H. L. Ettman Sponge Co.

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

COliPLAINT IN THE liATTER OF THE ALLEGED VIOLATION OF SECTION II OF AN ACT OF CONGRESS APPROVED SEPTEMBER 26, 1914, Docket 379.-February 4, 1021.

SYLLABUS.

I Where a corporation. engaged In the sale of sponges by weight to retallers and large consumers, without disclosing the fact that their weight had been artificially Increased, sold sponges " loaded " by the addition of foreign substances which did not Increase their usefulness or durablllty, but were added for the sole purpose of increasing their weight, thereby defrauding, deceiving, and misleading retallers and consumers, enabling It to secure business on a false and fictitious basis, and forcing c,ompetltors also to sell "loaded" sponges; to the injury of competitors who did not sell " loaded " sponges and to the Injury of the public: Held, That such practices, under the circumstances set forth, constituted an unfair method of competition.

COMPLAINT.

The Federal Trade Commission, having reason to believe from a preliminary investigation made by it that H. L. Ettnian Sponge Co., hereinafter referred to as respondent, has been and now is using. un- C fair 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 in that respect on information and belief as follows:

PARAGRAPH 1. That respondent, H. L. Ettman Sponge Co., is a corporation, organized, and existing under the laws of the State of Missouri, having its principal office and place of business in the city of St. Louis, in said State. That for more than a year last past respondent has been engaged in purchasing sponges in other States of the United States and foreign countries and in the sale and shipment of said sponges to persons, firms, copartnerships, and corporations in other States and Territories of the United States and the District of Columbia in direct competition with other persons, firms, copartnerships, and corporations similarly engaged. 260 FEDERAL TRADE COMMISSION DECISIONS. . . • Complaint. 8F.T.C. PAR. 2. That in the conduct of its business respondent purchases sponges in the State of Florida and other States of the United States and foreign countries and causes the same to be transported through other States of the United States to its place of business in the city of St. Louis, State of Missouri, where the same are sold and shipped to purchasers and dealers in different States and Territories of the United States and the District of Columbia, and that there is continuously, and has been at all times hereinafter mentioned, a constant current of trade and commerce in said sponges between and among the various States and Territories of the United States and more particularly from the State of Florida and foreign countries to and through the city of St. Louis, State of Missouri, and from there to and through other Stn,tes and Territories of the United States and the District of Columbia.

PAn. 3. That respondent for more than a year last past has knowingly and deceptively engaged in and is now knowingly and deceptively engaged in loading, doping, and saturating sponges with foreign matter, such ns glucose, sand, molasses, Epsom salts, and lead, and knowingly and deceptively caused and procured, and is now knowingly and deceptively causing and procuring others to so load, dope, or saturate sponges with the aforesaid foreign matter, with the intent and purpose of selling and disposing of said spong<!s by weight, per pound basis, in commerce as aforesaid,. thereby decep· tively increasing and falsifying the weight of said sponges, creating n fictitious price therefor, deceiving, defrauding, and misleading customers and consumers who can not readily differentiate and distinguish between pure, unndulterated sponges and sponges doped, loaded, or saturated with foreign platter, as aforesaid, to purchase and pay for, by weight, per pound basis, such loaded, doped, or saturated sponges as, and for, pure, un:tdulterated sponges; that the effect and result of the aforesaiu loading; doping, o~ saturating sponges is to create a fictitious price for said sponges in competition with competitors who purchase and sell pure, unadulterated sponges, thereby causing prejudice and injury to competitors, or may cause prejudice and injury to competitors; and other effects; that the further effect of loading, doping, or saturating sponges with foreign matter as aforesaid is to impair the durability, quality, and purity of said sponges.

r AR. 4. That respondent for more tlum n yeu.r ltu;t past knowingly and deceptively purchased and solu, by weight, per round basis, atul is still knowingly unll deceptively purchasing, selling, and disposing of, by weight, per pound basis, in commerce as aforesaid, large quantities of sponges, loaded, doped, or saturated with foreign • H. L. ETTMAN SPONGE CO. 261 25!l Findings. matter, such as glucose, sand, molasses, Epsom salts, and lead, with the intent and purpose of deceptively increasing and falsifying the weight of said sponges, creating a fictitious price therefor, deceiving, defrauding, and misleading customers and consumers who cn.n not readily differentiate and distinguish between pure, unadulterated sponges and sponges loaded, doped, or saturated with foreign matter, as aforesaid, to purchase and pay for, by weight, per pound basis, such loaded, doped, or saturated sponges as and for pure, unadulterated sponges; that the effect and result of the aforesaid purchase and sale of loaded, doped, or saturated sponges is to create a fictitions price for said sponges in competition with competitors who purchase and sell pure, unadulterated sponges, thereby causing prejudice and injury to competitors, or may cause prejudice and injury to competitors; nnd other effects; that the further effect of purchasing and selling sponges loaded, doped, or saturated with foreign matter in commerce as aforesaid, is to impair the durability, quality, and purity of said sponges.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER. Pursuant to the provisions of an act of Congress approved September 26, 1914, the Federal Trade Commission issued and served a comnlaint upon the respondent, H. L. Ettman Sponge Co., charging it with the use of unfair methods of competition in commerce in violation of the provisions of said act. ' The respondent having entered its appearance and filed its answer herein, hearings were had, and evidence wns thereupon introduced in support of the allegatiom; of said complaint before an e:taminer of the Federal Trade Commission theretofore duly appointed. · And thereupon this proceeding came on for final hearing, and the attorney for the Commission having submitted briefs, and the Commission having heard or11.l argument, and the Commission, having fully considered the record and being now fully advised in the premises, makes this its findings as to the facts and conclusion: FINDINGS AS TO THE FACTS.

