The Silvex Co.

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

FEDERAL TRADE COMMISSION v. THE t;ILVEX CO.

CO~Il'LAIXT IN THE l\IAT'l'EH OF THE ALLEGED VIOLATION 01'' SEC- TION II OF AN ACT OF CONGRESS APPROVED SEPTEMBER 26, 1914.

Docket No. 192.-December 24, 1918.

SYU..ABUS.

Where a corporation engaged In the manufacture and sale of spark plugs fulst>Iy advertised that its p!·oduct bud been certified by the Bureau of Standards of the United States Department of Commerce:

Held, That such advertisement constituted an unfair m~thod of competition in violation of s•--ctlon 5 of the act of September 26, 1914. COl\IPLAI~T.

The Federal Trade Commission, having reason to believe from a preliminary investigation made by it, that The Silvex Co., hereinafter referred to as respondent, has been and 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, 1914, 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 m that respect, on information and belief, as follows: PARAGRAPH 1. That the respondent, The Silvex Co., i~ now nnd was at all times hereinafter mentioned, u. corpomtion organized, exi:;ting, and doing business under and by virtue of the laws of the State of Pennsylvania, having it8 principal oflice and place of business at South Bethlehem in said State, and is now and for more than two years last pnst has been eng<tgeu in the business of manufacturing 302 FEDEEAL TRADE COMM ISS! ON DECISIONS, spark plugs and then selling them to various customers throughout the different States and Territories of the United States, and the District of Columbia and foreign countries, and that at aU times hereinafter mentioneLl the respon(lent has carried on and conducted such business in direct competition with other p<'rsons, firms, copartnerships, and corporations similarly engaged.

PAR. 2. That the respondent, the Silvex Co., in the conduct of its business, manufactures, moYes: and distributes its spark plugs to, from, and among the State of Pennsylvania and other States and Territories of the United States, and there is continuously. and has been at all times hereinafter mentioned, a con,tant current of trade and commerce in such spark plugs between and among the various Sttltes of the United States, the Territories thereof, and the District of Columbia.

PAR. 3. That the component parts used by the respondent in the manufacture of its spark plugs have been W!'tcd by the United States Department of ~lines, and that respondent has so worded and constructed an advertisement by referring to E'aid test that is calculated and designed to and does mislead the trade and general public into the belief the spark plug-; so manufactured and sold by respondent have been certifie(l by the Uniwd Statps Department of Mine~. PAn. 4. That the respondent, within the year last past, has puldishe<l and c:wsed to be published the nfon.'sai<l advertisenwnt in newspapers, magazines, periodicals, trurle papers and other publications circulate~! throughout the States and Territories o~ the UnitPCl Stutes and District of Columbia and foreign countries with the purpose~ intent and effect of stifling and suppressing competition in the sale of spark plugs in interstate commerce.

REPOnT, FINDINGS AS TO THE FACTS, AND ORDER.

The FPclC\ral Trade Commission, having- issued anrl ser\'ed its complaint lwrein. wherein it is alleged that it had reason to believe that the above-named respondent, The Silvex Co., has bN•n, and now is, using unfair methods of competition in interstate commerce, in violation of the provisions of sec- FEDl':RAL TRADE COMMISSION DECISIONS, 303 tion 5 of an act of Congress n.approved St>ptember 2G, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and that a proceeding by it in that respect would be to the interest of the public~ and fully stating its charges in this respect; and respondent having entered its appearance by Dnllett II. ·wilson, its attomey, duly authorized and empowered to act in the premises~ and filed its answer, admitting that certain of the matters and things alleged in the said complaint are true in the manner and form therein set forth, and denying others therein contained, nnd thereafter having made and executed an agreed statement of facts, which has been heretofore filed, in which it is stipulated and agreed by the respondent that the Federal Trade Commision shall take such agreed statement of facts as the evidrnce in this case and in lieu of testimony, and shall forthwith thereupon make and enter its report, st1tting its findings as to the facts and its conclusions, and its order, disposing of this proceeding without the introduction of testimony or presentation of argument, the Federal Trade Commission now makes and enters this, its report, stating its finding'=' as to the facts and its conclusion. FI~DINGS AS TO THE FACTS, PAnAGHAPH 1. That the respondent, the Silvex Co., is a COI1l0ration organized, existing, and doing business under and by virtue of the laws of the State of New York, having its principal factory, office, and place of business located at the borough of Hellertown, in the State of Pennsylvania, now, and for more than two years last past, engaged in the business of manufacturing and selling spark plugs in interstate commerce throughout the Stutes of the United Stutes, the Territories thereof, the District of Columbia, and foreign countries, in direct competition with other persons, firms, copartnerships, and corporations similarly engaged. PAn. 2. That within the year last past the respondent has sold to the Government of the United States large quantities of its product, and the same have been accepted by the Government.

304 FEDERAL TRADE COMMISSION DECISIONS. PAn. 3. That respondent's spark plugs have never been tested by the United States Department of Mines, but that the same have been tested, according to the tests made by the Bureau of Standards of the United States Department of Commerce.

PAn. 4. That respondent's Bethlehem aviation spark plugs have never been certified by the Bureau of Standards of the United States Department of Commerce. PAR. 5. That on April 19, 1918, the respondent printed and caused to be circulated a certain letter, in which it is stated and held out that its Bethlehem aviation spark plug had been certified by the Bureau of Standards. CONCLUSION.

That the method of competition set forth in the foregoing findings as to the facts in paragraph 5, is, under the circumstances therein set forth, an unfair method of competition in interstate commerce, in violation of the provisions of section 5 of an act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes." OllDER TO CEASE AND DESIST.

