Morris Gottsegen and David Jacoby, doing business as Mills Sales Company

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IN THE MATTER OF MORRIS GOTTSEGEN AND DAVID JACOBY, DOING BUSI- NESS AS MILLS SALES COMPANY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATIOZ'f OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Doclcet 2864. Complaint, June SO, 1936-Decision, Sept. 25, 1938 Where a .firm engaged as importers of and wholesale dealers in a variety of ped· dlers' and retail dealers' supplies, Including tooth brushes, dental crearus. shaving creams, offered In pretended "giant" sizes, razor blade hones, and other toilet articles- (a) Described many articles and items of merchandise listed in their catalogs and price lists as possessing retail values many times In excess of the actual selling price to the retailer or other purchaser and many times in excess of the actual value thereof, and stamped or printed on various items and ar· ticles offered, or on labels attached thereto, or on containers thereof, retail prices many times In excess of actual price thereof as sold by peddler or retailers to consuming public, and many times In excess of their true and actual value, through such practice as designating as "Honor" branu "Dental Creams, Large Sizes Marked 3::i¢", creams with said price printed on cartons thereof, but offered at GO¢ per dozen or $6.50 per gross, "Brushless" brund "Shaving Cream-Giant 50¢, 60¢, and 75¢ Sizes", creams with 60¢ printed as price on cartons, but offered at 72¢ a dozen or $8.25 per gross, and razor blade hones "1\Iarked to sell at $1.00", while offered at 45¢ per dozen or $5.00 per gross, and In their catalogs set forth many other Instances showing tbe "spread" between the dozen or gross rate at which the commodities were offered and sold, and the tictitlons retail prices marked thereon, which various prices were not those at which different Items were expected to be sold, but were greatly in excess of those at which same were Intended to be and were sold in usual course of trade;

(b) Caused word "1\lanufacturers" to appear on letterheads and advertising matter used by them In soliciting sale of and selling their aforesaid products, notwithstanding fact they were not manufacturers and did not own, operate. or control any factory In which products sold nnd distributed by them In interstate commerce were made;

(c) Used abbreviation "Dr." In connection with various commodities offered bY them, through such statements us "Dr. Jay's High Quality Tooth Brusbe9•" with depletion of brush and name "Dr. Jay" on handle thereof, and thus asso~ dated said name with their "!tubbing Alcohol," and with certain denta creams, In connection with which name "Dr. Sach's" was also set forth, not· withstanding facts products thus marked, stamped, branded, advertised, and sold were not made In accordance with design or under supervlsio~ of a doctor and did not contain special or scientific features as a result 0 medical advice or services;

With result of placing In bands of peddlers and retailers buying for resale 11~ Instrument and means enabling them to commit a fraud upon a substantlab portion of the consuming public, through representing and offering said toot 1\IILLS SALES CO. 519 518 Complaint brushes and other articles as genuinely superior products produced by manufacturers, with intent of selling same in usual course of trade to general consuming public at and for retail price stamped thereon or on containers thereof, in accordance with long standing and well understood custom by Which quality is associated with suggested retail price stamped on product Involved, and with Intent and effect of misleading a substantial portion of the consuming public Into belief that said various items were superior Products sold and distributed by said individuals with intent that they should be sold at retail at a price closely proximating that stamped thereon, and that they were composed of superior ingredients and ordinarily sold in usual course of trade at such approximate prices, and that said Individuals Were manufacturers and large scale operators and distributors and conducted their business on such a scale as to assure purchasers of superior Quality and closer prices through trading with them, and that products were made In accordance with design and under supervision of a doctor and contained special or scientific features as result of medical advice or services, and that products at prices at which actually offered represented bargains \ not ordinarily obtainable; and ~lth tendency and capacity to mislead and deceive distributors and purchasing Public into erroneous belief that said statements and representations were true and with effect of inducing members of public to buy said products on account of such erroneous beliefs, and with result, by reason of such false lind misleading statements and representations and added inducements therein for substantial number of retail merchants, as well as consumer Purchasers, to buy such products, of diverting a substantial volume of trade from competitors, including those who, as manufacturers and distributors, truthfully advertise and represent the nature, merit, and value of their respective products, nnd those who do not advertise or represent their merchandi:;e as stumped or marked with price marks greatly exceeding their actual intended retail sale value or retail sale price, or represent same as lllnde in accordance with design or under supervision of a doctor, etc., as above set forth; to the consequent damage and injury of manufacturers and distributors and injury of general public, and to the substantial injury of ]] competition in interstate commerce:

eld, That such acts and practices were to the prejudice of the public and comvetitors and constituted unfair methods of competition. Jtr. Joseph 0. Fehr for the Commission.