PA~AGnArH 1. That the respondent, H. L. Ettman Sponge Co., is a corporation organized and existing under and by virtue of the laws of the State of Missouri, having its principal office and place of business located at the city of St. Louis, in said State, o.nd is now and at all times hereinafter mentioned has been engaged in the business of selling and shipping sponges from the city of St. Louis, in the State of Missouri, to purchasers thereof located throu,ghout the 262 FEDERAL' TRADE COMMISSION DECISIONS. Findings. BF.T.C.

different States of" the United States and the District of Columbia, in direct competition with other persons, firms, a.nd corporations similarly engaged.

PAn. 2. That in the conduct of its business respondent purchases sponges in different States of the United States and causes the same to be transported through other States to its place of business, located in the city of St. Louis, in the State of Missouri, from which place said sponges are sold and shipped to purchasers thereof in different States of the United States and the District of Columbia, and there is and has been at all times hereinafter mentioned a current of trade and commerce in said sponges among and between the various States of the United 1States and the District of Columbia. PAn. 3. That in the conduct of its business respondent for more than two years prior to the filing of the complaint herein had been engaged in purchasing from sponge packers located at the city of New York, in the State of New York, and the city of Tarpon Springs, in the State of Florida, sponges whose weight had been artificially increased by said sponge packers by a process of soaking said sponges in a solution of a substance or substances, such as salt, Epsom salts, glucose, glycerine, and sugar; that the substance or substances contained in said solution were incorporated into the texture of said sponges and remained in said sponges after the said sponges were dried; that the said process of artificially increasing the weight of sponges by the addition of a substance or substances as aforesaid is commonly known to and designated by sponge packers as "loading"; that the sponges whose weight has been thus artificially increased are designated an.d referred to by sponge packers as" loaded!: sponges. When hereinafter mentioned, sponges whose weight has been thus artificially increased are referred to as "loaded" sponges; and the process by which the weight has been artificially increased i~ referred to as "loading."

PAR. 4. That the total cost of "loading" 1 pound of sponge, including the cost of ingredients and labor, is approximately 20 cents; that the substance or substances added to sponges in the process of "loading" do not add in any way to the usefulness or durability of the sponges and do not enable them better to serve any of the purposes for which sponges are employed; that the sole purpose of "loading" is to increase the weight of the sponges while they are in the channels of commerce before they have reached the ultimate user; that when said sponges are put into use the substance or substances introduced in the process of" loading" are generally -washed gut and lost.

H. L. ETTMAN SPONGE CO. 263 25~ Orde~ PAR. 5. That in the conduct of its business respondent for mora than two years prior to the filing of the complaint herein had been selling and shipping by weight in interstate commerce sponges "loaded" by it as aforesaid to purchasers thereof, including among others retail dealers handling sponges and large consumers, such as garages, painters, decorators, office buildings, and manufacturing concerns; that respondent in selling said "loaded" sponges to s~id retail dealers and said consumers did not disclose or make known to said retail dealers or to said consumers that said sponges were " loaded "; that said retail dealers and said consumers did purchase nnd pay for by weight said "loaded" sponges as and for sponges whose weight had not been artificially increased. PAa. 6. That the sale of "loaded" sponges by respondent as aforesaid is a fraudulent and deceptive practice and is designed and calculated to and does defraud, deceive, and mislead retail dealers and consumers; that the practice of " loading" as aforesaid is designed and calculated to and does enable respondent to sell said "loaded" sponges on a false and fictitious basis and to secure business on a false and fictitious basis, to the injury of competitors of said respondent who do not sell "loaded" sponges and to the injury of the public.

PAR. 7. That the sale of "loaded" sponges by respondent as aforesaid has the tendency and capacity to and does force competitors of respondent also to sell "loaded" sponges, to the injury of com- P£>titors who do not sell "loaded n sponges and to the injury of the public.