The Federal Trade Commission, having issued and served its complaint herein, and the re.<>pondent, having entered its appearance by Dallett H. Wilson, its attorney, duly authorized to act in the premises, and having filed its answer, and thereafter having made and entered into an agreed statement of facts, wherein it is stipulated and agreed thtLt the Federal Tralle Commission should take such agreed statement of facts as the evidence in this case and in lieu of testimony, and should proceed forthwith upon the same to make and enter its report, stating its finding-s us to the facts and its conclusion, 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 httving maJe and filed its report containing its findings as to the facts and its conclusion that the re:'lpondent has violated section 5 of an act ' FEDERAL TRADE COMMISSION DECISIONS, 305 of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define l.ts powers and duties, and for other purposes," which said report is hereby referred to and made a part hereof: Now, therefore, It i8 ordered, That the r<>spondent, The Silvex Co., of Kew York, and its officers, directot·s, representatives, agents, servants, and employees cease and desist from directly or iudirectly ad \'ertising or publishing or circulating or distributing any circuhtr letter, advertisement or printed matter whatsOfwer, in which it is statl'd or held ont that respondent's Bethlehem aviation spark plug has been "certified by the Bureau of Standards."

FEDERAL TRADE COM~HSSION v. VACUUM OIL CO.

COMI'LAI:\'T IN Tile MATTER o~· THE ALLF.GF.O VIOLATION o·po SECTION r5 OF THE ACT O.Jo' CONGRESS APPROVED SEPTEMBER 26 1 11.\14.

Docl,et No. 219.-Decellllll'r 27. 1918. SYJ.L.\8l18.

'Vhere 11n oil company- ( a) shlppt>tl Jnrg-e qunntltlcs of goods to Its customers a.n1l customers of Its I'OlllpPtltors, without tht>t'Ptofore huvlng received orders for thp SllnW; lllld, (b) Indue('(! and attPulpted to lmluce such consignees to accept and pu•·chase the goods so shlppl'd, hy (1) the extension of long tlme cre1\its. nnd (~) guurnntPeing the resale of such consignments und the ussistunce of its saiPsmen In pi·ocm·tng the same: Hdri, That sud1 ll('ts con~titutecl nn unfair method of competition In vlolutlun of HPI'Iion :i of the act of SPptember 2G, J9H. COMPLAINT.

I. The Fedt>ral Tmde Commission having reason to believe from a pn·liminary im·estigation made by it, that the Vacuum Oil Co., hereinafter referred to as responllent, has been 11ncl is using unfair methods of competition in interstate commerce in violation of the provisions of section 5 of an act of Congress, approved September 2G, HH4, entitled " An act to create a Federal Trade Commission, to define its 1-Jj -J:ll) 0 -:.!0--:!0 , 306 FEDERAL TRADE COMMISSION DECISIONS. 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, Vacuum Oil Co., is now and was at all times hereinafter mentioned a corporation organi?.ed, existing, and doing business under and by virtue of the laws of the State of New York, having its principal office and place of business located in the city of New York, State of New York, now and for more than one year last past engaged in commerce in petroleum and in the manufacture, sale, and distribution of its products in direct competition · with other persons, firms, corporations, and copartnerships similarly engawd.

PAR. 2. That the respondent, Vacuum Oil Co., is engaged in the business of purchasing patrol<'um in oil-producing districts of the United States; in causing to be shipped and transported crude oil from such districts through and into other States; in refining the petroleum and manufacturing it into various products; in shipping and transporting petroleum products through and into different States of the United States and in selling petroleum products in different localities in various States of the United States and in the District of Columbia; that after such products are so manufactured in various States of the United States they are continuously moved to, from and among other States and Territories of the United Stutes, the District of Columbia, and foreign countries, and there is continuously and has been at Rll times hereinafter mentioned a constnnt current of trade and commerce in said products between and among the various States and Territories of the United States~ the District of Columbia, and foreign countries. and especially through and to the city of Olean. State of New York, and therefrom to and through other States of the United States, the Territories thereof, the District of Columbia, and foreign countries.

PAR. 3. That the respondent, with the intent, purpo.c:<>, and effect of stifling and suppressing competition in the mnnnfarhm>:. sale. and (listribution of ppt.roleum products in interstate commerce within the year last past has adopted FEDERAL TRADE COMMIS~ION DECISIONS. 307 nnd maintained a system of marketing its various petroleum products, whereby it ships at market prices to various customers of its competitors: large quantities of its products without having theretofore sold or received orders for the same, and in the furtherance of sa.id system the re- Fpondent induces and attempts to induce such consignees to accept and purchase such consignments so shipped as aforesaid by various means and mdhods among which are the following, to wit:

1. The extension of long-time credits. 2. Guaranteeing the resale of such consignments and the assistance of its st1Jesmen in procuring the same. That such system and methods are calculated and designed to and do enlarge respondent's gallonage output and cause t.he customers of its competitors to be overstocked, and to hinder, harass, and restrain such competitors in the conduct of their business.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER.

The FC'deral Tradt> Commission having issued and served its complaint herein, wherein it is alleged that it had reason to believe that the above-named respondent, Vacuum Oil 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 approyed September 26, 1914. entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and that a proceeding by it in that respect would be to the interest of the public, and fully stating its charges in this respect, and the respondent having appeared by Edward Prizer, its president, and filed its answer admitting that certain of the matters apd things alleged in the said complaint are true in the manner and form herein set forth. and <h~nying others therein contained, and ther~after having made and executed an agr('ed statement of facts which has been heretofore filed in which it is stipulated nnd ngrePd by the respondent that the Federal Trade Commission shall take such agreed statement of facts ns the evidence in this case and in lieu of testilllony and pro- ..

