Radio Training Association of America

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IN Til MATTER OF RADIO TRAINING ASSOCIATION OF .AMERICA ET AL. COMI LAINT, FINDINGS, AND O1mer IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CO!\TGHESS APPHOVED SEPT. 26 , 1914 Docket 5586 OO?nplnint, APr. 20, 1948-Decision, Dec. 1951 Where a corporation ami its president who were engaged in the interstate sale and distribution of a COUlse of home f'study instruction in the fields of radio and television; in advertising in newspapers and magazines of general circulatioll and through form letters, directly and by implication- (a) Represented that a person who completed their course was assured of proper preparation and ample training for a successful career as a technician in said fields of science;

(0) Represented that the course embraced all the practical training necessary fur success in said fields, and that its satisfactory completion properly equipped one with the necessary qualifications to obtain and bold high salaried positons in the radio and television industries and SUPIJ!ied him with adequate radio shop knowledge for a lucrative future in1'al110; and (c) Represented that tIJeY had a modernly equipped radio and television laboratory in Hollywood in which those students who satisfactorily completed their llOme study course could obtain at least two weeks or eighty hours of practical b'aining and experience in television \vork, the expenses of which, including round- trip transportation from the student's home, and lodging while receiving said training in their laboratory;y, were all included in the original tuition fee;

he facts being that their course consisted entirely of instruction in the theory of radio and television; the techniques referred to cannot be acquired except by actual experience in working with radio and television sets in a shop or laboratory, preferably under the supervision of a trained instructor, and without such practical training a person is not qualified for any technical position in the radio field; the best that a person could reasonably expect of such a comse was that by its successful completion he would be somewhat better qualified to enter the trade as an apprentice than one who had had no practical training or experience in techniques and had Dot studied the theory of radio or television; and they had no laboratory nor any means of providing purchasers of their course with practical training or laboratory experience; and they bore no transportation and lodging expense and furnished their purchasers with nothing of value other than a home study course in theory;

(d) Uepresented through the use of the word "Association" in their corporate name that their enterprise was an organization composed of persons primarily interested in its activities from an educational standpoint; and (e) Represented that thee-' had the endorsement of or some connection with the radio and television manufacturing and distributing industry and acted as a medium through which its experts were trained, through use of their corporate name, "Uadio Training Association of America " together with such statements as " training men for the radio industry for over 25 years We are seeking ambitious, mechanically inclined men-to learn Radio and &: , 502 FEDERAL TRADE C011MISSION DECISIO Complaint 48 F. T. C.

Television, and prepare them for successful future careers as Certified Technicians " and Without obligating me advise how I can qualify for a Big Pay Job in the lUdJIO ELECTHOXIC AND TELEVISI() INDUSTRY in form letters, cards and printed contracts distributed to prospective purchasers;

\Vhen in fact said enterprise 'Yas comInded solely as a commercial business venture for profit; and at no time had they had the emlorserncnt of or any connection with the radio or teleyisioJl industry or had they acted as a medium through \vhleb its experts were trained; With tendency and capacity to mislead add deceive a substantial portion of the purchasing public into the erroneOl S belief tba t such reIH'esenta tiuns were true, and thereby induce its purchase of their said course of instruction: rances et forth, were allHeld, That such acts and practices, under rhe circllm to the prejudice and injury of the public, and constituted unfair and deceptive acts and practices in commerce.

Before MT. Everett F. Haycraft hearing examiner. lb. R. P. Belling'" for the Commission. lift. 3fuifl'ay A. NadZe' of Youngstown, Ohio Posne' , Berge, Fore ES8ey, of Los Angeles Arent of 1,Vashington, D. and 1Y ollson Calif., for respondents.

C0101PLAINT Pursuant to the provisions of the FedenLl Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission having reason to believe that R,adio Training Association of America, a corporation, and Bcnjarnin )1. I\Jekner, Earl L. Kemp, Paul II. Thomsen and 1. O' Conner, individually and as offcers of the Hadio Training Association of America, hereinafter referred to as respondents, have violated the provisions of said Act and it in respect it appearing to the Commission that a proceeding by thereof would be in the public interest, hereby issues its complaint sta ting its charges in that respect as follmvs : PARAGRAPH 1. Respondent, Radio Training Association of America if: a California corporation, with its offce and principal place of business located at 5620 Hollywood Boulevard, Hollywood, California. Respondents, Benjamin Clf. Klelmer, Earl L. Kemp, Paul H. Thomsen and 1. O'Connor, are individuals and offcers of the eorpomte respondent, Radio Training Association of America, and as such offcers they are responsible for and control and formulate and have controlled and formulated the advertising policies ot said corporate respondent, including the acts and practices hereinafter described. The business address of each of the said individual respondents is the same as that shown above for the corporate respondent.

RADIO 'rRAINING ASSOCIATION OF AMERICA ET AL. 503 501 Complaint Respondents are now, and for several years last past have been en. gaged in conducting a correspondence school, and in selling and distributjng in commerce between and among the various States of the United States and in the District of Columbia courses of instruction for home study in the practice and theory of radio and television. They have caused and are causing printed courses of instruction in said subjects, when sold, to be transported from their place of business in the State of California to student e11ro11ees, who are the purchasers thereof, at the.ir respective addresses in other States of the United States and in the District of Columbia.

Respondents maintain and at a11 times mentioned herein have maintained a course of tra.ce in said courses of instruction in commerce between and among the various States of the United States and in the District of Columbia.

