Bausch & Lomb Optical Co

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IN THE MATTER OF BAUSCH & LO~Ill OPTICAL COMPANY ET AL.

CO~lplaint. l•'INDINGS, OPINION, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 2 (a) OF AN ACT OF CONGRESS APPROVED OCT. 15, 1914, AS AIIIENDED Docket 3233. Comp.laint, Sept. 30, 19J/-Dccision, Jan. 21, 1939 Where (1) a corporation engaged in manufacture, distribution, and sale of a complete line of ophthalmic merchandise and optical goods, including lenses, frames, and mountings for eye glasses, scientific instruments for eye testing, cases, equipment, machinery, and specialties, and which (a) effected distribution and sale of its products through six corporate wholesalers, outstanding voting stodr of which Is controlled, with power to coordinate and control their sales and pricing pollcies, and which engaged In their respective territories in selling, through a system of wholesale outlets or branches extending throughout the United States, its said products under pricing policies coordinated and controlled by it and at uniform prices fixed or approved by it, and to which and other whole:;alers it sold its products at same priers as those listed as below set forth for $1,500 retailer accounts, and (b) constituted, considered toget!Jer with its aforesaid selling affiliu te», the second largest organization manufacturing and dh<tributing ophthalmic products in the United States; and (2) said six corpomte wholesalers, in their respective territories, dealing, principally, in its prodtwts, directin~ their sales efforts primarily to sale of its merchandise, and charging prices and using discount plans which were snbstantinlly the same, nnd qnoting and using, In the ease of Its mPrehnndi:;e, prices published in its catalogs, and making use thereof as basis for computation of various discount allowances; and, by and large, with well-equipped r•rPscription shops and doing substantial amount of vre:;cription business in their respective sail's territories, und competing for such business for which many retailers, not themselves Pquipped, rely upon nearby wholesalers; In !'wiling, lis thus engaged, such m::mufncturer's said products in competition with numerous other manufacturers of such goods, and in substantial competition with other wholesale-rs and with wholesale branches of !urge&!: manufacturer of such produds in the United States, (a) under certnln "column" schedules or discounts from list prices which were, In genPrnl, common to and mntle use of by mnnufacturing trade in question, and under wbieh pnrehnsf;'rs, irresp<'ctlve of total amounts otherwise bought, recei>ed, without furtl)('r concession, discount on basis or purchases In one onl<'r and di~cotmts on lenses, frames, and mountlllg8 based on such order purchases of 2, 5, 10, 2;), or 50 units, flf! case might be, (b) under so-called "big dealer" di~cotmt plan or "volume purchase schedule" by which, on hnsis of all monthly purcha>PS aggregating $l,!i00 or $750, as case might be, rl'tailer r!'CPived ofl' list, among nthPr discounts on types of merchandise for which dl'mand is greatt'St and which mnl{e up bulk of purchases of its cu;;tmm•rH, i. e., on len:<~s. frumes and ll11llllltlugs purchaser by it, 331!:1 percent or 25 percent, rhi:pectively, and under which thry included, In finch aggr<'gnte for dPtPI'!lliuing 1lisconnt eligibility us aforesaid, prescription BAUSCH & LO)ID OPTICAL CO. ET AL. 187 186 Complaint items, surfacing, polishing and edging machinery and all purchases, regardless of particular item's own discount status, and regardless also of size or number of separate orders making up total, and under which, moreover, large part of stock merclumdise as thus sold to $1,500 per month ''big dealers," and including most lenses, frames, and mountings, was sold at cost without markup for selling, handling and overhead- Discriminated iu price, through use of their "big dealer" cumulative dis· count piau and cumulative dl'scounts and differentials allowed thereunder, which bore no consistent relation to size of ~Single orders ot· differences In cost of sale and delivery per dollar of merchundh;e as between different purchasers, and did not make only due allowances for differences, If any, in cost of Sll.le or dPiivery resulting from differing methods or quantities In which sale or delivery Is made to dlfferPnt purchasers under said IJlan, In favor' of a substantial number of their larger customers who were able to rpcelve volume discounts thus provldt>d, and as against many other customers ' : engaged in competition with such "big dealers" and including small optome- (. trists and opticians who did not receive such discounts and could. not ~., purchase in sufficient volume to qualify therefor; I. I ~ : i With the result that the effect of sneh discrimination in price had been and might be to injure," detStroy, or prevent ·comlJetition. with customers of \,I, industry receiving benefit of discrlminntlon aforesaid, nud had been nud might be snhstanUally to lessen competition or tend to crPute a monopoly in the line" 9l commerce in which they were respecth·ely eugnged, and to ' I injure, destroy or pre,,ent competition with them by other wholesalers and with it by limited line mnnufactnrers of optical goods: lield, That through use of their "big dealer" cumulutlve discount plan and pricing policies Pmbruced therein they violated and WE're violating Seetiou 2 (a) of the Clayton Act.