308 FEDERAL TRADE COMMISSION DECISIONS. ceC'tling forthwith thereupon to make and enter it~ report, stating its finding~ as to the facts and its conclusions and its order, disposing of this proceeding without the introduction of testimony, or the presentation of argum!'nt, th~ Federal Tr:ule Commi!-:sion now makes and enters its report, stating it::; titHling,; as to the facts and its conclusions. FIXIHNGS AS TO TJU: FACTS.

1. That tlw respondent, Vacuum Oil Co., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of ~ew York, lyt,·ing its principal office and place of lmsiness located in the city and State ot' New York, now and for more than one year last past engaged in the manufacture anll sale of p!.'troleum and its products generally in comm!.'rce throughout the various States of the Unitetl States in tlirect competition with other persons, fi1·ms, copartn<>r~h ips. and corporutions similarly engag<'ll. 2. That during the month of November, 1D17, the manager of the Dt•s l\Ioines ofliee of the respondent company shipped at markl't prices to various custollll'l'S of the respondl•nt and to customers of its competitors throughout the State of lown lnrge qunntitiPs of its products without having theretofore sold or reePin•<l orders for the same, and in<luced and attempted to induce such consignees to accept ami pm·chase such consignHH'nb so shipped as aforesaid, by (1) the extenhion of long-tiuw credits, and (2) guaranteeing the resale of such consignnwnts and the assistance of respondent's salesmen in procuring the :onlllP.

a. That the method of selling an<l practice of selling and m:nkc\ting its products us describrd and set forth in pamgmph 2 hell•in was c:ll'ri<•ll on, concluded, and cons11mmated b.\: the managPI' of the Des Moines oflice of the respondent compai1y without the know ledge or consent of the respondt>nt and witho11t the knowledge and consent of \Yillard \V. S1nith, gPlwral manager of the wt>.-·tem .bmnches of the respondent company.

4. That the re,.;pomlent cli)PS not now .and nen\r has maintninNl a policy of mn.rketi11g and selling its products without orders therefor.

FEDERAL TRADE COMMJS:o;ION DECISIONS, 309 CO:-i CLt:SlONS, That the nwthods of competition set forth in the foregoing findings as tp the facts in paragraph 2 and each and all of them are, under the circumstances therein set forth, unfair methods of competition in interstate cornmcrce in violation of the provisions of section 5 of an net of Congress appro,·ed ~epternber 26, 1914~ entitleu, "An act to creat~ a Federal Trade Commission, to define its powers and duties, and for othu pu rpo:-;es."

Olllli::R TO CEASE .A"ND DESIST, The Federal Trade Commi:-;sion having issued and servPcl its complaint herein, and the respondent having appeare1l by Edward Prizer, its pn•si<lent, duly authorized to act in the premis<'s, and having filed its answpr and thereafter having made and entered into an agreed statenwnt of facts as the eYidl•nee in this case and in lieu of testimony, and sh01rld proceed forthwith upon the same to make and enter its report, stating its findings as to the facts, and its conclusions nnd its onle1·, disposing of this pro('eeding without the introduction of testimony in support of the same, and waiving any and all right to the introduction of such h•stimony; and the Commission having made and filed its report containing it'> fiudings as to the fads, and its condusions that the respondent ha.s violated section 5 of an act of Congress approved SPptember 26, 1!)14, entitled, "An act to create a Federal Tm<le Commission, to define its puwers and duties, nod for other purposes:" Now, therefore: It is ord('}·ed, That the respondent, \.,.acnnm Oil Co., of New Yorl{, and its officers, directors, representatives, agents, senants, and employees cease and desist from directly or indirectly shipping to its customers or prospective l'nstomers, or the customers or prospective customers of its competitors any of its products ut market prices without having theretofore sold or received orders for the same, and inducing or attempting to induce the consignees in any manner whatsoever to accept and purchase such consignment'> as aforesaid.

310 FEDERAL TR.\:DE COMJ\II:SSION DECISIONS, FEDERAL TRADE COMMISSION v. G_\.RTSIDE IRON RUST SOAP CO.

CO.:\fPL.\I:ST l:'ol THE ;\latter or THE ALLEGED VIOL;_\TION OF SEC- TION :J OJ<' AN ACT OF CONGRESS APPROVED SEPTEMBER 26, 1914.

Doeket No. 190.-February 2, 1919.

SYLLABUS.

Where 11 lllauufacturer and vendor of a stuln remover- (a) falsely claimed that Its prepamtlon was covered by patent: (b) fnl,.;ely charged that the pt·epat·atlons of competitors were lnfrin~eluents of such alleged patent;

(c) tht·eatened to bring suits for lnfrlugement of it::! alleged patent against competitot·s and their customers, such threats not h<'ing made lu good faith, lutendlng to bring such suits, but for the purpose of Injuring said competltot·s and of Intimidating them nod their agents, customers, and prospective custolllers; and (d) circulated false and mif!leuulng stutellleuts to the effect that certain competitot•s were tlunnciully lnesponslbie: He/.d, That such acts eonstltuted unfair methods of competition, In violation of section 5 of the uct of SPptember 26, 1914. COMPLAINT.

