Nacional Destilerias Corp

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IN THE MATTER OF NACIONAL DESTILERIAS CORPORATION CmiPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Doclcet 21/1"1. Compla.int, Ju1w 28, 1935-Dccision, Oct. 9, 1937 'Vhere a corporation engaged as a wholesaler, in the purchase and importation from the Philippine Islands of rum, brandy, gins, and cordials, such as Creme de Ment11e, Anisette, Creme ue Cacao, and Vermouth, and in the storing of its goods, on importation, in various warehouses in certain cities in the United States, and in resale and reshipment thereof from such points to wholesale and retail purchasers thereof in other States, in substantial competition with (1) those engaged in manufacture by distillation of rums, brandies, gins, cordials, and other spirituous beverages, and in sale thereof in tratle and commerce among the various States and in the District of Columbia, (2) those engaged in purchasing, rectifying, blending, and bottling such various beverages and similarly selling same, and (3) those engaged in purchasing, and reselling such various bevernges as aforesaid, and including among said competitors those who (1) manufacture and distill from mash, wort, or wash, through process of original and continuous distillation from raw materials, such as grain, mash, or wort, and truthfully use words "distillery," "distilleries," "distillers," or "distilling" as a part of their corporate or trade names on the label~ of the bottles in which they sell and ship such products as rums, bl'Undies, cordials, gins, and other alcoholic beverages, (2) those who, en~agcd in purchusiug, rectifying, blending, bottling, and selling such various beverages, do not use aforesaid word as above set forth, and (3) those who, engaged as wholesalers of rums, brandies, etc., and other such beverages, also do not usc afore~;aid words as above set fortll- Uepresented, through use of word "Destllcrias" in its corporate name printed on its stationery and on the labels attached to the bottles in which it sold and shipped its said products, along with names "Destilerias Ayala" and "Dcstilerias La Tondena," Manila distilleries for which it was exclusive distributing agent in the United States, and in various other ways to its customers and furnished them with means of representing to their vendees, both retailers and ultimate consumiug public, that it was a distiller of cordials, gins, and other spirituous beverages, notwithstanding fact it did not own, operate, or control any place or places where any alcoholic beverages were by it made by proce;;s of original and continuous distillation from mash, wort, or wash, through continuous clos('d pipes and vessels until manufacture is complete, and was not a distiller, for the purchase of the bottled liquors of which there is a J1reference on the part of a substantial portion of the purchasing public;

With effect of misleading and deceiving dealers and said public into belief that it was a distiller and of inducing such dealers and public, acting in such bP!ief, to buy rums, brandies, cordials, gins, and other spirituous beverages labeled and sold by it, and of thereby diverting trade to it from those of its competitors who do not, by their corporate or trade names or in any Complaint 25F.T.C.

other manner, misrepresent that they are distillers of whiskies, gins, and other spirituous beverages; to the substantial injury of competition in commerce:

Jleld, That such acts and practices were to the prejudice of the public and competitors and constituted unfair methods of competition. Before Mr. John J. /{eenan, trial examiner. ltr. PGad B. Morehouse for the Commission.

ColiiPLAINT Pursuant to the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define is powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that Nacional Destilerias Corporation, hereinafter referred to as respondent, bas been and is using unfair methods of competition in commerce, as "commerce" is defined in said act, and it appearing to the said Com· mission that a proceeding by it in respect thereof would be in the public interest, hereby issue's its complaint, stating its charges in that respect as follows:

