Imperial Distillers Co

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IN Tile MATTER OF IMPERIAL DISTILLERS COMPANY COMPLAIN'!' AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 21J, llll4, AND OF SEC, 3 OF TITLE I OF AN ACT OF CONGRESS APPROVED JUNE 16, lll33 • Docket 2395.-0complaint, May11, 1935-order, Jan. 14, 1931 Consent order requiring respondent corporation, its agents, etc., in connection With sale or offer in interstate commerce of whiskies, gins, and all other alcoholic beverages, but excepting gins produced by it through process of rectification of alcohol purchased, but not produced, by it, as specified, to cease and desist from representing, through use of word "Distillers" in its corporate name and on its stationery, advertising, etc., or in any other way, that it is a distiller of whiskies, gins, or other alcoholic beverages, or that said whiskies, etc., were by it made through process of distillation, or that It owns, operates, or controls a place where such products are thus made, Unless and until it shall own, operate, or control a place or places where F;uch products are by 1t manufactured through a process of original and continuous distillation from mash, wort, or wash, through contlnuons closed :Pipes and vessels until manufacture thereof is completed; and, Ordered further, That Count H of complaint as to violation of National Industrial Recovery Act be dismissed.

Mr. PGad B. Morehouse for the Commission.

Mr. Fred A. Oa8key and Mr. Briggs 0. Simpich, of 1Vashington, D. C. and Schmalzriedt, Frye, Gra11,ye & Frye, of Detroit, Mich., for respondent.

Con PLAINT Pursuant to the provisions of an Act of Congress approved September 26, 1914 entitled, "An Act to create a Federal Trade Com- :rnission, to defin~ its powers and duties, and for other purposes," the F:deral Trade Commission, having reason to believe that Imperial Distillers Company, a corporation, hereinafter referred to as respondent, has been nnd is using unfair methods of competition in commerce, as "commerce" is defined in said act, and in violation of the Act of Congress approved June 16, 1933, known as the "National Industrial Recovery Act," and it appearing to the said Commission that a proceeding 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 ~AIU.GRAPJI 1. Respondent is a corporation organized, existing and -domg business under the laws of the State of 1\Iichigan, with its office 1----- Count Two ot the eomplnlnt, under the Nntlonal Induatrlnl Recovery .Act, dismissed. 420 FEDERAL TRADE COl\11\IISSION DECISIONS Complolnt 24F.T.C.

and principal place of business in the city of Detroit in said State. It is nO\v, and has been since its organization in 1934, engaged in the business of purchasing, rectifying, blending, and bottling whiskies, ginst cordials, and other spirituous beverages and in the sale thereof 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 in Detroit aforesaid into and through various other States of the United States to the purchasers thereof consisting of wholesalers and retailers, some located within the State of l\lichigan, 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 at all times since its organization has been, in substantial competition with other corporations and individuals, partnerships, a]}(l 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 Stat<>s and in the District of Columbia; and in the course and conduct of its business us aforesaid respondent is, and has been since its organization, in substantial competition with other corporations and with individuals, firms, and partnerships engaged in the business of purchasing, rectifying, blending, and bottling whiskies, gins, cordials and other spirituous Leverages and in the sale thereof in commerce between and among the various States of the United States and in the Disti·iet of Columbia. PAR. 2. In the conn.,e and conduct of its business as ufor<>said respondent has, upon its said pr£'mif>es, a still which it us<>s in the production of gin by a process of r<>ctification wherrLy alcohol, purchased but not prodnce1l by respondent, is rNlistille1l ont· junip<>t• bell·ips and other aromatics. Such n•ctification of alcoholic spit·its does not make or constitute responll<>nt a distiller, as defined by sec· tion 3247 of the Uevis<>d Statutes regulating Internal Revenue, nor as commonly understoo1l by the public awl the liquor industry. For a long period of time the word "'listillPrs" wlwn used in connection with the liquor industry and with the lH'ollncts thereof has had and still has a definite significance and meaning to the minds of wholesal<>rs and retailers in such industry and to the ultimate purchasing public, to wit, the manufacture of such liquors by the process of original and continuous distillation fl'Dm mash, wort, or wash, through continuous closed pipes and vessels until the manufacture t~ereof is complete, and a substantial portion of the purchasing pubhe prefers to buy spit·ituous liquors bottled by the actual distillers and manufacturers thereof.

