United Indigo & Chemical Co. (Ltd.)

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COl\IrLAINT IN TIIE MATTER OF THE ALLEGED VIOLATION OF SECTION 5 OF AN ACT OF CONGRESS APPROVED SEPTEMBER 261 1914. Docket 596.-June 30, 1921.

SYLtABUfl.

Where a corporation dealing. in dyestuffs, chemicals, and other dyeing goods and products, gave to employees of customers and prospective customers, without tho knowledge and consent of their employers, (a) Gratuities of money, and (b) Dinner parties, theater and baseball tickets, and lavish entertainment at large expense, As an inducement for them to influence their employers to purchase its products or to refrain from dealing with its competitors: Held, That such gifts and entertainment, under the circumstances set forth, constituted unfair methods of competition.

COMPLAINT.

The Federal Trade Commission having reason to believe from a. preliminary investigation made by it that tho United Indigo & Chemical Co. (Ltd.) has been and is now using unfair methods of competition in commerce, in violation of the intent and meaning of section 5 of an act of Congress, entitled 11An act to create a Federal Trade Commission, to defme its powers and duties, and for other purposes," approved September 26, 1914, and the Federal Trade Commission, having determined that a complaint should issue hgainst said United Indigo & Chemical Co. (Ltd.) and that a full and complete inquiry with respect thereof would be to the interest of the public. Therefore, tho l!""'edcral Trade Commission, complaining, shows that it is informed, in such a manner that it believes the facts to be substantially as herein set out, and therefore charges as follows: PARAGRArrr 1. That the said United Indigo & Chemical Co. (Ltd.) is a corporation, as defined by the act known as tho Federal Trade Commission act, approved September 26, 1914, chartered, organized, and existing under the laws of Great Britain; that it has domesticated and registered in the State of Massachusetts, in the United States of America, and maintains its principal office and place of business in the United States, in the city of Boston, in said State of 1.1assachusetts, and is engaged in the manufacture and sale, in comme:rce, of dyestuffs, chemicals, and other dyeing goods and products. --- .... 426 FEDEIU.L TRADE COMMISSION DECISIONS. Complaint. 3F.T.C.

PAR. 2. That the said United Indigo & Chemical Co. (Ltd.) is and has been continuously for the year last past, and for a longer period of time, engaged in commerce as defmed by the act of Congress, approved September 26, 1914, above mentioned, and that it is manu· facturing and purchasing dyestuffs, chemicals, and other dyeing goods and products from manufacturers, dealers, and others in the State of Massachusetts and in other States and Territories of the United States and in the District of Columbia and foreign countries and having the said dyestuffs, chemicals, and other dyeing goods and produ~ts shipped and transported, in commerce, to, in, and through the State of Massachusetts to its place of business in the city of Boston and selling, shipping, and transporting said goods, in com· merce, from its place of business in said city of Boston, in the State of Massachusetts, among other States and Territories of the United States and the District of Columbia and into foreign countries, and there is continuously and has been, at all times within the year last past and more, a constant current of trade in commerce, by said respondent, in said dyestuffs, chemicals, and other dyeing goods and products, among and between tho various States of tho United States, the Territories thereof, and the District of Columbia and into foreign countries to and through tho city of Boston, in the State of Massa• chusetts, and therefrom to and through other States of the United States and Territories thereof and the District of Columbia and into foreign countries.

PAn. 3. That the United Indigo & Chemical Co. (Ltd.), in the course of selling dyestuffs, chemicals, and other dyeing gootls and protlucts, in commerce, as defined by an act of Congress, approved September 26, 1!)14, entitled "An act to create a Federal Trade Com· mis!!ion, to define its powers and duties, and for other purposes," has been for more than a year last past, and still is, engaged in unfair methotls of competition, in commerce, in violation of section 5 of the abovenamed act, approved September 26, 1914, in that, in the con<luct of its business in selling dyestuffs, chemicn.ls, and other dyeing goods and products, it secretly and 'vithout the knowletlge of tho pur· chasers, consumers, or prospective purchasers of its goods offered to give, and did actually give, to the employees of its customers and purchasers of its goods and offered to give, nnd did nctually give, to the employees of the customers of its competitors, dinners, theater tickets, prize-fight tiekcts, and nlso paid out und expended largo sums of money in lavish f'ntertainmcnts to tho employees of its cus· tomers, purchu.scro, r.nd proposed customers nnd purc}Jascrs, and to employees of the customers nnd purclu1scrs of ils ('Ompetitors, und n.lso offered to pay, nnd did nctuu.lly pay, secretly and without tle UNITED INDIGO & CHEMICAL CO., LTD. 427 425 Findings. knowledge of its customers, purchasers, and competitors, cash commissions and other bonuses, prizes, rewards, compensations, and gratuities to the employees of its customers, purchasers, and to the employees of its competitors, all of which was done by respondent to induce such employees to advocate, push, and favor the goods and the sale of the dyestuffs, chemicals, dyeing, and other products of respondent over its competitors, and to induce the sai~ employees of its customers, purchasers, and competitors to pursuade, urge, and recommend to their employers to purchase the dyestuffs, chemicals, and other dyeing goods and products of respondent, instead of the goods of the competitors of the respondent, in order that such employees might receive the cash commissions, bonuses, prizes, rewards, compensation, and gratuities offered and promised by the said respondent, all of which acts of respondent are unfair methods of competition and in violation of the intent and meaning of section 5 of the Federal Trade Commission act, approved September 26, 1914.

