Covered Button and Buckle Creators, Inc

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IN THE l\IA'ITER OF COVERED BUTTOX AKD RUCKLE CREATORS, INC., ET AL. COMPLAINT, FINDINGS, AND Ouder IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 3.186. Complaint, July 2-1, 1931-Decision, Sept. 4, 1937 \\'here a membership non-profit corporation, members of which were engaged in manufacture of covered buttons, buckles, and novelties for use in manufacture of wearing apparel, and in sale thereof to dress manufacturenl Rnd those engaged in kindred industries, making and selling approximately llinety percent of all such products made in the United States, and, prior to acts and things hereinbelow set forth, in competition as to price with one another in sale of said products between and among the various States and territories and the District of Columbia; and the officers, directors, and members of aforesaid corporation, for the purpose of 11} eliminating price competition among themselvesentered into and carried out au agreement, combination, understanding and conspiracy among themselves to fix and maintain, and did fix and maintain thereby, uniform minimum prices for the sale of covered buttons, buckles, and novelties and maximum discounts to be allowed by said members to their purchasers of said products, and prices thereof entering into interstate commerce; and pursuant to and for the purpose of carrying out aforesaid agreement, combination, understandings, and conspiracy- ( a) Fixed and maintained, by ag1·eement among themselves, (1) uniform minimum prices for sale of said products sold by them and each of them, and (2) uniform maximum discounts for said products thus sold; (b) Inserted in a trade paper of wide circulation among those engaged in dress manufacturing and kindred industries a "notice" to such manufacturers and industries to the. effect that, on and after date therein named, "a uniform policy of dealing with customers" would be adhered to "by manufacturers pursuant to the fair trade practice rules recently approved by the Federal Trade Commission for the covered button and buckle manufacturing industry," and that "rules" in said notice set forth would be "strictly enforced" ;

(c) Sent to manufacturers aud industries in question copy of said notice and advertisement· and (d) Falsely stated, represented, and implied, thereby and otherwise, that Commission had approved rules for industry in question (1) regulating prices for products in question or authorizing the fixing thereof, (2) prohibiting, without qualification, sale of said products below cost and approving or authorizing so-called llasic cost formula, (3) prohibiting the granting or allowing of price differentials, rebates, etc., to evade so-called established basic cost prices, ( 4) approving the fixing or authorizing as set forth in said notice, of maximum uniform discount, and (li) forbidding the gl-ring of free samples or free duplicates, and that Uniform policy set forth in said notice was initiated and carried out Complaint 25F. T. C.

through said rules approved by the Commission and with its knowledge, sanction or authorization; and (e) Advised nonmember manufacturers, through said notice setting forth rules, as above indicated, would be "strictly enforced," that they would be held strictly accountable for any violation of said rules, as assertedly promulgated by Commission, and subject to legal action therefor, and dress manufacturers and otllers dealing with members that action against those receiving discrimination was contemplated under the Robinson-Patroan Act, and that any member found selling merchandise at actual cost would be presumed to be engaged in unfair competition; Facts being trade practice rules in question, as approved by Commission, did not permit or authorize acts and practices stated, represented, expressed and implied as hereinabove Indicated and noted, said rombination, understanding, agreement and conspiracy were not entered Into with sanction, authorization, permission, or knowledge of the C'ommlsslon, and aforesaid letter to dress manufacturers nnd others enclosing said notice was false and mislenuing for reasons abo\·e set forth, in that purported rights as claimed In notice In question were not protected by trade practice rules approved by Commission ;

With result that said acts and practices had a dangerous tendency to, and actually did, hi11der and prevent price competition In sale by them, and among various States and Territories and District of Columbia, of covered buttons, bucldes, and novelties, lncreal'led prices of such products paid by dress manufacturers and those engaged in kindred industries, prices of dresses aud similar commodities and prices paid by purchasing pui.Jlic therefor increased, created ln aforesaid members a monopoly iu the sale ln Interstate commerce of said various products, nnd unreasonably re· strnlneu Interstate commerce In such various products, dresses and other articles of wear:

l/cld, That such acts and practices were all to the prejudice of the public and competitors and constituted ,unfair methods of competition. Defore .Vr. Charles F. Diggs, trial examiner. 11/r. Edward L. Smith for the Commission.

Mr. M. D . .Vosessohn and Mr. A. Fwrman G?-eene, of New York City, for respondents, with whom also appeared Mr. llfaxwell M. Flarnrn, of Brooklyn, N. Y., for Samuel Drown. COMPLAINT Pursuant to the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Conl· mission, to define its powers nnd duties, and for other purposes," the Federal Trade Commission having reason to believe that Covered Dutton ond Dudde Creators, Inc., its officers, Max Pearlstein, president, ALmham A vin, vice president, Isidore Feldman, treasurer, Irving Schwartz, secretary; its directors, Jack Kinsler, l\Iurray Horner, Isidore Nechim, Max Goldfeder, Ben Dlock, Jacob Neiderbacb, Samuel Brown, Isidore Spier; and its following members, indi- COVERED BUTTON AND BUCKLE CREATORS, INC., ET AL. 985 l:l83 Complaint vidually and as representative members of the Covered Dutton and Buckle Creators, Inc.; Regal Trimming & Dutton Co., Inc., Rapid Button Co., Inc., Unity Dutton ·works, Inc., N. D. Button \Vorks, Inc., International Button Co., Inc., Max Goldfeder, doing business Under the trade name, Grand Button Works; Den Block, Louis Rosenfeld, and Sam Wiener, doing business as l\fitrose Button 1Vorks; Jacob Neiderbach, trading as Novelty Button 1Vorks; Samuel Drown, doing business under the trade name, Brown Button \Vorks; Isidore Spier, and Harry Gardner, copartners trading as Ideal Button Works; Abraham Avin, trading as Practical Button & Trimming Co., and Irving Schwartz, David l\1. Schwartz, and Ida Schwartz, co- Ptntners trading as Cosmopolitan Dutton Co., all hereinafter referred to as respondents, have been and are using unfair methods of competition in commerce as "commerce" is defined in said act; and it appearing to the 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: PARAGRAPH 1. Respondent Covered Button and Buckle Creators, ~nc., is a New York membership, non-profit corporation, organized In 1934. Its officers are now and since its organization have been the following respondents:

Max Pearlstein, president, Abraham A vin, vice president, Isidore Feldman, treasurer, Irving Schwartz, secretary.

lts directors are now and since its organization have been the following respondents: Jack Kinsler, Murray Horner, Isidore Nechim, M~:x: Goldfeder, Ben Block, Jacob Neiderbnch, Samuel Drown, and Isidore Spier. Among its members are now and since its organization have been the following respondents: Regal Trimming & Dutton Co., Inc., a New York corporation; Rapid Button Co., Inc., a New York corporation; Unity Button "\Vorks, Inc., a New York corpor.ation; N. n. Button 'Vorks, Inc., a New York corporation; Interna- ~Iona} Dutton Co., Inc., a New York corporation; Max Goldfeder, do- Ing business under the trade name Grand Button ·works; Ben Block, Lon.is Rosenfeld, and Sam 1Viener, doing business as Mitrose Button Works; Jacob NeiderLach, trading as Novelty Dutton 'Vorks; Samuel n:own, doing business under the trade name, Drown Dutton 'Vorks; Isidot·e Spier and Harry Gardner, copartn£>rs trading as Ideal Button Works; Abraham Avin, trading as Practical Dutton & Trimming Co., and Irving Sclrwartz, David M. Schwartz, and Ida Schwartz, copartners trading ns Cosmopolitan Dutton Co. The above named COl\LMISSIO~ DECISIONS986 FEDERAL TRADE Complaint 25F.T.C.

respondent members of respondent Covered Button and Buckle Creators, Inc., do not constitute the entire membership of respondent Covered Dutton and Buckle Creators, Inc., but are representative members thereof. There are approximately 150 members of respondent Covered Button and Buckle Creators, Inc., and thry constitute a class so numl'rous as to make it impractical to name them all as parties respondent herein. All members of respondent Covered Button and Buckle Creators, Inc., are made parties respondent herein as a class, of which those specifically named are representative of the whole.