Mr. Cyru.s B. Au..stin for the Commission.

llubbell, Taylor, Ooodwjn, Ni.1·on & llm·grape, of Hochester, N.Y., for respondents, and AI-r. James Jll. O'Reilly, of Uochester, N.Y., also for Bausch & Lomb Optical Co.

Col\IPLAINT Pursuant to the provisions of an Act of Congress, approved October 15, 1914, entitled "An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes," commonly known as the Clayton Act, as an~ended by an Act of Congress, approved June 19, 1936 (U.S. C., title 15, sec. 13), commonly known as the Robinson-Patman Act, the Federal Trade Commission, having reason to believe that the respondents named in the caption hereof have violated, and are now violating the provisions of subsection (a) of section 2 of said act as amended, hereby issues its complaint against the said respondents, stating its charges in that respect as follows: PARAGRAPH 1. Respondent Bausch & Lomb Optical Co. is a corporation, organized and existing under and by virtue of the laws of the State of New York, and its principal office and place of business is 200346"'-40-vol. 28--115 188 FEDERAL TRADE COi\Il\IISSION DECISIO:NS Complaint 28 F. T.C. located in the city of Rochester in said State. It is now, and has been since June 19, 1936, engaged in the business of manufacturing and selling optical goods and ophthalmic products, including lenses, :frames, mountings, diagnostic instruments, optical machinery, tools, and grind~ ing and polishing materials, to various retailers, independent whole~ salers, and chain business enterprises engaged in business as lessee~ operators of the optical departments ·of various large department stores. Such sales are by said respondent made both directly and through the other respondents hereinabove named in the caption and hereinafter more particularly designated and described. Respondent Bausch & Lomb Optical Co. owns a controlling share of the stock in each of the said other respondent companies and exercises such control in directing the sales policies, pricing and selling activities engaged in by said other respondents in their respective businesses. PAR. 2. (a) Respondent Colonial Optical Co., Inc., is a corporation, organized and exist.ing under and by virtue of the laws of the State of New York, with its principal office and place of business at 62 ·west Forty-seventh Street, in the city of New York in said State. Bausch & Lomb Optical Co. owns and holds approximately 91 percent of the outstanding shares of voting stock issued by Colonial Optical Co., Inc. (b) Respondent Mcintire, Magee & Drown is a corporation, organ~ ized and existing under and. by virtue of the laws of the Commonwealth of Pennsylvania, with its principal office and place of business at 1700 Walnut Street in the city of Philadelphia, in said State. Ap~ proximately 58 percent of the outstanding shares of the voting stock by it issued ,are owned and held by the respondent Bausch & Lomb Optical Co.

(c) Respondent Riggs Optical Co. Consolidated is a corporation, organized and existing under and by virtue of the laws of the State of Delaware, with its principal office and place of business at 222 'Vest NoBnnk Drive, in the city of Chicago, in the State of Illinois. Approximately 82 percent of the outstanding shares of voting stock by it issuetl are owned and held by the respondent Bausch & Lomb Optical Co.

(d) Respondent Riggs Optical Co., Inc., is a corporation organized and existing under and by virtue of the laws of the State of Delaware, with its principal office and place of business at Flood Building, in the city of San Francisco, in the State of California. Approximately 74 percent of the outstanding shares of voting stock by it issued are Ol'med and held by the respond.cnt Bausch & Lomb Optical Co. (e) Respondent Southeastern Optical Co. is a corporation organized and existing under and by virtue of the Jaws of the Commonwealth of Virginia, with its principal office and place of business at 212 East ' '·I i BAUSCH & LO:\IB OPTICAL CO. ET AL. 189 I ' I I 186 Complaint II Franklin Street, in the city of Richmond in said State. Approximately GO percent of the outstanding shares of voting stock by it issued are owned and held by the respondent Bausch & Lomb Optical Co .. (f) Respondent The White, Haines Optical Co. is a corporation organized and existing under and by virtue of the laws of the State of Ohio, with its principal office and place of business at 82 North High Street, in the city of Columbus, in said State. Approximately 72 percent of the outstanding shares of voting stock by it issued are owned and held by the respondent.Bausch & Lomb Optical Co. (g) Each of the respondents in said subsections (a) to (f) inclusive in this paragraph named is now, and since June 19, 1936, has been engaged in the business of selling at wholesale the aforesaid optical goods and ophthalmic products of the respondent Bausch & Lomb Optical Co.

