betweenrespondent Union and respondent Hankins to adopt fix , and adhcreto the practice and policy of restricting and restraining competitionin the offering for sale, sale, and distribution of container board

corrugated boxes, and corrugated sheets , in commerce between andamong the several States of the United States.

PAR. 11. The capacity, tendency, and effect of the aforesaid under-standing, agreement, combination , conspiracy, and planned commoncourse of action and the policies , acts, practices, and the fulfillmentof the obligations assumed and undertaken by the contracts or agree-ments between the respondents in the year 1954 have been, and arenow , among others:1. To monopolize, or may tend to monopolize, in respondent

Union the production, sales , and distribution in commerce of con-taincr board and corrugated boxes and sheets.

2. To limit , restrict, and prevent actual and potential competitionbetween respondent Union and other producers andmanuracturers ofcontainer board in offering for sale, selling, and distributing incommerce container board.

3. To limit, restrict, and prevent the production by respondentHankins of liner board.

4. To limit, restrict, and prevent actual and potential competitionpricewise by and between respondent Union and respondent Hankinsin the offering for sale , sale, and distribution in commerce of corru-gated boxes and sheets.

1286 FEDERAl, TRADE COMMISSION DECISIONS

Complaint 52 F.

5. To restrict and restrain all othcr forms of actual and potentialcompctition by and between respondent Union and respondent Han-kins in the offering for sale, sale , and distribution by them of thecorrugated boxes and sheets manufactured or produced in theirrespective plants.

6. To eliminate respondent Hankins as a substantial competitivefactor in the manufa,cture, sale , and distribution in commerce ofcorrugated boxes and boards.

7. To further concentrate the manufacture, sale, and distributionin commerce of container board.

8. To eliminate the manufacture, sale , and distribution in commerceof corrugated boxes rmc1 sheets by independent manufacturers whoarc not integrated ,dth or a part of the manufacture of corrugatedpapel'

PAR. 12. The policies , acts , and practices of the responclents , all andsingularly, as hereinbefore set forth , are to the prejudice of the pnb1ichave a clangerous tendency to unduly hinder competition , to enhancethe prices which the consuming pubEc must pay for container boardand the products manufactured therefrom , including corrugated boxesana sheets , and to create a monopoly in respondent l,Tnion in the man-ufacture , sale , and distribution in commerce of container board a,corrugated boxes and sheets , a.nd constitute unfair acts and practices&nd unfair methods of competition in commerce ..""dthin the intentand meaning of Section 5 of the Federal Trade Commission Act.

COUNT II

PARAGRAPH 1. The allegat.ions of this Paragraph are the same asthe allegations made in Par agraphs 1 , 2 , 3 , 4 , 5 , 6 and 7 of Count 1.

PAR. 2. R.espondent Union has capital, surplus, and undividedprofits aggregating more than $1 000 000 , and is not a bank , bankingassociation , trust company, or common carrier subject to the Act toregulate commerce , approved February 4 , 1887.

Hesponclent IIankins has capital, surplus , and undivided profitsaggregating more than $1 000 000 , and is not a bank, banking asso-

ciation , trust company, or common carrier subject to the Act to regu-late commerce , approved February 4 , 1887.

PAR. 3. Respondent 'Union is engaged in the manufacture, ship-ment , and sale in interstate commerce of corrugated boxes and sheets.

R.espondent Hankins is engaged in the manufacture , shipment, andsale in interstate commerce of corrugated boxes and sheets.

Hesponclents Union and Hankins, in the regular course of theirrespective businesses, in the offering for sale, sale , and distributionof corrugated boxes and sheets , cause the same to be shjpped and

UNIO BAG & PAPER GORP. ET AL. 1287

1278 Complaint

transported from the various points of production in certain respec-tive States through and into other States of the united States. Theyare in competition between themselves in the offering for sale, saleand distribution of such products in commerce, as "commerce" isdefmed in the Clayton Act.

For many years , respondents Union and Hankins , by virtue of theirbusiness and location of operation , have been , and now are , competi-tors, so that the elimination or competition by agreement betweenthem would constitute a violation of a provision or the antitrust laws.

PAR. 4. Since the latter part of 1D54 , one Alexander Ca1cer, Jr.ha,s been a director, at the same time, or respondents Union andIIankins , and is now a director of respondents -Cniou and flankins.

Since the latter part or 195- , respondent union has permittedAlexa,ncler Calder , Jr. , to be elected and to serve as onc or its directorsat the same time that Alexander Calder , Jr. , was a director or 1'e.

spondcllt Hankins; and at the present time respondent Union con-t.inues to permit AlexRmler Calder, Jr. , to serve as one or its directorsat the same time that Alexander Calder

, .

Jr. , is a director of respondentHankins.

Since the latter part of 1D54 , respondent Hankins has permittedAlexander Calder , Jr. , to be elected and to serve as one of its directorsat the same time that Alexander Calder , Jr. , was a director of re-spondent Lnion; and at the present time , respondent I-Iankins con-tinues to permit Alexander Calder , Jr. , to serve as one of its directorsat the same time that Alexander CaldeT , Jr. , is a director of respondentUnion.

PAIL 5. The acts and practices, as hereinabove alleged, arc con-tinuing and are in violation of Section 8 of the Clayton Act.

COUXT III

.\RAGRAPH 1. The allegations of this Paragraph aTe thc same ast.he a.llegations in Paragntphs 1 , 4 , 5 , 6 and 7 of Count I.

PAR. 2. Respondents Union and Hankins , in the regular course oft.heir respective businesses , in the offering for sale , sale , and distribu-tion of corrugated boxes and sheets , cause the same to be shipped andtransported from the various points of production in certain respec-tiyc States through and into other States of the TJnited States , andboth respondents are engaged in commerce , as ': commerce" is definedin the Clayton Act.

In the course and conduct of its business , respondent union hasbee. , and is now , engaged in commerce , as "commerce" is defined inthe Clayton Act, hl offering for sale, selling, ana distributing con-tainer boarel and causing the same to be shipped and transported from

1288 FEDERAL TRADE COlcDlISSION DECISIO,,S

Complaint 52F.its point of production in the State of Georgia through and into otherStates of the United States.

Prior to June 1954 , respondents Union and Hankins were in directcompetition in the offering for sale , sale , and distribu60n of corru-gated boxes and sheets in that area of the United States east of theRocky ronntains and principally in that section lying adjacent to.and east of the )fississippi R,iver.

Prior to June 1954 , respondent 'Gnion was in substantial competition ""lith other manufacturers of container board in the offering forsale and sale of container board to respondent Hankins.

PAR. 3. In June 1954 , and subsequent thereto in the same yearrespondents 'Cnion and IIankins entered into the agreements out-

lined in Paragraph Six of Count I of this complaint and made a partof Count III in Paragraph One hereof. The effect of the acquisitionof Hankins ' stock by Gnion , together with the other collateral agree-ments and understa,ndings may be substantially to lessen competitionor tend to create a monopoly, in violation of Section 7 of the ClaytonAct, in the following ways , among others:

1. Actual and potential competition between respondents Unionand IIankins in the offering for sale and sale or distribution of cor-rugated boxes and sheets throughout. that area of the united States

adjacent to and east of the l\iississippi River has been eliminated.2. Actual and potential competition generally in the offcring for

sale, sale , and distribution of corrugated boxes and sheets may besubstantialJy 1essened.

3. H,esponc1cnt union s competitive advantage over other COIlYCrters

including those engaged in the manufact.ure, sale , and distributionof corrugated boxes and sheets , may he enhanced to the detriment ofactual and potential competition.

4. Respondent I-Iankins has been permanently eliminated as a sub-stantial competitive factor in the oiIering for sale, sale , and distri-bution of corrngated boxes and sheets.

5. Actual and potential competition between respondent Union andother manufacturers of container board in the solicitation and sale ofcontainer board to respondent Hankins has been eliminated.

6. Actual and potential competition generally in the manufactureand distribution of container board may be substantinJly lessened.

7. Respondent Vnion s competitive advant.age over other manufac-turers of container board , including those manufacturers e,ngagecl inthe offering for sale and sa1e of container board in that part of the

United States adjacent to and cast of the yrississippi River may beenhaneed to the detriment of actual and potential competition.

UNIO BAG & PAPER CORP. ET AL. 1289

1278 Decision

8. R,pspondent Hankins has been substantially eliminated as a buyeror purchaser of container board in the container board industry.

PAn. 4. The foregoing acquisition , acts , and practices of respondentUnion , as hereinbefore alleged and set forth , constitute a violationof Section 7 of the Clayton Act (15 D. C. Sec. 18), as amended andapproved December 29, 1950.

IXITL\L DECISIQX BY JOlIN LEWIS , HEAIUNG EXA:\IINER

The Federal Trade Commission issued its complaint against theabove. namec1 respondents on June 30 , 1955 , charging them ,vith use ofunf,Lir acts a.ncl practices and unfair methods of competition in com-merce , in violation of Section 5 of the Federal Trade Commission Actand with engagement in acts and practices in violation of Sections 7and 8 of the CJayton Act. After being duly served with said com-

plaint , the respondents appeared by counsel and subsequently enteredinto an agreenlent containing consent order to cease and desist datediarch 8, 1956. Said agreement, which has been signed by counsel

supporting the complaint, counsel for respondents, and all respond-ent.s, and approved by the Director and Assistant Director of theCommission s Bureau of Litigation , has been submitted to the under-signed , heretofore duly designated t.o act a.s hearing examiner hereinfor his consideration in accordance "ith Section 3.25 of the COIDmis-

ion s Rules of Practice nnd Procedure.Respondents , pursuant to the aforesaid agl'eelr.:ent , hnn admitted

a11 the jl1rj c1ict10nal facts alleged in the complaint and have ftgreecl

that the reeord may be taken as if findings of jurisdictional facts badbeen made in ac.cordance with slich allegations. Said agreementfurther provides that respondents waive any further procedural steps

be.Iore the hea.ring examiner and the Commission , the making offu)c1ings of fact or conclusions of law j and all of the rights they mayha.ve to challenge or contest the validity of the order to cease and

desist entered in a,ccorc1ancewith said agr ement. It has been agreed

that the order to cease and desist provided for in said agreement maybe entered without furt.her notice , that when w entered it sha.ll havethe same force and eii'ect as if entered after a, ful1 hearing, and thatthe complaint herein may be used in construing the terms of saidoTC1e.1. Said agreement purports to dispose of all of this proceedingas to all parties and has been entered into by respondents for settle-ment purpose,s only and wit.hout admitting that they have violated thelaw as alleged in the complaint.

This proce,eding having now come on for fmal consideration on thecomplaint and the aforesaid agreement containing consent order , andit appearing that the order provided for in said agreement covers al)


Order 52 F. T. C.

the dlegations of the complaint and provides for an appropriate

disposition of the proceeding as to all parties, the same is herebyaccepted and is ordered filed upon becoming part of the Commissiondecision pursuant to Section 3.21 and 3.25 of the Hules of Practiceand Procedure\ and the hearing examiner, accordingly, makes thefollowing jurisdictional findings and order:

1. Respondent Union is a corporation existing and doing businessunder and by virtue of the laws of the State of New Jersey, with itsoffce and principal place of business located at 233 Broadway, in theCity of Kew York , State of ew York. Respondent Hankins is acorporation existing and doing business under and by virtue of the

laws of the State of Ohio with its offce and principal place of businesslocated at 14801 Emergy A venue , in the City of Cleveland , State ofOhio.

2. The Federal Trade Commission has jurisdiction of the subjectmatter of this proceeding and of the respondents hereinabove named.The complaint states a cause or action against said respondents underthe Federal Trade Commission Act, and the Clayton Act , and thisproceeding is in the interest of the public.

OIilER

It is oTdeTed That respondent Union Bag & Paper Corporation(hereinafter referred to as respondent Union

),

and respondentHankins Container Company (hereinafter referred to as rcspondentHankins ), either directly or through their respective offcers , direc-

tors , agents , representatives and employees, together with the succes-sors or assigns or same , directly or through any corporate or otherdevice , in connection with the purchase , offcring for purchase, sale

offering for sale , or distribution in commerce , as "commerce" is defuledin the Federal Trade Commission Act , and Clayton Act , as amendedor container board , liner board , corrugating medium, corrugated

boxes , or corrugated sheets (hereinafter referred to collectively assaid products ), do forthwith cease and desist from entering into

continuing, cooperating in, or carrying out, any planned commoncourse of action , understanding, or agreement between said respond-ents or between either of said respondents and others not partieshereto , to do or perform any of the following acts:

1. Permitting, or attempting to permit, directly or indirectly, byany means or method , the Rcquisition by respondent Union , eitherdirectly or through any of its offcers , directors , employees , agentsrepresentatives , assigns or successors of any of the stock, assets 01'

control of , or in , respondent :Hankins other than 9% stock interest

UNIO BAG & PAPER CORP. ET AL. 1291

1278 Order

in respondent Hankins, which may be acquired and held accordingto the proviso hereinafter set forth;2. Causing, or attempting to cause, any stock , regRrdless of its

type or designation, in respondent Hankins, to be voted or used

directly or indirectly, by any means or method , for the pnrpose orwith the effect of having or causing any officer , director , employeeagent or representative of respondent Union , or of any subsidiary ofrespondent 1Jnion , to be elected , appointed , selected or designated asan offcer 01' director of respondent Hankins , or of any subsidiary ofrespondent Hankins;

3. Permitting, or attempting to permit , directly or indirectly, byany means or method , the respondent Union , directly or through anyoffcer, director, employee , agent or representative of said respondentor of any subsidiary of said respondent, to control , conduct, or attemptto control or conduct, by any means or nlcthoel , directly or indirectly,the management or operation of respondent Hankins or of any sub-sidiary of respondent I-Iankins;

4. Hestricting, preventing, limiting or attempting to restrict , pre-vent or limit the right , power, or privilege of responclent Hankins toseJl or transfer any of its stock;

5. Hestriding, limiting, or attempting to restrict or limit the rightpower or privilege of respondent Union to purchase or acquire anystock of any box manufacturer;

6. Restricting, preventing, limiting, or attempting to restrict, pre-vent or limit , the quantity or amount of said products , described inthe preamble hereto , which respondent Hankins can or may purchasefrom seners thereof other than respondent 'Guion;

7. Fixing, or attempting to fix , the maximum amount or quantjtywhich respondent Hankins shall , or may consume , use , produce, sell

or distribute of any of said products produced or manufactured byrespondent flankins;

8. Restricting, limiting, preventing, or atte,mpting to restrict , limitor prevent, actual or potential competition between respondent Unionand other producers or manufacturers of said products , in offering Torsale, sening or distributing any of same to respondent Ilankins;

It is furthe?' ordered That respondent Union cease and desist frompermitting or allowing anyone to be elected or to serve as a directorof respondent union or of any of its subsidiaries who is a directorof respondent Hankins.

It is further ordered That respondent Hankins cease and clesistfrom permitting or nJlmving anyone to be elected, or to serve as a

clirector of respondent Hankins or any of its subsidiaries who is adirector of respondent IT nion.

1292 FEDERAL TRADE CO!o1MISSION DECISIONS

Order 52 F.

It is fUTther oTdered That respondent Union , within 90 days fromthe date of service upon it of tl copy of this order, shall divest itselfabsolutely, in good faith , retaining no interest ,,,hatsoever therein , ofall stock which it now holds or owns , directly or indirectly, in , or ofre-spondent Hankins.

It ,is undeT8to()d ho-weveT That nothing in this order shan be con-strued or interpreted as preventing respondent Union from acquiring,O1vning, or holding stock in respondent I-lankins when the totalamount of such stock , by whatever means acquired , owned or helddoes not exceed 0% of the total outsta,ncling capital stock in re-ponc1ent 1-Iankins (this is the same percentage of stock interest inrespondent I-Iankins which was represented by the 12 500 shares ofrespondent IIankins acquired by respondent 1Jnion on June 24 , 1954plus the 6 250 shares acquired on ,) nne. 24 , 1955 , plus the 6 250 shareswhich \vere to be acquired on June 22 , 1856 , alIundeI' the provisionsof the agreements or contracts entered into by and bet1yeen respondentHankins and n:spondent r:nion on June 7 , 1954), JJ1'ovided said stock

is held solely for inve.stment. and provided further that respondent

Vnion , if it votes such stock , shaJJ not vote it for the purpose , or "withthe effect , of evading or viol,lt1ng any of the provisions in this orderor of substantially lessening- c01npetition or tending to create amonopoly in any line of commerce in which said respondents areengagecl and In' ovided stil1 further that should the Commission bringany action based upon n alleged violation of these provisos, the

burden 01 refuting same shrtll be assumed by respondent 'Cnion.It is fVJ'tho' 'Understood That nothing; in 1nlunctive provision 4 of

this order shall be construed as preventing respondent Hankins , act-ing in good faith and \vithont intent to yiolate any of the provisions

of this orc1er from contracting to sell , selling or transferring stock topurchasers not ownec1 controlled or acting under t.he direction ofrespondent Lnion or any of its subsidiaries.

It is further unde?'toocl That nothing in injunctive provisions 67 and S of this order shall be construed as preventing respondent

Union frOlll selling t.o respondent Hankins or respondent Hankinsfrom buying, 01' committing itself to buy, from re polldent -Cnion or

from ot.hers not parties hereto , any of the products described in thepreamble hereof , pnrsnant to contraet or c.ontracts:

PJ' o1)ide.d ho'We1)e.T That the Commission hereby is not approvingor disapproving the legality of any sueh contract or contrac.s betweenthe sa.id re.spondents for the purchase or sale of such products , withregard to grounds of attack not arising from these specific provisionsof the order.

