Western Reserve Distilling Co

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

IN Tile MATTER OF WESTERN RESERVE DISTILLING COMPANY COMPLAINT AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. I> OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914, AND OF SEC. 3 OF TITLE I OF AN ACT OF CONGRESS APPROVED JUNE 16, 1933 1 Docl•et 2418. Complaint, Ma-y 2i, 1935-order, July 2i, 1936 Consent order requiring respondent corporation, its agents, etc., in connection with the offer for sale or sale in interstate commerce of whiskies, gins, and other spirituous bevernges, fo1'thwith to cease and desist from representing, tl1rough use of word ''Distilling" in its corporate name, on stationery, advertising, or labels attached to bottles in which it ships and sells its said products or in any other way by wot·d or words of like import, that (a) it is a distiller of whiskies, gins, and other such beverages, or (b) said whiskies, E'tc., were by it made through process of distillation, or (c) it owns, operates, or controls a place or places where such beverages are made by such proce;;s, unless and until it shall own, operate, or control a place or places where such whiskies, etc., are by it made, through process of original and continuous distillation from mash, wort or wash, through continuous closed pipes and vessels until manufacture thereof is complete; and Ordered further, that complaint be, and same is, dismissed as to count 2 (National Industrial Recovery Act count).

J.Jr. PGad B .•lforehouse for the Commission, J.Ir. R. E. Joyce, of Wnshingt01~, D. C., for respondent. Complaint Pursna11t to the provisions of an Act of Congress approved SeptE:>mber 2G, 1914, entitlt>cl "An Act to create a Federal Tra<le Commission, to define its powers and duties, and. for other purposes," the Federal Trade Commission, having reason to believe that The 'Vestern Resene Distilling Co., a corporation, hereinafter referred to as respon<lent, has been and is using unfair methods of competition in commerce, as " commerce " IS. c1efi ne d In. sa1"<1 ac t, anu_, m. vwlatwn. . of the Act of Congress approved June 16, 1933, known as the "National In<lu~trial R~covery Act," and it appearing to the said Commission that a procee<ling by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows:

Count 1 PARAGRAPH 1. Respondent is a corporation orrranize<l existin rr and d omg. b usmess. un der the laws of the State of"' Ohio, 'with its"''office and principal place of business in the city of Cincinnati, in said 1 Count 2 of tbe complaint, under tbe National Industrial Recovery Act, dismissed. \VE::;TERN RE:';ERVE DI"iTJLLING CO. 179 178 Complaint State. It is now, and for more than 1 year last past has been, engaged in the business of a rectifier and wholesaler of liquors, purchasing, rectifying, blending, and bottling whiskies, gins, and other spirituous beverages and selling the same at wholesale in constant course of trade and commerce between and among the various States of the United States and in the District of Columbia. In the course and conduct of its said business, it causes its said products when sold to be transported from its place of business aforesaid into and through various Stat('s of the United States to the purchasers thereof, consisting of wholesalers and retailers some located within the State of Ohio and some located in other States of the United States and the District of Columbia. In the course and conduct of its business as aforesaid respondent is now, and for more than 1 year last past has been, in substantial competition with other corporations and with individuals, partnerships, and firms engaged in the manufacture by distillation of whiskies, gins, and other spirituous beverages and in the sale thereof in trade and commerce between and among the various States of the United States and in the District of Columbia; and in the course and conduct of its business as aforesaid respondent is, and for more than 1 year last past has been, in substantial competition with other corporations, and with individuals, firms, and partnerships engaged in the business of purchasing, rectifying, blending, and bottling whiskies, gins, and other spirituous beverages and in the sale thereof in commerce between and among the various States of the United States and in the District of Columbia. PAn. 2. For a long period of time the word "Distilling" when used in connection with the liquor industry and the products thereof has had and still has a definite significance and meaning in the minds of the wholesalers and retailers in such industry and to the ultimate purchasing public, to "·it, the manufacturing of such liquors by the Process of original and continuous distillation from mash, wort, or Wash, through continuous closed pipes and vessels until the manufacture thereof is completed; and a substantial portion of the purchasing public prefers to buy spirituous liquors prepared and bottled by the actual distillers and manufacturers thereof. PAR. 3. In the course and conduct of its business as aforesaid by the use of the word "Distilling" in its corporate name, printed on its stationery and advertising, and on the labels attached to the bottles in which it sells and ships its said products, and in various other Ways, respondent represents to its customers and furnishes them With the means of representing to their vendees, both retailers and the ultim:tte consuming public, that the whiskies, gins, and other E:piritnons beverages therein contained were by it manufactured i81J:I::i"'-3!l-vol. 23-14 180 FEDERAL TRADE COl\IMISSION DECISIONS Complaint 23 F.T. C. through the process of distillation from mash, wort, or wash, as aforesaid, when, as a matter of fact, respondent is not a distiller, does not distill the said whiskies, gins, or other spirituous beverages by it so bottled, labeled, sold, and transported, and does not own, operate, or control any place or places where such beverages are manufactured by the process of distillation from mash, wort, or wash.

