New York State Sheet Metal Roofing and Air-Condition Ing Contractors' Association

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IN '!'HE l\fATI'ER OF NE"\V YORK STATE SHEET l\fetal ROOFING AND AIR· CONDITIONING CONTRACTORS' ASSOCIATION, ET AL. CO~fPLAINT, FINDINGS, AND OUDEU I.S REGARD TO THE ALLEGED VIOLATION' OF SEC. G OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2931. Complaint, Sept. 28, 1936-Decision, Oct. 4, 1937 1Vhere a corporate trade association or organization, membership of which con· sisted of plumbing contractors and dealers in sheet metal roofing supplies and hot air furnaces, with respective places of business at various points In New York State, and In competition with one another and other plumb· lng contractors and dealers in such products located In other States and members therein of similar trade associations; and corporate manufacturer of hot air furnaces engaged in sale and distribution of its products in inter· state commerce to customers located in States other than that of said manu· fucturer, and in substantial competition with others likewise engaged tn business of making, selling, and distributing such furnaces In interstate com· merce, and, but for the matters and things below set forth, naturally and normally in competition with other manufacturers who normally also sell not only to contractors and dealers comprising membership of various trade organizations above de~>cribed, but to certain large mall order houses- Eutet·ed Into and engaged In carrying out an agreement and understandlnlr among themselves to list those manufacturers who were thus selling their hot air furnaces to mall order !louses aforesaid, and to urge members of their above association, and also the other various trade associations and their respective mcmbet·s, to purchase only from manufacturers recom· mended by them, and in tbe accomplishment of their aforesaid purposes-- ( a)' Held meetings to devise ways of exerting influence or pressure or other means of inducing members of the respective trade associations not to rmrehase the products of manufacturers named by them as being concerns dealing with mall order houses;

( lJ) Printed and publlshPd "White Lists" containing names of manufacturers approved by them who were not selling to such houses; (c) Used, in concert and agt·eement among themselves and with others, coerctv·e and concerted action, boycott, thrrats thereof, and other united acti011 against manufacturers who were selling to such houses; and (d) Caused to be published, and distributed, many thousands of pamphlets and bulletins to the various trade associations in the several Stutes and to their respective members, urging latter to discontinue buying products of manufncturers named therein, and said associations to induce their mProuersbiP to discontinue trading with such manufacturers; With effect of monopolizing in tliPIDSPlves bushll'ss of dealing in and dlstribnt· ing such Jlroducts, unreasonably lessening, eliminating, restraining, stifling, hamprrlng, and suppre~slng compl'tltlon In Industry concPrnNl, and de· priving purehnslng and consuming }mblic of advnntagrs in price, srrvlce and other considerations which they would receive and enjoy under con· dltlons of normal and unollstruct<>d, or free and fair, competition in said trade and industry, and otlwrwise operating us a restraint t1pon and a N. Y. STATE SHEET METAL UOOFING, ETC., ASSO., ET AL. 1151 1150 Complaint detriment to the freedom of fair and legitimate competition therein, and obstructing natural flow of trade in channels of inter~:;tate commerce, and with capacity and tendency so to monopolize, etc.: lleld, That such acts and practices of said corporate association and manufacturer nnd their respective officers were to the prejudice of the public and competitor~:~ and constituted unfair methods of competition. Air. lVilliam L. Penclte for the Commission. Griffith, lV ager & Brael.·ett, of Utica, N. Y., for New York State Sheet Metal Roofing and Rir-Conditioning Contractors' Assn, and its officers.

AIr. Gilbert II. AI ontague, of New York City, for Fox Furnace Co., and its officers.

Complaint Pursuant to the provisions of an Act of Congress approved September 2G, 1914, entitled "An Act to create a Federal Trade Com- :tnission, to define its powers and duties, and for other purposes," the Federal Trade Commission having reason to believe that each and all of the parties named in paragraphs 1 and 2 hereof, hereinafter referred to as respondents, have been and are now using unfair methods of competition in commerce, as "commerce" is defined in said 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 com- Plaint and states its charges in that respect as follows: PARAGRAPH 1. Respondent, New York State Sheet Metal, Roofing and Air-Conditioning Contractors' Association, Inc., is a corporation organized in the month of September 1D35, existing and doing business under the laws of the State of New York, with its principal office and place of business located at 016-D18 Columbia Street in the city of Utica in said State. Its officers arc the respondents, II. "\V, Norcp;on~ president, Clarence .J. Meyer, first vice-president, James F. Keys, second vice-president, Adolph Hesse, secretary, and Ellwarcl Klick, treasurer. Saill corpomtion is the successor to an unincorporated association known as New York State Sheet Metal and Roofing Contractors' Association, which had its place of business and office at the same place as the pres(.'nt corporation. Its officers were as follows: William J. Schmitt, president, II. "\V. Noregon, first vice-president, Adolph Hesse, secretary uncl Edward Klick, treasurer. Doth said corporation and its predecessor will hereinafter be referred to us the New York Association.