UNIOX BAG & PAPER COHP. ET AL. 1293

1278 Decision

It is further undentood That nothing in this order shall be con-strued or interpreted as preventing either respondent Hankins orrespondent Union from petitioning t.he Commission to reopen theseprocedings and modify this order to cease and desist because of achange in conditions of fact, law or the public interest, so as to per-mit, respondent Union to purchase , or respondent Hankins to sellto respondent Union , additional stock in respondent Hankins; andif such petition alleges, as a change in conditions of fact , that therehas been a full and complete compliance with all the injunctive pro-visions of this order , and that the acquisition of such additionalstock does not substantially lessen competition or tend to create amonopoly in any line of commerce in which said respondents areengaged , the Commission shall reopen the proceedings and permit theintroduction of evidence; and if at such reopening, the petitioning

respondent can sustain these alJegations , the Commission shall grantsuch petition to modify this order.

DEcrsTOY OF THE CO::Ul\IISSION AXD ORDER '1'0 FILB REPORT OF CO).fPLIANCB

Pursuant to Section 3.21 of the Commission 8 Rules of Practice

the initial decision of the hearing examiner shaD , on the 10th day of:May, 1856 , become the decision of the Commission; and , accordingly:

It is (J7'deTed That the respondents herein shall within sixty (60)days after service upon them of this order , file with the Commissiona report in ,vriting setting forth in detail the manner and form inwhich they have complied with the order to cease and desist.

45J524- iHJ- 63



IN THE MATT

WESTERN STAR yIILL CO. ET AL.

SEXT ORDER , ETC. , I REGARD TO THE ALLGED VIOLATION OF THEFEDERA TRADE COMMISSIO:: ACT

Docket 6500. Complaint, Feb. 8, 1956-Decision , May 10, 1956

Consent order requiring a flour mil at Salina , Kans. , and a wholesale grocerydealer of Tupelo, Miss., to cease furnishing to retail dealers and other

purchasers of their flour, devices and merchandising plans involving theoperation of a lottery scheme, in that purchasers of a bag of flour who

selected either of two lucky numbers on a push card received an additional25-pound bag of flour.

Before Mr. Earl J. Kolb hearing examiner.

Mr. J. W. BTOol'field, Jr. for the Commission.Mr. Jason K. Yordy, of Salina, Kans. , for "I'Vcstern Star yEll Co.

John J. Vanier and Robert H. Adams.Mitchell

&;

McNutt of Tupelo

, ,

Miss. , for L. P. McCarty.

COl\IPLAIXT

Pursuant to the provisions of the Federal Trade Commission Actand by virtue of the authority vested in it by said Act, the FederalTrade Commission , having reason to believe that 'Western Star MilCo. , a corporation , and John J. Vanier and Robert H. Adams , indi-vidually and as oiicers of said corporation , and L. P. McCarty, anindividual , hereinafter referred to as respondents , have violated theprovisions of said Act, and it appearing to the Commission that aproceeding by it in respect thereof would be in the public interesthereby issues its complaint and states its charges in that respect asfollows:

PARAGRAPH 1. Respondent 'Western Star yEll Co. is a corporationorganized and doing business under and by virtue of the laws of theState of Kansas, with its offce and principal place of business locatedat 215 East Iron Street , in the City of Salina, Kansas; respondentJ olm J. Vanier is president of said corporate respondent , and respond-ent Robert 1-1. Adams is sa.les manager of said corporate respondentand these two respondents direct the sales and adveTtising practicesof the corporate respondent.

Respondent 'Western Star Mil Co. is engaged in the milling, saleand distribution of flour to dealers and jobbers, and causes said flourwhen sold , to be shipped from its place of business in the State of

WESTERN STAR MILL CO. ET AL. 1295

1294 Complaint

Kansas to purchasers at their points of location in the various otherStates of the United States.

Respondent L. P. McOarty is an individual , and co-partner in thewholesale grocery firm of L. P. McCarty & Son , with his offce andprincipal place of business located in the City of Tupelo , Mississippi.Respondent McCarty purchases flour from respondent Western StarMill 00. and sells and distributes the same in the State of Mississippiand also ships and causes to be shipped said flour, when sold , from hisplace of business in the State of Mississippi to purchasers thereof

located in other States of the United States. All of said respondent"act together and cooperate in the performance of the acts and practiceshereinafter alleged.

Thcre is now and has been for more than two years last past Rsubstantial course of trade in such flour by said respondents in com-merce between and among the various States of the United States.

PAR. 2. In the course and conduct of their said business and in con-nection with and in furtherance of the sale of the said flour, respond-ents have furnished to retail dealers , and other purchasers of theirflour, devices and plans of merchandising involving the operation ofgames of chance , lottery schemes and gift enterprises.

Respondents ' plans of merchandising include the distribution toretailers of pull cards or punch cards having the following legend:

WIN 25 LBSOF FLOUR

Pick your Lucky NumberTWO BIG WINNERS

(Gold Seal)Winner No.

25 Lbs Flour

(Gold Seal)Winner No.

25 Lbs Flour

Here s All You Do, put your name on two blank spaces below with eachpurchase of a 50 lb sack of flour. Put your name on blank space with the

purchase of 25 Ibs. Lucky numbers are printed under the Gold Seals. The sealswil be removed when all blanks are filled.

Under the legend arc printed the numbers from "1" to "40" anda lined blank space for writing in the name of the purchaser of a sackof flour. Respondents also furnish each dealer with two 25 lb. bagsof flour to be awarded to the selectors of the winning nmnbers. Retaildealers who purchase and resell respondents ' flours display the " luckynumber" cards in their places of business and award the wllmers thflbags of flour in accordance with the legend.

Each purchaser of a bag of respondents ' flour makes a choice of anrnbcr and writes his or her name in the blank line opposite thechosen number. Under each of the two gold seals is concealed a nmn-ber. lI'hen the card is completely filled in with the names of

1296 FEDERAL TRADE CO \1ISSIO)/ DECISIO)/S


purchasers, the gold seals are broken , revealing a nmnber from 1 to, and the persons whose names are registered opposite the numbers

corresponding with the numbers under the gold seals are awarded a25 lb. bag of respondents ' flour without additional charge. Thenumbers under the gold seals arc effectively concealed from purchasersand prospective purchasers until all of the nunlbers on the cards havebeen chosen. The two bags of respondents ' flour are thus awardedto the purchasers of respondents other flour wholly by lot or chance.

PAR. 3. Retail dealers ,yho purchase respondents: flour , directly orindirectly, expose and sell the same to the purchasing public in

cordance with the aforesaid sales plan. Respondents thus supply toand place in the hands of others the means or conducting a lottery,game or chance, or gift enterprise in the sale of their products inaccordance with the sales plan hereinbefore set forth. Use by respond-ents of said plan or method in the sale of their flour, and the sale ofsaid flour by and through the use thereof, and by the aid of saidsales plan or method is contrary to the public interest and contmryto an established public policy of the Government of the United States.

PAR. 4. The sale of said flour to the purchasing pubJic in the maImeraboveallegecl involves a game or chance or the ard 01 a chance

to procure a sack or flour without additional cost. )lany persons arcattracted by respondents ' sales plan or method and the element ofchance involved therein and are thereby induced to buy and sell 1'8-

f,pondents ' flour.PAR. 5. The aforesaid acts and practices of respondents as herein

al1eged are all to the injury and prejudice of the public and constituteunfair acts and practices in commerce within the intent and meaningof the Federal Trade Commission Act.

INITIAL DECISION BY EARL J. KOLB , HEARING EXA):INER

The complaint in t.his proceeding issued February 3 , 1956 , chargedthe respondents Western Star Mill Co. , a corporation , and John .Vanier and Hobert II. Adams , individually and as offcers of WesternStar :Mill Co. , located at 215 East Iron Street , Salina , Kansas , andL. P. McCarty, an individual located at Tupe1o , :\lississippi , with theuse of unfair and deceptive acts and practices in int.erstate commercein violation of the provisions of the Federal Trade Commission Act.

After the issuance of said complaint and before the filing of answersthereto , the respondents ",'estern Star Mill Co. , a corporation , andJolm J. Vanier and Robert H. Adams , individually and as offcers ofWestern Star Mill Co. , and respondent L. P. McCarty, an individualentered into separate agreements for consent order with counsel in

support of the complaint disposing of all the issues in this proceeding,

WESTERN STAll MILL CO. ET AL. 1297

1294 Order

which agreements were duly approved by the Director and AssistantDirector of the Bureau of Litigation. It was expressly provided in

these agreements that the signing thereof is for settlement purposes

only and does not constitute an allmission by respondents that theyhave violated the law as alleged in the complaint.

By the terms of these agreements , the respondents admitted all thejurisdictional facts a1Jcged in the complaint and agreed that the rec-ord may be taken as if the Commission had made fidings of juris-dictional facts in accordance with such allegations.

By said agreements , the parties expressly waived any further pro-ced uraJ stcp before the hearing examiner and the Commission; themaking of findings of fact or conclusions of law and all the rightsthey ma,y have to challenge or contest the validity of the order to

cease and desist entered in accordance with the agreements.Respondents further agreed that the order to cease and desist

issued in accordance with said agreements , shall have the same forceand effect as if made after a full hearing.It was further provided that said agreements , together with the

complaint , shall constitute the entire record herein , that the complaintherein may be used in construing the terms of the order issued pur-suant to said agreements and that said order may be altered , modifiedor set aside in the manner prescribed by the statute for orders ofthe Commission.

The hearing examiner has considered such agreements and theidentical orders therein contained , and , it appearing that said agree-ments and orders provide for an appropriate disposition of this pro-ceeding, the same are hereby accepted and are ordered filed uponbecoming part of the Commission s decision in accordance with Sec-tions 3.21 and 3.25 of the Rules of Practice , and , in consonance withthe terms of sRiel agreements the hearing examiner fids that theFederal Trade Commission has jurisdiction of the subject matter ofthis proceeding and of the respondents named herein , and that thisproceeding is in the interest of the public, and issues the followingorder:

ORDER

1 t i.s ordered That respondents "I'Vestern Star Mill Co. , a corpora-tion , and John .J. IT anier and Robert H. Adams , individually and asoffcers of "IV estern Star :\Jill Co. , and respondent L. P. McCarty, anindividual , their representatives, agents and employees , directly orthrough any corporate or other device in connection with the offeringfor sale, sale and distribution of flour or any other merchandise incommerce , as " commerce" is defined in the Federal Trade CommissionAct, do forthwith cease and desist from:

1298 FEDERAL TRADE COJVIMSSION DECISIONS

Decision 52 F.

1. Using any sales promotion plan or scheme whereby purchasersof their said products arc entitled to participate in the award offlour or other prizes , the winners of which are determined by the useof push cards , pull cards , or any other lottery devices.

2. Selling or otherwise disposing of any merchandise through theuse of , or by means of , a game of chance, gift enterprise or lotteryscheme.

DECISION OF THE CO:lIJ\ISSION AND ORDER TO FILE REPORT OF rPLIANCE

Pursuant to Section 3.21 of the Commission s Rules of Practice

the initial decision of the hearing examiner shall , on the 10th day ofMay, 1956 , become the decision of the Commission; and , accordingly:

It is o1'dered That the respondents herein shall within sixty (60)days after service upon them of this order , file with the Commissiona report in writing setting forth in detail the n1anner and form inwhich they have complied with the order to cease and desist.

VANCOUVER FUR FACTORY 1299

Complaint

IN THE MATTR OF

WILLIAM OVERTON TRADING AS VANCOUVERFUR FACTORY

CONSENT ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION OF TilFEDERAL TRDE COl\IlIISSIOK AND THE FLR rRODuc'rs LABELING ACTS

Docket 6509. Complaint Feb. 17, 1956 Deci8ion May 10 1956

Conscnt order requiring a fur dealer to cease false advertising, misbranding,and false invoicing of his fur products in violation of the Fur ProductsLabeling Act, through failng to disclose the names of animals producingthe fur or that certain products contained artificially colored fur, settingforth names of animals other than the rcal source of certain furs , failngto maintain adequate records supporting purporten claims of savings, fail.ing to attach labels, and failng to set forth information as required onattached labcls and invoices.

Before 11h. William L. Pack hearing examiner.

Mr. John J. 11 eN ally for the Commission.

COMPLAIKT

Pursuant to the provisions of the Federal Trade Commission Actand the Fur Products Labeling Act, and by virtue of the authorityvested in it by said Acts , the F deral Trade Commission , havingreason to believe that 'William Overton, an individual trading asVancouver Fur Factory, hereinafter referred to as respondent, hasviolated the provisions of said Acts and the Rules and Regulationspromulgated under the Fur Products Labeling Act, and it appearingto the Commission that a proceeding by it in respect thereof wouldbe in the public interest, hereby issues its complaint, stating itscharges in that respect as follows:

PARAGItAPJI 1. Respondent "I'Villiam Overton is an individual trad-ing as Vancouver Fur Factory, with his offce and principal place ofbusiness located at 114 Sixth Avenue , Vancouver

, '

Washington.PAR. 2. Subsequent to the effective date of the Fur Products Label-

ing Act on August 9 , 1952 , respondent has introduced , soJd, advertisedoffered for sale , transported and distributed fur products in commerceand has sold , advertised, offered for sale , transported and distributedfur products which have been made in whole or in part of fur whichhad been shipped and received in commerce , as "commerce " "fur" and"fur product" arc defined in the Fur Products Labeling Act. Certainof said fur products have been misbranded, falsely advertised and

1300 FEDERAL 'l'RADE COMMISSION DECISIONS


falsely invoiced in violation of the Fur Products Labeling Act and ofthe Rules and Regulations promulgated thereunder.

PAR. 3. Certain of said fur products were falsely and deceptively

advertised , in vioJation of the Fur Products Labeling Act , in thatrespondent caused the dissemina60n in commerCB\ as "commerce" isdefined in the Fur Products Labeling Act, of certain advertisementsconcerning said products by means of newsp 1pers and by various othermeans , which advertisements were not in accordance with the provi-sions of Section 5 (a) of the Fur Products Labeling Act and of theHules and Regulations promulgated under said Act , and which ad-vertisements were intended to and did aid , promote and assist, directlyand indirectly, in the sale and offering for sale of said fur products.

PAR. 4. Among and including the advertisements as aforesaid , butnot limiteel thereto

, "-

ere advertisements which appeared in variousissues of "The Columbian," a publication having wiele circulationin the State of "lVashington and in the adjacent areas of other States

of the United States.Certain of said fur products were falsely and deceptively advert1sed

in that certain of the advertisements disseminated in commerce asaforesaid by respondent failed to set forth the information requiredby Section 5 (a) of the Fur Products Labeling Act, and in the mannerand form prescribed by the Rules and Regulations promulgatedthereunder, in the following respects:

a. Certain of said advertisements failed to disclose:1. The name or names of the animal or animals producing the fur

or furs contained in the fur products , as set forth in the Fur ProductsName Guide and as prescribed under the l uJes and Regulations;

2. That fur products contained or were composed of bleached , dyedor otherwise artificially colored fur , when such was the fact.

b. Certain of said advertisements set forth the name of an animalother than the name of the animal that produced the fur.c. Certain of said advertisements contained pricing claims and

representations as follows:

Values up to $299.00.................... Now $169.00....................Reductions up to 50%"

Respondent , in making the pricing c1aims and representations Jerred to above failed to maintain full and adequate records disclos-ing the facts upon which such c1aims and representations were pur-portedly based , in violation of Rule 44 (e) of the said Rules andRegulations.

PAR. 5. Certain of said fur products were misbranded in that theydid not have affxed thereto labels showing the information required

VANCOUVER FUR FACTORY 1301

1299 OJmplaint

under the provisions of Section 4 (2) of the Fur Products LabelingAct and in the manner and form prescribed by the Rules and Regula-tions promulgated thereunder.

PAR. 6. Certain others of said fur products 'vere misbranded in thatrespondent, on labels attached thereto, set forth the name of ananimal other than the name of the animal that produced the fur, inviolation of Section 4 (3) of the Fur Products Labeling Act and theRules and Regulations promulgated thereunder.

PAR. 7. Certain others of said fur products were misbranded inviolation of the Fur Products Labeling Act in that they were notlabeled in accordance with the Rules and Regulations promulgatedthereunder in the following respects:

(a) Required information was set forth on labels in abbreviatedform in violation of Rule 4 of the said Rules and Regulations;

(b) Required information was mingled with nonrequired informa-tion on labels, in violation of Rule 29 (a) of the said Rules andRegulations;

(c) Required information was not completely set forth on one

side of the labels , as required by Rule 29 (a) of the aforesaid Rulesand Regulations;

(d) Icequired information was set forth in handwriting on labelsin violation of Rule 29 (b) of the aforesaid Rules and Regulations.

PAR. 8. Certain of said fur products were falsely and deceptively

invoiced , in that they were not invoiced as required under the pro-visions of Section 5 (b) (1) of the Fur Products Labeling Act, andin the nlanncr and form prescribed by the Rules and Regulations pro-mulga,ted thereunder.

