Prendergast-Davies Co., LTD

Text (OCR of the scan at left; may contain errors)

IN THE ~latter OF I>RENDERGAST-DAVIES COMPANY, LTD.

COMI'LAI:!>IT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOL.\TION OF SEC. :; OF AN .ACT OF CONGRESS .APPROVED SEPT. 26, 19H Dot"kct f!S-W Conrplai11t, June 20, 19J!I-Decision, llfar. 5, 1938 Where word "Dir>tllleries," when usPc\ in rounPction with liquor Industry and products thereof, lllld had and still had a dt>ftnite significance and meaning to minds of whole,.alers nnd t·etallers and to ultimate purchasing public as dPsfgnatiug places whHe f'lleh liquors are made by process of original und continuous distillation from mash, wort, or wash thro\tgh continuou~ elosed pi[lf'S and ve"sel~ until numnfarture is romplete, and substantial portion of purehaslng public preferred to buy !;spirituous liquors prepared und butt leu by dir;tilleries; and thereafter a corporation engaged us 1mpot-ter, whole,:aler, and retailer of whi::;kiefl and other alcoholic beverages, in substantial compf'tition with others similarly engaged- (a) Sold bottled whisky, labels on which described snme as "Bottled It\ Scotlund, MacNab Distilleries Limited, 266 C'lyde Rt., Glnsgow, Scotland. Head Office 11 'Valerloo Place, London S. ,V, 1, England," and thereby represented to customers, and supplied to them means of rt>presenting to their retailer-Yewlees nnd to ultimate consuming puhlic, tllllt whisky thus contalnered was made ln Scotllm<l by aforesaid ''Distilleries"; ~otwithstanding fuel sahl eont•ern uPithet· owned, operated, nor controlled uny place or places where alcoholic liquors nre produced by process of original nnu continuous <li~<tillatiou from ma:;h, wort, or wash, and did not produce nny whisky whleh went into bottles thus labeled, nnd whisky in quer;tion was mfu'le for it under agreement with English di,.tillers, and tht>t•t> were no !<ueh distilleries nt said Glasgow address; and 'Where "Seotch Whi~ky" had long hnd nnd still had definite significan~e to Inhul,.; of wholt>salers, retuiie~·s, and ultimate part·hasing public as ineaning distinctive product of Scotland, there made, aud a substantial por· tion of purc·ha:;ing public preferred to buy Seotch whisky made in Scotlnnd; and there11after aforesaid importer, wholesRier, 11nd retaller- (b) Sold whil'ky In bottles, aforesaid labels of which fmther represented same as "Sandy M11rNab's Old Liqueur Scoteh Whiskey, a blend of the fine~t aged Scoteh Whiskey, Produce of Srotland-Bottled in Scotland, MacNab Dis. tilleries Limited," etc., as above !wt forth, and thereby rept·esentt-d to ens· toruers, and ~;npplied to them means of representing to own YendPe·rctailcrs lllll to ultimate eousnming public, that whisky thus contaiuered Wus a true Seoteh \Yhi~ky, di!<thwtive product of Seotland, and there made , by the lllacNab Distilleries;

J.l\otwithstan<ling fuel said liquor was uot n distinctive product of Scotinnd, nor tlwre mndt> nor bottled, and wns neither "Scotch "'hlsky" iu ful·t nor In arc-or<laure with stnndards of illt>utlty for distilled !'ipirlt>! estnbllshed hy ' Federal Alrohol Admini~tration;

With effect of misleading and dP<'eiving dealt'rs and pmrluudng pnhlic Into erroneous lwlit>fs that Seoteh while'ky sold by it was prndu1't of nn a«·tnal tlistillery in Seotlund and wus n dlstlnctiYe product of Slli<l country, tlll're :860 FEDERAL TRADE CO~IMISSIO::.-< DECISIO~S Complaint 26F. T. C.

