Amasia Importing Corporation

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IN THE MATTER OF AMASIA IMPORTING CORPORATION, SILK SKIN, IKC. AND GEORGE LACKS AND HAROLD G. LACKS COMPL.UNT, FINDINGS, AXD ORDER IK REGARD TO THE ALLEGED VIOLATION OF SEC. 1) OF AN ..CT OF CONGRESS APPROVED SEP. 26 , 1914 Docket -1459. Complaint, Aug. 9, 1948 Decision, July, 1951 Silk has been and is understood to be a product of the silk worm by the purchasing public which has held in high public esteem for a great many ears, garments composed of silk, and there is a preference among purchasers particularly for feminine silk undergarments. Lacking the force and effect of law, as trade practice rules do, their prime objective is to express the requirements of the statutes administered by the Commission and its decisions in terms particularly addressed to the problems and practices of industry members. In the instant proceeding, the practices alleged to be engaged in were charged as in violation of law, namely, the Federal Trade Commission Act; thus the proceeding was not based on transgression of the trade practice rules and no decision as to said matter was made or required under the issues presented by the pleadings. In said connection as regards the expressions contained in rule 11 (a) of the Trade Practice Rules for the Silk Industry', promulgated by the Commission on Kovember 4, 1938, which state that it is an unfair practice to use the word "silk" as a part of a trade or corporate name unless a substantial part of the business concerned is devoted to silk or silk products and there is full and nondeceptive disclosure in immediate conjunction with such name as to any merchandise which is not silk: Such expressions serve merely to define one particular area in which the Commission has reason to believe that use of the word "silk" as a part of the trade or corporate name is deceptive and in violation of the law, and obviously do not constitute a determination that in all other circumstances the use of such name is not in violation of law. Hence they present no bar to Commission action intended to remove a capacity and tendency to deceive, where found. Where one of two corporations (directed and controlled by the same two offcers), engaged in the manufacture of women s corsets, girdles, and foundation garments, and in the interstate sale and distribution thereof to department stores and retailers throughout the United States, and, after the war, in thus sellng its said products through the second concern unti about Novemher 19' , when it ceased to manufacture; and one of the aforesaid individuals, its managing director- (a) Represented that their garments ,\were composed of silk, the product of the cocoon of the silkworm, through using and featuring the product name snk Skin" to designate and refer thereto in their advertisements and in advertising mats furnished for the use of stores, on containers of their products, and through labels and tags attached thereto in which the statement of the constituent fibers was relatively inconspicuous; and 1 Amended.

FEDERAL TRADE CO MISSION DECISIONS Syllabus 4R F. T. C.

Where said second concern and the aforesaid individuals- (b) Represented that their garments were composed of silk, as aforesaid, through nse of the words " Silk Skin" in the expression "Full Fashioned and Seamless by Silk Skin, Inc." to designate the same on price lists in which, under the caption "Advertising Cooperation Policy," they offered to supply without charge mats and suggested advertising, ancl allow 50 percent of a store net local space rate, providing that the adnrtisement prominently display the legend "FCLL-FASIIIONED and SEAl\ILESS by SILK SKIN, I:\C. (in which the terms " " and "Inc." appeared in much smaller print and lighter type tllfln the words " SILK SKIN" ) ; through a mat and suggested nllvertising in which such names were similarly fcatured; and t.through featuring the corporate name " Silk Skin, Inc. " in advertisements in publications, on letterhead(ls, on containers of their merchandise, and on tags and labels including those all its nonsilk, rayon products, in which were stated the cOllstituent fibers and in "which the name s first two words were made relatively prominent;

'1'be facts being that none of their garments was made exclusively of silk; an elastic rarn co\.cred with lisle and knitted together ",-ith rayon or nylon or "with silk, "as used in their manufacture; when silk was used, the silk content constituted about one-third of the garment's weight; and about 85 percent of their merchandise contained no silk whatsoever, and were constituted in major part of rayon;

\With capacity and tendency to mislead and deceh'e a substantial portion of the consuming public with respect to the constituent fibers of their garments and thereby induce the purrhase thereof; and whh result of placing in the hands of dealers purchasing such products from them for resale a means to mislead and deceive the public y\'ith respect thereto: Held 'l' hat such acts and practices, under the circumstances set forth, were all to the prejudice and injury of the public, and consH1uted unfair and deceptive acts and practices in commerce.

Contention of respondents that no deception stemm cd from the use of the corpol' ate name " Silk Skin, Inc. " in connection with the !:ale of their garments, since it was used only to identify the manufacturer of the article and information with respect to the fiber content of the products appeared on the labels and tags affxed thereto was not tenable in view of their reference to their " Silk Skin Foundations" in pamphlets distributed by them to the trade; of the fact that their policy relating to cooperative advertising, as announced to dealers, contained no requirement that the use of the words " Silk Skin " be limitell exclusi,ely to identifying the corporate respondent as t.he source of the products offered; and the fact that their representative auvertisements relating to their mat sen-ice for dealers and store use contained no sug-g-estion that the great bulk of their line was constituted of garments which contained no silk, or contained any fiber other than silk.

The deception which stemmed from respondents' prior use of the product name Silk Skin " and the manner' of their current use of the word "silk" in the corporate name " Silk Skin, Inc. " to designate garments which contained no silk was not cured by the information relating to fiber content in the advertising and on the garments, since, in view of the great esteem in which silk garments are held by the public, thc j)llcI1aser mig"ht Dot be impel1ed , &:

AMASIA IMPORTING CORP. ET AL.

Oomplaint to inspect the labeling- to corroborate the impression necessarily engendered by the prominent display of the word "silk" in the product or corporate name; and in instances in .which the garment contained no silk, the labeling wouid not sene to amplify or explain the impressions thus engendered, but might serve only as a confusing contradiction. The Commission, accordingly, was of the opinion that only a p1'ohibition against the use of the word in any manner, including the corporate name as a designation for or in reference to t1108e of respondents' garments which were not composed in 1Jart of silk Quld eliminate adequately the decevtion which the word had the capacity and tendency to engender As to the contention of respondents that the advertising of respondents Silk Skin, Jnc." complied with the Trade Practice Rules for the Silk Industry, promulgated by the Commission on Kovember 4 , 1838, rule 11 (a) set forth that it was an unfair trade practice to use the \vorcl "silk" as a part of a trade or corporate name unless a substantial part of the business ill question was cleYotcd to silk or silk products, and there was full and none1eceptiye disclosure in imllcuia te conjunction, with the name, of the fact as to any merchandise advertised and sow which was not composed wholly of silk; and rule 11 (b) condemlled the use of the word "silk" in any trade-mark inclicati,e of silk when the ruerclwnc1ise concerned was not in fact composed thereof. Such expressions afforded no support for a conclusion that under the statute misrepresentation inuring to the use of decepti,e trade-marks might be pcrpetuated throng11 the medium of a subsequently adopted firil or corporate name, and there ,,,as no dispute that respondents ' purpose was to perpetuate and continue use of the word. silk " in connection with the sale of garments theretofore so designated theough adopting the corporate name "Silk Skin, Inc. " in order to prescne w11at was deemed to be a valuable asset, namely the product name " Silk Skin.

Before l1h. Miles J. FUTnas and MT. Henry P. Alden trial examiners.

Mr. Joseph Callaway for the Commission. GainsbuTg, Gotteib, Levitan Cole of New York City, for respondents.

Al\fEXDF.D COMPLAINT Pursuant to the provisions of the Federal Traele Commission Aet anel by virtue of the authority vesteel in it by said act, the Federal Trade Commission: having reason to believe that the Amasia Importing Corp. , a corporate,jon, Silk Skin, Inc., a corporation and George Lacks and Harold G. Lacks, individually and as president and secretary, respectively, of both corporations, have violated the provisions of 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 amended complaint, stating its charges in that respect as follows :

FEDERAL TRADE COM:ISSION DECISIONS Complaint 48 F. T. C.

PARAGRAPH 1. Respondents Amasia Importing Corp. and Silk Skin Inc., are both corporations organized, existing and doing business under and by virtue of the laws of the State of New York and both have their offces and places of business at 10 East Thirty-ninth Street in the city and State of N ew York.

PAR. 2. The individual respondent George Lacks is president of both Amasia Importing Corp. and Silk Skin, Inc., and respondent Harold G. Lacks is secretary of both corporations. These individual respondents also have their offces and principal places of business at 10 East Thirty-ninth Street, New York, N. Y., and formulate, direct and control the acts, policies, and business affairs of both corporate respondents PAR. 3. For a number of years prior to and during the early part of 1Vorld \Var respondent Amasia Importing Corp. was engaged in the manufacturing, sale, and distribution or corsets and foundation garments ror women. In 1943, respondent Silk Skin, Inc., was organized and ror a time acted as the sening agent for respondent Amasia Importing Corp. In November 1947, respondent Amasia Importing Corp. ceased to manufacture such garments which are now made, advertised, sold, and distributed by respondent Silk Skin, Inc. Hespondellts sell and have sold their products to department stores and other retail dealers and have caused and now cause such products when sold to be transported from their place of business in the State of New York to the purchasers thereof located in various other States in the United States and in the District of Columbia. Hespondents maintain and at aU times mentioned herein have maintained a course of trade in said merchandise in commerce among and between the various States of the United States and in the District of Columbia. The respondents ' volu1l1e of business in said articles in such commerce is substantial.