The Federal Trade Commission having reason to believe from a preliminary investigation made by it, that Gart:;ide Iron Rust Soap Co., hereinafter referred to as the respondent, has been and is using unfair methods of competition in interstate commerce in violation of the provisions of section 5 of an uct of Congress approved September 26, 1914:, 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:

PARAURAPH 1. That the respondent, Gartside Iron Rust Soap Co.,·is now and was at nll times hereinafter mentioned, a corporation organized, existing, and doing business under and by virtue of the laws of the State of Pennsylvania, having its principal office and place of business in the city of Philadelphia, in said State, and is now and for more than two years last past, has been engaged in the manufacture and FEDERAL TRADE COMMISSION DECISIONS. 311 ·sale in commerce among the various States and Territories of the United States and the District of Columbia, of a certain preparation known as Iron rust soap for use in removing iron rust, ink, fruit, and medicine stains from clothing, marble, and the like, in direct competition with other persons, firms, corporations, and copartnerships engaged in nmnufacturing preparations for similar purposes. PAR. 2. That the respondent, by means of notices in letters, circulars, pamphlets, and ad vert ising circulated through the trade and by oral statements made by its officers, directors, agents, ser\'ants, and employes. to competitors and to competitors' customers, and to others with whom said competitors were and are contracting or ended\'Oring to contract, with the intent, purpose, and effect of stifling 1•.nd suppressing competition in interstate commerce in the manufacture and sale of preparations for removing iron rust, ink, fruit, and ml'.dicine stains from clothing, marble, and the like, within two years lust past has represented and still does represent that the manufacture and sale of preparations for removing iron rust, ink, fruit, and medieine stains from clothing, marble, and the like, manufactured by competitors of respondent, were and are infringements of a patent granted to the respondent, and were and are marketed in a form calculated to deceive the public into the belief that such preparations are the products of the respondent; that the respondent within two years last past· has threatened and is now threatening suits for such alleged infringements and unfair competition against such manufacturers nnd against all persons using or dealing in such products of such comprtitors; that said threats have not been made in good faith but for the purpose of intimidating competitors of respondent and the agents, servants, employees, customers, and prospectiye customers of competitol:s of the respondent.

PAR. 3. That with the intent, purpose, and effect of stifling and suppressing competition in interstate commerce in the manufacture and sale of preparations for removing iron rust, ink, fruit., and medicine stains from clothing, marble, and the like, the respondent within two years lm:t pa.<;t has sent and continues to send to its customers and the custom- 312 FEDERAL TRADE COMMISSION DECISIONS, ers, agents, servants, employees, and officers of its competitors und other persons, letters, circulars, and pamphlets containing statements to the effect that certain competitors of respondent were and are financially irresponsible, which statements were and ure false and misleading, and known by the respondent so to be, and not made in good faith but for the purpose, intent and effect of inducing and compelling users and agents for the sale of preparations for removing iron rust, ink, fruit, and medicine stains from clothing, marble, and the like, from using such preparations manufactured by competitors of the respondent. REPORT, FINDINGS AS TO THE FACTS, AND ORDER.

The Federal Trade Commission, having duly issued and served upon the above-named respondent, its complaint herein, wherein it alleged upon information and belief that said respondent h11s 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 2G, 1914, entitled," An act to create u Federal Trade Commission, to define its powers and duties, and for other purposes," and fully stating its charges in that respect, and the said respondent having duly entet·ed its appenmnce and filed its answer to said complaint, admitting certain allegations therein contained and denying certain others thereof, and the issues so raised having, pursuant to due notice given to all parties interested, duly come on for hearing at Philadelphia, Pa., on the 8th day of January, 191!), and the Federal Trade Commission having duly appeared and introduced its evidence in support of its said charges, and the sa i<l respondent, ha\'ing duly appeared in person and by attornt>y and introduced his evidence in denial thereof, and all testimony he~ird at said hearing having been reduced to writing. und togethet• with the evidence reeei,·ed having been duly filed in the ollice of the Commission, nnd said respondent ha,·ing duly waived all rights to make argument or file a brief herein. the Commission now makes this its report and findings us to the facts and cone I usions.

FEDERA.L TRADE COMI\IISSION DECISIONS, 313 FINDINOS AS TO TH~~ PACTS.

PARAGRAPH 1. That the respondent is Joseph H. Gartside and that said respondent is now and for more than two years last past has been engaged in business as a sole trader under the name and style of Gartside Iron Rust Soap Co., and that during said time said respondent's principal office and place of business has been 'located in the city of Philadelphia, in the State of Pennsylvania; and that said respondent is now and fo1· more than two years last past has been engaged in the manufacture and sale in commerce among the various States and Tel'l'itories of the United States and the District of Columbia, of a certain preparation known as Iron rust soap, for use in removing iron rust, ink, fruit, and medicine stains from clothing, marble, and the like, in direct competition with other persons, firms, corporations, and copartnerships engaged in manu.facturing preparations for similar purposes. 1 PAR. 2. That the respondent, by means of notices in letters, circulars, and advertisements sent to and circulated among his said competitors and their customers, and others with whom said competitors were and are contracting or endeavoring to contmct, with the intent, purpose, and effect of stilling and suppressing competition in interstate commerce in the manufacture· and sale of preparations for removing iron I'list, ink, fruit and medicine stains from clothing, marble, and the like, within the two years last past, has represented and still does represent that the manufacture and sale of preparations for removing iron rust, ink, fruit and medicine stains from clothing, marble, and the like, manufactured by competitors of the respondent, were and are infringements of a patent granted ·to respondent; that said respondent is not and never has been the owner of a patent in the said preparation; that respondent within the two years last past has threatened and is now threatening snits for such alleged infringements and unfair competition against such mnnufactnrers and persons using or dealing in such products of such competitors; that such threats have not been made in good faith, but for the purpose and with the etrect of intimidating competitors of respondent and their agents, customers, and prospective cust01i1ers. 314 FEDERAL TRADE COMMISSION DECISIONS. lar. 3. That with the intent, purpose, and effect of stifling and suppressing competition in interstate commerce in the manufacture and sale of preparations for removing iron rust, ink, fruit and medicine stains from clothing, marble, and the like, the respondent within two years ·last past has sent and continues to send to its customers and the customers and agents of its competitors and other persons, letters and circulars containing statements to the effect that certain competitors of respondent were and are financially irresponsible, which statements were and are false and mislead.ding and known by the respondent so to be, and not made in good faith but for the purpose and with the intent of inducing users and agents for the sale of preparations for removing iron rust, ink, fruit and medicine stains from clothing, marble, and the like, to refrain from using or dealing in such preparations manufactured 'by competitors of the resp~mdent.