made, and genuine Seotch whi:.,;ky imported f1·om Scotland, and of indue· ing dealers and purchasing public, iu such beliefs, to buy said Sandy :\lac- Nab Scotch whisky, and thereby divert trade to it from competitors, nmong whom there are those who sell as Scot<'ll whisky, whh;ky made and bottll'll in Scotland and distiuctlve product of that country RIHl truthfnlly labeled .as product of actual dh;tilleries there located, and competitors who sell as blended, Scotch type whi~ky, mixture or blend made outside of Great Britain and do not falsely l't>present it:'! place of di~tlllation on labels attached to bottles in which liquor i~ !<old and shipped, and with l'llpadtY and tendency so to mislead, deceive, and induce; to the substantial injury of substantial competition in interstate commerce: :.Uel4, That such acts and practices were to the prejudice of the publlc and competitors and constituted unfair methods of competition. Before Jlr. John J. Keenan, trial examiner. Air. PCad B. Jforehou.Ye for the Commission. /11,•. Ce&rge J. Feldman, of ·washington, D. C. and lVei.~s·ma·n & .Maretz, of New Haven, Conn., for respondent. Complaint Pursuant to the provisions of an Act of Congress approved Sep· tember 26, 1914, entitled "An Act to create a Federal Trade Com· mission, to define its powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that Prendergast- Davies Company, Ltd., a corporation hereinafter referred to as re· spondent, has been and is 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 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 New York, with its principal office and place of business at 601 West 26th Street, in the city of New York in said State. It is now, and for more than 1 year last past has been, engaged in the business of an importer, wholesaler, and retailer of whiskies and other alcoholic beverages, purchasing, importing, and selling the same at both wholesale and retail in con· stant course of trade and commerce between the various States of the United States and in the District of Columbia. In the course and conduct of its said business it causes the aforesaid alcoholic beverages when sold to be transported from its place of business aforesaid, into and through the various States of the United States to the purchasers thereof, located in other States of the United States and in the District of Columbia. In the course and conduct of its business aforesaid, respondent is now and has been, for more than 1 year last past, irt substantial competition with other corporations and with individuals, PRENDERGAST-DAVIES CO., LTD. 861 859 Complaint Partnerships, and firms, engaged in the purchase, importation, and ~ale at wholesale and retail of whiskies and other alcoholic beverages 111 trade and commerce between and among the various States of the Dnited States and the District of Columbia. . PAR. 2. For a long period of time the word "Distilleries" when used 111 connection with the liquor industry and the products thereof has had and still has a definite significance and meaning to the minds of the wholesalers 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 lnash, wort, or wash, through continuous closed pipes and vessels until the ll1manufacture thereof is completed; and a substantial portion of the Purchasing public prefers to buy spirituous liquors prepared and bottled by distilleries. Further, "Scotch ·whiskey" for a long time has had and still has, a definite significance to the minds of wholesalers, retailers, and to the ultimate purchasing public, to wit: a distinctive l~product o.f Scotland, manufactured in Scotland, and a substantial portion of the purchasing public prefers to buy Scotch whiskey manufactured in Scotland.

PAR. 3. In the course and conduct of its business as aforesaid, re- 8~ondent has heretofore sold and is now selling, a whiskey in bottles ''"1th labels attached thereto containing the following representations, to wit:

Sandy MacNab's Old Liqueur Scotch Whiskey A blend of the finest aged Scotch Whiskey Produce of Scotland-Bottled in Scotland l\IacNab Distilleries Limited 266 Clyde St., Glasgow, Scotland Head Office 11 Waterloo Place, London S. W. 1, England ~.Y the use of the aforesaid designation "Scotch Whiskey" on said1i a els, together with the phrases "MacNab Distilleries, Ltd.," "Bottled 11 Scotland" and ,the address "2(i6 Clyde Street, Glasgow, Scotland" .the aforesaid labels in which it sells and ships the aforesaid " ••115key, respondent represents to its customers and furnishes them thtth tl~e means of representing to their vendees, both retailers and t: lllhmate consuming public, that the whiskey in said bottles con- ~tned is a true Scotch whiskey, a distinctive product of Scotland and anufuctnred in Scotland by the l\IacNab Distilleries, Ltd., when as l6045lm--39--VOL. 26----57 DECISIO~S862 FEDERAL TRADE C011Il\IISSION Complaint 26 F.T. C. a matter of fact the MacNab Distilleries, Ltd., is an English company with its principal office in the city of London, England, and does not own, operate, or control any place or places where alcoholic liquors are produced by the process of original and continuous distillation from mash, wort, or wash and does not produce or manufacture any whiskey or whiskies which go into the bottles so labeled as aforesaid; the so-called "Sandy MacNab Scotch Whiskey" is produced by ,V, IJ. Holt and Sons, Ltd., distillers of Chorlton-Cum-Hardy, England, under an agreement with the aforesaid MacNab Distilleries, Ltd., o! London, England, and said whiskey is not a distinctive product of Scotland and is neither manufactured nor bottled in Scotland, and is neither "Scotch Whiskey'' in fact, nor in accordance with the standards of identity for distilled spirits established by Article II of Regulation No. 5 of the Federal Alcohol Administration, effecth'e May 1, 1936, duly enacted and promulgated pursuant to the authority of the Federal Alcohol Administration Act, 49 Stat. 977, approved August 29, 1935. There are no MacNab Distilleries at 266 Clyde Street, Glasgow, Scotland.