PAR. 3. In the course and conduct of their respective businesses as aforesaid, respondents, and each of them, transports or causes to be transporteu the said products, when sold, from the places of their respective locations to the purchasers thereof located in the several States of the United States other than the States in which such shipnwnts originated, and tht:>re is and has been at all times herein mentiOJwd a current of trade and commerce in said products, between the · Statt:>s ·wherein tlwse~several respatH.lents are located. and the various l :_>i I.' I other States of the United States. ~ i ] I Said respondents and each of them sell and distribute the aforesaid \I! products for use, consumption, or resale within the United States and the District of Columbia, in the same territories and places and in ' I competition with various other manufacturers, distributors, and ·:I; wholesalers engaged in the sale of optical goods and ophthalmic products including lenses, frames, mountings, diagnostic instruments, op- lL tical machinery and tools, and grinding and polishing materials. all", I Respondents' aforesaid purchaser customers are competitively en- 'I gaged in the resale of said products, both at wholesale and retail, to the consumers or users thereof, within the several sales areas in which H said purchaser customers respectively offer for sale and sell the said products of Bausch & Lomb Optical Co. PAn. 4. Said respondents, and each of them, in the course and con- l'i1 duct of interstate commerce as hereinbefore set forth, have, since j.' June 19, 1936, discriminated in price, and are now discriminating in j. '! the price at which they and each of them have sold and do sell Bausch & Lomb Optical Co. products and commoditit:>s of like grade and qua.Iity, between the different purchasers of such products and commodities, by giving and allowing certain of said purchasers a lower ., price than given or allowed other purchasers competitivt:>ly engaged ~ I COl\IMISSIO~ DECISIO~S 190 FEDERAL TRADE Findings 28F.T.C.

in said line of commerce and by giving and allowing certain of said purchasers adjustments, rebates, or discounts in the form of cash or commodities not given and allowed to other of respondents' said purchaser customers. Respondents' purchaser customers in whose favor such discrimination is made, are generally the larger dealers who are thus enabled either to undersell their competitors or furnish better facilities and services to the prospective consumer purchaser, or both. PAn. 5. The effect of such discrimination in price made by said respondents, as set forth in paragraph 4 hereof, may be substantially to lessen competition between the respondents and their aforesaid competitors; between the customers of respondents in whose favor such discrimination is made and respondents' other customers; and betv.·een the customers of respondents' competitors who do not grant such customers the benefit of such discriminatory prices and the customers of respondents in favor of whom respondents discriminate; and said discrimination tends to create a monopoly in the aforesaid line of commerce in respondents and respondents' favored customers and to injure, d~stroy, and prevent competition with the said respondents and with those of respondents' customers who knowingly receive the benefit of such discrimination, and with the customers of each of them. Such discrimination in price by said respondents, and each of them, between different purchasers of commodities of. like grade and quality in int{)rstate commerce in the manner and form aforesaill are in violation of the provisions of subsection (a) of section 2 of the act described in the preamble hereof.

REPORT, FINDINGS As TO THE Facts; AND Onder Pursuant to the provisions of an Act of Congress approved October 15, 1914, entitled "An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes'' (the Clayton Act), as amended, the Federal Trade Commission, on September-r 30, Hl:37, issues its complaint against the abo\·e-named respondents and causes such complaint tole served as required by law, charg-ing that said respondents were and had been discriminating in price between different purchasers of commodities of like grade and quality in commerce in violation of the provisions of section 2 (a) of said act. Respondents duly filed theit· separate answers to said complaint. Thereafter a stipulation was entered into between counsel for the Commission and counsel for the respondents containing a statement of the facts in this proceeding upon which it was agreed that said proceeding might be submitted to the Commission for final determillation, the respondents consenting that upon said stipulation an order BAUSCH & L01In OPTICAL CO. ET AL. 191 186 Fin<lugs Le issued requiring them to cease and desist from the price discrimination alleged in the complaint. Said stipulation was duly approved and filed herein by order of the Commission. This proceeding regularly coming on to be heard upon said complaint, answers and stipulations, filing of briefs and presentation of oral ar&rument having been waived by counsel for all parties, the Commission, having duly considered the same and being fully advised in the premises, and being of the opinion that the respondents have been and are violating the provisions of Section 2 (a) of said Clayton Act, now makes these its findings as to the facts and its conclusions drawn therefrom.