PAR. 2. Respondent, Fox Furnace Company, is a corporation, organized and existing under the laws of the State of Ohio, with its Oflice and principal place of business in the city of Elyria in said 1G812Im--30----7~ Complaint 25F.T.C.

State. Its officers are respondents, Clarence A. Olsen, president, George '\V. Cobb, Jr., secretary, and 1\J. M. Suppes, treasurer. It will hereinafter be referred to as the Fox Company. PAR. 3. Respondent, New York Association, is a trade organization whose membership consists of plumbing contractors, and dealers in sheet metal, roofing supplies, and hot air furnaces, with their respective places of business located at various points in the State of New York. Said members are in competition with each other, and with other plumbing contractors and dealers in sheet metal, roofing supplies, and hot air furnaces, located in States other than the State of New York, and who are likewise members of similar trade associations in their respective States.

PAR. 4. Respondent, Fox Furnace Company, is now, and for more than three years last past has been, engaged in the manufacture, sale, and distribution of hot air furnaces. Respondent sells and distributes its products in commerce between and among the various States of the United States and in the District of Columbia, causing said products when sold to be shipped from its place of business in the State of Ohio to purchasers thereof located in a State or States of the United States other than the State of Ohio. In the course and conduct Qf its business aforesaid, respondent, Fox Furnace Company, is now, and for more than three years last past has been, in substantial competition with other corporations, firms, partner· ships, and individuals engaged in the business of manufacturing, selling, and distributing hot air furnaces in commerce between and among the various States of the United States and in the District of Columbia.

PAn. 5. The members of said New York Association and other trade associations described in paragraph 3 hereof purchase hot air furnaces from said Fox Company in Ohio and from other manufac· turers located in various other States of the United States. Said manufacturers ship their said products when purchased by the aforesaid members of the aforesaid associations from their respective places of business to the aforesaid members of the said associations located in the various States of the United States. There are cer· tain manufacturers of hot air furnaces who not only sell to the contractors and dealers comprising the membership of the various trade organizations hereinabove described, but who have been and are selling hot air furnaces to certain large mail order houses. In the course and conduct of their aforesaid respective businesses, the said last mentioned manufacturers, but for the matters and things hereinafter set out, would be and would have been naturally and N. Y. STATE SHEET :METAL ROOFING, ETC., ASSO., ET AL. 1153 1150 Complaint normally in competition with the other manufacturers of hot air furnaces, among which manufacturers is the Fox Company. PAR. 6. On or about September 1934, the said New York Association and the said Fox Company entered into, have since carried out and are still carrying out an agreement, combination, understanding, and conspiracy among themselves, to blacklist those manufacturers Who were and are selling hot air furnaces to the mail order houses aforesaid; to prejudice the members of the New York Association and the various other trade associations and their respective members against said manufacturers; to urge the members of said trade associations to purchase only from manufacturers recommended by said respondents.

To carry out the aforesaid purposes, the said respondents have done among others, the following acts and things : (a) Held meetings to devise means of exerting influence, pressure, or other means of inducing or requiring members of the respectiv~ trade associations not to purchase the products of manufacturers named by them as being manufacturers dealing with mail order houses· (b) Printed' and published lists (so-called "White-Lists") contain- ~ng the names of manufacturers approved by them who are not sell- Ing to mail order houses ;

(c) U:;ed in .concert and agreement among themselves and with others coercive and concerted action, boycott, threats of boycott and other united action against manufacturers selling to mail order houses· (d) 'Caused publication and distribution of many thousands of Pamphlets and bulletins to the various trade associations in the several states of the United States and to the respective members thereof, urging and requiring said members to discontinue purchasing the products of manufacturers named in said pamphlets and bulletins, and urging and requiring the said trade associations to induce their membership to discontinue trading with said manufacturers. PAn. 7. The capacity, tendency, and effect of said agreements, combinations, understandings and conspiracies, and the said acts and practices of the said respondents set forth in paragraph () hereof, are and have been to unreasonably lessen, eliminate, restrain, stifle, hamper, and suppress competition in said hot air furnace industry throughout the several States of the United States; to operate as a restraint upon and a detriment to the freedom of fair and legitimate competition in such trade and industry; to obstruct the natural flow ?f. commerce in the channels of interstate trade; to prejudice and Injure the public and manufacturers, dealers and others who did 1154 FEDERAL TRADE COl\Il\IISSION DECISIONS Findings 25 F. T. C. not conform to respondents' program, and to spread into States other than New York and Ohio the same methods of boycott and "white-listing'' employed by respondents.

