Luxor, LTD.

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

IN THE MATTER OF LUXOR, LTD.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOL.-\TIO:\' OF SEC. 2 (E) OF AN ACT OF CONGRESS APPROVED OCT. 15, 1914, AS AMENDED BY AN ACT OF CONGRESS APPROVED JUNE 19, 1936 Docket 3"186. Complaint, Mar. 10, 193,q-Decision, July 81, 1940 Where a corporation which was engaged in manufacture or toilet articles and cosmetics and in sale· thereof to purchasers in each of the several States and in the District of Columbia, and which, as thus engaged in sale or its said products to retailers in the various States, was in competition with others who made and thus sold like articles and products to retailers who purchased products of said corporation and those of said other manufacturers and were in competition with each other in business of selling and reselling same to purchasing public;

In carrying on its business as above indicated and set forth, in connection with which it (1) sold and shipped its products to retail druggists and drug jobbers ln every State, (2) made contracts fixing minimum resale price thereor in all States in which it was permissible by law so to do, called on retail druggists who did not receive direct shipments from it, and maintained its pricing policies with druggists not under contract and who purchased indirectly through jobbers, and (3) packaged for resale some ot its most popular complexion powders, creams and rouge in "standard" or "regular" size packages and in "junior" size containers having about one-fltth capacity of others and resale price of 10 cents, as compared with 49 cent resale price of "standard" or "regular" size packages; and ( 4) accorded to novelty, V!J.riety, syndicate and five and ten cent stores both service or facility of such "standard" size packaging or packages, further division o! which by retailer was impracticable and undesirable, and such "junior" size packaging, for which there was public demand from all classes of consumers, irrespective of financial conditions or position in life, by reason, 1n part, of convenience, reduction of waste and retention of fragrance and freshness, and by which packaging resale was facilitated_ Refused to furnish service or facility of such "junior" size packaging to competing purchasers of identical products, including retail druggists upon whom there was demand for its products in said "junior" size and whose practice it was to seek to maintain stock in their stores tor which there was public demand, and who endeavored to obtain its products 1n such "junior" size and were in direct competition in same cities with, and often in close proximity to, said novelty, variety, syndicate and five and ten cent stores to whom 1t furnished its "junior" size facilities, in or through which convenience in display and sale was promoted, and lack of which, through such druggists' inability to furnish same in response to public call tben•for, resulted in loss ot sale and sometimes loss of regular customer : Held, Subsection (e) of Section 2 of act of Congress approved October 15, 1914, as amended by act of Congress approved June 19, 1936, violated by it. LUXOR, LTD. 659 658 Complaint Before Mr. lrebster Ballinger, trial examiner. Mr. P. C. Kol,in.~ki for the Commission.

Mr. R. F. Feagans, of Chicago, Ill., for respondent. Complaint Pursuant to the provisions of an act of Congress approved October 15, 1914 (The Clayton Act), as am£>nded by an act approved June 1D, 1936, the Robinson-Patman Act (15 U. S. C. A. sec. 13 (e)), the Federal Trade Commission hereby issu£>s its complaint against Luxor, Ltd., stating its charges in that respect as follows: PARAGRAPH 1. Respondent, Luxor, Ltd., is a corporation organized and existing under the laws of the State of Maine, with its principal place of business at 1355 West Thirty-first Street, Chicago, Ill. For more than a year last past respondent has been engaged in the manufacture of toilet articles and cosmetics and the sale thereof to retail dealers, causing the said products when sold to be shipped from its place of business in the State of Illinois to purchasers thereof located in the several States of the United States'and in the District of Columbia. Such customers of respondent have been and are now in competition with each other in the business of selling and retailing said products to the purchasing public.