Coji-IPLAINT te Pursuant to the provisions of an Act of Congress approved Sep- . rnber 26, 1914 entitled "An Act to create a Federal Trade Com.mis- ;on, to define its powers and duties, and for other purposes," t~e Q e<leral Trade Commission havin()' reason to believe that Morris ottsegen and David Jacoby' copartners trading as .Mills Sales Com- Pany h · . ' b d · ' eremafter referred to as respondents have een an are usmg ~nfair methods of competition in commerce' as "commerce" is defined In said act, and it appearing to said Commission that a proceeding by Complaint 23F.T.O.

it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondents, Morris Gottsegen and David Jacoby, are copartners trading as Mills Sales Company, having their principal office and place of business located at 901 Broadway, in the city of New York, State of New York, with a branch office also located in the city of New York and another branch office located in the city of Chicago, State of Illinois. Respondents have been for more than one year last past engaged in business as importers of and wholesale dealers in a variety of peddlers' and retail dealers' supplies, including tooth brushes, dental creams, razor blade hones, and other toilet ar· ticles. In the course and conduct of their business, respondents offer said products for sale and sell the same in commerce between the State of New York and the several States of the United States and in the District of Columbia.

'Vhen said products are sold, respondents transport or cause the same to be transported from their principal place of business in the State of New York or one of their aforesaid branch offices, to pur· chasers thereof located in States of the United States other than the State from which shipment originated, and in the District of Colum· bia. There has been for more than one year last past, and still is, a constant current of trade and commerce in said products so manu· factured and sold by respondents, between and among the various States of the United States and in the District of Columbia. Re· spondents are now and for more than one year last past have been engaged in substantial competition with other partnerships, and with individuals, firms, and corporations engaged in the manufacture of like and similar products and in the sale thereof in commerce be· tween and among the various States of the United States and in the District of Columbia.

PAR. 2. In the course and conduct of their business, as aforesaid, the respondents, in soliciting the sale of and in selling their conl· modities and for the purpose of creating a demand upon the part of the consuming public for said commodities, now cause and for more than one year last past have caused their commodities to be adver· tised through the medium of catalogs, price lists and other printed matter published, issued, and circulated through the United States mails, to their customers and prospective customers in the various States of the United States and in the District of Colqmbia. In said ways and by said means, respondents make and have made to the general public many unfair, false, and misleading statements with reference to the commodities offered by them for sale. l\Iany articles and items of merchandise listed in said catalogs and price lists are MILLS SALES CO • 521 .518 Complaint <lescribed as possessing retail values many times in excess of the actual selling price by the respondents to the retailer, or other purchaser, and many times in excess of the actual value thereof. A number of the said items and articles of merchandise, described jn said catalog, have retail prices stamped or printed thereon, on the labels attached thereto, or on the containers in which they are offered for sale and sold to the public. The retail prices, so stamped or pr~nted as aforesaid, are many times in excess of the actual selling Pnce of the said items or articles of merchandise by the peddler or retailer to the consuming public, and are many times in excess of their true and actual value. The retail prices so stamped or printed as aforesaid, are false and fictitious and in no sense represent either the true value or the true selling price of the articles so price marked. A portion of such statements and representations made by the re- ~pondents regarding the selling prices and value of the commodities thus offered by them for sale are as follows: "Honor" brand "Dental Creams Large Sizes Marked 35¢," offered at 60¢ per Qozen, or $6.50 per gross; the pri~e of 35¢ was pri:Qted on the cartons in which Packed;

''Seven Star" brand "Dental Creams-Giant 50¢ and 60¢ Sizes,'' offered 72¢ per dozen or $8.50 per gross; the prices of 50¢ and GO¢ were printed on :t he carton in which packed • "D rushless" brand "Shaving' Cream-Giant 50¢, 60¢, and 75¢ Sizes," off ered at 72¢ per dozen or $8.25 per gross, and the price of GO¢ was printed on the ~artons;

A. razor blade hone, "Marked to sell at $1.00," offered at 45¢ per dozen or $5.oo per gross.

The said catalogs contain many other instances showing the "spread" between the dozen or gross rate at which said commodities Were offered for sale and sold and the fictitious retail prices marked thereon.