PAR. 9. Certain others of said fur products were falsely and de-

ceptively invoiced , in violation of the Fur Products Labeling Act , inthat they were not invoiced in accordance with the Rules and Regu-lations promulgated thereunder in the following respects:

(a) Required information was set forth in abbreviated form inviolation of Rule 4 of the aforesaid Rules and Regulations;

(b) Respondent failed to set forth an item number or mark as-oigned to fur products in violation of Rule 40 (a) of the aforesaid

Rules and Regulations.P "':. 1 O. The aforesaid acts and practices of respondent are in

v ioJation of the Fur Products Labeling Act and of the Rules and

Regulations promulgated thereunder and constitute unfair and de-ceptive acts and practices in commerce under the Federal Trade

Commission Act.


Order 52 F.

INITIAL DECISIOX BY 'VILLIAM L. PACK , HEAilNG EXA1\HXER

The complaint in this case charges the respondent with misbrand-ing certain fur products in violation of the Fur Products LabelingAct and the Federal Trade Commission Act. No answer to the com-plaint has been fied by respondent. An agreement has now beenentered into by respondent and counsel supporting the complaintwhich provides, among other things, that respondent admits all of thejurisdictional allegations in the complaint; that the record on whichthe initial decision and the decision of the Commission shall be basedshall consist solely of the complaint and agreement; that the inclu-sion of fidings of fact and conclusions of law in the decision dis-posing of this matter is waived , together with any further proceduralsteps before the hearing examiner and the Commission; that the orderhereinafter set forth may be entered in disposition of the proceeding,such order to have the same force and effect as if entered after a fullhearing, respondent specifically waiving any and all rights to chal-

lenge or contest the validity of such order; that the order may bealtered , modified or set aside in the manner provided for other ordersof the Commission; and that the agreement is for settlement purposesonly and does not constitute an admission by respondent that he hasviolated the law as aJleged in the complaint.

The hearing examiner having considered the agreement and pro-posed order aud being of the opinion that they provide an adequate

basis for an appropriate disposition of the proceeding, the agreementis hereby accepted , the following jurisdictional fidings made , andthe following order issued:

1. Respondent "lVilliam Overton is an individual doing business asVancouver Fur Factory, with his principal pIa,ce of business located&t 114 Sixth Avenue , Vancouver , ,Vashington.

2. The Federal Trade Commission has jurisdiction of the subjectmatter of this proceeding and of the respondent, and the proceedingis in the public interest.

ORDER

It is ordered That respondent

, '

William Overton , individually ortrading as Vancouver Fur Factory or under any other trade nameand respondenes representatives, a.gents, and employees , directly orthrough any corporate or other device , in connection with the intro-duction, or the sale , adver6sing or offering for sale, or the trans-

portation or distribution of any fur product in COIT11erCe , or in con-nection with the sale , advertising, offering for sale , transportation ordistribution of fur products which have been made in whole or inpart of fur which had been shipped and received in commerce, as

COUVER FUR FACTORY 1303

1299 Order

commerce " "fur " and "fur product" are defied in the Fur ProductsLabeling Act, do forthwith cease and desist from:

A. Misbranding fur products by:1. Failing to aff labels to fur products showing:(a) The name or names of the animal or animals producing the

fur or furs contained in the fur product as set forth in the Fur Pro-ducts Name Guide and as prescribed under the Rules and Regulations;

(b) That the fur product contains or is composed of used furwhen such is a fact;


dyed , or otherwise artificially colored fur when such is a fact;(d) That the fur product is composed in whole or in substantial

part of paws, tails , belles or waste fur when such is a fact;(e) The name , or other identification issued and registered by the

Commission , of one or more pcrsons who manufactured such furproduct for introduction into commerce , introduced it into commercesold it in commerce , advertised or offered it for sale in commerce , ortransported or distributed it in commerce;

(f) The name of the country of origin of any importecl furs usedin the fur product.

2. Setting forth , on labels attached to fur products , the name ornames of any animal or animals other than the name or names pro-vided for in Paragraph A (1) (a) above.

3. Setting forth on labels attached to fur products:

(a) Required information in abbreviated form;(b) Non-required information mingled with rcquired information;(c) Required information in handwriting;4. Failing to show , on labels attached to fur products , all of the

required information on on8 side of such labels.B. Falsely or deceptively invoicing fur products by:

1. Failing to furnish invoices to purchasers of fur productsshowing:

(a) The name or names of the animal or animals producing thefur 01' furs contained in the fur product as set forth in the Fur Pro-ducts Name Guide and as prescribed under the rules and regulations;

(b) That the fur product contains or is composed of used fur whensuch is a fact;


dyed , or otherwise artificially colored fur when such is a fact;(d) That the fur product is composed in whole or in substantial

part of paws , tails , bellies, or waste fur when such is a fact;(e) The name and address of the person issuing such invoices;

1304 FEDERAL TRADE CO",\1ISSION DECISIONS

Decision 52 F.

(f) The name of the country of origin of any imported furs con-tained in the fur product.

2. Setting forth required information in abbreviated form.

3. Failing to show the item number or mark of fur products onthe invoices pertaining to such products , as required by Rule 40 ofthe rules and regulations.

C. Falsely or deceptively advertising fur products, through theuse of any advertisement, representation, public announcement, ornotice which is intended to aid , promote or assist, directly or indirectly, in the sale or offering for sale of fur products , and which:

1. Fails to disclose:

(a) The name or names of the animal or animals producing thefur or furs contained in the fur products as set forth in the FurProducts Name Guide and as prescribed under the rules and regua-tions;

(b) That the fur proclucts contain or are composed of bleacheddyed , or otherwise artificially colored fur when such is a fact;

2. Contains the name or names of any animal other than the nameor names of the animals provided for in Paragraph C (1) (a) above.

3. ::Takes claims or representations as to value or savings, unlessthere arc maintained by respondent full and adequate records dis-losing the facts upon which such claims or representations are based.

DECISION OF THE CQ:fBnSSION AND ORDER TO FILE REPORT OF COMPLIAXCE

Pursuant to Section 3.21 of the Commission s Rules of Practice

the initial decision of the hearing examiner shall , on the 10th day ofMay, 1956 , become the decision of the Commission; and , accordingly:

It is ordered That the respondent herein shall within sixty (60)days aft.er service upon him of this order, file with the Commissiona report in writing setting forth in detail the manner and form inwhich he has complied with the order to cease and desist.

IUGID STBBL COND-CIT ASS'N ET AL. 1305

Order Denying, etc.

Ix THE IA'IR OF

:RIGID STEEL COXDlJT ASSOCIATION ET AL.

Docket 4452. Ordm' ana disscnting opInion , May 11, 1956

Order denying motion to modify desist order since it does not prohibit theindependent practice of freight absorption or individual use of delivered

prices.

Mr. Paul R. Dixon and 11fT. It D. Young, Jr. for the Commission.

ORDBR DEN"1'"NG 10TION TO REOPEN AND 10DIFY ORDER TO

CEASE AND DESIST

This matter having been considered by the Commission upon amotion , filed by Triangle Conduit & Cable Co. , Inc. , requesting thatthe proceeding be reopened and the order to cease and desist enteredon June 6, 1944,1 modified in certain respects; and

It appearing that the alleged purpose of the requested modification

is to make clear that the order docs not prohibit any of the respond-tnts

, '

when acting indepcndently, from quoting or selling rigid con-duit at delivered prices or from absorbing .freight, and particularlyfrom quoting prices which "difier in terms of mill nets according tothe location of purchasers ; and

The Commission having stated in its order of July 7, 1949 , denyinga similar motion that the questioned portion of the order to cease

and desist does not prohibit the independent practice of freight ab-sorption or selling at delivered prices by individual sellers, but onlythe continuance of the basing-point, delivered price system, roundto have been the subject of cOllspintcy, or any variation thereof whichlnight be accomplished through the practices specified in subpara-graphs (a), (b), (c) or (d) when done, as stated in the order

, "

forthe purpose or with the effect of systematically matching deliveredprice quotations ; and

The Commission being of the opinion that saiel portion of the orderdoes not under any other circumstances prohibit the practice ofquoting prices which differ in terms of mill nets received on sales todiif'erent purchasers; and

The allegations of the motion being insuffcient to support a con-clusion that conditions of fact or of law may have so changed sincethe issuance of the order as to require its modification or that the-

public interest ma.y now require it:

).38 F. T. C. 534.


Dissenting Opinion 52 F. T. C.

It

;"

ordered That the motion for reopening and modification be

and it hereby is, denied. Commissioner Mason dissenting.

DISSENTING OPINION OF COM IISSIO)'""R MASON

Quasi-judicial agencies would improve their appearance if , whencaught in an irreconcilable position, they frankly (and in good sea-

son) admit the error of their ways and Get Right with Justice.In the instant case the CODlmission made pretensions at powers not

congressionally included within its statutory authority. The FederalTrade Commission was unable to find Clifton Conduit Co. and SpangChalfant , Inc. , guilty of conspiracy. Lacking the authority to com-mand persons innocent of unlawful acts to submit to sanctions , theCommission nevertheless lmder COlmt II , which merely charged themwith knowingly doing the same thing others were doing, orderedClifton Conduit Co. and Spang Chalfant, Inc. , to "cease and desistfrom

* * *

selling rigid steel conduit at delivered prices which syste-matically reflect the inclusion of a transportation factor greater 01'

le8s than the actual cost of transportation from point of shipment todestination.': A reviewing court, like the praising courtiers in thefable of the king who dressed in nothing, approved. Thus for twelveyears we have been caught in the web of our over-enthusiasm. Wehave paraded too long in the naked inconsistency of Rigid Conduit.The Commission needs an innocent child to tell it that it hasn t any

clothes on.

Now that the Supreme Court and the Seventh Circuit Court ofAppeals have released us from our folly,' it would be the better partof discretion to renounce our former pretensions and amend the orderin Rigid Concluit so that it would not provide as above.

The instant order does not clo this.I am against it.

2 'l'hcuter Enterprises, InG.

"".

Paramount FUm, Distributin!) Corp. 346 U. S. 537;National Lead Company v. F. T. G. 227 F. 2d 825.

PELTA FURS 1307

Findings

IN THE :MTTER OF

.JACQUES DE GORTER ET AL. TRADING AS PELTA FURS

ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRECOMMISSIO A:r"" THE FUR PROD"GCTS LABELING ACTS

Docket 6297. Complaint , Feb. 19S5-Decision , May , 1956

Order requiring furriers in Los .. ngeles, Calif. , to cease false advertising andmisbranding of fur products in violation of the Fur Products Labeling Actand the Federal Trade Commission Act.

Before Afr. Abner E. Lipscornb hearing examiner.

11fr. John T. Walker and i1fr. Edwaj'd F. Downs for the Commission.1V alley

&;

Davis of Los Angeles, Calif. , for respondents.

FrXDINGS AS TO THE FACTS , CmmLuSIONs AXD ORDER

The Commission , having iu11y considered the entire record hereinincluding the initial decision of the hearing examiner and the cross-ppeals therefrom , and having rendered its clr.eision granting the

appeal of counsel in support of the complaint and denying the appealof respondents , and having vacated and set aside the ini6al decisionfinds that this proceeding is in the interest of the public and makesthis , its findings as to the facts , conclusions drawn therefrom , andorder , the same to be in lieu of said initial decision.

FIXDINGS AS TO TilE FACTS

1. Respondents, Jacques De Gorter and Suze C. De Gorter, areindividuals trading as Pelta Furs, \vith their offce and principal placeof busincss located at 437 "I'Vest Seventh Street , Los Angeles, Cali-fornia.

2. Respondents , Jacques De Gorter and Suze C. De Gorter, indi-vidually and trading as Polta Furs , for several years last past havebeen engaged in the purchase and distribution of fur products, in-cluding fur coats , jackets , stoles and related fur garments.

3. Respondents stipulated that in the course of their business , theyare in substantial competition in commerce v.rith other iirms , corpora-tions, copartnerships and individuals also engaged in the sale of furproducts to members of the purchasing public, and it is cstahlishec1

by uncontroverted evidence that respondents obtained approxi11 (ely25% of their fur products by means of purchases made outside theState of CaJifornia , and that such fur products were shipped to them

1308 FEDERAL TRADE COM.\1ISSIOX DECISIO

Findings 52 Ji' T. C,

at their place of business in California. The evidence also shows thatthese fur products were thereafter advertised in newspapers havingan interstate circulation. The evidence further shO\vs that in themonths of September , October and Kovember, 1953 , rcspondents soldand shipped one fur product each month to purchasers outside theState of California , and that in the month of December of the sameyear , respondents so sold and shipped four fur products. Althoughthese seven sales in com.merce represent only a small proportion ofall respondents ' sales ( luring that period of time , they aTe not mereisolated insta,nces , but constitute a course of trade in commerce amongand between the various States of the United States , as "conuereeis defmcd in the Federal Trade Commission Act. It is further foundthat the activities of the respondents in procuring fur products fromsources outside the State of California, and thereafter advertising

and offering for sale in newspapers of interstate circulation and then

selling and shipping and delivering, such fur products in commerceclearly bring their business activities within the concept of "com-merce" under the Fur Products Labeling Act.

4. As established by stipulation, and by other record evidence

respondents , in the course and concluct of their business , caused to bedisseminated , in various newspapers having interstate circulationadvertisements containing certain statements and representationsamong and including but not limited to the following:

In the "Los Angeles Examiner " issue of September 20 , 1953:

tter Thirty-Eight Years-Los Angeles ' La.rgest Bxclusive FUITicr- PEr,TA.FURS Quits. Going Ont of Business Sale: I\ '" * Entire Stock Must Go * * Slashed Prices * I\ I\

In the "Los Angeles Examiner " issue of October 11 , 195

PELTA FURS I\ I\ I\ QUITS! $250,000.00 Inventory Sacrificed. Entire FnrStock JIUST GO: At a Fraction of Original Prices! Savings are Tremcn-

dous *" * ,

In the "Los Angeles Examiner " issue of Kovember 22, 1953

substantially the same la,nguage appeared as quoted immediatelyabove , with the added statement:

All Advancc 1954 Holiday Gift Furs Now At Cost and Helow Cost

* "' *

In the "Los Angeles Examiner " issue of January 17, 1954:

Out They Go-For Whatever We co,n Get! Final days of Pelta Furs Going'

Out of Business Sale, A Group to he Liquidat.ed at Cost or Below Cost"' * '"NOTICE-Arrangements Have Been Made to Adequately Take Care of Com-plete Gllarantee and Promised Free Fur Service * * *

PELTA FURS 1309

1307 Findings

I Wr.rc I

Furitcms___ n__--

--- --- ---====

=== ============ i

Kow I'

$166 II Furitems_

_--

--u -u-

I g ============:==::::==::12991:

\Verc ! )Jo'

'5"675750795

81. 0\1.51,175

250

$3333\IS

In the "Los AngcJes Times," issue of September 26 , 1954:

2.IANUFACTURliJR' S FINANCIAL SACRIFICE! M:my at Cost! Man;' Below

Cost l )'lany Marked Regardless of Cost! * * *

In the "Los Angeles Times " issue of October 1954:

DISCOU T SALE! Tremendous Inventory of Selected Ifurs.REGARDLESS OF COST l '" II '"

PRICED

Furitems.__

___

_n__

--_ --- -------

Do_

---- ----

DO___

_--_ _-- ~~~

450:595

:\0" I V?oJuc ) .:ow-,o

-=-

111: F'" g:

:::-:-:-::::::::::

::::i

$750975500

38818'488

As est.ablished by Commission s Exhibit No. 14, respondents, on

May 17, 1953 , pub1ished in the Los AJlgeles Examiner an advertise-ment , as follows:

PELTA FURS consolidates with famous wholesale mink manufacturer. :More

Room Required! Complete Stock S250 000.00 Exquisite Styles No,," all Sale 11prke. Present unchanged price tags remain on garment. YOU MAY DEDCC'lONI' HALF! ! !

5. Advertisements disseminated in commerce , by respondents , typical examples of which are quoted above and which advertisements

were intended to and did aid , promote and assist , directly and indi-rectly, in the sale and offering for sale by respondents of fur productsare ShO"\'l1 by stipulation or othenyise to have been false and deceptivethrough failure to set forth information required by Section 5 fa) ofthe Fur Products Labeling Act, by omitting to state:

(a) The name or names of the animal or animals producing the fur01' furs contained in the fur products , as set forth in the Fur ProductsName Guide and as prescribed under the rules and regulations:

(b) That fur products contained or were composed of bleached

dyed or otherwise artificially colored fur , when such was the fact;(c) The name of the cOllntry of origin of imported fur contained

in such fur products.

6. Besides it having been so stipulated by respondents , the recordshows and it is found that certain of respondents ' fur products weremisbranded as follows:

4511324-59-

1310 FEDERAL TRADE COMMISSIO DECISIONS

Findings 52 F. T. C.

(a) The name or names of the animals producing the fur containedin such fur products were in violation of Scction 4 (1) of the FurProducts Labeling Act, falsely and deceptively identified as "mink"on the reverse side of the label attached thereto, on the obverse sideof which appeared the proper identification of such fur product;

(b) They did not have affxed thereto labels showing the informa-tion required under the provisions of Section 4 (2) of the Fur Prod-ucts Labeling Act and in the manner and form prescribed by the rulesand regulations promulgated therelUder;

(c) Labels attached to fur products set forth the name of an animalother than the name of the animal that produced the fur , in violationof Section 4 (3) of the Fur Products Labeling Act and the rules andregulations promulgated thereunder;

(d) Required information was mingled with non-required informa-tion on labels, in violation of Rule 29 (a) of the said rules and regu-lations;

(e) Required information was not completely set forth on one sideof the labels , as required by Rule 29 (a) of the aforesaid rules andregulations;

(I) Requircd information was set forth in handwriting on labelsin violation of Rulc 29 (b) of the aforesaid rules and regulations;

(,q)

Hequircd information was set forth in improper sequence onlabels, in violation of R.ule 30 of the aforesaid rules and regulations.