PAn. 4. That by reason of the facts set out in the foregoing paragraphs of this complaint, the respondent has been guilty of unfair methods of competition in commerce as defined and prohibited by section 5 of·an act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define ita powers and duties, and for other purposes." REPORT, FINDINGS AS TO THE FACTS, AND ORDER. Pursuant to the provisions of an act of Congress,. approved Sept~mber 26, 1!)14, the Federal Trade Commission issued and served n complaint upon the respondent, United Indigo & Chemical Co. (Ltd.), 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 and amended answer herein, and a hearing having been had and cyidence introduced in support of the allegations of said complaint before an examiner of tho Federal Trade Commission theretofore duly appointed;

Thereupon this proceeding came on for final hearing, and the respondent having waived the introduction of further evidence, and the attorneys for the Commission and the respondent having waived the filing of briefs and oral argument, and the Commission having duly considered the record and being now fully advised in the premh,E:S, make~ this its findin;;s as to the facts and conclusion: .

428 FEDERAL TRADE COl\Il\IISSION DECISIONS. Findings. 3F.T.O.

FINDINGS AS TO THE FACTS.

PARAOUArn 1. That the respondent, United Indigo & Chemical Co. (Ltd.), is a corporation organized and existing under the laws of Great Britain, having a registered office in the State of Massachusetts, in the United States of America, and a place of business in the city of Boston, in said State of Massachusetts, and is now and at all times hereinafter mentioned has been engaged in the selling and transporting of dyestuffs, chemicals, and other dyein;; goods and products through and among the various States and Territories of the United States, the District of Columbia, and into foreign countries in direct competition with other persons, partnerships, and corpora.tions similarly engaged.

PAR. 2. That the respondent, the United Indigo & Chemical Co. (Ltd.), in the course of its business as described herein, purchases dyestuffs, chemicals, and other dyeing good3 and products from manufacturers, dealers, and others in the State of Massachusetts and in other States of tho United States and foreign countries, transporting such products from said places of purchase through other States of the United States to their place of business in tho city of Boston, State of Massachusetts, where they are kept and st<ired for their trade in selling such commodities.

r AU. 3. That the respondent, the United Indigo & Chemical Co., in the course of its business of selling dyestuffs, chemicals, and other dyeing goods and products, as described herein, for several years last [past] to July 1, 1019, gave to employees of its customers, without the knowledge and consent of their employers, gratuities in tho form oC money as an inducement to persuade, urge, and recommend to their employers the purchase of dyestuffs, chemicals, and other dyeing goods and products from respondent, or to refrain from purchasing such products from competitors of tho respondent. r AR. 4. That the respondent, the United l"ndigo & Chemical Co. (Ltd.), in the course of its business in selling dyestuffs, chemicals, aud other dyeing goods and products, as described herein, for several years last past has given to employees of its customers and prospective customers, without the knowledge and consent of their employers, dinner parties, theater and baseball tickets, and expended lnrge sums of money in lavish entertainment of such employees, as nn inducement to persuade, urge, and recommend to their employers tho purchase of dyestuffs, chemicals, and other dyeing good::i and products from the respondent, or to refrain from purchasing such products from competitors of the respondent. r AR. 5. That the annual sales of dyestuffs, chemicals, and other dyeing goods and products in the United States by tho respondent, UNITED INDIGO & CHEMICAL CO., LTD. 429 425 Order. the United Indigo & Chemical Co., during the years 1916, 1917, and 1918 amounted to approximately $700,000 per year, and its expenditures for entertainment and gratuities given to employees during that period averaged from $40,000 to $50,000 per year. CONCLUSION.

That the practices of the said respondent, under the conditions ~tnd circumstances described in the foregoing findings, arc unfair methods of competition in interstate and foreign commerce, and constitute a violation of an act of Congress, approved September 2G, 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, the answer and amended answer of respondent, and testimony, and the Commission having made its findings as to the facts, with its conclusion that the respondent has violated the provisions of an 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 therefore ordered, That the respondent, the United Indigo & Chemical Co. (Ltd.), its officers, directors, agents, salesmen, servantq, nnd employees cease and desist from directly or indirectly giving to employees of its customers, or prospective customers, or those of its competitors' customers or prospective customers, without the knowledge and consrnt of their respective employers, sums of money, dinner parties, theater and baseball tickets, and other forms of entertainment as an inducement to persunde, urge, or recommend to their employers the purchase of dyestuffs, chemicals, and othrr dyeing goods and products from the respondent, or to refrain from purchasing such dyestuffs, chemicals, and other dyeing goods and products from competitors of respondent, and It is further ordered, That the respondent, within GO days after the date of service upon it of this order, file with the Commission n report in writing setting forth in detail the manner and form in which it has complied with the order to cease and desist herein set forth. - .... 430 FEDERAL TRADE COMMISSION DECISIONS. Complaint. 8F.T.O.

FEDERAL TRADE COMMISSION 1}, ORLEANS IRON WORKS, INC.