The prices placed upon said labels and appearing in said catalog as the value of said products were not and are not the prices nt which the same were or are expected or intended to be sold, but were and are greatly in excess of the prices at which the same were sold or intended to be sold in the usual course of trade. The statement and representation in such catalogs that their ~'Br Us hl ess" brand of shavm"· cream was put up m· "G'Ian t s·1zes" wa s 'ltnd is inaccurate and misle:ding· in fact said shaving cream is not Put up in packao-es of sizes kno~n to the trade and the purchasing Public as "Giant~ sizes.

Said respondents further cause and have caused the word "Manu- ~acturers" to appear on their letterheads and advertising matter used 111 soliciting the sale of and selling their products in interstate com- 522 :FEDERAL TRADE COl\Il\IISSION DECISIONS Complaint 23 F. T. C. merce; when in truth and in fact, said copartners were not and are not manufacturers, and do not and did not own, operate, or control any factory wherein the products sold and distributed by them in interstate commerce, or any of them, were made or fabricated. Among other statements and representations made by the respondents regarding the prices and value of the commodities offered by them for sale are the following:

"Dr. Jay's High Quality Tooth Bruslws", accompanied by a pictorial representation of a brush, showing the name "Dr. Jay", on the handle; "Rubbing Alcohol", accompanied by a pictorial r!.'presentatlon of a bottle of said product, showing the words "Dr. Jay's" on the label; "Dental Creams" • • • Dr. Sach's; and "Dental Creams"-Dr. Jay's; accompanied by a pictorial representation of tbe latter product, showing the words "Dr. Jay's Milk of Magnesia Dental Cream,. on the carton and on the tube In which said product was packed. The products so marked, stamped, branded, advertised, and sold in interstate commerce were not and are not made in accordance with the design and/or under the supervision of a doctor, as represented, and did not nor do they contain special or scientific features which were or are the result of medical advice or services. PAR. 3. The retail prices, as indicated above, appearing on the items of merchandise or on the containers thereof, are not and were not intended by either the respondents or the purchaser purchasing for resale, to be the true retail price or the true retail value of the merchandise so price marked. The retail prices, as indicated, appearing on the items of merchandise or on the containers thereof, were intended by the respondents and by the purchaser purchasing for resale, to be far in excess of the price intended to be charged and actually charged on a sale of merchandise to the ultimate consumer purchasing in the usual course of trade, and far in excess of the true value of the various items of merchandise so price marked. PAR. 4. Over a period of many years manufacturers have, in many trades, formed the custom of marking or stamping on the article or item of manufacture, or on the container thereof, the retail price at which said manufacturers suggest the retailer should sell the item or articles to the ultimate consumer purchaser. This suggested retail price, Ro stamped or marked, is intended to represent the cost of the manufacture of the article plus a reasonable profit for the manufacturer and retailer and, consequently, to represent the approximate re· tail sale value of the item. The range of the suggested retail price is intended by the manufacturer to be indicative of the quality and character of the ingredients used and the process by which the item is manufactured. The public generally understands the custom herein MILLS SALES CO. 523 ~18 Complaint detailed and has been led to, and does, place its confidence in the price Inarkings so stamped and the representations thereby made as to the quality of the product to the extent that it purchases a substantial ~volume of merchandise in reliance on this aforesaid custom. For many years a substantial portion of the consuming public has €xpressed, and has had, a marked preference for dental creams, shaving creams, toilet articles, and similar household novelties that are composed of superior ingredients and are produced by the manufacturer thereof with the intent and design of selling said products for Prices in excess of the general and usual range of prices for similar Products manufactured with the usual and customary ingredients or with inferior ingredients. Said manufacturers, following the custom herein detailed, have marked or stamped the suggested retail prices on said products as an indication of the superior quality and character of the product and its resulting higher value. Whenever a genuinely superior product so stamped or marked with the retail . ' Price thereof, is offered for sale at a substantially reduced price, the general purchasing public has been led to believe, and does believe, that in purchasing said product it is securing a bargain not ordinarily <lbtainable in the usual course of trade. The purchasing public has a Preference for purchasing genuinely superior products sold at less lhan the customary retail value thereof, over ordinary products sold for the regular price which is lower than the normal retail price of the superior product in the customary course of trade. Also, a substantial portion of the purchasing public has a marked Preference for dealing with and purchasing items of merchandise from :manufacturers or distributors who operate on a large scale and do a large volume of business believing that superior quality and closer .t>l'J.Cesh. can be secured by dealing' with such distributor. PAR. 5. The false and misleading advertising and representations ~ereinabove set out, together with the false and fictitious price mark- Ings herein set out, on the part of the respondents, places in the. hands of the aforesaid peddlers and retailers, buying for resale, an ms~ru­ :tnent and a means whereby said peddlers and retailers may comnut a fraud upon a substantial portion of the consuming public by enabling such dealers to represent and offer for sale, and sell, the said tooth brushes, shaving cream, dental cream, and other toilet articles, more !ully described in paragraph 2, as genuinely superior products pro- Uced by the manufacturer thereof with the intent and purpose of Selling the said products in the usual course of trade to the general consuming public at and for a retail price stamped on the products <lr on their containers.

