Penn Lubric Oil Company

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COMPLAINT IN THE latter OF THE ALLEGED VIOLATION OF SECTION 3 OF AN ACT OF CONGRESS APPROVED SEPTEMBER 26, 1914, Docket 910-May 19, 1923.

SYLLABUS.

Where a corporation engaged in the sale of lubricating olls composed of the so-called Pennsylvania grade of oll mixed with cheaper and Inferior oils; ln posters, stationery, and other advertising matter represented the same as Pennsylvania olls, and only Inadequately advised the purchasing public, through small stickers or circulars which did not reach the attention of any considerable number of persons, that said olls were not composed exclusively of said superior and more expensive stock; with the result that lt was thereby enabled to obtain a higher price tor Its products than lt could otherwise have obtained; to the Injury both of competitors dealing In pure Pennsylvania oil and of those dealing In a mixture thereof and so advertising and branding the same:

Held, That such false and misleading advertising, under the circumstances set forth, constituted an unfair method of competition. COl\IPLAINT.

Acting in the public interest, pursuant to 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," the Federal Trade Commission charges that the Penn Lubric Oil Company, hereinafter referred to as the respondent, has been and is using unfair methods of competition in commerce in violation of the provisions of Section 5 of said Act, and states its charges in that respect as follows : PARAGRAPH 1. The respondent, Penn Lubric Oil Company, is a corporation organized, existing and doing business under and by virtue of the laws of the State of Missouri, with its principal office and place of business in the city of Kansas City, in said State. It was at all times hereinafter mentioned and still is engaged in the business of selling lubricating oils and greases and causing such products, when sold, to be transported from the place of manufacture in the city of Kansas City, aforesaid, to purchasers thereof located in other States of the United States and the territories thereof and PENN LUBRIC OIL CO. 185 184 Findings. the District of Columbia, and there is now and was at all times hereinafter mentioned a constant current of trade and commerce in said products between and among the various States and Territories of the United States and the District of Columbia, and particularly from the city of Kansas City, aforesaid, and therefrom to, into and among the various other States and Territories of the United States and the District of Columbia. In the course of its business respondent was at all times hereinafter mentioned and still is in competition with other corporations, partnerships and individuals engaged in the manufacture and sale of similar products in and among the various States and Territories of the United States and the District of Columbia.

PAR. 2. The greater part of the products sold by the respondent is and has been for more than two years last lubricating oils. Pennsylvania oil, which is a kind and grade of oil found in the State of Pennsylvania, is considered in the trade to be a high-grade lubricating oil and for that reason commands a higher price than do oils which are not so highly regarded; most of the lubricating oils made and sold by the respondent are now and have been for more than two years last past made of a compound of Pennsylvania oil and of inferior and cheaper oils, the percentage of Pennsylvania oil in some of such compounds being as low as 10 per cent, and such compounds are not considered in the trade of as high a quality as is pure Pennsylvania oil and do not for that reason command' as high a price as do pure Pennsylvania oils. The respondent now uses and for more than two yea.rs last past has used various forms of advertising which have been and are calculated to deceive the buying public into believing that the lubricating oils sold by the respondent and compounded by it as aforesaid are and have been pure Pennsylvania oils. PAR. 3. The above alleged acts and things done by respondent are all to the prejudice of the public and respondent's said competitors and constitute unfair methods of competltlon 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, MODIFIED FINDINGS AS TO THE FACTS, AND MODIFIED ORDER.

Pursuant to the provisions of an Act of Congress approved September 26, 1914, the Federal Trade Commission issued and c,;served a complaint upon the respondent, Penn Lubric Oil Company, a corporation, charging it with the use of unfair methods of compe- 186 FEDERAL TRADE COMMISSION DECISIONS~ Findings. 6F.T.O.

tition in interstate commerce, in violation of the provisions of said act.