PARAGRAPH 1. Respondent is a corporation organized, existing and doing business under the laws of the State of Indiana, with its of· free and principal place of business in the city of Indianapolis, in said State. It is now, and for more than one year last past has been, engaged as a wholesaler, purchasing and importing from the Philip· pine Islands and elsewhere and reselling whiskies, gins, and other spirituous beverages in constant course of trade and commerce be· tween and among the various States of the United States and in the District of Columbia. In the course and conduct of its said businessr it causes its said proj.uds when sold to be transported from its place of business aforesaid into and through various States of the United States to the purchasers tlwreof, consisting of wholesalers and retail· ers, located in other States of the United States and the District of Columbia. In the course and conduct of its business as aforesaid, respondent is now, and for more than one year last past has bcent in substantial competition with other corporations and with in· diviJ.uals, partnerships, and firms, engaged in the manufacture by distiliUtion of whiskies, gins, and other spirituous beverages and in the sale thereof in trade and commerce between and among the various States of the United States and in the District of Columbia; and in the course and conduct of its business as aforesaid, respondent is now, and for more than one year last past has been, in substantial competition with other corporations, and with individuals, firms, and partnerships engaged in the business of purchasing, rectifying, blend- NACIONAL DESTILERIAS CORPORATION 1161 1159 Complaint ing, and bottling whiskies, gins, and other spirituous beverages and in the sale thereof in commerce between and among the various States of the United States and in the District of Columbia; and in the course and conduct of its business as aforesaid, respondent is now, and for more than one year last past has been, in substantial competition with other corporations, and with individuals, firms, and partnerships engaged in the business of purchasing and reselling whiskies, gins, and other spirituous beverages in commerce between and among the various States of the United States and in the District of Columbia . • PAn. 2. For a long period of time the word "distilleries" when used In connection with the liquor industry and the products thereof has had and still has a definite significance and meaning to the minds of the \vholesalers and retailers in such industry and to the ultimate purchasing public, to wit, the places where such liquors are manufactured by the process of original and continuous distillation from mash, Wort, or wash, through continuous closed pipes and vessels until the manufacture thereof is completed; and a substantial portion of the Purchasing public prefers to buy spirituous liquors prepared and bottled by distillers. The words "Naciona~ Destilerias" are the Spanish for "National Distillers" and are so similar in spelling and sound to their English equivalent as to be readily understood by a substantial Portion of the purchasing public. ' PAn. 3. In the course and conduct of its business as aforesaid, by the use of the word "Destilerias" in its corporate name, printed on its ~tationery and advertising, and on the labels attached to the bottles ln which it sells and ships its said products, and in various other ways, respondent represents to its customers and furnishes them with the means of representing to their vendees, both retailers and the ulti- ~ate consuming public, that it is a distiller and that the whiskies, gms, and other spirituous beverages therein contained were by it manufactured through the process of distillation from mash, wort, or ":ash, as aforesaid, when, as a matter of fact, respondent is not a dishiler, does not distill the said whiskies, gins, or other spirituous beverages by it so labeled, sold, and transported, and does not own, operate, or control any place or places where such beverages are manufnctured by the process of distillation from mash, wort, or wash. PAR, 4. There are among the competitors of respondent engaged in the sale of spirituous benrages, as mentioned in paragraph 1 hereof, corporations, firms, partnerships, and individuals who manufacture ttnd distill from mash, wort, or wash, as aforesaid, ·whiskies, gins, and other spirituous beverages sold by them and who truthfully use the ''"ords "distillery," "distilleries," "distillers," or "distilling'' as a part of their corporate or trade names and on their stationery and ad- 1162 FEDERAL TRADE COl\:1:1\IISSION DECISIONS Findings 25 F. T.C.

vertising and on the labels of the bottles in which they sell and ship such products. There are also among such competitors corporations, firms, partnerships, and individuals engaged in the business of purchasing:, rectifying, blending, bottling, and selling whiskies, gins, and other spirituous beverages ·who do not use the words "distillery," "distilleries," "distilling," or "distillers," as a part of their corporate or trade names, nor on their stationery or advertising, nor on the labels attached to the bottles in which they sell and ship their said products. There are also among such competitors corporations, firms, partnerships, and individuals engaged in business as wholesalers of whiskies, gins, and other spirituous beverages who do not use the words "distillery," "distilleries," "distilling," or "distillers," as a part of their corporate or trade names, nor on their stationery or advertising, nor on the labels attached to the bottles in which they sell and ship their said products.

PAn. 5. Uepresentation by respondent as set forth in paragraph 3 hereof, is calculated to and has the capacity and tendency to and does mislead and deceive dealers aml the purchasing public into the beliefs that respondent is a distiller and that the whiskies, gins, and other spirituous beverages sold by the respondent are manufactured and distilled by it from mash, wort, or wash, as aforesaid, and is calculated to an<l has' the capacity and tendency to and does induce dealers and the purchasing public, acting in such beliefs, to purchase the whiskies, gins and other spirituous beverages labeled a11<l sold by the respondent, thereby diverting tmue to responuent from its competitors who do not by their corporate or trade names or in any other manner misrepresent that they are manufacturers by distillation from mash, "·ort., or wash, of whiskies, gins, and other spirituous beverages, and thereby respondent docs substantial injury to substalltial competition in interstate commerce.