PAR. 2. In the course and conduct of its business, as described in paragraph 1 hereof, respondent, since June 19, 1936, has been and now is discriminating in favor of certain of its purchasers against other purchasers of its said products bought for resale, by contracting to give and furnish, and by giving and furnishing, certain services and :facilities in connection with the handling, sale, or offering for sale, of its said products so purchased by its customers, not accorded to all such purchasers on proportionally equal terms. Specifically, said respondents are favoring certain purchasers, as aforesaid, of their said commodities, cosmetics, and toilet preparations bought for resale, by contracting to furnish or furnishing to such favored purchasers, packages, containers, and mounted sales cards of a special size and capacity for the vending of certain o£ their toilet articles and cosmetics known as Luxor Complexion Powder, Luxor Rouge, and Luxor Cold, and Cleansing, Vanishing, and Foundation, Special Formula, Tissue, and Hand Creams, without .similarly nccording such said package, container and sales card facilities to other such purchasers on proportionally equal terms. • PAn. 3. The services und facilities in connection with the handling, sale. and offering for sale of its products furnished by rpspondent to ce.rt n in of its customers consist of the following: Complaint 31 F.'l'.C. The toilet and cosmetic article known as ''Luxor Complexion Powder" is packed in square cardboard containers with approximate dimensions of 31Jt inches per side, and a depth of 1% inches. The capacity of such container is approximately 21;2 ounces of said complexion powder, and to its customers respondent suggests the price of this ::article for r1~sale to the public at 55 cents. To certain other of its customers respondent furnishes said complexion powder of identical grade and quality in smaller square cardboard containers with approximate dimensions of 2% inches per side and a depth of five-eighths of an inch. The capacity of such smaller container is approximately one-half ounce, and to its customers respondent suggests the price of this article for resale at the public at 10 cents.

The toilet and cosmetic articles known as Luxor Cold and Cleansing Cream, Luxor Vanishing nnd Foundation Cream, Luxor Tissue Cream, and Luxor Hand Cream, are packed in opaque glass jars of an approximate capacity of 4 ounces of such creams, and respondent suggests to its customers the resale of said products to the public at the price of 55 cents. To some of its customers, respondent furnishes the same grade and quality of Luxor Cold and Cleansing Cream, Luxor Vanishing and Foundation Cream, Luxor Tissue Cream, and Luxor Hand Cream in opaque glass jars of a much smaller size with a capacity of approximately three-quarters of an ounce, and to such customers respondent suggests the price of said articles for resale to the public at 10 cents. .

Respondent manufactures and sells an additional cosmetic cream known as Luxor Special Formula Cream. This article is packed in a collapsible metal tube of a capacity of approximately 2 ounces of said cream, and its resale to the public is suggested by respondent at a price of 55 cents. To some of its customers respondent furnishes the identical cream, as to grade and quality, in small opaque glass jars having a capacity of approximately one-half ounce of said cream. To customers who are supplied with this article respondent suggests a price of 10 cents fot· its resale to the public. The cosmetic article known as Luxor Rouge is packed in metal containers known as compacts, having a capacity of approximately onefifth ounce of said produce. Respondent suggests to customers-to whom it sells this product a price of 55 cents for its resale to the public. For some of its customers respondent packs Luxor Rouge of the identical grade and quality in much smaller metal compacts. The capacity of such smaller compacts is approximately one-twentieth of an ounce, and they are mounted singly on paper cards of the approximate dimensions-3 by 4 inches. Respondent suggests to customers to whom LUXOR, LTD. 661 e5s Findings it supplies this produce on mounted sales cards, a resale price to the purchasing public of 10 cents.

Respondent designates its said toilet and cosmetic products packed and mounted as aforesaid in smaller containers, "Luxor 10 Cent Toiletries," and accords the facilities of small packaging and sales card mounting only to so-called novelty, variety, syndicate and 5and 10-cent stores.

There exists among the purchasing and consuming public a demand for !3aid cosmetic and toilet products, designated "Luxor 10 Cent Toiletries."

