Rainey & Co., J.P

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IN THE ~ATTER OF J. P. RAINEY TRADING AS J. P. RAINEY & COMPANY 1 COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. II OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 4800. Complaint, Aug. 6, 1942-Decision, Oct. 9, 1944 Where an individual engaged in city concerned in the electrical contracting business and in purchasing in said capacity and as agent of a general contractor below referred to, electrical equipment and supplies, including electric cable, wire, switches, conduits, fittings, condulets, potheads, cable heads, transformers, insulators, lighting fixtures, lamps and accessories, from three certain concerns and others, and in competition in making and seeking to make purchases and sales in commerce, with sellers of such products, except insofar as said competition had been restricted or forestalled as below set forth; Following arrangements by the Navy with a shipbuilding company under which latter was to undertake construction of naval vessels and pursuant to which (1) the Navy agreed to arrange for the advancing of the necessary funds to rehabilitate the latter's shipyards in the city concerned, including office buildings and shipways, to be expended under the general supervision of the Navy and subject to its approval, and (2) said shipbuilding company contracted with the aforesaid general contractor for the reconstruction by him of said office buildings and shipways on a cost-plus-a-fixed-fee basis, with the understanding that, in securing materials or services he would obtain competitive offers from as many as practicable but not less than two-or three where specified-reputable firms and award a contract to the firm quoting the minimum price; bids to be opened by or in the presence.of the Supervisor of Shipbuilding of the Navy or his representative, and to be subject to his approval before award of the sub-contract- Engaged in the general practice of preparing and submitting different and purportedly competitive, but in fact non-competitive, bids and price quotations in the purchase and sale of said products in commerce; and as a part 6f said practice, in addition to his bid, submitted over his own signature as his proposal to furnish several items of electric wire and cable to said general contractor for aforesaid use, prepared and submitted two additional bids, on stationery bearing the letterheads, and over names of two of aforesaid three certain concerns, respectively proposing to furnish the same items but at total amounts which exceeded by some $400 the amount quoted by him in his own bid, and through thus quoting the minimum price received the contract;

With intent and result of deceiving and misleading officials of said shipbuilding company and representatives of the Navy Supervisor of Ships, into believing, considering and approving the aforesaid bids purportedly made by said individual, and aforesaid two concerns, as independent, genuin·e and competitive bids; and with the effect of depriving buyers and prospective buyers, including contractors and subcontractors with the United States Government, of the benefit of competition in commerce between said individual, the three concerns aforesaid, and others:

1 The inotant eaoe ia one of a 1roup of eight havin1 to do with the preparation and eubmi011ion of ,ham,------lal•e, fictitious, fraudulent and non-1)ompetitive bide in eonneetion with the Navy's arrangement for the tonotruction of ehipe by the Cramp Shipbuildine Co., at it.t ahipyarde in Philadelphia. For list of tbeee ca"""• aee footnote to the caae of the Grater-Bodey Co., et al., Dooket '799, p. 113. Complaint 39 F. T. C.

Held, That such acts, practices and methods, under the circumstances set forth, were all to the prejudice of the public; had a dangerous tendency to and did actually restrain and eliminate competition in the sale of electrical supplies and equipment in commerce; had the tendency and capacity to and did unreasonably restrain commerce in said products; and constituted unfair methods of competition and unfair and deceptive acts and practices in commerce within the intent and meaning of Section 5 of the Federal Trade Commission Act. Mr. Everette ltfaclntyre and Mr. V. W. Summers for the Commission. Mr. James F. Masterson, of Philadelphia, Pa., for respondent. Complaint Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said act, the Federal Trade Commission having reason to believe that J.P. Rainey, an individual, trading as J.P. Rainey & Co., named in the caption hereof and more particularly hereinafter described and referred to as respondent, has violated the provisions of Section 5 of the said act, and it appearing to the 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, J. P. Rainey, is an individual, engaged in the electrical contracting business and trading as J. P. Rainey & Company' 511 North Broad Street, Philadelphia, Pa. Said respondent, during the period covered by the activities involved in the charges in this complaint, also served as an employee, agent, and sub-contractor of one Charles F. Rohleder more particularly and fully hereinafter described. PAR. 2. Charles F. Rohleder is an individual, engaged in general contracting and construction work, with office and principal place of business located at Philadelphia, Pa.