PAR. 8. The above acts and things clone or caused to be clone by the respondents were and are each ancl all to the prejudice of the public and of respondents' competitors, and constitute unfair methods of competition in interstate commerce within the meaning and intent of Section 5 of "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 2G, 1014.

REPORT, FINDINGS AS TO THE FACTS, AND Onm:n Pursuant to the provisions of an Act of Congress approved September 2G, 1014-, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," the l•'ederal Trade Commission, on the 28th day of SPptember 1036, issued and served its complaint in this proceeding upon the parties named in the above caption, charging them with the use of unfair methods of competition in violation of the provisions of said act. Sub· sequently, all of said respondents filed their answers to said complaint, consenting therein that for the purposes of this proceeding all the material allegations of said complaint might he decmecl to be admitted.

The said Commission having duly considered the above and being fully advised in the premises, finds that this proceeding is in the in· terest of the public, and makes these its findings as to the facts and its conclusion drawn therefrom.

FINDINGS AS '1'0 1'11E FACTS PAnAGHAPII 1. Respondent, New York State Sheet M£'tal Hoofing and Air-Conditioning Contractors' .Association, was incorporttted under the laws of the State of New York in the month of September l 035. It is the sucepssor to an unincorporated ar,sociation lmown as New York State Shp£'t .Metal aml Roofing Contractors' Associnti0!1' The principal oflice aud place of Lusiuess of said respomlent is lll the city of Utica, State of New York Its officers are the r(•spondents, II. "\V. Noregon, president, Clarence J. Meyer, first vice-prPsidend James F. Keys, second vice-president, Adolph Hesse, secretary, an Edwaz·d Klick, treasurer.

PAn. 2. Uespon<lent, Fox Furnace Company, is a corporation ~r­ ganize<l and existing under the laws of the State of Ohio, ,~·ith 1.~ nffice and principal place of business in the city of Elyria, lll sai N, Y. STATE SHEET :METAL ROOFING, ETC., ASSO., ET AL. 1155 ll:JO Findings State. Its officers are respondents, Clarence A. Olsen, president, George ,V, Cobb, Jr., secretary, and 1\I. l\1. Suppes, treasurer. It will hereinafter be referred to as the Fox Company. PAn. 3. Respondent, New York Association, is a trade organization whose membership consists of plumbing contractors, aJ}(l dealers in sheet metal roofing supplies and hot air furnaces, with their respective places of business located at various points in the State of New York. Said members are in competition with each other, and With other plumbing contractors and dealers in sheet metal roofing supplies and hot air furnaces located in States other than the State of New York, and who are likewise members of similar trade associations in tlwir respective States.

PAn. 4. Respondent, Fox Furnace Company, is now and for many Years has bren engaged in the manufttctme, sale, and distribution of hot air furnaces. It sells and distributes its products in interstate eommercr, shipping said products to customers who are located in States other than the State of Ohio. The Fox Furnace Company is llow, and for many years has been, in substantial competition with other corporations, firms, partnerships, nnd individuals who are also engaged in the business of manufacturing, selling and distributing hot air furnaces in interstate commerce'.

PAn. 5. The members of said New York Association and other trade associations described in paragraph 3 hereof purchase hot air furnaces frolll said Fox Company in Ohio aJHl from other manufacturers located in various other States of the United States. Said manufacturers ship their said proclncts when purchased by the aforesaid lttt'IHbers of the aforesaid associations from their respective places of business to the uforesaitl members of the said associations located in the various Stutes of the Unitrd SLates. There are certain manufacturers of hot air furnaces who not only sell to the contractors and (~ealers comprising the membership of the various trade organizations ll<'reinabovc JescribPtl, but who have been and are selling hot uir furnaces to certain large mail onler houses. In the conrlie ami <'?nduct of their aforesaid respective businesses, the said last menhoned manufacturrrs, but for the matters nml things hereinafter set 0.ltt, would be and woultl have been naturally and normally in compelltion with the other manuf<tcturers of hot air furnaces, among which lttanufacturers is the Fox Company .

. PAn. G. On or about S<'pt<'mber 1934, the said New York .Association and the said Fox Company entered into and carried out, atlLl up to a date prior to the filing of the complaint were still carrying out, 1111 agreement and under!:itanding among themselves, to list those lttanufacturers who were and arc selling hot-air furnaces to mail order Conclusion 25F.T.C.

houses aforesaid; and to urge the members of the New York Association and the various trade associations and their respective members to purchase only from manufacturers recommended by said respondents.

