Dictograph Products, Inc.

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IN THE IATTER OF DICTOGRAPH PRODUCTS, INC.

:DECISION AND OPINION IN REGARD TO THE ALLEGED VIOLATION m' SEC. 3 OF THE CLAYTON ACT AND THE FEDERAL TRADE COMMISSION ACT Docket ;;6.55. Com.p/(vi"t, May 1949-Deci, ion, Sept. 24, 1953 - Vhere OIle of the larg( st corporate luul1ufatturers of hearing aids, engaged in the manufacture and competitive interstate sale and distribution of its Acousticon" instruments and parts and accessories therefor; in selling its said products to about 220 independently owned and operated distributors located throughout the United States, who were part of a group of about 000 devoted solely to the sale of hearing aids and related products, and as such offered the best market therefor, and one which was used generally by manufa(.turers of such products as distributive mediums- (a) Consistently follow cd, since 1937, a policy of making sales and contracts for sales of its products on the condition, agrcement, and understanding that the purchasers thereof should not use or deal in hearing aid instruments or parts or acccssories therefor sold and distributed by competitors; ,ell) Required also that all its distributors refrain from sellng any used hearing aids or any which had been traded in as part payment for a new heating aid;

,( c) Provided in its said contracts for thc appointment of sub-distributors by its distrihutors in the territory allotted to them, on contract forms supplied by it and suhject to the same restrictive exclusive-dealing provisions contained in the contract between it and the distributors; .( d) Provided in its said contracts that they might be cancelled at any time with or without cause, and tliat in said evcnt the distributor would cancel thc franchises of all its dealers and would not for a year engage in any hearing aid business in the territory concerned; '(e) Required its distributors to sign supplements to such agreements by which they agreed that, upon termination of the contracts, they would surrender their telephone directory listing and authorize that any mail upon which appeared the name 'jAcousticon" or any variation of the word "Acoustic," be forwarded to its home offce, said latter agrcement being in such form as to constitute a directive to the Postal Department to forward all mail so addressed direct to it ; .(f) Brought to the attention of each distributor at the time of the execution of the written contract that such distributor must handle only its products; and through its exclusive-dealing clause in conjunction with the right of cancellation and the prohibitions against continuing in business for a year after cancellatlon, intimidated and coerced distributors and compelled them to purchase products concerned solely from it; and representatives to check the stock of products carried19) Iustructed its field by its deaiers and distributors to determine whether auy competitive products were being carried, and threatened those whom it discovered to be carrying such products with immediate discontinuance of the distributor franchise pursuant to the canccllatlon provisions contained therein, and in the event of any such distributor s persistence in carrying such products immediately discontinued him:

Decision 50 F. T. C.

Held (a) That such acts and practices, under the circumstances set forth constituted unfajr methods of competition and unfair acts and practices in commerce within the intent and meaning of the 1!'ederal Trade Commission Act; and (b) That the acts and practices of respondent in seIJng and making contracts for sale of hearing aids and parts and accessories therefor on the condition agreement, or understanding that the purchasers thereof should not sell or deal in similar products of a competitor constituted a violation of Sec. 3 of the Clayton Act.

Before Mr. Earl J. K olb hearing examiner. Mr. William C. Kern and llfr. Andrew C. G'oodhope for the Commission.

Theodore F. Tonlconogy and lir. lir. George J. Feldman of New York City, for respondent.

ORDERS AND DECISION OF THE COMMISSION Order dcnying appeal from initial decision of hearing examiner and decision of the Commission and order to mc report of compliance Docket 5655, September 24, 1953, follows:

This matter having come on to be heard by the Commission upon respondent' s appeal from the initial dccision of the hearing examiner briefs in support of and in opposition to said appeal and oral argument of counsel; and The Commission, upon consideration of the record herein, having decided, for the reasons stated in the written opinion of the Commission which is being issued simultaneously herewith, that the findings as to thc facts contained in the initial decision are supportcd by reliable, substantial, and probative evidence of record; that the conclusions contained herein are correct; and that the ordcr to cease and desist therein providp,S proper relief from the respondent' s ilegal practices; and The Commission, therefore, being of thc opinion that respondent' appeal from and exceptions to the hearing examiner s initial decision are of no merit and that said initial decision is appropria.te in all respects to dispose of this proceeding:

It is ordered That the appeal of respondent from the initial decision of thc hearing examiner be, and it hereby is, denied. It i8 f71Tthe1' ordered That the initial decision of the hearing examiner shall on the 24th day of September, 1953, become the decision of the Commission.

It is f71Tther ordered that respondent Dictograph Products, Inc. shall, within sixty (60) days after service upon it of this order, fic with thc Commission a report in writing setting forth in detail the manner DICTOGRAPH PRODUCTS, INC. 283 281 Findings and form in which it has complied with the order to cease and desist contained in said initial decision * * * Said initial decision, thus adopted by the Commission as its decision, follows:

INITIAL DECISION BY EARL ;T. Ie OLE, HEARING EXAMINER Pursuant to the provisions of the Act of Congress entitled " Act to supplement existing laws against unjawful restraints and monopolies, and for other purposes" approved October 15, 1914 commonly known as the Clayton Act, and the provisions of the Federal Trade Commission Act, the Federal Trade Commission on May 2, 1949, issued and subsequently served its complaint in this proceeding upon the respondent Dictograph Products, Inc., a corporation, charging it with the violation of the provisions of section 3 of thc Clayton Act and use of unfair methods of competition and unfair and deceptive acts (lnd practices in commerce in violation of the provisions of thc Federal Trade Commission Act. After the filing of answer to the complaint, hearings were held at which testimony and other evidence in support of, and in opposition to, the allegations of the complaint were introduced before the above-named Hearing Examiner theretofore duly designated by the Commission and said testimony and other evidence were duly recordcd and filed in thc ofiee of the Commission. Thereafter this proceeding regularly came on for final consideration by said Hearing Examiner on the complaint, answer thereto, testimony and other evidence, and proposed findings as to the facts and conclusions presented by counsel and said Hearing Examiner, having duly considered the record here- , makes the following Endings as to the facts and conclusions drawn thercfrom and order:

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent Dictogrnph Products, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of N ew York, having its principal offce and factory at 95- , 149th Street, Jamaica, Long Island, New York. Respondent maintains branch offccs located in New York ew York; Chicago, Illinois; and Los Angles, California. PAR. 2. Since its incorporation in 1938 or 1939 and prior thereto, as a Delaware corporation, the respondent has been engaged in the manufacture and thc sale and distribution of hearing aid instruments under the trade name "Acousticon " and of parts and accessories therefor. llespondent is one of the largest manufacturers of hearing aids and parts and accessories therefor located in the United States. Respondent causes said products when sold to be transported from its _ ___ __ 284 FEDERAL TRADE COMMISSIOK DECISIONS Findings 50 F. T. C.

phwe of business and factory located in the State of N ew York to purchasers thereof located in the various other States of the United StJates and in the District of Columbia. Respondent maintains and HI, all times mentioned herein has maintained a course of trade in said products in commerce among and between the various States of the United States and in the District of Columbia. PAR. 3. In the course and conduct of its business hereinbefore described, respondent is now, and has been for many years, engaged in competition in the sale of hearing aids and parts and accessories therefor in commerce among and bctwcen the various States of the Unite States and in the District of Columbia with other corporations and with persons, partnerships and firms engaged in the manufacture and sale of similar products.