CONCLUSIONS.

That the acts and conduct~ of the respondent set forth in paragraphs 2 and 3 of the foregoing findings as to the facts are unfair methods of competition in interstate commerce and as such are within the meaning, and in violation of the provisions of section 5 of an act of Congress approved September 26, 1914, entitled, "An act to create a Fedeml Trade Commission, to define its powers and duties, and for other purposes."

OHOEH TO CEAS!•; AND DESIST.

The Federal Trade Commission, having duly i~s11ed and served upon the above-named respondent, its complaint herein wherein it ulh•ged upon information and belief that said respondent htls 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 appro\'cd September 26, 1014, entitled, "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and fully stating its charges in that respect, and the said respondent having duly entered his appearance and filed his answer to said complaint, admitting certain FEDERAL TRADE COMMISSION DECISTO~S. 315 allegations therein contained and denying certain others thereof, and the issues so raised having, pursuant to due no~ice given to all parties interestNl, duly come on for hearing at Philadelphia, Pa., on the 8th day of January, 1919, and the· Federal Trade Commission, having duly appeui·ed and introduced it::; evidence in suppmt of its said charges, and the said respondent having duly appeared in person and by attorney and introduced his evidence in denial thereof, and all testimony heard at said hearing having been reduced to writing, and togl'ther with the evidence received, having been duly filed in the oflice of the Commission, and said respondent having duly waived all rights to make argument or file a brief herein, and the Commission having duly made and filed its report wherein it set forth its findings as to the facts and its conclusions that respondent has violated the provisions of section 5 of an act of Congress approved September 26, 1914, entitled, "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and which said report is hereby referred to and made a part hereof: Now, therefore, It ~ ordered, That the respondent, Joseph H. Gartside, doing business under the name and style of Gartside Iron Rust Soap Co., at Philadelphia, Pa., cease and desist from falsely representing by means of notices contained in letters, circulars, ftdvertisements, or by any means whatsoever, that he is the owner of letters patent or anything similar thereto, issued by the United States Pntent Office, which gives him the exclusive right to make, use. and vend a preparation for removing iron rust, ink, fruit, and medicine stains from clothing, marble, and the like, and from falsely representing that the manufacture, sale, or use of preparations for removing iron rust, ink, fruit, and medicine stains from clothing, marble, and the like, manufactured by competitors of respondent are an infringement of a patent granted to the respondent; and from intimidating or interfering with his competitors or their agents, customers or prospective customers by threatening to sue them for such alleged infringements, or by falsely representing that certain of his competitors are financially irresponsible. 316 .FEDERAL TRADE COMMISSION DECISIONS. FEDERAL TRADE COM~IISSION v. GOHDON-VAN TINE CO.

CO)IPLAINT IN THE ::\latter OF THE ALLEGED \"VIOLATION OF SEC· TION Ci OF AN ACT 01'' CONGRESS, APPRO\'ED SEPTECIIBER 2\1, l () 14.

Doll\Pt ~o. 220.-Fehruury 6, 1919.

SYLLABUS.

Where a mail-or<ler house dealing in lumber and building materials- (a) l'ublislw<l an<l clrcula tPd an atlvertlsmm•nt purporting to be a quotation from an order of tbe FPd<'ral Trade Commission against certain competitor!', such ad vertisPmE>nt being false, misleading, nnd a gross mil:; representation of said ord<'r; (b) Puid and offet·Pu to puy se<·ret colllmisslons to contractors, builders, und eut·(Jenters, us an iltdU('elllent to iutluPnce them to favor the sale of Its goods to others; (c) 1\lnde false or mislt>ndlng statements to the eflect- (1) That the United Stutes vouched for and guarnnteed its rellabillty and honesty, and that the lost Olllce D!'JHII"tnwnt c(•nsuretl Its advertislug mutter;

(2) That its lullliJer products were of its own manufnctut·e, tht>rPby giving custolllers tlle benefit of mill or manufactun•rs' price; (3) 'that cPrtuin of Its competitors \\"l're memhl'rs of a lumlwr trust whleh fix!'d and maintained t>xcesslve utHl unr<•usonable prices;

( 4) '!'hut it wns thf' only finn wltkh mad(> lll"iees both ways on lumber mnterinl, 1. e., reudy-eut-to-tlt, und not t"t>tHly-eut; and, (5) That it suvt>d Its pur<"haflers $!.!00 to $.}00 per lmilding ns compared with similar purchases from "regular dealers." Jleld, That Ruch acts .constitute<! unfair methods of colllpet!tion, in violation of sl'dion 5 of thl' lll:t of HeptPmber 26, 1914. COl\IPL.\I~T.