PAR. 2. The respondent members of respondent Covered Dutton and Buckle Creators, Inc., are enga,ged at their respective places of business chiefly in the city of New York, State of New York, in the manufacture of covered buttons, buckles, and novelties for use in .the manufacture of wearing apparel, and in the sale thereof to dress manufacturers and to those engaged in kindred industries. In the course and conduct of their businesses, respondent members of respondent Covered Button and Buckle Creators, Inc., cause such articles when sold by them to be transported from their respl'ctive places of business to the purchasers thereof, some located in the dty of New York, State of New York, and others located in various other States of the United States, the territories thereof, and the District of Columbia, and there is now and has been for more than two years last past, a constant current of trade and commerce by respomh>nt members of respondent association in such coven·~l buttons, buckles, and novelties, between and among,g the various States of the United States, the Territories thereof, and the District of Columbia. The amount of covered buttons, buckles, and novelties for use by dress manufacturers and manufacturers of kindred lines, manufacttu·ed ancl sold by the respondent members of respondent Covered Button and Buckle Creators, Inc., constitutes, and for more than two years last past has constituted, approximately 90% of all of the covered buttons, buckles, and novelties manufactured in the United States.

The said respondent members of respondent Covered Button and Buckle Creators, Inc., were prior to April 1937, or thereabouts, in competition, as to price, with one another in the sale of covered buttons, buckles, awl novelties, between and among the various States of the United States~ the Territories thereof, and the J)' strict of Columbia, and but for the combination, agreement, tmderstanding, and conspiracy hereinafter described, said respondents would have been at all times since April 1937, or thereabouts, and would now be in such competition with one another.

COVERED BUTTON AND BUCKLE CREATORS, INC., ET AL. 987 983 Complaint PAR. 3. In April 1937 or thereabouts, respondent Covered Dutton and Buckle Creators, Inc., its respondent officl'rs, directors, and its respondent members, for the purpose of eliminating price competition among the members of respondent Covered Button and Buckle Creators, Inc., entered into and have since carried out and are still carrying out an agreement, combination, understanding, and conspiracy· among themselves to fix anJ maintain, and by which they have fixed and maintained uniform. minimum prices in the sale of covered. buttons, buckles, and novelties, and to fix and maintain and by which they have fixed and maintained uniform maximum discounts to be allowed by the respondent members of respondent Covered Button and Buckle Creators, Inc., to their purchasers of covered buttons, b11ckles, and novelties, and thus to fix the prices of covered buttons, buckles, and novelties entering into interstate comlllerce. Pursuant to and for the purpose of carrying out the said agreement, combination, understanding, and conspiracy, the said respondents have done, among other things, the following: (a) By agreement among themselves have fixed and maintained and still fix and maintain uniform minimum prices for the sale of c:overecl buttons, buckles and novelties sold by the respondent members of respondent Covered Dutton and Buckle Creators, Inc., and by each of them;

(b) By agreement among themselves have fixed and maintained and still fix and maintain uniform maximum Jiscounts for covered buttons, buckles and novelties sold by the respondent members of respondent Covered Button and Buckle Creators, Inc., and by each of them· ' (c) Caused to be inserted in the l\fay 26, 1V37, issue of ·women's Wear, a trade paper of wide circulation among those engaged in dress ~manufacturing and kindred industries, notice of which the following Is a copy:

NOTICE TO DRESS MANUFACTURERS J and Kindred Industries ON AND AFTER JUNE 1, 1937, PRICES FOR COVERED BUTTONS AND P.UCKLES WILL BE REGULATED AND A UNIFORM POLICY OF DEALING WITH CUSTOMERS WILL BE ADHERED TO BY MANUFACTURERS PUR· ~UANT TO THE FAIR TRADE PRACTICE RULES RECENTLY APPROVED By THE FEDERAL TRADE COMMISSION FOR TIIFl COVERED BUTTON A.ND BUCICLE MA.NUFACTURING INDUSTRY.

THE FOLLOWING RULES WILL BE STRICTLY ENFORCED: 1-THE SALE OF GOODS BELOW COST IS PROHIBITED. A basic cost fonnula for the industry has been established by taking Into consideration all 988 FEDERAL TRADE COl\I:MISSION DECISIONS Complaint 25F. T. C.

elements recognized by good accounting practice ns proper elements of such cost.

2-Grnntlng or allowing secretly, directly or indirectly, any price differentials, rebates, refunds, discounts, credits, or other allowances for the purpose of evading the established basic cost prices Is absolutely prohibited. 3-A UNIFORM DISCOUNT OF 2o/o will be allowed to customers, and no more.

4-NO FHEE SAMPLES AND NO FREE DUPLICATES wlll be given; samples and duplicates will be furnished at cost. 5--No commission, brokerage, or other compensation, or any allowance or discount In lieu thereof, will be allowed to a customer or to anyone in the employ or under the control of the customer. Attention is called to the fact that the Fair Trade Practice Rules above mentioned have been incorporated into the By-Laws of the Covered Button & Buckle Creatot·s, Inc., as rules which will hereafter govern the business conduct of Its members. An ADMINISTRATIVE BOARD has been set up to hear com· plaints, to enforce compliance and to Impose penalties for violations. l\Iembers of this Association have pledged their united support and their full cooperation in this movement, the purpose of which Is to stabilize the industry, to prevent destructive competition and therefore to insure its members a fair return from their business.

Manufacturerr of covered buttons and buckles who are not members of tbc undersigned .Association are hereby notified that they will be held strictly accountable for any violation of the rules as promulgated by the Federal Trade Commission and will be subject to lt>gal action for any such violations. Dress Manufacturers and others dealing with members of the industry are reminded of the provisions of the Robinson-Patman Act which make 1t unlawful to receive a price discrimination or other rebate as well as to grant it. It is therefore the purpose of the Association to Invoke the laws against those who receive unlawful favors as well as those who grant them. While the fair trade practice rules prohibit the sale of merchandise below · cost, members of the industry are advised that U ia unethical to sell merchan· dUie at nwre cost and that they a1·e legally en.titled to fair profits upon theill' sales. 'J.'hPrPfore, any member who is found to be selling merchandh;e at actual cost will be presumed to be engaged in unfair competition. · The above rules are now actually in force but in order to enable manufactl~rers to adjust tbPmt~elves to the new pt·lce regulation, which wlll 1•esult from the adoption of the code, a short pet·,iod ot grace has been established, but TH:E NEW PRICES WILL ABSOLUTELY GO INTO EFFECT ON .AND AFTER JUNE 1, 1937.