PAR. 4. There are among the competitors of respondent engaged in the sale of spirituous beverages as mentioned in paragraph 1 hereof corporations, firms, partnerships, and individuals who manufacture and distill from mash, wort, or wash, as aforesaid, whiskies, gins, and other spirituous beverages sold by them and who truthfully use the words "distillery," "distilleries," "distillers," or "distilling'' as a part of their corporate or trade names and on their stationery and advertising, and on the labels of the bottles in which they sell and ship such products. There are also among such competitors corporations, firms, partnerships, and individuals engaged in the business of purchasing, rectifying, blending, and bottling whiskies, gins, and other spirituous beverages who do not use the words "distillery," "distilleries," "distilling," or "distillers" as a part of their corporate or trade names, nor on their stationery or advertising, nor on the labels attached to the bottles in which they sell and ship their said products.

PAR. 5. Tiepresentation by respondent, as set forth in paragraph 3 hereof, is calculated to and has the capacity and tendency to and does mislead and deceive dealers and the purchasing public into the belief that the whiskies, gins, and other spirituous beverages sold by the respolldent are manufactured and distilled by it from mash, wort, or wash, as aforesaid, and is calculated to and has the capacity and tendency to and does induce dealers and the purchasing public, acting in such belief, to purchase the whiskies, gins, and other spirituous beverages bottled and sold by the respondent, thereby <liverting trade to respondent from its competitors who do not by their corporate or trade name or in any other manner misrepresent that they are manufacturers by distillation from mash, wort, or wash of whiskies, gins, and other spirituous beverages, and thereby respondent does substantial injury to substantial competition in inter·· "State commerce.

PAR. 6. The acts and things above alleged to have been done and the false representations alleged to have been made by respondent are to the prejudice of the public and the competitors of respondent and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress entitled "An WESTER~ RESERVE DISTILLING CO. 181 178 Complaint Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914. Count~ PARAGRAPH 1. Respondent is a corporation organized, existing, and doing business under the laws of the State of Ohio, with its office and principal place of business in the city of Cincinnati, in said State. It is now, and for more than 1 year last past has been, engaged in the business of a rectifier and wholesaler of liquors, purchasing, rectifying, blending, and bottling whiskies, gins, and other spirituous beverages and selling the same at wholesale in constant course of trade and commerce between and among the various States of the United States and in the District of Columbia. In the course and conduct of its said business, it causes its said products when sold to be transported from hs place of business aforesaid into and through various States of the United States to the purchasers thereof, consisting of wholesalers and retailers, some located within the State of Ohio and some located in other States of the United States and the District of Columbia. In the course and conduct of its business as aforesaid respondent is now, and for more than 1 year last past has been, in substantial competition with other corporations and with individuals, partnerships, and firms engaged in the manufacture by distillation of whiskies, gins, and other spirituous beverages and in the sale thereof in trade and ~commerce between and among the various States of the United States and in the District of Columbia; and in the course and conduct of its business as aforesaid respondent is, and for more than 1 year last past has been, in substantial competition with other corporations, and with individuals, firms, and partnerships engaged in the business of pur- ~hasing, rectifying, blending, and bottling whiskies, gins, and other spirituous beverages and in the sale thereof in commerce between and among the various States of the United States and in the District of Columbia.

PARS. 2, 3, 4, and 5. As grounds for these paragraphs of this complaint, the Federal Trade Commission relies upon the matters and things set out in paragraphs 2, 3, 4, and 5 of count 1 of this complaint to the same extent as though the several allegations thereof were set out at length and in separate paragraphs herein, and the said paragraphs 2, 3, 4, and 5 of count 1 of this complaint are incorporated herein by reference and adopted as the allegations of paragraphs 2, 3, 4, and 5, respectively, of this count, and are hereby charged as fully and as completely as though the several averments of the said paragraphs of count 1 were separately set out and repeated verbatim. C0:\!1\IISSIO~ DECISIONS182 FEDERAL TRADE Complaint 23F.T.C.

PAR. 6. Under and pursuant to title I of the National Industrial Recovery Act, approved Jm~e 16, 1933 {48 Stat. 195, c. 90), the President of the United States, by Executive Order No. 6182, of June 26, 1933, as supplemented by Executive Order No. 6207, of July 21, 1933, and Executive Order No. 6345, of October 20, 1933, delegated to H. A. 'Vallace as Secretary of Agriculture certain of the powers vested in the President of the United States by the aforesaid act. Under and pursuant to the delegation of such powers, the said Secretary of Agriculture pursuant to section 3 (d) of the act and Executive orders under the act, upon his own motion presented a Code of .Fair Competition for the Distilled Spirits Rectifying Industry after dne notice and opportunity for hearing in connection therewith had been afforded interested parties, including respondent, in accordance with title I of the National Industrial Recovery Act and applicable regulations issued thereunder, to the President of the United States who approved the same on the 9th day of December 1933, thereby constituting the said code a Code of Fair Competition within the meaning of the said National Industrial Recovery Act, for the regulations of the aforesaid industry.

