Twinplex Sales Co

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IN THE MATTER OF T\VINPLEX SALES COMPANY COMPLAINT (SYNOPSIS), FI~D~NGS, AND ORDER IN P...EGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26 1 1914 Docket 1282. Complaint, Feb. 13, 1925-Decision, Jan. 11, 1927 Where a corporation engaged in the manufacture and sale of stroppers for safety-razor blades, gave and oflered to give to employee salesmen of Its retail dealer customers, without the knowledge or consent of their employers, cash rewards for each stropper sold as an inducement to devote time and care to the demonstrations and Instructions involved in the sale thereof; with the capacity and tendency to Injure competitors by diverting trade from their products to it! own, deprive such competitors of equal opportunity for the sale and distribution of their products, and mislead and deceive the purchasing public and especl.ally those who sought Information and advice from the aforesaid salesmen with their undisclosed Interest as to the r~latlve merits of its products and those of its competitors, and thereby d<>stroy the competition in quality, price and service to which the public is entitled :

Held, That such practices, under the circumstances set forth, constituted an unfair method of competition.

Mr. Robert 0. Brownell for the Commission. Covington, Burling & Rublee, of Washington, D. C., for respondent.

SYNOPSIS OF Complaint Reciting its action in the public interest, pursuant to the provisions of the Federal Trade Commission Act, the Commission charged respondent, a Delaware corporation engaged in the manufacture of. safety razor blades n.nd in the sale thereof in wholesale or retail quantities to purchasers in various States and with principal or executive offices in St. Louis, and with manufacturing plant in Chicago, with subsidizing secretly customers' salesmen, in violation of the provisions of section 5 of such act, prohibiting the use of unfair methods of competition in interstate commerce, in that respondent for more than a year preceding the complaint, " for the purpose and with the effect of depriving competitors of access to equal opportunities to compete in the channels of trade in the sale and distribution in interstate commerce of safety razor blade strappers, has offered to give and has given sums of money to salesmen in the employ of retail merchants, without the knowledge or consent of their respective employers or principals and without other con· siueration therefor, to induce said salesmen to sell respondent's product or as a gratuity for selling respondent's product to the exclusion Findings 11 F.T.C. of the products of said competitors," with the capacity "to injure competitors who do not engage in such practice by unduly hindering and otherwise obstructing the sale of their products and by unfairly and unlawfully diverting said trade to the said respondent," and with the effect of ·depriving competitors." of access to equal opportunities in the channels of trade for the sale and distribution of their products" and with the further capacity "of deceiving and misleading the purchasing public as to the relative merits of the competitors' products, especially those of the purchasing public who seek information and advice from such salesmen having an undisclosed interest in the sale of respondent's product, thereby destroying the advantage of competition in quality, price and service to [which] the purchasing public is entitled," all to the prejudice of the public and respondent's competitors.

Upon the foregoing complaint, the Commission made the following REPORT, FINDINGS AS TO THE FACTS, AND ORDER 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 issued and served a complaint upon respondent, Twinplex Sales Co., charging it with the use of unfair methods of competition in commerce in violation of the provisions of said act.

Respondent having entered its appearance and filed its answer herein, an agreed statement of the facts in this proceeding was signed and filed by counsel for respondent and counsel for the Commission, and it was further stipulated and agreed by them that the Commission might proceed further upon said agreed statement of the facts to make its report in the said proceeding, stating its findings as to the facts and its conclusion based thereon, and entering its order disposing of the said proceeding.