7. As established by stipulation and other evidence of record , cer-tain of respondents ' products were falsely and deceptively invoicedas follows:

(a) Certain of respondents' fur products wcrc falsely and decep-

tively invoiced , in that they were not invoiced as required under theprovisions of Section 5 (b) (1) of the Fur Products Labeling Actand in the manner and form prescribed by the rules and regulationspromulgated therelUlcler;

(b) Certain of respondents' fur products were falsely and decep-

tively invoiced in that respondents , on invoices furnished to pur-chasers of said fur products , set forth the name of an animal otherthan the name of the animal that produced the fur , in vioJation ofSection" (b) (2) of the Fur Products Labeling Act and the rulesand regulations promulgated thereunder;

c) In violation of the Fur Products L"bcling Act , they were notinvoiced in accordance with the rules and reglllatLons promulgatedther81mdcr , in the following respects:

(1) Required information was set forth in abbreviated form in\iolation of Rule 4 of the aforesaid ruJes and regulations;

PELTA FURS 1311

1307 Findings

(2) Respondents failed to set forth an item nmnber or markassigned to fur products in violation of Rule 40 (a) of the aforesaidrules and regulations.

8. Advertisements , typical examples of which are heretofore quotedwhich show discount sales and comparative and fictitious prices, mustbe considered in connection with respondents ' method of determiningthe prices at which their fur products shall be sold, and of setting

forth such prices on the price tags attached to each fur product. Theevidence shows that when a shipment of fur products is received byrespondents, price tags arc prepared bearing three pl'ices , the largestof which' is set forth in plain figures and may be read by anyone. Theother two prices are writtcn in code , end may only be rcad by therespondents or members of their sales staff who know the code.The plainly shown maximum price is reierred to by the respondentsas the "regular price " and represents respondents ' maximum askingprice. 'When a sale is advertised , the plainly marked price is shownas the regular price or value of the item featured , and the higher ofthe two coded prices is shown as the sale price. The lower of the twocoded prices represents the price below \vhich respondents cannot sellthe product and still make a profit. These price tags are not alteredor removed from the garments when they are placed on sale , and theonJy price that can be read by the customers is the first or maximumprice. These maximum prices are realized by respondents during theoff-season in only 10% of their sales , and in the fur-selling season inless than 509' of their sales.

Respondent Jacques De GOlter testifted that he never identified aparticular garment in advertisements , and that therefore he sold anyof his fur garments at any of the three prices marked on the tag,preferably the maximum if he could get it. He further testificd thatif a customer offered him one of the coded prices and he concludedthat he could not sell the garment at the higher price , then he wouldseD it for the price offered.

The conclnsion is warranted , and it is therefore found that:(a) When respondents advertise a sale and list the plainly ticketed

price as the regular price of the item on sale , they are using a fictitiousprice in the sense that it is not the price at which the garment hasbeen customarily ancl nsually sold by the respondents in the recentcourse of their business in violation of Rule 44 (a) of the aforesaidrules and regulations.

(b) The respondents , by the use of comparative prices as sllOwn int.he above-quoted advertisements , misrepresented the wings to beeffected by purchasers of respondents' fur products in violation ofRule 44 (b) and (e) of the aforesaid rules and regulations.

1312 FEDERAL THADE. COM:MISSION DECISIOKS

Conclusion 52 F. T. C,

It is established by stipnlation and other evidence of record that:(a) Respondents have misrepresented the grade, quality or value

of ccrtain of their fur products by advertising such fnr products bythe use of illustrations which showed such fur or fur products to behigher priced products than the ones so advertised in violation ofRule 44 (f) of the aforesaid rules and regulations.

(b) Respondents , in violation of Rule 44 (g) of the aforesaid rulesand regulations, have misrepresented certain of their fur productsas being:

(1) from the stock of a business in the state of liquidation; and(2) from the stock of a business consolidat.ed with that of a famous

mink manufacturer.(c) Respondents, by doing the acts and engaging in the practiccs

above found , have failed to maintain full and adeqnate records dis-closing the facts upon which the claims and representations werebased , in violation of Rule 44 (e) of the aforesaid rules and regu-lations.

FIRST CONCLUSION

It is concluded that this proceeding is in the public interest. for theprotection of consumers and othcrs within the purpose and intent ofthe Fur Products Labeling Act; that respondents through misbrand-

ing, false , misleading and deceptive statements , representations andadvertising, a,nd false invoicing of fur products as covered , in Para-graphs 1- , inclusive, intended to , and did , aid , promote and assistdirectly or indirectly in the sale of said fur products; and that theuse of t.he aforesaid practices by respondents has been and is unlawfulwithin the meaning of the Fur Products Labeling Act and of therules and regulations prornulgated thereunder and constituw unfairmethods of competition, and unfair and deceptiv!? acts and practicesin commerce under the Federal Trade Commission Act.

9. By means of the statements contained in advertisements , typicalexamples of which are set forth above, respondents represented thatthe firm of Pelta Furs, and the o\,ne1'S thereof , were going out of thefur business; were discontinuing operations, and disposing of or

liquidating their entire stock of fur products at "distressn prices , andthat members of the public could purchase such products at, or forless than, the amount respondents had paid for them. The recordshows , however , that respondents did not go and arc not now out ofthe fur business; did not discon6nuc operations and did not disposeof or liquidate their entire stock at "distress" prices or otherwise.Accordingly, the aforesaid repl'c,sentations as to reduced prices andas to savings to be effectuated thereby, and respondents' acts , prac-

PELTA FURS 1313

1307 Conclusion

tices , statements and representations relating thereto , are false, mis-leading and deceptive.

10. By means of statements contained in advertisements, typicalexamples of which are set forth above, and by oral representationsmade by respondents or their sales people, respondents representeddirectly or by implication that price tags affxed to fur products

offered for sale by them were the usual prices charged by respondentsfor their fur products in the recent regular course of business. The

evidence substantiates and it is found that said quoted prices were

primarily for bargaining purposes; the actual price at which respond-ents generally expected to and did sell such fur products during therecent regular course of their business was a lower price , as set forthin a series of coded prices on the price tags. The final coded pricerepresented the lowest price at which the fur product can be sold andstill permit respondents to make a profit. The selling prices so repre-sented in code were not understandable as a price marked on said pricetags to a substantial portion of the purchasing public, but could beeasily understood by respondents and their sales people.

Respondent Jacques De Gorter testified that he sold fur productsor authorized their sale , at any of the three prices marked on the pricetag, preferably the maximum. He further testified that if a customerwould not purchase at the higher price but offered a price within themaximum and minimum code prices , then he would on occasion sellor authorize the sale , at the price offered.

Accordingly, it is found that when respondents advertise a sale andlist the plainly ticketed price as one at which a fur product has beencustomarily and usually sold in the recent course of business they areusing fictitious prices. And , by use of the comparative prices as shownin the above-quoted advertisements , respondents have misreprescntedthe savings to be effected by prospective purchasers of their fur

procluds. In summary, by affxing to fur products price tags showingplainly marked price values containing fictitious prices and by theaforesaid advertised reductions in price , such as one-half off and bycomparative pricing, coupled with oral representations made byrespondents and their sales people , respondents are found to haveengaged in false , misleading and deceptive practices.

It is further established by stipulation and other probative evidencethat respondents by means of illustrations or depictions of higherpriced or more valuable fur products than those actually availablefor sale at the advertised selling price have represented that such furproducts are of a higher grade , quality, or value than is the fact.

11. The compJaint herein al1eges and the record shows that theprincipal acts and practices complained of occurred in 1953 , prior to


Order 52 F. T. C.

the dissolution of the partnership between the two respondents, whichoccurred on January 31 , 1954. The withdrawal of Suze C. De Gorterfrom the business of Pelta Furs, after p"rtici pation in the commis-sion of unlawful acts and practices, does not absolve her from respon-sibility therefor Ullder the Federal Trade Commission Act and theFur Products Labeling Act. Furthermore, the record contains noevidence which would give adequate assurance to the Federal Trade

Commission that she would not again participate in such acts in thefuture. Accordingly, respondent Suze C. De Gorter must be heldequally responsible with respondent Jacques De Gorter for the actsand practices herein found to be in violation of the Fur ProductsLabeling Act and the Federal Trade Commission Act. Therefore

the dismissal of the complaint as to her is not warranted.

FINAL CONCL1;SIONS

It is concluded , as previousJy indicated , that this proceeding is inthe public interest, and that the use by respondents of the false andmisleading statements and representations covered in Paragraphs Dand 10 above has had and now has the tendency and capacity to mis-lcad and deceive a substantial portion of the purchasing public intothe erroneous and mistaken belief that such statements and repre-sentations were and are in fact true , and to induce the purchase ofsubstantial quantities of respondents ' fur products by reason of sucherroneous and mistaken belief. As a result thereof, substantial tradein commerce 11(8 been unfairly diverted to respondents from theircompetitors , and substantial injury has been and is being clone tocompetition in commerce.

It is further concluded that the aforcsaid acts and practices of

respondents, covered in Paragraphs 9 and 10 above, are all to the

prejudice and injury of the pubJic and of the respondents ' competitorsand constitute unfair and deceptive acts and practices and unfairmethods of competition in commerce within the intent and meaningof the Federal Trade Commission Act.

ORDER

It is ordered That respondents , Jacques De Gortcr and Suze C.De Gorter , individua.lly and as copartners trading as Pelta Furs orunder any other trade na.me , and respondents : representa.tives, agentsand employees, directly or through any corporate or other device , inconnection with the introduction , or the sale , advertising or offeringfor sale , or the transportation or distribution of any fur product incommerce, or in connection v,rith the sale, advertising, offering forsale , transportation or distribution of fur products which have been

PELTA FURS 1315

1307 Order

made in whole or in part of fur which had been shipped and receivedin commerce , as "commerce " "furt and "fur product" are defied in

the Fur Products Labeling Act, do forthwith cease and desist from:A. Misbranding fur products by:1. Falsely or deceptively labeling or otherwise identifying any such

product as to the name or names of the animal or animals thatproduced the fur from which such product was manufactured;

2. Failing to affx labels to fur products showing:(a) The name or names of the animal or animals producing the fur

or furs contained in the fur product as set forth in the Fur ProductsName Guide and as prescribed under the rules and regulations;


(c) That the fur product contains or is composed of bleached , dyedor artificially colored fur when such is a fact;

(d) That the fur product is composed in whole or in substantialpart of paws , tails, bellies or waste fur when such is a fact;

(e) The name, or other identification issued and registered by theCommission, of one or more persons \"ho manufactured such furproduct for introduction into commerce , introduced it into commercesold it in commerce, advertised or offered it for sale in commerce" ortransported or distributed it in commerce;

(f) The name of the cOlUltry of origin of any imported furs usedin the fur product.

3. Setting forth , on labels attached to fur products , the name ornames of any animal or aniumls other than the name or names pro-,ided for in Paragraph A (2) (a) above.

. Setting forth on labels attached to fur products:

(a) ,"on-required information mingled with required information;(b) Required information in handwriting;(c) Required information in a scquence different from that re-

quired by Rule 30 (a) of the rules and regulations.5. Failing to shove , on labels attached to fur products , all of the

required information on one side of such labels.B. Falsely or deceptively invoicing fur products by:

1. Failing to furnish invoices to purchasers of fur products&howing :

(a) The name or names of the animal or animals producing the furor furs contained in the fur product as set forth in the Fur ProductsKame Guide and as prescribed under the rules and regulations;


1316 FEDERAL TRADE COMMISSION DECISIO

Order 52 . T. C.

(c) That the fur product contains or is composed of bleached , dyedor artificially colored fur when such is a fact;

(d) That the fur product is composed in whole or in substantialpart of paws , tails, bellies , or waste fur when such is a fact;

(e) The name and address of the person issuing such invoices;

(f) The name of the country of origin of any imported furs con-tained in the fur product.

2. Using on invoices the name or names of any animal or animalsother than the name or names provided for in Paragraph B (1) (a)above , or setting forth thereon any form or misrepresentation or de-ception , directly or by implication , with respect to such fur products.

3. Setting forth required information in abbreviated form.

4. Failing to show the item number or mark of fur products on theinvoices pertaining to such products , as required by Rule 40 of therules and regulations.

C. Falsely or deceptively advertising fur products , through the useof any advertisement, public announcement , or notice which is in-tended to aid , promote or assist, directly or indirectly, in the saleor offering for sale of fur products, and which:

1. FaiJs to disclose:

(a) The name or names of the animal or animals producing the furor furs contained in the fur products as set forth in the Fur Products?-T amc Guide and as prescribed under the rules and regulations;

(b) That the fur products contain or are composed of bleached

dyed , or otherwise artificial1y colored fur \vhen such is a fact;(c) The name of the country of origin of imported furs contained

in fur products.

2. Represents directly or by implication:

(,,) That the regular or usual price of any fur product is anyamount which is in excess of the price at which respondents havensually anel customarily sold such products in the recent regular

('ourse of their business;

(b) That a sale price enables purchasers of fur products to effec-tuate. any sa,vings in excess of the diiIerence bet.ween the said priceand the price at which comparable products "i, ere sold during the timespecifie,d or , if 110 time is specified , in exeess of the difference betweensaid price and the current price at which comparable products aresold;

(c) That an amount sct forth on price tags , or otherwise relatingor referring to fur products , represents the value or the usual price:it which said fur products had been customarily sold by respondentsjn the recent regular course of their business, contrary to fact;

PELTA :FURS 1317

1307 Appeal

(d) t any snch product is of a higher grade , quaJity, or valuethan is the fact , by means of illustrations or depictions of higherpriced or more valuable products than those actual1y available forsale at the advertised selling price , or by any other means.

(e) That any of such products are:1. from the stoek of a business in a state of liquidation , contrary

to fact;

2. fronl the stock of a business recently consolidated with anothercontrary to fact.

3. lakcs pric.ing claims or representations of the type. referred toin Paragraph C (2) (a), (0), and (c) above , unless there is main-tained by respondents fun and adeqnate records disclosing the factsupon ,\Chich such claims or representations are based.

It is fUTther ordered That respondents, Jacques De Gorter andSuze C. De Gorter , individually and as copartners trading as PeltaFurs or under any other trade name , and respondents ' representativesagents, and employees , directly or through any corporate or otherdevice in connection with the offering for sale, sale, and distributionof fur products in comme.rce , as "commeree ' is defied in the FederalTrade Commission Act do further cease and desist from making,directly or by implication , any of the representations prohibited by

Paragmph C (2) of this order.It is further ordered That the respondents herein shall , within

sixty (60) days after service upon them of this order , file with theCommission a report in writing setting forth in detail the manner andform in which they have complied ,vith the order to cease and desist.

Commissioners Gwynne and l\fason dissenting in part.

ON APPEAL FR01\I INITIAL DECISION

By ICERx , Commissioner:Hcspondents, retailers of furs , were charged in a complaint , issued

February 25 , 1955 , with false advertising, misbranding and falseinvoicing of fur products in violation of the Fur Products LabelingAct and rules and regulations promulgated thereunder , and , furtherthe acts complained of also were alleged to constitute unfair methodsof competition and unfair and deceptive practices under the FederalTrade Commission Act.

In due course, the hearing examiner filed his initinl decision inwhich he found that respondents had engaged in all of the questionedacts and practices. On the basis of these fmdings he concluded thatsuch acts constituted unfair and deceptive acts and practices andunfair methods of competition in commerce "within the intent andmeaning of the Federal Trade Commission Act.

1318 FEDERAL TRADE CO:\ISSION DECISIONS

Appeal 52 F.

Both sides have appealed from the initial decision. Respondentscontend on appeal that the complaint against them should be dis-missed. COtmsel in support of the complaint appeals from the failure

of the hearing examiner to prohibit as violative of the Fur ProductsLabeling Act , as well as the Federal Trade Commission Act, respond-ents , lise, in their advertising, of fictitious or false comparative price&nd value representations as to fur products.

The facts in this proceeding are not seriously in dispute. Most ofthe factual issues have been resolved by stipulations between counseland the only issues remaining for consideration arise out of disputedinterpretations and conclusions to be drawn from facts on the recordstipulated and otherwise.

Respondents' contention that no cease-and -dcsist order should beentered against them essentially is based upon a two-pronged plea:

(1) That respondents were not , and arc not now , engaged in inter-state commerce.

(2) That Rule 44 (a) to (g), inclusive, of the rules and regula-

tions promulgated by the Commission under the Fur Products Label-ing Act , is not binding upon respondents since it , Rule 44 , is beyondthe Commission s authority under that Act.

