Benjamin Shatkun and David Kahn

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

COMPLAINT IN THE l\IATTER OF THE ALLEGED VIOLATION OF SEC;rion 5 OF AN ACT OF CONGRESS APPROVED SEPTEl\iber 26, 1914. Docket 664-January 7, 1922.

SYLLABUS.

Where a corporation engaged in the manufacture and sale of cheap fountain pens packed in individual containers bearing the legend "Price $3.00," which was a fictitious and exaggerated price, sold the same so packed to dealers who resold them to the publlc at prices many times in excess of their cost and often at the price so indicated; with the effect of misleading purchasers and the general public into believing said price to be the usual retail price, and of enabling, encouraging and aiding dealers to· defraud the public by obtaining excessive prices, and, by selling at less than the figure indicated, to mislead and deceive purchasers into believing that a higher grade of pen was being sold at a reduced price: Held, That such mislabeling, or misrepresentation of price, under the circumstances set forth, constituted an unfair method of competition. AMENDED COMPLAINT.

The Federal Trade Commission, having reason to believe from a prel,i.minary investigation made by it that Benjamin .Shatlrun and David Kahn, partners styling themselves Shatkun & Kahn, hereinafter referred to as respondents, have been and are 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 amended complaint, stating its charges in that respect on information and belief as follows: PARAGRAPH 1. That the respondents are partners and style themselves Shatkun & Kahn, and have their principal place of business at New York, in the State of New York.

PAR. 2. That respondents are engaged in the business of manufacturing and selling fountain pens, and cause same to be transported to the purchasers thereof, from the State of New York through and into other States of the United States, in direct, active competition with other persons, partnerships and coroorations similarly engaged.

168 FEDERAL TRADE COMM:ISSION DECISIONS, Findings. 4F.T.C.

PAR. 3. That respondents in the course of their business, as de· scribed in Paragraph 2 hereof, sell at wholesale, fountain pens manu· factured by them, which pens they pack singly in containers upon which they conspicuously print what purports to be proposed resale prices, but which prices are false, fictitious and misleading in that such prices are greatly in excess of the prices at which respondents and their vendees contemplated that said pens will be resold, and are greatly in excess of the actual prices at which such pens sell in the usual course of retail trade; and such pens are sold by respondent, packed in the containers marked as aforesaid, with full knowledge that such marks are to be used for the purpose of misleading and deceiving the purchasing public and inducing them to purchase said pens when offered for sale at prices substantially below those printed on said containers, upon the mistaken belief that said pens are being sold at a greatly reduced price; that among pens so sold by respondents, at prices ranging from 16¢ to 25¢ each, are pens placed in containers upon which respondents print "Price $3.00 ", and in selling the pens in containers so marked, respondents come in direct competition with other manufacturers of pens who do not mark their product with such false, fictitious and misleading price marks, and respondents by the means aforesaid, aid, abet and assist their customers, to whom they sell their pens in containers· so marked, in using unfair methods of competition against others similarly engaged, but who do not sell their pens in containers marked with such false, fictitious and misleading price marks. PAR. 4. That by reason of the facts recited the respondents have been using an unfair method of competition in commerce within the intent and meaning of Section 5 of an Act of Congress entitled, "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914. REPORT, FINDINGS AS TO THE FACTS, AND ORDER.. Pursuant to the provisions of an Act of Congress approved Sep· tember 26, 1914, the Federal Trade Commission issued and served a complaint and an amended complaint upon the respondents, Benja· min Shatkun and David Kahn, partners, styling themselves Shatkun & Kahn, charging them with the use of unfair methods of competition in commerce in violation of the provisions of said Act. ' Respondents having entered their appearance and filed their answer herein, admitting that certain of the methods and things alleged in said complaint are true in the maimer and form therein set forth, and having made, executed and filed an agreed statement of facts in which it is stipulated and agreed by the respondents that the SHATK'ON & KAHN' <BENJAMIN' SltATKU'N ET AL.), 169 Findings.

Federal Trade Commission shall take such agreed statement of facts as the .facts in this case and in lieu of testimony, and proceed forthwith with such agreed statement of facts to make its findings as to the facts and such order as it may deem proper to enter therein, with- · out the introduction of testimony or the presentation of argument in support of same, and the Federal Trade Commission being now fully advised in the premises makes this its findings as to the facts and conclusion.

FINDINGS AS TO THE FACTS.