PAR. 2. In the course and conduct of their business in commerce as &foresaid, and for the pllrpose of enrolling prospective students and thereoy promoting the sale or their said courses of instruction, rcsponde,nis, through field agents, who personally approach their prospects, and also by means of advertisements inserted and caused by respondents to be inserted in newspa,pcTs and magazines hu,Ving, general circulations throughout the united States, and in pamphlets leaflets, circulars, form letters and cards, printed contracts and other mediums, distributed t.through the l7united States mails, have nut,de and are making numerous false, deceptive and mislead.ding statements and representations with respect to the ndvantages and bene,fits which the purchasers of their said courses of instruction could expect to receive. Among a,nel typical of such false and misleading statemfmts and representations so used by the respondents are the following: We are seeking ambitions, mechanically inclined men-to learn Radio and Television, and prepare them for successful future careers as Certified Technicians.

During the next few years the growth of Radio and 'television wid be tremendous, and along with tllis gro,vth there ,vil be vast new job opportunities for trained men.

SUClCess right . . . R. T. A. brings you the practical training necessary for into your own home.

Printed on cards to be returned to respondents: Without obligating me advise how I ran qualify for a Big Pay Job in the Uadio Electronic and Television Industry.

URGE):T NEED for alert men ancl 'Nomen to train for E"i BIG-PAY developments i11 RADIO- rBLIiJVISIO);.

You gel Practical Rac1io Shop "Know How.

Upon the stuuent's completion of the Home Study portion of this training with a passing grade of seventy percent, the student is given the privilege 504 FEDERAL TRADE CO?\L\IISSIO),T DE. CISIONS Complaint 48 F. T. C.

of securing a Postgraduate Course of two weeks, (not less tlmll eighty shop hours) of intensive and Practical Shop and Laboratory training in tho R. T. A. modern equipped laboratory.

The tuition fee charged by the R. T. A. includes round-trip bus transportation (within the continental limits of the e. S. A. ), from the bus station nearest the student' s residence. It also includes the cost of the student's room, at a place designated by the R. T. A. during the student's attendance \Yhile taking the Shop and Laboratory training.

The RADIO TRAIKING ASSOCL'TIO:' OF A !EmCA Plan enables you to become a CEnTIFII D RADIO Lid TELEVISION TECHICIAK . . . If you want us to, we can so arrange your RiJ)IQ TRAI ING ASSOCIATION OF AMERICA training so that you wil be brought to our shop and laboratory in Hollywood, California, . . . where you wil be given the opportunity to work with the modern radio and television equipment and your expenses, such as your round-trip transportation from your home and your lodging while attending the training in the laboratory are all a part of our plan. PAR. 3. Through the use of the statements and representations hereinabove set forth, and ma,ny others of similar import and effect, rcspondents represent, directly and by implication, that one completing their courses in radio and television is a.ssured of proper preparation and ample training for a sllccessful future career as a technicia.n in said fields or science; that respondents' said courses for home study embrace all the practical training necessary for success in said fields of science, and the satisfactory completion thereof properly equips one with the necessary qualifications to obtain and hold high salaried positions in the radio and television industry, and supplies him with adequate radio shop know ledge for a lucrative future in radio; that respondents lUlye a modernly equipped radio and television laboratory in Hollywood, in which those students who satisfactorily complete their home study courses can obt.ain at least two \vBeks or eighty hours of practical training and experience in radio and television work the expenses of which, including round-trip transportation from the student's home to Hollywood and lodging while receiving said practical training in respondents' laboratory, are an included in the original tuition fee agreed upon.

PAR. 4. The aforesaid statements and representations are grossly exaggerated, false, and misleading. In truth and in fact, respondents courses in radio and television are not suffcient to properly prepare and train one as a technician in said trades, and respondents' home study courses do not qualify a person to take a job as a technician, and the best that a student of such courses can reasonably expect is to be somewhat better qualified to enter the trade as an apprentice than one who has not received any practical training or experience or who has not studied the theory of such sciences; respondents' courses for home study not only do not embrace all the practical training neces- RADIO TRAINIKG ASSOCIATION OF Ac',IERICA ET AL. 505 SOl Complaint sary for success in the radio and television trades, but do not include any practical training whatever in said fields, and merely instruct the student in the theory of said subjects, and the completion of said courses does not properly equip one with the necessary qualifications to obtain and hold a high-salaried position in the radio and television industry, nor does it equip him with adequate radio shop knowledge nor "with any practical experience to assure a lucrative future career in the radio field; at the time said representations were made respondents did not have, and do not now have, a radio and television laboratory in Hollywood or elsewhere, and respondents have no means of securing to students practical training or laboratory experience for any period of time in radio and television work, and respondents do not bear any expense in the transportation of students to or . from Hollywood, nor for lodging in Hollywood, and the student never sees IIollJiVood unless he does so at his O\V11 expense. PAn. 5. RespollclEmts use of the word "Association" in the corporate name of their business is deceptive and misleading, in that such usage implies that said enterprise is an organization composed of persons engaged, from an educational standpoint, in giving training in the mechanics and science of radio and television engineering, and as such has the endorsement of or some connection with the radio manufacturing and distributing industry, and that respondents' said enterprise is the medium through which the industry s radio and television experts are trained and secured. Such usage of the word "Association is made partieularJy deceptive and misleading in said respects when coupled with displays by respondents' field representatives to prospective students of letters and certain printed matter furnished by respondents, some of the letters bearing the letterheads of various electrical instrument and equipment manufacturers and radio distributors, some of the other literature carrying the heading, "Chart Showing Progress and Possibilities for a "'1member of the Radio Training Association of America " and such statements as "Join the Association " and "I-Iookup with a Great Industry. PAR. 6. In truth and in fact respondents' said enterprise is not an organjzatiol1 composed of persons engaged in or interested, from an educational standpoint, in imparting scientific training, but respondents' organization is conducted solely as a commercial business venture for profit; it neither has the endorsement of nor any connection with the radio manufacturing and distributing industry, and is not a medium through which the industry's radio and television experts are trained and secured.