P"m. G. The acts ancl things above allrged to have been clone nnd the false representations alleged to have been made by respondent are to the prejudice of the public and the competitors of respondent and constitute unfair methods of competition in commerce within the jntent and meaning of Section 5 of an Act of Congress entitlrtl ''An Act to create a Federal Trade Commission, to define its powN'S and duties, and for other purposes,'' approved September 2G, 1!)14. lle.Pon·r, FINDINGS As TO THE FACTs, AND OnoEH Pursuant to the provisions of an .Act of Congress, approved September 2G, 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 June 28, 1935, issued, and on July NACIONAL DESTILERIAS CORPORATION 1163 Findings 1, 1935, served its complaint in this procecdillg upon the respondent, Nacional Destilerias Corporation, charging it with the use of unfair methods of competition jn commerce in violation of the provisions of said act. After the issuance of said complaint and the filing of respondent's answer thereto, testimony and other evidence in support of the allegations of the said complaint were introduced by PGad B. 1\Iorehouse, attorney for the Commission, before John J. Keenan, an examiner of the Commission, theretofore duly designated by it. No testimony or other evidence was introduced by the respondent in opposition to the allegations of the complaint. The said testimony and other evidence in support of the allegations of the complaint Were duly recorded and filed in the office of the Commission. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint, the answer thereto, testimony, other evidence, and brief in support of the complaint, no brief in opposition thereto and no oral arguments having been made; and the Commission having duly considered the same, and being now ~ully advisetl in the premises, finds that this proceeuing is in the ~nterpst of the public, aml makes this its findings as to the facts aml lts conclusion drawn therefrom:

FINDINGS AS TO Tile FACTS P.\RACR.\I'II 1. The rrpondeJlt is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Indiana, with its principal office and place of business at 130 East Washington llnihling, Room ()00, in the city of Indianapolis, in said. State. It "·as incorporated on November 28, 19:l3, anJ. since a time shortly after its organization has bern engagrd as a wholesaler, pmehasing and importing from the Philippine Islands and re-selling tnm, brandy, and g.ins, and cordials such as CrPme de .l\Ienthe, Anisette, Creme de Cacao, and Vrrmouth. Upon importation, respond- ~lt stores its goods in various warehouses in Chicago, New York, .r ew Orleans, and Los Angelrs, aml such goods are re-shipped from tltose points upon the ordc•r of the respondent to the purchasers there- ~ ~onsisting of wholesalers, and retailers located in States of the ·ll1lt.ed States othrr than the point of origin of such shipments, inc ll<long the States of Massachusetts, New York, Rhode Island, Krntucky, Illinois, and ~Iissouri. In the course ami conduct of its business, respondent is engagrcl in selling its said pro1lncts in constant cour·se of trade and commerce between anJ. among the vadons States of the United States.

. In the course and conduct of its business as aforesaid, respondent 18 now and for more than one year last past has been, in substantial Findings 25F.T.C.