CONCLUSION.

The practices of the said respondent, under the conditions and circumstances described in the foregoing findings, are unfair methods of competition in interstate commerce and constitute a violation of the 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."

ORDER TO CEASE AND DESIST.

This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and answer of the respondent, the testimony and evidence, and the argument of counsel, and the Commission having made its findings as to the facts with its conclusion that the respondent has violated the provisions of the act of Congress approved September 26, 1914, entitled "An act to 2G! FEI.IERAL TRADE COMl\USSIOY DECISIO~S. Table.' 3F.T.O.

create a Federal Trade Commission, to define its powers and duties, and for other purposest It is now ordered, That the respondent, II. L. Ettman Sponge Co., and its agents, servants, and employees, and each and every one of them, do cease and desist from directly or indirectly: 1. Increasing the weight of sponges intended for sale and subsequent shipment in interstate commerce by soaking them in a solution of sa.lt, Epsom salts, gfycerine, glucose, or sugar, or any other substance producing the like effect.

2. Selling for shipment in interstate commerce, or shipping in interstate commerce, any sponges the weight of 'which has been increased by soaking them in a solution of salt, Epsom salts, glycerine, glucose, or sugar, or uny other substance producing the like effect. It i8 further ordered, That the respondent, H. l.J. Ettm::m Sponge Co., shall within 60 days after the service upon it of a copy of this order, file with the Commission a report in writing setting forth in detail the manner and form in which it has complied with the order to cease and desist hereinbefore set forth. Commissioners Murdock nnd Nugent took no part in the final consideration or decision of this case.

T1H~ Commis;sion has also issued similar orc1f"rs in other rns;<'s in· volying suLstuntially the same facts, as shown by the following: TARLE.

Answer, Dod~: stipula- Date. ttC!IJ!ondent, Locotfon, tlon, or No. trilil ~-- 1921. - Feb. 1/Jf Y. F. Rosenbaum and H. P. Rtoelr, copartners, doing New York City .. ., Tr181. buslni'Ss un.!or the llrm name and style of Atlantic ' Sponge Co. 389 Theodore Schroeder and llarry JT. Tremayned eopnrt- St. Loull, Mo ..... Do. ners, doing bn•IDI'SI under t!Je firm n1.111~ 611 lt)'lt o( r ' Brhroeder & Tremayne. 300 S. Perlman and Charlllll Perlma~ down1 business under New York City ... Do. the ftrm name and &t)I'IO of 8. erlman & Sun. ' 3\)1 FrankUo Lam pel, tole tr&dlll', dolna: buslnese under L. I the name and style Spouge Cu. 11! 1!', L. Lampo! ' St. Louis, Mo ..... Do. l'J.::TER VAN SCHAACK 1u SONS. 265 Complaint.

FEDERAL TRADE COMMISSION tl.

PETER VAN SCHAACK & SONS.

COllPLAINT IN THE MA1"rer OF THE .ALLEGED VIOLATION 01" SECTION II OP' A.N ACT OF CO;!S"GRF.SS APPJWVED SEPTEMBER 2~ 1 19U, Docket 881-February 4, 1921.

SYLI.ARGS.

Where a corporation engaged In the sale of sponge!! by wcight- (•1} "Loaded" ~pongcs by the ndrlitlon ot :Corel~,o'll substanct!S, whh·b dld not Increase th£>ir usefulness or durabillty, but were added tor the sole purpose of Increasing their weight; and lli) With the knowledge and expectation th:~t the snme would he resold with· out disclosing the tact that their weight had been artlflClally Increased, sold such "loaded" sponges to wholesalers without d!scloslng the amount of such "loading," thereby enabling the purchasers to nrl!!lead and deceive retailers and consumers who unwittingly bore, In whole or in part, the cost Of such "londlng";

With the effect Of altHng In the misleading and deception of retallers and con- ' sumers, of ~nnbUng It and Its wholesale purcbn~rs to secure bnsiuess on a false nnd tlctltlous ba:;IR, and of forcing C()mpetltors also to sell "loaded 1' sponges; all to the 1njnry o( competitors who uid not sell "load I'd" sponges, and to the Injury ol tbe public:

lleld, That such prnctlces, under the circumstances set forth, constituted unfair ml·thods of t'ODlpetltlon.

COMPLAINT.