On the question of whether respondents are engaged in commerceit was stipulated on the record by agreement of counsel , and the hear-ing examiner fmmel , that respondents are in substantial competitionin commerce with other firms, corporations , copartnerships and indi-viduals also engaged in the sale of fur products to members of thepurchasing public. And , the hearing examiner immel Ullcontrovcrtedevidence showing that 25% of the fur products dealt in by respondentsconsisted of purchases outside of California which arc shipped tothem at their place of business in that State , and that these productswere advertised in newspapers having interstate circulation. Thehearing examiner also found that respondents sold and shipped furproducts to purchasers outside of California, thus engaging In a

course of trade in COlnmerce , as "commerce :' is defined in the FederalTrade Commission Act. Since the record clearly discloses that re-spondents procured fur products outside of California and thereafteradvertised them in ne,vspapers with interstate circulation their busi-

ness a.ctivities clea.rly come "within the concept of commerce undcrthe Fur Products Labeling Act." vVe are of the opinion that thehearing examiners' conclusion that respondents ' business activitiescome within the ambit of both Acts ;s correct and is substantiated onthe record.

Our conclusion that respondents arc engaged in interstate com-merce, both as defied by the Fur Products Labeling Act and by the

PELTA FURS 1319

1307 Appeal

Federal Trade Commission Act, as indicated above, and our rulingshereinafter on respondents ' second plea on appeal and on the appealof counsel in support of the complaint render it unnecessary specifi-cally to discuss in this opinion respondents ' exceptions on appealas such.

Respondents ' second plea on appeal and the cross-appeal of counselin support of the complaint raise the remaining issue , which we stateas follows:

1. Is Rule 44 of the Rules and Regulations under the Fur ProductsLabeling Act , relating to misrepresentation of prices and values withregard to fur products , within the rule making authority conferredupon the Commission by the Act!

Under Section 8 (b) of the Fur Products Labeling Act , the Com-mission is both empowered and directed to prescribe rules and regu-lations governing the manner of disclosing information required bythe Act and those necessary and proper for purposes of its administra-tion and enforC81nent. Agency rulemaking authority embraces state-ments of general applicability designed to implement or interprctexisting law and policy. Hence, if the acts cataloged as price mis-representations and the matters which persons are forbidden toadvertise" under the various paragraphs of Rule 44 arc practices

forbidden under the Act itself , then the rule must be regarded as avalid exercise of the Commission s authority to promulgate rules.

The validity of the rule s prohibitions against pricing misrepre-

sentations turns primarily on the meaning of the following empha-sized language in Section 5 (a) (5):

SEC. 5. (a) For the purposes of this Act, a fur product or fur shall be con-

sidered to be falsely or deceptively advertised if any advertisement, representa-tion , public announcement. or notice which is intended to aid , promote , or assistdirectly or indircctly in the sale or offering for sale of such fur product or fur-

* * * . * * *

(5) contains the name or names of any animal or animals other than thename or names specified in paragraph (1) of this subsection , 01' contains anyform of misrepresentation or deception, directly or by implication, with 1'espectto such fur product or fur,.

'" * '"

(Emphasis supplied.

There can be no doubt but that the underscored language, when liter-ally read , comprehends all forms of misrepresentation or deception inconnection with the advertising of furs and fur products. That thisphrase constitutes a separate and substantive rule of law rather than

mere amplification of other requirements of the Act also is clear.Attesting to this is the bct that a comparable provision in referenceto false invoicing (Section 5 (b) (2)) is likewise prefaced by thedisjunctive " " and in the misbranding section (Section 4 (1)) a

similar expression is entirely segregated from the requircments for


Appeal 52 F, T. C.

rdfirmative disclosure as to the presence of used fur , waste fur , andother matters and is an integral paTt of one of the various definitiveprovisions relating to misbranded fur products. Thus, under thatsubsection , a fur product is misbranded when falsely or deceptiyelylabeled and also when the label contains any form of misrepresenta-tion or deception with respect to it.

Helevant to this aspect and another circumstance indicating thatthe phrase under consideration was to stand alone is the fact thatsimilar but not identical language appeared in the first t,,-o billsconsidered by the Congress all the subjects of fur labeling, a,her-tising and invoicing. Prior to the statute s final enactment by the82d Congress , legislation had been considered in the 80th and 81stCongresses. The definitions of deceptjve advertising and invoicingprovided under each of the two original bills introduced in the 80thCongress appeared in one section comprising one paragraph and con-taining hvo numbered provisions. TInder each bill , one numberedprovision forbade use of animal names other than those elsewhere

specified in the Act, and the other rendered advertising and invoicingfalse when "any other form of misrepresentation or deception othertha.n misbranding is practic.ed direc.tly or by implic.ation in connec-tion with the sale of such article or fur.

The House committee considered the particular bil pending beforethat body and reported out a substitute bill which treated the subjectsof false advert.ising and invoicing separately and imposed certainaffrmative disc.osure requirements. The revisions necessitated for thedisclosure requirements and in another respect for defining false anddeceptive advertising comprised four new , separately numbered sub-sections , and the original two provisions were retained to constitutea fifth subsection , but without nlil1erical differentiation bebveen themas formerly. The language of the comn1ittee s substitute in reference

to general deception was identical to that of Section :i (a) (5), as

today effective."lVe note , too , that Section 5 (a) (5) of the Fur Act is somewhat

analogous to Section 15 (a) (2) of the Federal Trade CommissionAct. The former is in the disjunctive and consists of a specific pro-vision that is followed by a more general proyision. The specificexpression condemns the use of any animal HaIDes for fur products

other than those listed in the Fur Products Kame Guide withoutregard to whether sneh usc would be , or tcnds to be, deceptive. Thisresembles the flat prohibition of Section 15 (a) (2) of the Federal

Trade Commission Act against the use of dairy terms in oleomar.garine advertising suggesting that such margarine is a dairy productand irrespective of whether deception has been engendered. As

PELTA FURS 1321

1307 Appeal

recently held in Reddi-Spread Corp. v. Federal Trade Oommission

No. 11673 , 3d Cir.

, .

Tan. 18 1956 , it is not necessary for the Commis-sion to prove deception in proceedings instituted under the section

relating to the advertising of margarine. It is apparent that the

obvious intent and effect of the first provision of Section 5 (a) (5)of the Fur Act was to make unlawful per se the use of animal namesnot listed in the Fur Guide with the second element of the disjunc-tion then providing that aJl forms of provable deception should also

be unlawful. Reading the statute in this fashion , there is no tenablebasis for conclusions that the broad provision is limited by the specificprovision that precedes it.

Having concluded that the provision against misrepresentation anddeception was not to be a mere adjunct to other language in Section

5 (a) (5) and tbat it constituted instead a separate and substantiverule of law , we turn to the question of whether Congress may haveintended to exclude misrepresentation of prices from its application.While the legislative reports do not specifically or expressly indicatethat Congress intended to proscribe pricing misrepresentations

neither do they show that this form of misrepresentation was to be

exclnded. The report submitted in the House which antedated thebrief confcrence report on the final draft of bill emphasized therequirements for affrmative disclosure set out in Sections 4 and 5.However, the report submitted by the Senate Committee which ante-dated the conference report referred to Section 4 relating to misbrand-ing and shlted that a product would be considered to be misbrandedif falsely or deceptively labeled or identified or "if the label containsany form of misrepresentation or deception ; and it added , amongother things, that Section 5, the false advertising section , closely

followed the language of Section 4.N or does the testimony rcceived during the legislative hearings con-

tain any conc1usive indication that instead of a literal interpretationthe phrase under considerat.ion should be given some secondary mean-ing, perhaps , restricting it to advertising misrepresentations solelyrelated to physical or zoological characteristics and attributes of fur

articles. On the contrary, there was recognition in certain of the testi-mony as to enforcement problems then being encountered by theCommission in the administration of its Trade Practice Rules fort.he Fur Industry, particularly those directed against price misrepre-sentations. Two of those rules (Hules 25 and 29) had provisionssimilar to those in Rule 44.

The absence of references in the Act to pricing misrepresentationsis nowise controJling. " (I) f Congress has made a choice of languagewhieh fairly brings a given situation ,vithin a statute , it is unimpor-


Opinion 52 F. T. C.

tant that the particular application may not have been contemplatedby the legislators. Barr v. United States 324 U. S. 83 , 90 (1945).Furthermore, statutory expressions arc to be broadly construed withinthe limitations of their literal meaning and the ascertainable legis-lative intent. The plain meaning of the statute will prevail as longas it docs not lead to absurd results or clash with policy behind thelegislation. U. S. v. American Trucking Associations , Inc. 310 U. S.

534 , 543 (1940).In the circumstances here , moreover , we are convinced that the

Congress ' goal was a legislative solution of the fur industry's majorproblems including that of deceptive pricing representations and thatwhen enacting this legislation, its intention was to proscribe all

deceptive advertising practices in connection with the sale of fur

articles.The respondents ' appeal is without merit and denied accordingly.

The appeal of cOlilsel supporting the complaint chalJenges, amongother matters , the initial decision s failure to prohibit all of the prac-tices covered therein, including particularly respondcpts' pricing

practices, as violative of the Fur Products Labeling Act and therules and regulations promulgated thereunder. His appeal is granted.Having determined that the initial decision was deficient in that andrelated respects , we , in the discharge of the ultimate responsibilityfor determining the merits of this proceeding and in the interests ofconforming its disposition with the views expressed in this opinionhave appended hereto the Commission s findings as to the facts , can-cl usians and order to cease and desist. These arc adopted in lieu ofthe initial decision of the hearing examiner which is hereby vacatedand set aside.

Commissioners Gwynne ancll\1ason dissented in part in the decisionherein.

Ol'INION OF CHAIR .fAX GWYXNE , DISSENTING IN PART

By GWYN"" , Chairman:I dissent from that part of the majority opinion which grants the

appeal of counsel supporting the complaint. It is my view that Rule44 of the Rules and Regulations under the Fur Products Labeling Actis not warranted by anything in that law.

The hearing examiner fmmd that certain practices of rcspondentsviolated the Fur Products Labeling Act and issued an order accord-ingly. He also found that respondents had made certain other repre-sentations -which were contrary to the Federal Trade Commission Act

and issued an order in accordance with such fmdings.

I agrec with his fmdings and. order.

PELTA FURS 1323

1307 Opinon

Authority for Rule 44 and for the conclusion of the majority isdaimed to be found in the underlined portion of Section 5 (a) (5) the Fur Products Labeling Act. Section 5 (a) (5) is as follows:

( 5) contains the name or names of any animal or animals otherthan the name or names specified in paragraph (1) of this subsectionor contains any form of misrepTesentat'ion or deception, directly or bymplication , with respect to such lw' pToduct 01' f tr;

The majority opinion contains the following:There can be no doubt but that the underscored language , when

literally read , comprehends all forms of misrepresentation or decep-tion in connection with the advertising or furs and fur products.

That this phrase constitutes a separate and substantive rule of lawrather than a mere amplification of other requirements of the Act

also is clear.On the basis of this interpretation , the majority opinion "vacated

and set aside" the initial decision and adopted new findings in lieuthereof and issued a new order. .Among other things , the order pro.hi bits advertising which represents directly or by implication:

(a) That the regular or usual price of any fur product is any

amount ,,,hich is in excess of the price at which respondents haveusually and customarily sold such products in the recent regularcourse of their business;

(b) That a sale price enables purchasers of fur products to effec-tuate any savings in excess of the difference between the said price

and the price at which comparable products were sold during the timespecified or, if no time is specified , in excess of the difl'erence betweensaid price and the current price at which comparable products aresold;

(c) That an amount set forth on price tags , or otherwise relatingor referring to fur products, represents the value or the usual priceat which said fur products had been customarily sold by respondents

in the recent regular course of their business, contrary to fact;(d) That any such product is of a higher grade , quality, or value

j han is the fact, by means of illustrations or depictions of higberpriced or more valuable products than those actually available forsale at the advertised selling price , or by any other means;

(e) That any of such products are:1. from the stock of a business in a state of liquidation , contrary

to fact;

2. from the stock of a business recently consolidated with anothercontrary to fact.

Such an order is justified under the Federal Trade Commission Actbut not under the Fur Products Lllbeling Act.

1324 FEDERAL TRADE CO:MISSIO DECISIONS

Opinion 52 F.

The interpretation placed by the majority on the Fur ProductsLabeJing Act violates well-established principles of statutory con-struction and is contrary to the intent of Congress in passing the Act.The clause in question, instead of being a separate and substantive

rule of law is limited by the specific provision which precedes it.This is in accordance with the principle of ejusdem generis. "Ejusdemgeneris means literally of the same kind or species. People

i!lachalski 115 S. 2d 28.

"The principle (ejusdem generis) requires that general terms ap-pearing in a statute in connection with precise , specific terms shallbe accorded meaning and efIect only to the extent that the generalterms suggest items or things similar to those designated by the

precise or specific terms. In other words , the precise terms moddy,influence or restrict the interpretation or application of the generalterms where both are used in sequence or collocation in legislativeenactments. State v. Thompson (IVashington 1951), 232 P. 2d 87.

The rule is based on the supposition that if the legislature hadintcnded the general V.iOTds to be considered in an unrestricted senseit would not have enumerated the particular things.

:'

S'lnith

liigg'inbothorn (Maryland 1946), 28 A. 2d 754.

The law itself and the Congressional history also throw light onthe proper interpretation of the section in question. Paragraphs (1),(2), (3), and (4) of Section 5 (a) contain specific provisions pro-hibiting false advertising rclating to the character or quality of thefur itself. Paragraph (5) contains another specific provision , to witthat the advertisement shall not contain " the name or names of anyanimal or animals other than the name or names specified in Para-graph (1) of this subsection." Congress evidently concluded that someamplification of that provision was necessary. For exampJe , decep-tion might be caused as to the character or quality of furs by meansother than the use of names; pictures or slogans or other means couldbe employed which might not come within the strict category ofnamesParagraph (6) prohibits an advertisement which " does not show

the name of the country of origin of any imported furs or those

contained in a fur product." If the majority view is correct, Para-graph (6) is not necessary and adds nothing to Section 5. In factthat is true of the other paragraphs in the section.

I fail to see how the use of the disjunctive " : supports the

majority viev.. . The word " :' is common in many statutes vd18re the

J-.rinciple of ejusdem geneTis was held applicable. Nor can I see any

enalogy between the section here considered and Section 15 (a) (2)

cf the Federal Trade Commission Act. There is nothing in the Act

PELTA FURS 13251307 Opinion

or in the legislative history to indicate that Congress intended theFur Products Labeling Act to cover the types of deceptive adver-tising heretofore set out.

I would adopt the fidings and order of the hearing examiner and

deny both appeals.Commissioner Mason joins in this dissnt.

451524--59--


Opinion 52 F. T. C.

IN THE MATTR OF

FEDERAL LIFE AND CASUALTY COMPANY

Docket 6812. Order and opinion, May , 1956

Interlocutory order reversing ruling of hearing examiner who limited scope ofproceeding to states without regulating statutes , and returning the matterto him to determine whether insurance advertising activity beyond thereach of state regulation may be involved.

Before Mr. Frank Hwr hearing examiner.

Mr. J. W. Brookfield , Jr. and Mr. Donald K. King for the Com-mISSIOn.

Beaumont, Smith

&;

Harris of Detroit , Mich., for the respondent.

ORDER GRANTIXG APPEAL FROM HEARING EXA):INER OIilER LIMITINGSCOPE OF rROCEEDIXG

Counsel in support of the complaint having filed an interlocutoryappeal from a ruling of the hearing examiner limiting the scope ofthis proceeding to the respondent's advertising representations dis-seminated in the States of Rhode Island and Mississippi and in theDistrict of Colmnbia; and

The Commission having concluded , for the reasons set forth in itsopinion in the matter of The American Hospital and Life InsuranceCompany, Docket o. 6237, issued April 24 , 1956 , that the examinerwas in error in so ruling:

It is ordered That the appeal of counsel in support of the complaint, and it hereby is, gcanted.It is furthe1' ordered That insofar as the hearing examiner s order

of November 16 , 1955 , purports to limit the scope of this proceedingto advertising representations disseminated in Rhode Island , Missis-sippi and the District of Columbia , said order is hereby reversed.

It is further ordered That the respondent's request for considera-

tion of other alleged errors in the examiner s order, raised for thefirst time in the answering brief , be, and it hereby is , denied,

Commissioners Gwynne and Mason dissenting in part and con-curring in part.

JOINT OPINION OF CHAIRl\AN GWYN:! AND COMMISSIONER MASONDISSENTING IN PART AND COXCURING IN PART

In AmfrWan Hospital and Life Insurance Oompany (Docket 6237)

we stated our views as to the proper accommodation of federal-stateauthority over the insurance industry under the nnique conditions of

FEDERAL LIFE AND CASUALTY CO. 1327

1326 Opinion

the McCarran Insurance Act. We did not, however, on the recordthere presented, attempt to defie the precise scope of federal power

nor do we believe that such defil1ition could be accomplished in anysingle proceeding.

The hearing examiner found here that the respol1dent was licensedto sell insurance and did sell in all the states of the Union , exceptMontana and etah; that the business is handled through generalagents in the states and respondent does not sell by mail; that in allbut three jurisdictions , state regulating statutes did exist; that someof respondent's agents have used radio and television advertising ininterstate commerce , sometimcs ,,,ith and sometimes ,yithout respond-ent' s permission.

,V c belicve that therc 1nay be an area of insurance advertising

activity in commerce-for example, radio or TV within the peculiaraegis of the federal government and effectively beyond the reach ofdate regulation.