PAR. 4. In the course and cond uet of their business and for the purpose of inducing the purchase of their products, respondents have since March 21, 1938, made and caused to be made representations regarding the materials of which said garments were made, in advertisements published in newspapers, magazines, and other publications for distribution to the purchasing public. Respondents Amasia Importing Corp. in such advertisements used the trade name "Silk Skin" to designate and describe all of its garments, irrespective of the materials from which the garments were made. Respondent Silk Skin, Inc., prominently displays its corporate name on letterheads, bilheads, and other advertising matter. Among and typical of the representations made and used by respondent Silk Skin, Inc., since the end of World War II with regard to said corsets and foundation garments is the following: AMABIA IMPORTING CORP. ET AL.

indings At Last Silk Sldn, Inc.

Bring You Pre-War Full-Fashioned Quality.

ve waited five long years for this day-for the fine quality yarns that would allow us to offer you the world-famous Full-Fashioned Panty and Girdle by Silk Skin, Inc.

PAR. 5. Through the use of the trade name Silk Skin to designate their products, and through the prominent display of the corporate name Silk Skin, Inc., on letterheads, billheads, and other advertising matter, and through the representations sct forth above and others similar thereto, respondents have represented directly and by implication that their garments were and are composed of silk, the product of the cocoon of the silkworm.

PAR. 6. The foregoing representations were and are deceptive and misleading. In truth and in fact none of respondents' garments have ever been made exclusively of silk and many of them contain no silk at all In fact, approximately 85 percent of the business of respondents is and always has been in garments containing no silk. PAR. 7. Over a period of many years the word silk has had and stil has in the minds of the purchasing and consuming puhlic generally a definite and specific meaning as being the product of the cocoon of the silkworm. Silk products for many years have held and still hold great public esteem and confidence for their precminent qualities. PAR. 8. The use by the respondents of the foregoing misleading and deceptive representations, disseminated as aforesaid, with respect to their products has had and now has the capacity and tendency to and does mislead and deceive a suhstantial portion of the consuming public into the erroneous and mistaken belief that such representations were and are true and to cause and does cause a substantial portion of the public to purchase respondents garments under such mistaken belief. PAR. 9. The aforesaid acts and practices of respondents are all to the prejudice and injury of the public and constitute unfair and deceptive acts and practices within the intent and meaning of the Federal Trade Commission Act.

REPORT, FINDINGS ,,\S TO THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Commission on February 4, 1941, issued and suhsequently served its complaint in this proceeding upon the respondent, Amasia Importing Corp., charging said respondent with the use of unfair and deceptive acts and practices in commerce in violation Findings 48 F. T. C.

of the provisions of that act. After the filing by said respondent of its answer, testimony and other evidence were introduced before a trial examiner of the Commission theretofore duly designated by it and' such testimony and other evidence, together with a stipulation as to the facts entered into on January 26, 1943, between counsel supporting the complaint and counsel for respondent under which respondent Amftsia Importing Corp. waived further intervening procedure and consented to issuance by the Commission of findings as to the facts and order disposing of the proceeding, were duly recorded and fied in the ollice of the Commission. This proceeding thereafter came on to be heard before t11e Commission upon the complaint, answer, and the testimony and other evidence, including the aforesaid stipulation as to the facts. After the issuance on September 16, 1946 by the Commission of its findings as to the facts and order to cease and desist, respondent Amasia Importing Corp. on K ovember 25 , 1946 fied petition requesting that the proceedings be reopened and that said order to cease and desist be modified or, in the alternative, that the respondent be relieved of the stipulation of facts received into the record on January 26, 194-3. It appearing to the Commission, among other t.things, that there had been a misconception and misunderstanding by counsel for respondent and there being reason to believe that changes in the factual situation had occurred, said findings as to the facts and order to cease and desist as theretofore issued by the Commission were all December 3 1947, vacated and set aside and the matter was reopened for such further proceedings as appeared appropriate \with leave being grant€'.c1 to respondent Amasia- Importing Corp. to withdraw or amend the stipulation or facts referred to above. After the filing by respondent Arnasia Importing Corp. of its statement withdrawing said stipulation or racts, the Commission on August 9 1948, issued and subsequently served its amended compla-int in this proceeding upon the respondents named in the caption hereof. Following the filing of rcspondcnts' answers to the amended complaint testimony and other evidence in support of and in opposition to the allegations of the amended complaint were introduced before a trial examiner or the Commission theretofore duly designated by it and such testimony and other evidence were recorded and filed in the offce' O! the Commission. Thereafter, this proceeding regularly came on for final hearing by the Commission upon the Teeord including the amended complaint, respondents' ans\,ers, testimony, and other evidence, recommended decision or the trial exa,miner and the exceptions thereto filed by respondents, briefs in support of and in opposition tD the amended complaint, and oral argument; and the Commission having duly considered the matter find being now fully advised in the AMASIA IMPORTDW CORP. E.T AL.

Findings premise. , finds that. this proceeding is in the interest of the public and makes its findings a to the fnrts and its conclusion drawn therefrom. FJSD1XGS AS TO THE PACTS P AUAGRAPH 1. Rcopondcnts Amusia Importing Corp. and Silk Skin Inc., are:N ew York corporations with their principal place of business at 10 East Thirty- ninth Street, New York . Y. Respondent Harold G. Lacks has been an oiIcer and a managing director of respondent Amasia Importing Corporation since 19;18, and an offcer a.nc1 a director of respondent Silk Skin, Inc., since its organization in 1943. Respondent George Lacks has been an offcer and a managing director of both of the corporate respondents since 1944. Respondents Harold G. and George Lacks arc the only offcers of the respondent corporations and they have directed and controlled the acts and policies and business affairs of both respondent corporations. PAR. 2. From prior to ,August 19:)8 until after the beginning of World "Val' II , respondent Amasia Importing Corp. engaged in the ITlanufacture and sale of women s corsets, girdles, and foundation garments to department stores and other ret.ail dealers throughout the United States. Respondent Amasia Importing Corp. resumed the manufacture of these garlnents at the end of the wat, but the merchandise produced thereafter was sold and distributed to retail stores by respondent Silk Skin, Inc. On or about JXovember 1 , 1047, Amasia Importing Corp. ceased to manufacture respondents' garments and since that date respondents' merchandise has been manufactured, sold and distributed by respondent Silk Skin, Inc. PAR. 3. In connection ivith the sale of their girdles, corsets, and foundation garments to dealers, respondents ha.ve caused their merchandise to be transported from their place of business in the State of New York to purchasers thereof located in various other States of the United States and in the Dist.rict of Columbia. Respondents, during the periods mentioned herein, have maintained a course of trade in their merchandise in commerce-among and between the various States of the United States and in the District of Columbia, the volume of which has been substantial.

PAR. 4. In the course and conduct of ,their business and for the purpose of inducing the purchase of their products, respondents have made and caused to be made representations concerning such merchandise in advertisements published in newspapers, magazines, and other publications for distributionto the purchasing public. (a) In the advertising of respondent Alnasia Importing Corp. disseminated prior to 'V orId 'Val' II , respondents' garments ,were desig- . .. ..

Findi ngs 48 F. T. C.

nated and described by the product name "Silk Skin " which name was displayed prominently and conspicuously in advertisements and on the garments when offered for sale to the purchasing public. Typical of such advertisements is one which appeared on August 24 1938, in The N ew York Sun over the name of a store engaged in the resale of such garments. This advertisment was reproduced from an advertising mat furnished by respondent Amasia Importing Corp. to such store and read:

SILK SKIN Trademark Reg. No. 323812 U. S. Pat. Off.

your new free " " easy girdle Gives you wonderful feeling of U D ease and comfort. Quick to R E sup into, with its zipped E L front panel. Keeps you sleeked, without a wrinkle. into lovely curves. 80% elastic yarn with 20% rayon.

Another typical advertisement used by respondent Amasia Importing Corp. appeared in The New York Times on October 23, 1938 wherein the display was in single column width and the words "Silk Skin" appeared variously in large script and prominent type, which advertisement read:

You ll be SLIMMER SMOOTHER SMARTER Full-fashioned, Free as Air SILK SKIN 80% to 100% elastic yarn combined with lisle, rayon or silk U D R E E L .. . . .

AMASIA IMPORTING CORP. ET AL.

Findings You d have to pay two and three times the price for expensive French band-fashioned girdles to look as lusciously smooth and slim as J'OU do in a SILK SKIN.

U D R E E L You can wear the new romantic fashions with distinction, and yet be perfectly comfortable, in a SILK SKIN pantie4 corset. The' highly resilent, unique elastic fabric (it actually improves with washing) molds you naturally, with not a seam to bulk or bind. * U D R E E L You look chic as a fashion model in a SILK SKIN all-in-one because the powerful elastic molds you into today s smart fashion figure.

SILK SKIN girdles, panties and all-in-one with !Iud ,without zipper panel, at all leading stores, $3.50 to $15 Write for ilustrated Brochure T- SILK SKIN-IO EAST 39, N. Y.

.. ..