Allen McLaine Ward, and J. R. Baldridge, Jr., during the period covered by the activities involved in the charges of this complaint served as em· ployees and agents of Charles F. Rohleder. . PAR. 3. At all times hereinafter mentioned, Charles F. Rohleder, dlrectly and through his agents, Allen McLaine Ward, J. R. Baldridge, Jrd and respondent, J. P. Rainey, has been engaged in negotiating with an buying from Westinghouse Electric Supply Co., 1101 H.ace Street, Philadelphia, Pa., Anaconda Wire and Cable Co., 1301 Architects Building, Philadelphia, Pa., and General Cable Corporation, 123 South Broad Street, Philadelphia, Pa., directly and through their agents, "electrical equipment and supplies" which were shipped from many points located in States other than the State of Pennsylvania by the sellers or their suppliers to Charles F.ltohleder or his said agents at Cramp Shipbuilding Co. shipyards, H.ich .. mond and Norris Streets, Philadelphia, Pa. . At all times hereinafter mentioned, respondent, J. P. Rainey, doing business as J.P. Rainey & Co., has been engaged in the electrical contracting business and in that capacity, and also as an agent of Charles F. Rohleder, has purchased electrical supplies and equipment from Westinghou1e Electric Supply Co., Anaconda Wire and Cable Co., and General Ca~ e Corporation and others, and has sold and caused such electrical supplies J. P. RAINEY & CO. 311 309 Complaint and equipment to be shipped from locations in States other than the State of Pennsylvania to him in Philadelphia, Pa.

PAR. 4. Respondent J. P. Rainey, an individual trading as J. P. Rainey & Co., at times within the period named in paragraph 7 hereof, engaged in competition with sellers of "electrical equipment and supplies" in making ~nd seeking to make purchases and sales in "commerce" (as "commerce" Is defined in the Federal Trade Commission Act), between and among the Various States of the United States, except insofar as the said competition has been hindered, lessened, restricted or forestalled by the acts, things, Practices, policies and methods done and carried on as hereinafter set forth .

. PAR. 5. The term "electrical equipment and supplies" as used herein Includes, but is not limited to, such items as electric cable, electric wire, electric switches, electric conduit, fittings, condulets, potheads, cableheads, transformers, insulators, lighting fixtures, lamps and accessories. PAR. 6. During 1940, as a part of its work in the Defense Program of the United States of America, the Navy Department arranged with Cramp Shipbuilding Co., whose shipyards are·located at Richmond and Norris streets, Philadelphia, Pa., for the latter to undertake the construction of naval vessels and in that connection agreed to arrange for the advancement of the necessary funds to rehabilitate the facilities at the said ship- Yard, including office buildings and shipways, with the understanding that the expenditure of the said funds for such work would be under the general ~Pervision and subject to the approval of officials of the United States avy Department. Thereupon, the said Cramp Shipbuilding Co. contracted with said Charles F. Rohleder for the latter to reconstruct certain office buildings and shipways on a cost plus a fixed free basis, with the Understanding that the said Rohleder in securing materials and services Would obtain competitive offers from as many as practicable, but not less than two (and not less than three where specified) reputable firms in a Po:sition to provide the material, equipment, services, etc., as required at a ~easonable cost, and to award contract to that firm quoting the minimum Price; and with the further understanding that the said offers, proposals br bids were to be opened by or in the presence of the Supervisor of Shipuilding, U. S. Navy, or his representative, and subject to his approval before award of the subcontract for materials, equipment or services . .In connection "'ith his aforesaid contract with Cramp Shipbuilding Co., said Charles F. Rohleder negotiated with and made awards of contracts for the purchase, directly and through agents, of "electrical equipment and supplies" from respondent, J.P. Rainey, Westinghouse Electric Sup- Ply Co., Anaconda Wire and Cable Co., General Cable Corporation and Others.