1Ve would , therefore , return this proceeding to the hearing examinerfor the limited purpose of identifying such commercial activity anddetermining the extent to which those practices may be condemnedUlHler Section J of the Federal Trade COlnmission \ct. Bcfore pass-ing upon such a novel question , we believe that due administrativeprocess requires full opportunity for counsel on both sides to briefthe issue.

To this limited degree we concur in the order herein.

1328 FEDERAL TRADE COM.V!ISSION DECISIONS


IN THE MATTR OF

LUXURIOUS WOOLLENS , LTD. , ET AI,.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE:FEDERAL TRADE C01\DHSSION AND THE WOOL PRODVCTS LABELING ACTS

Docket 6518. Complaint, Feb. 20, 19S6-Decision , May , 1956

Consent order requiring manufacturers in New York City to cease violating theWool Products Labeling Act through misrepresenting the percentage ofbeaver fur in certain wool fabrics on sales invoices and shipping memorandaand on attached labels, and through furnishing similar labels to customersfor attachment to garments manufactured from the fabrics; through fur-nishing false guaranties that certain of their wool products were not mis-branded; and through failng to label certain wool products as required.

Before Mr. Everett F. Haycraft hearing examiner.

ilr. Donald R. Moore for the Commission.Mr. Frederick E. Jl. Bailon of New York City, for respondents.

IPLAINT

Pursuant to the provisions of the Federal Trade Commission Actand the 'Wool Products Labeling Act of 1939 and by virtue of theauthority vested in it by said Acts , the Federal Trade Commissionhaving reason to believe that Luxurious V oollens , Ltd. , a corporation1\iax "\Vasserman , individually and as an offcer of said corporation

and Paul A. Haich , individually and as General )fanager of saidc:orporation , hereinafter referred to as respondents , have violated theprovisions of said Acts, and it appearing to the Commission that aproceeding by it in respect thereof would be in the public interesthereby issues its complaint, stating its charges in that respect follows:PARAGRAPH 1. Hespondent Luxurious "\Voollens , Ltd. , is a corpora-

tion , organized , existing and doing business under and by virtue ofthe laws of the State of New York. Respondent Max 'Wasserman ispresident and secretary, and respondent Paul A. Raich is generalmanager of the corporate respondent and they formulate , direct andcontrol the acts, policies and practices of the corporate respondent.Respondents have their principal place of business at 234 West 37thStreet ew York , K ew York.

P AU. 2. Respondents, in the course and conduct of their businessare and were in competition with other corporations and with firms

i'nd individuals likewise engaged in the sale of wool products :in

commerce.

LUXURIOUS WOOLLENS LTD. , ET AL. 1329

1328 Complaint

PAR. 3. Subsequent to the effective date of the Wool ProductsLabeling Act of 1939 , and more specifically since January 1 , 1954

respondents have manufactured for introduction into commerce, intro-duced into commerce, sold, transported, distributed, delivered forshipment and offered for sale in commerce , as "commerce" is defined inthat Act, wool products, as "wool products" are defied therein.

PAR. 4. Certain of those wool products were misbranded by re-spondents , within the intent and meaning of Section 4 (a) (1) ofthe "IV 001 Products Labeling Act and the Rules and Regulations pro-mulgated thercunder in that they were falsely and deceptivcly labeledcr tagged with respect to the character and amount of the constituentfibers contained therein.

Among such ,vool products were fabrics labeled or tagged byrespondents as consisting of 650/ Beaver Fur and 350/ Wool; 60%Beaver Fur and 40% 'Wool; and 50% Deaver Fur and 50% "I'Vool;whereas, in truth and in fact , the products were not composed of65% Beaver Fur and 35% "lVool; 60% Beaver Fur and 400/ "lVool;or 50% Be,aTeI' Fur and 5070 ,y 001 , as represented by the respondents.

PAR. 5. Certain of these wool products were further misbranded byrespondents in that t.hey wpre not. stamped, tagged or labeled as

required under the provisions of Section 4 (a) (2) of the "lVool

Products Labcling Act and the Rules and Regulations promulgated

thereunder.PAIL 6. R.espondents ha,ve also furnished false gnaranties that cer-

ta.in of their \yool products were not misbranded, in violation ofSection 9 of the 'Wool Products Labeling Act. Respondents furnishedsuch guaranties , having reason to belieV' that the wool products

falseJy guarantecd may be introdnced , sold , transported or distributedIn commerce.

PAR. 7. The acts and practices of the respondents , as set forth aboveare in violation of the "IV 001 Products Labe1ing Act of 1939 and the

Rules and Regulations promulgated thereunder , and constitute unfairmethods of competition and unfair and deceptive acts and practicesin commerce within the intent and meaning of the Federal TradeCommission Act.

PAll. 8. In the course a.nd conduct of their business , as aforesaidand for the purpose of inducing the purchase of wooJ products by

manufacturers of garments and other wool products for resale toretailers and distributors in commerce , rcspondents have:

(a) Made various representations as to the fiber content of theirwooJ products in sales invoices and shipping memoranda applicablethereto. Among and typical , but not all inclusive of such represent.-

1330 FEDERAL TRADE COM.\fISSION DECISIONS

Decision 52 F. T.

tions, are the following: 65% Beaver Fur and 35% Wool; 60% BeaverFur and 40% Wool; 50% Beaver Fur and 50% Wool.

(b) Furnished to customers labels to be attached to garments manu-factured from certain of respondents ' wool products , which labelsrepresented the fiber content as follows: 60% Beaver Fur-40% Im-ported Lamb's Wool; 65% Beaver Fur 35% Imported Lamb's Wool.

PAR. 9. The aforesaid statements and representations on invoicesshipping memoranda and labels for use on garments manufacturedfrom respondents ' wool products , are false , misleading and deceptive.In truth and in fact , respondents ' products do not contain beaver furfibers and wool in the proportions represented; the products containsubstantially smaller amounts of beaver fur fibers than representedand in addition appreciable quantities of undisclosed fur fibers; theproducts do not contain lamb's wool as represented.

PAR. 10. The false , misleading and deceptive rcpresentations oninvoices , shipping memoranda and on labels furnished to customershave tbe capacity and tendcncy to mislead and deceive a substantialportion of the purchasing public into the erroneous and mistaken

belief that such statements were and are true , and to induce the pur-chase of such products on account of such beJief induced as aforesaid.As a result thereof , substantial trade in commerce has been divertBdto respondents from the,ir competitors and substantial injury hasthereby been done to competition in commerce.

PAH. 11. By means of invoices , shipping memoranda and labelsfurnished to customers , as described in Paragraph Eight hereinrespondents place in the hands of others the means and instrumen-talities whereby such others may mislead and deceive members of thepurchasing public as to the character and amount of the constituentfibers in their wool products.

PAR. 12. The acts and practices of the respondents , as set forth inParagraphs Eight through Eleven herein, were all to the prejudice

and injury of the public and of respondents ' competitors and consti-tute unfair and deceptive acts and practices and unfair methods ofcompetition in commerce , within the intent and meaning of theFederal Trade Commission Act.

JXITIAL DEOISIOK BY EVERETT F. HAYCRAFT , HEARING EXAMI1\""H

The Federal Trade Commission issued its complaint against theabove-named respondents on February 20 , 1956 , charging them withhaving violated the Wool Products Labeling Act of 1939 and theRules and Regulations promulgated thereunder and the Federal

Trade Commission Act through the misbranding of certain woolproducts, the furnishing of false guaranties that wool products are

LUXURIOUS WOOLLENS LTD. , ET AL. 1331

1328 Deison

not misbranded , and the making of false , misleading and deceptiverepresentations on invoices, shipping memoranda and labels for useon garments manufactured from respondents ' wool products. . Afterbeing duly served with said complaint, the respondents, in lieu of

submitting answer to said complaint, entered into an agreement onMarch 19 , 1956 , for a consent order with counsel supporting the com-plaint, disposing of all the issues in this proceeding in accordancewith Section 3.25 of the Rules of Practice and Procedure of the Com-mission , which agreement has been approved by the Director and theAssistant Director of the Bureau of Litigation.

Respondents, pursuant to the aforesaid agreement, have admittedall the jurisdictional facts alleged in the complaint and agreed thatthe record may be taken as if fidings of jurisdictional facts had beenduly made in accordance with such allegations. Said agreement alsoprovides that the agreement disposes of all of the proceeding as to allparties. Respondents in the agreement waived any further proceduralsteps before the hearing examiner and the Commission; the makingof findings of fact or conclusions of law; and all of the rights they

may have to challenge or contest the validity of the order to cease anddesist entered in accordance with this agreement. It was further pro-vided that said agreement , together with the complaint, shall consti-tute the entirc record herein; that the agreement shall not become apart of the offcial record unless and until it becomes a part of thedecision of the Commission; that said agreement is for settlementpurposes only and does not constitute an admission by the respondentsthat they have violated the law as alleged in the complaint. Theagreement also provided that the order to cease and desist issued inaccordance with said agreement shall have the same force and effectas if entered after a full hearing; that it may be altered , modified orset aside in the manner provided for other orders; and that thecomplaint may be used in construing the terms of the order.

This proceeding having now come on for fial consideration by thehearing examiner on the complaint and the aforesaid agreement forconsent order , and it appearing that said agreement provides Tor anappropriate disposition of this proceeding, the aforesaid agreementis hereby accepted and is ordered filed upon becoming part of theCommission s decision in accordance with Sections 3.21 and 3.25 ofthe Rulcs of Practice , and in consonance with the terms of said agree-ment , the hearing examiner makes the following jurisdictional fid-ings and order:

1. Respondent Luxurious Woollens, Ltd. , is a corporation , organ-ized , existing and doing business under and by virtue of the laws ofthe State of New York. Respondent Max Wasserman is president

1332 FEDERAL TRAE COMMSSION DECISIONS

Order 52 F.

and secretary, and respondent Paul A. Raich is general manager ofthe corporate respondent and they formulate , direct and control theacts, policies and practices of the corporate respondent. Respondentshave their principal place of business at 234 West 37th Street , NewYork, New York.

2. The Federal Trade Commission has jurisdiction of the subjectmatter of this proceeding, which is in the public interest , and of therespondents hereinabove named; the complaint herein stares a causeof action against said respondents under the provisions of the FederalTrade Commission Act and the Wool Products Labeling Act of 1939.

ORDER

It is ordered That the respondent, Luxurious Woollens, Ltd., acorporation; its offcers; the respondent , Max Wasserman , individu-ally and as an offcer of the corporation; the respondent , Paul A.Raich, individually and as General Manager of the corporation; andrespondents' representatives, agents and employees, directly orthrough any corporate device, in connection with the introduction

or manufacture for introduction into comnlerce , or the offering forsale, sale , transportation or distribution in commerce (as "commerceis defied in the Federal Trade Commission Act and the Wool Prod-ucts Labeling Act) of piece goods or other "wool products" (as "woolproducts" are defied in the "I'Vool Products Labeling Act), do forth-with cease and desist from:

A. Misbranding such products by:1. Attaching or using stamps , tags , labels or other means of identi

fication ,,,hich represent that such products contain a certain percent-age of beaver hair or fiber which is contrary to fact;

2. Otherwise falsely or deceptively stamping, tagging, labeling oriclentifying such products as to the character or amount of theirconstituent fibers;

3. Failing to affx securely on each such product a stamp, tag, labelcr other means of identification showing in a clear and conspicuousmanner:

(a) The percentage of the total fiber weight of such wool product(exclusive of ornamentation not exceeding five percentmn of the totalfiber weight) of (1) wool, (2) rcprocessed wool , (3) reused wool( 4) each fiber other than wool where the percentage of weight of suchfiber is five percentmn or more, and (5) the aggregate of all otherfibers;

(b) The maximmn percentage of the total weight of such woolproduct, of any non. fibrous loading, fillng or adulterating matter;

(0) The name or the registered identification number of the manu-

LUXURIOUS' WQOLLENSLTD., ET'AL. 1333

1328 Desion

factureI' of such wool product or of one or more persons engaged inintroducing such wool product into commerce , or in the offering forsale, sale, transportation , distribution , or delivery for shipment ofsuch wool product in commerce (as "commerce" is defied in the WoolProducts Labeling Act of 1939).

B. Furnishing faJse guaranties that piece goods, or other woolproducts (as "wool products" are defied in the Wool ProductsLabeling Act) are not misbranded under the provisions of the WoolProducts Labeling Act , when there is reason to believe that the woolproduct.c; so guaranteed may be introduced, sold, transported, or

distributed in commerce.

Provided That the foregoing provisions concerning misbranding

shaJJ not be construed to prohibit acts permitted by Paragraphs (a)and (b) of Section 3 of the Wool Products Labeling Act of 1939; and

Provided further That nothing contained in this order shall beconstrued as limiting any applicable provisions of said Act or the

Rules and Regulations promulgated thereunder.It is further ordered That the respondent, Luxurious vV oollens

Ltd. , a corporation; its offcers; the respondent, :\lax vVassermaniudividuaJJy and as an offcer of the corporation; the respondent

Paul A. Raich , individua.lly and as gcneral manager of the corpora-tion; and respondents ' agents , representatives , and employees , directlyor through any corporate or other device, in connection with the

oilering for sale, sale or distribution in commerce (as "commerce" is

defined in the Federal Trade Commission Act) of piece goods, orothcr wool products, do forthwith cease and desist from:

A. llisrepresenting in invoices , by labels sepaTately furnished or inany other manner the character or amount of the constituent fiberscontained in such products.

B. Furnishing to or placing in the hands of others stamps , tagsor labels by means of which the respondents ' products , or garmentsmade from them , may be falsely or deceptively stamped , taggedlabeled or otherwise identified , either as to the character or amountof their constituent libers or in any other respect.

DECISlOX OF THE COMMISSION A::'T ORDER TO FILE HEPOHT OF COJ\IPLIAXCE

Pursuant to Section 3.21 of the Commission s Rules of Practice, theinitial decision of the hearing examiner, as corrected by his order fiedApril 13 , 1956 , shall on the 11th day of May 1956 , become the decisionof the Commission; and, accordingly:

It is ordered That the responclents herein shall within sixty (60)days after service upon them of this order , file with the Commission areport in writing setting forth in detail the manner and form in whichthey have complied with the order to cease and desist.


Appearances 52 F . T. C.

IN THE MATTR OF

CORDAGE INSTITUTE ET AL.

CONSENT ORDER , ETC. , IN REGAR TO THE ALLEGED VIOLATIONOF THE FEDERA TRADE COMMISSION ACT

Dooket 584.8. Oomplaint , Feb. 15, 1951-Decision, May 12. 1956

Consent order requiring 18 corporate manufacturers of hard fiber rope , cordageand wrapping twine and their trade association, to cease concertedly main-taining geographical price zones or zone price differentials in the sale oftheir products; and

Dismissing for failure of proof charges of fixing uniform delivered prices andterms and conditions of sale; of concertedly classifying customers forpricing purposes and fixing discounts and terms and conditions of sales foreach class; of disseminating among themselves through respondent Institutetheir current and future quotations of prices, terms and conditions of sales;and holding meetings at which prices and trade practices and policiesdesigned to eliminate competition among themselves were discussed andacted upon.

Before J.1fr. lVilliam L. Pacle hearing examiner.

Mr. Floyd O. Oollins and Mr. J. Wallace Adair for the Commission.Jackson, Nash, Brophy, Barringer

&;

Brooks of New York City,for Cordage Institute , R. C. Utess and H. ),1. Wall.

M,.. Karl F. Steinmann of Ba1timore 1d. , for J. S. McDaniel.Gaston , Snow , Rice

&;

Boyd of Boston, Mass., for Plymouth

Cordage Co.

Mr. Danwl G. Oonnolly, of Brooklyn , :N. Y. , for American Manu-facturing Co. and Cupples Co. , Inc.

Hiscock , Dowie , Bruce , Lee and Jlawhinney, of Syracuse , )Y, Y.for Cohnnbian Rope Co., The Edwin II Fit1er Co. and R. A.Kelly Co.

Kibwr' , Hervey

&;

Kibwr of Newark , Ohio, for The E. T. Rugg Co.Younge , Frederick

&;

Rutherford of Peoria, Ill., for PeoriaCordage Co.

Prescott , Bulla7'd

&;

AfcLeod of New Bedford, Mass. , for NewBedford Cordage Co.

Pillsbury, Madison

&;

Sutro of San Francisco , Calif. , and Mr. HughFullerton of Washington , D. C. , for Tubbs Cordage Co. (Calif. ) andTubbs Cordage Co. (Wash.

Clark , Brown , McOo"un , Fortenbaugh

&;

Young, of Philadelphia

Pa. , for Wall Rope Works, Inc.Parsons , Closson

&;

McIlvaine of New York City, for \'itloekCordage Co.

CORDAGE INSTITUTE ET AL. 1335

133 Complaint

Mr. Bernrd J. Ferguson of Woodside , N. Y. , for Cating RopeWorks, Inc.

Stevens, DeLong Dry, of Reading, Pa. , for The Thomas Jackson& Son Co.

Shook, Lax

&;

0180n of Washington , D. C. , for Waterbury RopeSales Corp.

Smith, McOallister Gibney, of Xenia , Ohio , for The Hooven &Allison Co.

Mr. Gladstone P. Lilicrapp, of Easton , Pa. , for Rinck Cordage Co.