The Frderal Trade Commission, having reason to believe, from a prPiiminnry investigation mndc by it, that the Gordon-Van Tine Co., hereinafter referred to ns respondent, has been, and is, using unfair methods of competition in interstate cornmerf'e, in violation of the provisions of nn act of Congress, appro,·ed Septentber 2G, 1914, entitled "An act to create a Federal Trade Commission, to define its powers nnd 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 in formation and Lelief a.s follows: FEDERAL TRADE COMMISSION DECISIONS, 317 PARAGnAI'II 1. That the respondent, Gordon-Van Tine Co., is a corporation organized, existing anu doing business under and by virtue of the laws of the State of Iowa, having its principal office and place of btisiness at the city of Darl'nport, in said State, now, and for more than two years last past, engaged in the manufacture and sale of lumber and building materials among the several States and Territories of the United States, and the District of Columbia, in direct competition with other persons, firms, copartnerships and corporations similarly engaged.

PAR 2. That, in the conduct of its busines!':l, respondent pun·hases lumber and building materials in the various States of the United Statrs and the Territories thereof, and transports the same through other States and Territorie,_o;; in and to the town of Davenport, in the State of Iowa, tmd · other points of concentmtion, where they are sold and tihipped to purchasers in different States and Territories of the United States through the medium of mail orders; and there is continuously, and has been at all times herein mentioned, a constant current of trade and commerce in said lumber nnd building materials between and among the nu·ious States and Territories of the United States, the District of Columbia and foreign countries, and especially from other States and Territories of the United States to and through the town of Davenport, State of Iowa, and therefrom to and through olher States and Territories of the United States, the District of Columbia, and foreign country·ies. PAn. 3. That there exist certain commerciul establislunents in all or most of the States of the United States which now are. und for several years last past hase been engaged in selling lumlwr and building materials in interstate commerce through the medium and means of yards located in different cities of the various States and are usually referred to in the lumber industry as "regular dealers" as distinguished from so-called catalogue or mail-order houses; that such establishlllents usually sell lumber and building materials in the community wherein they are located and that such establishments purchase lumber and building materials in large quantities in interstate commerce from manufacturers and wholesalers. · 318 FEDERAL TRADE COMMISSION DECISIONS, PA.R. 4. That the respondent, within the year last past, with the intent, purpose, and effect of stifling and suppressing competition in the sale of lumber and building materials in interstate commerce, has published and circulated in various periodicals, magazines, trade journals, and catalogues an advertisement which purports to be an order nnd decision of the Federal Trade Commission in certain proceedings instituted and carried on by the Federal Trade Commission against certain "regular dealers" of lumber wherein such dealers were charged with unfair methods of competition in interstate commerce; such publication being as follows: f'Ellt:RAL TRADE COMMISSION SAYS "lfAHAlTDlNG TACTICS OF UNFAIB COMPETITION MVHT CI(AHE."

A victory has been won for you and for us. Thron(.!'h cof'rPion, threats, misrepresentation, and subterfuge, retail lamb<>r ut'nlers hn ve for ~·ears attempted to prevent us from selling to y.:>u and to keep you from buying from us. Now, the Federal 'Trntle Commission has stepp<'tl in, and said: " No lnt~>rference! A square deal for everybody I " From now on, you can buy wht>rever you pl<>ase without being botheretl, boycotted, or blufl'ed.

Tlwre ifl only one ren~on, of <'course, why the concerns u~uinst whom this Clovernmeut ol'liPr has been isflUPd, followed these unfair methods. Tlwy knew that GoJ'IIon· Van Tine's Immense buying resources, systematlzl'd operation!', and bi~ volume of business enabled us to undersell tlll'lll In tlwlr ow11 market nnd "give better value!" And whl'n they couldn't compete fairly, they uttempted to do It unfairly.

We could ask no better evidence of our r.bility to furnish you the llll!lwst ~rnde building material at less-than-local·tleuler prices than the ~<iluation which occasioned this Federal I"Uiing, following which is set out a list of the "regular dealers" against whom the said order issued. That the above ad verlist>nwnt so published and circulated is false, misleading and a gross misrepresentation of the t{'rms of the said order and drci8ion issued by the Commission in the aforementioned prorPedings and it does not fairly un<l truth fully represent to the public the Commi9Sion's order and decision in the said proceedings.

PAR. 5. That in the course of its husinrss of selling lumher n~d huil<ling materials in interstate commerce, the respondent, Gordon-Ynn Tine Co .. for more thm two years last past FEDERAL TRADE COMMISSION DECISIONS, 319 has secretly, and without the knowledge of the purchaser or consumer, offered and paid to local contractors, builders, and carpenters, a bonus or so-called commission as an ind,lCement to influence such contractors and builders to push or favor the sale of respondent's lumber and building materials over those of its competitors. PAR. 6. That the respondent, Gordon-Van Tine Co., with the intent, purpose, and effect of injuring and embarrnssing and discrediting its competitors, for more than two years last past has circulated catalogues and published statements through the various States and Territories of the United States, the District of Columbia, and in foreign countries among customers and prospective customers of competitors, containing certain ad,·ertisements wherein it is represented that- ( a) The l"7united States Government vouches for and guarantees the reliability, honesty, and business methods of the respondent, and that such statements carry the impression that the Post Office Department censors the respondent's advertising matter.

(b) Respondent sells its products from the mill direct to the customer, imputing it manufactures all the lumber pro<lucts which it sells, thereby giving the customers the benefit of mill or manufacturers' prices.