PAn. 7. Respondent, J.P. Rainey, has engaged in the practice of pre- Paring and submitting different and purportedly competitive but in fact ~on-competitive Lids and price quotations in the purchase and sale of electrical equipment and supplies" in commerce and as a part of that Pr~ctice, on or about March 18, 1941, said respondent prepared a bid and Pnce quotation over his signature as and for his proposal to furnish several Itellls of electric "'ire and cable to Charles F. Rohleder for use in rehabilitating the facilities of Cramp Shipbuilding Co. shipyards, Norris and Richlb.ond Streets, Philadelphia, Pa., at the stated price of $29,280.12. On or Findings 39 F. T. C.

about the same date said respondent also submitted two additional bids, one each on stationery bearing the letterheads, and over the respective names of General Cable Corporation, and Anaconda Wire & Cable Co., proposing to furnish to said Charles F. Rohleder the same items specified in the said bid he submitted over his name. However, before said respond· ent submitted the said bids over the names of the said General Cable Cor· poration and said Anaconda Wire Co., he so fixed the amount quoted in the Anaconda Wire & Cable Co. bid that it amounted to $29,673.40, or 1¢ higher than the amount quoted in the General Cable Corporation bid and approximately $400.00 higher than the amount quoted in the bid said re· spondent submitted over his own name. As a result of such action, said Rainey, in so quoting the minimum price received a contract to furnish the above described "electrical equipment and supplies" and caused the same to be shipped across State lines into Philadelphia, Pa. Said J.P. Rainey, submitted the aforesaid bids, for the purpose and with the result of deceiving and misleading purchasing officials of Cramp Shi~ building Co. and representatives. of the Supervisor of Ships, U. S. Navy, into believing, considering and ap{iroving the aforesaid bids and price qu~ tations purporting to have been made by J. P. Rainey, Anaconda Wire & Cable Co., and General Cable Corporation as independent, genuine and competitive bids. . , PAR. 8. The doing and performing of the aforesaid acts, things, and the use of the methods set forth in the immediately preceding paragraph hereof, tend to have and do have the effect of depriving buyers and pro· spective buyers including contractors and sub.contractors with the United States Government of the benefit of competition in commerce between and among the said J.P. Rainey, Westinghouse Electric Supply Co., Anaconda Wire & Cable Co., General Cable Corporation, and between them and others.

PAR. 9. The acts, practices and methods, as hereinbefore alleged, are all to the prejudice of the public; have a dangerous tendency to and have actually frustrated, hindered, suppressed, lessened, restrained and elim· ina ted competition in the sale of electrical supplies and equipment in corn· merce within the intent and meaning of the Federal Trade Commission Act; have the tendency and capacity to restrain unreasonably and have restrained unreasonably such commerce in such products; and constitute unfair methods of competition and unfair and deceptive acts and practices in commerce within the intent and meaning of Section 5 .of the Federal Trade Commission Act.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on August 6, 1942, issued and subsequently served its complaint in this proceeding upon the respondent named in the caption hereof, charging him with the use of unfair methods of competition and unfair and deceptive acts and practices in commerce in violation of the provisions of the Federal Trade Commission Act. After the issuance of the said complaint and filing of the respondent's answer, the Commission, bY order entered herein, granted the request of respondent for permission to J, P. RAINEY & CO. 313 309 Findings withdraw his answer and to substitute therefor an answer admitting all of the material allegations set forth in the said complaint and waiving all intervening procedure and hearings, which substitute answer was duly filed in the office of the Commission. Thereafter, this proceeding regularly carne on for final hearing before the Commission on the complaint and the said substitute answer; and the Commission, having duly consid- . ered the matter 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 FACTS PARAGRAPH 1. Respondent, J. P. Rainey, is an individual, engaged in the electrical contracting business and trades as J. P. Rainey & Co., 511 North Broad Street, Philadelphia, Pa. Said respondent, during the period covered by the activities hereinafter specified, also served as an employee, agent, and subcontractor of one Charles F. Rohleder, more particularly and fully hereinafter described.

PAR. 2. Charles F. Rohleder is an individual engaged in general contracting and construction work, with his office and principal place of business located at Philadelphia, Pa.

Allen McLaine Ward and J. R. Baldridge, Jr., during the period covered by the activities hereinafter specified, served as employees and agents of Charles F. Rohleder.