The Federal Trade Commission, h~J.v"ing reason to believe from a }Weliminary investigation made by it that Peter Van Schnack & Sons, hereinafter referred to n~ respondent, hns been and now is using unfair methods of competition in intrr~tate commerce in. violation of the provisions of secti~n 5 of an ac(of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to <lefine 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 jts charges in that respe-ct on information nnd belief as follows: PA.RAGnArii 1. That respondent, Peter Van Schaack & Sons, is a corporation organized and c:listing under the laws of the St;tte of Illinois, having its principal office and place of business in the city ~f Chicago, in ~aid State. T.hot for more than one year, last past responrlent has b<'en E>ngnge<l in purchasing sponges in other States of the United States and foreign countries and in the sale and shipment 266 FEDERAL TRADE CO?.IMISSION DECISIONS. Complaint. SF.T.C.

of said sponges to persons, firms, copartnerships, and corporations in other States and Territories of the United States and the District of Columbia in direct competition with other persons, firms, copartner- .ships, and corporations similarly engaged. PAn, 2. That in the conduct of its business respondent purchases sponges in the State of Florida and other States of the United States !lnd foreign countries and causes the same to be transported through other States of the United States to its place of business in the city of Chicago, State of Illinois, where the same are sold and shipped to purchasers and dealers in different States and Territories of the United States and the District of Columbia, and that there is continuously, and has been at all times hereinafter mentioned, a constant current of trade and commerce in said sponges between and among the various States and Territories of the United States and more particularly from the State of Florida and foreign countries to and through the city of Chicago, State of Illinois, and from there to and through other States and Territories of the United States and the District of Columbia.

P .An. 3. That respondent for more than a year last past has knowingly and deceptively engaged in and is now knowingly and deceptively engaged in loading, doping, and saturating sponges with foreign matter, such as glucose, sand, molasses, Epsom salts, and lead, and knowingly and deceptively caused and procured, and is now knowingly and deceptively co.using and procuring, others to so load, dope, or saturate sponges with the aforesaid foreign matter, with the intent and purpose of selling and disposing of said sponges by weight, per pound basis, in commerce as aforesaid, thereby decepth·ely increasing and falsifying the weight of said sponges, creating o. fictitious price therefor, deceiving, defrauding, and misleading customers and consumers who can not readily differentiate and distinguish between pure1 unadulterated sponges and sponges doped, loaded, or saturated with foreign matter, as aforesaid, to purchase and pay for, by weight, per 'pound basis, ·such loaded, doped, or saturated sponges as, and for, pure, unadulterated sponges; that the effect and result of the aforesaid loading, doping, or saturuting sponges is to create a fictitious price for said sponges in competition with competitors who purchase and sell pure,'unadulterated sponges, thereby causing prejudice and injury to competitors, or may cause prejudice and injury to competitors; and other 'effects; t.hat the further effect of loading, eloping, or saturating sponges with foreign matter as aforesaid is to impair the durability, quality, and purity of said sponges. ' :PETER VAN SCHAACK .t SONS. 267 Findings., PAR. 4. That respondent for more than a year last past knowingly and deceptively purchased and sold, by weight, per pound basis, and is still knowingly and deceptively purchasing, selling, and disposing of, by weight, per pound basis, in commerce as aforesaid, large quantities of sponges, loaded, doped, or saturated with foreign matter such as glucose, sand, molasses, Epsom salts, and lead, with the intent and purpose of deceptively increasing and falsifying the Weight of said sponges, creating a fictitious price therefor, deceiving, defrauding, and misleading customers and consumers who can not readily differentiate and distinguish between pure unadulterated sponges and sponges loaded, doped, or saturated with foreign matter, as aforesaid, to purchase and pay for, by weight, per pound basis, such loaded, doped, or saturated sponges as, and for, pure unadulterated sponges; that the effect and result of the aforesaid purchase and sale of loaded, doped, or ~aturated sponges is to create a fictitious price for said sponges in competition with competitors who purchase. and sell pure unadulterated sponges, thereby causing prejudice and injury to competitors, or may cause prejudice and injury to competitors; and other effects; that the further effect of purchasing and selling sponges loaded, doped, or saturated with foreign matter, in commerce as ~~:foresaid, is to impair the durability, quality, and purity of said sponges.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER. Pursuant to the provisions of an act of Congress, approved September 26, 1914, the Federal Trade Commission issued and served a complaint upon the respondent, Peter Van Schaack & Sons, charging it with the use of unfair. methods of competition in commerce in violation of the provisions of said act. The respondent having entered its appearance and having .file,d its answer herein, hearings were had and evidence was thereupo:fl introduced in support of ~he allegations of said complaint before. an examiner of the Federal Trade Commission, theretofore duly appointed.