.. FINDINGS AS TO THE FACTS ' P.\RAGRAPH 1. Respondent, Bausch & Lomb Optical Co. (hereinafter refened to as "Bausch & Lomb'') is a corporation organized, existing, and doing business under and by virtue of the laws of the State of ~ew York, with main offices and factories located at Rochester, N.Y. Said respondent is now and for many years has been engaged in the business of manufacturing, distributing, and selling, among other thhlgs, a complete line of ophthalmic merchandise and optical goods, .".,' !., /1'i. including lenses, frames, and mountings for eye glasses, scientific ':'·:I\'l instruments for eye testing, cases, equipment, machinery, and, I' specialties.

PAR. 2. Respondent Colonial Optical Co., Inc., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of New York, with its principal office located in \: .. :

New York, N. Y. Said respondent is engaged in the business of distributing and selling optical and ophthalmic products at wholesale, sale, through some 21 branches located in the principal cities of and serving the following territory: New York, the northern half of New Jersey, and all of New England. Of 6,777 shares of capital stock of said respondent outstanding, 6,350 shares are owned by Bausch & Lomb.

J> AR. 3. Respondent Mcintire, Magee & Drown Co. is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Pennsylvania, with its principal office located in Philadelphia, Pa. Said respondent is engaged in the business of distributing and selling optical and ophthalmic products at wholesale, through some 9 branches located in the principal cities of and serving the following territory: the southern half of New .Jersey, the eastern half of Pennsylvania, :Maryland (except two western counties), Delaware, the District of Columbia, and the northern quarter of Virginia. ;:' Findings 28 F. T. C. Of 3,695 shares outstanding capital stock of said respondent, 2,139 shares are owned by Bausch & Lomb.

PAR. 4. Respondent Southeastern Optical Co. is a corporation or::ranized, existing, and doing business under and by virtue of th'3 laws of the State of Virginia, with its principal office located in Richmond, Va. Said respondent is engaged in the business of distributing and selling optical and ophthalmic products at wholesale, through some 21 branches located in the principal cities of and serving the following territory: Virginia (except the northern quarter), N ort:h Carolina·, South Carolina, Georgia, Florida, Alabama, Mississippi, Tennessee, and northeastern Arkansas. Said respondent has voting stock outstanding consisting of 2,014 shares of class A stock, all of which is owned by Bausch ~~ Lomb, and 2,663 shares of common stock, of which 1,559 shares are owned by Bausch & Lomb. PAR. 5. Respondent The \Vhite-Haines Optical Co. is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Ohio, with its principal office located in Columbus, Ohio. Said respondent is engaged in the business of distributing and selling optical and ophthalmic products at wholesale, through some 24 branches located in the principal cities of and serving the following territory: The 'Vestern half of Pennsylvania, 'Vest Virginia, Maryland (two western counties), Ohio, Kentucky (except southwestern, corner), Indiana (except three northwestern counties), central Illinois, and the southern peninsula of Michigan. Saill respondent has voting stock outstanding as follows: 5,725 shares, second preferred, of which 4,280 shares are owned by Bausch & Lomb, and 14:,376 shares of common stock of which 7,650 are owned by Bausch & Lomb. PAn. 6. Respondent Riggs Optical Co., Consolidated is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its principal office located in Chicago, Ill. Said respondent is engaged in the business of distributing and selling optical and ophthalmic products at 'vholl"sale, through some 56 branches located in the principal cities of and serving the following territory: Illinois (except the central portion), Indiana (three northwestern counties), the southwest corner of Kentucky, the northern peninsula of :Michigan, 'Wisconsin, Minnesota, North Dakota, South Dakota, the eastern quarter of 1\Iontana, the t•eastern two-thirds of 1Vyoming, Nebraska, Iowa, Missouri, Kansas, Colorado,' New l\!mexico, the southeastern corner of Arizona, Texas, Oklahoma, Arkansas (except the northeastern portion), and Louisiana. The outstanding voting stock of said respondent consists of 8,070 common shares, of which 6,555¥2 shares are owned by Bausch & Lomb.

BAUSCH & LOl\IB OPTICAL CO. ET AL. 193 186 Findings PAR. 7. Respondent Riggs Optical Co., Inc., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its principal office located in San Fran- I cisco, Calif. Said respondent is ~ngaged in the business of distrib- ,! uting and selling optical and ophthalmic products at wholesale, l through some 33 branches located in the principal cities of and serving the following territory: Montana (except eae,tern quarter), the western third of ·wyoming, Idaho, ·washington, Oregon, California, Nevada, Utah, and Arizona (except southeastern corner). Of 9,798% slnares outstanding capital stock of said respondent, 7,996% shares are owned by Bausch & Lomb.