IMPERIAL DISTILLERS CO. 421 419 Complaint PAR. 3. In the course and conduct of its business as aforesaid, by the use of the word "Distillers" in its corporate name, printed on its stationery, advertising and on the labels attached to the bottles in which it sells and ships its said products, and in various other ways, respond"'nt represents to its customers and furnishes them with the means of representing to their vendees, both retailers and the ultimate consuming public, that the said whiskies, gins, cordials, and other spirituous beverages therein contained were by it manufactured through the process of distillation from mash, wort, or Wash, when, as a matter of fact respondent is not a distiller, does not distill the said whiskies, cordials, or other spirituous beverages by it so bottled, labeled, sold, and transported, and merely by the llse of a still as aforesaid in the rectification of alcoholic spirits by redistillation over juniper berries and other aromatics, respondent ?oes not distill the gins by it so bottled, labeled, sold, and transported In the sense in which the word "distilled" is commonly accepted and understood by those engaged in the liquor trade and the public. Respondent docs not own, operate, or control any place or places Where such beverages are manufactured by the process of original and continuous distillation from mash, wort, or wash through continuous closed pipes and vessels until the manufacture thereof is complete .

• PAR. 4. There are among the competitors of respondent engaged In the sale of spirituous beverages as mentioned in paragraph 1 l1ereof corporations, firms, partnerships, and individuals who manuf~cture and distill from mash, wort, or wash as aforesaid whiskies, gms, and other spirituous Leverages sold by them and who truthfully llse the words "distillery," "distilleries," "distillers," or "distilling" as a part of their corporate names and on their stationery, advertising, and on the labels of the bottles in which they sell and ship s~1ch prouucts. There are also among such competitors corporahans, firms, partnerships, and individuals engaged in the business of rectifying, blending, and bottling whiskies, cordials, gins, and 0.ther spirituous beverages who do not use the words "distillery," "distilleries," "distilling," or "distillers" as a part of their corporate names, nor on their stationery, nor on the labels attached to the bottles in which they sell and ship their said products. PAR 5. The representation by respondent, as set forth in paragraph 3 hereof, is calculated to and has n capacity and tendency to and does mislead and deceive dealers and the purchasing public into the belief that the whiskies, cordials, gins, and other spirituous beverages sold by the respondent are manufactured and distilled by it from lllash, wort, or wash as aforesaid and is calculated to and has the Complaint 24F.T.C.

capacity and tendency to and does induce dealers and the purchasing public, acting in such belief, to purchase the whiskies, cordials, gins, and other spirituous beverages rectified, blended and bottled by the respondent, thereby diverting trade to respondent from its competitors who do not by their corporate name or in any other manner misrepresent that they are manufacturers by distillation from mash, wort, or wash as aforesaid of whiskies, cordials, gins, and other spirituous beverages, and thereby respondent does substantial injury to substantial competition in interstate 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 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 Michigan, with its office nnd principal place of business in the city of Detroit in said State. It is now, and has been since its organization in 1934, engaged in the business of purchasing rectifying, blending, and bottling whiskies, gins, cordials, and other spirituous beverages and in the sale thereof in constant course of trade and commerce between and among the various States of the United States and in the District of Columbia. 1 n the course and conduct of its said business, it causes its said products when sold to be transported from its place of business in Detroit n foresnid into and through various other States of the United States to the purchasers thereof consisting of wholesalers and retailers, some located within the State of Michigan, 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 at all times since its organization has be~n, in substantial competition with other corporations and 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 has been since its organization, in substantial competition with other corporations and with individuals, firms, and partnerships engaged in the business of purchasing, rectifying, blending, and bottling whiskies, gins, cordials, Il\IPERIAL DISTILLERS CO. 423 419 Complaint 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 thing!:l set out in paragraphs 2, 3, 4, and 5 of count 1 of this complaint to the same extent as though the allegations thereof were separately, by like numbered paragraphs, set out at length herein, and 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 of this count and are hereby charged as fully and as completely as though the several averments of eac.h of the said paragraphs of count 1 were here repeated verbatim.