PAR. 4. There are among the competitors of respondent engaged in the sale of Scotch Whiskey, as mentioned in paragraph 1 hereof, corporations, firms, partnerships, and individuals, who sell at whole· sale and retail as Scotch whiskey, whiskey which is manufactured and bottled in Scotland and is a distinctive product of that country and which whiskey is truthfully labeled as the product of actual dis· tilleries located in Scotland. There are also among the competitors of respondent as aforesaid, corporations, individuals, firms, nnd partnerships, who sell "blended Scotch Type Whiskey," a mixture or blend made outside of Great Britain and who do not falsely represent its place of distillation on the labels attached to the bottles in whicb such liquor is sold and shipped.

PAR. 5. The representations by respondent, as set forth in pars· graph 3 hereof for each of them nave the capacity and tendency to and do mislead and deceive dealers and the purchasing public into the erroneous beliefs that the "Scotch 'Whiskey" by it sold is the product of an actual distillery located in Scotland, and that it is a, distinctive product of Scotland, manufactured there, and is otherwise genuine !Scotch whiskey, imported from Scotland and have the c~­ pacity and tendency and do induce dealers and the purchasing pubbC acting in such beliefs to purchase the Sandy l\lack ab "Scotch 'Vhiskey" sold by respondent, thereby diverting trade to respond~nt from its competitors who do not so misrepresent the Scotch whiskteS and blended Scotch type whiskies by them sold and thereby r.espondent does substantial injury to substantial competition 111 interstate commerce.

PRE~DERGAST-DAVIES CO., LTD. 863 859 Findings PAR. 6. The acts and things above alleged to have been done and the false representations alleged to have been made by respondent are to the prejudice of the public and the competitors of respondent and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914. REPORT, FINDINGS AS '1'0 THE FAC'TS, AND ORDER Pursuant to the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Tmde Commission, to define its powers and duties, and for other purposes," the Federal Trade Commission on June 20, 1936 issued, and later served its complaint in this proceeding upon the respondent., Prendergast- Davies Company, Ltd., charging it with the use of unfair methods of competition in commerce in violation of the provisions of said act. After the issuance of said complaint and the filing of respondent's answer, the Commission, by order entered herein, granted respondent's request for permission to withdraw said answer and to substitute tlwrefor an answer admitting all the material allegations of the complaint to be true, ami waiving the taking of further evidence nnd all other intervening procedure, which substitute answer was duly filed in the office of the Commission. Thereafter, this proceeding regularly came on for final hearing before the Commission on the said complaint and the substitute answer, briefs and oral arguments of counsel having been waived, and the Commission having duly considered the same and being now fully advised in the premises, finds that this proceeding is in the int{'rest of the public and makes this its findings us to the facts and its conclusion drawn therefrom: FINDINGS AS TO THE FACTS PARAGRAPH 1. This respondent is a corporation organized, existing, ~~d doing business under and by virtue of the laws of the State of r ew York. Its office and principal place of business is located at 601 West 26th Street, in the city of New York, in said State. For ~nore than 1 year last past it has been engaged in the business of an 1~Porter, whole~miler, and retailer of whiskies and other alcoholic e 11~t·nges, ,purchasing, importing, and st>lling the same at both ~\"ho~resale and ~·etail in constant co.urse of trade ~nd com~nei:ce ueh, een the vanous States of the Umted States and m the D1stnct of Columbia. In the course and conduct of its said business it ~auses the afort>said alcoholic beverages when sold to be transported rom its place of business aforesaid, into and through the various 864 FEDERAL TRADE UOl\11\IISSION DECISIONS Findings 26F.T.O.