PAR. 8. Distribution and sale of the Bausch & Lomb products herein referred to is effected chiefly through the said six wholesaler respondents. Bausch & Lomb sells most of its ophthalmic merchandise, equipment, and machinery to said wholesaler respondents, and also sells such products to other wholesalers. No sales are made direct to retailers. The lenses, frames, mountings, and other ophthalmic products manufactured by Bausch & Lomb, are listed, described, and priced in its catalogs, which are distributed to and used by the wholesaler respondents as a basis for selling to the trade. Bausch & Lomb sells to the six wholesaler respondents and to other wholesalers at the same prices for goods of the same grade and description, regardless of quantity purchased, the wholesaler or jobbers' prices being in general the same as those listed for "$1,500 Accounts'' in the schedule set forth in paragraph 14 hereof. Bausch &. Lomb, through its o\mership of a majority of the out- !:itanding voting stock of each of ~;aid wholesaler respondents, has power to coordinate and control the sales and pricing policies of said wholesaler respondents.

PAR. 9. Each of said six wholesaler respondents restricts its selling activities to its own territory, as above described, and said respondents uo not engage in competition with each other. Said responrlents deal principally in the products of Bausch & Lomb, although they also deal in the products of other manufacturers; but their sales efforts are directed primarily to the sale of Bausch & Lomb merchandise. The prices charged by them, respectively, and their respective discount plans are substantially the same, and as to Bausch & Lomb merchandise all of them quote the prices published in the Bausch & Lomb catalogs and use such prices as a basis for computing the various discount allowances hereinafter described. PAR. 10. Respondent Bausch & Lomb's said products are manufactured at Rochester, N. Y., and are constantly shipped from that ,.

'' ~; ' COl\Il\IISSIO~ DECISIONS194 FEDERAL TRADE Findings 28F.T.C.

point to its wholesaler customers in other States of the United States and the District of Columbia for use and resale by and through said customers to meet the constant demand which exists for said products on the part of opticians, optometrists, and oculists using and selling such products at retail. Each of said wholesaler respondents is constantly engaged in shipp"ing and distributing such products from its main office or warehouse to its b1;anches in the same and other States in which it does business for resale through said branches to supply the demand of its retail customers. Shipments are also made, when necessary or convenient, directly from the main office to purchasers in the same and other States. Frequently orders for machin£>ry, equipment, or special merchandise are filled by direct shipment from Bausch & Lomb to the retailer purchaser, nt the request of the wholesaler. There is a constant stream of commerce in such products running from Bausch & Lomb to said whole· saler respondents and their branches and through them to the retailer purchasers of such products.

PAR. 11. Respondent Bausch & Lomb sells and distributes its said products throughout the United States in competition with numerous other manufacturers of optical and ophthalmic products. Said wholesaler respondents, respectively, are engaged in substantial competition with other wholesalers and with American Optical Co. branches in the sale anJ. distribution of such products in most of the localities and sales areas in which said. respondents do business. Many of the customers of said wholesnler respondents are engaged in competition with each other and with customers of competitors of said respond.ents, in the use and resale of such products in the several localities where such customers are located. PAR. 12. An important function of the optical wholesaler is" the maintenance and operation of a prescription shop with the necessary machinery and tools for grinding, polishing, edging, and inserting or mounting lenses. There are many retailers who cannot or do not wir,;h to make the investment in machinery and provide the space necessary to maintai•.1 their own prescription shops, and they rely upon the nearby wholesalers to do this work and to maintain an extensive supply of unfinished lenses, fmmes and mountings of various types and styles from which individual prescriptions can be fillf'd promptly as ordered. The greater part of the business of the average small optical wholesaler is in the filling and delivery of prescription orders for the retailers in his locality. Substantially all of the branches of the six wholesaler respondents have well equipped prescription shops and, in addition to selling stock merchandise, compete for and do a substantial amount of the prescription business BAUSCH & LOMB OPTICAL CO. ET AL. 195 186 Finding~ in their respective sales territories. l\Iany of the larger retailers maintain their own prescription shops and do most of their own grinding, edging, etc. in order to enable. them to give better service. PAR. 13. The lenses, frames, and mountiugs manufactured by Bausch & Lomb are listed and sold by said wholesaler respondents to retailers at varying prices, depending on the number of pairs (lenses) or units (frames and mountings) of one description, type or brand purchased in a single order. For example, as applied to certain gold filled mountings and lenses, the catalog "column" schedules quote prices under the following headings: 2 (pairs) of a kind or 5 assortt>d 5 (pairs) of a kind or 10 assorted 2!1 (pairs) assorted r.o (pairs) 'asso1ted For certain other items, such as blank and semifinished lenses, zylonite frames, solid gold mountings, etc., fewer columns are listed, in some cases the price reduction for quantity extending only to purchases on 5 or more assorted units, or 1 package of lenses. No price concession is made on the basis of single purchases in excess of 50 units or pairs. These "column prices" are available to all purchasers on the basis above stated, irrespective of the total amount of merchandise of various kinds ordered at one time or the total volume pt1rchased during any given period. Prices listed for n. single pair of lenses or a single frame or mounting art) also the prices charged in filling prescription orders. The column price lists above described do not apply to sales on prescription, b~1t only to sales of stock merchandise.