· Members of the Cowred Button and Buckle Industry are urged to report violations promptly to the undersigned .Association or to lts attorneys. Dat!'d, New York City, 1\Iay 2(1, 1937.

COVERED BUTTON & BUCKLE CREATORS, INC.

l\IAX PEARLSTEIN, Preside-nt.

1\I. D. l\IOSESSOIIN, A. FURMAjN GREENE, Counsel.

570 Seventh Avenue, New Yo1·k Oitu.

(d) Caused to be sent, on May 2G, 1937, or thereabouts, to dress manufacturers and kindred industries, a false and misleading letter, COVERED BUTTON AND BUCKLE CREATORS, INC., ET AL. 989 !183 Comolalnt enclosing a copy of the notice described in subparagraph (c) of this Paragr!!.ph, a copy of which said letter is as follows: Tel. Lackawanna 4-5727 Covered BUTTON & BUCI{LE Creators, INC. '570 SEVENTH AVENUE, New Yot·k City, May 26, 19.11.

To Dress Manufacturers and Kindred Industries: We are enclosing ht:>rewlth copy of page advt:>rtlsemt:>nt which appeared in the Women's Wear l\Iny 2G, l!l37, announcing new prict:>s for covered buttons and buckles and new regulations for the industry. Please notify your department which deals with the manufacturers of this industry to cooperate fully as the producers iu this industry are protected in their rights both by the Fair Trttde Practice Rules approved by the Federal trade Commission and the Robinson-Patman Act. It is the purpose of this organization to prosecute all infractions to the limit. We trust that we may have your constructive cooperation. Very truly yours, Covered Button & Buckle CREATORs, INc.

(Sgd) 1\IAX PEARLSTEIN.

Dy l\IAX PEARLSTEIN, President.

l\I. D. l\IOSESSOHN, A, FURMAN GREENE, COIN18Cl.

(e) Falsely stated, represented nnd implied, in and by the notice described in subparagraph (c) of this parag-raph and by other means, t~at the Federal Trade Commission has approved Fair Trade Prac• hce Rules for the Covered Button and Buckle Manufacturing Indus· try regulating prices for covered buttons, buckles and novelties or authorizing the fixing of such prices.

(/) Falsely stated, represented and implied, in and by the notice described in subparagraph (c) of this paragraph and by other means that Trade Practice Rules for the Covered Button and Buckle Manufacturing Industry, approved by the Federal Trade Commission, Prohibit, without qualification or limitation, the sale of covered buttons, buckles and novelties below cost, and that in and by Trade Practice Rules for the said industry, approved by the Federal Trade Commission, a basic cost formula is provided therein or authorized thereby.

(g) Falsely stated, represented and implied, in and by the notice described in subparagraph (c) of this paragraph, and by other llleans that the Federal Trade Commission has approved Fair Trade Practice Rules for the said industry, prohibiting the granting or allowing, secretly, directly, or indirectly, any price differentia$, rebates, refunds, discounts, credits or other allowances for the pur- Pose of evading what the said respondents, in and by the said notice, term "established basic cost prices."

990 FEDERAL TRADE CO:\IMISSIO:N DECISIONS Complaint 25 I!'. T. C. (h) Falsely stated, represented and implied, in and by the notice described in subparagraph (c) o£ this paragraph and by other means that the Federal Trade Commission has approved Fair Trade Practice Rules for this industry, fixing a maximum uniform discount of 2% or authorizing the fixing of a maximum uniform discount. ( i) Falsely stated, represented and implied, in and by the notice described in subparagraph (c) of this paragraph and by other means, that the Federal Trade Commission has approved Fair Trade Practice Uules for the said industry, forbidding the giving of free samples or free duplicates.

(j) Falsely stated, represented and implied, in and by the notice described in subparagraph (c) of this paragraph, and by other means, that the uniform policy described in said notice was initiated and carried out by and through the means of Tra.de Practice Rules for the said industry, approved by the Federal Trade Commission. (k) Falsely stated, represented and implied, in and by the notice described in subparagraph (c) of this paragraph, and by other means, that the aforesaid uniform policy described in said notice was initiated and carried out with the knowledge, sanction, approval or authorization of the Federal Trade Commission .. PAR. 4. In truth and in fact, the Trade Practice Rules for the ~aid industry, approved by this Commission, a copy of which said rules is annexed hereto and made a part hereof as Appendix One/ do not permit or authorize the acts and practices stated, represented, expressed and implied by the respondents as stated in. subparagraphs (e), (f), (g), (h), (i), {j), and (k) of paragraph 3 of this complaint; and in truth and in fact, the combination, understanding, llgreement, and conspiracy described in paragraph 3 hereof, was not enter into with the sanction, authorization, permission, or lmowledge of the Federal Trade Commission. PAR. 5. The letter described in subparagraph (d) of paragraph 3 of this complaint is false and misleading in that- 1. The enclosure with the said letter, being the notice described in subparagraph (c) of paragraph 3 of this complaint, is false and misleading for the reasons set out in paragraph 4 of this complaint. 2. The purported rights of Covered Dutton and Buckle Creators, Inc., as claimed by the respondents in the notice described in subparagraph (c) of paragraph 3 of this complaint, are not protected by Fair Trade Practice Rules approved by the Federal Trade Commission.

t llce Infra, p. I OO:l.

COVERED BUTTON AND BUCKLE CREATORS, INC., ET AL, 991 Findings PAn. 6. The alleged acts and practices of respondents are all to the prejudice of the public and to the prejudice of the competitors of the respondent members of respondent Covered Button and Buckle Creators, Inc.; have a dangerous tendency to and have actually hindered and prevented price competition in the sale between and among the various States and Territories of the United States, and in the District of Columbia, of covered buttons, buckles, and novelties; have increased the prices of covered buttons, buckles, and novelties paid by dress manufacturers and those engaged in kindred industries; have increased the prices of dresses and similar commodities; have increased the prices paid by the purchasing public for dresses and other articles of wear; have created in the respondent members of respondent Covered Button and Buckle Creators, Inc., a monopoly in the sale in interstate commerce of covered buttons, buckles, and novelties; have unreasonably restrained interstate commerce in covered buttons, buckles, and novelties, dresses and other 1trticles of wear, and constitute unfair methods of competition in interstate 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, FINDINGS As TO THE FACTS, AND Onder 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, on July 24, 1937, issued and served its complaint in this proceeding upon respondents Covered Button and Buckle Creators, Inc., its officers, Max Pearlstein, president; Abraham Avin, vice-president; Isidore Feldman, treasurer; Irvin Schwartz, secretary; its directors, Jack Kinsler, Murray Horner, Isidore Nechim, Max Goldfeder, Ben Block, Jacob Neiderbach, Samuel Brown, Isidore Spier; and its following members, individually and as representative members of the whole membership of the respondent Covered Button and Buckle Creators, Inc., to wit: Regal Trimming & Button Co., Inc., Rapid Button Co., Inc., Unity Button Works, Inc., N. B. Button Works, Inc., International Button Co., Inc., Max Goldfeder, doing business under the trade name Grand Button Works; Ben Block, Louis Rosenfeld, and Sam Wiener, doing business as Mitrose Button Works; Jacob Neiderbach, trading as Novelty Button 'Vorks; Samuel Brown, doing business under the trade name Brown Button Works; Isidore Spier and Harry Gardner, copartners, 1~8121m--39----6~ Findings 25 F.1'. C. trading as Ideal Button Works; Abraham A vin, trading as Practical Dutton & Trimming Co., and Irving Schwartz, David M. Schwartz, and Ida Schwartz, copartners, trading as Cosmopolitan Dutton Co., charging them and each of them with the use of unfair methods of competition, in violation (l)f the provisions of said act. On August 25, 1937, the said respondents filed their substituted answer, in which said substituted answer they stated that they desired to and thereby waived hearing on the charges set forth in the complaint insofar as the same referred to alleged unfair methods of competition in commerce within the intent and meaning of 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," commonly called the Federal Trade Commission Act; that they, and each of them, for the sole purpose of avoiding the trouble and expense incident to further continuation of this proceeding, refrained from contesting the proceeding; that they and each of them consented that all of the material facts alleged in said complaint might be deemed to be admitted but not within the intent and meaning of any law of the United States other than the Federal Trade Commission Act, such answer not constituting an ad· mission of any conclusions of law and not constituting an admission of fact for any other purpose nor to be used against them in any other proceeding, suit or action; and that they and each of them consented that the Commission might, without trial, without further evidence, and without any intervening procedure, make and enter its findings as to the facts, and issue and serve upon them and each of them an order to cease and desist from any methods of competition alleged in the said complaint which constitute violations of Section 5 of the Federal Trade Commission Act.