FEDERAL TRADE COM:lission DECISIONS Findings 48 B'. T. C.

(b) Among the advertisements used in promoting the sale of respondents' products by Silk Skin, Inc., has been a price list, effective October 1, 1947, b1 which, among other things, appears the following: ADVERTISING COOPBRATION POLIOY \'?e ,vil supply \vithol1t clmrge matrix and suggested advertising copy to stores desiring same. lye wili allow 50% of a store s net local space rate for any newspaper 3(herti.sCilcnt to coyer actl1allineage used provided that the aelve!"

tisement is separately enclosed and prominently disIJlays the legend CLL-FASIIIONED and SEA)ILESS by SILK SKI , Inc.

In the foregoing, the terms bi' and "Inc." appear in much smaller print and in lighter type than the words "SILK SKIN. " A matrix and suggested advertising referred to, as offered by respondents in lH47, are the following:

at last SILK SILK SKIN SKIN Inc. Inc. presents brings you the OXL Y full fashioned seamless vantie in the world PRE-WAR C 1\ FULL FASHIOXED T 0 I FREE AS AIR-'.cal comfort, with not a T' D QUALITY !:ingle seam to R E bulk or bind. E L n:LL FASHIO ED- I1Ve ye waited fixed long nnu€l' a Imtented PIC'lTHE years for this day-for j I toprocessexpensiYC!comparablehand- MODELthe .fne quality yarns i tlw t w0111d allow 118 to \,OYell French offer you the w01'I(I- l'Jnstic to shape famous Full-Fashioned you ,with real Pantle and Girdle by corset control. SILK 81\1::\ inc. 800. STORE NA STORE NAME :::

AMASIA EvlPOR'fI:\G CORP. ET AL. Findings (c) To the merchandise sold b;y Amasia Importing Corp. there were attached hyo woven tab Jabels. These were amxed at the same place on the top scam of the garments in such manner that onc was superimposed over the other. In large script on the outer face of the upper label were imprinted the words "Silk Skin" in flowing script, and on the reverse fftce appeared information relating to patents. The under or less con picuous Inbel had irnprinted on its outer face the style number and size and on t11c under side appeared a statement jn small but discernible type relah11g to the constituent fibers of such garment. To these garments respondents also afIxec1 a cardboard tag on which the term ;' Silk Skin:: appPfll'ed in very large letters, and on the back, in sllull but relatively discernible type, there was imprinted, among other things, laundering instructions together with a statement in reference to constituent fibers. To its garments containing rayon but no silk, respondent Silk Skin, In( . causes to be attached cardboard tags on which there is imprinted, among other things, the wonls "By Silk Skin, Inc. Cotton Lastex ' * Rayon Yarn." On such tag the term "Inc. " appears in extrelnely small type, A single woven tab label also is affxed which reads "Cotton Lastex and Bemberg Rayon * ., * By Silk Skill Inc. :' The letters in the words " Silk Skin': appear in script. The word "B.'/' and the expression "Inc.:: appear in somewhat smaller type.

\H. 5. Through the use of the product mllne " Silk Skin " to designate, desc.ribe and refer to all of their garments in advertisements appearing in yarious publications and in other achertising matter including t.he boxes in which their merchandise was packaged and the labels nnd tags attached to such garments, respondents Amasia Importing Corporation and Harold G. Lacks represented directly and by implication that the garments so designated were composed of s11k, the product of the cocoon of the silk "worm. Through use of the words ;;Silk Skin:' in the expression "Full Fashioned and Seam- Jess by Silk Skin, Inc, " to designate their rnerchandise, and through prominent display of the corporate name ' Silk Skin, Inc." in a(hertisements appearing in publicat.ions on letterheads and in other c1Yertising mauer, including the boxes in \which their merchandise is packed and on Jabelf: and tags attached to slich gannrnts, responc1f:nts Silk Skin, Inc., George Lacks and Harold G. Lacks have represented and now represent directly and by implication that all of the garments so designated and offered for sale a,nc1 sold by them are C'omposc(l of silk, the proc1nct of the cocoon of the silk \VOl'11. PAR. 6, The. representations of respondents referred to in P,tragraph Five above are false and misJeac1jng. K one of respondents :.1:3S,fQ-54- Findings 48 F.

garments ever has been made exclusively or silk. An elastic yarn the covering of which is composed or lisle, is used in the manufacture of respondents' girdles, corsets and foundation garments. The yarn "Then silk isis knitted together with rayon or nylon, or with silk. used as plating 01' facing in the knitting of respondents' garments the silk content of the article so produced constitutes approximately 331 percent of garment weight. Approximately 8;'5 percent of themel' chanclise sold by respondents contains no silk whatsoever, and ga.rments containing rayon which resembles silk in lppCal'ance constitute the major part of this category of merchandise in ,which no silk fiber is present.

PAR. 7. Silk has been a.nd is understood by the purchasing public to be the product of the cocoon of the silk worm and garments composed of silk have been held in high public esteem for a gre,at many years. There is a preference among purchasers particularly for feminine silk undergarments;

PAR. 8. In the course of these proceedings, respondents ha,ve urged that no decep60n stems from the use of the corporate name "Silk Skin, Inc." in connection with the sale of their garments for the reasun that the name is used only to identify the manufacturer of the articles being offered for sale and for the further reason that information n'specting fiber content of the products appears on labels and tags affxed thereto. Respondents' contention that the advertising of respondent Silk Skin, Inc., has been1limited to identifying the corporate respondel1t as the maker of the product offered for s tlc is not tenable. Statements in reference to respondents Silk Skin foundations" lmve appeared in pamphlets distributed by respondents to the trade. Pertinent and considered in this connection also is the fact that respondents' policy relating to cooperative advertising with dealers as announced hy responde,nt Silk Skin, Inc., to the trade, has contained no express requirement that use of the words Silk Skin" be limited(l exclusively to identifying the corporate respondent as the source of the products offered for sale. One of the representative iI(lvertisernents depicted in respondents' promotional matter relating to the mat service available in 1947 to dealers contains no suggestion thflt the gre.at bulk oi respondents' Ene of merchandise constitutes gn,rrnents containing no silk 01' that respondents' glut1ents contain i\n ' fiber other than silk. The mats referred to 'ihle adaptable to :store nse merely through insertion of the name of the store in 'ihich t hey fire' being offered for sale.

In the opinion of the Commission, the deception sternrning from respondents' Prior llse of the product nmne, "Silk Skin and the malmer AMASIA IMPORTING CORP. ET AL. Findings of their current use of the word "Silk" in the corporate name "Silk Skin, Inc." to designate garments containing no silk is not cured by the information relating to fiber content appearing in the advertising and on SHch garments. Silk has been used widely in the manufacture of women s corsets, girdles, and foundation garments. Silk garments are held in great esteem by the purchasing public and where, as in the circumstances here, the product name or corporate name suggests that the garments are composed of this fiber the purchaser may not be impelled to inspect the labeling of the garment to corroborate thereby the impressions necessarily engendered by prominent display of the word "Silk" in a product or corpor.ate name. In instances in which the garments offered for sale contain no silk fiber, the labeling would not serve to amplify or explain the impressions engendered by the presence of the word "Silk" in such product name or business name, but may serve only as a confusing contradiction thereto. considering the remedy to bc applied here, the Commission is of the opinion, therefore, that only a prohibition against use of the word silk" in any manner including the corporate name as a designation for, or in reference to, those of respondents' garments which are not comprised in part of silk, adequately will eliminate the deception which this word has the capacity and tendency to engender. PAR. 9. It is urged by respondents that the advertising of respondent Silk Skin, Inc., complies with the Trade Practices Rules foy: the Silk Industry promulgated by the Commission on November 4 1938. Rule 11 (a) of such rules contains an expression to the effect that it is an unfair tnlcle practice to use the word "silk" as part of the trade or corporate name unless a substantial part of the business conducted by such user is devoted to silk or silk products, and that as to any merchandise of the business which is not composed wholly of silk, full and nondeceptive disclosure is made in immediate conjunction with such trade or corporate name of the fact that the merchancnse advertised and sold is not silk but is composed of or contains other fibers. Rule 11 (b) states that it is an unfair trade practice to use the word "silk" in any trade-mark indicative of silk when tho merchandise which bears such mark, or which is advertised and sold thereunder, is not in fact composed of silk, or to use said trade-mark in any other manner: or under any other condition, which is misleading or deceptive.

lt is not correct, as respondents contend, that the advertising of respondent Silk Skin, Inc. , has complied with the Trade Practice Rules. This conclusion, in part, is based on the Commission s consideration of the advertising matter used by Silk Skin, Inc., offering Findings 48 F.

to dealers its mat service which contained the suggested advertising described hereinbefore in paragraph 4 (b). In 1943, prior to the issuance of the amended complaint in this proceeding but during the time when this proceedllg was pending, respondent Silk Skin, Inc., was organized by the same interests who theretofore had conducted the affairs of Amasia Importing Corp. js asserted by respondents that the corporate na,me under consideration here was adopted in order to preserve what was deemed to be it valuable asset, namely, the product name "Silk Skin" and there is 110 dispute, therefore, that respondents' purpose was to perpetuate and continue use of the 'word "silk" in connection ,with the sale of garments theretofore so designated. The expressions contained in Rule 11 (a) afford no support for a conclusion that under the statute misrepresentation inhering in the use of deceptive trade-marks, referred to in Rule 11 (b), may be perpetuated through the medium of the subsequently adopted firm or corporate name. Lacking as they do the force and effect of law, the prime objective of trade practice rules is to express the requirements of the statutes administered by the Commission and decisions in terms particularly addressed to the problems and practices of industry members. The amended complaint in this proceeding, therefore, charges that the practices anegcd to have been engaged in are in violation of law namely, the Federal Trade Commission Act, and the proceeding is not based 011 transgression of the Trade Practice Rules. Therefore whether such part of respondents business as relates to the offering for sale of garments actually containing silk constitutes a substantjal part of the business of Silk Skin, Inc., is not being decided by the Commission and a decision in this reslJcet is not necessary to determination of the issues presented \mder the pleadings. The expressions contained in Rule 11 (a), moreover, serve merely to define one particular area in which the Commission has reason to believe that. use of the word "silk" as part of a trade or corporate name is deceptive and in violation of the law. Obviously, these statements do not constitute a detennination that in all other circnmstances the use of such name is not. in violation of the law, and 'where as here, the use of the name is found to have the capacity and tendency t.o deceive, Rule 11 (a) presents no bar to Commission action intended to remove such capacity and tendency.