PAR. 4. The method of distribution used by respondent is to sell its Lring aids and parts and accessories therefor to approximately 220 independcntly owned and operated distributors located throughout the United States, who are not agents, servants or employees of respondents, but indcpcndent contractors in the purchase of respondent's products. This method of distribution is generally followed by manufacturers and distributors of hearing aids and parts and accessories therefor except for a fcw who also sell to dcalcrs for over the counter sales. The bcst market for the manufacturers of hearing aids is the independcntly established retail distributor whose business is devoted entirely ' () the fitting and sale of hearing aids to the hard of' hearing public. There is a total of approximately 1 000 distributors located in the United States who devote their entire time and business efforts solely to the sale of hearing aids and rclated products. Such distributors also serve as the best market for parts and accessories for hearing aid instruments since the purchaser thereof generally returns to the distributor from whom he purchased the hearing aid for any further purchases of parts or batteries or for any repairs or replacemcnts or parts in the hearing aid purchased. PAR. 5. The dollar volume of business done by the respondent with its distributors has been substantial. During the years 1944 to 1949 inclusive, sales of hearing aids and pa.rts and accessories therefor by rcspondcnt to its distributors were as follows: Parts r1 rear 11 eadng .i ids Acc688orie8 1fJ44 ---- --. $741, 874 $257, 933 1945- . 1 041 097 162, 100 1946__ ---. 2 231 570 187 , 761 1947--___ . 1 937 432 269, 182 1948_ . 1 763 955 200, 757 10 Ionths m19-_- . 1 546 797 142, 025 DICTOGRAPH PRODUCTS, INC. 285 281 Findings PAR. 6. In the course and conduct of its business, respondent has since 1937 consistently followcd a policy of making sales and contracts for sale of its hearing aid instrnments and parts and accessories therefor on the condition, agrcement and understanding that the purchasers thereof shall not use or dcal in hearing aiel instruments or parts or accessories therefor sold and distributed by competitors of the respondent. The respondent also required that all of its distributors refrain from selling any used hearing aids or any hearing aids which have been traded in as part payment for a new hearing aid. PAR. 7. The standard form of contract entered into by respondent and its distributors has been substantially the same since 1937 and contains, among other things, the following provisions: 2. Subject to the reservations hereinaftcl' stated, the Company hereby grants to Distributor an exclusive franchise to purchase Aconsticon Products for resale in the following desel'ihed territory:

(DescriptioIl of territur)' allolled) It is agreed that Company may at ally time enlarg' , reduce or otherwise change said territory in ally way and at any time Company may see tit and without prior notice, \YHhollt otherwise affecting the terms of this agreement and without incurring any lial)ility wlwtsueyel' tu Distributor uy reason thereof. Anyslleh enlargement, reduction or ehaJlge of territory, shall ue effective frolll the date of written notice thereof.

4. (a) Distributor hereby :lC'cepts the fnuH'hise lliion the tenns, covenants and conditions set forth in the agreement and in acting" hereunder be agrees to appoint dealers to sell Acoustkon Prodnet in all tuwns and cities Inntually agreed upun by Company um! Distributor.

(b) Distributor agrees to tic with Company)' a fully executed copy of each latcst Dealer Franchise ..\greellent entered into by him \with any and all deniers. whicl1 Dealer I, rallchise Agreements shall be on appropriate forms supplied hy COlnpany. In event any such Dealer rallchise ..\greements are tcnninated for any reason, Distributor will imnwdiately furnish COlllpany with a copy of the notice of termination.

5. Distributor agrees that during the tenn of this agrcement, Distributor will not Illanufacture, sell, lllarl, distribute or otter for sale in any way, directly or indirectly, any hearing- aid instruluents, parts or accessories, other than Acollsticon Products, except us otherwise a nthorized by Company. 13. Distributor agrees that Distributor shall bear any and all expense incident to the operation of his lJnsille s as an Acoustic-on Distributor including, without: limiting' the foregoing, the cost of furnishing and equipping Distributor s place of business, and cost of Dli1intaining said plac' e of business, and Distributor will at his expense and at his sale diesel'etion, ill the event Distributor deeicles he requires elllployees or assistants, hire such assistants or employees as Dis- :jbutol' requires for the operation of his business, and Distributor shah pay the wages, salaries or COIlmission of all snell assistants and employees awl :1SS1une full dir€('Uul1 and control over and l'esrJoIlsibility for all sue11 flssi tants and employees. It is understood and agreed that if Distributor hires such assistants 01' emIJlo:yee, ::nch assistants and employees are the assistants and emplo)' ecs of Distributor and not of Company. Findings 50 F.

17. (a) This agreement shall continue in force and govern all relations and transactions between Company and Distributor until terminated, as hereinafter provided; Provided, however, that in event Distributor for any reason whatsoevcr violates or breaches this agrcement, Company may at its option treat such hreach as a termination of this agreement, as though the same were terminated by Distributor.

(b) This agreement may be terminated at any time with or without cause hy either party hereto hy posting in the United States Registered Mail, return receipt requested, postage prepaid, a written notice of termination in an envelope properly addressed to the last known address of the otl1cr party, or by personally delivering a written notice of termination to thc other party. In event of termination of this agrcement by either party, Distributor agrees that he wil within ten days after receipt of notice of termination, or within ten day,; after the rnailiI4 of notice of termination, cause the franchises of all Distributor s dealers handling Acousticon Products as of the effective date of cancellation, to be cancelled in accordance with the provisions of such franchises. (c) It is agreed that any such termination of this agreement wil not release Distributor from payment of any sum which may then be owing Company. (d) Notice of termination of this agreement hy either party wil immediately act as cancellation of all orders which may have been sent by Distributor for Acousticon Products and standard repair or replacement parts', if said orders had not been shipped prior to Company s sending or receiving notice of termination.

21. In the event of the termination of this agrel'ment by either party, Distributor expressly covenants and agrees that for a period of onc year from the date of said termination Distributor wil not, directly or indirectly, carryon, or be engaged, employed or interestcd in any hearing aid business within the territory outlined in Paragraph "2" hereof, either alone or jointly with, or as agent or employ e of, any person, firm or corporation, and that during said one year period, "within the aforesaid territory Distributor wil not, in any manner whatever, solicit or accept the custom, trade, or business of any user of or prospect for hearing aids. Distributor further covenants and agrees not to do any other act that shall or may prejudice the business of the Company or any other Distributor of the Company within the territory ontlined in Paragraph " hereof.

PAR. S. Pursuant to the provisions of the Distributor Agreement hereinbefore described respondent' distributors have appointed sub- distributors or dealers to sell respondent's products using contract forms supplied by respondent to distributors for this purpose. These contracts were subject to the restrictive exclusive dcaJing provisions contained in the contracts between respondent and its distributors. As of November 1, 1949, there were approximately thirtysix such dealers under contract with respondent's distributors. PAR. 9. In addition to respondent requiring its distributors to entcr into formal written contracts with it containing the provisions hereinbefore described, the respondent at the same time required its distributors to sign supplements to such agreements by which they agreed that, upon termination of said contracts, they would surrender their DICTOGRAPH PRODUCTS , INC. 287 281 Findings telcphone directory listing and authorize that any mail upon which appears the name "Acousticon" or any variation of the word "Acous tic" be forwardcd to the home offce of respondent. This latter agreement was in such form as to constitute a directive to the Postal De. partment to forward all mail so addressed direct to the respondent. PAR. 10. In the general course and conduct of respondent' s business relations with its distributors, respondent has required strict com pliance with, and its distributors have strictly adhercd to, the cxclusive dealing requircmcnts of its contracts. Furthermore the exclusive dealing clause of respondent's contract, when considered in conjunction with the right of cancellation by respondent and the prohihitions against continuing in the business of selling hearing aids after cancellation, is a suffcient dctercnt to require compliance with the contract. Such contractual provisions and the rcquirement of strict compliance therewith has the effect of intimidating and coercing distributors and compelling them to purchase hearing aids and parts and accessories thcrcfor solely from respondent. PAR. 11. In the course of its dealings with its distributors, respondent has adopted other acts and practices which were designed to and did intimidate such distributors and which caused and compelled them to purchase hearing aids and parts and accessories therefor solely from the respondent and which prohibited purchases from competitiors of respondent. Among such acts and practices were instructions issued by respondent to its field representatives to chcck the stock of products Larried by respondent' s dealers and distributors to determine whether any competitive. products were being carried and to report any such violations of respondent's contract to the respondent. The various field representatives followed these instructions and did check on dealers' and distributors' stocks and reported violations of the respondent' s requirement to deal only in its products to the respondent. PAR. 12. Respondent in order to enforcc and implement require ment that distributors handle only respondent's products to the exclusion of any products of a competitor of respondent, not only has brought to the attention of each distributor, at the time of the execution of the written contract, that such distributor must handle only respondent' s products, but also has threatened distributors whom it discovered to be carrying competitve products with an immediate discontinuance of the distributor s franchise pursuant to the cancellationin carryingprovisions anycontained' compctitivetherein andproductsif any ,suchhedistributorwas immediatelypersisted discontinued.