PAR. 7. The statements, representations and implications made and caused to be made by respondents, including the usage of the word 506 FEDERAL TRADE CQ'I!YIISSION DECISIONS Findings 48 F. T. C.

Association" in the corporate name, as set forth herein have had and now have the tendency and capacity to, and do, mislead find deceive many members of the purchasing public into the erroneous a.nd 1ljs taken belief that such statements, representations and implications are true, and because of such erroneous and mistaken beho,f emsc a substantial portion of the public to purchase respondents' said eonrses of instruction.

PAR. 8. The aforesaid acts and practices of respondents, a,," herein alleged are all to the prejudice and injury of the public and consti. tnto unfair and deceptive acts and practices in commerce ,within the inttnt and meaning of the Federal Trade Commission Act. Rerort, FI DIXGS AS TO THE F \CTS , A:XD Order Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Commission on April 20, 1948, issued and subse- (illently served its complaint in this proceeding upon the respondents narnecl in the caption hereof, charging them with tlle nse. of unfair fwd deceptive acts and practices in comlDerce in violat.ion of the provisions of that Act. After the fijng of re,spoJlc1ents' answer, testimony and ot.her evidence in support of the allegations of the complaint and stipulation as to certain facts entered(l into between counsol \were in1:1'oed before a hearing examiner of the Commission, theretofore duly designated by it (no testimony or other evidence having been presented in opposition to the aJ1egations of the omplaillt), and such testimony, stipulaUon and other evidence \Store duly fied in the offec of the Commission. Thereafter, the proceeding regnlarl T came', on for final hearing before the Commission upon the aforesaid complaint the respondents' answer thereto, the testimony, stipulation and other evidence: the recommended decision of the hearing examiner and brief in support of the complaint (;10 brief having been filed on behalf of the respondents and oral argument not having, been requested) ; and the Commission, having duly considered the matter' and being now fully advised in the premises, finds that tllis proceeding is jn the interest of the public and makes this its findings as to the facts and its eonc1l1sion c1ra\\'n therefrom.

FINDINGS AS TO THE FACTS PARj.GRAPH 1. Respondent Radio-Television Training School (formerly named Radio Training Association of America prior to the amendment of its corporate charter in 1949) is a California corporation, with its offce and princip,e! place of business at 5100 South Vermont, Los Angeles 37, California. Respondent Benjamin M. Klek- RADIO TRAINING ASSOCIATION OF MIERICA ET AL. 507 501 Fi:dings 1H'T , whose present address is unknown, was president of respondent corporation and directed and controlled its advertising policies for ,"veral years immediately prior to April of 1949, at which time he severed all connection with the respondent corporation. Respondents Earl L. Kemp, Paul H. Thomsen and 1. O' Connor are employees of the respondent corporation and have had no control or direction over the policies of the respondent corporation. The Commission is of the opinion, therefore, that the a.legations of the complaint have Dot been sustained as to respondents Earl L. Kemp, Paul H. Thomsen and 1. O Connor a.nd that the compla.int should be dismissed as to them as illcbvjc1uals, and the term "respondents" as used hereinafter docs not include these individuals.

PAR. 2. Respondent corporation is now and during t.he six years , fmd respondent Benjamin I. I\:Jekner for severallast past has been years immediately preceeding A pri11949, was, engaged in the s,tle and distribution of a course of instruction for home study in the fields of ,were So en-radio and television. During the periods of time they gaged, each of the said respondents caused, and the respondent cor poration now callses the said course of instruction, when sold, to be transporteel from their place of business in the State of California to the purchasers thereof in the other States of the l:united States. Respondent corporation maintains, and at an times mentioned herein has maintained, and respondent Benja.min :M. Klekner at all times mentioned herein prior to April 1949 did maintain, a course of trade in said course of instruction, in commerce between and among the various States of the United States.

PAn. 3. In the C0111'Se and conduct of their said business in commerce and for the purpose of enrolling prospective students and promoting the sale of their sa,icl course of instruction, respondents, by means of advertisements inserted in newspapers and magazines having general circulation in the United States and through the use of form letters distributed throughout the United States by means . of the United that one States mails, have represented, directly and by implication, completing their course in radio and television is assured of proper preparation and ample training for a successful future career as a technician in said fields of science; that respondents, said course for home study embraces all the practical training necessary for success in said fields of science, and the satisfactory compJet10n thereof properly equips one with the necessary qmtliflcations to obtain and hold high salaried positions in the radio and television industry and supplies him \with adequate radio shop knowledge for a lucrative future in radio; that respondents have a modernly equipped radio and television laboratory in Hollywood, in which those students who satisfactorily \.