PAR. 10. The use by the respondents of the foregoing representations has had and uow has the capacity and tendency to mislead and deceive a substantial port.ion of the consuming public with respect AMASIA LVIPORTING CORP. ET AL.

Order to the constituent fibers or respondents' garments, and to cause a substantial portion of the public to purchase respondents' garments as a result of the erroneous and mistaken belief so engendered. Respondents' acts and practices have served and now serve also to place in the hands of dealers purchasing such merchandise from respondents for resale a means and instrumentality whereby they are enabled to mislead and deceive the public with respect to respondents' garments. CONCLUSION The acts and practices or the respondents as herein round are all to the prejudice aud injury or the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

ORDER '1'0 CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the record including the amended complaint, the answers of respondents, testimony and other evidence introduced before a trial examiner of the Commission theretofore duly designated by it recommended decision of the trial examiner and the exceptions thereto briefs filed in Support or aml in opposition to the amended complaint and oral argument; and the Commission having made its findings as to the facts and it.s conclusion that the respondents have violated the provisions or the Federal Trade Commission Act: It is ordered That respondent Amusia Importing Corp., a corporation, and respondent Silk Skin, Inc., a corporation, and said respondents' offcers, agents, representatives, and employees, and respondents George Lacks and Harold G. Lacks, individually and as offcers or Amusia Importing Corp. and Silk Skin, Inc., and their agents, representatives and employees, directly or through any corporate or other device, in connection with the ofiering for sale, sale, or distribution in commerce, as commerce is defined in the Federal Trade Commission Act, of wearing apparel not composed of silk, do forthwith cease and desist from:

using the product name "Silk Skin" or the corporate name "Silk Skin, Inc. " or the word "silk" or any simulation thereof, either alone or with other words or as part of any product or corporate name; provided, however That nothing herein shan be construed to prohibit use of such product name or corporate name or other word or words indicative of silk content in connection with the offering for sale, sale or distribution, as aforesaid1 of garments composed in substantial part FEDERAL TRADE COMl\HSSION DECISIONS Order 48 F. T. C.

of silk and in part of another fiber or fibers if, whenever such terms or words appear, there are used in immediate conjunction therewith in letters of equal conspicuousness, words truthfully describing such other fiber or fibers.

It i8 further ordered That the respondents shall, within sixty (60) days after service upon them of this order, file with the Commission a report in writing, setting forth in detail the manner and form in which they have complied with this order.

ATLAS SUPPLY CO. ET AL.

Syllabus IN THE lVIATl'EH OF ATLAS SUPPLY CO., STANDARD OIL CO. (OHIO), STAND. ARD OIL CO. (KENTCCKY), STANDARD OIL CO. OF CALIFORNIA, AND STANDARD OIL COSo (OF INDIANA AND NEW JERSEY), ET AL.

lrLAINT, 1"INDIXGS, Axn OHDEHS IN RJ GARD TO 'rile ALLEGED VIOLATION OJ. SDBSECS. (C) AND (F) OF SEC. 2 OF AN ACT OF CONGRESS APl ROVED UCT. 15, 1914 , AS AMENDED BY AN ACT APPROVED JUNE 19 , 1836 , AND OF SEC. 5 OF AN ACT APPIWVED SEPT. 20, 1914 Docket 57DJ,. 001nlJluint. Ju.lu 10, 1950-Decision, July, 1951 Where a corporation through which, as their controlled intermediary, the Stand. ard Oil companies of Ohio, Kentucky, California, Indiana, and ew .Tersey had engaged increasingly since lobo in purchasing "TEA" products, namely, tires, batteries, and other automobile products and accessories; and in sellng the same through a substantial percentage of all the senke stations located throughout t.he United States- (a) Heeeived and accepted commissions, brokerages, or other compensation in lieu thereof on purchases of "'tba" products made through it by said oil companies in transactions in which the supply company acted as an intermediary subject to the control of the oil compaliies; and Where said oil companies (b) Received and accepted in the form of dividenus on their common stock in said supply company and in the form of services and facilties furnished hy it in the marketing of their "TEA" products, and in various other ways compensation which said supply company thus received and transmitted to them:

Held That such acts and practices of said corporations in receiving and accepting commissions, brokerages, and other compensation or allowance, or dis. count in lieu thereof, as above set forth, violated the provisions of subsec. (c) of sec. 2 of the Clayton Act, as amended by the Robinson-Patman Act; and Where said supply company, in connection with the purchase of "TBA" products from sellers or vendors who were in competition with other sellers for its business- (n) Knowingly induced and knowingly received and accepted discriminatory prices from some of such sellers 01' vendors which were lower than prices paid to the same "TEA" sellers for commodities of like grade and quality by other purchasers competing with the uil companies in their resale; and Where said oil companies, in the purchase of certain of their requirements of sneh products through and from the supply company, in tbe resale of which they were in competition with distributors, wholesalers, jobbers, and others- (b) Knowingly received and accepted discriminatory prices from some of such sellers or "Vendors which were lower than those paid to the same "TEA" sellers as aforesaid;

FEDERAL TRADE COl'llISSION DKCISIONS Syllabus 48 F. T. C.

Effect of which discriminations in price and of the practices and activities above set forth in connection with said various companies' purchases of wl'BA" products, might be and was substantially to lessen competition in the lines of commerce in which they were engaged, and to injure, destroy, or pre,ent competition between their suppliers who granted them lower prices and those suppliers ,v11o did not grant such discriminatory prices, and also to injure, destroy, and prevent competition between sairl companies and other marketers, incJuc1ing distributors, wholesalers, jobbers, and others, who did not receive said discriminatory prices: Held That such acts and practices of said Tarious companies in knowingly inducing and receiving and knowingly accepting the discriminations in price as above set forth were in violation of the provisions of subsec. (f) of sec. 2 of the Clayton Act, as amenrled by the Robinson-Patman Act; and "-There the aforesaid oil companies, which since 1930 either directly or through their wholly owned subsidiaries Q'vned all the common stock of said supply company, and operated the same in conn ction with rheir aforesaid purchases of "TEA" products (sales of which by them grew from 1930 to 1949 to about 10 percent of the total replacement sales of such products in tbe United States)- Agreed and combined among themselves, through their uninterrupted ownership, control, and operation of said "Supply Company " since 1fJ30 and its use as an intermediary in the purchase of TBA" products, to uti1zc the influence of their combined purchasing power in jointly buying said products, and thereby to purchase the same at ilegal1y discriminator;)' prices; to receive ilegal commissions, brokerages, or other compensation in connection with purchases of sairl products; and to obtain other preferential treatment from sellers or vendors which WiiS preferential to that allow('l, afforded, or ronde available by such sellers to competitors of said various companies; Effects of which practices and activities, under the circumstances set forth were tal. Injure, lessen, and preyent competition between them rmd other oil companies and distributors, wholesalers, and jobbers of "TEA" products in the purchase Hnd resale thereof;

2. Eliminate competition between respondent "Oil Companies" in the purchase of "TBA" products through respondent " Supply Company 3. Foreclose a large market to those manufacturers and yeDllors of the aforesaid products who refused to grant ilegal discriminatory prices or to pay ilegal commissions, brokerage, or other compensation to resl-JOndents; and 4. Increase Substantially the size, power, and market control of respondents in the purchase and resale of "TEA" products: Held That such acts and practices, under the circumstances set forth, were all to the prejudice of the pubhc, and had a dangerolls tendency to hinder, lessen and restrain competition in the purchase and resale of "TEA" products in commerce; and to create in reslJOndents a monopoly in the purchase, sale and distribution thereof; and constituted unfair methods of competition in commerce.

Before Aft. Everett F. Haycraft trial examiner. Mr. Earl W. Kintner, l11r. J. Wallace Adair, Mr. L. E. 01'eel, Jr. and M1'. James 1. Rooney for the Commission. , ? .

ATLAS SUPPLY CO. ET AL.