PAR. 13. As a part of its defcnsc the respondent called representatives of nine competing manufacturers of hearing aids in an attempt to 288 FEDERAL TRADE COTvlMISSIOK DECISIONS Findings 50 J!' T. C. estahlishthat during the period the respondent has been requiring its distributors to deal exclusively in respondent' s products, that some of these manufacturers have commenced the manufacture of hearing aids and that their sales of hearing aids have increased despite the fact that they were unable to sell to any of respondent's dealers or distributors. The merc fact that some competitors have entered the field and that the sales of some competitors have increased during the period that respondent has required its distributors to handle its products exclusively, constitutes no defense to this proceeding where it affrmatively appears that such competitors were foreclosed from a substantial portion of the market. Respondent's distributors constitute a substantial segment of the outlets for sale of hearing aids and supply coverage for the more important trade areas of the United States. such segment thc respondent has effectively established a monopoly. Competing manufacturers of hearing aids have suffered substantial injury in the form of loss of sales and inadequate distribution of their competing products as a result of the respondent's requirements that its distributors and dealers handle only the products manufactured and sold by the respondent, and such competing manufacturers have been forced to sell less desimble outlets for their products such as optical stores, dcpartment stores and drug stores.

PAR. 14. As a further defense to this proceeding it was contended by the respondent that its hearing aids are developed along the highest lines of scientific research, that its products arc supcrior, that the fitting techniques developed by the respondent and utilized by its distributors and dealers to fit its hearing aids to the hard of hearing are superior and that no other competing company s products are adapted to or capable of performance as effciently for the hard of hearing nor do such other competing companies employ fitting methods and procedures comparable to those of respondent. While the hearing aids manufactured and sold by respondent cover a variety of responses and are adaptable to various degrces of hearing loss, there are also other competing manufacturers whose hearing aids cover' a variety of responses and which are adaptable to various degrees of hearing loss though not on as elaborate a scale as that developed by the respondent. Competing manufacturers as well as respondent have developed techniques for thc. fitting of hearing aids. All these techniques have for their pmpose thc fitting of a hearing aid most satisfactory to the purchaser to be fitted, and to compensate for the hearing loss involved. PAR. 15. Thc relative merits of respondent' ' hearing aids or its fitting teelmiques does not constitute a defense to this proceeding. matter how compclling the advantage of handling thc respondent' products might be cither to the di"tributOl or his customer this does DICTOGRAPH PRODUCTS , INC. 289 281 Conclusions 110t justify thc evasion or violation of thc statutory provisions dealing with exclusive dealing contracts. IVhile the distributor is engaged in 'ln entirely private business and has a right to freely exercise his own independent discretion as to parties with whom he wil deal or stop dealing for reasons suffcient unto himself, this right should be left to the dealer free of any contractual requirement to deal only in respondent' s products.

CONCLUSIONS 1. The distributors' and dealers' oontracts and llgreements and methods of sale as hereiubefore described constitute sales or contracts for sale of respondent's hearing aids and parts and acccssories on the condition, agreement or understanding that the purchasers thereof shall not dcal in similar products sold and distributed by competitors of respondent.

2. Distributors who have executed written contracts with respondent suffcr substantial injury to their respective businesses, because of the fact that they are foreclosed from making any independent judgment or decision as to what products they shall handle and sell in their business enterprises and lose substantial sales because they are unable to carry and sell competitive heariug aids. iJ. Distributors ,,' ho refuse to abide by respondent's exclusive dealing policy and insist on carrying competitive hearing aids and who arc, therefore, promptly discontinued by respondent as such distributors for no other reason, are injured in their busincsses because of the fact that they are unable to make the normal sales which they would ordinarily make of respondent' s products, solely because they refused to handle respondent's products exclusivcly. 4. The acts and practices and policy of the respondent, relative to exclusive dealing, adversely affects the ability of competitive manufacturers and suppliers to sell hearing aids and parts and accessories therefor to independcnt distributors under contract with respondent and deprives such manufacturers and suppliers of an equal opportunity to obtain the business of such distributors and such practices restrain, restrict and lcssen the market for thc sale of such products of such independent manufacturers and suppliers. 5. The dollar volume of such products annually sold by respondent to its distributors under restrictive conditions, understanding and agreements \Vas substantial and has materially lessened competitive sales in each of the trade areas covered by respondent's distributors and respondent, during all the times mentioned herein, would have been, and would now be, in free and open competition in the sale of similar merchandise in commerce in said trade areas "' ere it not for 403443-- 7 -- , .

Order 50 F. T. C.

the suppression of such competition by such restrictive policy and practices and conditions, understandings and agreements imposed upon its distributors as hereinbefore found. 6. The use by the respondent of the acts and practices hereinbefore described has had and now has, the capacity and tendency to, and docs, intimidate respondent' s distributors and coerce and compcl them to purchase hearing aids and parts and ac.cessories therefor only from the respondent with the result that substantial trade has been diverted to the respondent from its competitors who are engagcd in the manufacture and in thc sale and distribution of similar products as sold by the respondent.

7. The acts and practices of respondent as hereinbefore described are all to the injury and prejudice of the respondent' s competitors and of the public, and have the tendency to, and have, hindcred and prevented competition in commerce, and tends to, and has, hindered competition in the sale of the products sold by the respondent, and has a tendency to, and has, obstructed and restrained such competition in commerce.

8. The effect of the sale and contracts for sale of hearing aids and parts and accessories therefor on the condition, agreement and understanding that the purchaser thereof shall not sell or deal in similar products of competitors has the effect of substantially lesscning competition and has the tendency to create a monopoly in respondent in thc saJc of such hearing aids and parts and accessories therefor sold by respondent.

9. The acts and practices of the respondent, as herein found, constitute unfair methods of competition and unfair acts and practices in commerce within thc intent and meaning of the Federal Trade Commission Act; and the acts and practices of the respondent in selling and making contracts for the sale of hearing aids and parts and accessories therefor on the conditions, agrcemcnt or understanding that the purchasers thereof shall not sell or deal in similar products of a competitor constitute a violation of section 3 of that Act of Congress entitled "An Act To supplcment existing laws against unlawful restraints and monopolies and for other purposes" approved October 1914 (thc Clayton Act).

ORDER It is ordered That the respondent, Dictograph Products, Inc. , a corporation, and its offcers, agents, representatives and employees directly or through any corporate or other device in connection with the offering for sale, sale or distribution of hearing aids and parts and accessories therefor and other similar or related products in com- DICTOGRAPH PRODUCTS , INC. 291 281 Order meree, as "commerce" is defined in the Clayton Act, do forthwith cease &nd desist from:

1. Sellng or making any contract or agreement for the sale of any such products on the condition, agreement or understanding that the purchaser thereof shall not use, or deal in, or sell hearing aids or parts and accessories therefor or other similar correlated products supplied by any competitor or competitors of respondent; 2. Enforcing or continuing in opcration or effect any condition agreement or understanding in, or in connection with, any existing contract of sale, which condition, agreement or understanding is to the effect that the purchaser of said products shall not use or dmtl in hearing aids or parts and accessories therefor or other similar or related products supplied by any competitor or competitors of respondent. It is furtlwr ordered That the respondent Dictograph Products Inc., a corporation, its offcers, representatives, agents and employees directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of hearing aids and parts and accessories therefor and other similar products in commerce, as commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from directly or indirectly- 1. Selling or making any contract for the sale of any such products on the condition, ngreemcnt or understanding that the purchaser thereof shall not use, or deal in, or scJJ the goods, wares or merchandise of a competitor or competitors of respondent; 2. Enforcing or continui;' g in operation or effect any condition ftgreement or undcrsta.nding in, or in connection with, any existing 1les contract, which concLtion, agrecment or understftnding is to the effect that the purchaser of said products shall not use or deal in the goods, wares or merchandise of a competitor or competitors of rcspondent;

3. Cancelling, or directly or by implication threatening the cancell ition of, any contract or franchisc or selling agrecment with respondent' s distributors or with any other customers, for thc sale of said products, because of the fftilure of such purchasers to purchase or deal exclusively in the products sold and distributed by respondent.