508 FEDERAL TRADE COl\:L lISSIO DECISIOKS Findings 48 F. T. C. complete respondents' home study conrSC can obtain at least two weeks or eighty hours of practical training and experience in radio and television work, the expenses of which, including round-trip transporta tion from the student' s home to Hollywood and lodging while receiving said practical training in respondents' laboratory, are all included jn the original tuition fee agreed upon. PAR. 4. Tho aforesaid representations are false and misleading. In fact, respondents' course does not include any practical training in the techniques of radio or television repair or construction, but consists entirely of instruction in the theory of radio and television. Such techniques cannot be acquired except by actual experience of working with radio Hnd television sets in a shop or laboratory, preferably under the supervision of a trained instructor. vVithollt such practical training in shop techniques a person is not qualified for any technical position in the radio field. Respondents' course of instruction, therefore, does not qualify a person for a position as a radio or television technician or repairman, nor does it equip a person \with the necessary qualifications to obtain or hold any high salariec1 position in the radio or television industry. The best that a purchaser can reasonably expect of such a course is that by successful11y completing it he wil be somewhat better qualified to enter the trade as an apprentice than one who has had no practical training or experience in radio or television techniques and has not studied radio and television theory. Respondents do not have" radio or television laboratory in Hollywood or elsewhere, nor do they have any means of providing to the purchasers of their course of instruction practical training or laboratory experience in radio or television work. Respondents do not bear any expense in the transportation of purchasers of their course of in struction to Hollywood, nor do they furnish to the said purchasers anything of value other than a home study course of instruction in the theory of radio and television.

PAR. 5. For several years prior to 19.J9, respondents, by the use of the word "Association" in the corporate name of their business, implied that said enterprise was an organization composed of persons primarily interested in its ac6vit1es from an educational standpoint. During this same period of time, by the use of the corporate name Radio Training Association of .. Jllerjca " together with such statements as "Training :Men for the R.adio Industry for Over Twenty-five Years V\Te are seeking ambitions, mec.hanicaJly inclined menlearn Radio and Television, and prepare them for successful future careers as Certified Teclllicians " and "Without obligating me advise 110W I ern qualify for a Big Pay Job in the RADIO, ELECTRONIC AND TELEVISION INDUSTRY" contained in form Jetters, cards RADIO TRAINING ASSOCIATION OF AMERICA ET AL. 509 501 Order and printed contracts distributed to prospective purchasers of their said courses, respondents implied that they had the endorsement of or some connection wit.h the radio and television manufacturing and distributing industry and that they acted as a medium through which the industries radio and television experts were trained. PAR. G. In fact respondents' said enterprise is now and at all times mentioned herein has been conducted solely as a commercial business venture for profit; at no time has it had the endorsement of or any connection with the radio or television industry, a,nd at no time has it acted as a medium through which the inchlstry s radio and television experts are trained.

PAH. 7. The use by respondents of the false and misleading representations as hereinbefore set forth, including the 'Use of the word Association" in the corporate name, has had the tendency and capaeity to mislead and deceive a substantial portion of the purchasing public into the errone011S and mistaken belief that such representations atc true and has had the tendency and capacity to cause such por60n of the public to purchase respondent's said course of instruction because of such erroneous and mistaken belief. CONCLUSION The acts and practices of the respondpnts, as herein found, atc all to the prejudice and injury of the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

ORDER TO CEASE AKD DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, respondents' answer thereto, testimony and other evidence, including a stipulatjon of facts entered into by and bet,yeen counsel for respondents and counsel in support of the complaint, introduced before a hearing examiner of the Commission theretofore duly designated by it, recommended decision of the hearing examiner, and brief in support of the complaint (no brief having been filed by respondents and oral argument not having been requested), and the Commission having made its findings as to the facts and its conclusion that the respondents Radio-Television Training School, a corporation, and Benjamin 1\1. Klekner, individually, have violated the provisions of the Federal Trade Commission Act:

It is ordered That the respondents R.adio-Television Training School, a corporation, and its offcers, agents, representatives, and em- . .

510 FEDERAL TRADE CO:ynnSSIOX DECISIONS Order 48 F. T. C.

ployees, and Benjnmin 11. Klekncr, an individual, and his agents representatives, and employees, directly or through any corporate or other device, in connection with the offering Tor sale, sale, or distribution in commerce, as "commerce" is defined in the Federal Trade Commission Act, of a course of instruction for home study in t.he fields oT radio or television, do forthwith cease and desist from: 1. Representing, directly or by implication: (a) That said course is capable of training radio or television teeh- 111CIal1S or repairmen.

(b) That any practical training is pro\'idecl to purchasers of said course.

(c) That persons who complete said course are qualified thereby to hold high -salaried positions in the radio or television industry. (d) That laboratory or shop equipment is available for the use of purc.hasers of said course.

(e) That any purchaser of said course wiII rec.eive anything of value other than a home study course of instruction. (f) That said course is endorsed by or that respondents' business has any connection with any of the members of the radio or television industry.

2. Using the word " Association " or any other word or words of similar meaning, as a part of the trade or corporate name under' which the respondents conduct their business; or otherwise representing, directly or by implication, that respondents' business is anything ot.her 1 han a commercial business H;nature operated for profit. It is fu.rtlwT ordered That the complaint herein be, and it hereby ls dismissed as to respondents Earl L. ICemp, Paul H. Thomsen, and 1. O'Connor, ,vithout prejudice: however, to the right of the Commission to issue a ne,', complaint or take such further or other action against such respondents at any time in the future as may be wa.rra,nted by the then existing circumstances. It is fUTthe/' o1'dend That the respondents Radio-Television Training School, a corporation, and Benjamin 1\1. Klekner, an individual shed!, wit.hin sixty (60) days after service upon them of this order fie with the Commission a report in writing setting forth in detail the manIler and form in which they have complied with this order. , .