PAR. 14. The wholesaler respondents also sell their lenses, frames mountings, machinery, equipment, and other stock merchandise to retailer customers at different prices, under a "big dealer" discount plan. This plan is illustrated by the following "Volume Purchase Schedule" set forth in a price bnlletin issued October 1, 1936, by respondent the White-Haines Optical Co., which is still in effect. The same or substantially the same "big dealer" discount plan is used by the other wholesaler respondents.

VOLUME PURCHASE SCIIEDULE \Vhen a customer's total monthly purchases reach $7u0, or more, or $1,500, ()r more, in uny givf'n month, the following diiicounts are f'xtemleu, when the account is paid ou the loth of the month following purchases. Prescription work ___________________________________________ .. ___ 2% only (Includes all kind of Rx work, lenses, frames, etc., in single or pairs) Findings 28 F. T. C. ANY ITEMS OF LENSES, FRAI\IES OR MOUNTINGS SOLD IN THE FIVE COLUl\IN SET-"C'P AT THr~ 25 OR 50 QUANTITY PRICES ARE SUBJECT ONLY TO THE 2 PERCENT CASH DISCOUNT $7~0 $1,.'i00 accounts accounts LICENSED PRODUCTS:

PANOPTIKS-Sold to Lic~nsees only Rt term~ specitled in License. SOFT-LITES-Sold to Licensee.' only at Licensee St.ock and Rx N~t Prices. ORTHOGONS-Sold to Frnnchise Dealers only: Percent Percenf Finished Uncut~, Single Vi~ion in "10 pr. asst." and"~ pr. asst." columns. 25 33~i Rin~les or sin~le poirs ____ ---------------------- --··--- -------------------- 2 2 Semiflni•h•<l. Sin~le Vi•ion or Bifocal blanks (any quantity)_----------- 25 33~i LOX ITS-Sold to Licen.ees only:

Gold Filled In qu:mtit.ies of two (2) or more _____________________________ _ 25 33~) Solid Gold in quantities of two (2) or more _____________________________ _ 20 20 Binl!les ____ -------------------------------------------------------------- 2 zLENSES (not includin~r "fl-50", Ort.hoj.!on or Soft-Lite lenses): Finished Uncuts, Single Vision in "10 pr. asst." and "5 pr. asst." Columns __ 2.0 33~3 Sinrle• or single pairs ____ ------------------------------------------------ __ _ ~ 2 Remi-flnished or Rough, Sin~le Vi•ion or Bifocal Blanks (any quantity) ____ _ 25 33~~ LENSRS-B & L "1st'' fl-/\0 Ophthalmic.lemes (in any quantity) _____________ _ 2 2 GOLD FILLED FRAMES, MTGS., AND PARTS (Also lnnerlm and Zylonite).

In quantities of two (2) or more ________ : ____________________________________ _ 25 33~ Sin~les ________________________ ---------------------------------------------- 2 2 SOLID GOLD FRAMES, MTGS., AND PARTS:

In quantities of two (2) or more .• -------------------------------------------- 20 20 Rinl!les. ___ .. __________ ------------------------------------------------------ 2 2 OXFORD AND CHAINS (except Z-Foldl------------------------------------ 2 2 EarOXFORDS,Loop anda-FOLDII. P. Chains,__ ----------------.---------------------------------------Ribbons, Cor•ls, etc _______________________________ _ 1010 2020 Sun Glasses & Gog!'les (except Soft-Lite) Sport-Lite and Soft-Lite Overgless. ___ _ 10 20 Soft-Lite Sport-Lite and Overglass ________ --- _----------------------------------- 2 2 Cases .. ·- ____ ---_---_-_--------------------------------------------------- ______ _ !iO Z5 Miscellaneous-Reels, Field<l & Opera Glasses, Binoculars, Readers & MagniHers, Charts, Case Labels, E. G. Cleaners, C'lens, etc ______________________________ _ 2 2 Jl,farhineru (except Mi<lget Cleaner)._----------------------------------------- __ 10 20 Mi<l~et Cleaner ___ ---------------- __ ------------------------------ __ -------- ___ _ 2 2 Dual Ed~er. __ ------------------------------------------------------------------ 10 20 Shop Tools, plier~. etc., Grinding & Polishing Material & Supplies_. ___________ _ 10 20 Eq!tipmmt'Hausch & Lomb, ~huron, American ________________________________________ _ Green Test Cabinets, Hamilton and Archer furniture _______________________ _ 1010 1010 RnyderRotoscoples.Electric_____Table-- ____________________--------------------------------------------------·--- ____________________________________ __ 2 2 2 2 Henry Retinoscope ______________ -_---_-----------------------_---- _________ _ 2 2 Ri~ht-Llgh t Equipment _____ --_---_----_-_- _____ ----------- ________ ------ __ _ 2 2 '!'roy Furniture ______________ -_---------_--_--.-------------- __ -- ___________ _ 10 10 7.eiss _____ --- __ --- _- ____ -- _-----·-------------------------------------------- 2 2 The 2-percent discount shown above is a cash discount. This same 2-percent cash discount is also allowed in addition to the trade discounts shown. Cash discounts are not allowed according to custom on the west coast.

The lenses, mountings, and frames subject to the big dealer discounts of 25 and 33V:J percent under the above schedule include the types of such merchandise for which the demand is greatest and which make up the bulk of the purchases of the optical retailer. Under this schedule, the discounts allowed are determined solely by the customer's total purchases duri11g the discount period, regardless of the size or number of separate orders filled in making up the total. No discount (other than 2 percent for cash) is allowed on prescription (Rx) sales and "net" items, but such sales are included in determining total volume for qualification for big dealer discounts on stock merchandise.· Purchases of surfacing, polishing, and edging machin- BAUSCH & LOI>IB OPTICAL CO. ET AL. 197 186 Opinion ery are likewise so included. Such purchases frequently run into hundreds of dollars and in some cases are in larger amounts and a single such purchase may under the above schedule affect the discount recein•d by the buyer on lenses and frames purchased during the month or year. A substantial number of respondents' customers have been able to secure the volume discounts provided for in the above discount schedule, while many other etistomers engaged in competition with such "big dealers" in the use and sale of respondents' said products have not received the benefit of such discounts. PAn. 15. Respondent Bausch & Lomb considered together with its selling affiliates (the wholesaler respondents herein) is the second largest organization manufacturing and distributing ophthalmic products in the United States, the largest being American Optical Co. of Southbridge, Mass. Many other manufacturers of such products (some of whom also do substantial volumes of business) market their products largely through wholesalers, other than the wholesaler respondents herein. Some engaged to a large extent in direct factoryto-retailer selling. Some of these manufacturers produce only limited lines, some making only lenses, others frames, etc. List prices of the various manufacturers are substantially the same for competitive merchandise, price competition generally being carried on through the \i.) granting of discounts rather than by lowering of base prices. The I usual manufacturer-to-wholesaler discount on lenses, frames, and mountings is 33113 percent, but greater discounts are given by some manufacturers.

OPINION ?}{respondent Bausch & Lomb is engaged in the sale and shipment of ophthalmic products and other optical merchandise in interstate commerce from its factories in Rochester, N. Y., to its customers in other States. The six wholesaler respondents are likewise engaged in interstate commerce as to a substantial portion of their business. Said wholesalers deal principally in Bausch & Lomb merchandise, their pricing policies are coordinated and controlled by Bausch & Lomb, and such merchandise is sold by each of them at uniform prices fixed or approved by Bausch & Lomb. The prices so fixed and charged for Bausch & Lomb products are fixed and charged by respondents in the course of commerce, and such sales are sales in commerce within the meaning of Section 2 (a) of the Clayton Act. The wholesaler respondents provide a system of wholesale outlets for Bausch & Lomb products extending throughout the United States. All of said wholesalers sell Bausch & Lomb merchandise to different purchasers at varying prices pursuant to the "big dealer" discount plan described in paragraph 14 of the above findings. The discounts 198 FEDERAL TRADE COl\IMISSION DECISIONS Order 28F. T.C.