4. Instituting litigation, or directly or by implication threatening the institution of any litigation against any of respondent's distributors or other customers because of the failure or refusal of such purchasers to purchase or deal exclusively in the products sold and distributed by respondent.

5. Enjoining or attempting to enjoin any of respondent's distributors or customers from engaging in thc hearing aid busine",s for thc 292 FEm;RAL TRADE COMMISSION DECISIONS Opinion 50 F. T. C.

period of one year or Hny other period pursuant to flny injunctive provision contained in respondent's distributor contrf1cts or otherwise; or obstructing or f1ttempting to obstruct by Wf1Y of Jitigf1tioll or otherwise flny of respondent's distributors from procuring theilmail; or obstrncting or attempting to obstrnct by way of litigation or otherwise any of respondent's distributors from the continued use of their telephone listing, where flny of such actions are taken by respondent for the purpose cither of coercing or intimidating such distributors into dCf11ing in respondent's products exclusively to the exclnsion of products of competitors or for the purpose of rctaliatingagainst such distributors for their failure or refusal to purchase or def11 exclusively in the products sold and distributed by respondent. 6. The performance of any act of intimidation or coercion either through statements, oral or written, made by representf1tives of the respondent either at the time when a distributor agrees to purchase any products from respondent or during the course of any oalJs made. upon distributors or customers at their phces of business or at any other place, or thc use of any other plan, practice, system or method of doing business for thc purpose or having the effect of intimidating or cocrcing the respondent's distributors or other customers to purchase the products or merchandise in which they dcal exclusively from the respondent.

OJWJm TO FILJ' Import OF C01\PLIA='CE It is f1lrther ordered That respondent Dictograph Products, Inc. , fileshalJ, within sixty (60) (ktys after service upon it of this order with the Commission a report in writing setting forth in detail the manner and form in which it has complied with the order to cease and desist * * * Las required by aforesaid order and decision of the. Commission J :

OPINION OF THE CO"L1\ISSlON By CARRETTA, Commissioner :

This nmtter invoJvcs the practice of thc Dictograph Products, Inc. respondent herein, of entering into and enforcing exclusive dealing' agreements with its purchf1scrs. This company, one of the three Jf1rgcst in the hem'ing aid industry in volume of Sf1Jcs, sells its products to independently owned and operated dist.ributors loc tted throughout the United States. Since 1937 t.hc forms of contract entered into by respondent with its distributors have contained a provision to the cffeet that. thc distribut.or shall not sell hearing instruments ot.her than those manufactured by respondent. The hearingexaminer in his initial decision held that the use of these exclusive. DICTOGHAPH PRODUCTS, INC. 293 Opinion dealing provisions is in violation of Section 3 of the Clayton Act and that respondent's practice of entering into and enforcing them js in violation of Section 5 of the Federal Trade Commission Aet. Respondent in its appeal does not deny that its practice is to require .exclusive dealing contracts from its distributors. It contends rather that its exclusive dealing contracts are legal and proper in all respects that they are essential to its business and beneficial to the public and that they do not have the adverse effect on competition required to make their use a violation of law. Respondent also takes exception to .certain findings of fact and to the conclusions in the initial decision and, in addition, contends that certain procedural rulings of the hearjng examiner were in error and seriously prcjudiced its defense in this proceeding.

Respondent contends that it takes an entirely diffcrcnt and superior a approach to the problem of assisting persons who arc hard of hearing than do other sellers of hearing aids. It is of the opinion that the great majority of hard of hearing cases are not helped by an instrument which just amplifies sound but require one which amplifies a particular range of sound frequcncies more than it does others. Respondent, therefore, manufacturcs and sells at least ten different types of receivers, each of which is designed to cmphasize a different range of frequencies. It has devcloped special tests to determine the nccds of each customer and has instructed its distributors in conducting thcsc tests and in selecting thc proper type of its instruments for use in each case. Respondent claims that many other brands of hearing aids do not follow this principle 01' do not offer as \viele a range of types. therefore, contends that to permit its distributors to scll other brands which require different, conflicting and erroneous tests and sales approach, would destroy its efforts to properly present its hearing aids to the purchasing public to its injury and to the injury ,of the public.

This contention is believcd to be of no merit. It is recognizcd that it may be an advantage to a seller to have the distributors of his products conccntrate their sales efforts on his products only. This may be particularly true where the seller has developed a sales approach and technique which conflicts with the sales approach required to sell competitive products. However, exclusive dealing agreements betaken independent distributors and a seller are expressly prohibited hy Section 3 of the Clayton Act where the requisite effect on competition is present. The economic advantage to respondent of requiring its distributors to contractually agree not to sell competing products will not justify a violation of this section of the Act. The purpose -of this Act is to preserve competitive conditions. Congress by passing 294 FEDERAL TRADE COJ\L\IISSION DECISIONS Opinion 50 F. T. C.

this Act has determined that the public interest requires that the advantage of requiring its distributors to agree to deal exclusively in its products must be denied a seller where the effect of such agreements may be to substantially lessen competition or to tend to create a monopoly.

In support of its contention that its exclusive dealing agreements have not had the requisitc effect on competition, respondent urgcs that competition in thc industry has in fact increased, that respondent did not take over existing distributors but established its own and that its distributors do not have a monopoly of the hearing aid market in any city or area of the country.

The record shows that respondent sells its hearing aids to approximately 220 well-established distributors who specialize in the hearing aid field. These distributors are retailers who sell directly to the public. These distributors, each of which has entered into an exclusive dealing agrcement with respondent, comprise a substantial portion of the established responsible distributors specializing in the sale of cstimate in thehearing aids in the United States. One informed record is that there are only approximately 1 000 such accounts in the United States. These accounts which specialize in the sale of hearing aids constitute the best market for these products. The nature of this market is such that to sell effectively potential users of hearing aids must be sought out and convinced of the advantages of hearing aids to them. Many persons who are hard of hearing are reluctant to wear hearing aids and will not shop for this product. well-established distributor accounts specializing in the sale of hearing aids employ a field sales force and concentratc their sales efforts on locating and selling such potential users. In this manner a market is reached which is not accessiblc to accounts selling across thc counter only. Also, wellestablished distributor accounts build up a satisfied clientele which constitutes an excellent market for the sale of improved models. Thus effective control of a substantial number of these established distributors is of great advantage to a manufacturer of hearing aids. During the last fifteen years, due to great technical advances in thc product, there has been a tremendous growth in the hearing aid industry. Sales have boomed. The number of producing companies in the field has incrcascd from twenty to over eighty. Respondent which has used its exclusive dealing contracts throughout this period has maintained its position as one of the top three in the industry. During this period of expansion, hearing aid manufacturers trying to break into this field found that they were foreclosed from selling to respondent's distributors by the exclusive dealing requirement in respondent' s contract with its distributors. These newcomers in the DICTOGRAPH PRODUCTS , INC. 295 281 Opinion field were forced to turn to other nonexclusive distributors and to less desirable outlets, such as optical, drug, and department stores. Certain of them, notably Zcnith Radio Corporation, which is now first in volume of sales in the industry, were able to successfully enter this field despite this handicap. They are now in the process of locating and establishing other independently owned purchasers for their products who will specializc in the sale of hearing aids. Respondent's exclusive dealing contracts contain provisions authorizing termination at any time by cither party. However, they also provide that after termination by either party the distributor wil not engage in the hearing aid business in the same sales area for a period of one year. Thus, under the terms of this contract the distributor agrccs to go out of the hearing aid business for one year if he becomes unwilling to continue to sell respondent' s hearing aids exclusively. Respondent's policy has been to require compliance with the exclusive dealing requirement and to threaten cancellation of the distributorship for selling competing products. Respondent in several instances has cancelled distributorships for violation of the exclusive dealing requiremcnt and has brought legal proceedings seeking enforcement of the termination provisions. As a result respondent has restricted its independently owned distributors in their choice of products and has to a great extent foreclosed to its competitors access to thc customers served by its distributors. By thc Clayton Act, Congress designated exclusive dealing contrticts as unreasonable restraints on tr:de where their effect may be to substantially lessen competit.ion. That t.est is met here where one of the largest producers in the field has t.ied up a substantial portion of the established rct.ail outlet.s with exclusive dealing contracts containing such t.crminat.ion provisions, and where the contracts not. only tend to foreclose a substant.ial portion of the market. to respondent' competitors, but. also deny competitive opportunities to respondent' distributors. Under such agreements the dist.ributors must refuse all opportunities to sell competing brands, including those desired by their customers. They are also denied any opportunity to handle superior or better priced products which may come on the market. Such contracts affect a substantial volume of business and tend to substantially lessen competition in violation of Section 3 of the Clayton Act. It is believed, therefore, that respondent's contention t.hat the record does not establish a violation of the Clayton Act is of no merit and should be rejected.