PAR. 3. At all times hereinafter mentioned, Charles F. Rohleder, directly and through his agents, Allen McLaine Ward, J. R. Baldridge, Jr., and respondent, J. P. Rainey, has been engaged in negotiating with and buying from Westinghouse Electric Supply Co., 1101 Race Street, Philadelphia, Pa.; Anaconda Wire & Cable Co., 1301 Architects Building, Philadelphia, Pa.; and General Cable Corporation, 123 South Broad Street, Philadelphia, Pa., directly and through their agents, "electrical equipment and supplies'' which were shipped from many points located in States other than the State of Pennsylvania by the sellers or their suppliers to Charles F. Rohleder or his said agents at Cramp Shipbuilding Co. ship- Yards, Richmond and Norris Streets, Philadelphia, Pa. At all times hereinafter mentioned, respondent, J.P. Rainey, doing business as J.P. Rainey & Co., has been engaged in the electrical contracting business, and in that capacity and also as an agent of Charles F. Rohleder has purchased electrical supplies and equipment from Westinghouse Electric Supply Co., Anaconda Wire & Cable Co., and General Cable Corporation, and others, and has sold and caused such electrical supplies and equipment to be shipped from locations in States other than the State of Pennsylvania to him in Philadelphia, Pa. . PAR. 4. Respondent, J. P. Rainey, trading as J. P. Rainey & Co., at times within the period named in paragraph 7 hereof engaged in competition with sellers of "electrical equipment and supplies" in making and seeking to make purchases and sales in commerce, as "commerce" is defined in the Federal Trade Commission Act, between and among the various States of the United States; except insofar as the said competition has b.een hindered, lessened, restricted, or forestalled by the acts, things, practlces, policies, and methods done and carried on, as hereinafter set forth. 638680"'--47-23 Findings 39 F. T. C.

PAR. 5. The term "electrical equipment and supplies" as used herein includes, but is not limited to, such items as electric cable, electric wire, electric switches, electric conduit, fittings, condulets, potheads, cable· heads, transformers, insulators, lighting fixtures, lamps, and accessories. PAR. 6. During 1940, as a part of its work in the defense program of the United States of America, the Navy Department arranged with Cramp Shipbuilding Co., whose shipyards are located at Richmond and Norris Streets, Philadelphia, Pa., for the latter to undertake the construction of naval vessels and in that connection agreed to arrange for the advancement of the necessary funds to rehabilitate the facilities at the said shipyard, in eluding office buildings and shipways, with the understanding that the ex· penditure of the said funds for such work would be under the general supervision and subject to the approval of officials of the United States Navy Department. Thereupon, the said Cramp Shipbuilding Co. con· tracted with said Charles F. Rohleder for the latter to reconstruct certain office buildings and shipways on a cost-plus-a-fixed-fee basis, with the un· derstanding that the said Rohleder in securing materials and services would obtain competitive offers from as many as practicable but not le~s than two (and not less than three where specified) reputable firms in a posi· tion to provide the material, equipment, services, etc., as required, at a reasonable cost, and to award contract to that firm quoting the minimum price; and with the further understanding that the said offers, proposals, or bids were to be opened by or in the presence of the Supervisor of Ship:" building, U. S. Navy, or his representative, and subject to his approval before award of the subcontract for materials, equipment, or services. In connection with his aforesaid contract with Cramp Shipbuilding Co., said Charles F. Rohleder negotiated with and made awards of contracts for the purchase, directly and through agents, of" electrical equipment and supplies" from respondent, J. P. Rainey, Westinghouse Electric Supply Co., Anaconda Wire & Cable Co., General Cable Corporation, and others· PAn. 7. Respondent, J. P. Rainey, has engaged in the practice of preparing and submitting different and purportedly competitive but in fac} noncompetitive bids and price quotations in the purchase and sale o "electric equipment and supplies" in commerce, and as a part of that practice, on or about March 18, 1941, said respondent, prepared a bid and price quotation over his signature as and for his proposal to furnish seve~~l items of electric wire and cable to Charles F. Rohleder for use in rehab1h· tating the facilities at Cramp Shipbuilding Co. shipyards, Norris and Rich· mond Streets, Philadelphia, Pa., at the stated price of $29,280.12. 0~ or about the same date said respondent also submitted two additional bt?9• one each on stationery bearing the letterheads and over the respective names of General Cable Corporation and Anaconda Wire & Cable Co., proposing to furnish to said Charles F. Rohleder the same items specified in the said bid he submitted over his name. However, before said respondent submitted the said bids over the names of the said General Cabld Corporation and said Anaconda Wire Co., he so fixed the amount quote inir thehigherAnacondathan the\Vireamount& CablequotedCo. bidin thethatGeneralit amountedCable toCorporation$29,673.40,b r and approximately $400 higher than the amount quoted in the bid SV.! respondent submitted over his own name. As a result of such action, s~I~ Rainey, in so quoting the minimum price, received a contract to furntS J. P. RAINEY & CO. 315 309 Order the above-described "electrical equipment and supplies" and caused the same to be shipped across State lines in Philadelphia, Pa. Said J.P. Rainey, submitted the aforesaid bids, for the purpose and with the result of deceiving and misleading purchasing officials of Cramp Ship- ~uilding Co. and representatives of the Supervisor of Ships, U. S. Navy, Into believing, considering, and approving the aforesaid bids and price quotations purporting to have been made by J.P. Rainey, Anaconda Wire & Cable Co., and General Cable Corporation as independent, genuine, and competitive bids.