QOl\Il\USSIO~ DECISIONS524 FEDI.:RAL TRADE Qomplalnt; 23 F. T. q~ 'rher~ are among the competitors of the respondents in interstate~ commerce, manufacturers and distributors of like and similar prod~ ucts who truthfully advj\rtise and represent the nature, merit, and value of their respective' products. There are also among the com· petitors of respondents, manufacturers and. distributors of like and similar products who do not advertise or represent through their cat, alogs and other advertising media that the merchandise offered for sale by them is stamped or marked with price marks greatly exceeding the actual intended retail sale value o~ retail sale price of the merchandise offeted for sale, and who do not advertise or represent through their catalogs that their merchandise was made. in accordance with the design andjor under the supervision of a doctor and that they contain special or scientific features which are the result of medical advice or services.

PAR. 6. The effect of the foregoing false and misleading r~presenta· tions and acts of the respondents in selling and offering for sale items of merchandise as described in paragraph 2, is to mislead a substantial portion of the consuming public in the several States of the United States by inducing them t9 believe:

(1) That the various items of merchandise descrlberl in respondents' catalogs, as set forth in paragraph 2 hereof, were anJ ar~ superior products sold and, distributed by respondents with the jntent and purpose that said products would be sold at retail at a pric~ closely approximating the price stamped thereon; (2) That said products, because of the price marks affixed or stamped thereon, are products composed of superior ingredients and are products that ordinarily retail, in the usual comse of trade, for prices closely approximating the prices stalnped on mid merchandise; (3) That tho respondents are manufacturers of said products and large scale operators and distributors and conduct their business on such a scale as to assure purchasers o( superior t]Ualiry and doser prices by trading with such operators;

(4) That such products are made, sold, and distributed in accordance with the design and/or under the supervision of a doctor and that they contain special or scientific features which are the result of medical au vice or services.

The foregoing false and misleading statements and representations on the part of respondents are added inducements for a substantial number of retail merchants, as well as consumer purchasers, to buy the products distributed and offered for sale by respondents, and have a tendency and capacity to, and do divert a substantial volume of trade from competitors of respondents engaged in similar busi· I j: :MILLS SALES CO •. · 525 518 li Findings nesses, with ·the result that substantial quantities of said products as described in paragraph 2 hereo£ are sold to said retailers and to the ~onsuming public on account o£ said beliefs induced by said false iuid sleading representations, and as a consequence tht:~eof, substantial II :nJury has been and is being done by respondents to competition in f Interstate commerce. I · . PAn. 7. Said acts and practices of respondents are all to the prejudice of the public and respondents' competitors, and constitute unfair methods of competition in commerce within the intent aad meaning of Section 5 of an Act of Congress entitled "An Act to 'create a Federal Trade Commission, to define its powers and duties, imd for other purposes," approved September 26, 1914. REronT, FINDINGS AS TO THE FACTs, AND ORDER ) .