And thereupon this proceeding came on for .final hearing, and the attorneys for the Commission having submitted briefs, and the Commission having heard oral argument, and the Commission, having :Cully considered the record and being now fully advised in the premises, makes this its findings as to the facts and concl~sions: FINDINGS AS TO : TUE FACTS• ...., PARAGRAPH L That respondent, Peter. Van Schaack & Sons, is a corporation organized and existing under and by virtue of the laws 268 FED,ERAL TRADE COMMISSION DECISIONS. Flndh1gs, 3F.T.C.

of the Stat~ of Illinois, having its l'rincipal office and place of business located at the city of Chicago, in said State, and is now and at all times hereinafter mentioned has been engaged in the business of selling and shipping sponges from the city of Chicago, in the State of Illinois, to purchasers thereof located throughout the differ· ent States of the· United States and the District of Columbia in direct competition 'with other persons, firms, and corporations similarly engaged.

PAR. 2. That in the conduct of its business respondent purchases sponges in different States of the United States and in foreign countries and causes the same to be transported through other States to its place of business located in the city of Chicago, in the State of Illinois, from which place said sponges are sold and shipped to purchasers thereof in different States of the Unhed States and the District of Columbia, and there is and has been at all times hereinafter mentioned a current of trade and commerce in said sponges among and between the'various States of the United States and the District of Columbia.

PAR. 8. That in the conduct of its business respondent, for more than two years prior to the filing of the complaint herein, had been engaged in artificially increasing the weight of sponges by a process of soaking said sponges in a solution of a substance or substances such as salt, Epsom salts, glucose, glycerine, and sugar; that the substance or substances. contained in ·said solution are incorporated into the texture of said sponges and remain in said sponges after the said sponges are dried; that the said process of artificially increasing the weight of sponges by the addition of a substance or sub· stances, as aforesaid, is 6commonly known to and designated by sponge packers as" loading"; that the sponges whose weight has been thus artificially increased are designated and referred to by sponge packers as "loaded" sponges. '""hen hereinafter mentioned, sponges whoso weight has been 'thus artificially increased are referred to as "loaded" sponges, and the process by which the weight is artificially increased is referred to as "loading."

PAR. 4. That the total cost of "loading" 1 p~und of sponge, in· including the cost of ingredients nnd labor is approximately 20 cents; that the substance or substances added to sponges in the process of "loading" do not add in any way to the usefulness or durability of the sponges and do not enable them better to serve any of the pur· poses for which sponges are employed; that the sole purpose of "loading" is to increase ~he weight of the _sponges while they are in the channels of commerce before they have reached the ultimate user; that' when said sponges are put into use tho substance or substances PETER VAN SCHAACK & SONS. 269 26~ Flndlngs. introduced in the process of "loading~' are ·generally washed out and lost.

PAn. lS. That in the conduct of its business respondent, for more than two years prior to the filing of the complaint herein, had been selling and shipping by weight in .interstate commerce sponges "loaded" by it as aforesaid, to purchasers thereof, including, among others, wholesale dealers handling sponges; that respondent in sell· ing said " loaded" sponges to said wholesale dealers did not disclose or make known to said wholesale dealers the amount of matter artificially added to ~aid sponges; that said wholesale dealers did not know the amount of matter artificially added to said sponges; that the "loading" of said sponges was paid for by said wholesale dealers. PAn. 6. That said wholesale dealers who purchased said "loaded" sponges from respondent in turn resold said " loaded " sponges by weight to purchasers thereof, including among other retail dealers, such as dealers in the drug, hardware, and paint and oil lines, and large consumers of sponges, such as garages, painters, decorators, office buildings, and manufacturing concerns; that said wholesale dealers did not disclose or make known to said retail dealers or to said consumers that said sponges were "loaded"; that said retail dealers and said consumers did purchase and pay for by weight said "loaded " sponges ns and for sponges whose weight had not been artificially increased by "loading," as aforesaid; that respondent " loaded " said sponges and sold said " loaded ,, sponges to said wholesale dealers with the knowledge and expectation that said " loaded" sponges would be resold by said wholesale dealers to said retail dealers and said consumers in a manner calculated to deceive and mislead and actually deceiving an.d misleading said retail dealers and said consumers; that the cost of the substance or substances added to said spong('s by the process of "loading," and of the lnbor by which said substance or substances were introduced into said sponges, was ultimately borne, in whole or in part, by said retail dealers and said consumers, without their knowledge.

PAR. 7. That the "loading" of sponges and the sale of ''loaded" sponges by respondent, as aforesaid, is a fraudulent and dec('ptive practice and results in injury to the public; that it enables said wholesale dealers who purchase said ''loaded" sponges to resell said sponges as and for sponges whose weight has not been artificially increased and in the natural course of business causes such result; that the practice of '' loading" as aforesaid is calculated to nnd docs enable respondent and said wholesale dealers who resell said "loaded" sponges to secure business on a false and fictitious basis to the injury of competitors of said respondent and to the injury of competitors ------- 270 FEDE~AL TRADE COlr:&HSSION DECISIONS. Order. SF.T.C.

of said· wholesale dealers who do not sell "loaded" sponges and to the injury of the public.