CO:;PLAIN'

Pursuant to the provisions of the Federal Trade Commission Actand by virtue of the authority vested in it by said Act, the FederalTrade Commission , having reason to believe that the Cordage Insti-tute , a non-profit membership association , its offcers and members tndemployees

, .

J. S. j',,(cDaniel , R. C. utess , S. "I'V. Metcalf , W. S. JilesJr. , E. G. Roos, H. M. "lVall , Plymouth Cordage Co. , a corporationAmerican fanufacturing Company, corporation , Columbian HopeCompany, a corporation. The Edwin H. Fitler Company, a corpora-tion , R. A. ICelly Company, corporation , The E. T. Rugg Company,a corporation , Peoria Cordage Company, a corporation , New BedfordCordage COlnpany, a corporation , Tubbs Cordage Company, a cor-poration (Calif. ), Tubbs Cordage Company, a corporation ("I'Vash."I'Vall Rope IV orks , Inc. , a corporation , "lVhitlock Cordage Company,a corporation , Cating Hope IV o1'k8 , Inc., a corporation, Cupples

Company, Inc. , a corporation , The Thomas Jackson & Son Company,a corporation, \Vaterbury Hope Sales Corporation , a corporation , TheHooven & Allison Company, a corporation , and Rinck Cordage Com-pany, a corporation , have violated the provisions of said Act, a,nd itappearing to the Commission that a proceeding by it in respect

thereof would be in the public interest , hereby issues its complaintstating its charges in that respect as follows:PARAGRAPH 1. The products involved in this proceeding are rope

cordage and twine made of fiber from abaca , agave and other plantsfrom which hard fiber is obtained. Such products are commonlyknown and referred to as hard fiber rope, cordage and twine. Saidproducts are used extensively by the Navy and all branches of theArmed Services; by steamship companies and those in the fishingindustry; by railroads and other common carriers; by steel com-panies , coal companies, oil companies, farmers and ranchers. It isused by substantially everyone engaged in a productive enterpriseor economic activity.



PAR. 2. Respondent , Cordage Institute , hereinafter referred to asRespondent Institute, is an unincorporated non-profit membershipassociation , whose membership is composed of corporations, partner-ship firms and individuals who are engaged in the Continental UnitedStates in the manufacture , sale and distribution of rope, cordage andtwine wholly or in chief value of abaca , agave , or other hard fiberand commodities commonly known as tarred hemp. The home offceand principal place of business of said respondent is located at 350

Madison Avenue , New York , New York. Its Articles of Associationstate its purposes and objects to be:

(a) To promote the interest of the industry and improve its servicesto the public.

(b) To compile , distribute and exchange information;(c) To establish trade standards; and(d) To cooperate in handling all problems of common interest to

the industry.

The offcers of Respondent, Institute are President Secretary,Treasurer, Executive Committeemen and members of such othercommittees as arc designated from time to time.

The President of Respondent Institute is a1so Chairman of theExecutive Committee and it.s Articles of Association declare hisauthority and duties to be coextensive ,,.ith and limited to those ofChajrman of the Executive Committee.

It is the duty of the Executive Committee to determine the policiessupervise the carrying out of the purposes and objects , and direct thebusiness and financial matters of Hesponc1ent Institute.

The duties of the Secrctary arc to keep the records of the Instituteand of all the committees; keep informed as to conditions prevailingin the industry, the happenings of importance and of interest to themembers , and to transmit to the members such information as isdeemed helpful and instructive to them.

The Executive Committee and Respondent Institute ho,.e fromtime to time authorized and directed the Secretary to collect anddisseminate among the members, at regu1ar intervals , statistics andinformation such as:

(1) Monthly sales statistics in cordage business by products.(2) :lIonthly charts indicating (a) trend of business for the indus-

try, and (b) trend of percentage of total business by each company.(3) :l\onthly statistics of Manila fibers showing stocks on hand

consumption , etc.(4) Monthly reports of sales of distress or obsolete merchandise.(5) Copies of printed price lists of the respective members.(6) Surveys of wages , hours and labor conditions.


1334 Complaint

(7) Statistics on Manila fiber production.

(8) List of brand names of various products.

(9) Special studies and activities, such as cost accounting systems.Respondent, J. S. McDaniel , whose address is 350 Madison Avenue

New York , I\ ew York , is now and has becn since its organization theSecretary of Hespondcnt Institute , and haspcrformed and is nowperforming an the d nties of said offce.

Respondent, R. C. Utess , whose address is 11 oble and 'West StreetsBrooklyn 22 , X ew York , is President of Respondent Institute andChairman of its Executive Comnlittee.

Respondent, S. "iV. Metcalf, whose address is 309 Genesee StreetAuburn , K ow York , is a. member of the Executive Committee ofRespondent Institute.

Hcspondent, "IV. S. Miles , Jr. , whose address is 1502 South "iVash-Ington Street , Peoria 2 , Illinois , is a member of the Executive Com-mittee of the Respondent Institute.

espondcllt, E. G. RODS, ,yhose address is Korth Plymouth , J\1assn-chusetts , is a member of the Execubve Commjttee of RespondentInstitute.

sl)Ol:(kllt , I-I. ?- L \' c.ll hOS2 address is 48 Sonth Street, NewYork , K ew York, i5 a member or the Executive Committee ofRespondent Institute.

r All. 3. Respondent , Plymouth Cordage Co. , hereinafter referredto as Respondent Plymouth , is a corporation organized and existingunder and by virtue of the Jaws of the State of Massachusetts , wjthits home offce and principal place of business located at Plymouth:.Iassachusetts. Respondent is engaged in manufacturing and sellinghard fiber cordage , wrapping twine , baler twine and binder twine andis a member of Respondent Institute. In addition to two whollyowned subsidiary corporations in Canada , respondent owns and oper-ates as a division of respondent , The Federal Fiber Mills, located at1101 South Peters Street , K ew Orleans , Louisiana.

R.espondent

;-

American lanufacturing Company, hereinafter re-ferred to as Respondent A_merican , is a corporation organized andexisting under and by virtue of the laws of the State of lassachu-setts , with its horne offce and principal place of business located atNobel and IV est Streets, Brooklyn 22 , 11 ew York. Respondent isengaged in manufacturing and selling hard fiber cordage, wrappingtwine , baler twine and binder twine. It is a member of RespondentInstitute. It owns and operates a branch factory located at 11th andLaFayette Streets , St. Louis , :Missouri. Said branch factory is oper-ated under the name , St. LOllis Cordage :l\i11s , and is also a Inembcrof Respondent Institute.

1338 FEDERAL TRADE COMMISSIOK DECISIONS


Hespondent , Columbian Rope Company, hereinafter referred to asRespondent Colnmbian , is a corporation organized and existing underand by virtue of the laws of the State of New York, with its homeoffce and principal place of business located at 309 Genesee Street

Auburn ew York. Said respondent is now and has been engaged

in manufacturing hard fiber cordage , wrapping twine , baler twineand binder twine and is a member of Respondent Institute.

Respondent, The Edwin H. Fitler Company, hereinafter referredto as Respondent Fitler, is a corporation organized and existing underand by virtue of the laws of the State of Pennsylvania, with its homeoffce and principal pJace of business located at 5625 Tacony StreetPhiladelphia 24 , Pennsylvania. Respondent is now and has been

engaged in manufacturing hard fiber cordage, wrapping twine andbaler twine. Respondent is wholly owned by Respondent Columbianbut functions as a separate corporation and is a member of Respond-ent Institute.

Respondent, R. A. Kelly Company, hereinafter referred to as Re-spondent Kelly, is a corporation organized and existing under andby virtue of the laws of the State of Ohio , with its home ollce andprincipal place of business located at Xenia , Ohio. Respondent iswholly owned by Respondent Columbian and is operated as a branchof Columbian. It is a member of Respondent Institute.

Respondent , The E. T. Rugg Company, hereinafter referred to asRespondent Rugg, is a corporation organized and existing under andby virtue of the Jaws of the State of Ohio , with its home offce andprincipal place of business located at Newark , Ohio. Respondent isnow and has been engaged in manufacturing hard fiber cordage , wrap-

ping twine and baler twine. Respondent is a member of RespondentInstitute.

Respondent , Peoria Cordage Company, hereinafter referred to asRespondent Peoria , is a corporation organized and existing under andby virtue of the laws of the State of Illinois , with its home offce andprincipal place of business located at 1502 South 'Washington StreetPeoria 2 , Illinois. Respondent is now and has been engaged in manu-facturing hard fiber , cordage, wrapping twine , baler twine and bindertwine. Respondent is a member of Respondent Institute.

Respondent , New Bedford Cordage Company, hereinafter referredto as Respondent K ew Bedford , is a corporation organized and exist-ing under and by virtue of the laws of the State of Massachusetts

with its home ollce and principal place of business Jocated at Courtand Ash Streets , New Bedford , Massachusetts. Respondent is nowand has been engaged in manufacturing hard fiber cordage andwrapping twine. Respondent is a member of Respondent Institute.

CORDAGE INSTITU' rE ET AL. 1339

1334 Complaint

Respondent, Tubbs Cordage Company, is a corporation organizedand existing nnder and by virtue of the laws of the State of Cali-fornia, with its home offce and principal place of business located at225 Bush Street, San Francisco 4, California. Said Respondent ownsand operates as a division of Respondent, a manufacturing plant

located at Orange , California. Said division is operated under thetrade name of Great Western Cordage. Respondent and its divisionGreat Western Cordage, are both members of Respondent Institute.

Respondent , Tubbs Cordage Company (of Washington) is a cor-poration organized and existing under and by virtue of the laws ofthe State of Washington , with its home offce and principal place ofbusiness located at 2021 15th Avenue, "\Vest, Seattle, Washington.Said Respondent is a subsidiary of the Respondent Tubbs CordageCompany of San Francisco , California , but is operated separate andapart from the parent corporation. Said Respondent is engaged in

manufacturing, sellng and distributing hard fiber cordage and twineand is a member of Respondent Institute.

Respondent , "IV all Rope Works, Inc., hereinaftr referred to as

Respondent Wall , is a corporation organized and existing under andby virtue of the laws of the State of New .Jersey, with its home offceand principal place of business located at 48 South Street, NewYork 5 , N ew York. Said Respondent is now and has been engagedin manufacturing hard fiber cordage and wrapping twine. Respondentis a member of Respondent Institute.

Respondent, \'itlock Cordage Company, hereinafter referred to asRBspondent \'itlock , is a corporation organized and existing underand by virtue of the laws of the State of New Jersey, with its homeoffce and principal place of business locatcd at 46 South Street, NewYork 5 , New York. Respondent is now and has been engaged inmanufacturing hard fiber cordage and wrapping twine. Respondentis a member of Respondent Institute.

Respondent, Cating Rope Works, Inc. , hereinafter referred to asRespondent Cating, is a corporation organized and existing underand by virtue of the laws of the State of N ew York , with its homeoffce and principal place of business located at 58-29 - 64th StreetMaspeth, New York. Respondent is now and has been engaged inmanufacturing hard fiber cordage and wrapping twine. Respondentis a member of Respondent Institute.

Respondent , Cupples Company, Inc. , hereinafter referred to asRespondent Cupples , is a eorpora6on organized and existing underand by virtue of the laws of the State of Missouri , with its homeoffce and principal place of business located at 386 - 3rd AvenueBrooklyn, K ew York. Respondent is now and has been engaged in

1340 FEDERAL TRADE COMMISSIQI\T DECISIO

Complaint 52 F.

manufacturing hard fiber cordage and wrapping twine. Respondentisa member of Respondent Institute.

Respondent, The Thomas Jackson & Son Company, hereinafterreferred to as Respondent Jackson , is a corporation organized andexisting under and by virtue of the laws of the State of Pennsylvaniawith its home offce and principal place of business located at Reading,PmIDsylvania. Respondent is now and has been engaged in manu-facturing hard fiber wrapping twine. R,espondent is a member ofRespondent Institute.

Respondent, Waterbury Rope Sales Corporation , hereinafter re-

ferred to as Respondent ' Waterbury, is a corporation organized andexisting undcr and by virtue of the laws of the State of New Yorkwith its home offce and principal place of business located at 88 Wall-,"bout Street, Brooklyn 11 , New York. Respondent is now and hasbeen engaged in manufacturing hard fiber cordage and wrappingtwine. Respondent is a member of Respondent Institute.

PAR. 4. Respondent , The Hooven & AlJison Company, hereinafterreferred to as Respondent Hooven , is a corporation organized andexisting nnder and by virtue of the laws of the State of Ohio , withits home offce and principal place of business located at Xenia , Ohio.Respondent is now and has been engaged in manufacturing ha-rd fibercordage , wrapping twine, balerbvinc and binder twine.

Respondent , Rinek Cordage Company, hereinafter referred to asRespondent Rinck, is a corporation organized and existing under andby virtue of the laws of the State of Pennsylvania, with its homeoffce and principal place of business located at Easton, Pennsylvania.Respondent is now and has been engaged in the manufacture of hardfiber cordage.Respondent Hooven and Respondent Rinek are not members of

Respondent Institute, but they have aided and abetted and partici-pated in the carrying out and maintaining the wrongful and unlawfulacts and practices herein alleged.

PAR. 5. The Respondent Institute and Respondent McDaniel andthe members of the Executive COlllnittee of said Institute , are notengaged in the manufacture or sale and distribution of any commodityin commerce, but said respondents have aided , abetted , furthered andparticipate.c in some or an of the concerted actions, understandingsand agreements herein dcscribed and actively cooperated and partici-pated in the planning, maintaining and carrying out of some or all ofrhe acts and practices done pursuant thereto and in furtherancethereof.

PAR. 6. In t.he course and conduct of their respective businesses the

respondent manufacturers manufacture hard fiber rope , cordage and

CORDAGE S'fI'l' rE ET' AL. 1341

133 Complaint

twine and sell and distribute said products to purchasers thereof invarious States of the United States , pursuant to which sales saidproducts are shipped and transported , to the purchasers thereof across'State lines into States other than the State of origin of said ship-ments. Each of said respondent manufacturers , in the manner afore-said , maintains a constant current of trade in commerce among andbetween the various States of the United States.

PAR. 7. Respondent Inanufacturers in the course and conduct oftheir respective businesses have at all times been in competition withother firms and individuals in the manufacture , sale and distributionof rope, cordage and twines in commerce among and between thevarious States of the United States, and have been and are now incompetitioll ,vith one another except to the extent to which such com-petition has'been restrained , lessened , injured and suppressed by theunderstandings, agreements and concerted actions herein set forth.

PAR. 8; Respondent manufacturers manufacture and sell approxi-mately 65 percent of all the hard fiber twine and approximately80 percent of all the hard fiber rope and cordage manufacturedHnd sold in the Continental United States. Because of their dominantposition in the industry, respondents are able to and do, to a sub-

stantial degree control the prices at which said products are sold andlimit and eliminate the effects of other competitive elements.

P,,\R. 9. For more than three years last past the respondent manu-facturers- and Respondent Institute (including its offcers and variouscommittees- and committee members) have been engaged in and carry-ing out an unlawful combination, understandings and agreements

and a planned common course of action to fix and establish uniformidentical delivered prices for hard fiber rope, cordage and twine andto lessen , - limit, restrict and restrain competition in price and other-,visejftm(;mg and between respondents in the sale and distribution ofhard fiber rope, cordage and twine in interstate commerce , and pur-suant. to and in furtherance or said planned common course of actionagreements and understandings respondents have done and per-formed,. and are now dQing and performing among others, thefollowing acts and practices:

(a) Agreed upon uniform identical delivered prices to be quotedand charged, and upon terms and conditions of sale to be imposedand have systematically quoted and charged such prices to andimposed such terms and conditions upon their customers and pro-spective customers;

(b) Classified customers for pricing purposes and fixed and agreedupon discounts and terms rmd conditions or sales applicable to salesto customers in each classification;

451024--59--


Complaint 52 F.

(c) Established and maintained identical geographical zones forpricing purposes and systematically applied agreed upon uniformidentical zone price differentials in the sale of their products;

(d) Computed or averaged delivery or transportation costs withineach price zone from some agreed upon shipping point or points toall delivery points therein and used the amount thus obtained incalculating selling prices in order to prevent differences in delivery

costs from the various plants of respondents to their customers creat-

ing differences in prices of the products laid down at the customerplace of business;

(e) Agreed to disseminate and have disseminated among themselvesand by and through Respondent Institute at frequent intervals cur-rent and future quotations of prices, terms and conditions of salesoffered to the trade by various respondent manufacturers; and

(f) Have held meetings at which prices, terms and conditions ofsales and trade practices and policies designed to eliminate competi-tion in price and otherwise between respondents were discussed andacted upon.

PAR. 10. Each respondent manufacturer, in calculating, makingand announcing delivered price quotations , terms and conditions ofsale at which it offers to sell and does sell hard fiber rope , cordageand twine , does so by dividing the continental United States into sixGeographic Zones. Thereafter, subject to the customer classificationherein alleged , each respondent manufacturer quotes to each customerin a given zone identical delivered prices to those it quotes to each ofits other customers in said zone, irrespective of the places of deliveryin the zone or differences in delivery costs. Each respondent manu-facturer has adopted and uses an arbitrary zone price differential foreach of the six zones. The zone price differentials , zone numbers andzone boundaries used by each respondent manufacturer are identicalto the zone price differentials, zone nmnbers and zone boundaries usedby each of the other respondent manufacturers, regardless of thegeographic location of the factory of such respondent.