. P~1rsuant to the provisions of an Act of Congress approved Scpt~rnbet 2G., 1914, entitled "An Act to create a Federal Tr~de Commis- ;ou,1 to define its powers and duties, and for other purp~ses," the ederal Trade Commission, on the 30th day of June 1936, issued and ~rv~d its complaint 1n this proceeding upon Morris Gottsege11 and tl avid Jacoby, copartners, trading as Mills Sales Company, charging ,1em with the use of unfair methods of competitio:a in commerce in VIolation of the provisions of said act • .After the issuance of said complaint, the respontlents herein filed separate answers thereto, in which answers the rrspondents stated that they waived hearing on the charges set forth in the complaint, that they admitted all of the material allegations of the complaint to. be true and that they consented that the Commission may, without trial · 1 • • • · ' Wit 10ut further evidence and Without any mtervPnmg pro- ~:~ure, make, ent~r, issue, and serve upon them its .findings as to, ~~e f cts and concluswn based thereon and an order to cett':ie and de::;Ist ;om the methods of competition alleged in the compla.int. There- ~ reo-ularlyb came on for final hearing, and_ the ca. omter this. proceeding' adv· Inis~ion having .duly considered ~he same, ~nd .beng no~ fully of tlSed 111 ~he premises, fin.ds. that t~lis proceedmg IS lll the ~ntercst he public and makes tlus 1ts findmo-s as to the facts !tnd Its con· cI nsi d !:'> · on ra wn therefrom. FINDINGS AS TO Tile FACTS h PAllAGit.tPII 1. The respondeJlts Morris Gottsegen a11d David Jacoby, Arnave b een for more than one year' last past, copartner~ tra dmg as at I 8 Sales Company with their principal place of busmess located 901 Broadway in the city of New York, State of New York. Tl.ey FEDERAL TRADE COMl\IISSION DECISIONS526 Findings 23 F. T. C. also operated a branch office in New York City and another branch office located in the city of Chicago, State of Illinois. On or about February 19, 1936, the said respondents terminated and dissolved their partnership since which time -the managemant and operation of said Mills Sales Company has been carried on under the direction of the respondent, David Jacoby, at the same place of business located at 901 Broadway, in the city of New York, State of New Yctk. Respondents have been for more than one year last past engaged in business lls importers of llnd wholesale dealers in a variety of peddlers' and retail dealers' supplies, including tooth brushes, dental creams, razor blade hones, and other toilet llrti.cles. In the course and conduct of their business, respondents have offered said products for sale in commerce between the State of New York and the various other States of the United States, and in the District of Columbia. In the sale of said products respondents have transported or caused the same to be transported from their principal place of business in the State of New York or one of their aforesaid branch offices, to the purchasers thereof located in States of the United States other than the State from which the shipment originated, and in the District of Columbia. There has been for more than one year last past, and still is, a constant current of trade and commerce in said products so distributed and sold by respondents, between and among the various States of the United States, and in the District of Columbia. For more than one year last past respondents have been engaged in substantial competition with other partnerships and with individuals, firms, and corporations engaged in the manufac· ture and distribution of like and simihr products and in the sale thereof in commerce between and among the various States of the United Stlltes, and in the District of Columbia. PAn. 2. In the course and conduct of their business, as aforesaid, the respondents, in soliciting the sale of and in selling their coJil· modities and for the purpose of creating a demand upon the part of the consuming public for said commodities, have for more than one year last past caused their commodities to be advertised through the medium of catalogs, price lists, and other printed matter published, issued, and circulated through the United States mails, to their customers and prospective customers in the various States of the United States, and in the District of Columbia. In said ways and by sa~d means, respondents have made to the general public many unfair, false, and misleading statements with reference to the commoditieg offered by them for sale. Many articles and items of merchandise listed in said catalogs and price lists have been described as possessing retail values many times in excess of the actual selling price by MILLS SALES CO. 527 518 Findings ~he respondents to the retailer, or other purchaser, and many times lll excess of the actual value thereof. A number of the said items and articles of merchandise, described in said catalogs, have retail Prices stamped or printed. thereon, on the labels attached thereto, or on the containers in which they have been offered for sale and sold to the public. The retail prices, so stamped or printed as aforesaid, are many times in excess of the actual selling price of the said items or articles of merchandise sold. by the peddler or retailer to the consuming public, and are many times in excess of their true and actual value. The retail prices so stamped or printed as aforesaid are false and fictitious and in no sense represent either the true value or the true selling price of the articles so price marked. A portion of such statements and representations made by the respondents regarding the sellin,... prices and value of the commodities thus offered by them for sak and which the respondent, David Jacoby, has continued to make since the dissolution of the partnership, as aforesaid, and which he now makes, are as follows: "Honor" brand "Dental Creams, Lnrge Sizes Marked 35t", offered at 60t per dozen, or $6.50 per gross; the price of 35¢ was printed on the cartons in which Daeked;