PAR, 8. That the sale of "loaded" sponges by respondent, as aforesaid, has the tendency and capacity to, and does, force competitors of respondent also to sell "loaded" sponges, to the injury of com· petitors who do not sell "loaded" sponges and to the injury of the public.

CONCLUSIONS, The practices of the said respondent, under the conditions and circumstances described in the foregoing findings, are unfair methods of competition in interstate commerce and constitute a violation of the net 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."

ORDER TO CEASE AND DESIST, This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and answer of the respond· ent, the testimony and evidence and the argument of counsel, und the Commission having made its findings as to the facts with its conclusions that the respondent has violated the provisions of the net 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,"

It is now ordered, That the respondent, Peter Van Schaack & Sons1 and its agents, servants, and employees, and each and every one of them, do cease and desist from directly or indirectly: 1. Increasing the weight of sponges intended for sale and subsequent shipment in interstate commerce by soaking them in a solution of salt, Epsom salts, glycerine, glucose, or sugar, or any other substance producing the like effect.

2. Selling for shipment in interstate commerce, or shipping in interstate commerce any sponges the weight of which has l;>een increased by soaking them in a solution of salt, Epsom salts, glycerine, glucose, or sugar, or any other substance producing the like effect. And it is further ordered, That the respondent, Peter Van Schaac1~ & Sons, shall, within 60 days after the service upon it of a copy of this order, file with the Federal Trade Commission, a report in writing setting forth in detail the manner and form in which it has complied with the order to cease and desist, hereinbefore set forth • • late.B. VAN SCHAACK & SONS. 271 26~ Table. Commissioners Murdock and Nugent took no part in the final consideration or decision of this case.

The Commission hns also issued similar orders in other cases involving substantially the same facts, as shown by the following: TABLE.

Answer, Date. Dock Respondent. Location. stipula- No. tion, or trial.

------ 1921. I I Feb. 4 382 1011. Niehaus Co ........................................ ' Cincinnati, Ohio .. Trial 4 385 Herbert N. Worth and Maurice Seelman~ eopo.rtners, New York City ... Do. doing business under the firm name an style o! A. Isaaca Co.

387 Ben:Jn Frelrlcb and Paul Mans~ co~partners, dolnl ..... do ............. Do. • bus ess under the firm name an sty e ot l!'relrlcb Mansell. 3\J& 1ohn K. Cheyney, 1ohn Boucholos, and Slalloa Bouchl)o Tamon Springs, Do. • los, copartnersh doing business under the firm name Fa. and atlf.l• o! Jn n K. Cheyney &: Co. 397 Geora• • Emmanuel, a sole trader~down~t business do ............. Do. un er the name and atyle o! George • Emmanuel&: ' Co. 272 FEDERAL TRADE COl\IMISSION DECISIONS. Complaint. 3F.T.C.

FEDEUAL TRADE COMMISSION 1~ ·r EMIL BLOCH, A SOLE TRADER, DOING BUSINESS UNDER THE NAl\IE AND STYLE OF El\IIL BLOCH.

CO~II'LAIX:r IN Tile MATTER OF THE ALLEGED VIOLATION OF SECTION 6 OF AN ACT OF CONGRESS APPROYED SEI'TEliiBER 26, 1914. Docket 392-I~'ebrunry 4, 1921.

STI.LABUB.

Where an lnrlll·iclunl pngnged 1n the sale of spon:;es by wdgllt to r<>tnilers anll large consumers, "loaded" t~pon:;t>s by tlle addition of foreign suhstanccs which did not lncren~a the USE>tulness or dnrabillty ot the sponges but were added tor the sole purpo~e or lnc1·easing tbelr weight, and sold such "lo:Hkd'" spun:;es without disclostn;: the tnct that their weight had been nrtlflclally lncreaF:ed, thert•by d£>ft'lllHling, deeelvlng, and mlslen1ling retailers and consumers and euabling him to secure business on a false and fictitious bnsls; to the Injury of competltot·s who did not sell " loaded" sponges and to tlle Injury ot the public:

Held, That such prnctlres, under the circumstances set forth, constituted unfair methods of competition.

CO~IPLAINT.

The Federal Trade Commission, having reason to believe from a preliminary investigation made by it that Emil Dloch, hereinafter referred to as respondent, has been anJ 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, 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: PARAGRAPH 1. That the respondent, Emil Dloch, is a resident of the State of New York, having his principal office and place of business located at the city of New York, State of New York; that for more than one year last past respondent has been and now is engaged in purchasing sponges in other States of the United States and foreign countries and in the sale and shipment of said sponges to persons, firm!'!, copartnerships, and corporations in other States and Territories of the United States and the District of Columbia in EMIL BLOCH. 273 2i2 Coruplaint. direct competition with other persons, firms, copartnerships, and corporations similarly engaged.