PARAGRAPH 1. That the respondents, Benjamin Shatkun and David Kahn, partners, styling themselves Shatkun & Kahn; are now and at all times hereinafter mentioned have been engaged in the business of manufacturing and selling fountain pens throughout the various states and territories of the United States, with their principal place of business at 118 Walker Street, in the City of New York, State of New York, in direct, active competition with other persons, partner~ ships and corporations similarly engaged. PAR. 2. That in the conduct of their business as aforesaid, respondents have sold and transported fountain pens, packed in individual' boxes or containers, stamped or marked with a fictitious or exa.ggerated price, to customers in different .states of the United States, causing the same to pass from the state of New York through and into other states of the United States, and there is and has been at all times hereinafter mentioned a constant current of trade and commerce of such fountain pens, packed in boxes as aforesaid, between and among the different states of the United States. PAR. 3. That within one year last past respondents have sold at wholesale, in commerce as aforesaid, throughout the United States, cheap grades of fountain pens at prices ranging from $24 to $36 per gross, said pens being packed in individual boxes or containers on which boxes or containers is stamped ol"' marked "Price $3.00." That since April, 1920, respondents have discontinued the sale of fountain pens packed as aforesaid.

PAR. 4. That such resale prices are not bona fide but placed on Such boxes for th~ purpose of enabling the retail dealer to represent to the ultimate consumer that such pens are of high grade and reasonably worth the false and fictitious price marked on such boxes. . PAR. 5. That respondents have sold said fountain pens packed in boxes or containers, stamped or marked with fictitious or exaggerated price as aforesaid, to dealers who resell them to the public at prices many times in excess of the cost price, and often at the same price stamped or marked on the boxes or containers. 170 FEDERAL TRADE COMMISSION DECISIONS. Order 4F.T.C.

P .AR. 6. That the sale by respondents to dealers of cheap fountain pens in boxes or containers, stamped with a fictitious price as aforesaid, was calculated to, and did enable dealers in said pens to de- . fraud the purchasing public by obtaining for such pens prices greatly in excess of the cost price of said pens; that said pens are solrl by some dealers at prices below those indicated on the boxes or containers, and the prices so indicated mislead and deceive the purchasing public into believing that a higher grade of pen is being sold at a reduced price; and that thus respondents encourage, aid and abet said dealers in misleading and deceiving the public as to the real value of said pens.

P .AR. 7. That the effect of printing or stamping of fictitious or exaggerated prices on the boxes or containers in which fountain pens are packed and sold by respondents, to dealers, who resell them to the public as aforesaid, has been and is to mislead purchasers and the general public into the belief that the retail price of said fountain pens is the price stamped or marked on the box or container. CONCLUSION.

':{'he practices of the said respondents, under the conditions and circumstances described in the foregoing findings, are unfair methoda 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 and the amended complaint of the Commission and agreed statement of facts filed herein, and the Commission having made its findings as to the facts and its conclusion that the respondents have violated the provisions 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,"

It is now ordered, That the respondents, Benjamin Shatkun and David Kahn, partners, styling themselves Shatkun & Kahn, their agents, representatives, servants and employees, do cease and desist from directly or indirectly:

(t) Stamping, printing or otherwise marking on boxes or containers in which fountain pens are sold or intended to be sold, a. fictitious, exaggerated or misleading price, known to be in excess of UNITED STATES NOVELTY CO. (ABRAHAM SHATKUN). 171 1\Iemorundum.

the price at which such pens are intended to be and usually are sold at retail.

(2) Selling or supplying their customers with individual boxes or containers made to contain fountain pens, Jr selling fountain pens packed in individual boxes or containers, on which said boxes or containers is stamped, printed, or otherwise marked a fictitious, exaggerated or misleading price, known to be in excess of the price at which such pens are intended to be and usually are sold at retail. And it is further ordered, That said respondents shall within thirty (30) days from the date of service of this order, file. with the Commission a report, setting forth in detail the manner and form in which they have complied with the order of the Commission herein set forth.

The Commission also made similar findings and order in the case of Abraham Shatkun, doing business under the trade name and style of United States Novelty Company, (o:f New York City, Dock. 665) issued as of January 7, 1922, in which the respondent, a manufacturer of cheap fountain pens, sold the same packed in individual containers marked "Price $1.50" "Price $2.00" "Price $2.50" and " Price $3.00," under the same circumstances and with the same effect as in the preceding case.

J 172 FEDERAL TRADE COMMISSIO:N' DECISION'S. Complaint. 4F.T.C.

FEDERAL TRADE COMMISSION v.

CHARLES J. McNALLY, DOING BUSINESS UNDER THE TRADE NAME AND STYLE OF MACFOUNTAIN PEN AND NOVELTY COMPANY.