Complaint Mr. William W. Nottingham of New York City, ani Covington & Burling, of Washington, D. c., for Atlas Supply Co., and along with llicAfee, Grossman, Taplin, Hanninq, Ne-wc07ner Hazlett Cleveland, Ohio, for Standard Oil Co. (Ohio) ; iliddleton, Seelbach, TVolfoTd, Willis Cochmn of Louisville Ky., for Standard Oil Co. (Kentucky) ;

PilsbUJ' Y, il adi80n SntTo of San Francisco, Calif., for Standard Oil Co. of California;

IfiTldanrl, li' levi1ing Green, ill aTtin re EU1 and lif1'. Thomas E. SundeTland and il r. Albert L. Green of Chicago, 111., for Staudard Oil Co. (Indiana) ; and Davis, Polk, WaTdwell, S1l!Cledand Kiendl of New York City, for Standard Oil Co. (New Jersey) .

C02\IPLAINT Pursuant to the provisions of the Federal Trade Commission Act and the Clayton Act lS amended by the Robinson-Patman Act, and by virtue of the authority vested in it by said acts, the Federal Trade Commission having reason to believe that the parties Hamed in the caption hereof and more particularly described and referred to hereinafter as respondents, have violated the provisions of subsections (c) and (f) of section 2 of the Clayton Act, as amended by the Hobinson- Patman Act (U. S. c., title 15, sec. 13), and section 5 of the Federal Trade Commission Act (D. S. c. , title 15 , sec. 4,5), and it appearingto the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges as follows:

COUNT I Charging violation of section 2 (c) of the Clayton Act, as amended the Commission alleges:

\TIAGHAl'H 1. Each of the following-named respondents is a corporation, organized, existing, and doing business under the laws of the State and with its principal offce and place of business located as hereinafter set forth:

O; Kame ! State COT. - - Principal offce and pIrtce - business 0- pcm te Athls Supplv Co_ -- Del:\WlIrC_ h 714 Broad St. , Kcwark Strwdard Oil Co. (Ohio)-- .. Ohio- -- Midland Remk Blu!,., CJeveland, Obio. Standard Oil Co. (Kentucky). - Kentucky-- -- Starks Bldg. , 4th and 'Walnut Sts., Louisvile. ' Ky.

Standard Oij Co. ofCalifor:Jia DeJiw,arc-- , StaJllard Oil mdg. , San Fnmc:sco, Calif. Standard Oil Co, (Tn(liauB). -- - Indwna -- glo South .\Iic!ngan J.ve., (,llc l"o, IlStandard Oil Co. ( ew Jersey)-- ew Jersey.. - 3D HockefelIer Plaza, !-ew York 20 , N. FEDERAL TRADE COMMISSIOK DECISIONS Complaint 48 F. T. C. Respondent, Atlas Supply Co., is hereinafter referred to as the Supply Company." The ot.her above-named respondents, when referred to collectively hereinafter, wil be referred to as the "Standard Oil companies.

PAR. 2. The " Standard Oil companies " either directly or through their whony owned subsidiaries, arc neff, and for many years hayo been, engaged in the business of producing, refining, and selling petroleum products. Beginning in 1$129, and with increasing emphasis since that date, they have engaged in the business of purchasing and selling tires, batteries, and other automobile parts and accessories which products arc generally referred to in the trade as "TEA" products and will sometimes hereinafter be referred to as "TBA" products. The sale of "TEA" products now constitutes a large and profitable portion of their business.

The " Standard Oil companies " respec6very, sell their petroleum products and reseJ1 "TEA:' products to or through. service stations operated by them or by persons, firms, and corporations whose buying, selling, and operating policies the "Standa.rd Oil companies" arc able t.o greatly influence or control. These said service. stations constitute a substantial percent ge of th3 total number of service stations in the United States. The influence or control of the "Standard Oil companies " over these service stations ;yas acquired through o\vnership leases, or subleases of the service stations: leasing of pumps and fixtures, dealer contract.s, agreements, promotional and marketing assistance, and many other factors.

PAIL 3. The "Standard Oil companies" purchase "TEA" products through the "Supply Company " and have been doing so continuously since its organization and incorporation which wa.s effected, directly or indirectly, by the "Standard Oil companies" on February 27 , 1929. A11 of the common stock in the "Supply COlnpany" is now: and since the time of its organization has been, owned in equal amounts of 100 000 shares each by the "Standard Oil companies" either directly or through their wholly owned snbsidifJ.ries. The holder:3 of the common stock have the sale voting power. Part of the net profits or net earnings of the "Supply Company" have been paid to t11e "Standard Oil companies" as divi(lends on its common stock Such dividends have not been paid on the number oT shares of common stock owned by each of the "Standard Oil companies " but the net profits or earnings on each cla.ss of products handled haTc been divided among the ': St.andard Oil companies:" respectively, in proportion to their purchases of TBA" products of that class.

ATLAS SUPPLY CO. ET AL.

Complaint The "Supply Company" in each of the transactions hereinafter referred to acted as the agent, representative, or intermediary acting in fact for, or in behalf of, and subject to the control of, the "Standard Oil companies.

PAR. 4. In the course and conduct of said business since 1929, said purchases of "TEA" products have been made continuously from vendors located in thc several States of thc United States; and respondents have caused said products so purchased to be transported from said States to destinations in other States and the District of Columbia in a regular current and flow of commerce. PAn. 5. In the course of said business in commerce since June 19 1936, the "Standard Oil companies" have purchased certain of their requirements of "TEA" products through the "Supply Company from "TBA ' vendors, some of whom paid the " Supply Company conunissions, brokerage fees, or other compensations on said purchases. The "Supply Company" received and accepted said compensations and transmitted and paid them to, and they were received and accepted by the "Standard Oil companies" in the form of dividends on the, common stock of the "Supply Company," and in the form of service and facilities furnished them by the "Supply ComlJany" in the marketing of their "TEA," proclncts and in various other ways. In alj of the aforesaid transactions where the "Supply Company rccejyec1 commissions, brokerage fees, or other compensations, it acted as agent, representative, or other intermediary therein acting in fact for or in hchalf, or subject to the direct or indirect control of the Standard Oij companies " and in some of said transactions it also purported to act as agent of the vendor.

Among the transactions in which the "Supply Company" received and accept.ed said valuable considerations ",ere those made under agreements entered into by the "Supply Company" with 'Vestinghonse Electric Corp. and General Electric Co. In saiel transactions the "Supply Company" agreed to act as sales agent for each of these two companies in the sale and distribution of electric lamps and related items, and the said two companies agreed to pay and paid the Supply Company" a commission on purchases thereof made through it by the "Standard Oil companies PAn. 6. The foregoing acts and practices of the respondents, and each of them, in receiving and accepting commissions, brokerages, or other compensation or allowances or discounts in lieu thereof, in the manner and form aforesaid, are in violation of the provision of subsection (c) of section 2 of the Clayton Act, as amended. FEDERAL TRADE COM:\IISSION DECISIONS Complaint 8 F. T. C. COUXT II Charging violation of section 2 (f) of the Clayton Act, as amended the Commis ion alleges:

PAR. 7. Paragraphs 1 to inclusive, of c.count I are hereby repeated and made a part of this charge as fully and with the same effect as though here again set forth in Inll.

PAR. 8. In the course of said business in commerce since June 19 1936, the "Standard Oil companies" have purchased certain of their requirements of "TBA" products through the "Supply Company from " TEA" vendors, in the resale of which the Standard Oil companies were in competition with distributors, wholesalers, jobbers, and others, except to the extent that this competition has been lessened or eEminated by the methods, practices, and policies of respondents described herein. In certain of these purchases the respondents have knowingly induced or knowingly received discriminatory prices from certain "TEA" vendors which \\ere lower than prices paid to the same TEA" vendors for commodities of like grade and quality by other purchasers competing with the "Standard Oij companies:' in their resale.

In each of the purchases referred to in this paragraph Inade by the Standard Oil companies " a sale was made by a "TEA" vendor which " and saidtransferred title to the products to the "Supply Company products, in turn, "cre resold and title to them was transferred the "Supply Company" to one of the "Standard Oil companies." At al1 times the "Supply Company" has been "holly o\vned and C011t.rolled by the " Standard Oil companies " and in each of these transactions the "Supply Compani' \Ias an iJ1t rmediary acting for, or in behalf of, and subject to, the control of the " Standard Oil companies. Among the transactions in which respondents have kno\vingly induceel or knowingly received discriminatory prices from their venelors are: (1) Purchases of tires and tubes ham the Lnited States Rubber Company at cost plus 6 percent, while at the same time other competing distributors who purchased tircs and tubes from United States Rubber Compa,ny, directly or through its wholly owned subsidiary were required to and did pay higher prices for tires and tubes of like Batterygrade and quality; (2) purchases of batteries from Auto-Lite Corp. at discriminator:y prices which were approximately 25 percent lower than the prices paid by competing distributors to Auto-Lite Battery Corp. for batteries of like grade and quality; and (3) purchases of fan belts and radiator hose from Ra:vbestos J\fanhattan, Inc. at discriminatory prices which were approximately 28 percellt lowe-r ATLAS SUPPLY CO. ET AL.