Respondent furnishes the services and facilities of small packaging and sales card mounting in the 10-cent size designated as aforesaid, to certain of its said customers. Respondent does not accord said services and facilities to other of its said customers competitively engaged with the favored customers. Respondent's failure to accord to the latter class of customer the services and facilities hereinbefore described, has the capacity and tendency to divert trade from, and to cause competitive disadvantage to, such latter class of customer. PAR. 4. The foregoing alleged acts of said respondent are a violation of subsection (e) of section 2 of the act of Congress approved October 15, 1914, entitled "An Act to supplement existing laws against unlawful restraints and monopolies, and .for other purposes," as amended by said act approved June 19,1936.

REPORT, FINDDWS AS TO THE FACTS, AND ORDER Pursuant to the provisions of an act of Congress approved October 15, 1914, entitled "An act to supplem£>nt existing laws against unlawful restraints and monopolies, and for other purposes," as amended by an act of Congress approv£>d June 19, 1936, entitled "An act to amend section 2 of the act entitled 'An act to supplement existing laws against unlawful restraints and monopolies, and for other pur· poses,'" the Federal Trade Commission, on the loth day of March 1939, issued, and on the 13th day of March 1939, sl'rved its complaint in this proceeding upon the respondent, Luxor, Ltd., charging said respond- Pnt with violating the provisions of subsection (e) of section 2 of said act as amend£>d. Aiter tlw issuance of said complaint, and the filing of respondent's answer thereto, testimony and other evidence in support 'of the allegations of said complaint were introduced by P. C. Kolinski, attorney for the Commission, and in opposition to the allegations of the complaint Ly R F. Feagans, attorney forth£> rPspolHl- <>nt, before "·ebstPr ll:tllingl'r, an l'xamint'r of tht' Commission, therl'tofol'<' duly appointl'd by it, and said testimony and other evi(lence Findings 31F.T.C.

were duly 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, and other evidence, briefs in support of the complaint, and in opposition thereto, respondent having waived oral argument, and the Commission having duly considered the same and being now fully advised in the premises, finds that this proceeding is in the interest of the public, and makes this its findings as to the facts and its conclusion drawn therefrom. FINDINGS AS TO THE FACfS PARAGR.\PH 1. Respondent, Luxor, Ltd., is a corporation organized and existing under the laws of the State of Maine, with its principal place of business at 1355 West Thirty-first Street, Chicago, Ill. PAR. 2. Respondent is now, and has been since June 19, 1936, engaged in the manufacture of toilet articles and cosmetics, and in the sale thereof has caused, and is causing said products, when sold, to be shipped from its said place of business in Illinois to the purchasers thereof located in each of the several States of the Union, and in the District of Columbia.

PAR. 3. Respondent is now, and has been since June 19, 1936, in competition with other manufacturers of like toilet articles and cosmetics, and in the sale thereof to retail dealers located in the various States of the Union, which said manufacturers cause their said products, when sold, to be shipped from their respective places of business in certain States of the Union to said purchasers located in other and different States of the Union. The said retail dealers, located in various States of the Union, purchase respondent's products and the products of other manufacturers, and are in competition with each other in the business of selling and retailing said products to the purchasing public. Respondent sells and ships its products to retail druggists and drug jobbers in every State of the Union, and employs 20 salesmen to call on this particular trade, which salesmen frequently secure orders from retailers which orders they turn over to jobbers for delivery of respondent's products. Respondent makes contracts fixing the minimum resale price of its products in all of the States of the Union wherein it is permissible by Jaw to make such contracts. Respondent's salesmen tall on retail druggists who do not receive direct shipments from respondent, and respondent's pricing policies on its products are maintained as to retail druggists who are not under contract and purchase indirectly through drug jobbers in the same manner in which they are maintained in the case of druggists who are under contract to main· tain prices and receive direct shipments from respondent. The Com- LUXOR, LTD. 663 Findings mission finds that retail druggists who purchase the respondent's products indirectly from drug jobbers are under the circumstances of this case purchasers within the meaning of section 2 {e) hereinabove cited.