Similarly, it is believed that thc hearing examiner correctly held in his initial decision that respondent's practices of entering into contracts containing exclusive dealing provisions with its distributors and 296 FEDERAL TRADE COMMISSION DECISIOKS Opillion 50 F. T. C.

of intimidating and coercing them into complying with these provisions were unfair methods of competition and unfair acts and praeticcs in commerce in violation of Section 5 of the Federal Trade Commission Act.

Also, respondent's coercive practices, in addition to being unfairly llsed to. cnforcc an ilegal exclusive dealing arrangement, constitute unfair restrictions on respondent' s distributors in the operation of their independently owned businesses. Respondent's contracts with it.s distributors, by not providing any means by which a distributor can withdraw from t.he arrangement without. bringing into effect his agreement. to go out of the hearing aid business completely for one year in t.hat. sales area upon t.crminat.ion of the agreement, and by permit.t.ing respondent t.o cancel any distributorship without cause and thus bring this termination provision into effect, have provided respondent with the means of coercing and intimidating its distributors into operating t.their businesses in accordance with respondent' s dictat.es. Respondent has used thcsc means to exert pressure on distributors who were selling used hearing aids and on others who were considering taking on other lines of hearing aids in place of respondent.'s products. The use by respondent of these means to coerce and intimidate its distribut.ors in this manner constitutes an unfair act and practice and an unfair method of competition within the meaning of Seetioll 5 of the Federal Trade Commission Act.

Respondent. has specifically exeeptc:l to certain of the findings of fact and to the conclusions set out in t.he init.ial decision. These exceptions are believed to bc of no merit for the following reasons: Respondent cont.ends that there is no record basis for the finding t.hat. its met.hod of distribut.ion is generally followcd by competit.ors. Respondent misint.erprets this finding which does not hold that competit.ors follow respondent's practices to thc extent of assigning exclusive territories, furnishing confidential lists of prospects and encouraging their dist.ributors t.o operate under names incorporating their trade names. The excepted to finding only states that respondent' method of selling to independently owned distributors is followed generally by most. competing manufacturers. Certain competitors sell through optieal, drug and department stores. However, the record indicat.cs t.hat. established distributors spccializing in this field are very desirable accounts and that most. manufacturers in this field attempt, with varying degrees of success, to sell to such accounts. The record cont.ains an estimate by Mr. Charles Leyman, who has been very active in t.his field for over thirty years, t.hat t.here are approximately 1 000 responsible dealers spccializing in t.he sale of hearing aids in t.hc United States. This estimatc excluded accounts DICTOGRAPH PRODUCTS, INC. 297 281 Opinion sellng other products and sub dealer accounts. These are the approximately 1 000 distributor accounts referred to in the finding exeepted to by respondent. This estimate is not in conflict with the testimony of representatives of respondent's competitors stating the number of their sales outlets, as the record does not' show how many of those outlets so referred to, can properly be defined as responsible distributors specializing in the sale of hearing aids only. It is clear from the record that certain of those accounts do not fit into this category. The record clearly supports the finding that respondent required its distributors to refrain from seIJing used hearing aids. It shows that respondent gives its distributors a trade-in allowance and. requires all used hearing aids to be turned in to it. This rcquirement was included in the distributor agreements until 1945. The practice was abandoned for a short period in 1945 but was soon resumed, being placed in effect by oral directions to the distributors from respondent' s sales representatives. Respondent's exception to this finding, therefore, is of no mcrit.

Respondent contends that- its distributors voluntarily agreed to deal exclusively in its products in return for other considerations and that its desire to enforce these agreements is improperly found to be coercion and intimidation. The record shows that when respondent finds that one of its distributors is seIJng competing products, it threatens to tcrminate the distributorship and calls attention to the provision of the agreement requiring the distributor to withdraw from the hearing aid field in that sales area for one year, in :tn :tttcmpt to intimidate and coerce the distributor into continuing to sell its products on an exclusive basis. Respondent's exception to the finding of coercion and intimidation, therefore, is belicved to be of no merit. The contention that the findings erroneously state that respondent' hearing aids are adaptable only to various degrees of hearing losscs isof no merit. The findings, in effect, further state that respondent' line of instruments provides a broad variety of frequency responses as contended by respondent.

Respondent' s exception to Paragraphs Thirteen, Fourteen, and Fiftecn of the findings as to the facts and to the conclusions set out in the initial decision as not being supported by the evidence of record is rejected by thc Commission.

Respondent' s contention that the hearing examiner committed prejudicial error by certain of his procedural rulings is also rejected. His refusal to compel counsel supporting the complaint to furnish respondent with a list of witnesses prior to the hearings does not constitute a violation of due process as fuIJ opportunity to crossexamine each witness called was available to it. If later investigatiOll 298 FEDERAL TRAJJJ; COMMISSION DECISIONS Opinion 50 F. T. C.

had revealed the cxistencc of documents or other material which would have enabled respondent to impeach or otherwise materially affect previously given testimony, that witness could have been recalled for further cross-examination on respondent's motion. discretion in rcfusing to The hearing examiner acted within his compel Commission s witness Whitcomb to turn over to respondent' -counsel a fie of his papers which hc had with him in the hearing room. This witness made no reference to these papers on direct Bxamination and only referred to them on cross-examination when presscd to give exact dates upon insistencc of counsel for respondent. There is no indication that any of these papers contain lwything in i:onflict with the witness' testimony. It is well settled that where a witness is testifying from his recollection and not upon the basis of documents, the opposing party has no absolute right to inspect documents in his possession for exploratory purposes. Similarly the hearing examiner was acting well within his discretion in refusing between to direct witness Ranson to produce written communications to direct himself and attorneys for the Commission and in refusing counsel supporting the complaint to produce a written statcment of witness English made during the preliminary investigation of this n:tatter. These documents were not used by the witnesses in t.cstifying and there is no indication that they contain anything in conflict with the witnesses' testimony. The hearing examiner also properly refused to compel witness Hanson to produce from his oifce copies of his contracts with competing companies, it not having been shown that these documents arc relcvant in any manner to this proceeding. The hearing examiner s rulings refusing to admit certain documents into evidence which are specifically excepted to by respondent are sustained by the Commission. Hcspondent's exhibits 90 through 92 for identification, which consist of a Sears, Roebuck and Company advertisement and pages from its catalogs, have not been shown to be material in any respect. Thc other proposed exhibits, the rejection of which is specifically exccpted to, consist of documents relating to the nature of a Public Health Survey which purportedly recommendcd a new approach to helping persons who are hard of hearing, documents documents show- indicating thc superiority of this ncw approach and ing respondent's adoption of this approach 11 Jts bus mess and its efforts in devcloping instruments and procedures for use in carrying out the recommended program in its business. These documents were properly rejected as being immaterial to the issues herein. Other valid reasons for rejecting these documents were given by the hearing examiner in his rulings which specifically apply to thc individual offers. DICTOGRAPH PRODUCTS , INC. 299 281 Opinion The Commission, therefore, is of the opmlOn that respondent' appeal from the initial decision of the hearing examiner is of no merit and should be denied.