Thereafter', the .proceeding regularly came on for final hearing before the Commission on the said complaint and the said substituted answer thereto, and the Commission having duly considered the same and being now fully advised in the premises, finds that this pro· ceeding is in the interest of the public, and makes this its findings as to the facts and its conclusion drawn therefrom. FfNDINGS AS TO Tile FACTS PARAGRAPH 1. Respondent Covered Dutton and Buckle Creatoril, !nc., is a New York membership, non-profit corporation, organized m Hl34. Its officers are now and since its organization have been the following respondents:

l\fax Pearlstein, president, Abraham A vin, vice president, COVERED BUTTON AND BUCKLE CREATORS, INC., ET AL. 993 983 Findings Isidore Feldman, treasurer, Irving Schwartz, secretary.

!ts directors are now and since its organization have been the follow~ Ing respondents: Jack Kinsler, Murray Horner, Isidore Nechim, M~:x Goldfeder, Hen Block, Jacob Neiderbach, Samuel Brown, and I.s1dore Spier. Among its members are now, and since its orga11iza~ bon have been, the following respondents: Regal Trimming & Dutton Co., Inc., a New York corporation; Rapid Rntton Co., Inc., a New York corpomtion; Unity Button "\Vorks, Inc., a New York corporation; N. D. Dutton "\Vorks, Inc., a New York coq)oration; Intenlational Dutton Co., Inc., a New York corporation; Max Go:Idfeder, doing business under the trade name Brand Dutton Works; Den lllock, Louis Rosenfeld, and Sam Wiener, doing busi~ ness as Mitrose Dutton "\Vorks; Jacob Neider bach, trading as Novelty ~utton "\Vorks; Samuel Drown, doing business under the trade name rown Button "\Vorks; Isidore Spier and Harry Gardner, copartners, ~ading as Ideal Button 'Vorks; Abraham A vin, trading as Practical utton & Trimming Co., and Irving Schwartz, David M. Schwartz, ~nd Ida Schwartz, copartners, trading ns Cosmopolitan Dutton Co. he above named respondent mPmb!:'rs of respondent Covered llut~ ~on a~1d Buckle Creators, Inc., do not constitute the entire mem~ berslup of respondent Covered Dutton and Ruekle Creators, Inc., ut are r£>presentative members thereof. There ure approximately 150 members of respondent Covered Ruttan and Dnckle Creators, Inc. members of respondent Covered Dutton and Buckle Creators, tll llc., are parties respondent herein as a class, of which those specifi~ \ ca]Jy hereinabove named are representative of the whole. PAn. 2. The respondent members of respondent Covered Dutton ~ 11~ Duckle Creators, Inc., are engaged nt their respective places of llSiness chiefly in the city of New York, State of New York, in the l'llanufacture of covered buttons, buckles ami novelties for use in the lnannfacture of wearing apparel, and in the sale thereof to dress 111llllufacturers and to those engaged in .kindred industries. In the course and conduct of their businesses, respondent members of re~ sp~ndent Covered Dutton and Buckle Creators, Inc., cause such a~'hcles whe1~ sold by them to be transported from their .respect~ve p aces of busmess to the purchasers thereof, some located m the -city ~f N"ew York, State of New York, and others located in various other °;atesColumbia,of the Unitedand thereStates,is now,the Territoriesand has bPenthereof,for andmorethethanDistricttwo ~ears last past, a constant current of trade and commerce hy re~ spondent members of respondent association in such covered J.m lions, Findings 25F.T.0· buckles and novelties, between and among the various States of the United States, the Territories thereof, and the District of Columbia. The amount of covered buttons, buckles, and novelties for uso by dress manufacturers and manufacturers of kindred lines, manufactured and sold by the respondent members of respondent Co\"· ered Button and Buckle Creators, Inc., constitutes, and for more than two years last past has constituted, approximately 90% of all of the covered buttons, buckles, and novelties manufactured in the United States.

The said respondent members of respondent Covered Button and Buckle Creators, Inc., were, prior to April 1937, or thereabouts, in competition, as to price, with one another in the sale of covered buttons, buckles, and novelties, between and among the various States of the United States, the Territories thereof, and the Dis· trict of Columbia, and but for the combination, agreement, under· standing, and conspiracy hereinafter described, said respondents would have been at all times since April 1937, or thereabouts, and would now be in such competition with one another. PAR. 3. In April 1937, or thereabouts, respondent Covered Button tmd Buckle Creators, Inc., its respondent officers, directors and i~ respondent members, for the purpose of eliminating price competl· tion among the members of respondent Covered Button and Buckle Creators, Inc., entered into and have since carried out and are still carrying out an agreement, combination, understanding, and con· spiracy among themselves to fix and maintain, and by which they have fixed and maintained uniform minimum prices in the sale of covered buttons, buckles, and novelties, and to fix and maintain and 1 by which they have fixed and maintained uniform maximum dis· counts to be allowed by the respondent members of respondent Co\"• ered Button and Buckle Creators, Inc., to their purchasers of coy· ered buttons, buckles, and novelties, and thus to fix the prices of covered buttons, buckles, and novelties entering into interstate co~­ merce. Pursuant to and f~r the purpose of carrying out the sa~d agreement, combination, understanding, and conspiracy, the said respondents have done, among other things, the following: {a) By agreement among themselves have fixed and maintained, and still fix and maintain, uniform minimum prices for the sale of covered buttons, buckles and novelties sold by the respondent melll· bers of respondent Covered Button and Buckle Creators, Inc., and by each of them;

(b) By agreement among themselves have fixed and maintained, and still fix and maintain, uniform maximum discounts for co\"ered buttons, buckles and novelties sold by the respondent members of COVERED BUTTON AND BUCKLE CREATORS, INC., ET AL, 995 Findings respondent Covered Button and Buckle Creators, Inc., and by each of them;

(c) Caused to be inserted in the May 26, 1937, issue of Women's Wear, a trade paper of wide circulation among those engaged in dress manufacturing and kindred industries, notice of which the following is a copy :