The Federal Trade Commission, having considered the record herein and being fully advised in the premises makes this its findings as to the facts and its conclusions drawn therefrom: FINDINGS .AS TO THE FACTS PARAGRAPII 1. Respondent, Twinplex Sales Co., is a corporation organized and doing business under the laws of the State of Delaware, with its principal or executive office located in the city of St. Louis, State of :Missouri, and with a manufacturing plant, known as the Floyd Uanufacturin¥ Co., located in the city of Chicago7 State TWINPLEX SALES CO. 59 Findings of Illinois. It is now and for several years has been engaged in the Jnanufacture of strappers for safety razor blades, and the sale of same to wholesale and retail customers located in various States of the United States. It causes its said products, when so sold, to be transported from its said place of business in the city of Chicago, State of Illinois, into and through other States of the United States to the said purchasers thereof. In the regular course of its said business, respondent has been at all times hereinafter mentioned, and still is, in competition with other persons, partnerships, and corporations manufacturing and selling safety razor blade strappers in interstate commerce between and among the various States of the United States. PAR. 2. In order to display the qualities of the strapper manufactured and sold by respondent, a salesman in a retail store must demonstrate its use to purchasers and also give them instructions thereon. To induce such salesmen to devote time and care to this demonstration and instruction, respondent offers to give and gives them cash rewards for each strapper sold. Respondent incloses with each strapper a folder containing instructions in the use of the strapper, and a coupon which is arranged for the signatures of the purchaser and of the salesman. Upon the receipt of the coupon, properly signed, respondent sends to the salesman whose name appears thereon, the said cash reward. There are more than 1,300 clerks in the various States of the United States who have received or are now receiving the cash rewards paid by the respondent as aforesaid. PAR. 3. Prior to January 1, 1025, respondent paid cash rewards in the manner aforesaid in paragraph 2 hereof, to salesmen -who were employed in stores where the owners or managers of the said stores were opposed to the practice of a manufacturer giving premiums to the said salesmen and did not know that the said salesmen were receiving premiums or rewards as aforesaid from respondent. PAR. 4. Prior to January 1, 192G, in an advertising magazine called "Edgewise " respondent had explained its reward plan for paying rewards to salesmen, and had sent copies of this magazine, from time to time, to its trade throughout the United States, and to others who might become customers. The executive officials of respondent had not authorized or approved the payment of rewards to salesmen without the knowledge and consent of their employers, and when protests had been made to them by such employers, they had taken steps to prevent the payment of further rewards unless the employer subsequently consented to such payment. PAn. 5. On or about Jan nary 1, 1925, after learning that rewards had been paid to certain salesmen without the knowledge and consent Order llf.T.C.

of their employers, respondent instituted a method of operation whereby any retail salesman, before becoming eligible to receive rewards from respondent, was required to file with respondent an application, signed by a responsible official of the company for which be worked, containing the company's consent to the payment of such rewards, when earned by the salesman. This method of operation is now in full force and effect.

par. 6. The said acts and practices of respondent as carried on prior to January 1, 1925, in giving cash rewards to salesmen employed by retailers, whose employers did not know that the salesmen were receiving such rewards, and who were opposed to the giving of such rewards by manufacturers, had the capacity and tendency to injure the respondent's competitors by diverting trade from their goods to those of respondent, and to deprive the said competitors of the equal opportunity for the sale and distribution of their products; and the said acts and practices of respondent had the · further tendency and capacity to mislead and deceive the purchasing public as to the relative merits of the products of respondent and its competitors, especially those of the purchasing public who seek information and advice from the salesmen who have an undisclosed interest in the sale of respondent's product, thereby destroying the competition in quality, price and service to which the public is entitled.

CONCLUSION The acts and practices of respondent, as carried on prior to January 1, 1925, under the conditions and circumstances set forth in the foregoing findings, are all to the prejudice· of the publ_ic and of respondent's competitors, and constitute methods of competition in interstate commerce in violation of the provisions of section 5 of the 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 of rcsponclcnt, and an agreed statement of the facts filed herein, and the Commission having made its findings as to the facts and its conclusion that respondent has violated 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", TWINPLEX SALES CO. 61 Order It is now ordered, That the respondent, Twinplex Sales Co., its officers, agents, representatives, servants, and employees do cease and desist from offering to give or giving to salesmen employed by dealers _in the products made by respondent any premium, reward, or bonus whatsoever, conditioned upon the sale of respondent's products by said salesmen, without the fulllmowlegde and consent of the employers of the said salesmen.

It is further ordered, That respondent shall, within 30 days after the service of this order, file with the Commission a report in writing setting out the manner and form in which it has complied with the said order.

Complaint llf.T.C.