Chairman Howrey and Commissioner Mason are of thc opinion that since the order to cease and desist contained in the initial decision is sustained by the Commission s interpretation of Section 3 of the Clayton Act as applied to the facts of this case, it was not necessary to go on to consider whether it might also be sustained by Section 5 of the Federal Trade Commission Act. See Standard Oil Co. of California v. U. , 337 U. S. 293, 314.

Order 50 F. T. C. IN 'Ill g MATTf:U OF CHARLES F. HARAD AND SARA E. HARAD TRADING AS INDUSTRIAL ENGINEERING ASSOCIATES Docket ii992. Oomplaint, May 1952 Order denying, etc. , Sept. 24, 1958 Charge: Advertising falsely or misleadingly as to qualities, results and COllparative merits of product; in connection with the sale of a device designated as- Sportsman Athletic Truss" or "Sportsman Athletic Lift" Before 1111'. John Lewis hearing examiner. llfr. J. W. Brookfield, Jr. for the Comniission. Mr. Oharles F. Ii arad of Mooresville, Ind., for respondents. OUDER DENYING THE Appeal OF COUNSEL SUPPORTING THE COMPLAINT FROM THE INITIAL DECISION OF THE HEARING EXAMINEU, AND DECISION OF THE COMMISSION DISMISSING COMPLAINT ,VrrnOUT PUEJUDICE This matter came on to be heard upon the appeal of counsel supporting the complaint from the hearing examiner s initial decision proposing dismissal of the complaint herein without prejudice and briefs filed in support of and in opposition to such appeal. Thc complaint charges that respondents have engaged in the dissemination of false advertisements by various means in commerce for the purpose of inducing, and which have been likely to induce, the purchase of a therapeutic device designated as "Sportsman Athlctic Truss" offered by respondents to those afficted with hernia. In proposing to dismiss the complaint without prcjudicc, thc hearing examiner concluded that certain of the advertising statements used by respondents should not be construed to contain or embrace the representations attributed thereto under thc charges of the complaint and that such advertisements accordingly would not appear to have the capacity to mislead and deceive as therein alleged, and he additionally concluded that other challenged advertising representations were not shown by the greater weight of the evidence to hc false or to have the, capacity to deceive, al1 of which conclusions arc challenged by counsel supporting the complaint in his appeal.

One of the allegations of thc complaint is that respondents have rcprcsented in their advertising that their truss wil retain all reducible hernias, it being further charged in such connection that some reducible hernias will not be rctained by respondents' device. The hearing examiner concluded that the over-al1 import of respondents advertising statements have constituted representations only that INDUSTRIAL ENGINEERING ASSOCIATES 0U.. 300 Order retntion will be afforded for reducible hernias of the inguinal variety and that the likelihood of purchase of respondents' product by a member of the public under the impression that it would be effective for all t.types. of hernia is remote. Counsel supporting the complaint, in excepting to this conclusion, points out that at least two of the advertisements received into the record do not mention inguinal hernia but offer the device for reducible hernias, and it is further contended by counsel that other advertising matter furnished by respondents for stores' display in which the device is offered to those who are "ruptured" also implies that the truss will retain all hernias. Only one of the advertisements typical of those disseminated by respondents in soliciting mail order for their truss fails to mention inguinal hernia or otherwise to restrict claims for product value to reducible inguinal hernia but, in addition to its written tcxt, this advertisement contains added pictorial matter indicating that the area to be supported is the inguinal region or area of the grain. addition to thc display for stores' use previously referred to, one other advertisement designed for promoting over the counter sales in retail stores likewise fails to mention inguinal hernia, but it also contains pictorial matter somewhat similar to the advertisement used in promoting sales by mail. Noted in passing with respect to these advertiserl1cnts is an additional circumstance referred to by thc hearing examiner, namely, that clear-cut instructions for use have accompanied t.he truss, and other language appears in large type on the device container v . package indicative that it is for use in retaining reducible inguinal hernias.

The matters cited by counsel supporting the complaint in connection with this first exception have been carefully considered by the Commission and the Commission is of thc view that the greater weight of the evidence received into the record does not establish that respondents' advertising has been likely to induce the purchase of their device by others than those believing their impairments to bc reducible inguinal hernia. This exception accordingly is deemed to be without merit.

Under his second exception, counsel supporting the complaint states that he objccts to the hearing examiner s finding that all reducible hcrnias will be retained by respondents' truss, under his third exccption he asserts that he is interposing objection to the hearing examiner tin ding that the device will not slip, and his fourth cxception interposes objcction to the conclusions reached by the hearing examiner as to rheextcnt to which hernias will bc retained under abnormal conditions uf strain. 'With respect to the first of these, the hearing examiner concluded instead, however, that the greater weight of the cvidcnce FEDERAL TRADE COMMISSION .DECISIONS Order 50 F. T. C.

did not establish that a representation that respondents' . truss will retain all reducible inguinal hernias is substantially untrue and he additionally observed, in such connection, that the situations or conditions cited by certain expert medical witnesses under which they believed the device might not successfully retain the defect were not of such nature as to rcquire rcvision of respondents' advertising statements in the public interest. In this connection, counsel supporting the complaint contends that the evidence shows that there are approxi" mately a dozen situations in which reducible inguinal hernias will not bc retained under conditions of normal stress, including, among others, those where thc rubber pad may be smaller than the body opening which is the situs of thc protrusion and those where the wearer has a leg deformity, malignant tissue or thinned-out tissue in the vicinity where worn, or where increased pressure through coughing incident to a respiratory disease is presented. It seems clear from thc record that respondents' device is basically effective in retaining reducible hcrnias in the average person under normal conditions of stress and it would not appcar, therefore, that any lessening of product effcctiveness which may occur by reason of some physical impairment other than hernia should bc controlling in a determination as to whether respondents' advertisements have been false advertisements. Moreover, the greater weight of thc evidence does not establish that thc pads furnished with respondents' truss are not suffciently large to fully cover thc inguinal canal and there accordingly appears to be insuffcient support in the record for a conclusion here that respondents truss w;n be ineffectivc where the opening into that canal is a very large one. The Commission is of the view that certain of the conclusions reached by the hearing examiner in evaluating the wcight of the evidence introduced in support of and in opposition to the charge of the complaint here pertincnt are substantially correct conclusions and the Commission accordingly has concluded that such charges are not supportcd by the greater weight of the evidence. Reverting to counsel's third and fourth exceptions, the hearing examiner found that counsel supporting the complaint had failed to establish by substantial evidence that respondents have engaged in misrepresentation through statements in their advertising to the effect thflt their truss wil not slip and will hold hernias under conditions of unusual stress and strain, including those associated with sports. The lmaring examiner manifes!1y has accm'deci weight to the fact that one of the medic tl witnesses testifying in support of thc complaint at one point in his testimony, appeared merely to exprcss doubt as to truss to hold t hCIl1ia under conditions ofthe ability of respondents' abnormal strain and stress instead of stating with certainty that INDUSTRIAL ENGINEERING ASSOCIATES 303 Order ilures of retention would result and the hearing examiner has noted ill another statcment by one of the witnesses called by counsel !pporting the complaint, made after a visual dmnonstration of the uss in usc, which is to the effect that it would bc diffcult for the uss to slip when worn in thc manner adopted in the demonstration. hc cvidentiary matters to which counsel supporting the complaint irects attention .in connection with these exceptions have been con- 'dercd, but, in the light of the evidence including that introduced y respondents and the fad that evidence in rebutt.al thereof was not fiber' , the Commission is of the view that these charges of the comlaint arc not supported by the greater weight of the evidence received 'lto the record. Counsel's second, third and fourth cxceptions, accord- I1g1y, are denied.