.:lIDDLE ATLA. TIC DISTRIBUTORS) I , ET AL. 511 Syllabus IN THE !\A TIR OF MIDDLE ATLANTIC DISTRIBUTORS, INC., ET AL.

COMPLAINT, FINDINGS. AXD ORDER IN REGARD TO THE ALLEGED ",' VIOLATION OF SEG. 5 OF AN ACT OF CUXGlmSS APPIWYED SEPT. 26 , 191,1 Dockr:t 5634. Comp/.aint, Jan. IS Decisioll, Dec. , 1951 "'here a coi"Joratioll and its president, who o"\vned all its CalJital stock, engaged in selling at wholesale to retailers in the District of Columbia certain bnwds of ,vhiskies and other alcoholic bevera cs and exclusive distributor in said District fol' products made by Hiram Walker, Inc. Follo\\' ing the adoption of a policy of estaiJlishing, maintaining and enforcing uniform minimum re8111e prices at ,,,hkh said products were to be advertised and sold by its llan ' retail customer!:, as conllllullicated to them in letters and price lists; and in pnrsuance of sah11Jolicy which included the declared intention of terminating all business relationships with any dealer, who sold below I aicllisted prices- (a) Solicited ami, with few exceptiolls, secured the agreement and cooperation of its :,aid customers in maintaining the uniform minimum resale prices Rp€cifiec1 by it; and Where said corvoration, in taking such further steps as necessary to full efIectiyeness, and acting through its representatives- (b) Maiutailleu a constant check on the prices at ,vhirh its said products were offered by its cmt.omers, told them that they had been and would be shopped,'. and requested at least ODe of them to report any instances of competitor retailers sellng said products at less than its minimum resale prices;

(c) Visited retailer customers disco,-eled, in a few instances, selling or offering its products at less than its said minimum prices and urged them to cease so doing, with the result that: three did change their prices and continued to maintain the prices establislwd;

(d) Cut off the source of supply of the few dealers who declined or failed to cooperate in maintaining the desired prices; (e) Informed a retailer price cntter, prior to the announcement of its said policy, that if he did Dot maintain resale prices he would not be IJermitted to purchase further any of said products thereafter, discontinued fillng bis orders, and in the subseqnent ilontb and follo\ving a further visit and assurance that if he would maintB.io " said prices it would resume selling to him, did so resume following his agreement to do so; and follm..ing its later discovery that. said dealer WtiS again sellng at less than its said fixed prices, again cut off its supply;

'With the result that its many retailer customers aOYel'tised and sold its said products in aecordance with the minimum resale prices thus announced and established by it ;

Effect of which acts and practices was to suppress competition among retailers in said District in the sale of said products; to cause them to sell at the prices fixed b ' it and to prevent them from sellng at such lower prices as they might deem adequate and warranted by their respective sellng costs 213840 ---G4--- 512 FEDERAL TRADE CO?vCdISSIOX DECISIOXS Complaint 48 F. T. C.

and trade conditons generally; and to deprive purchasers of the advantage in price whkh they would otherwise obtain from free and uncontrolled competition among retailers in the srtle of said products and from a natural and unobstructed fiow of commerce therein:

Held That such acts and practices of said corporation and individual, under the eirCl1mstauces set fortb, were fill to the prejudice and injury of the public; ha(l a dangcrous tcd(lency to hinclcr flnrl suppress awl did hinder and suppress competition between and among retnDel's scUing" said products in said D-istrict; and constituted unfair and deceptive arts and practices in commerce and unfair methods of competition therein.

In said proceerling it was the opinion of the Commission that the activities said coqJoration exceeded what was lawfully permissible; that its conduct cmbracecl consilleraLJJy mol' C than t11e mere exercise of its right to inform and make kno\\'n to its dealer customers that it desired its fixed resale prices l(lhered to, and ,,,auld discount.inue selling to any dealer who disregarded its policy in this regard; and it was the conclusion of the Commission that the conduct of said corporation, particularly in connection with t.hat of it:: salesmen in exerting pressure on (1ealers to abide by the specified prices, and reporting' t.o it the names of dealers W110 did not do so, resulted in the liecuring of assnrances and ul11ersttlndings from its retail cllstomers that they would abide hy its fixed resale prices ami that, as a result, competition between retailers was suppressed ami eliminated, and consumers in said District ,,-ere depriyecl of the benefit of price competition based on cost eHiciency, rtDd service.

Before Mr. Willa1l1 L. Pack hearing examiner. Mr. Paul R. Dixon and Afr. James S. Kelahe?' for the Commission. Afr. William R. LichtenbeTg, of Washington, D. C., for respondents. COlHPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by sajd Act, the Federal Trade Commission, having reason to believe that the. respondents named in the caption hereof, and more particularly described hereinafter, have 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 compla.int, stating, its charges in that respect as follows:

P ARAGlUrH 1. Respondent fic1c11c Atlantic Distributors, Inc., sometimes hereinafter in this complaint referred to as respondent corporation, is a Delaware corporation with Hs principal offce and place business located at 1125 Second Street J\ 'V. , ,Yashington, District of Columbia. It is now, and has been for more than one year last past, engaged in the wholesale business of selling to dealers, in the District of Columbia, certain brands of whiskies and alcoholic beverages sold to it by manufacturers and their agents located in various MIDDLE ATLA1 TIC DISTRIBUTORS, INC. , ET AL. 513 511 Complaint States and shipped in commerce to it through various States of the United States.