Each of the respondents, through the use of said pricing system

charges and collects a false amount as freight or delivery costs onsubstantially every sale made by it. On some sales the amount chargedis more and on the others it is less than the actual freight or deliverycost, and only in very few instances is the amount charged and col-lected as delivery cost identical with the actual delivery cost. Theactual differences in delivery costs between two zones are not identicalto the zone differentials used by the respondents; neither do the differ-entials used bear any reasonable relationship to the actual differences

in outbound freight or transportation costs between said zones.


1334 Order

Said pricing system enabJes respondents to match , and has resultedin the matching of delivered prices by all of said respondents at everydestination in the united States, thereby nullifying the effectivenessof differenCBs in delivery costs as an element of competition betweenthe respondents , and has precluded purchasers and prospective pur-chasers from fiding or obtaining any price advantage in dealing

with one respondent manufacturer as against another.Each of said respondents , has adopted and is using the acts , prac-

tices and methods described in this Paragraph 10 for the purpose andwith the effect of contributing to the hindrance , Jessening and injuryto com petition in price and otherwise between and among said re-spondents in the sale and distribution of their products, and therebyfurthers and helps the carrying out of the purposes and objects of

the agreements and understandings between the respondents, as

herein alleged.PAR. 11. The capacity, tendency and effect of said understandings

agreements , combination and plannf'Al c.ommOll course of action andthe acts and praetices of the respondent-5 and each of them, done andperformed pursuant thereto and in furtherance thereof, are no,". andhaye been to substantially Jcsse. , restrict, restrain and injure com-petition among and between respondent.s in the saJe Rnd distrihutionof hard fiber rope , cordage and twine in eommerce \vit.hin the intentand meaning of the Federal Trade Commission Act; have a dangeroustendenc.y to a,nd hRve actuaJJy hjnc1el'ecl restricted, and prevent.ed

price eompetition between and mnong said respondents in the saleand distribution of said products in said commerce; have empoweredand enahled respondents t.o R subst.ant.ial degree, to control themarket and enhance the prices of said products above the prices whichwould prevail under a condition of natural , normal and free competi-tIOn among said respondents and deprived the purchasing public of a

free and open competitive market in which to purchase said products.PAR. 12. The acts and practices of the respondents and each of them

as herein alJeged , are al1 to the injury and prejudice of the public andcompetition and constitute unfair methods of eompetition in com-merce within the int.ent and meaning of Section 5 of the FederalTrade Commission Act.

ORDER REl\IA l)!NG CASE TO HEARIXG EXA1tIXER

Counsel in support of the complaint and the respondents both

having filed appeals from the hearing examiner s initial decision

dismissing the complaint in this proceeding at the close .of the casein chief , and the matter having been heard on briefs of counsel (oral


Appeal 52 F. T. C.

argwnent not having been requested), and the Commission havingrendered its decision vacating and setting aside the initial decision:

It is order' That the case be, and it hereby is, remanded to thehearing examiner for further proceedings in conformity with the

Commission s decision.

o~ APPEAL FRO:\1 IX!T'AL DECISIO

Chairman Howrcy delivered the opinion:This case is before the Commission npon an appeal , filed by counsel

in support of the complaint, from the hearing examiner s initialdecision , issued at the close of the case in chief , dismissing the com-plaint. The basis of the decision was that a prima facie case had notbeen established. The respondents also appealed , contending that theexaminer was in error in fInding that the respondents , during the

A. period , agreed upon and put into operation a zone plan forpricing their products , and that they have continued its use dovl"n tothe present time.

vYe believe that counsel in support of the complaint have establisheda prima facie case with respect to that portion of the complaint whichcluLrged that the respondents collusively and wllawfully csta,lJlishec1geographical zones and freight differentials for pricing purposes.

As hereinabove indicated , the hearing examiner found that respond-ents had agreed upon a zone plan which fixed freight differentials andthat they had continued to use such plan down to the present time.He conceded that if this were part of a price fixing combination therewould be no doubt of its illegality, but held that "* * * in the circmn-stances here existing the plan is not a price fixing device but is simplya convenient method of charging freight."

The hearing examiner erred , we think , when he held that the zoneplan ,vas not a price fixing device.

Under the plan the United States was divided into six zones. Zone 1comprised roughly New England and the North Atlantic States.Moving wesbvarcl , provision was made for the other five zones , withZone 6 comprising the Pacific Coast States. Under the plan , as pres-ently operated , varying freight differentials were established to beadded to or deducted from list prices. The plan had the effect ofequalizing delivered list prices on rope and twine so that each re-spondent , regardless of its location , had the same delivered list pricein each zone. By delivered list price ,ve mean the quoted cost to theeOl1sumer, namely, the list priee plus or minus the established freightdifferential.

A comparison of the price lists and zone differentials shows howthe plan worked. For example, most 1952 price lists of companies

CORDAGE INSTITUE ET AL, 1345

1334 App

located in Zones 1 and 6, listed a price of $.50 per pound for %"

diameter, best grade , Manila rope and showed freight zone differ-entials for less-than-carload shipments as follows:Zones:

1 ....................................... List Prices

2 ....................................... :1 lb. over List Prices3 ....................................... 1 lb. over List Prices4....................................... I1fc lb. over List Prices5 ....................................... 1 if lb. over List Prices6 -............"..,..................... List Prices

At the same time an Ohio company, located in Zone 2 , had a listprice on comparable rope of $. ;(,. Its freight differentials were asfollows:Zones:

2 ........

3 .........

4....... ..5 ............

...........................

Printed List prices

1; C over printed prices

11 ovcr printed prices

%, C over printed priceslh if under printed prices

............................-..........................................................

land e...

..,........................

Thns , the seller on the Pacific Coast charged more for shipments tonearby Colorado than to more distant Kansas , and more for shipmentsto Kansas than to Ohio , and 11lore for shipments to Ohio than toJ\1assachusctts. In other words , with one exception (Zone 5), thefurther the shipping distance the less the freight chn rge.

Likewise , some of the differentials of t.he K ortheast seller bore littlerelationship to differing freight costs. He sold in California, for

example \ at. his :Massachusetts list price , that is , he charged no freightat all for his longest shipment. On the other hand , he charged 1%for deliveries to less distant K evada and l1/zif for deliveries to stillless distant Colorado.

The seller in Ohio (Zone 2) had different freight differentials. Hestarted with a list price of l/if more than the sellers on the two coaststhat is , the deJivercd cost for the customer across the street in XeniaOhio , was more than for customers located in either California orNew York. On shipments to the two coasts , that is , the two farthestpoints from his plant, he not only charged no freight but in fact madea deduction for fre,ight. Some of his in-between shipments were alsounrelated to freight costs. He charged less , for example , for shipmentsto Nevada than for shipments to points nearer his Ohio mill.

As we have indicated , the net result of thc varying differentialsand varying list prices, generally speaking, was that most respondentsquoted the same delivered price to all customers in each zone.

Respondents concede that post-World vVar II price lists show thatmost of the respondents used an identical zone plan for charging


Decision 52 T. C.

freight , but deny there is any evidence of a post- war agreement to usesuch plan. They contend , assuming arguendo that there may be evi-dence of use of the plan by agreement up to World War that wartime controls are a complete insulation from any presmnption thatan agreement continued post war.

\'ile the hearing examiner did not deal specifically with this argu-ment, he met the issue by holding that the zone plan was establishedmany years ago pursuant to an agreement and respondents had con-tinued its use down to the present time. It should be added , it seemsto us , that it is unlikely the present plan could have been worked outexcept in pursuance of some sort of an agreement or understanding.The artificiality and arbitrariness of the zone differentials are suchthat the plan cannot, prima facie, at least , withstand the inference ofagreement. See Fort Howard Paper 00. , et al v. Federal Trade

Oommission 156 F. 2d 899 , 907."lVe think the case should be remanded for further proceedings con-

sistent with this opinion , that is , to permit the respondents to showif they can, that the zone plan was not established pursuant to agree-ment or was not a price fixing device. The hearing examiner s initial

decision dismissing the complaint is accordingly vacated and set aside

IXITIAL DECISION BY WILLIA:\r L. PACK , HEARING EXAMIKEH.

The complaint in this matter charged the respondents with enter-ing into a combination in restraint of trade, in violation of the

Federal Trade Commission Act. At the conclusion of the reception

or evidence in support or the complaint , the hearing examiner granteda motion made by respondents seeking dismissal of the complaint forfailure of proof , and issued his initial decision dismissing the com-plaint. Upon appeal to the Commission by counsel supporting thecomplaint the Commission in effect affrmed the decision of the hear-ing examiner except as to one issue raised by the complaint , thatinvolving the use by respondents of geographical zones. As to thisissue, the Commission held that a prima facie case had been estab-lished and the matter was remanded to the hearing examiner forfurther proceedings in regular course.

An agreement with respect to this remaining issue has now beenentered into by respondents and counsel supporting the complaint

which provides , among other things , that respondents admit all thejurisdictional allegations ill the eompbint; that respondents ' iLuswers

to the complaint shall be considered as having been withdrawn; thatthe inclusion of fidings of fact and conclusions of law in the decision

disposing of this matter is waived , together with any further pro-ced ural steps before the hearing examiner and the Commission; that


1334 Deison

the order hereinafter set forth may be entered in disposition of theproceeding, such order to have the same force and effect as if enteredafter a full hearing, respondents specifically waiving Rny and allrights to challenge or contest the validity of such order; that theorder may be altered, modified or set aside in the manner providedfor other orders of the Commission; and that the agreement is forsettlement purposes only and does not constitute an admission by re-spondents that they have violated the law as alleged in the complaint.

The hearing examiner having considered the agreement and pro-posed order and being of the opinion that they provide an adequate

basis for an appropriate disposition of the proceeding, the agreementis hereby Rceepted, the following jurisdictional findings made , andthe following order issued:

1. Respondent Cordage Institute is an unincorporated non-profitmembership association , with its offce and principal place of businesslocated at 350 Madison Avenue cw York , New York.Respondent J. S. McDanie) , an individual , was secretary of re-

spondent Institute for a period of more than twenty-five yearsimmediately preceding March 1950.Respondent R. C. Utcss, an individual, was president of the

respondent Institllteand chairman 01 its Executive Committee fromMarch 1949 to January 1950.Respondent S. W. Metcalf , an individual , was a membcr of the

Executive Committee or the respondent Institute from !J anuary 1949'to January 1950.

Respondent \V. S. yIiles

, .

Jr. , an individual , was a member of theExecutive Committee of the respondent Institute from January 1949to January 1950.

Respondent E. G. Roos , an individual , \yas a member of the Execu-tive Committee of the respondent Institute from .J anuary 1949 toJanuary 1950.

Respondent H. M. "I'VaJl , an individuaJ , was a member of theExecutive Committee of the respondent Institute from January 1949to January 1951.

Hespondent Plymouth Cordage Co. is a corporation , existing anddoing business under and by virtue of the laws of the State of Massa-chusetts, with its offce and principal pJace of business located atPlymouth , Massachusetts.

Respondent American Manufacturing Company is a corporationexisting and doing business under and by virtue of the laws of the

State of Massachusetts , with its offce and principal place of businesslocated at Noble and West Streets , Brooklyn, New York.

1348 FEDERA TRAE COMMSSION DECISIONS


Respondent Colmnbian Rope Company is a corporation , existingand doing business under and by virtue of the laws of the State

New York, with its offce and principal place of business located at309 Genesee Street , Auburn , New York.

Respondent The Edwin H. FitJer Company is a corporation, exist-ing and doing business under and by virtue of the laws of the Stateof Pennsylvania, with its offce and principal place of business locatedat Devereaux and MiJnor Streets, Philadelphia , Pennsylvania.

Respondent R. A. KeJJy Company is a corporation , existing anddoing business under and by virtue of the Jaws of the State of Ohiowith its offce and principal place of business located at Xenia , Ohio.

Respondent The E. T. Rugg Company is a corporation , existingand doing business under and by virtue of the laws of the State ofOhio , with its offce and principal placc of business located at NewarkOhio.

Respondent Peoria Cordage Company is a corporation , existing

and doing business under and by virtue of the laws of the State ofIJJinois, with its offce and principal place of business located at 1502

South IVashington Street, Peoria , Illinois.Hesponclent Kew Bedford Cordage Company is a corporation

existing and doing business under and by virtue of the laws of the

State of Massachusetts , with its office and principal place of businesslocated at Court and -\sh Streets , New Bedford, J11asSfLchusetts.

Hespondent Tubbs Cordage Company is a corporation , existing anddoing bnsinese ,mder and by virtue of the la we of the State of CaE-fornia , with its offce and principal place of business located at 200Bush Street , San Francisco , California.

Respondent Tubbs Cordage Company (Washington) is a corpora-tion , existing and doing business under and by virtue of the Jaws ofthe State of IVashington , with its offce and principal place of businesslocated at 2021 - 15th Avenue

, '

West, Seattle, Washington.Respondent IV all Rope IVorks, Inc. , is a corporation existing and

doing business under and by virtue of the laws of the State of NewJ ersey, with its offce and principal place of business located at48 South Street ow Yark , New York.

Hespondent vYhitlock Cordage Company is a corporation , existingand doing business lUldel' and by virtue of the laws of the State of

cw J el'sey, ,,' ith its offee and principal place of business located at46 South Street , Kew York , New York.

Hespondent Cating Rope "\Vorks, Inc. , is a corporation , existingand doing business under and by virtue of the laws of the State New York , with its offce and principal place of business located at58-29 64th Street , :Ylaspeth , New York.

CORDAGE INSTITUTE ' ET AL. 1349

1334 Order

Respondent Cupples Company Manufacturers (named in the com.plaint as Cupples Company, Inc. ) is a corporation, existing anddoing business under and by virtue of the laws of the State of Mis-souri , with its offce and principal place of business located at 440South Brentwood Boulevard , St. Louis, :l1issouri.

Respondent The Thomas Jackson & Son Company is a corporationexisting and doing business under and by virtue of the Jaws of theState of Pennsylvania , with its offce and principal place of businesslocated at Reading, Pennsylvania.

Respondent 'Vaterbury Rope Sales Corporation is a corporationexisting and doing business under and by virtue of the laws of the-State of New York, with its offce and principal place of business

located at 88 "I'Vallabout Street , Brooklyn , ?"ew York.Jtcspondent The Hooven & Allison Company is a corporation , exist-

ing and doing business under and by virtue of the laws of the Stateof Ohio, with its offce and principal place of business located at

Xenia , Ohio.Respondent Rinck Cordage Company is a corporation , existing and

doing business under and by virtue of the laws of the State of Penn-sylvania , with its offce and principal pIa,co of business located atEaston , Pennsylvania.

2. The Federal Trade Commission has jurisdiction of the subjectmatter of this proceeding and of the respondents , and the proceedingis in the public interest.

ORDER

It is oTdered That respondents , Cordage Institute, 8.n unincor-porated membership association , J. S. IeDHniel , inclividua.lly and asSecretary of Cordage Institute, R. C. 1) tess , individually and asPresident and Chairman of the Executive Committee of CordageInstitute , S. "Iv. :l1etcalf, indiviclually and as a member of the Execu-tive Committee of Cordage Institute , "IV. S. :'1iles , .Tr. , iudi,'iduallyand as a member of the Executive Committee of Cordage InstituteE. G. Roos , individually and as a member of the Executive Com-mittee of Cordage Institute , H. 1U. \Vall , individually and as a mem-ber of the Executive Committee of Cordage Institute , and PlymouthCordage Co. , American J\fanufactllring Company, Columbian HopeCompany, The Edwin H. Fitlel' Company, R A. Kelly Company,The E. T. Rugg Company, Peoria Cordage Company, New BedfordCordage Company, Tubbs Cordage Company, Tubbs Cordage Com-pany (Washington), Wall Rope Works , Inc. , l'itlock Cordage Com-pany, Cating Rope Works , Inc. , Cupples Company ManufacturersThe Thomas Jackson & Son Company, "lVaterbury Rope Sales Cor-poration , The Hooven & Allson Company, and Rinek Cordage Com.


Decision 52 F.

pany, corporations, and their offcers, agents, representatives, andemployees, directly or through any corporate or other device, in con-nection with the offering for sale, sale , and distribution of hard fiberrope or hard fiber wrapping twine in commerce , as "commerce" isdefined in the Federal Trade Commission Act, do forthwith cease anddesist from entering into , continuing, cooperating in , or carrying outany planned common course of actjon, agreement, understanding,combination, or conspiracy between or among any two or more ofsaid respondents, or between anyone or more of said respondents andothers not parties to this proceeding, to establish or maintain geo-graphical price zones or zone price differentials in the sale of hardfiber rope or hard fiber wrapping twine.

It is further ordered That the remaining charges of the complaint, and they hereby are , dismissed.

DECISIO~ OF TI-IE COMl\ISSION AXD ORDER TO FILE REPORT OF CO:1IPLIAXCE

Pursuant to Section 3.21 of the Commission s Rules of Practice , the

initial decision of the hearing examiner shall , on the 12th day of May,1956 , become the decision of the Commission; and , accordingly:

It is ordered That the respondents herein shall within sixty (60)days after service upon them of this order , file with the Commissiona report in writing setting forth in detail the manner and form inwhich they have complied with the order to cease and desist.

Commissioner Kern not participating.

mr. john j....puge'l sol, d salmon canners, inc., et al. 1253 1251 complaint its principal...

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