NOTICE TO DRESS MANUFACTURERS and Kindred Industries Ol'{ AND AFTER JUNE 1, 1937, PRICES FOR COVERED BUTTONS .AND lltJCKLES WILL BE REGULATED AND A UNIFORM POLICY OF DEALING 'WITH CUSTOMERS WILL BE ADHERED TO BY :MANUFACTURERS l>tJRSUANT TO THEl FAIR TRADE PRACTICE RULES RECENTLY AP· l>ROVED BY THE FEDERAL TRADE COMMISSION FOR THE COVERED lltJTTON .AND BUCKLE J.lr!MANUFACTURING INDUSTRY. THE FOLLOWING RULES WILL BE STRICTLY ENFORCED: t l, Tle SALE OF GOODS BELOW COST IS PROHIBITED. A basic cost rmuin for the industry has been established by taking into consideration 1 n elements recognized by good accounting practice as proper elements of such "OSt, tl 2• Granting or allowing secretly, directly or indirectly, any price ditreren- 0 nls, rebates, refunds, discounts, credits, or other allowances for the purpose r evading the established basic cost prices is absolutely prohibited. 8· .A UNIFORM DISCOUNT OF 2o/o wlll be allowed to customers, and no In ore.

lll4· NO FREE SAMPLES AND NO FREE DUPLICATES will be given i sames and duplicates will be furnished at cost. d! ~. No commissions, brokerage, or other compensation, or any allowance or lll~count In Ueu thereof, will be allowed to a customer or to any one in the em- Y or under the control of the customer.

t1 .Attention is called to the fact that the Fair Trade Practice Rules above men- Coned have been incorporated into the By-laws of the Covered Button & Buckle rn.reators, Inc., as rules which will hereafter govern the business conduct of its t e~nbers. An ADMINISTRATIVE BOARD has been set up to hear complaints, enforce compliance and to impose penalties for violations. Members of this la thj.soctaUon have pledged their united support and their full co-operation in 8 !It movement, the purpose of which is to stabilize the Industry, to prevent dethl'Ucttve competition and therefore to insure its members a fair return from etr business.

unlttanutacturers ot covered buttons and buckles who are not members of the co derstgned Association are hereby notified that they wlll be held strictly ac- Countable for any vlolntion of the rules as promulgated by the Federal Trade · ~llllssion and wlll be subject to legal action for any such violations. ren::ss Manufacturers and others dealing with members of the industry are tui ded of the provisions ot the Robinson-Patma.n Act which makes it unlawis t~o receive a price dlscrlminatlon or other rebate as well as to grant it. It '~'~>'h erefore the purpose ot the Association to invoke the laws against those 0 receive unlawful favors as well as those who grant them. 996 FEDERAL TRADE COMl\IISSION DECISIONS Findings 25F.T.C· While the fair trade practice rules prohibit the sale of merchandise below' cost, members of the industry are advised that it is unethical to sell merchan· dise at mere cost and that· they are legally entitled to fair profits upon their sales. Therefore, auy member who is found to be selling merchandise at actual cost will be presumed to be engaged in unfair competition. The above rules are now actually in force but in order to enable manufac· turers to adjust themselves to the new price regulation, which will result frolll the Adoption of the code, a short period of grace has been established, but THE NEW PRICES WILL ABSOLUTELY GO INTO EFFECT ON AND AFTI<~R JUNE 1, 1937.

Members of the Covered Button and Buckle Industry are urged to report violations promptly to the undersigned Association or to its attorneys. Dated, New York City, May 26, 1937.

COVERED BUTrON & BUCKLE CUEATORS, INC.

MAX PEARLSTEIN, President. 1\I. D. MosESSOHN, A. FURMAN GREENE, Counsel.

570 Se·venth Avenue, New York City.

(d) Caused to be sent, on May 26, 1937, or thereabouts, to dress manufacturers and kindred industries, a false and misleading letter, enclosing a copy of the notice described in subparagraph (c) of this paragraph, a copy of which said letter is as follows: Tel. Lackawanna 4-5727 Covered BUTI'ON & BUCKLE CnEATous, INc.

570 SEVENTH AVENUE, New York City, May 26, 19J7.

To Dress Manufarturers and Kindred Industries: We are enclosing herewith copy of page advertisement which appeared ill the Women's Wear l\Iay 26, 1937, announcing new prices for covered buttons and buckles and new regulations for the industry. Please notify your department which deals with the manufacturers of this industry to co-opern te fully as the producers in this industry are protected ill their rights both by the Fair Trade Practice Rules approved by the Federal Trade Commission and the Robinson-Patman Act. It is the purpose of this organization to prosecute all infractions to the lilllit. We tru~t that we may have your constructive co-operation. Very truly yours, COVERED BUTTON & BUCKLE CREATORS, INC. (Sgd.) J\!A.x PEARLSTEIN.

Dy 1\I.Ax PEARLSTEIN, Pt·esident.

M.D. MosESSOHN, A. FURMAN GnEENE, Counsel.

(e) Falsely stated, represented and implied, in and by the notice described in subparagraph (c) of this paragraph and by other means, that the Federal Trade Commission has approved Fair Trade Prac· tice Rules for the Covered Dutton and Buckle Manufacturing Indus· try regulating prices for covered buttons, buckles and novelties, ot' authorizing the fixing of such prices.

COVERED BUTTON AND BUCKLE CREATORS, INC., ET AL. 997 '983 Findings (f) Falsely stated, represented and implied, in and by the notice described in subparagraph (c) of this paragraph and by other means that Trade Practice Rules for the Covered Button and Buckle l\fanufacturing Industry, approved by the Federal Trade Commission, prohibit, without qualification or limitation, the sale of covered buttons, buckles and novelties below cost, and that in and by Trade Practice Rules for the said industry, approved by the Federal Trade Commission, a basic cost formula is provided therein or authorized thereby.

(g) Falsely stated, represented and implied, in and by the notice described in subparagraph (c) of this paragraph, and by other means that the Federal Trade Commission has approved Fair Trade Practice Rules for the said industry, prohibiting the granting or ullowing, secretly, directly, or indirectly, any price differentials, rebates, refunds, discounts, credits or other alowances for the purpose of evading what the said respondents, in and by the said notice, term "established basic cost prices."

(h) Falsely stated, represented and implied, in a11d by the notice described in subparagraph (c) of this paragraph and by other lhea11s that the Federal Trade Commission has approved Fair Trade Practice Rules for this industry, fixing a maximum uniform discount of 2%, or authorizing the fixing of a maximum uniform discount.

(i) Falsely stated, represented and implied, in and by the notice described in subparagraph (c) of this paragraph and by other means, that the Federal Trade Commission has approved Fair Trade Practice Uules for the said industry, forbidding the giving o£ free samples o£ free duplicates.

(j) Falsely stated, represented and implied, in and by the notice described in subparagraph (o) of this paragraph and by other means, that the uniform policy described in said notice was initiated and carried out by and through tho means of Trade Practice Rules for the said industry, approved by the Federal Trade Commission. (k) Falsely stated, represented and implied, in and by the notice described in subparagraph (c) of this paragraph, and by other lheans, that the aforesaid uniform policy described in said notice Was initiated and carried out with the knowledge, sanction, approval or authorization of the Federal Trade Commission. PAR. 4. In truth and in fact, the Trade Practice Rules :for the said industry, approved by this Commission, a ~opy of which said rules is annexed hereto and made a part hereof as Appendix One,1 1 See, Infra, p. 1003.