Respondents Paul H. Coughlin, Murdoch J. FinJaysou, and vViJiam R. Lichtenberg are individuals and the legal address of each of said respondents is 1125 Second Street NW. , 'Vashington, District of Columbia. Respondent Paul H. Coughlin owns al1 of the capital stock of respondent Middle Atlantic Distributors, Inc., and serves as president and director of this respondent corporation. Respondent :Murc1och J. Finlayson serves as vice president and director of respondent corporation and respondent 'Villiam R. Lichtenberg serves as secretary and director of this respondent corporation. Said individual respondents control, direct, and mailage the business policies and operations of respondent :Middle Atlantic Distributors, Inc. PAR. 2. Respondent MiddJc Atlantic Distributors, Inc., in the course and conduct of its aforesaid business, in order to flx, stabilize, and make uniform the resale prices of its said whiskies and alcoholic bevcrages, adopted, established, and has maintained a system or policy of me,l'chandising ,,- hereby it fixed specified, standard, and uniform resale prices at which said prodllcts should be resold by retail dealers and solicited and secured the active support and cooperation of said ctaiJ dealers in the maintenance of said resale prices, and in order to carry out and make effective said system or policy, said respondent has entered into unlawful agreements and understandings with retail dealers purporting to bind said retail dealers to the maintenance aT said retail prices, and solicited and obtained their cooperation in the maintenance of such prices. Pursuant to such understandings and agreements, this respondent has undertaken to prevent, and has prevented, retail dealers from selling said products at prices less than the said minimum resale prices fixed by respondent corporation as aforesaid.

In further carrying out and making effective said system or policy, respondent corporation instituted and does presently carry out the following acts:

1. Since Febrllary 24, 1948, advertising or sale of said prodllcts by its retail dealers is permitted only at the fixed resale prices; 2. Since February 24 , 19-1-8, respondent corporation has refused to seJJ said products to retail dealers who refused to agree to carry out its said system of advertising and selling of said products at its fixed resale prices;

3. Respondent corporation maintains a constant check on its retail dealers through its salesmen who are instructed to report any violation of its fixed resale prices;

, .

514 FEDERAL TRADE CO::VDIISSION DECISIQXS Findings 48 F. T. C. 4. Since February 24, 1948, respondent corporation has refused to sell said products to former customers who refused to sen at its fixed les le prices.

PAR. 3. The direct effect of the above alleged acts and practices done by respondent lidc11e Atlantic Distributors, Inc., has been to suppress competition anJOJlg retail dealers in the sale of said products: to cause said retail dealers to sell said procincts at the prices fixed and established by said respondent; and to preyent them, and each of them from selling said products sold by respondent corporation at suel1 lower prices as they might deenl adequate and warranted by their respective - selling costs and by trade conditions generally, and to deprive the purchasers of said products of the advanta.ges in price which they otherwise would obtain fl' om a natural md unobstructed flow of commerce in said products, thus tending to unduly hinder a.nd 01' llppress competition in the resale of sa.id products in the Dist.rict Columbia, and in violation of seetio1l 5 of the Federal Trade, Commission Act.

REI'OH1\ FLVDIXG AS TC) THE FACTS -\XD OHDEI Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Comlnission, on January 18, 1949, issued and thereafter served its complaint in this proceeding upon the respondents named in the caption hereof, charging them "with llaving violated Section 5 of said Act. After the issuance of said complaint and the filing of respondents' answer thereto. testimony and other evidence in support of the allegations of the complaint were introduced bdore a trial examiner of tile COlnmission theretofore duly designflted by , and sllch testimony and other evidence were duly recorded an(l filed in tbe offce of the Commission. Xo testimony 'vas introduced in opposition to the allegations of tbe cCllnplaint. Thereafter this proceeding regularly came on for final consideration by the Commission upon the complaint, answer thereto, testilllony and other evidence in support of the fl11egations of the compbil1t, recommended decision of the trial examiner and exceptlOllS tlwreto filed by Coullsel !:supporting the complaint, and briefs and oral argument of counsel; and the Commission, having duly considered the matter and lUlvjng entered its order disposing of the exceptions to the trial examiner s recommended decision, and being now inlly ndvisccl 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 tllerefrom. :\IIDDLE ATLAN"TIC DISTRIBVTORS , Thw.) ET AL. 515 511 Findings FIXDIXGS AS TO THE FACTS PAHAGHAPH 1. Respondent Middle Atlantic Distributors, Inc., is a Delaware corporation, with its principal offce and place or business located at 1123 Second Street, N. ,V., Washington, D. C. Respondent Paul II. Coughlin is president and a director, and owns all or the capital stock or said corporate respondent. He controls directs, and manage the business policies and operations of the corporate respondent and is responsible for the acts and practices or the c.orporat.e respondent. hereinafter set rorth. Respondent :\lnrdoch J. Finlayson, during the period covered by the complaint., was vice president and a direct.or or said corporate respondent. Respondent Finlayson died on Angnst 16, 1951, after the hearings ill this matter ",were completed. The complaint will be clismissrd as to him.

Respondent ,Villinm R, Lichtenherg is secretary and a c1ii'ector or the corporate respondent. The record herein fails to establish that. respondent. Lichtenberg has part.icipated actively in the cont.rol, c1irec- 60n, or management of the corporate respondent., or that he has any substantial connection with the business other than as its legal counsel. The Commission is therefore 01 the opinion that the complaint should be dismissed as to respondent Lichtenberg.

\R. 2. Respondent :\fiddle Atlantic Distributors, Inc., is now, and for 1nore than OIle year last past this beell, engaged ill the wholesale business of selling to retail dealers ill the District of Columbia, certain brands of ",yhiskies and other alcoholic beyerages and is engaged in commerce, as "COmlnel'('e is defined in the Federal Trade Commission Act.