OJmplaint than the prices paid by competing distributors to Raybestos-1\1anhattan, Inc., for products of like grade and quality. PAR. 9. The effect of said discriminations in price, knowingly induced or received by respondents, as above alleged, may be snbstantially to lessen competition with or tend to create a monopoly in the Standard Oil companies " in the line of commerce in which the "Standard Oil companies" arc engaged, or to injure, destroy or prevent competition with the "Standard Oil companies:' or with their cllstomers.

P AH. 10. The foregoing acts and practices of the respondents, and each of them, in knowingly inducing or in knowingly receiving the aforesaid discriminations in price are in violation of the provisions of subsection (f) of section 2 of the Clayton Act, as amended. COUNT In Charging violation of section J of the Federal Trade Commission Act, the Commission alleges:

PAIL 11. Paragraph 1 to 10, inclusive, of counts I and II are hereby repeate.c1 and made it part of this charge as fully and \'with the same effect as though here again set forth in full. Paint. 12. Respondent, the Standanl Oil Co. (New Jersey), prior to December 1, 1911, owne,l substantially all of the capital stock of respondent Standard Oil Co. (Kentucky), respondent Standard Oil Co. (Indiana), respondent Standard Oil Co. (Ohio), and Standard Oil Co. (California). All of the assets and liabilities of the Standard: Oil Co. (California) were later acquired by respondent Standard Oil Co. of California (incorporated in Delaware on .January 27, 1926). Respondent Standard Oil Co. (New Jersey) and its subsidiaries were hcJd by the Circuit Comt of the United States for the Eastern District of :Missol1l'i to have il1legal1y monopolized the production and sale of petroleum products. Acting under the court's decree of December 1 , 1911, respondent Standard Oil Co. (New Jersey) distributed to its stockholders all of its stock in all of the other above-named Stanchrd Oil companies and t.hereby w.ithdrew from the direct control and direction of these companies.

PAR. 13. Beginning in 1828 nnd continuing to the present date, aU of t1lease respcmdents combined to monopolize trade in the purchase sale, and distribl1tion of "TBA:: prmlucts in interstate commerce. The respondents, as partifls to this lnd nvfu1 combination, have agreed and conspired among theJlsdves to purchase the said cOlllnodities at illegally discriminatory prices and to receive illegal commissions brokerage, or ot.her compensation in connection with purchases of the Complaint 48 F. T. C.

said commodities. The effects of this combination and conspiracy are to hinder, lessen, frustrate, suppress, restrain, and eliminate competition and tend to create a monopoly in the sale and distribution of these commodities in interstate commerce.

PAR. 14. On February 27 1929, the " Standard Oil companies " acting in concert, either directly or indirectly, organized the "Supply Company." This company has, at all times, been managed, controlled and operaied by the "Standard Oil companies" to serve as a medium or instrumentality by, through, or in conjunction with which said Standard Oil Companies" exert the influence of their combined purchasing power on their vendors of "TBA" products. Prior to 1929 the percentage of total sales of tires, batteries, and other automobile parts and accessories sold in the United States for replacement by the "Standard Oil companies" was negligible. In the 20 years from 1929 to 1949, their percentage of total sales has grown to where it now constitutes a substantial portion of the total replacement sales of these commodities made in the United States. Among these commodities in which respondents' percentage of the total replacement sales in the United States has tremendously increased are tires, tubes, batteries: fan belts, radiator hose, electric lamps, and spark plugs. The " Standard Oil companies" purchasing collectively through the "Supply Company" are at the present time the largest or one of the largest buying units purchasing these commodities for resale in the United States. Their sales for each of these items purchased through the "Supply Company" has increased from a negligible amount prior to 1929 to from about 5 percent to 10 percent or more of the total replacement sales made in the United States. PAR. 15. Among the acts, methods, practices, and poEcies engaged in by respondents pursuant to and in furtherance of their combination and conspiracy which have resulted in this tendency tow lrd monopoly and restraint of trade and commerce, hereinabove described, respondents have:

(1) Directed the attention of their vendors to the purchasing power possessed by them acting in concert and, by reason of such, have demanded and have received discriminatory prices, discounts, allmvances, rebates, and terms and conditions of sale from their vendors on their individual purchases ,,,which were not offered or granted by said vendors on purchases by others of commodities of like grade and quality;

(2) Replaced those vendors which would not accede to such demands w.ith vendors which did grant the said discriminatory prices discounts, allowances, rebates, and terms and conditions of sale; ;

ATLAS SUPPLY CO. ET AL.

Oom plaint (3) Entered into contracts with their vendors whereby said vendors agreed no' to sell to respondents' competitors at prices lower than those charged respondents.

(4) Applied part of the savings secured by the aforesaid illegal purchasing methods to finance a very large and efiective merchandising and sales promotional organization;

(5) Passed on to the " Standard Oil companies " in the form of dividends on the common stock of the "Supply Company," rebates on their purchases of the said commodities through the "Supply Company (6) Agreed between, and among themselves not to compete in the resale of commodities purchased through the "Supply Company," and the "Standard Oil companiest with Ie\V exceptions, carried out a planned common course of action whereby each sold commodities purchased through the "Supply Company" in mutually exclusive areas although one or more of the " Standard Oil companies: or their subsidiaries, do compete in the sale of like commodities purchased other- ,,,ise than through the "Supply Company:' in many of the States of the United States.

PAR. 16. The effects of the adoption and nse by respondents of the practices and activities hereinabove alleged arc that they have: (1) Tended to create a Inonopolistic pmver in the purchase and lesale of "TBA': products;

(2) lnjured, Jessened, prevented, and destroyed competition betwee,n respondents and other 011 companies and distributors, wholesalers, and jobbers of "TEA': products in the resale of the aforesaid commodities;

(3) Eliminated competition between themselves in the resale of aforesaid commodities purchased through the "Supply Company (4) Foreclosed a large market to those manufacturers and vendors of the aforesaid commodities who refuse to grant il1legal1y discriminatory prices or to pay il1legal commissions, brokerage, or other compensation to the respondents;

(5) Increased substantially the size, power, and market control or respondents.

PAR 17. The acts practices, methods, agreements, combination, and conspiracy of the respondents, as hereinabove alleged: are all to the prejudice of the public, have a dangerous tendency to and have actually frustnlted, hindered, suppressed, lessened, restrained, and eliminated competition in the purcha e and sale of "TEA" products in commerce within the intent ancl meaning of the Federal Trade Commission Act; have the capacity and tend1ency to restrain unreasonably and have FEDERAL TRADE COl\LvIISSION DECISIONS Decisions 48 F. T. C.

restrained unreasonably such commerce in said products; have a dangerolls tendency to create in respondents a monopoly in the purchase saJe, lend distribution of said products, and constitute unfair methods of competition and unfair and deceptive acts and practices in commerce within the intent and meaning of section G of the Federal Trade Commission Act.

Commissioner Ayres not participating.

DECISION OF Til CO:U:\USSION Pursuant to rule XXII of the Commission s rules of practice, and as set forth in the Commission s "Decision of the Commission and Order to File Report of Compliance " dated July 19, 1931, the initial decision in the instant matter of trial examiner Everett F. Haycraft as set out as follows, became on that elate the decision of the Commission.

INITIAL DECISION BY EVERETT F. HAYCRAFT, TRIAL EXAMINER Pursuant to the provisions of the Federal Trade Commission Act (U. S. C. title 15, sec. 45) and the Clayton Act as amended by the Robinson-Patman Act, approved June 19, 1936 (D. S. C. title 15, sec. 13), and by virtue of the authority vested in it by said acts, the Federal Trade Commission on the 10th day of July 1950, issued and subsequently served its complaint in this proceeding upon respondents Atlas Supply Co., Standard Oil Co. (Ohio), Standard Oil Co. (Kentucky), Standard Oil Co. of California, Standard Oil Co. (Indiana), and Standard Oil Co. (New .J ersey), corporations, their offcers and directors, charging thelTl with violation of subsections (c) and (f) of section :2 of the said Clayton Act as amended, and section 5 of the said Federal Trade Commission Act. AJiel' the filing of ans\V8r8 to the complaint in November 1950, negotiations ,were conducted between counsel in support of the complaint. and cOllnsel for respondents for a stipulation of the facts, or other disposition of the case, without formal hearings. On April 25 1931, counsel for respondents and counsel in support of the complaint filed ,, ith the trial examiner joint motions for initial decision 011 the pleadings \which would allow counsel for respondents to be permitted to file substitute answers in lieu of the original ans\vcrs, \which, solely for the purpose of disposilJg of the proceed1ing flchnitted the 8-11egations of fact set forth in the complaint which they deemedllecessary for the disposition of all the iSSllCS in the case waived hearings and consented that the trial examiner and the Commission may without trial without the taking of evidence, a.nd without other intervening procedure, make and enter .

ATLAS SUPPLY CO. ET AL.