Conclusion 25F.T.C.

do not permit or authorize the acts and practices stated, represented, expressed and implied by the respondents as stated in subparagraphs (e), (/), (g), (h), (i), {j), and (k) of paragraph 3 hereof; and in truth and in fact, the combination, understanding, agreement and conspiracy described in paragraph 3 hereof, was not entered into with the sanction, authorization, permission or knowledge of the Federal Trade Commission.

PAn. 5. The letter described in subparagraph (d) of paragraph 3 hereof is false and misleading, in that- 1. The enclosure with the said letter, being the notice described in subparagraph (a) of paragraph 3 hereof, is false and misleading for the reasons set out in paragraph 4 hereof. 2. The purported rights of Covered Button and Buckle Creators, Inc., as claimed by the respondents in the notice described in subparagraph (c) of paragraph 3 hereof, are not protected by Fair Trade Trade Practice Rules approved by the Federal Trade Commission.

PAn. 6. The acts and practices of the respondents as herein and hereby found have a dangerous tendency to and have actually hindered and prevented price competition in the sale between and among the various States and Territories of the United States, and in the District of Columbia, of covered buttons, buckles, and novelties; have increased the prices of covered buttons, buckles, and novelties paid by dress manufacturers and those engaged in kindred industries; have increased the prices of dresses and similar commodities; have increased the prices paid by the purchasing public for dresses and other articles of wear; have created· in the respondent members of respondent Covered Button and Buckle Creators, Inc., a monopoly in the sale in interstate commerce of covered buttons, buckles, and novelties; have unreasonably restrained interstate commerce in covered buttons, buckles, and novelties, dresses and other articles of wear.

CONCLUSION The aforesaid acts and practices of respondents are all to the prejudice of the public, and to the prejudice of the competitors of the respondent members of respondent Covered Button and Buckle Creators, Inc., and constitute unfair methods of competition in commerce within the intent and meaning of 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."

COVERED BUTTON AND BUCKLE CREATORS, INO., ET AL. 999 983 Order ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and the substituted answer thereto filed herein by all of the respondents on August 25, 1937, in which said substituted answer they stated that they desired to and thereby waived hearing on the charges set forth in the said complaint insofar as the same referred to alleged unfair methods of competition in commerce within the intent and meaning of Section 5 of the 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, commonly called the Federal Trade Commission Act, that they and each of them for the sole purpose of avoiding the trouble· and expense incident to further continuation of this proceeding refrained from protesting the proceeding, and that they and each of them consented that aU of the material facts alleged in said complaint might be deemed to be admitted, but not within the intent and meaning of any law of the United States other than the Federal Trade Commission Act, such answers not constituting an admission of any conclusions of law and not constituting an admission of fact for any other purpose nor to be used against them in any other proceeding, suit or action, and that they and each of them consented that the Commission might without trial and without further evidence and without any intervening proceeding, make and enter its findings as to the facts and issue and serve upon them and. each of them an order to cease and desist from any methods of competition alleged in said complaint which constitute violations of Section 5 of the Federal Trade Commission Act; and the Commission having made its findings as to the facts and its conclusion that all of the said respondents have violated the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, io define its powers and duties, and for other purposes." It is ordered, That respondents, Covered Button and Buckle Creators, Inc., its agents, servants, and employees, its officers, to wit: Max Pearlstein, president, Abraham Avin, vice president, Isidore Feldman, treasurer, Irving Schwartz, secretary, and Jack Kinsler, Murray Horner, Isidore Nechim, Max Goldfeder, Ben Block, Jacob Neiderbach, Samuel Brown, and Isidore Spier, directors, and their agents, servants, and employees, and its following members, to wit: P..legal Trimming & Button Co., Inc., Rapid Dutton Co., Inc., Unity Button 'Yorks, Inc., N. B. Button 'Vorks, Inc., InternationalButton Orqer 25 F. T. 0. Co., Inc., Max Goldfeder, doing business under the trade name Grand Button Works; Ben Block, Louis Rosenfeld and Sam Wiener, doing business as Mitrose Button 'Vorks; Jacob Neiderbach, trading as Novelty Button Works; Samuel Brown, doing business under the trade name, Brown Button 'Vorks; Isidore Spier and Harry Gardner, copartners trading as Ideal Button ·works; Abraham Avin~ trading as Practical Button & Trimming Co., and_ Irving Schwartz, David M. Schwartz and Ida Schwartz, copartners trading as Cosmopolitan Button Co., their officers, agents, representatives, and servants, in connection with the sale and offering for sale of covered buttons, buckles and novelties in interstate commerce, and in the District of Columbia, forthwith cease and desist from: Carrying out and engaging in, and from entering into any further agreement, combination, understanding and conspiracy among themselves or between and among any of them, or with any other person, firm, corporation, or partnership, to fix and maintain uniform minimum prices or to fix and maintain uniform maximum discounts in the sale of covered buttons, buckles, and novelties, or to fix the prices of covered buttons, buckles, and novelties, and for the purpose of carrying out any such agreement, combination, understanding, and conspiracy, or for any other purpose, from doing any of the following, to wit:

(a) Fixing and maintaining uniform prices for the sale of covered buttons, buckles and novelties;

(b) Fixing and maintaining uniform discounts for the sale of covered buttons, buckles and novelties;

(c) Inserting or causing to be inserted in 'Vomen's Wear or any other trade paper or in any other publication the following notice or any other notice of similar import, tenor or substance: NOTICE TO DRESS MANUFACTURERS and Kindred Industries ON AND AFTER JUNE 1, 1937, PRICES FOR COVERED BUTTONS AND BUCKLES WILL DE REGULATED AND A UNIFORM POLICY OF DEALING WITH CUSTOMERS WILL BEl ADHERED TO BY MANUFACTURERS PUR· SUANT TO THE FAIR TRADE PRACTICE RULES RECENTLY APPROVED BY Tile FEDERAL TRADE COMMISSION FOR TIIE COVERED BUTTON AND BUCKLE MANUFACTURING I!VDU8TRY.

COVJiiRED BUTTON AND BUCI{LE CREATORS, INC., ET AL. 1001 Order THE FOLLOWING RULES WILL BE STRICTLY ENlt'ORCED: 1-THE SALE OF GOODS BELOW COST IS PROHIBITED. A basic cost formula for the industry bas been established by taking into consideration all elements recognized by good accounting practice as proper elements of such cost.

2-Granting or allowing secretly, directly or indirectly, any price dill'erentials, rebates, refunds, discounts, credits, or other 'allowances for the pur- Dose of evading the established basic cost prices is absolutely prohibited. 3-A UNIFORM DISCOUNT OF 2o/o will be 'allowed to customers, and no more.

4--NO FREE SAMPLES AND NO FREE Duplicates will be given; samples and duplicates will be furnished at cost. 5-No commissions brokerage, or other compensation, or any allowance or discount in lieu thereof, will be allowed to a customer or to anyone in the employ or under the control of the customer . .Attention is called to the fact that the Fair Trade Practice Rules above mentioned l1~1ve been incorporated into the By-Laws of the Covered Button & Dnclde Creators, Inc., as rules which will hereafter govern the business conduct of its members. An ADMINISTRATIVE BOARD has been set up to bear complaints, to enforce compliance and to impose penalties for violations. :Members of this Association have pledged their unit.ed support and their full cooperation in this movement, the purpose of which is to stabilize the industry, to prevent destructive competition and tlJerefore to insure its members a fair return from their business.