PAR. 3. Responfh:mt J\Iic1dJe -\ tlantic Distributors, Inc., is the exclusive distribut.or in the District of Columbia for products manufadm' cd by Hiram ,Valker, Inc. In the course and conduct or its business said corporate respondent, on .June 1947, sent the followng letter to an of its 388 retail dealer customers in the District of Columbia:

No changes have taken place in the policies of l\iddle Atlantic Distributors Inc. We stil believe, strongly, tlwt it is desirable and in the best interests of the retail trade. to place the ernplwsis OIl sound merchandising principles rather than resorting to vicions and destructive compet.ition based on price alone whereby the true values of brands may he destroyed along with the individuals who support such unsound practices.

Restating our policy '1'e desire tllat the retail t.trade continue in the future to sell all brands distributed by us at 011 suggested resale prices which allows the trade the C'usiomary 331J %, less 10% on case sales. Secondly: 'Ve are not opposed to retailers ad1'ertising Hiram Walker and Associated brands plo,ic1ed they are ac1yertised at our suggested resale price 516 FEDERAL TRADE COMlIISSION DECISIONS Findings 48 F. T. C. Our suggested resale prices for Hiram Wall s and associated lines represent honest and sound consumer "\aJ11es based on the high quality of the brands, in addition to a reasonable profit to those engaged in their distribution to the con. sumer.

A heavy schedule of advertising is to be released immecliateJy in the Times- Herald, Post, and Ne'"s, on Canadian Club, Biram 'ValJ"er s Deluxe Bourbon Hiram Walkcr s Imperial, and Hiram Wallwr s Gin. Tlwrefore "\ve do not wish to have the purpose and effect of this advertising campaign nullfied by the inconsiderate treatment of any retailer who thinks that his interests may be served by advertising them for less.

The basis of a sound and secure rela tionship for the future consists of a proper degree of cooperation between us and we propose to extend our best efforts in the promotion of these principles. As Steinmetz once said: "Cooperation is not a sentiment. It is an economic necessity.

On February 20, 1948, said corporate respondent sent the following letter to all of its 388 retail dealer customers in the District of Columbia:

You are hereby advised that effective Tuesday, February 24th, 19"18 we wm not sell our products to any retailer who seUs them below the prices stated in the list attached. There is to be no reduction to the consumer on case purchases. Advertising of the bmnds is permitted only at the prices stated. The resale prices of these brands represent genuine values to the consumerplus a fail' margin of profit to you at the prescnt market level. Experience in this industry bas clearly demonstrated that the best interests of tbe retailer are served when the emphasis is plflced on sound merchandising principles rather than vicious and destructive price competition whereby the true values of brands are destroyed along with the individ11als who engage in such practices.

Theretore--t a retailer sells or aavertises these brands in '1:-violation of the policy nR outlned, tre slIGH tenn'Uwte aU bnsiness relationships '1with him immedia.tely.

No employee of this company bas authority to vary or alter this policy. All communications concerning it can be acted upon only by the undersigned. Enclosed with the letter of February 20, 1948, was a price list setting forth the resale (consumer) prices of the various Hiram IValker products. Subsequently, on :November 29, 1948, and December 8, 1948, the corporate respondent sent to all of its retail dealer customers in the District of Columbia notice of price changes on specified items of said products, each such notice cont.aining the foJ1O'ving statement: . . . if a retailer sells or advertises this product in violation of our policy as outlned to you in our letter of Feb. 20, 1948, we shall terminate all business relationships with him immediately.

The corporate respondent did thus institute, inaugurate, and adopt a system or policy, in merchandising the aforesaid products, of estab. lishing, mainta.ining and enforcing uniform minimum resale prices 1\UDDLE ATLANTIC DISTRIBUTORS, INC. , ET 517 511 Findings at which said products were to be advertised and sold by its retail dealer customers.

PAR. 4. The corporate respondent, in pursuance of the aforesaid system or policy, solicited thc agreement and cooperation of its retail dealer customers in maintaining the uniform minimum resale prices specified by it on said products, and with few exceptions thus secured the agreement and cooperation sought. The corporate respondent was so successful in this respect that few additional actions on its part were necessary to make the resale prices specified fully effective. However to the extent necessary to full eiIectiveness, the corporate respondent did take further and additional steps. In order to keep itself in- Tormed concerning continued adherence to the minimum resale prices specified, it maintained a constant check on the prices at which said products were offered by its retail dealer customers; such customers were told by representatives of the corporate respondent that they had been and would be "shopped" ; and at least one such dealer was requested by a representative of the corporate respondent to report any instances of competitors of said dealer selling said products at less than the uniform minimum resale prices established. In the few instances where retail dealer customers ,were discovered selling or offering Tor sale said products at less than the uniform minimum resale prices fixed, they were visited by representatives of the corporate respondent and urged to cease sellng or offering for sale said products at less than such prices. Three of such retail dealer customers who were visited by representatives of the corporate respondent soon after February 20, 1948, did change their prices on some of said products either in the presence of such representatives or shortly after their visit, and these dealers have continued to maintain the uniform minimum resale prices established. The few dealers who declined or failed to cooperate by maintaining the uniform minimum resale prices designated were cut off from their source of supply of said products in that the corporate respondent refused to sell to them, and such respondent was the exclusive distributor of such products in the District of Columbia. One of the corporate respondent' s retail dealers who was so cut off was visited by representatives of the corporate respondent prior to the date of the issuance of the aforesaid letter of June 17 1947, and informed that if he did not maintain the fixed uniform minimum resale prices, he would not be permitted to purchase any more of said products. Said retail dealer did not at that time agree to maintain such prices, and in July 1947 the corporate respondent stopped filling any of said dealer s orders. In August 1947 said dealer was again visited by representatives of the corporate respondent, at 518 FEDERAL TRADE CO:\EvIISSIOX DECISIONS Findlngs 48 F. T. C.