The respondent having entered its appearance by its attorr.ey, and filed its answer herein, hearings were had before an examiner of the Federal Trade Commission, theretofore duly appointed, &.nd testimony and documentary evid·ence were thereupon offered and received in support of the allegations of said complaint, which evidence was duly recorded, duly certified and forwarded to the Commission; and the respondent having made, executed and filed an agreed statement of facts, in which it waives the filing of exceptions to the findings herein and admits the truth thereof, and waive.s the filing of brief and stipulates and agrees that the Federal Trade Commission shall take such agreed statement of facts and preceed 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 without the presentation of argument in support of same, and the Federal Trade Commission having duly considered the record and being fully advised in the premises, makes this its findings a~ to the facts and conclusion:

FINDINGS AS TO THE FACTS, PARAGRAPH 1. That the respondent, Penn Lubric Oil Company, is a corporation, duly organized and doing business, with its pnnci· pal office and place of business in the city of Kansas City, Mis!:iuuri. That it was for six years last past, and is now, engaged in the business of selling lubricating oils and greases, and causing such products, when sold to be transported from Kansas City, Missouri, to purchasers thereof located in other States of the United States, and that there is now, and has been during the six years last past, a constant current of trade and commerce in said products between and among the various States of the United States, and particularly irom the City of Kansas City, Missouri to, into, and among the various other States and Territories of the United States; That the respondent, in the conduct of such business during said six years, was, and still is, in competition with other corporations, partnerships, and individuals engaged in the manufacture and sale of similar products in and among the various States and Territories of the United States.

PAR. 2. Pennsylvania oil, which is a kind and grade of oil pro· duced in the Appalachian field, is a high-grade lubricating oil, and is regarded by the public as a superior grade of oil, by reason of which it commands a higher price than other oils produced in the PENN LUBRIO OIL 00. 187 18·1 Findings. Mid-Continent field and in the California field, and is also regarded as a higher grade and a more desirable oil than any blend or combination of Pennsylvania oil with the oils produced in said other fields, and commands a higher price in the market than such blend with inferior oils.

That the Penn Lubric Oil Company sells its oil under the name of "PLOCO."

That said respondent compounds or mixes a certain quantity of Pennsylvania Bright or Pennsylvania" E" stock with double filtered Mid-Continent neutrals, and the different grades of oils thus produced and sold by respondent are designated as " PLOCO " A, B, C. D, E, F. "PLOCO" G sold by respondent is a 100 per cen\ Pennsylvania oil.

PAR. 3. That in advertising its products, respondent displays throughout its trade territory, in the garages and other places where its " PLOCO " oil is sold, large cloth posters or banners, 6 feet long by 3 feet wide, which read as follows:

"We sell (Genuine) PLOCO Pennsylvania AuTOJI!OBILE OIL - and - GEAR GREASE TRACTOR OIL Manufactured by PF.NN LunRic Orl Co., Kansas CITY, Mo." The word " PLOCO" appears upon said posters in very much larger letters than the balance of the reading matter. Also, the respondent extensively uses, throughout its trade territory a small poster about 15 inches long by 7 inches wide, which reads as follows:

"PLOCO PENN LunRIC OIL Co.

Pennsylvania Oils Home Office Branch and Works Shipping Stations KANSAS CITY, Mo. In Other Cities The Home of Ploco Motor Oil and Gear Grease " Also, the respondent has used in its business an envelope, upon which was printed, in the upper left-hand corner, the following words:

"PLOCO Automobile Oil They are Pennsylvania Tractor Oil Products Noiseless Gear Grease HIGH GRADE " 188 FEDERAL TRADE COMMISSION DECISIONS. JJ'lndings. 6F.T.C.

Also, the respondent has used in its business an envelope, upon which was printed, on the upper left-hand corner, the following words:

"PLOCO Auto Oil (Carbonless) They are I>ennsylvania Liquid Fiber Cement Products Noiseless Gear Compound HIGH GRADE" Also, the respondent in its business used a letterhead, which reads as follows:

" 1\Iotor and Motor and Tractor PLOCO Tractor Oil Gear Grease PENN LUBruc OIL Company Kansas City, l\Io.

We Sell Pennsylvania Oils"

PAR. 4. That the small circular stickers placed upon the containers in which the oils were conveyed, or the circulars sent out to dealers, and the certificates of guarantee given to dealers, copy of which stickers and certificates follows:

THIS OIL IS PRODUCED BY COli POUNDING Heavy-Bodied Pure PENNSYLVANIA OIL with Double Filtered Mid-Continent Oil PENN Lunmc Orl Co.