PAR. 4. The respondent, in connection with the sale of some of its most popular complexion powders, creams and rouge, packages each of such products in both "standard" or "regular" size packages, and in containers known as "junior" size which have approximately one-fifth t.he capacity of the "regular" or "standard" packages. The resale prices of the "regular" size are 49 cents, and of the "junior" size, 10 cents. Each of the respective products packages in the two sizes are identical. These products pack11ged in the "regular" or "standard'' size are sold to all types of retailers, novelty, variety, syndicate, 5- and 10-cent stores, and retail druggists both directly from the respondent and indirectly through jobbers. The Commission finds that the "junior" size packaging facilitates the resale of products so packaged.

The respondent, in connection with the sale of these products, accords the SPrvice or facility of the "junior" size packaging and the "standard" size packaging to purchasers known as novelty, variety, syndicate and 5- and 10-cent stores, and refuses to furnish the service or hcility of such "junior" size packaging to competing purchasers of the identical products. The Commission further finds that the furnishing of the "junior" size packaging constitutes a service or facility supplied in connection with the handling, sale, or offering for sale of such commodities.

PAR. 5. In the course and condnet of its business respondent, since June 19, 1936, continuously in selling its aforesaid products to various classes of purchasers has refllsed and now refuses to accord the service or facility of packaging in small sized containers for all competing purchasers of such commodities upon proportionally equal terms, or upon nny terms whatsoever.

PAR. 6. The Commission finds that the public demand for the "junior" size of cosmetics comes from all classes of consumers irrespectiye of financial condition or position in life, and is in part due to the fact that such "junior" size is more convenient to carry1 that such size reduces the element of waste, and adds to the retention of fragrance and freshness. The retail drug stores have demand for respondent's products in the "junior" size nnd have endeavored to obtain respondPnt's "junior" size products. Retail dru~gists seek to maintain stock in their stores for which there is a public demand. The novelty, variety, syndicate, and 5- and 10-cent stores, to whom respondent furnishes its "junior" size facilities, are located in the 296~16m--41--VOL. 31----4~ Order 311<', 1'. c. same cities of the various States of the Union in which the retail drug stores to whom respondent refuses to accord its "junior" size facilities are located, the two classes of stores being in direct competition and often located in close proximity to each other. Thirtyeight percent of the dollar volume of respondent's products is packaged for customers in the "junior" size. The aforesaid "junior" size facilities promote convenience in display and sale of respondent's products, and it is impractical and undesirable for retailers to divide the "standard" size packages into smaller quantity units. The inability of the retail druggists to furnish the "junior" size of respondent's products when called for by the public results in the loss of a sale and sometimes the loss of a regular customer. CONCLUSION The Commission concludes that subsection (e) of section 2 of the said act of Congress approved October 15, 1914, entitled "An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes," as amended by the act of Congress approved June 19, 1936, entitled "An act to amend section 2 of the act entitled 'An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes' " has been violated by the respondent.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of the respondent, testimony and other evidence, taken before 'Webster Ballinger, an examiner for the Commipsion theretofore duly designated by it, in support of the allegations of said complaint and in opposition thereto, briefs filed in support of said complaint and in opposition thereto, and the respondent having waived oral argument, and the Commission having made its findings as to the ~acts and its conclusion with respect to the violation of 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" as amended by an act of Congress approved June 19, 1936, entitled "An act to amend section 2 of the act entitled 'An act to supplement existing laws against unlawful restraints and monopolies nnd for other purposes' approved October 15, 1914, as amende<.l (U. S. C. title 15, sec. 13) and for other purposes." It is ordered, That the respondent Luxor, Ltd., and its officers, representatives, agents, and employees, in connection with the sale aJH.l LUXOR, LTD. 665 658 Order distribution of toilet articles and cosmetics in commerce among the senral States and in the District of Columbia, cease and desist from furnishing any such commodity packaged in containers of a certain size and style unless all purchasers competing in the resale of such commodities are accorded the facility of packaging in containers of. like size and style, on proportionally equal terms. It is further ordered, That the respondent shall, within 60 days after service upon it of this order, file with the Commission a report in writing, setting forth in detail the manner and form in which it .has complied with this order.

666 FEDERAL TRADE COM:YIISSION DECISIONS Syllabus 31 F. 1'. C.