In support of his fifth and sixth exceptions, counsel objects to findngs asserted by him to appear in the initial decision to the effect that respondents' truss is comfortable at all times and that such device s self-fitting, and cannot bc worn incorrectly. Thc hearing examner, however, concluded that the evidence introduced in support of he complaint's allegation that the device, in many cases, may not be :omfortable was not substantial evidence., and he additiomtlly stated J1 effect, that the evidence offered in support. of thc charges tlmt re- ;pondents have falsely represented that their device is self-fitting and JfUlnot. be worn incorrectly was inconclusive. In reference to the first )f these matters, evidence was introduccd by counsel supporting the ;omplacnt tending to show that some perspiration and redness of the ,kin may be induced by the pressure of the truss, but it appCl!rS also from the record, however, that these reductions in comfort are akin to and perhaps no more cousequential than those ordinarily caused by such friction as attends the wearing of a wristwatch, ring or eyeglasses. The evidcncc additionally referred to by counsel in support of these exceptions has been considered but the Commission has concluded that the matters cited arc not controlling hcrc and Rre otherwise lacking in merit. Exceptions ii and 6 Rre denied, Rccordingly. Counsel, under his seventh exception, interposes objection to the conclusion expressed in the initial decision that thc cvidcnce does not adequately support the charge of the complaint thrt respondents have falsely represented thrt their truss wil bc effecti ve where all other trusses fail. The statement which has Rppcared in respondents' advertising to which this chRrgc relatcs is that their product will be effective under condit.ions where most trusscs fail, and thc greatcr weight of the evidence does not support a conclusion thrt respondents' truss ,composed primarily of wcbbed elastic may not be eflective under some conditions where another widely used type of truss may COMlVIISSIOK DECISIONS304 FEDIcRAL 'trade Ordcr 50 F. T. C.

be ineffective. The Commission has determined that thc allegations of the complaint here pertinent are not sustained by the greater weight of the evidcncc and counsel's exception is not being granted. Equally without merit are the contenti()ls advanced in support of counsel's eighth exception inasmuch as it appears from the record that thc advertising st.atements representing that respondents' truss will be beneficial following treatment of hernias. by the injection method and by surgery were disseminated only t.o physicians and t.hat the record accordingly does not support a conclusion here that the public int.erest requircs that respondents be directed to limit representations of product value in these respects to instances in which their device is used upon the advice of and under the supervision of a physician. Similar considerat.ions to others noted hereinbefore apply in an appraisal of counsel's ninth and tenth exceptions interposing general objcctions to the hearing examiner s action in concluding that the complaint herein should be dismissed, and these exceptions likewise are denied.

The Commission being of the opinion that thc appeal of counsel supporting the complaint is without mcrit and that this procecding should be dismissed without prejudice as provided in thc initial decision of the hettring examiner:

It O''dend, therefore That the appeal of counsel supporting the complaint from the initial deci.fi9J1 of tgehe,aring examiner be, and it hereby is, denied.

It i8 fU1'ther O''de1'ed That thc initial decision of tbe hearing examiner, a copy of which is attached, shall, on the 24th day of September, 1958, become the decision of the Commission. ()ltDEH DISJ\IISSDrG COJ\Il'LAlNT vV J'l'HOUT PREJUDICE INITIAl. DEClSlON BY JOH LEWIS, HEAHINGEXAJ\IINEH This proceeding calle on to be considered by thc above-nallcd hearing examiner, heretofore duly designated by the Commission, upon the complaint of the Commission, the answer of respondents thereto and testimony and other evidence introduced in support of and in opposition to the allegations of the complaint at hearings held herein. The complaint charges the rcsponcents with having disseminated certain false advertisements concerning the effectiveness and qualities of their product, a device known as "Sportsman Athletic Truss" or Sportsman Athletic Lift." Thc undersigned, being of the opinion that the record is lacking in substantial evidence to sustain the allegations 0 f the complaint and that under all the circumstances thc public interest docs not require any conective action in this case, will INDUSTRIAL ENGINEERING ASSOCIATES 305 300 Order order that the complaint issued herein be dismissed. Thc reasons and basis for such dismissal are hereafter discussed in connection with the various aJlcgations of the complaint, which are summarized below under separate headings for convenience of discussion. 1. The Het.ention of All R.ed'ucible Hernias For a better understanding of the issues involved, brief reference should be made to the nature of a hcrnia. A hernia, according to the record, is any protrusion of the body contents through an opening in the body walJ, congenital or acquired. The most common type of hernia is the inguinal hernia, in which there is a protrusion of some of the body contents through an opening in the abdominal walJ in the region of the grain. Such hernias may be reducible or irreducible. They are said to be reducible when the protruding mass can be pushed back into the cavity from whence it came, cithcr by manipulation or spontaneously.

The complaint alleges that respondents have falsely represented that their truss willrctain "alj reducible hernias. llespondents deny all reducible that they have represented their product as rei:aining hernias, contending that their claim is limited to reducible herniils of the inguinal variety. It is therefore necessary, before considering whether the representation made with respect to the truss is false, to determine the extent of the rcpresentiltion. The record discloses that in advertising their product in a number of newspapers respondents have used the phrases: "For All Reducible Hcrnias." However, in all but one instance there ilppears in the body of the same advertisement the language: "Provides maximum retcntion for all reducible inguinal hernias." Moreover, in each advertisement there appelLI' seveml dmwings of a male in a state of undress, wearing a truss in the inguinal region, and there is attached a form for ordcring the truss which requircs the prospective purchaser to check the appropriate box to indicate whether his hcrnia is on the "Right side Left side " or "Both sides " and to give his waist" measurement. The record also contains other advertising matter distributed by respondents to druggists for use in advertising the truss, which refers to the product as providing protection "For All Reducible Inguinal Hernias." The box in which respondents product is sold contains on the outer cover thereof, in letters of clearly legible size, the words: "For All Reducible Inguinal Hernias." The booklet of instructions which is enclosed in the box with eilch truss sold likewise contains on the outer cover thereof the words: "For Alj Reducible Inguinal Hcrnias " as well as il picture of a man wearing 403443--57-- Order 50 F. T. C.

a truss in the inguinal region. The inncr portion of the booklet contains detailed instructions and diagrams regarding the fitting of the truss, which leave no doubt that it is intended to give relief for inguinal hernias only.

Considering respondents' advertising as a whole, it is the opinion of thc undersigned that respondents' claim of effectiveness for their product is limited, substantially, to hernias of the inguinal variety. While the expression "For All Reducible Hernias" used in some of the advmtising matter might, if considered by itself, appear to suggest thc respondents are making a broader claim, this is put in proper perspective by thc balance of the information contained in these same advertiscmcnts.

In the light of the testimony in the record that the word "hernia is generally associated in thc public mind with the region of the grain, and the absence of any testimony to show that members of the public Imve ever construed respondents' advertising matter as claiming that the truss is intended for all types of hernias, it is the opinion of the undersigned that the likelihood of deception is very remote. Moreover, the clear-cut instructions accompanying the truss render unlikely the possibility that anyone would attcmpt to usc the tI1SS for another type of hernia, in the rcmote circumstance that he might have misconstrued respondents' newspaper advertising. Under all the circumstances, and considering the effectiveness of the device for the purpose for which it is intended, as will hereafter more fully appear, the undersigned does not regard the possibility of deccption to be such as to require any corrective action in the public interest. .Moreover, the undersigned is confident, in the light of the attitude displayed by the respondents throughout this proceeding, that there was no intention on their part to permit even the remote possibility of deception, and that any ambiguity appearing in their advertising material will be clarified.

Construing respondents' claims as being limited to inguinal hernias the next ques!icn is whether their truss wiJJ , in fact, retain all reducible inguinal hcrnias. By way of definition of terms, it should be noted that a truss is said to "retain" a hernia when it is able, by the application of pressure to the opening in the abdominal wall, to keep the contents from protruding through thc wall after the mass has been pushed back by manual or other means. There is no claim by respondents tlwt this will accomplish a permanent cure or that the trtlSS will be effective other than during: the time it is being worn. In this connection it may be noted that thc position of the doctors ,yho testified in support of the complaint "as that, in general, the unly pcrmanently eit'ecti,-e method of treating a hernia is by way INDUSTRIAL ENGINEERING ASSOCIATES 307 300 Order of surgcry. They regarded a truss as a palliative to be used only by persons whose state of health was such that they could not withstand surgery. However, the merits of the surgical versus the support method in the treatment of hernias is not onc which concerns this examiner. The question for disposition here is whether respondents truss will retain a hernia during thc period of its use, not whether other methods are medically more effective or desirable. It is thc Godgiven right of every individual to put up with what may be regarded by some as a lifetime of inconvenience in wearing a support which will give relief only during the period of its usc, rather than submit his body to the surgeon s knife in the hope of obtaining a quick, permanently effective cure of his hernia.