States of the United States to the purchasers thereof, located in other States of the United States and in the District of Columbia. In the course and conduct of its business aforesaid, respondent is now and has been, for more than 1 year last past, in substantial competition with other corporations and with individuals, partnerships, and firms, engaged in the purchase, importation, and sale at wholesale and retail of whiskies and other alcoholic beverages in trade and commerce between and among the various States of the United States and the District of Columbia. PAR. 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 wholesalers 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 bny spirituous liquors prepared and bottled by distilleries. Further, "Scotch ·whiskey" for a long time has had and still has, a definite significance to the minds of wholesalers, retailers and to the ultimate purchasing public, to wit: a distinctive product of Scotland, manufactured in Scotland, and a substantial portion of the purchasing public prefers to buy Scotch whiskey manufactured in Scotland.

Pursuant to the authority conferred upon him by the act of August 29, 1935 ( 49 Stat. 977) the Federal Alcohol Administrator promulgated regulations No. 5, article II of which became effective as of }fay 1, 1936. Said article II establishes certain official standards of identity for distilled spirits, including Scotch whiskey. The standard of identity thus established is as follows: "Scoteh whbkey" is a distinctive product of Scotland, manufactured in Scotland in compliance with the laws of Great Britain regulating the mannfacture of Scotch whiskey for consumption in Great Britain, and containing no distilled ~<spirits less than three years old: Provided, That if In fact such product as HO manufactured is a mixture of distilled spirits, such mixture Is "Blended Scotcl1 whiskey" (Scotch whiskey-a blend). "Scotch whiskey" snail not be designated as "straight."

PAR. 3. In the course and conduct o£ its business as aforesaid, respondent has heretofore sold and is now selling, a whiskey in bottles with labels attached thereto containing the following representations, to wit:

Sandy MacNab's Old Liqueur Scotch Whiskey PRENDEHGAST-DAVIES CO., LTD. 865 859 Findings A blend of the finest aged Scotch Whiskey Produce of Scotland-Bottled in Scotland MacNab Distilleries Limited 266 Clyde St., Glasgow, Scotland Head Office 11 Waterloo Place, London, S. "'· 1, England By the use of the aforesaid designation ''Scotch Whiskey" on said labels, together with the phrases "MacNab Distilleries, Ltd.," "Bottled in Scotland" and the address "266 Clyde Street, Glasgow, Scotland" on the aforesaid labels in which it sells and ships the aforesaid whiskey, respondent represents to its customers and furnishes them with the means of representing to their vendees, both retailers and the ultimate consuming public, that the whiskey in said bottles contained is a true Scotch whiskey, a distinctive product of Scotland and manufactured in Scotland by the l\facNab Distilleries, Ltd., when as a matter of fact the MacNab Distilleries, Ltd., is an English company with its principal office in the city of London, England, and does not own, operate, or control any place or places where alcoholic liquors are produced by the process of original and continuous distillation from mash, wort, or wash and does not produce or manufacture any whiskey or whiskies which go into the bottles so labeled as aforesaid; the so-called "Sandy l\fact ab Scotch Whiskey" is produced by W. H. Holt and Sons, Ltd., distillers of Chorlton-Cum- Hardy, England, under an agreement with the aforesaid MacNab Distilleries, Ltd., of London, England, and said whiskey is not a distinctive product of Scotland and is neither manufactured nor bottled in Scotland, and is neither "Scotch Whiskey" in fact, nor in accordance with the standards of identity for distilled spirits established by article II of regulations No. 5 of the Federal Alcohol Administration, effective May 1, 1936, duly enacted and promulgated pursuant to the authority of the Federal Alcohol Administration Act, 49 Stat. 977, approved August 29, 1935. There are no MacNab Distilleries at 266 Clyde Street, Glasgow, Scotland. At the time of the issuance of the complaint and for a long period of time thereafter, the company known as "l\facNab Distilleries, Ltd.," did not own, operate, or control any distilleries whatever. All sa]e of "Sandy MacNab Scotch Whiskey" by respondent was discontinued in February 1937.