To carry out the aforesaid purposes, the said respondents have done, among others, the following acts and things: (a) Held meetings to devise means of exerting influence, pressure, or other means of inducing members of the respective trade associations not to purchase the products of manufacturers named by them as being manufacturers dealing with mail'-order houses; (b) Printed and published lists (so-called "White Lists") containing the names of manufacturers approved by them who are not selling to mail-order houses;

(o) Used in concert and agreement among themselves and with other coercive and concerted action, boycott, threats of boycott and other united action against manufacturers selling to mail-order houses;

(d) Caused publication and distribution of many thousands of pamphlets and bulletins to the various trade associations in the several States of the United States and to the respective members thereof, urging said members to discontinue purchasing the products of manufacturers named in said pamphlets and bulletins, and urging' the said trade associations to induce their membership to discontinue trading with said manufacturers.

PAR. 1. The capacity, tendency, and effect of said agreement and understanding and the said acts and practices of these respondents ns set forth in paragraph () hereof, are, and have been to monopolize i.n said respondents the business of dealing in and distributing hot-air furnaces; to unreasonably lessen, E-liminate, restrain, stifle, hamper, and suppress competition in said industry, and to deprive the purchasing and consuming public of the advantages in price, service and other considerations which they would receive and enjoy under co~­ ditions of normal and unobstructed or free and fair competition 111 said trade and industry; to otherwise operate as a restraint upon a~d a detriment to the freedom of fair and legitimate competition in s:nd trade and industry and to obstruct the natural flow of trade in the channels of interstate commerce.

CONCLUSION The aforesaid acts and practices of respondents New York State Sheet Metal Roofing and Air-Conditioning Contractors' Association, a corporation, and H. ,V. Noregon, president, Clarence J. l\Ieyer, first vice·president, James F. Keys, second vice-president, Adolph N. Y. STATE SHEET METAL ROOFING, ETO., ASSO., ET AL. 1157 1150 Order Hesse, secretary and Edward Klick, treasurer, and Fox Furnace Company, a corporation, and Clarence A. Olsen, president, George ,V. Cobb, Jr., secretary, and M. M. Suppes, treasurer, are to the prejudice of the public and of said respondents' competitors 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." ORDER TO CEASE AND DESIST This matter coming on to be heard by the Commission on the (!Complaint filed herein on September 28, 1936, and the answers of the respondents herein, New York State Sheet Metal Roofing and Air-Conditioning Contractors' Association, and H. '\V. Noregon, President, Clarence J. Meyer, first vice-president, James F. Keys, Second vice-president, Adolph Hesse, secretary, and Edward Klick, treasurer, of said association, and Fox Furnace Company, and Clar- ~nce A. Olsen, president, George '\V. Cobb, Jr., secretary, and M. 1\f. Suppes, treasurer, of said company, filed on November 13, 1936, in ~which they state that they desire to and have hereby waived hear- Ing 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," and that they and each of them, for the sole purpose of avoiding the trouble and expense incident to further continuation of this Proceeding, refrain from contesting the proceeding, and that they nnd each of them consent that all the material facts alleged in said complaint may be deemed to be admitted; but not within the intent ~nd meaning of any law of the United States other than the Federal trade Commission Act, said respective answers not constituting an :n.admission of any conclusions of law, and not constituting an admis- !!Ion 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 consent that the Commission may, without trial and without further ;-vidence and without any intervening proceeding, make and enter lts findings as to the facts and issue and serve upon them and each ·o.f 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. It i.~ ordered, That the respondents, New York State Sheet Metal Uoofing and Air-Conditioning Contractors' Association, and H. ·w. 1158 FEDERAL TRADE COJ\11\IISSION DECISIONS Order 25 F. T. C. Noregou, president, Clarence J. Meyer, first vice-president, James F. Keys, second vice-president, Adolph Hesse, secretary, and Edward Klick, treasurer, of said association, and Fox Furnace Company, and Clarence A. Olsen, president, George "\V. Cobb, Jr., secretary, and M. l\I. Suppes, treasurer, of said company, and their successors, officers, agents, and employees cease and desist, in connection with the business of selling and offering for sale of hot-air furnaces, from doing and performing by agreement, or understanding between or among any t\vo or more of said respondents, the following acts and things:

(a) Holding meetings to devise means of exerting influence, pressure, or other means of inducing members of the respecti\'e trade associations not to purchase the products of manufacturers named by them as being manufacturers dealing with mail order houses; (b) Printing and publishing lists (so-called "White Lists") containing the names of manufacturers approved by them who are not selling to mail order houses;

(c) Using in concert and agreement among themselves and with others coercive and concerted action, boycott, threats of boycott and other united action against manufacturerers selling to mail order houses;

(d) Causing publication aml distribution of pamphlets and bulletins to the various trade associations in the several States of the United States and to the respective members thereof, urging said members to discontinue purchasing the products of manufacturers named in said pamphlets and bulletins, and urging the said trade associations to induce their membership to discontinue trading with said manufacturers.

It is further ordered, That the above respondents shall within 60 days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they and each of them have complied with this order. NACIONAL DESTILERIAS CORPORATION 1159 Syllabus