competition with other corporations and with individuals, partnerships, and firms, engaged in the manufacture by distillation of rums, brandies, gins, cordials, and other spirituous beverages and in the sale thereof in trade and commerce between and among the various States of the United States and in the District of Columbia; and in the course and conduct of its business as aforesaid, respondent is now, and for more than one year last past has been, in substantial competition with other corporations, and with individuals, firms, nnd partnerships engaged in the business of purchasing, rectifying, blending, and bottling rums, brandies, gins, cordials, and other spirituous beverages and in the sale thereof in commerce between and among the various States of the United States and in the Dis· trict of Columbia; and in the course and conduct of its business as aforesaid, respondent is now, and for more than one year last past has been, in substantial competition with other corporations, and with individuals, firms, and partnerships engaged in the business uf purchasing and reselling rums, brandies, gins, cordials, and other spirituous beverages in commerce between and among the various States of the United States and in the District of Columbia. PAR. 2. The words "N acional Destilerias'' in the corporate name of this respondent are the Spanish equivalent for "National Distil· lers" and are so similar in spelli~g and sound to the English equiva· lent thereof as to be readily misunderstood. by a substantial portion of the purchasing public to mean "National Distillers." For a long period of time, the word "Distilleries" when used in connection with the liquor industry and the prouucts thereof has had and still has a uefinite significance and meaning to the minds of wholesalers and 1ctailcrs in such inuustry and to the ultimate purchasing public, to wit, the places where whiskies, gins, and other alcoholic bever· ages are manufactured by the process of original and continuous dis· tillation from raw materials such as grain, mash, or wort. Within the cities of Inuianapolis, Ind.; St. Louis, :Mo.; Kansas City, 1\Io.; and Chicago, III., more than thirty-five witnesses testified, as disinterested members of the public, what "Nacional Dcstileria9 Corporation" meant to them in association with the liquor industry· With the exception of some four or five who did not unuerstand the words, they all testified substantially to the effect that the corporate name "Nacional Destilerias Corporation" meant to them "National Distillery Company"; that such trade name printed on the labels of bottles as used by the respondent would influence them to pur· chase the merchandise of respondent under the belief that they we~e purchasing the merchandise of a distillery. The gist of the testi· mony of practically all these public witnesses was to the effect that NACIONAL DESTILERIAS CORPORATION 1165 1159 Findings in purchasing a product with a distiller's name upon the same, preference would be given to such product in the belief that it would be more uniform, up to certain specifications, etc., because it was made under Government supervision; that they preferred buying in us direct manner as possible; that distillers have more responsibility than a rectifier or wholesaler in the field of spirituous liquors; that the use of the word "Destilerias" as used in the corporate name by respondent would indicate to them that respondent was a distiller; ihat they would give preference to respondent's package over a bottle which did not contain any words indicating a distillery. The Commission finds that a substantial portion of the purchasing public prefers to buy from the retailer spirituous liquors prepared and bottled by, and purchased by the retailer from, real distillers; and that the inclusion of respondent's present corporate name upon the labels of the bottles in which it sells and ships its aforesaid liquors therefore has a tendency unfairly to induce purchasers and prospective purchasers to purchase respondent's said liquors in preference to liquors sold by competing wholesalers who do not falsely designate themselves as distillers or distilling companies, and to induce retailers to purchase the respondent's cordials, gins, and liquors in preference to like products sold by wholesalers who do not use trade or corporate names having a capacity and tendency to confuse the PUrchasing public as to their status in the trade. PAn, 3. In the course and conduct of its business as aforesaid, by ~he use of the word "Destilerias" in its corporate name, printed on Its stationery and on the labels attached to the bottles in which it sells and ships its said products, and in various other ways, respondent represents to its customers and furnishes them with the means of :representing to their vendees, both retailers and the ultimate consum- Ing public, that it is a distiller of cordials, gins, and other spirituous beverages, when, as a matter of fact, respondent is not a distiller, and does not own, operate, or control any place or places where any alcoholic beverages are manufactured by the process of distillation from rnash, wort, or wash.

. The specimens of labels introduced in this case, show that in some Instances the names of the :Manila distilleries; viz, Destilerias Ayala a~d Destilerias La Tondena, for which respondent is the exclusive distributing agent in the United States, appear thereon in addition to the words "Imported by Nacional Destilerias Corporation, Indianapolis, Indiana." The Commission finds that such labeling, under the circumstances hereinabove set forth; namely, the existing preference of a substantial portion of the public to deal in as direct a tnanner as possible with the actual distillers and bottlers of the Conclusion 25 F. T. C. package of liquors which it buys, is misleading and deceptive in fact, and. has led retail liquor dealer purchasers to purchase respondent's products under the false impression induced by such labeling and by the use of respondent's name upon its stationery and invoices, that respondent was a distiller and owned and operated distilleries of those names in the Philippine Islands.