PAR. 4. There are among the competitors of respondent engaged in the sale of Scotch whiskey, as mentioned in paragraph 1 hereof, 866 }"EDERAL TRADE C0l\Il\IISSION DECISIONS Order 26F.T.C.

corporations, firms, partnerships, and individuals, who sell at whole· sale and retail as Scotch 'Vhiskey, whiskey which is manufactured and bottled in Scotland and is a distinctive product of that country and which whiskey is truthfully labeled as the product of actual distilleries located in Scotland. There are also among the com· petitors of respondent as aforesaid, corporations, individuals, firms, and partnerships, who sell "blended Scotch Type Whiskey," a mix· ture or blend made outside of Great Britain and who do not falsely repre9E1nt its place of distillation on the labels attached to the bottles in which such liquor is sold and shipped.

PAR. 5. The representations by respondent, as set forth in para· graph 3 hereof, and each of them have the capacity and tendency to and do mislead and deceive dealers and the purchasing public into the erroneous beliefs that the "Scotch Whiskey" by it sold is the product of an actual distillery located in Scotland, and that it is a. distinctive product of Scotland, manufactured there, and is other· wise genuine Scotch whiskey, imported from Scotland, and have the capacity and tendency to and do induce dealers and the purchas· ing public acting in such beliefs to purchase the Sandy MacN a.b "Scotch Whiskey" sold by respondent, thereby diverting trade to respondent from its competitors who do not so misrepresent the Scotch whiskies and blended Scotch type whiskies by them sold, and thereby respondent does substantial injury to substantial competi· tion in interstate commerce.

CONCLUSION 'ifhe aforesaid acts and practices of the respondent, Prendergast· Davies Company, Ltd., are to the prejudice of the public and of respondent's competitors, and constitute unfair methods of competi· tion 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 proceeding having been heard by the Federal Trade Com· mission upon the complaint of the Commission and the answer filed herein on the 28th day of February 1938 by respondent, admitting all the material allegations of fact contained in the complaint to be true, waiving hearing on the charges set forth in the said complaint, and stating that without further evidence or other intervening pro· PRE~DERGAST-DAVIES CO., LTD. 867 859 Order cedure the Commission may issue and serve upon it findings as to the facts and conclusion drawn therefrom, and an order to cease and desist from the violations of law charged in the complaint, 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 26, 1914, entitled "An Act to <'reate a Federal Trade Commission, to define its powers and duties, and for other purposes."

It is ordered, That the respondent, Prendergast-Davies Company, Ltd., a corporation, its officers, representatives, agents, and employees, in connection with the offering for sale, sale, and distribution of "Sandy l\IacN ab" brand whiskey in interstate commerce or in the District of Columbia, do cease and desist from: 1. Representing, through the use of the word "Distilleries'' in the trade or corporate name of the bottler of said "Sandy l\Icn ab" Whiskey as shown on all stationery, advertising or labels attached to the bottles in which said "Sandy McNab" whiskey is sold, and shipped, or in any other way by word or words of like import, (a) that said bottler is a distiller of the said "Sandy McNab" whiskey; or (b) that the said "Sandy McNab" whiskey is by said bottler Inanufactured through a process of distillation; or (c) that said bottler owns, operates, or controls a place or places where such "Sandy MacNab" whiskey is by said bottler manufactured by 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 such bottler shall actually own, operate, or control such a place or places. 2. Representing that a product imported into this country and resold by said respondent, which product as of June 1936, was designated and labeled "Sandy MacNab Old Liqueur Scotch Whiskey" is either a blend of the finest aged Scotch whiskey or that it is a product of Scotland, or that there are in existence any distilleries known as "MacNab Distilleries," unless and until the corporation known as MacNab Distilleries, Ltd., shall actually own, operate, or control a place where, in a continuous process of distillation from mash, wort, or wash, spirits shall be by it produced by distillation and said spirits shall be distinctive products of Scotch manufacture· in Scotland, in compliance with the laws o£ Great Britain regulating the manufacture of Scotch whiskey for consumption in Great Britain and containing no distilled spirits ~e~s than 3 years old; provided that if in fact such products by said distilleries so manufactured are mixtures of distilled spirits, Order 26 F. T. 0. such mixture may be called "Blended Scotch Whiskey" or "Sotch Whiskey-a Blend."

It is further ordered, That the said respondent, within 60 days from and after the date of service upon it of this order, shall file with the Commission a report or reports in writing setting forth in detail the manner and form in which it is complying and has complied with the order to cease and desist hereinabove set forth. TOSTO FOODS, INC., ET AL. 869 Complaint