Findings findings as to the facts from the pleadings herein, including inferences which may be drawn therefrom and conclusions based thereon and issue and serve upon respondents the order set forth as appendices to the substitute ans\Vere it being understood that in the event the trial examiner denies said motions, this proceeding will revert to its former status. Counsel in support of the complaint and counsel for respondents also filed, in connection with said motions, supplemental memoranda cxplnnatory thereof. On J\Iay 15 , 1951: the trial examiner entered an order granting the said motions for initial decision on the pleadings, the filing of substitute answers and closing the record before the trial exalniner. Thereafter the proceeding regularly came on for final consideration by said trial examiner on the complaint the suhstitllte answers thereto, a.ll intervening procedure having been waivec1 and said trial examiner, having duly considered the record herein finds that this proceeding is in the interest of the public and makes the following findillgs as to the facts, conclusions drawn therefrom, a.nd order:

FINDINGS AS TO THE FACTS PARAGRAPH 1. Each of the following named respondents is a corporation, organized1 existing and doing business under the laws of the State and with principal offce and place of business or principal business office as hereinafter set rorth :

t,lte of incor- Principal offce Rml phce of bt: ines Name poration principal business ollcr teas Supp;y Co -- iH Broarl St. , K war1;, N. J. lbe Standard 011 Co. , RII 01110 CQJ'pora- ;1 Dela\'iarc-OhlO- 1\Jidlnncl Bldg. , Cln-clHnd, Ohio. S(,aIHlnrcl Oij Co. (Kentucky). -- O K(.'ntucky- -- St'1lkS' l ldg. , 401 and -Walnut Sts. , LOl1is\'ille/.on.Stnllclf)( Oil Co- of ClllifO!'ia_ Dr1:ware- - Stari,linl OjJ BIdg_ , San :Fn !Jciscu, Crt)jf. nrlf,rd 0;1 Cn, an Inclirma corpora- Inclir.na_ ' 910 Suntll.:ficlJlgan Ave. , Chicago, Ill. Stnmlnrd Oil Co. ( ew Jersey)__ : Xcw Jersey. HOCkCf lnw, New y :. 2 , X . Y.tion. Respondent .l\,tlas Supply Co. is sometimes hereinarter reierred t.o as the "Supply Company:iJ nnd the other above-nmned respol1(lclltS. when referred to collectively hereinafter, -will sometimes be referred to as the "Oil Companies.

).Jj\H. 2. The "Oil companies " eit.her directly or through their wholly owned subsidiaries, are now and for many years hflve been. engaged in the business of selling petroleum products. Beginning in 1080, and with increasing emphasis since that elate, said "Oil companies" have engaged in the business of purchasing and selling tires batterics and other automobile pa,rts and accessories which products arc generally referred t.o in the trade., and will sometimes :!12.S40 :,,-1 FEDERAL TRADE COMMISSION DECISIOXB indings 48 F.

hereinafter be referred to, as "TEA" products, and the respective Oil companies" have sold said petroleum and "TEA" products to or through a substantial percentage of the total number of service stations located throughout the United States. PAR. 3. The "Oil companies" purchase "TEA" products through and from the " Supply Company" and have been doing so continuously since 1930. All of the common stock of the " Supply Company" is now and since 1030 has been owned in equal amounts by the Oil companies" either directly or through their wholly owned suhsicliarics. As holders of this common stock, the aforesaid "Oil companies" have the sale voting power and control of the "Sllpply Company." In the exercise of this power the "Oil companies" have paid out part of the net profits or earnings of the "Supply Company" to thell1Selves as divide.nds on this common stock. 'iViih certain exceptions: these dividends have not been based on the number of shares of common stoele owned by each of the " Oil cOlllpanies:' but have been based upon the net profits or earnings of the "Supply Company" on each class of products handled and have been divided among the "Oil companies" respectively ill proportion to their purchases of "TEA" products of that class from the "Supply Company. The ' Supply Company" in the purchase of "TBA" products nOlY acts and has acted since 1930 as an intermediary subject to the control of the "Oil companies " this control being in part exercised through the exercise of said voting power.

PAIL 4. In the course and conduct of its business since 1900 the Supply Compani' has made purchases of "TBA ' products from sellers or vendors located in the several States of the -cnited States and has caused said products so purchased to be transported from said States to destinations in other States and the District of Cohnnbia in a regular current and flow of COl1merce and certain of the purchases of "TEA" products made by eac.h of the ' Oil companies have been made through and from the "Supply Company" in such interstate commerce.

PAll. 5. In the course of said business and commerce since June 19, 193G, the "Oil companies" have purchased "TBA" products through t.he "Supply Company" from "TEA" se1Jers or vendors, some of whom paid the "Supply Company" commissions, brokerages, or other compensation in lieu thereof on said purchases. In all of these purchase transactions the "Supply Company" acted as an intermediary subject to the control of the Oil companies. The "Supply Company" since June 19 , 193G, received and accepted said compensatjons and transmitted and paid them to, and they were received and accepted by, the Oil companies" in the form of clivi- A TLAS SUPPLY CO. ET AL.

Findings dends on the common stock of the "Supply company" and in the form of services and facilities furnished them by the " Supply Company" in the marketing or their "TEA" products and in various other ways.

PAR. 6. In the course or said business and commerce since June 19 1936, the " Oil companies" have purchased certain of their requirements or " TEA" products through and from the "Supply Company In the resale or which the respondents were in competition with distributors, wholesalers, jobbers and others. The "Supply Company has purchased "TEA" products from sellers or veDelors competing v., ith other sellers for its business and in certain or these purchases the "Supply Company" has knowingly induced and knowingly received and accepted, and in certain purchases through and from the Supply Company" the "Oil companies" have knmvingly received and accepted discriminatory prices from some "TEA" seners or vendors which were Imyer than prices paid to the same "TEA" sellers for commodities of like grade and quality by other purchasers competing 'with the "Oil companies " in their resale. PAR. 7. The effect of the discriminations in price knowingly induced l"eceived or accepted by the respondent.s and of tlle pnictices o.nd activities hereinbefore found in connection with their purchases of "TEA" products, may be and is substantially to lessen competition in the lines of commerce in which the respondents are engaged and to injure. destroy, or prevent competitiun between respondents' suppliers of the aforesaid products who grant respondents lmyer prices on the one hand find those suppliers who do not grant such discriminatory prices on the other, and also to injure, destroy, or prevent competition bet een respondents and other marketers, including distributors, wholesalers jobbers, and others who do not recci ve the said discriminatory prices. PAR. 8. Respondent Standard Oil Co. ("'ew Jersey), prior to December 1 , 1911 , owned substantially all the capital stock of respondent Standard Oil Co. (Kentucky), respondent Standard Oil Co. (Indiana), respondent Standard Oil Co. (Ohio), and Standard Oil Co. (California). Ali of the assets and liabilities of the Standard Oil Co. (CaJiforniiL) were later acquired by respondent Standard Oil Co. of California (inc.orporated in Delaware on January 27, 1926). Respondent Standard Oil Co. (Xcw Jersey) and its subsidiaries were held bv the Circuit Conrt of the United States for the Eastern District of l\fi souri to have illegally monopolized the production and sale of petroleum products. (The opinion of the court is recorded in 173 Federal Reporter at p. 177. ) Acting lmder the court's decrce of December 1, 1911, respond em Standard Oil Co. (New Jersey) distributed to its stockholders all of its stock in all of the other above-named :

FEDERAL TRADE COM nSSIO DECISIONS indings 48 F. ' , C.

Standard Oil companies "nd thereby withdrew from the control and direction of saiel companies. Thereafter respondent Standard Oil Co. (New Jersey) has at no time possessed or exercised any control or direction over the above-named Standard Oil companies. PAIL 9. The "Supply Compitny" and the "Oil companies" on purchases through and from the "Supply Company" lu1.v8 received and accepted commissions, broln tages, and other compensation 111 lieu thereof in connection with the purchase of "TEA" products as hereinbefore found in paragraph 5 j have PUl'ChHScd "TEA" products at discriminatory prices as hereinbefore found in paragraphs 7 and S; and have obtained other preferential treatment from "TEA" sellers which was preferential to th:lt allowed, afforded, 01' made available by such sellers to competitors of the re ponc1ents. Since 1930 all the common stock of the "Supply Company" has been owned in equal amounts by the "Oil cOlllpanies either directly or In connection with thethrough their wholly owned subsidiaries. aforesaid purchases of "TEA" products through and from the "Supply Company, " the "Supply Company" has been operated by and subject to the control of the " Oil companies whereby the " Oil campauiee have utilized the influence of tbcir combined purchasing power on TEA" sellers in the purchase of "TBA': products. \R. 10. The respondents have agreed and combined among themsehes, through their uninterrupted mvnership, control and operation of the " Supply Company " since 1D30 and its use as an intermediary in the purchase of "TEA" products, to utilize the influence of their combined purchasing pmyer in jointly buying "TEA" products and thereby to purchase the said products at illegally discriminatory prices; to receive illegal eormnissions, brokerages, or other compensation in connection with purchases of the said products, and to obtain other preferential treatment from sel1ets or vendors which was preferential to that allowed, afforded, or made available by such sellers to competitors of the respondents.

PAR. 11. Prior to 1D30 the percentage of tota) sales of "TEA" replacement by the Oil COIl-I'rodnc1s sold in the United States for panics \yas negligible. In the period from 1980 to 1940 the combined percentage of total sales of said Oil companies has grown to approximately 10 percent of the total replacement sale, of "TBA" prodl1ct, in the United States.