"S even Star" brand "Dmtal Creams-Giant 50¢ and GO¢ Sizes", offered :lt 7. e!¢ Per dozen or $8.50 per gross, the prices ot 50¢ nnd 60¢ were printed on the rton fn which packed · "n, at ru8hless" brand "Shaving Cream-Giant 50¢, 60¢ and 75t Sizes", offered 72¢ per dozen or $8.25 per gross, smd the price of 60¢ was printed on the carton;

$5 A. razor blade hone, "Marked to sell at $1.00'', offered at 45¢ per dozen or .(}() Per gross. The said catalocrs contain many other instances showing the "s ""' d" · Pread" between the dozen or gross rate at which said common ities Were offered for sale and sold and the fictitious retail prices marked thereon.

The prices placed upon said labels and appearing in said catalogs ~ the value of said products were not and are not the prices at which t e same were or are expected or intended to be sold, but were and ~re greatly in excess of the prices at which the same were sold or ln~nded to be sold in the usual co~rse ~f trade. . ,, he statement and representation m such catalogs that their 13 rnsh1ess" brand of shavincr cream was put up in "Giant Sizes" was and · · ~ · · t Is Inaccurate and misleadin,... · in fact, said shaving cream lS no Put · e' h · llp ln paclmcres of sizes known to the trade and the pure asmg Pub}' ~-> Ic s . as "Giant" sizes . " to azd respondents further have caused the word "1\Ia~ufac~u:e.rs appear on the letterheads and advertising matter used m sollcitmg Findings 23F.T.C.

the sale of and selling the aforesaid products in interstate commerce; when in truth and in fact, said respondents, Morris Gottsegen and David Jacoby, were not and are not manufacturers, and do not and did not own, opemte, or control any factory wherein the products sold and distributed by them in interstate commerce, or any of them, were made or fabricated.

Among other statements and representations made by the respondents regarding the prices and value of the commodities offered by them for sale are the following:

"Dr. Jay's High Quality Tooth Brushes", accompanied by a pictorial representation of a brush, showing the name "Dr. Jay" on the handle; "Rubbing Alcohol", accompanied by a pictorial representation of a bottle o! said product, showing the words "Dr. Jay's'' on the label; "Dental Creams" • • • Dr. Sach's; and "Dental Creams"-Dr. Jay's; accompanied by a pictorial representation of the latter product, showing the words "Dr. Jay's Milk of Magnesia Dental Cream" on the carton and on the tube In which said product was packed. The products so marked, stamped, branded, advertised, and sold in interstate commerce were not and are not made in accordance with the design andjor under the supervision of a doctor, as represented, and did not nor do they contain special or scientific features which were or are the result of medical advice or services. PAn. 3. The retail prices which, as indicated above, appear on the items of merchandise or on the containers thereof, are not and were not intended by either the respondents or the purchaser purchasing for resale to be the true retail price or the true retail value of the merchandise so price marked. The retail prices thus appearing on the items of merchandise or on the containers thereof, were intended by the respondents and by the purchaser purchasing for resale, to be far in excess of the price intended to be charged and actually charged on a sale of merchandise to the ultimate consumer purchasing in the usual course of trade, and far in excess of the true value of the various items of merchandise so price marked. PAn. 4. Over a period of many years manufacturers have, in many trades, formed the custom of marking or stamping on the article or item of manufacture, or on the container thereof, the retail price at which said manufacturers suggest the retailer should sell the item or articles to the ultimate consumer purchaser. This suggested retail price, so stamped or marked, is intended to represent the cost of the manufacture of the article plus a reasonable profit for the manufacturer and retailer and, consequently, to represent the approximate retail sale value of the item. The range of the suggested retail price is intended by the manufacturer to be indicative of the quality and character of the ingredients used and the process by which the item M.ILLS SALES CO. 529 :518 Findings is manufactured. The publl.c generally understands the custom :herein' detailed and has been led to, and does, place its confidence in the price markings so stamped and the representations thereby made .as to the quality of the product to the extent that it purchases a sub- -stantial volume of merchandise in reliance on this aforesaid custom. · lJ'or many years a substantial portion of the consuming public has ~xpressed, and has had, a marked preference for dental creams, shav- Ing creams, toilet articles, and similar household novelties that are ·~ornposed of superior ingredients and are produced by the manufacturer thereof with the intent and design of selling said products '!or prices in excess of the general and usual range of prices :for simllar products manufactured with the usual and customary ingredients -or with inferior ingredients. Said manufacturers, following the custol_ll herein detailed, have marked or stamped the suggested retail 'Prices on said products as an indication of the superior quality and -character of the product and its resulting higher value. Whenever a ~enuinely superior product, so stamped or marked with the retail Price thereof, is offered for sale at a substantially reduced price, the general purchasing public has been Jed to believe, and does believe, that in purchasing said product it is securing a bargain not ordinarily obtainable in the usual course of trade. The purchasing public has : Preference for purchasing genuinely superior products sold at Jess han the customary retail value thereof over ordinary products sold [or the regular price which is lower th~n the normal retail price of he superior product in the customary course of trade. . A. substantial portion of the purchasing public has shown a marked ~reference for dealing with and purchasing items of merchandise rom manufacturers or distributors who operate on a large scale and do a large volume of business, believing that superior quality and ~loser prices can be secured by dealing with such distributor. . P~n. 5. The false and misleading advertising m~~ repre~entatwns 11 . eremabove set out toO'either with the false and fictitious price marklugs herein set out, ~n the part of the respondents, places in the hands of the aforesaid peddlers and retailers buying for resale, an instrument and a means whereby said peddl~rs and retailers may commit :bi~aud upon a substantial portion of the consuming public by e?t Ing such dealers to represent and offer for sale, and sell, the satd ooth brushes, shaving cream, dental cream, and other toilet articles, tnore fully described in paraO'raph 2 as O'enuinely superior products Prod "" ' ~ uced by the manufacturer thereof with the intent and purpose of selling the said products in the usual course of trade to the general {!onsuming public at and for a retail price stamped on the product~or on th . . e1r contamers. Findings 23 F.T.C.

There ar£' among the competitors of the respondents in interstate commerce, manufacturers and distributors of like and similar products who truthfully advertise and represent the nature, merit, and value of their respective products. There are also umong the competitors of respondents, manufacturers and distributors of like and similar products who do not advertise or represeJJt. through their catalogs and other advertising media that the merchandise offered for sale by them is stamped or marked with price marks greatly exceeding the actual intended retail sale value or ret~il sale price of the merchandise offered for sale, and who do not a·ivertise or represent through their catalogs that their merchandise was made in accordance with the design and/or under the supervision of a doctor and that they contain special or scientific features which are the result of medical advice or services.

PAR. 6. The effect of the foregoing false and misle.ading representations and acts of the respondents in selling and offering for sale items of merchandise as described in paragraph :2, is to mislead a substantial portion of the consuming public in the several States of the United States by inducing them to believe: (1) That the various items of merchandise described in respondents' catalcgs, as set forth in paragraph 2 hereof, were and are superior products sold and distributed by respondents with 1the intent and purpose that said products would be svld at retail at a price closely a pproximatbg the price stamped thereon; (2) That said products, because of the price marks affixed or stamped thereon, are products composed of superior ingredients and are products that ordinarily retail, in the usual comse of trade, for prices closely approximating the prices stamped on ~aid merclumdise; (3) That the respondents are manufacturers of said products and large scale operators and distributors and conduct their business on such a scale as to assure purchasers of superior qtlality and closer prices by trading with such operators;

( 4) That such products are made, sold, and distributed in accord· nnce with the design andjor under the supervision of a doctor and that they contain special or scientific features which are the result of medical advice or services.