PAn. 4. There are among the competitors of respondent engaged in the sale of spirituous beverages, as mentioned. in paragraph 1 hereof, corporations, firms, partnerships and individuals who manufacture anJ distill from mash, wort, or wash, as aforesaid, whiskies, gins, and other spirituous beverages sold by them and who truthfully use the words ''tlistillery," "distilleries," "distillers," or "distilling" as a pn.rt of their corporate or trade names on the labels of the bottles in which they sell and ship such products as rums, brandies, cordials, gins, and other alcoholic beverages. There are also among such competitors corporations, firms, partnerships, and individuals engagell in tho business of purchasing, rectifying, blending, bottling, and selling whiskies, gins, and other spirituous beverages who do not use the words ''distillery," "distilleries," "distilling,'' or "distillers," as a part of their corporate or trade names on the labels attached to the bottle::; in which tlh"Y sell awl ship their said products. There are also among such competitors corporations, firms, partnerships and individuals engage<l in business as wholesakrs of rums, brnndies, cordials, gins. and other spirituous beveragl.'s who do not use the 'words "distillery," "distilleries," "distilling,'' or "distillers," as a part of their corporate or trade names, on the lahels attached to the bottles in which they s<•ll and ship their said products.

PAR. 5. Uc>prPs£>ntation by l'<'spondent ns s<>t forth in parngrnph 3 hereof has the capacity and tendeney to and does mislead and deceive dealers an<l the purchasing public into tlw belie£ that respontlent is a distiller, and has the capacity and tendency to and does induce dc>alers aml the purchasing public, acting in such b<'lief, to purchase the rums, brandies, cordials, gills, anll other spirituous bewragcs lahehl and sold by the respondent, thereby diverting tra<le to responde11t fr·om those of its competitors who do not by tlwir corporate or trade names or in any other manner misrepresent that they are distillers of whiskies, gins, and other spirituous beverap:es, und thereby respondent does substantial injury to competition in interstate commerce.

CONCLUSION The aforesaid acts and practices of respondent, Nacional De~tilerias Corporation, are to the prejudice of the public and of respondent's N ACION AL DESTILERIAS CORPORATION 1167 lli)!) Order competitors, and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress, approved September 2G, 1D14, 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 proceeding lutving been heard by the Federal Trade Commis- Sion upon the complaint of the Commission, the answer of respondent, ~testimony and other evidence taken before J olm J. Keenan, an exam- Iner of the Commission theretofore duly designated by it, in support of the allegations of said complaint and brief filed herein in support thereof, and the Commission having made its findings as to the facts and its conclusion that said respondent has violated the provisions of an Act of Congress approved September 2G, 1014, entitled, "An Act to Create a Fc\tleral Trade Commission, to define its powers and duties, and for other purposes."

. It is ordered, That the respondent, Nacional DestiJerias Corporah?n, its officers, representatives, agents, and employees, in connection '"Ith the ofrering for sale or sale and distribution by it in interstate commerce or in the District of Columbia, of whiskies, gins, or other s .. I)]ntnous Leverages, do cease aml desist from: Hepresenting, through the use of the word "Destilerias'', or any form of the words distiller, distilleries, distilling, or distilled, or equivalents thereof, in its corporate name on its stationery, invoices, or labels attached to the bottks in which its said products are sold !t~d shipp<'<l (a) that respondrnt is a distiller of the sai<.l rums, brandies, cordials, or otlter spirituous bcwragPs; or, (b) that the s:1id '"hiskies, gins, or other spirituous beverages were by it manufactured through a pro('£•ss of distillation; or (c) that respondent owns, operates, or controls a plare or places where such products arc by it 111rtnufactured Ly a process of original and continuous distillation from mash, wort or wash, through continuous closed pipes and vessels until the manufacture thereof is completed, unless and until resl)OJHlPnt shall actually own, operate, or control such a place or Places.

i.~ furtlwr ordel·ed, That the said re.spon<.len.t, within GO daysf/t 71th..01U theantlCommissionafter the datea rPportof serviceor reportsupon init writingof tins settingorder, shallforth filein c ~.ta 1 l tho manner aJ1d form in which it is complying and has cam- P Jed. with the order to cease aml desist hereinabove set forth. 1~812tm--3D----7G 1168 FEDERAL TRADE COl\Il\USSION DECISIONS Syllabus 25F. ·r. c.