PAn. 2. That in the conduct of its business respondent purchases sponges in the State of Florida and other States of the United States and foreign countries and causes the same to be transported through other States of the United States to its place of business in the city of New York, State of New York, where the same are sold and shipped to purchasers and dealers in different States and Territories of the United States and the District of Columbia, and that there is continuously, nnd has been at all times hereinafter mentioned, a constant current of trade and commerce in said sponges betwe.en and among the various States and Territories of tlle United States und more particularly from the State of Florida and foreign countries to and through the city of New York, State of New York, and from there to nnd through other States and Territories of the United .States and the District of Columbia.

P.An. 3. That respondent for more than a year last past has know- · ingly and deceptively engaged in and is now knowingly and deceptively engaged in loading, doping, and saturating sponges with foreign mutter, such as glucose, sand, molasses, Epsom salts, and lead, and knowingly and deceptively caused and procured, and is now knowingly and deceptively causing and procuring, others to so load, dope, or sl\turate sponges with the aforesaid foreign matter, with the intent and purpose of selling and disposing of said sponges by weight, per pound basis, in commerce as aforesaid, thereby deceptively increasing nnd falsifying the weight of said sponges, creating a fictitious price therefor, deceiving, defrauding, and misleading customers and consumers who can not readily differentiate and distinguish between pure unadulterated sponges and sponges doped, loaded, or saturated with foreign matter, as R.foresaid, to purchase and pay for, by weight, per pound basis, such loaded, doped, or saturated sponges as, and for, pure unadulterated sponges; that the effect and result of the aforesaid loading, doping, or saturating sponges is to create a fictitious price for said sponges in competition with competitors who purchase and sell pure unadulterated sponges, thereby causing prejudice and injury to competitors, or may cause prejudice and injury to competitors; and other effects; that the further effect of loading, doping, or saturuting sponges with foreign matter as aforesaid is to impair the durability, quality, and purity of said sponges.

PAn. 4. That respondent, for more than a year last past, knowingly nntl rlcc<'ptivcly purchased and sold, by weight, per pound ha1"is, and is still knowingly and dcecptively purchasing, selling, and dis- 74G~u"--22----18 274 FEDERAL TRADE COMMISSION DECISIONS. Findings. 8F.T.C.

posing of, by weight, per pound basis, in commerce as aforesaid, large quantities of sponges, loaded, doped, or saturated with foreign mutter such as glucose, sand, molasses, Epsom salts, and lead, with the inteXJt and purpos~ of deceptively increasing and falsifying the weight of said !.'ponges, creating a fictitious price therefor, deceiving, defrauding, and misleading customers and consumers who can not readily differentiate and distinguish between pure unadulterated sponges and sponges loaded, doped, or saturated with foreign matter, as aforesaid, to purchase nnd pay for, by weight, per pound basis, such loaded, doped, or saturated sponges as, and for, pure unadulterated spongt!s; that the effect and result of the aforesaid purchase and sale of loaded, doped, or saturated sponges is to create a fictitious price for said sponges in competition with competitors who purchase and sell pure unadulterated sponges, thereby causing prejudice and injury to competitors, or may cause prejudice and injury to competitors; and other effects; that the further effect of purchasing and selling sponges loaded, doped, or saturated with foreign matter, in commerce as aforesaid, is to impair the durability, quality, and purity of said sponges.

REPORT, FINDINGS AS TO THE FAOTS, AND ORDER. Pursuant to the provisions of an act of Congress approved SeptemLcr 26, 1914, the Federal Trade Commission issued and served a complaint upon the respondent, En1il Dloch, a sole trader, doing business under the name and style of Emil Dloch, charging him with the use of unfair methods of competition in commerce in violation of the provisions of said act.

The respondent having entered his appearance and filed his answer herein, hearings were had and evidence was thereupon introduced in support of the allegations of said complaint and on behalf of the respondent before an examiner of the Federal Trade Commission theretofore duly appointed.

And thereupon this proceeding came on for final hearing, and the attorneys for the Commission and respondent having submitted briefs, and the Commission having heard oral argument, and the Commission, having fully considered the record and being now fully ndvised in the premises, makes this its findings as to the facts and conclusions:

FINDINGS AS TO Tlle FACTS.