Kansas City, Mo.

CERTIFICATE OF GUARANTEII Given by PENN Lunmc Orl Co:uPANY Kansas City, l\Io.

Dated at the General Offices of the Company Kansas City, Mo.

This Certificate entitles the holder to positively guarantee that every package of PLOCO MOTOR OIL shipped by the PENN Lusnxo OIL Co:urANY, contains genuine Pennsylvania Oil and a label to this effect is pasted on every paclmge before leaving our plant. Our oils are produced by compoundin~ heavy bodied pure Pennsylvania Oils with double-filtered Mid-vontinent Oils. We PENN LUBRIC OIL CO, 189 184 Conclusion. offer a liberal reward for proof of any man offering for sale any inferior oil and representing it to be PLOco Motor OIL. . R. 0. BONE, Pres. and Gen. Mgr.

Certificate No. ------· That the above did not reach the attention of any considerable number of the purchasing public, and had no material effect of counteracting the impression upon the purchasing public made by the general display advertising of respondent as above set forth. PAR. 5. That the advertisements of the resrondent by which it placed its product "PLOCO " before the pubhc as above set forth, are misleading, and had and have the capacity and tendency to mislead and deceive the purchasing public and to induce the said purchasing public to purchase said " PLOCO " oil, of the grades from "A" to" F," inclusive, upon the mistaken belief that all the different grades of oil sold by respondent under the name of " PLOCO " are made from crude oil of the Pennsylvania grade, which oil is generally regarded as the highest grade of oil, and superior to oil produced in the Mid-Continent field and California fields and enables the respondent, by reason of such deception, to obtain a higher price for said " PLOCO " oil than it otherwise could if the purchasing public knew the facts.

PAR. 6. That the advertisement and sale by said respondent of the different grades of" PLOCO " as though made from the superior Pennsylvania grade of oil, when in truth and in fact" PLOCO" oil, with the exception of the "G" grade, is a mixture of Pennsylvania oil with western oil which is generally regarded as inferior to oil of ~ennsylvania grade, had and have a capacity and tendency to destroy or lessen the demand upon the part of the purchasing public for genuine Pennsylvania oil, and in that way injure the business and reputation of the competitors of the respondent who are engaged in the sale of pure Pennsylvania oil, and also had and have a capacity and tendency to injure those competitors of respondent who are using a mixture of Pennsylvania oil and western oil the same as respondent, but who are advertising and branding the same as such mixture.

CONCLUSION.

The practices and acts of respondent herein, as hereinbefore set forth, under the conditions and circumstances set forth in the foregoing report upon the facts, are unfair methods of competition in interstate commerce and constitute a violation of Section 5 of the Act of Congress approved September 26, 1914, entitled "An Act to create 190 FEDERAL TRADE COMMISSION DECISIONS. Order. 6F.T.O.

a Federal Trade Commission, to define its powers and duties, and for other purposes."

MODIFIED ORDER TO CEASE AND DESIST.

This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of the respondent and the evidence taken before an examiner of the COmmission, a.nd the Commission having made its findings as to the facts with its conclusions that respondent has violated the provisions 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,"

It is now ordered, That the respondent, Penn Lubric Oil Company, its officers, agents, representatives, servants and employees do cease· nnd desist From using in letters, circulars, posters or other advertising matter in connection with the sale of its oil products which are compounds or mixtures of the products of Pennsylvania crude oil, or of the products of crude oil produced in the Appalachian field and generally known in the trade as "Pennsylvania grade," with the products of nny other kind of crude oil whether sold under the name of ., PLOCO " or any other name, the word "PENNSYLVANIA" or words "PENNSYLVANIA OILS," without conspicuously disclosing in such advertisements that such blended oils are made by combining the Pennsylvania oil with Mid-Continent or other oils. It is further ordered, That the respondent within thirty (30) days from notice hereof, file with the Commission a report in writing stating in detail the manner in which this order has been complied with and conformed to.

FOX FILM CORPORATION. 191 Complaint.

FEDERAL TRADE COMMISSION v.

FOX FILM CORPORATION.