allowed under said plan are determined on the basis of a customer's volume of purchases over a month or year and bear no consistent relation to the size of single orders or differences in cost of sale and delivery per dollar of merchandise as between different purchasers. By allowing such cumulative discounts respondents have discriminated in price in favor of a substantial number of their larger customers. Small optometrists and optidans do not receive these discounts and camiot purchase in sufficient volume to qualify for them. The "big deal£>r" discount plan employed by these respondents is substantially the same as the "big dealer" plan considered by us in .Matter of American Optical Company, et al. (F. T. C. Docket No. 3232), decided this day. The two plans appear to be coextensive in operation and effect. For the reasons stated in our opinion in that case (insofar as applicable to the facts here), we find that the efl"ect of the discrimination in price above described has been to injure, and may be to injure, destroy or prevent competition with respondents' customers receiving the benefit of such discrimination. We find, further, that the effect of such price discrimination by respondents is and may be substantially to lessen competition or tend to create a monopoly in the lines of commerce in which respondents, respectively, are engaged, aud to injure, destroy, or prevent competition with respondents by other wholesalers and, with respondent Bausch & Lomb, by limited line manufacturers of optical goods. As to this branch of the case, the same considerations apply which we outlined in our opinion in Matter of American Optical Company, ~;upra. It is ,also to be noted here that a large part of the stock merchandise sold by the respondent wholesalers to $1,500-per-month "big dealers," including most lenses, frames, and mountings, is sold at cost without any mark-up for selling, handling, and overhead. It does not appear from 'the facts before us that the differentials of the "big dealer" plan make only due allowances for differences, if any, in cost of sale or delivery resulting from differing methods or quantities in which sale and delivery is made to different purchasers under said plan.

'Ve conclude that through the use of their "big dealer" cumulative discount plan and the pricing policies embraced therein respondents have violated and are violating Section 2 (a) of the Clayton Act. ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the separate answers of the respondents, and a stipulation as to the facts signed by counsel BAUSCH & LOMB OPTICAL CO. ET AL. 199 186 Order for the Commission and counsel for all of the respondents in which it is provided that the statement of facts contained therein may be accepted as the facts in this proceeding in lieu of testimony in support of the charges stated in the complaint and in .opposition thereto, and the taking of testimony and all intervenillg procedure having been Waived, and the Commission being of the opinion that said respond- i i, ' ents have violated the provisions of Section 2 (a) of an Act of Congress i:approved October Hi, 1914, entitled "An Act to supplement existing laws against unlawful restraints and monopolies, and for other pur- Iposes" (the Clayton Act), as amended, and lia ving made its report stating its findings as to the facts, which report is made a part hereof. It is ordered, That the respondents, Bausch & Lomb Optical Co., Colonial Optical Co., Inc., Mcln6re, Magee & Brown Co.; Riggs Optical Co., Consolidated, Riggs Optical Co., Inc., Southeastern Optical Co., and The 'Vhite-IIaines Optical Co., and their respective officers, representatives, agents, and employees, in connection with the distribution and sale of optical and ophthalmic products in commerce between the States and in the District of Columbia, do forthwith cease and desist:

1. From discriminating in price between different purchasers of such products of like grade and quality, either directly or indirectly, by grunting or allowing the cumulative or volume discounts described in paragraph 14 of said Findings as to the Facts, or by continuing in effect the "big dealer" discount plan in said paragraph described. 2. From discriminating in price between purchasers of ophthalmic stock merchandise and equipment who also purchase merchandise from respondents on prescriptions for single.e pairs of glasses, or employ respondents to fill such prescriptions, and other purchasers of such merchandise and equipment who do not purchase from respondents on prescriptions or employ respondents to fill prescriptions, unless such price difference make only due allowance for differences in cost of manufacturing, selling, or delivering such stock merchandise and equipment to such purchasers resulting from the differing methods or quantities in which such stock merchandise and equipment is sold and delivered. ' 3. From discriminating in price between different purchasers of such products of like grade and quality by granting or allowing any other cumulative or volume discounts, rebates or price reductions, where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in a line of commerce in which respondents or their customers are engaged, or to injure, destroy, or prevent competition with respondents or with any of their customers except where such discounts, rebates or price reductions make only due allow- FEDERAL TRADE C01I·r.IISSION DECISIONS200 Order ::?SF.T.C. ance for differences in cost of manufacture, sale or delivery resulting from the differing methods or quantities in which such products ar~ to such purchasers sold and delivered during the period of time for which such discounts, rebates, or price reductions are granted or allowed.

Nothing contained in paragraphs 2 or 3 hereof shall be construed to prevent said respondents from showing that any such discount, rebate or other price reduction made or offered to be made by them was given in good faith to meet an equally low price of a competitor or the services or facilities furnished by a competitor, or from granting any discounts,.rebate.s, or price reductions~permitted by law .• It is further ordered, That each of said respondents, within 60 days after service upon them of this order, shall fill~ with the Commission a report in writing, setting forth in detail the manner and form in. which it has complied and is complying with this order. IDEAL GIFT CO. 201 Complaint