Manufacturers of covered buttons and buckles '!1.'710 are not members of the luulersigned Association are hereby JJOtificd that they will be held strictly accountable for any ylolatlon of the rules as promulgated by the Federal Trade Commission and will be subject to legal action tot· any such violations. Dress Manufacturers 'and others dealing with members of the Industry are reminded of the provisions of the Robinsrnz-Patman Act which make it unlawful to receive a price discrimination or other rebate as well as to grant it. It is therefore the purpose of the Association to invoke the laws against those who receive unlawful favors as well 'as those who grant them. While the fair trade practice ruiPs prohibit the sale of merchandise below cost, members of the industry are advised that it is 1t·nethical to sell merchandiBe at mere cost a.nd that they are legally entitled to fair profits tlpon their Bales. Therefore, any member who Is fonud to be selling merchandise at actual cost will be presumed to be engaged in unfair competition. The above rules are now actually In force but In order to ena.ble manufachirers to adjust themselves to the new price regulation, which will result from the adoption of the code, a short period of grace has been established, but THE NEW PRICES WILL ABSOLUTELY GO INTO EFFECT ON AND AFTER ,JUNE 1, 1937.

Members of the Covered Button and Bnekle Industry are mged to report \'lolations promptly to the undersigned Association or to its attorneys. Dated, New York City, l\Iay 26, 1937.

COVERED BUTTON & BUCKLE CREATORS, INO, !II. D. 1\!0SEBBOHN, 1\!Ax PEARLSTEIN, President. .A. FURMAN GBEENE, Counsel.

5"10 Seventh Aven.ue, New York City.

Order 25F. T.O.

(d) Sending or causing to be sent to dress manufacturers anJ kindred industries, or to anyone else, the following letter, alone or with an enclosure described in "c" hereof, or any other letter of similar import, tenor or substance:

Tel. Lackawanna 4-i>727.

Covered Button & Buckle Creators, INc.

570 SEVENTH Avenue, New York City, May 26, 1931.

To Dress Manufacturers and Kindred Industries: We are enclosing herewith copy of page advertisement which 'appeared in the Women's Wear May 26, 1937, announcing new pt:lces for covered buttons and buckles and new regulations for the industry. Please notify your department which deals with the manufacturers of this industry to cooperate fully as the producers In this industry are protected In their rights both by the Fair Trade Pl"actice Rules approved by the Federal Trade Commission and the Roblnson-Patman Act. It is the purpose of this organization to prosecute all infractions to the limit. We trust that we may have your constructive cooperation. Very truly yours, COVERF:D BUTTON & BUCKLE CREATORS, !NO.

(Sgd.) MAX PEARLSTEIN.

By MAX PEARLSTEIN, President.

M. D. l\IOSESSOHN, A. FURMAN GREENE, Counsel.

(e) Stating, representing or implying by any other means what· soever, that the Federal Trade Commission has approved Fair Trade Practice Rules for the Covered Button and Buckle Manufacturing Industry regulating prices for covered buttons, buckles and novel· ties or. authorizing the fixing of such prices; U) Stating, representing or implying by any other means what· soever, that Trade Practice Rules for the Covered Dutton and Buckle Manufacturing Industry, approved by the Federal Trade Commission, prohibit, without qualification or limitation, the sale of covered buttons, buckles and novelties below cost, or that in and by Trade ~practice Rules for the said Industry, approved by the Federal Trade Commission, a basic cost formula is provided therein or authorized thereby.

(g) Stating, representing or implying by any other means what· soever, that the Federal Trade Commission has approved Fair Trade Practice Rules for the said. Industry, prohibiting the grant· ing or allowing, secretly, directly, or indirectly, any price differen· tials, rebates, refunds, discounts, credits or other allowances for the purpose of evading what the said respondents, in and by the notice described in "c" hereof, termed "established basic cost prices." (h) Stating, representing or implying by any other means what· soever, that the Federal Trade Commission has approved Fair COVERED BUTTO:N AND BUCKLE CREATORS, INC., ET AL, 1003 Appendix Trade Practice Rules for the said Industry, fixing a maximum uniform discount of 2%, or any other discount or authorizing the fixing of a maximum uniform or other discount;

{i) Stating, representing or implying by any other means whatsoever, that the Federal Trade Commisssion has approved Fair Trade Practice Rules for the said Industry, forbidding the giving of free samples or free duplicates;

(i) Stating, representing or implying by any other means whatsoever, that any policy of price fixing has been initiated and carried out by and through the means of Trade Practice Rules for the said Industry, approved by the Federal Trade Commission; (k) Stating, representing, or implying by any other means whatsoever, that any policy of price fixing has been initiated and carried out with the knowledge, sanction, approval or authorization of the Federal Trade Commission.

A.tul it is further ordered, That all the respondents hereinabove Inentioned shall within 30 days after service upon them of this ?rder, file with the Commission a report in writing, setting forth ln detail the manner and form in which they have complied with this order.

APPENDIX ONE TRADE PRACTICE RULES COVERED BUTTON AND BUCKLE MANUFACTURING INDUSTRY 'I'these rules promulgated by the Commission are designed to foster and prolllote fair competitive conditions ln the interest of industry and the public. 'I'hey are not to be used, directly or Indirectly, as part of or in connection with any combination or agreement to fix prices, or for the suppression of competition, or otherwise to unreasonably restrain trade. Group I . 'I'he unfair trade practices which are embraced in Group I rules are considered to be unfair methods of competition or other lllegal practices within the statutes and the decisions of the Federal Trade Commission and the. courts; and appropriate proceedings in the public interest will be taken by the Comlnission to prevent the use of such unlawful practices in or directly affecting interstate commerce.

· Rule 1.-The practice of selling goods below the seller's cost, with the intent and with the effect of injuring a competitor and where the effect may be to substantially lessen competition or tend to create a monopoly or to unreasonably restrain trade, is an unfair trade practice; all elements recognized by good accounting practice as proper elements of such cost shall be Included in deterlnl.ning cost under this rule. ' · Rule !.-Wilfully enticing away the employees of competitors, with the Purpose and effect of unduly hampering, injuring or embarrassing competitors in their businesses, is an unfair trade practice. 1004 FEDERAL TRADE CO:Ml\USSION DECISIONS Trade Practice Rules 25F. T. C. Rule 8.-the defamation of competitors b~· falsely imputing to them dis· honorable conduct, inability to perform contracts, questionable Credit standing, or hy other false representations, or the false disparagement of the grade, quality or manufacture of the products of competitors, or of their business methods, selling prices, values, credit terms, policies or services with the ten· dency, capacity or effect of misleading or deceiving purchasers, prospective purchasers or the consuming public, is an unfair trade practice. Rule .q.-The imitation ot the trade-marks, trade names, brands, labels or other marks of identification of competitors, having the tendency, capacity or eflect of misleading or deceiving purchasers, prospective purchasers or the consuming public, is an unfair trade practice. Rule 5.-(a) ProTiiMtcd discriminatory Differentials, Rebates, Refut!dS, Discounts, Credits and other Allowances.-It is an unfair trade practice for any member of the industry engaged in commerce, 1 in the course of such com· merce, to grant or allow, secretly or openly, directly or indirectly, any prlctJ dit'l'erentlals, rebates, refunds, discounts, credits or other allowances which effectuate a discrimination in price between different purchasers of goods of like grade and quality where either or any of the purchases involved therein are in commerce 1 and where the effect thereof may be substantially to Jessen competition or tend to create a monopoly in any line of commerce 1 or to injure, destroy or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination or with customers of either of them: Pr()1Jided, however, (1) That the goods involved in any such transaction are sold for use, con· sumption or re~ale within any place under the jurisdiction of the United States; (2) That nothing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered;