which time he was told that if he would maintain the fixed uniform minimum resale prices, the corporate respondent would resume selling to him. Said dealer agreed to maintain such prices and the corporate respondent resumed selling to him. Later, however, the corporate respondent discovered that said dealer was selling said products at less than the fixed uniform minimum resale prices, and his sonTce of supply for said products was again cut off by the corporate respondent. As a result of the corporate respondent' s system or policy instituted adopted, and enforced as aforcsa, , more than 380 retail dealer customers of the corporate. respondent have, since receipt of the corporate respondent' s letter of February 20, 1948, sold said products in accordance with the policy stated in said letter, and all advertisements of said products by such deale-rs have also been in ac.c.ordance with such policy.

PAR. 5. The direct effect of the acts and practices of the corporate respondent as hereinabove found has been to suppress competition among retail dealers in the District of CoJnmbia in the sale of said products; to c.cause said retail dealers to sell said products at the prices fixed by the corporate respondent and to prevent them from selling ;aicl products at such lower prices as they might deem adequate and ,\yarrantecl by their respective selling costs and by trade conditions genrally; and to deprive purchasers of said products of the advantage in price which they would otherwise obtain from free and uncontrolled competition among retail dealers in the sale of said products and from a natural and unobstruc.ed flow of commerce in said products. It is the opinion of the Commission that the activities of ::fiddle Atlantic Distributors, Inc., exceeded what is lawfully permissible; that hs conduct embraced considerably 1110re than the mere exercise of its right to inform and make known to its dealer customers that it desireel its fixed resale prices adhered to, and to inform and make known to said dealers that it would discontinue selling to any dealer who di8 regarded its policy in this regard. It is the conclusion of the Commis- ,ion that the conduct of Middle Atlantic Distributors, Inc., and particularly its conduct in connection with the conduct of its salesmen in exerting pressure on dealers to abide by the specified prices and the practice of said salesmen in reporting to Middle Atlantic Distributors the naines of dealers who did not adhere to its specified prices, 1'0snlted in the securing of ussura,ncps and understandings from its retail customers that they would abide by Middle Atlantic Distributors fixed resale prices and that, as a result thereof, competition between dealers in said products was suppressed and eliminated, and consumers in the District of Columbia. were deprived of the benefit of price competition based on cost, effciency, a,nd service. ?lnDDI E ATLA.1\TIC DISTRIBUTOHS INC., ET AL. 519 511 Order CONCLUSION The acts and practices of the corporate respondent, Middle Atlantic Distributors, Inc., and of the individual respondent Paul H. Coughlin acting by and through the corporate respondent, as hereimtbove found are a1l to the prejudice and injury of the public; have a dangerous tendency to hinder and suppress l1c1 llfr8 actually hindered and suppressed, competition between and among the retail dealers in the District of Columbia selling said products; and constitute unfair and deceptive acts and practices in commerce and unfair methods of competition in commerce within the intent and meaning of Section 5 of the Federal Trade Commission Act.

Order TO CK-\SE XXD DESIST This proceeding ha vi ng been heard by the Federal Trade Commission upon the cOlnplaint of the Commission, the answer of the respondents, testimony and other evidence in support of the allegations of the complaint introduced before a trial examiner of the Commission theretofore duly designated by it (no testimony having been introduced in opposition to the allegations of the complaint), recommended decision of the trial exami11cr and exceptions thereto, and briefs and oral argument of counsel; and the Commission having made its findings as to thc facts and its conclusion that the respondents l\Iidclle Atlantic Distributors, Inc., and Paull-I. Coughlin have violated the provisions of the Federal Trade Commission Act: It is o1'dered That the respondent ::\iddle Atlantic Distributors Inc., a corporation, its offcers, and the respondent Paul H. Coughlin individually and as an offccr of saiel corporate respondent, and said respondents' respective representatives, agents, and employees, directly 01' through any corporate or other device, in connection with the offering for sale, sale and distribution of whiskies or other alcoholic beverages in the District of Columbia, do forthwith cease and desist from:

(1) Entering into or enforcing any agreement or llnderstanding, verbal or written, with any retail dealer or other distributor concerning the price at which any said proclncts are to be resold by such retail dealer or other distributor.

(2) Obtaining or utte1npting to obtain from any retail dealer or other distributor, as a condition precedent to the sale of said products to such retailer dealer or other distributor, any agreement, underst.anding, 01' promise concerning the price at which any of sa-ic1 products are to be resold by sneh retail dealer or other distributor. 520 FEDERAL TRADE COMl\USSIO:N DECISIONS Order 48F.

It i8 further ordered That the complaint herein be, and it hereby , dismissed as to respondents Murdoch J. Finlayson and Willam R. Lichtenberg.

It i8 That the respondents Middle Atlantic Dis- further ordered Paul H. Coughlin shall, within sixty (60) days Inc., andtributors, after service upon them of this order, file with the Commission a report, in writing, setting forth in detail the manller and form in which they have complied with this order.

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low A FIBRE PRODUCTS, INC. J ET AL. 521 Complaint