The foregoing false and misleading statements and representations on the part of respondents are added inducements for a substantial number of retail merchants; as well as cons11mer purchasers, to buy th<> products distributed and offered for sai(>. by respondents, and have n. tendency and capacity to, and do divert a substantial volume of trade from competitors of respondents m1gaged in similar businesses, with the result that substantial quantitiea of said products l\IILLS SALES CO. 531 tile Order as described in paragraph 2 hereof are sold to said retailers and to the consuming public on account of s ..tid beliefs induced by said false and misleading representations, and as a coi>~equence thereof, substantial injury has been and is being done by respondents to competition in interstate commerce.

PAR. 7. The use of each and all of the foregoing false and mis- ~eading statements and representations by the respondent, as set out In paragraphs 2, 3, and 4 hereof, have had and do l1.-1.ve the tendency and capacity to mislead and deceive distributors and the purchasing public into the erroneous belief that said statements and represen. tations are true, and have induced and do induce members of the Public to purchase the products of t.he said responde:1.ts on account of such erroneous belief, to the consequent damage and injury of manu. facturers and distributors and to the injury of the general public, and said representations have unfairly diverted trade to said respondents from competitors and thereby substantial injury has been done by respondents to competition in interstate commerce. CONCLUSION The aforesaid acts and practices of the respondents, Morris Gottse· gen and David Jacoby, formerly copartners trading as Mills Sales Company, are to the prejudice of the public and of respondents' competitors, and constitute unfair methods of competition in com· lllerce, within the intent and meaning of Section 5 of an Act of Congress, approved September 26, 1914, entitled "An Act t? 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 Commis- Sion upon the complaint of the Commission and the separate answers of the respondents dated September 8, 1936, in which answers respondents admit all of the material allegations of the complaint to true, and state that they waive hearin(J' on the charges set forth?e~ ~ . h . said complaint and consent that, without further evidence or ot er Intervening procedure the Commission may issue and serve upon them findings as to the fa~ts and conclusion and an order to cease and desist from the violations of the law charged in the complaint; and the Commission havin(l' made its findings as to the facts and conclu · ~ · · f A t Sion that said respondents have violated the provisions o an c of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission to define its powers and duties, and for Oth ' er purposes." 780:l5'"-3ll-vol. 23-36 532 FEDERAL TRADE 001\Il\:IISSION DECISIONS Order 23 F. T. 0. lt ia ordered, That the time within which answers may be filed by ~aid respondents be, and the same hereby is, extended from August :22, 1936, to this date, and that the separate answers of the respondents, :Morris Gottsegen and David Jacoby, formerly trading as Mills Sales Company, be, and the same hereby are, received and filed. It ia further ordered, That the respondents, Morris Gottsegen and . David Jacoby, formerly copartners trading as Mills Sales Company, individually, jointly or separately, or through or by means of any copartnership, firm, or corporation, and their associates, agents, servants, representatives, and employees, in connection with the offering for sale, sale, and distribution of general merchandise and peddlers' supplies, including tooth brushes, shaving cream, rubbing alcohol, razor blade hones, and other toilet articles and household novelties, in interstate commerce or in the District of Columbia, do forthwith cease and desist from- Representing, directly or indirectly, through circulars, catalogs, labels, or any other form of printed matter, or by radio broadcasting, or in any other manner- (1) That the price marks affixed to or stamped on the products sold by them are the regular or customary resale prices for such products when said price marks are fictitious and greatly in excess of the regular and customary prices at which said products are sold or .offered for sale at retail;

(2) That the products sold by them are designed by or are compounded under the supervision of a doctor or one possessing special knowledge of dental hygiene and pharmacology; (3) That respondents or either of them are manufacturers of said products and are large-scale operators in and distributors of said products, or that they conduct their business on such a large scale as to assure purchasers of said products that they will receive products of superior quality and at lower prices by trading with respondents; and (4) That the fictitious and excessive prices at which such or similar products are offered for sale or sold or intended to be sold by respondents are the regular retail prices customarily received for said products.

And it ia further ordered, That the said respondents shall, within 60 days from the date of the service upon them of this order, file with this Commission a report in writing, setting forth in detail the manner and form in which they have complied with this order. ATLANTIC COAST OIL. CO. OF NEW YORK7 INC. 533 Syllabus