PAR. 8. The doing and performing of the aforesaid acts and things, and the use of the methods set forth in the immediately preceding paragraph hereof, tend to have, and do have, the effect of depriving buyers and Prospective buyers, including contractors and subcontractors with the United States Government, of the benefit of competition in commerce be- . tween and among the said J. P. Rainey, Westinghouse Electric Supply Co., Anaconda Wire & Cable Co., and General Cable Corporation, and between them and others.

CONCLUSION The acts, practices, and methods, as hereinbefore found, are all to the Prejudice of the public; have a dangerous tendency to and have actually frustrated, hindered, suppressed, lessened, restrained, and eliminated com- P~tition in the sale of electrical supplies and equipment in commerce Within the intent and meaning of the Federal Trade Commission Act; have the tendency and capacity to restrain unreasonably, and have restrained Unreasonably, such commerce in such products; and constitute unfair methods of competition and unfair and deceptive acts and practices in commerce within the intent and meaning of Section 5 of the Federal Trade Commission Act.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission ~Pon the complaint of the Commission and the answer of the respondent, ~n which answer respondent admits all of the material allegations set forth In said complaint and waives all intervening procedure and further hearing as to said facts, and the Commission having made its findings as to the f~cts and its conclusion that respondent has violated the provisions of Section 5 of the Federal Trade Commission Act .

. It is ordered, That the respondent, J.P. Rainey, individually, and trad- Ing as J. P. Rainey & Co., or trading under any other name, and his agents, dep~ese~tatives, and emJ?loyees, dire~tly or through any corp?ra~e or. oth~r CVICe, m connection With the offermg for sale, sale, and d1stnbutwn m commerce as "commerce" is defined in the Federal Trade Commission ~ct, of el~ctric cable electric wire, electric switches, electric conduit, fit- ~1_ngs, condulets, pothead"!, cablehead"l, tra.nsforme.rs, insulators, li~hting ftures, lamps accessories, or other electncal eqmpment or supphes, do Orthwith ceas~ and desist from doing or performing any of the following acts, things, or practices:

Order 39 F. T. C.

1. Submitting or procuring, assisting, or cooperating in the submission to any buyer of multiple bids or price quotations for the same materials for use on the same project but in the names of different or apparently differ· ent prospective sellers.

2. Aiding, assisting, or cooperating in any manner in the submission of any sham, fictitious, fraudulent, or noncompetitive bids or price quotations to any buyer or prospective buyer, or to any official or awarding au· thority of any Federal agency or to any one acting for or on its behalf, or for or on behalf of any contractor with such agency. 3. Interfering with or assisting in interfering with the procurement or consideration of genuinely competitive bids or price quotations by any Federal agency or any official or awarding authority of such agency, or by any buyer or prospective buyer.

4. Promoting, establishing, carrying out, or continuing any act or prac· tice for the purpose or with the effect of maintaining or presenting a false appearance of competition between or among sellers in the submission of price quotations or bids to buyers or prospective buyers. 5. Arranging or attempting to arrange for the filing of any bid in t~e name of one ostensibly competent bidder when the prices and terms are 10 fact determined by some other bidder or when in fact the bid is not a bona fide bid.

It is further ordered, That the respondent shall, within 60 days after serv· ice upon him of this order, file with the Commission a report in writing setting forth in detail the manner and form in which be has complied with this order.

THE COLRAN INSTITUTE, ET AL. 317 Syllabus