In his written report to the President, the said Secretary of Agriculture made, among others, the following findings with respect to the said Code in the following words, to wit:

That said Code will tend to f>ffectuate the declared policy of title I of th& National In<lustrial Recowry Aet ns ~et forth in section 1 of said net in that the t(•rms nnrl provision~ of such Colle tend: (a) To remove obstmctlons to th& free flow of foreign comm<'rre. which tPml to dimini~h the amount thpreof; (b) to provide for the g<>nernl welfare by promoting th<> organization ot Industry for the purposes of coopernth·e artion among trade groups; (c) to eliminate unfair competitive prn<"ti<'<''!; (d) to promote the fullest possible nti!lznlion of the present pro<lul'tive enpndty of industries; (e) to avoid undue restriction ot production (ex<"Ppt 11"' mny be tE>IllJlornrily rrquirPd); (f) to inrrense the consumption of industrial and ngt·ieultural products by inereasing pm·chasing pow('!': and (g) otherwise to rrhnbllitnte indn~try. Dy his approval of the said code on December 9, 1933, the President of the United States, pnrsnant to the authority vested in him Ly title I of the National Int.lnstrial Uecovery Act aforesaid, made and issued his certain written Executive order, ·wherein he adopted and approved the report, recommendations, and findings of the said Secretary of Agriculture, and ordered that the said Code of Fair Competition be, and the same thereby was approved, and by virtue of the National Industrial Reco,·ery Act aforesaid, the following provision of article V of said Code became and still is one of the standards of fair compe- WESTERN RESERVE DISTILLING CO. 183 178 Order tition for the Distilled Spirits Rectifying Industry and is binding upon every member of said industry and this respondent: The following practices constitute unfair methods of competition and shall not be engaged in by any member of the industry: Section 1. False Advertisinu.-To publish or disseminate in any manner any false advertisement of any rectified product. Any advertisement Rhall be deemed to be false if it Is untrue In any particular, or 1f directly or by ambiguity, omission, or inference It tends to create a misleading impression. PAR. 7. The use by respondent of the word "Distilling" in its corporate name, printed upon its stationery and advertising and on the labels attached to the bottles in which it sells and ships such products and in various other ·ways, constitutes false advertising within the meaning of the aforesaid provision of said article V and tends to and does create the misleading impression that respondent is engaged in the business of distilling spirits from mash, wort, or wash, that the spirituous beverages by it so sold and transported have been prepared and bottled by the original distillers thereof, and that the whiskies, gins, and other spirituous beverages sold by respondent have been manufactured and distilled by it from mash, wort, or wash as aforesaid, all contrary to the provisions of section 1, article V, of the Code aforesaid.

PAR. 8. The above alleged methods, acts, and practices of the respondent are and have been in violation of the standard of fair competition for the distilled spirits rectifying industry of the United States. Such violation of such standard in the aforesaid transactions in interstate commerce and other transactions which affect interstate commerce in the manner set forth in paragraph 5 of count 1 hereof, are in violation of section 3 of title I of the National Industrial Recovery Act and they are unfair methods of competition in commerce within the meaning of the Federal Trade Commission Act as amended.

ORDER TO CEASE AND DESIST This proceeding having come on to be heard by the Federal Trade Commission upon the complaint hereinbefore issued and sen·ed upon Western Uesene Distilling Company, a corporation, respondent herein, and the said respondent's written answer made thereto, waiving the taking of testimony, findings as to the facts, filing of briefs, oral argument and all other intervening procedure, and consenting that an order shall issue herein for it to cease and desist from methods of competition charged in the complaint, and the Commission being fully advised in the premises, having thereupon concluded that respondent has violatt>d Section 5 of an Act of Congress approved Order 23F. T. C.

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, 1Vestern Reserve Distilling Company, its agents, salesmen, and employees, in connection with the offering for sale or sale by it in interstate commerce of whiskies, gins, and other spirituous beverages, forthwith cease and desist £rom: Representing through the use of the word "Distilling" in its corporate name, on its stationery, advertising, or on the labels attached to the bottles in which it sells and ships its said products or in any other way by word or words of like import representing, (a) that it is a distiller o£ whiskies, gins, and other spirituous beverages; or (b) that the said whiskies, gins, and other spirituous beverages were by it manufactured through the process o£ distillation; or (c) that it owns, operates, or controls a place or places where such beverages are manufactured by the process of distillation, unless and until the said respondent shall own, operate, or control a place or places where such whiskies, gins, and other spirituous beverages are by it manu· factured through a process of original and continuous distillation from mash, wort, or wash, through continuous closed pipes and vessels until the manufacture thereof is completed. It i8 further ordered, That the aforesaid complaint be and the same is hereby dismissed as to count 2 thereof. It i,y further ordered, That the said respondent within 60 days from and after the date of the service upon it of this order, shall file with the Commission a report or reports in writing setting forth in detail the manner and form in which it is complying and has complied with the order to cease and desist hereinabove set forth. WESTERN AMERICAN DISTILLERS CORP. 185 Syllabus