Indestro Manufacturing Corp.

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IN THE MATTER OF INDESTRO MANUFACTURING CORP.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIQLATI0 J'( OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket .qooa. Complaint, Feb. 1, 1940-Decision, Sept. 10, 1942 Where a corporation, engaged in the manufacture and Interstate sale and d'!t"1 tributlon of automobile tools- Represented and described certain wrenches as being made from "Forged ,A.llo1 Steel," ''Drop Forged Alloy Steel," "Special Alloy Steel," and "Carbon .A..ll~: Steel" through application of such terms ther.eto in catalogues, price lis ' · and other advertising material, and on labels attached thereto; The facts being that the quantity of chromium, vanadium, nickel, molybdenuJI) and copper present in its said products was not sufficient, either alone or in combination, to have any appreciable effect upon the properties thereof 0~ the steel contained therein, or to constitute "alloy steel," 1. e., carbon steel to which such alloying elements have been added in quantities sutncle~d to atecl its properties: and the small quantities of elements a:foresa found ln its products indicated thilt they were residual only, resulting tro~ . the method of processing which included, probably, use of some alloy sera~~ With tendency and capacity to mislead and deceive the purchasing public in the mistaken bellef that said wrenches were made from alloy steels-; for which there is a decided preference in the industry, and among dealer llnd the purchasing public over those made from plain carbon steels_.. thereby inducing it to purchase substantial quantities of said products: Held, That such acts and practices, under the circumstances set forth, wer~ all to the prejudice and injury of the public, and constituted unfair 80 deceptive acts and practices in commerce..

Before Mr. Edwa;d E. Reardon and Mr. Andrew B. Dwvall, trial examiners .

. Mr. William M. King, Mr. James I. Rooney and Mr. S. F. Rose fot the Commission.

Mr. Albert G. McOaleb and J/r. Arthur Nelson Oornell, of Ch.1ca..,0'0 ' Ill., and Mr. James ll. Litt~elwles, of ·washington, D. C., £or re· spondent.

Complaint · Pursuant to the provisions of the Federal Trade Commission ,.A.c~ and by virtue of the authority vested in it by said act, the Federn. Trade Commission, having reason to believe that Indestro :Manu· facturing Corporation; a corporation, hereinafter re.ferred to as .re· - spondent, has violated the provisions of said act, and it appearing ~ 0 the Commission that a proceeding by it in respect thereof would be Jll INDESTRO MANUFACTURING CORP. 453 Complaint the public interest, hereby issues its complaint, stating its charges in that respect as follows: · • PARAGRAPH 1. Th~ respondent, Indestro Manufacturing Corporah?n, is a corporation, organized under the laws of the State of Illinois, -w..1.th its principal office and place of business located at 2649 North l{lldare A venue, in the city of Chicago in said State of Illinois. PAR. 2. Respondent is now, and for many years last past has been, engaged in the manufacture, sale and distribution of automobile tools, including wrenches of various sizes and descriptions. Said Products are manufactured in respondent's factory loca~d in the city of Chicago, State of Illinois. Respondent causes said products, when Sol.d, to be transported from its factory situated in the State of llhnois to the purchasers thereof located in various other States of the United States and· in the District of Columbia. At all times ?erein mentioned respondent has maintained a course of trade in Its said products in commerce between and among the various States of the United States and in the District of Columbia . • PAn. 3. In the course and.conduct of its aforesaid business and to l~duce the purchase of its said products,' the respondent issues and distributes among prospective purchasers catalogues, price lists, and Other advertising material purporting to be descriptive of respondent's l_)r~ducts. Among the products so advertised are certain wrenches ~which are represented and described as being manufactured from 8Forged Alloy Steel," "Drop Jrorged Alloy Steel," "Special Alloy~ t~el'' and "Carbon Alloy Steel." Respondent also causes such decriptive terms to be stamped or embossed upon such wrenches . . 'I'through the use of such descriptive terms in its advertising and on lts 'df sa1 products the respondent represents that such tools are ma.nunctured from "alloy steel."

r par. 4. The foregoing representations are false and misleading. f n truth and in fact, respondent's wrenches are not manufactured rom alloy steel but are manufactured from what is known as com- ~on steel or carbon steel. The term "alloy sfeel'' is understood by_ e steel industry, the trade, antl the purcl)asing public as denoting carbon steel to which have been added certain other elements such a~ nickel, tungsten, molybdenum, vanadium and chromium. Such e elnents are added to give the finished product certain additional f~operties and attributes, such as hardness and toughness. None of U e aforesaid elements or any similar element is added to the steel l_) Sed by respondent and the products made from such steel cannot .}0Perly be represented ·as having been manufactured from alloy "'~eel.