PARAGRArii 1. That respondent, Emil Dloch, is a sole trader, doing business under the name and style of Emil l3loch, having his principal office and place of business located at the city of New York, EMIL BLOCH. 275 272 Findings. in the State of New York, and is now and at all times hereinafter mentioned, has been engaged in the business of selling and shipping sponges from the city of New York, in the State of New York, to purchasers thereof located throughout the different States of the United States and the District of Columbia, in direct competition with other persons, firms, and corporations similarly engaged. PAR. 2. That in the conduct of his business respondent, for more than two years prior to the filing of the complaint herein, had been engaged in artificially increasing the weight of sponges by a process of soaking said sponges in a solution of a substance or substances such as salt, Epsom salt, glucose, glycerine, and sugar; that the sub~ stance or substances contained in said solution are incorporated into the texture of said sponges and remain in said sponges after the said sponges are dried; that the said process of artificially increasing the weight of sponges by the addition of a substance or substances as aforesaid is commonly known to and designated by sponge packers ns "loading"; that the sponges whose weight has been thus artificially increased are designated and referred to by sponge packers as "loaded " sponges. 'Vhen hereinafter mentioned, sponges whose weight has been thus artificially increased are referred to as " loaded " sponges, and the process by which the weight is artifically increased is referred to as "loading."

PAR. 3. That the total cost of " loading " 1 pound of sponge, including the cost of ingredients and labor, is approximately 20 cents; that the substance or substances added to sponges in the process of " loading" do not add in any way to the usefulness or durability of the sponges and do not enable them better to serve any of the purposes for which sponges are employed; that the sole purpose of "loading" is to increase the weight of the sponges while they are in the channels of commerce before they have reached the ultimate user; that when said sponges are put into use the substance or substances introduced in the process of " loading" are generally washed out and lost.

PAR. 4. That in the conduct of his business respondent, for more than two years prior to the filing of the complaint herein, had been selling and shipping by weight in interstate commerce sponges "loaded" by him as aforesaid to purchasers thereof, including among others retail dealers handling sponges and large consumers, such as garages, painters, decorators, office buildings, and manufacturing concerns; that respondent in selling said " l.oaded " sponges to said 27G FEDERAL TRADE COMMISSION DECISIONS. Order. 3F.T.C.

retail dealers and said consumers did not disclose or rna ke known to said retail dealers or to said consumers that said sponges were " loaded "; that said retail dealers and said consumers did purchase and pay for Ly weight said " loaded " sponges as and for sponges whose weig-ht had not been artificially increased. PAn. 5. That the " loading" of sponges and the sale of " loaded " sponges by respondent as aforesaid is a fraudulent and deceptive practice and is designed and calculated to, and does, defraud, deceive, and mislead retail dealers and consumers; that the practice of" load· ing " as aforesaid is designed and calculated to and does enable rc· spondent to sell said " loaded " sponges on a false and fictitious basis and to secure business on a false and fictitious basis to the injury of competitors of said respondent who do not sell "loaded" sponges and to the injury of the public.

CONCLUSIONS.

The practices of the said respondent, under the conditions and circumstances described in the foregoing findings, are unfair methods of competition in interstate commerce and constitute a violation of the 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."

ORDER TO CEASE AND DESIST.

This proceeding having been heard by the Federal Trade Commis· sion upon the complaint of the Commission and answer of the re. spondent, the testimony and evidence, and the argument of counsel, and the Commission having made its findings as to the facts with its conclusions that the respondent has violated the provisions of the act of Congress approved September 2G, 1914, entitled, "An act to create a. Federal Trade Commission, to defi.ne its powers and duties, and for other purposes,"

It is now 01"dered, That the respondent, Emil Bloch, a sole trader, doing business under the name and style of Eml Bloch, and his agents, servants, and employees, and each and every one of them, do cease and desist from directly or indirectly: 1. Increasing the weight of sponges intended for sale and subse· quent shipment in interstate commerce, by soaking them in a solu· tion of salt, Epsom salts, glycerine, glucose, or sugar, or any other substance producing the like effect.

2. Selling for shipment in interstate commerce or shipping in interstate commerce any sponges the weight of which has been in· EMIL BLOCH. 277 272 . Order. creased by soaking them in a solution of salt, Epsom salts, glycerine, glucose, or sugar, or any other substance producing the like effect. 1t is furtlter _ordc,red, That the respondent, Emil Bloch, a sole trader, doing business under the name and style of Emil Bloch, shall within 60 days after the service upon him of a copy of this order, file with the Federai Trade Commission a report in writing, setting forth in detail the manner and form in which he has complied with the order to cease and desist hereinbefore set forth. Commissioners Murdock and Nugent took no part in the final con· sideration or decision of this case.

• ., 278 FEDERAL TRADE COMMISSION DECISIONS. Complaint. 8F.T.O.

'· FEDERAL TRADE COl\IMISSION v.

ANDREW BLUM, A SOLE TRADER, DOING BUSINESS UNDER THE NAME AND STYLE QF R. DLU:M.