(c) Certain competitors of respondent are members of the Lumber Trust, by means of which excessive and unreasonable prices for lumber and building materials are fixed and maintained, thus wrongfully and falsely charging that such competitors do not deal justly and fairly. (d) Respondent is the only firm that makes prices both ways on lumber materials, i. e., ready-cut-to-fit, and notready-cut. . (e) Respondent does a much larger volume of business, buying lumlJer and building materials in larger quantities than do such "regular dealers" and that this enables them to buy at a lower price and obtttin greater discounts, and keep on hand a bigger stock from which the purchaser may !ielect such materiuls as he desires t.han do such "regnlur dealers," and that the purchaser is given the benefit of all of such sales ami that respondent saves for the consumer 320 FEDERAL TRADE COMMISSION DECISIONS, from 25 to 50 per cent, or in amount from $200 to $500 per building of what such purchaser or consumer would be compelled to pay for the same materials if purchased from a "regular dealer."

That such statements and ad ,·ertisements are in truth false, deceptive, and misleading, and do unfairly tend to, nnd do deceive and mislead such purchasers, and further do injure, damage, and discredit the so-called "regular dealers" and <"reate and foster n suspicion in the minds of prospccti ve pur<'hasers of lumber and building materials that such regular dealers, as a class, do not deal fairly, and that such advertisements are calculated and designed to deceive the trade and general public.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER.

The Fedeml Trade Commission, having isstwtl and served its compl11int herein, wherein it is alleged that it hua reason to believe that the abm·e named respondent, Gordon- Van Tine Co., has been, within the two years last past, using unfair nwthods of competition in interstate commerce in violation of the provisions of section 5 of un act of Congress approved September 2G, 1914, entitled "An act to create a FPderal Trade Commission, to define its powers and duties, ontl for other purposes," and that a proceeding by it in that respect would be to the interest of the public, and fully Rtatiug its charges in that respect; and the respondent. Gordon- Van Tine Co., having enterl•d its appearance by H. V. Scott, Esq., its vice president, duly authorized and empowered to net in the premises, and having filed its answer admitting that certain of the matters and things alleged in said complaint are true in the manner and form therein set forth, and denying others therein contained, and theren after ha \'ing lilade and executed an agrc>ed statement of facts, which has been heretofot·e filed in which it is stipnlnted nnd agt·Petl by the respondent that the Federal Trade Commission shall take such agJ'el'd stat:Rment of facts ns the evidence in this case and in lieu of testimony. and shall forthwith thereupon make and enter its report, stating its findings ns to the facts and its conclusions, and its order disposing of this proceed- FEDERAL TRADE COMMISSION DECISIONS, 321 ing, without the introduction of testimony or the presentation of argument; now, thm-efore, the Federal Trade Commission makes and enters this, its report, stating its findings as to the facts and its conclusions as to the respondent, Gordon-Van Tine Co.

FINDINGS AS TO THE FACTS.

PARAGRAPH 1. That the rrspondent, Gordon-Van Tine Co.,. is now, and for more than two years last past has been, a corporation organized, existing, and doing bnsine.<;s under nnd by virtue of the laws of the State of Iowa, having its principal factory, office, and place of business located in the city of Davenport, State of Iowa, at all times hereinafter mentioned engaged in the business of manufacturing and selling lumber and building materials in interstate commerce throughout the various States of the United States, the Territories thereof, the District of Columbia, and foreign countries, in direct competition with other persons, firms, copartnerships, and corporations similarly engaged. PAR. 2. That there exists certain commercial establishments in all or most of the States of the United States which now are, and for several years last past have been, engaged in selling lumber and building mntl'rinls in interstate commerce through the medium and by means of yartls located in different cities of the various States and are usually referred to in the lumber industry as "regular dealers" as distinguished from so-called catalogue or mail ordrr houses; that such establishments usually sell lumber and building materials in the community wherein they are located and that such establishments purchase lumber· and building mnter;als in large quantities in interstate commerce from mnnufacturet·s and wholesalers; and that respondent, Gordon-V n.n Tine Co., is, and has been within the two years last pnst, in direct competition with such "regular dealers."

PAR. 3. That during the year prior to the filing of the cornplaint herein, the respondent, Gordon-Van Tine Co., printed and circulated by means of circulars, an advertisement which purported to be a quotation from an order of the Federal Trade 0omrnission in certain proceedings instituted and 147430°--2Q----21 322 FEDERAL TR,\DE COJ\fl\f!SSION DECISIONS, carried on by said Federal Trade Commission against certain "regular dealers" of lumber, wherein such dealers were charged with unfair methods of competition in interstate commerce, such advertisements being in the words a.nd figures as follows, to wit:

FEilERAL TRADE COMMISSION SAYR "MARAUDING TACTICS OF UNFAIR COM· l'ETITION Ml:ST CEASE."

A victory has been won for you and for us. Through coercion, threats," misreprc>sentutlon, and subterfuge, retail lumber dt'alei'S have for years nttempted to prevent us from selling to you nnd to kepp ~·ou from buying from us. Now. the Fedei·al Trade Commission has stt•ppetl In, alit I Sllld: "No Interference! A square deal for everybody." !<'rom now on you can buy wherever you please without being bothered, boycotted, or bluffed. There Is only one reason, of course, why the concerns against whom this Government order has been Issued, followed thPse unfair methods. They knew that Gordon-Van Tine's Immense buying resources, syst .. matlzetl ovei·atlow;, and hlg volume of buslnt•ss enabled us to under&>ll them In their own market and "g-Ive better value." And when they couldn't compete fulrly, they attempted to do It unfnlrly.

