Essex V Arnish Company

Text (OCR of the scan at left; may contain errors)

FEDERAL TRADE COMMISSION v. ESSEX V AR- NISH COMPANY.

COMPLAINT IN THE MATTER OF THE ALLEGED VIOLATION OF SEC- TION II OF THE ACT OF CONGRESS APPROVED SEPTEMBER 26 1 1914, Docket No. 75.-Aprll 15, 1918.

SYLLABUS.

Where a corporation engaged In the manufacture and sale of varnish and kindred products gave and oflered to give to employees of customers and of competitors' customers, in some Instances without FEDERAL TRADE COMMISSION DECISIONS, 139 the knowledge and consent of their employers, gratuities, entertainment, and money, as an inducement for them (a) to influence their employers to purchase its goods or to refrain from dealing with its competitors, and (b) to adulterate and spoil its competitors' products:

Held, That such gifts and others to give, \Wder the circumstances set forth, constituted an unfair method of competition ln violation of section 5 of the act of September 26, 1914. COMPLAINT.

The Federal Trade Commission, having reason to believe :from a preliminary investigation made by it that the Essex V urn ish Co., hereinafter referred to as respondent, has been, :for more than a year last past, using unfair methods of competition in interstate commerce in violation of the provisions of section 5 of the act of Congress approved September 26, 1!>14, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and it appearing that a proceeding by it in respect thereof, would be to the interest of the public issues this complaint, stating its charges in that respect on information and belief as :follows:

Paragraph 1. That the respondent, the Essex Varnish Co., is a corporation, organized and existing, and doing business under and by virtue of the laws of the State of New Jersey, having its principal office and place of business at the city of Newark, in said State, and is now and for more than one year last vast has been engaged in manufacturing and selling varnish, lacquers, and japans throughout the States and Territories of the United Sttttes, and that at all times hereinafter mentioned, the respondent has carried on and conducted such business in direct competition with other persons, firms, copartnerships, and corporations manufacturing and selling like products.

PAR. 2. That, with the intent, purpose, and effect o:f stifling and suppressing competition in interstate commerce in the manufacture and sale of .varnish, lacquers, and japans, the respondent, for more than one year last past, has been, systematically and on a large scale, giving and offering to give, to employees of both its customers and prospective customers and its competitors' customers and prospective cus- 140 FEDERAL TRADE COMMISSION DECISIONS, tomers, as an inducement to influence their employers to purchase or contract to purchase from the respondent, varnish, lacquers, and japans, without other consideration therefor, gratuities such as lictnor, cigars, meals, theater tickets, valuable presents, and entertainment.

PAn. 3. Tha~, with the intent, purpose, and effect of stifling and suppressing competition in inhlrstate commerce in the manufacture and sale of nunish, lacquers, and japans, the rpf;pon<lent, for more than one Yl'ar last past, has been, systetnatically and on a large scale, secretly paying nnd oflering to pay, to etnployees of both its customers and prospective cw:tomers, ancl its competitors' customers and prospective customers, ,vithout the knowledge and consent of their employer~, large sums of money as an inducement to influence their said e1nployers to purchase or contract to pmchase from the respomlent, varnish, lacquers, and japans, or to influence such customers to ref'r;~in from dealing or contracting to deal with competitors of the respondent. PAn. 4. Th:tt, with the intent, purpose, and effect of stifling and Euppre;-;sing; ~:ompetiti.on in intt·x-:;tt\te commerce in th~ manufacture and sale of varnish, lacquers, and japans, the respondent has, for more than one yt•ar last pnst, secretly and surreptitiously paid and offered to pay employees of both its customers n,JI(l pro'-'pecti\·e customers and its competitors' customers and pro.-;pective customers, without the knowledge and consent of their employers, large sums o£ money to adtilteratc ancl spoil for their proper uses varnish, lacquers, and japans sold or offered for sale by its competitors to such customers.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER.

The Feder:tl Trade Commission, having issued and served its complaint herein, wherein it is alleged that it hnd reason to believe thttt the abo\'e named respondent, E~sex Varnish Co., has been and now is using unfair methods of competition in interstate commerce in violation of the provisions of section 5 of an act of Congress approved September 26, 19H, entitled, "An act to create a Fedeml Trade Commission, to define its powei'S and dutie-;, and for other purpo~es," and FEDERAL TRADE COMMISSION DECISIONS. 141 that a proceeding by it in that respect would be to the intcrc,.;t of the puolic, and fully stating its charges in this respect, and the respondent having entered its appearance and having filed its answer admitting th1tt within the lust three year:'> it has done and performed the actl as alleged in the :-;aid complaint, and agreeing and consenting that the Commis:::ion shall forthwith proceed to make and enter its report, stating its findings as to facts, and its order disposing of this proceeding without the introduction of testimony in support of the same and waiving any and all right to the introduction of such testimony, the Commission makes this report and findings as to the facts and conclusions. FINDINGS AS TO THE FACTS.