454 FEDERAL TRADE COMMibSION · DE.CISIONS Findings 35F.T. c:.

· There is a decided preference in the steel industry and among dealers and the· purchasing public for tools made from alloy steel over tools made from common or carbon steel. PAR. 5. The use by the respondent of the foregoing false and misleading statements and representations with respect to its said products has had and now has the capacity and tendency to, and doe~, mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that such statements and representations are true and that respondent's products possess properties and qualities which they do not in fact possess. As a result of such erroneous belief, the purchasing public has been induced to and does purchase a substantial quantity of respondent's products. PAR. 6'. The aforesaid acts and practices of respondent are all to the prejudice and injury of the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. REPORT, FINDINGs AS TO THE FACTs, AND OnnER Pursuant to the provisi~ns of the Federal Trade Commission A.ct, the Federal Trade Commission, on the. 1st day of February, A .. P· 1940, issued and thereafter served its complaint in this proceed111g ·nupon the respondent, Indestro Manufacturing Corp., a corporate1° ,; named in the complaint as "Indestro Manufacturing Corporation.' charging it with the use of unfair and deceptive acts and practices 1n commerce, in violation of the provisions of said act. After the i&suance of the complaint and the filing of respondent's answer thereto testimony and other evidence in support of the al~egati~ns of the complaint were introduced by attorneys for the Commissio~ before duly appointed trial examiners of the Commission designate. by it to serve in this proceeding, and said testimony and other. evldence were duly recorded and filed in the office of the Commissi~ni . Respondent waived the introduction of testimony, filing of the tfl:.lf examiners' report upon the evidence1 oral argument and the filing 0 briefs, and agreed that "the record be considered closed and submitted to the Commission for final disposition. Thereafter this proceeding .came on for final hearing before the Commission on the said· complaint, the answer thereto, testimony nnd other evidence, and brief in support of the complaint; and tbe Commission having duly considered the same and now being :full~ advised in the premises, makes this its findings as to the facts an its conclusion drawn therefrom.

INDESTRO MANUFACTURING CORP. 455 452 Findings FINDINGS AS TO THE FACTS . PARAGRAP~ 1. The respondent, Indestro Manufacturing Corporatt?n, is a corporation, organized under the laws of the State of Illinois, With its principal office and place of business located at 2649 Kildare Avenue, in the city of Chicago, in the State of Illinois. PAR. 2. Respondent now is, and for many years last past has been, engaged in the manufacture, salt>, and distribution of automobile tools, including wrenches of various sizes and descriptions. Said r>.roducts are manufactured in respondent's factory, located in the City of Chicago, State of Illinois. Respondent causes said products, When sold, to be transported from its factory situated in the State of Illinois to the purchasers thereof located in various other States of the United States and in the District of Columbia. At all times ~entioned herein, respondent has maintained a course of trade in tts said products in commerce between and among various States of the United States aild in the District of Columbia . . PAn. 3. In the course and conduct of its aforesaid business, and to 1~duce the purchase of its said products, the respondent issued and· distributed among prospective purchasers, catalogues, price lists, and other advertising material purporting to be descriptive of respondent's products. Among the products so advertised were wrenches ~which were represented and dt>scribed as being manufactured from ~orged Alloy Steel," "Drop Forged Alloy Steel," "Special Alloy Steel," and "Carbon Alloy Steel." Respondent also caused such de- !:criptive terms to be stamped or embossed upon such wrenches. Such ~ractices were discontinued by respondent prior to the issuance of the 0.lllplaint, but after the respondent had been contacted by the Comnussion with reference thereto.