PAn. 6. Under and pursuant to Title I of the National Industrial Recovery Act, approved June 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. Wallace 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 Industr! after due notice and opportunity for hearing in c01mection there- With had been afforded interested parties, including respondent, in accordance with Title I of the National Industrial Recovery Act and applicable reo-ulations issued thereunder, to the President of the United Stateso who approved the same on the 9th day of December, 1~33, thereby constituting the said code a Code of Fair Competition Within the meaning of the said National Industrial Recovery Act, for the regulation of the aforesaid industry.

In his written report to the President, the said Secretary of Agriculture made, nrnon" others the followin" findings with respect to the . e ' e Said code in the following words, to wit:

That said Code will tend to efrectuate the declared policy o:f Title I o:f the 1\ atlonal Industrial Hecovery Act as set forth In Section 1 of said Act In that tbe terms and provisions o:f such Code tend: (a) to remove obstructions to the tree flow of :foreign commerce, which tend to diminish the amount thereof; (b) to Jlrovlde for the general welfare by promctlng the organization o:f Industry tor tbe purposes o:f cooiJ('rative action among trade groups: (c) to ellminate Unfair competitive practices· (d) to promote the :fullest possible utilization o:f the J>r ' esent productive capacity o:f Industries: (e) to a void undue restriction o:f Production (except as may be temporarily required); (:f) to Increase the con- Order 24F. T.C.

. s.umption of industrial aud agricultural . products by increasing purchasing power; and (g) otherwise to rehabilitate Industry. Dy his approval of the said code on December 9, 1933, the President of the United States, pursuant to the authority vested in him by Title I of the National Industrial Recovery 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 Recovery Act aforesaid, the following provision of Article V of said Code became and still is one of the standards of fair competition 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 Advertislng.-To publish or disseminate in any manner any false advertisement of any rectified product. Any advertisement shall be deemed to be false it it is untrue in any particular, or it dh·ectly or by ambiguity, omission, or Inference it tends to croate a misleading Impression. PAn. 7. The use by respondent of the word "Distillers" in its cor· porate name, printed upon its stationery 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 and that the spirituous Leverages by it so sold and transported have been bottled by the orig· inal distillers thereof, a1l contrary to the provisions of Section 1, Article V, of the Code aforesaid.

PAR. 8. The above alleged methotls, acts, and practices of the re· spondent are and have been in violation of the standard of fair com· petition 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 Re· covery 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 served upon Imperial Distillers Company, a corporation, respondent herein and Il\IPERIAL DISTILLERS CO. 425 419 Order 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 cousenting that an order shall issue herein for it to cease and desist from the methods of competition charged in the complaint, and the Commission being fully advised in the premises, having thereupon concluded 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 po".-ers and duties, and for other purposes." It is now ordered, That the respondent, Imperial Distillers Com- ~any, a corporation, its agents, salesmen, and employees, in connec- ~lon with whiskie~, gins, and all other alcoholic beverages by it in Interstate commerce hereafter sold or oifered for sale (except gins produced by it through a process of rectification whereby alcohols purchased but not produced by respondent are redistilled over juniper benics and other aromatics), do cease and desist from: Representing through the use of the word "Distillers" 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 "·ords of like import representing (a) that it is a distiller of whiskies, gins, or any other alcoholic beverages; or (b) that the said whiskies, gins, or other alcoholic beverages were by it manufactured through the process of distillation; or (c) that it owns, operates, or controls a place or places where such products are manufactured by the process of distillation, unless and until the said respondent shall own, operate or control a place of places where such products are by it manufactured through a process of original and continuous d~stillation from mash, wort, or wash, through continuous closed Pipes and vessels until the manufactme thereof is completed. It i~ furtlter ordered, That the said complaint be and the same is ltereby dismissed as to count 2 thereof.

It is further ordered, That the said respondent within GO 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 compli<'<l with the order to cease and desist hereinabove set forth. 426 FEDERAL TRADE COl\Il\IISSION DECISIONS Syllabus 24 F. T. C.