P.\nAGRAPII 1. That the respondent, Essex Varnish Co., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of New Jersey, with its home office located at the city of Newark, in the said Stale of New Jersey, now and for more than one year last. past engaged in the business of manufacturing and selling Yal'llish, lacquers, japans, and kindred products, generally in commerce throughout the States and Territories of the United States in direct competition with other persons, fil'lns, copartnerships and corporations manufacturing and Eelling like pro<lucts.

PAn. 2. That within the last three years the respondent }w;; given and offered to give employees of both its customers an(] prospective customers as an inducement to influence tiH'ir employers to purchase or to contract to purchase from the respondent, varnish, lacquers, japans, and kindred products, or to influcnee such employers to refrain from dealing or contracting to deal with competitors of respondent, without other consideration therefor, gmtuities consisting of liquors, cigars, meals, theater ticl<ets, and o·ther personal property.

P.\n. 3. That within the last three years the respondent has given ami offered to give employees of both its customers an<l prospecti,,e customers, and its competitors' customers nnd prospective customers, as an inducement to influence 142 FEDERAL TRADE COMMISSION DECISlO:'<S, their employers to purchase or to contract to purchase from the respondent, varnish, lacquers, japans, and kindred prodnets, or to influence such employers to refrain from dealing or contracting to deal with competitors of respondent, without other consideration therefor, entertainment consisting of amusements and diversions of various kinds and description. PAR. 4. That within the last three years the respomlc·nt hns given and. offered to give employees of both its customers and prospective customers, and its competitors' customers and prospective customers, without the knowledge nnd consent of their employers, as an inducement to inflnrnce their employers to purchase or to contract to purchase from the respondent, varnish, lacquers, japans, and kindred products, or to influence such employers to refrain from denling or contracting to deal with competitors of respondent, without other consideration therefor, large sums of money. PAR. 5. That within the last three years the respondent has given and oflered to give employees of both its customers and prospective customers, and its competitors' customers and prospective customers, without the knowledge and consent of their employers, large sums of money to adulterate and spoil for their proper uses, varnish, lacquers, japans, and kindred products, sold or offered for sale by its competitors w such customers. · CONCLUSIONS, That. the methotls of competition set forth in the foregoing findings as to facts in paragraphs 2, 3, 4, 5 and each and all of them, are under the circumstances therein set forth, unfair methods of competition in interstate commerce in viol:ttion of the provisions of section 5 of an act of Congress approved Septl'mber 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

ORDER TO CEASE AND DESIST, The Federal Trade Commission, having issued and served its complaint herein, and the respondent having entered its appear:mce and filed its answer admitting that it has in the FEDERAL TRADE COMMISSION DECISIONS. 143 last three years done and performed the acts as alleged and contained in the said complaint, and agreeing and consenting that the Commission shall forthwith proceed to make and enter its report stating its findings as to the facts and its order disposing of this proceeding without the introduction of testimony in support of the same, and waiving any and all right to the introduction of such testimony and the Commission having made and filed its report containing its findings us to the facts and its conclusions that the respondent has violntcd section 5 of an act of Congress approved September 2G, 1014, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," which said report is hereby referred to and made a part hereof. Now, therefore, It is ordered, that the respondent, Essex Varnish Co., of Newark, N. J., and its officers, directors, agents, servants, and employees, cease and desist from directly or indirectly: 1. Giving or offering to give employees of its customers or prospective customers, or those of its competitors' customers or prospective customers, as an inducement to influence their employers to purchase or to contract to purchase from the respondent varnish, lacquers, japans, and kindred products, or to·influence such employers to refrain from dealing or contracting to deal with competitors of respondent, without other considemtion therefor, gratuities, such· as liquor, cigars, meals, theater tickets, valuable presents, and other personal property.

2. Giving or offering to give employees of its customers or prospective customers, or those of its competitors' customers or prospPetive eustorners, as an inducement to influence their employers to purchase or to contract to purchase from the re.-;pondent varnish, lacquers, japans, and kindred products, or to influence such employers to refrain from dealing or contracting to deal with competitors of respondent, without other consideration therefor, entertainment, consisting of amusements or diversions of any kind whatsoeyer.

3. Giving or offering to give employees of its customers or prospective customers, or those of its competitors' customers or prospective customers, as an inducement to influence their 144 FEDERAL TRADE COMMISSION DECISIONS, C'employers to purchase or to contract to purchase from the respondent, varnish, lacquers, japans, and kindred products, or to influence such employers to refrain from dealing or contracting to deal with competitors of respondent, without other consideration therefor, money.

4. Giving or offering to give employees of its customers or prospective customers, or those of its competitors' customers or prospective customers, to adulterate and spoil for their proper uses varnish, lacquers, japans, and kindred products, sold or offered fol' sale by its competitors to such customers, money.