PAn. 4. The use by the respondent of the term "Alloy Steel" in ~efic~ibing and designating its products, is false, deceptive, and miseu.dtng. The term "Alloy Steel" is understood by the steel industry, the trade, and the purchasing public as denotingcarbon steel to which alloying elements, such as nickel, tungsten, molybdenum, vanadium, topl)er, chromium, and other alloying elements have been added in quantities sufficient to affect the properties of the steel. The addition 0 ~ such alloys in sufficient quantities, either singly or in combination, gtves the steel properties not found in plain carbon steel. Carbon ~tee} and carbon steel products generally contain traces of these various alloys, due to the method of processing, particularly where alloyed scrap has been added in such processing. The steel used by the re- Spondent in the manufacture of the products herein described, is ['tl~chased by it under the specification of "1045 S. A. E. Steel," \\rhiei1 indicates a standard for carbon steel adopted by the Society 456 FEDE.RAL TRADE COMMISSION DECISIONS Findings 35 F. T. C. o:f Automotive Engineers and is so understood and considered by the industry and the trade. . Certain o:f respondent's products represented and designated by It as "Forged Alloy Steel" and "Drop Forged Alloy Steel" were an· alyzed by the Bureau o:f Standards and were :found to contain the following elements in the percentages set out as :follows: Commission's E:chibit S, designated "Forged Alloy Steel" · percen 1 ChromiumCarbon--------------~-----~-----------------------------------·------_________________________________________________________ _ 0: ~~ Vanadium, less than _______ _:-------------------------------------------- .. 01 10 ~Iolclltebld-----~----.-t-h-------------------------------------------------- . 01 ~ y ennm, ess an------------------------------------------------- .o1 Copper--------------------------------------------------------------- Commission's Exhibit 5, designated "Drop Forged Alloy Steel" • percen 1 Carbon---------------------------------------------!---------------- 0:~ ____t_h----------------------------------------------------- , 01 Chromd1tum __1V ana urn, ess an--------------------------------------------------- .11.N iclteL--------------------------------------------------------------- . Ol lfolybdenurn, less than------------------------------------------------- .13 Copper--------------------------------·----------------------------- !" Commission's E:chibits 6a, 6b, and 6c, designated "Drop Forged Alloy Stee t pcrcetl . 41 ~:;: 0:~~Vanadium, less than---------------------------------------------------- '18 ~Ickel---------------------------------------------------------------- · ot llolybdenurn, less than------------------------------------------------ · 13 Copper---------------------------------------------------------~---- . The quantity of chromium, vanadium, nickel, molybdenum, and copper found to be present in said products is not sufficient, either alone or in combination, to have any appreciable effect upon the prop· erties of said products or the steel contained therein, and said ele· ments are not present in sufficient quantities to constitute an a111 steel product. The small quantities of such alloys present in respon · ent's products indicate that they are residual only, and result frolll the method of processing, which probably included the use o:f soJlle portions o:f alloyed scrap. · There is a decided preference in the steel industry, among dealers and the purchasing public, :for wrenches and tools of various sorts made from alloy steels, over such products made from plain carboil steels.

PAR. 5. The use by the respondent of the foregoing false and mir leading state~ents and representations with respect to its said prot · . .

lNDESTRO MANUFACTURING COI<P. 457 452 Onlel' Ucts has had the tendency and capacity to mislead and deceive a su?stantial portion of the purchasing public into the erroneous and nustaken belief that such statements and representations were true and that respondent's products possessed properties and qualities "'which they did not in £act possess. As a result of such erroneous belief, the purchasing public has been induced to, and did, purchase a substantial quantity of respondent's products. CONCLUSION The aforesaid acts and practices of respondent as herein found are aU to the prejudice and injury of the public, and constitute unfair and deceptive acts and practices in commerce within the intent and llleaning of the Federal Trade Commission Act. ORDER TO CEASE AND DESIST . This proceeding having been heard by the Federal Trade Commis- Sion upon the complaint of the Commission, answer of the respond- . ~nt, testimony and other evidence in support of the complaint, taken bef?re duly appointed trial examiners of the Commission designated. Y ~t to serve in this proceeding, and brief filed in support of the com- Plaint; and the Commission having made its findings as to the facts ~d its conclusion that the respondent has violated the provisions of e Federal Trade Commission Act. . 1 t is ordered, That the respondent, Indestro Manufacturing Cor- Poration, a corporation, its officers, representatives, agents, and emf.loyees, directly or through any corporate or other device, in connec- 1011 With the offering for sale, sale, and distribution of its wrenches ~nd other steel products in commerce as "commerce" is defined in the ederal Trade Commission Act, do forthwith cease and desist from: Dsing the word "alloy" or any other word of similar import and ltleaning, either alone or in combination with_any other word or \Words, in branding, advertising, or otherwise describing, designating or referring to its wrenches or any other steel products which are ltlade from carbon steel to which there has not been added alloy eleltlents such as nickel, tungsten, molybdenum, vanadium, chromium, ~ 0 :P:Per, or any other alloying element, either singly or in combination, ~~quantities sufficient to affect the properties of the steel, and to give 1 specific properties not found in plain carbon steel. . th It is further ordered, That respondent shall, within. 60 days after e 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 colllplied with this order.

458 FEDERAL TRADE COMMISSION DE·CISIONS Complaint 35F.T.C·