PAR 12. The dfects of the adoption and use by respondents of the practices and activities hereinbefore found in paragraphs 8 through 11 hereof arc as follows:

ATLAS SUPPLY CO. ET AL.

Order 1. Injured, lessened, and prevented competition between respondents and uther oil companies and distributors, wholesalers, and jobbers of "TEA" products in the purchase and resale thereof. 2. Eliminated competition between the "Oil companies" in the purchase of "TEA" products through the ': Sl1apply Company. 3. Foreclosed a large market to those manufacturers and vendors of the aforesaid products whu refused to grant illegally discrimina. tory prices or to pay illegal commissions, brokerages, or other compensation to the respondents.

'1: Increased substantially the size, po\',, , and market control of respondents in purchase and resale of "TBA" products. CONCLUSION The aforesaid acts and practices of respondents in receiving and accepting commissions, brokerages, and other compensation or allowance or discount in lieu thereof in a manner and form as found in paragraph 5 herein are in viulation of the provisions of subsection (c) section 2 of the Clayton .,ct as amended by the Robinson-Palman Act. The aforesaid acts and practices of the said respondents in l-mowingly inducing and receiving and knowingly accepting the discriminations in price as found in paragraphs G and 7 herein are in violation of the provisions of subsection (f) of section 2 of the Clayton Act a' :lmencled by the Robinson-Patman Act.

The aforesaid acts and practices of respondents as hereinbefore found in paragraphs 8, 9, 10, and 11 herein are all to the prejudice of the public and have a dangerous tendency to hinder, lessen, and restrain competition in the purchase and resale of "TEA" products in commerce within the intent and meaning of the Federal Trade Commission Act; and a tendency to create in respondents a monopoly in the purchase, sale, and distribu60n of "TEA" products, and constitute unfair methods of competition in commerce within the intent and meaning of section 5 of the Federal Trade Commission Act. ORDER It i8 ordered Under the authority vested in the Federal Trade Commission by section 2 (0) and section 11 of the Clayton Act, as amended that the respondent, Atlas Supply Coo, a corporation, its offcers, directors, agents, representatives, and employees, directly or through any corporate or other device, in connection with the purchase or sale of automobile tires, tubes, balteries or other anlomobile parts or FEDERAL TRADE COl\ISSION DECISIO Order 48 F.

accessories, in commerce as "commerce" is defined in the Clayton Act do forthwith cease and desist from:

(a) Receiving or accepting, directly or indirectly, from any seller anything of value as a commission, brokerage, or other compensation or any allowance or discount in lieu thereof, upon any purchase in connection with which the respondent, Atlas Supply Co., is the buyer or acts for, or in behalf of, or subject to the direct or indirect control of the buyer.

(b) Transmitting, paying, or granting, directly or indirectly, in the form of money, dividends, or credits or in the fonn of services or benefits provided or furnished, or otherwise to any buyer any commission, brokerage, or other compensation, or any allowance or djscount in lieu thereof, received on such buyer s purchases. It is further ordered Under the authority vested in the Federal Trade Commission by section 2 (c) and section 11 of thc Clayton Act as amended, that the respondents, Standard Oil Co. (Ohio), Standard Oil Co. (Kentucky), Standard Oil Co. of California, Standard Oil Co. (Indiana), and Standard Oil Co. (Kcw Jersey), and their respective offcers, directors, agents, representatives, and employees when acting directly or through any intermediary (including Atlas Supply Co. ) in connection with the purchase of automobile tires tubes, batteries, or other automobile parts or accessories, in commerce as "commerce" is defined in the Clayton Act, do forthwith cease and desist from:

Receiving or accepting from any seller, or from any agent, representative, or other intermediary acting for, on in behalf of, or subject to the direct or indirect control of said respondents, in the form of money, dividends or credits or in the form of services or benefits provided, or furnished, or otherwise, any commission, brokerage, or other compensation, or allowance or discount in liou thereof, upon purchases ror their own accounts.

It is fUTthe1' oj'deJ' Under ihe authority vested in the Federal Trade Commission by section 2 (f) and section 11 of the Clayton Act, as amended, that the respondent, Atlas Supply Co., a corporation, its offcers directors, agents representatives, and employees, directly or through any corporate or other device, in connection with the purchase or automolJilc tires, tubes, batteries, or other tltomobile parts or accessories, in commerce as "commerce" is defined in the Clayton Act do forthwith cease and desist from:

Kno'iyingly inducing or knowingly receiving or accepting any discrimination in the price or such products, by directly or indirectly inducing, receiving, or accepting a net price from any seller known by respondent or its representatives to be below the net price at which , ,, ATLAS SUPPLY CO. ET AL.

Order said products of like grade and quality arc being sold by such seller to other customers, where the seller is competing with any other seller for respondent's business, or ",vhere respondent is competing with other customers of the seller: Provided, however That the foregoing shall not be construed to preclude the respondent from defending any allege,a violation of this order by showing that a lower net price received 01' accepted from any seller makes only clue allowance :for differences in the cost of manufad.ure sale, or delivery resulting from the differing methods or quantities in ",which such commodities are by such seller sold 01' delivered to respondent, and when differentials are thus shown by respondent to be so justified they are not to be construed as in violation of this order; and P.rovided further That nothing herein contained shall prevent respondent from rebutting a prima racie case of alleged violation of this order based upon discriminations \which may be practiced subsequent to the date of this oreler by showing that its seller s lower price or the furnishing of services or facilities to respondent was made in good faith to meet an equally low price of 11 compe6tor, or the services or facilities furnished by a. competitor.

For the purposEc, 01 c1eterrnining "net price" Ender the terms of this order, there shall be, taken into account discounts, rebates, allowances cleductions or other terms and conditions of sale by which net prices arc effected.

It i8 fu.rther ordered Under the authority vested iu the Federal Trade Commission by section 2 (f) and section 11 of the Clayton Act as amended, that the respondents, Standard Oil Co. (Ohio), Standard Oil Co. (Kentucky), Standard Oil Co. of California, Standard Oil Co. (Indiana), and Standard Oil Co. ( ew Jersey), corporations, and their respective offcers, directors, agents, representatives, and employees, in connection "With the purchase of a.automobile tires, tubes batteries, or other automobile parts or accessories from or through any medium (including Atlas Supply Co.) which is owned in any degree or controlled by one 01' more of said respondent Sblldard Oil Cos. , in C011118rce as "commerce; is defined in the Clayton Act, do forthwith cease and desist from:

I\:nowingly inducing or knowingly receiving or accepting any discrimination in the price of such products, by directly or indirectly inducing, receiving, or accepting a net pri.ce from any seller known by the respondent or its representatives, who so induces, receives, or accepts such diserimirmtion in price, to be below the net price at which said product.s of like gnHle and quality are being sold by such seller to other customers here the seller is competing with any other seller for said respondent's business, or where said respondent is competing FEDERAL TRADE COMMISSION DECISIOKS Order 48 F T. C.

with other customers of thc seller: PTovided, however That the fore- !:doing shall not be const.rued to preclude the said respondent from defending any alleged violation of this order hy showing that a lower net price received or accepted from any seller makes only due allowance for differences in the cost of Jnannfacturc: sale, or delivery resulting from the differing methods or quantities ill which such commodities are by such seller sold or delivered to ,saicll'respondent, and when differentials are thus shown by said respondent to be so justified they are not to be construed as in violation or this order; and Provided further That nothing herein contained shan prevent saicll'csponc1ent from rebutting a prima facie case or alleged violation of t.his order based upon discriminations which may be practiced subseqnent to the date of this order by showing that its seller s lower price or the furnishing of services or facilities to such respondent was made in good faith to meet an equally low price of a competitor, or the services or facilities furnished by a competitor.

For the purpose of determining "net price" under the terms of this order, there shah be taken into account discounts, rebates, allowances deductions or other terms and conditions of sale by which net prices are effected.

It is f1lather ordered Under the authority vested in the Federal Trade Commission by the Federal Trade Commission Act, that respondents, Atlas Supply Co. , Stanchrd Oil Co. (Ohio), Standard Oil Co. (Kentucky), Standard Oil Co. of California, Standard Oil Co. (Indiana), and Standard Oil Co. (New Jersey), corporations, their offcers, agents, representatives, and employees, in connection with the purchase of automobile tires, tubes, batteries or other automobile parts or accessories in commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from entering into, continuing, cooperating in, or carrying out any planned common course of action, understanding, agreement, combination, or conspiracy betw' een any two or more of said respondents to do or perform any of the following things:

Exerting the influence of their combined purchasing power, directly or indirectly, in jointly buying said products so as to obtain any price discount, rebate, allo\'mnce or any other treatment from a seller \which is preferential to that allowed, afforded or made available by sneh seller to competitors of the respondents or any of them. It is further ordered That the provisions set forth in t.he inst foregoing paragraph shan become effective on and after 12 months from the date this order is issued.

ATLAS SUPPLY CO. ET AL.

Order ORDER TO FILE REPOHl' OF rPLIANCE I tis O1'dered That the respondents herein shall, within 60 days after servic.e upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with the order to cease and desist (as required by said declaratory decision and order of July 10, 1051). Syllabus 48 F. T. C.