(3) That nothing herein contained shall prevent persons engaged in seJliug goods, wares or merchandise in commerce 1 from selecting their own customers in bona fide transactions and not in restraint of trade; ( 4) That nothing herein contained shall prevent price chang-es from time to time where made in response to changing conditions affecting either (a) the market for the goods concerned, or (b) the marketability of the goods, such as, but not limited to, actual or imminent deterioration of perishable goods. obsolescence of seasonal goods, distress sales under court process, or sales in good faith in discontinuance of business in the goods concerned. (b) Prohibited Brokerages and OommtsBions.-It is an unfair trade practice for any member of the industry engaged in commerce,' in the course of such commerce, to pay or grant, or to receive or accept, anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, except for services rendered in connection with the sale or pur· chase of goods, wares, or merchandise, either to the other party to such transaction or to an agent, representative, or other intermediary therein where such intermediary is acting in fact for or in behalf, or is subject to the direct or indirect control, of any party to such transaction other than the person bY whom such compensation is so granted or paid. (c) Prohibited Advertising or Promotional Allowances, Etc.-It is an unfair trade practice for any member of the industry engaged in commerce 1 to pay or 1 Bee footnote page 1005.

COVERED BUTTON AND BUCKLE CREATORS, INC., ET AL. 1005 .Appendix -contract for the payment of advertising or promotion allowances or any other thing of value to or for the benefit of a customer of such member in the course of such commerce as compensation or in consideration for any services or facll· !ties furnished by or through such customer in connection with the processing, handling, sale or offering for sale of any products or commodities manufactured, sold or offered for sale by such member, unless such payment or consideration is available on proportionally equal terms to all other customers competing in the distribution of such products or commodities. (d) Prohibited Discriminatory Services or Facilities.-It is an unfair trade ·practice for any member of the industry engaged in commerce 1 to discriminate in favor of one purchaser against another purchaser or purchasers of a commodity bought for resale, with or without processing, by contracting to furnish -or by furnishing, or by contributing to the furnishing of, any services or facilities connected with the processing, handling, sale or offering for sale of such commodity so purchased upon terms not accorded to all purchasers on l>roportlonally equal terms.

(c) Illegal Price Discrimination.-It is an unfair trade practice for any member of the industry or other person engaged in commerce,' in the course of "SUch commerce, to discriminate in price in any other respect contrary to Section 2 of the Clayton .Act as amended by the .Act of Congress, approved June 19, 1036, (Public No. 602, 74th Congrpss), Ol' knowingly to induce or receive a dis· '<!riminatlon in price which is prohibited by such section as amended. Rule 6.-Wilfully inducing or attempting to induce, by any false or deceptive tneans whatsoever, the breach of any lawful contract or contracts existing betwe£>n competitors, and their customers or their suppliers, or wilfully interfering with or obstructing the performance of any such contractual duties or services, with the purpose and effect of unduly hampering, injuring or embarl'assing competitors in their business, is an unfair trade practice. Rule 7.-The making, or causing or permitting to be made or published, any false, untrue or deceptive statement or representation, by way of advertisement or otherwise, concerning the grade, quality, quantity, substance, character, nature, origin, size or preparation of any product of the industry, or in any <lther material respect, with the tendency, capacity or effect of misleading or deceiving purchasers, prospective purchasers or the consuming public, is an unfair trade practice.

Rule 8.-The practice of coercing the purchase of one or more products as a Prerequisite to the purchase of one or more other products, where the effect may be to substantially lessen competition or tend to create a monopoly or to unreasonably restrain trade, is an unfair trade practice. Rule 9.-offering merchandise for sale at prices purported to be reduced from 'Vhat are in fact fictitious prices, or offering merchandise for sale at a purported reduction in price when such purported reduction is in fact fictitious, with the tendency and copacity or effect of misleading or deceiving purchasers, pro· -spective purchasers or the consuming public, is an unfair trade practic~. 1 As herein used, the word "commerce" means trade or commerce among the several States and with foreign nations, or between the District of Columbia or any Territory of the United States and any State, Territory, or foreign nation, or between any insular pos· sessions or other places under the jurisdiction of the United States, or betwern any such Possession or place and any State or Territory of the United States or the District of Columbia or any foreign nation, or within the District of Columbia or any Territory or any Insular possession or other place under the jurisdiction of the United States; Provided, 'I'hat this shall not apply to the Pb1llpplne Isl~nds. Trade Practice Rules 25 F. T. C. Rule 10.-The use of the word "free" where not properly or fairly qualified when the article i~ in fact not free, with the tendency or capacity to misleatl or deceive purchasers, prospective purchasers or the consuming public, is an unfair trade practice.

Rule 11.-The practice of shipping or delivering products which do not con· form to the samples submitted or representations made prior to securing the orders, without the consent of the purchasers to such substitutions, and having the tendency, capacity or effect of deceiving or misleading purchasers, pros· pective purchasers or the consuming public, is an unfair trade practice. Rule 12.-Directly or indirectly to give or permit to be given or offer to give money or anything of value to agents, employees or representatives of customers or prospective customers, or to agents, employees or representatives of competitors' customers or prospective customers, without the knowledge of their employers or principals, as an inducement to influence their employers or princi· pals to purchase or contract to purchase industry products from the maker of such gift or offer, or to influence such employers or principals to refrain from dealing or contracting to deal with competitors is an unfair trade practice. Rule 18.-Securing information from competitors concerning their businesses by false or misleading statements or representations or by false impersonation of one in authority, and the wrongful use thereof to unduly binder or stifle the competition of such competitors, is an unfair trade practice. Rule 1~.-In connection with the sale or offering for sale of products of tile industry, representing through advertising or otherwise that such products con· form to any standards recognized in or applicable to the industry when such is not the fact, with the tendency, capacity or effect of misleading or deceiving purchasers, prospective purchasers or the consuming public, is an unfair trade practice.

Rule 15.-For any person, firm or corporation to bold himself or itself out to the public as a manufacturer or wholesaler when such is not the fact, or in any other manner to misrepresent the character, extent or type of his or its business, with the tendency or capacity to mislead or deceive purchasers, pro· spective purchasers or the consuming public, is an unfair trade practice. Rule 16.-The false or deceptive marking or branding of products of the in· dustry for the purpose or with the tendency, capacity or effect of misleading or deceiving purchasers, prospective purchasers or the consuming public with respect to the grade, qualtty, quantity, use, size, material, content, origin, prepa· ration, manufacture or distribution of such products, or in any other material respect, is an unfair trade practice.

Rule 17.-Witbholding from or inserting in invoices or sales tickets any state· menta or information by reason of which omission or lnsertlon a false record Is made, wholly or ln part, of the transactions represented on the face of such in· voices or sales tickets, with the purpose or effect of thereby misleading or de· ceiving purchasers, prospective purchasers or the consuming public, is an unfair trade practice.

PASCAL 00.1 INO. 1007 Syllabus