We could ask no bett<•r evldl'ncP of our ability to furnish you the hlghest-grndP hnlltling muterlul at lel<~-thnn-locul dealers prlees than till' situation which occusionPd this l•\•dt>rul ruling, following which is set out a list of the "regular deniers" against whom the aforesaid order wns issued. That the above advertisement so printed and circulntcd is false, misleading,· nnd a gross mi!:irepresentation of the terms of the said order issued by the Commission in the aforementioned proceeding nnd it does not fairly and truth fully represent to the public the Commission's order in the said proceeding. That the aforesaid nd\'ertisement so printed and circulated wns calculated and designed to, und did decei\'e the trade and gl•neral public. . PAn. 4. That, in the course of its business of selling lumber nml building materials in interstate conuuerce the ref'pondent, Gordon- Vnn Tine Co., for more than two years last past did offer to pay to local contractors, builders, and carpenters a bonus or so-cnllt•u commission without the knowledge of the purcha~er or consumer, as nn inducement to influence such coutntcton; or builders to push or favor the sale of respond- FEDERAL TRADE COMMISSION DECISIONS. 323 ent's lumhrr and building materials over those of its competitors.

PAR. 5. That the respondent, Gordon-Van Tine Co., for more than two years last past has circulated, by means of catalogue and letters, statements and advertisements throughout the various States and Territories of the United States among customers and prospective customers of competitors, wherein it is represented, stated and held out that- ( a) The V united States Government vouches for, and gnar:mtees the reliability, honesty, and business methods of the r<>spond<:nt; and that such statements carry the impression that the Post Office Department censors respondent's advertising matter; · ( o) Respondent manufartmes all the lumber products which it sells, thereby giving customers the benefit of mill or manufacturer's prices;

(c) Certain competitors of respondent are members of the Lmnbet· Trust, by means of which excessive and unreasonable prites for lumber and building materials are fixed and maintained;

(d) Respontlent is the only firm that makes prices both ways on lumber material, i. e., ready-cut-to-fit, and not ready-cut;

(e) Respondent sa,·es for the purchasers of its products an amount of $200 to $500 per building of what such purchaser or consumer would be compelled to pay if purchased from a "regular dealer."

That such statements and advertisements are false, decepti\'e, and misle1Hling and do unfairly tend to, and do, deceive · and mislenll such purchasers, and further do injure, damage, and discredit the so-called "regulnr dealers" and create and foster a suspicion in the minds of prospective purchasers of lumber and Luilding materials that such "regular dealers,l' as a dnss, do not deal fairly, and that such advertisements are calc·nlated and designed to, and do, deceive the trade and gl•neral public.

CONCLrSIONS.

That the methods of competition set forth in the foregoing findings as to the facts in pnragmphs 3, 4, and 5, and each and all of them are, under the cirtumstances therein set forth, 324 FEDERAL TRADE COMMISSION DECISIONS. unfair methods of competition in interstate commerce in violation of the provisions of section 5 of an act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to definite its powers and duties, and for other purp~>ses."

Om>Im TO CEASE AND DESIST.

The Federal Trade Commission, having issued and served its complaint herein, and the respondent, Gordon-Van Tine Co., having entered its appearance by H. V. Scott, Esq., its vice president, duly authorized and empo>vered to act in the premises, and having filed its answer, and thereafter having made, executed, and filed an agreed statement of facts, in which it was stipulated and agreed that the Federal Trade Commission should take such agt·eed statement of facts as the evidence in this case and in lieu of testimony and proceed forthwith upon the same to make anrl enter its repmt, stating its findings as to the facts nnd its conclusions and its order without the introduction of testimony, nnd waidng therein any and all right to require the introduction of testimony or the presentation of argument in support of the same, and the Federal Tracie Commission, having ma<le and. entered its report stating its findings us to the facts, and its conclusions that the Gordon-Yan Tine Co. has violated section 5 of an act of Congn•ss appro,·cd Septcnil>er 2G, lDH, entitled "An act to create a Fe<leral Trade Commission. to define its powers nnd duties, and for other purposes," which said report is hereby referred to and made a part hereof: Now, therefore, It is Older'('d, That the rpspondent, Gordon-Van Tine Co., its oflitrrs, agrnts, representatives, servants, and employees cease and desist from dirrctly or inflirectly- (1) Printing or causing to be printed, circulating or causing to be circulated, orders, findings, and other public records of the Federal Trade Commission unless the whole of the order, findings, or public record of said Commission be printed in full and in the exact wording of the Commission without Any interpretation of, addition to, or subtraction from such order, findings, or public record, us made and entered hy the Commission.

(2) Paying and offering to pay to local contractors, builders, and carpenters, a bonus or a commission without the FEDERAL TRADE COl\DflSSION DECISIONS, 325 knowledge of the purchaser or consumet· as an inducement to influence such contractors and builders to push or favor the sale of respondent's lumuer and lJuilding materials over those of its competitors.

(3) From publishing and circulating nmong its customers and prospective customers, catalogs, letters, and advertisements containing the following, or any statement similar thereto, which tend to deceive or to mislead purchasers and the general public into the belief that- ( a) The United States Government vouches for and guarantees the reliability, honesty, and business methods of the respondent, and that such statements carry the impression that the Post Otrice Department censors respondent's advertising matter;

(o) Respondent manufactures all the lumber products which it sells, thereby f,"iving customers the benefit of mill or manufucturer's prices;

(c) Cet·tuin competitors of respondent are members of the Lumber Trust, by meuns of which excessive and unre:lsonable prices for lumber and building materials are fixed and maintained;

(d) Resl)Ondent is the only finn that makes prices both ways on lumber material, i. e., ready-cut-to-fit, and not ready cut;

(e) Respondent sa ,·es for all purchasers of its products an amount from $200 to $500 per building on what such pur- <"haser or consumer would be compelled to pay if purchased from a "regular dealer."

:FEDERAL TRADE CO]\fMISSIO~ v. ST. LAWRENCE LUMBER CO.