Despite differences of opinion between the experts called in support of the complaint and those testifying for respondents, as to the extent that rspondcnts' device would be effective in retaining hernias, there was substantial agrccment on the fact that respondents' device would be at least effective in retaining reducible inguinal hernias in the average, normal individual under ordinary conditions of stress. The main instances cited where there was any doubt as to the ability the device to hold a reducible inguinal hernia under normal conditions of stress were (1) where the opening in the inguinal canal through which the hernia might protrude was larger than the rubber pad which is attached to the truss and which is intended to covcr the canal, and (2) where a person was so excessively obese that the truss might not give him a snug fit, or had suffered some radical change in wcight or body contour so that the truss which might once have fitted would no longer do so. vvith respect to thc first situation, the experts who testified in support of the complaint conceded that the instances where the opening in the abdominal wall would be larger than the supporting rubber pad in the truss would be "a very small percentage, possibly not more than 1 or 2 percent." They agreed that the cases where the pad would not adequately cover the opening in the wall would be "unusual" situations and that in "at least" 98 percent of the cases the pad would bc sufficient to cover the inguinal canal. \With respect to those situations involving excessively stout persons or marked changes of weight or body contour, it does not appear from thc record that this is a signi ficant or common occurrence. It may also be noted that respondents' device is sold in four standard sizes, up to size 46, and that it is also made up specially in larger sizes to accommodate stouter individuals. Likcwise the straps used to hold the device to the body may be adjusted to the exact necds of the particular individual. Considering the fact that respondents' device is basically effectiyc in retaining reducible inguinal hcrnias in the avcrage person under Jlor- Order 50 F. T. C.

mal conditions of stress, and the rare and atypical nature of the instances where it was claimed that it would not do so, it is the opinion of the undersigned that there has been no showing that the representation made by respondents concerning the ability of the truss to hold such hernias is substantially untrue. In any event, the instances cited where it was claimed that the truss would not be effective are not such as to require any corrective action in the public interest. 2. The Retention of H ernia8 Under Conditions of PhysiealStmin Thc preceding discussion has related mainly to the question of whether the truss will retain reducible inguinal hernias under ordinary conditions of stress. To the extent that thc claims made for it in retaining reduciblc hernias may be rcgarded as extcnding to conditions of abnormal stress, they are discussed herein in connection with another allegation of the complaint, which charges that respondents have falsely represented that their device will not slip and that it will retain hernias under conditions of physical strain such as might arisc when the wearcr is engaged in strenuous activity, including sports. The doctors called by the attorney in support of the complaint while substantially conceding the effectiveness of the truss in holding reducible inguinal hcrnias in thc average individual under normal conditions, expressed doubt as to the device s ability to hold a hernia under conditions of physical stress and strain. Their attitude is best summarized ill he following testimony of Dr. D. C. Richtmeyer: I would say under those circumstances (i. e., with the truss properly adjusted on an average individuals it probably would hold a hernia under most circumstances. I would not be sure it would hold it under conditions of abnormal straining or stress. I would be a little doubtful about that.

As an example of a condition where he did not "think" the truss would hold, the doctor rcferrcd to "a patient (who J had pneumonia with scvere cough and was coughing all thc time." The witness also expressed the opinion that in activities such as would be involved in some parts of the game of tennis or in football the truss "might possibly slip. while the doctor scvcral times expressed doubt that the truss would retain a hernia under conditions of stress, he appeared reluctant to express a positive opinion that it would not. This is not intended as a reflection on thc doctor s forthrightness, but is rather indicativc of his scrupulous fairness and objectivity. In cvaluating the doctor s testimony it should be noted that, according to his own admission, it was based in large measure on his own brief test of the device which was submitted to him for inspection by INDUSTRIAL ENGINEERING ASSOCIATES 309 300 Order a representative of the Commission prior to the hearing. Although admittedly not having a hernia, thc doctor testified that he wore the truss on his own body for a period of four hours, and, while conceding that the truss fitted him "very ,veil in the inguinal region " he claimed that when sitting back on a chair in a slouch cd position, thc rubber pad in the truss did not touch his skin in the inguinal region, and that under those circumstances if I had coughed at that time, if I had a hernia, it would have protruded, I feel." However, on cross-examination, when thc doctor was asked to observe the truss on the body of respondent Charlcs F. Harad, who admittedly had a "very good-sizcd" inguinal hernia and was wearing one of his own trusscs, the doctor conceded that as the truss was seated on l-Iarad's body, it appeared to him that "it would hold an inguinal hernia in." Thc doctor agreed that this was true even when Harad was sitting in a relaxed position similar to that which the doctor had prcviously testified he himself had occupied when the truss had slipped. He also conceded that there appeared to be no additional tcnsion on the straps holding the truss when Harad engaged in various squatting and bending exerciscs and that the truss was holding the hcrnia " very well." The doctor s own diffculty with the truss in the reclining position appears to have been that he had not tightened the straps suffciently in accordance with the directions enclosed in the box, which provide: Straps should be tight to thoroughly anchor inner pads in position. BE SURE STRAPS ARE SUFFICIENTLY TIGHT TO HOLD HERNIA SECURELY. Truss must be worn snugly to as ure proper results.

Thc other doctor call cd by the attorney in support of the complaint also claimed that the truss could slip during strenuous activity. This doctor had had no particular experience with respondents' truss, but based his testimony on his claim that all trusses operated on the same general principle. After being given an opportunity to observe the truss on Harad' s body during cross-examination, and watching Harold engage in strctching and stooping exercises with the truss on his body, the doctor conceded that hc had a somewhat different impression of the truss, and that as it was applied to Harad's body "it would be diffcult rfor itJ to slip" (although the doctor claimed that this was because the truss was relatively new, despite Harad's assertion that he had been wearing it for about a year).

Even on the basis of the testimony of his witnesses, considering the marked change in their attitude after actually observing the truss on Harad' s body, the cvidently favorable impression which it made on them, and the modifications made in their direct testimony, it is doubtful whether it can be said that the attorney in support of the 310 FEDERAL TRADE COMMISSION DECISIO Order 50 F. T. C.

complaint has adduced substantial evidence to establish his contention on this issue. In any event, such doubt as may exist is, in the opinion of the undersigned, clearly overbalanced by the affrmative testimony offered on behalf of respondents. One witness, who had been wearing respondents' trusses for about four years, testified that he had worn the truss while lifting heavy bundles in his business and while engaged in golf and other outdoor activities without it having slipped. The witness, while over scventy years of age, impressed the undersigned as very spry and agilc. Another witness, a physician who has practiced surgcry at one time but for the past ten years had been engaged in general medicine and biochemistry, testified that he had recommended respondents' truss to about fifty patients since 1947 and that it had held their hernias under active conditions of work and play. While admittedly this doctor is not an expert herniologist, the undersigned sees no reason to question his integrity as a witness or question the correctness of his conclusions based on the simple observation of patients. In addition to these witnesses, there is the testimony of respondent Charles F. Harad, who testified that the truss had held his own hernia while lifting bundles and while active in golf and swimming. According to Harad, when hc had previously worn a socalled "spring-type" truss, he had been unable to engage in these activities without the truss slipping. liVhile Harad was undoubtedly an interested witness, he impressed the undersigned as basicaUy forthright. and sincere, and his claims regarding the ciIectiveness of his truss received a large measure of support from the Commission s own .nesses.

Contrasted with the testimony of actual users of the truss Itnd of a doctor who had prcscribed it for patients and seen it in use on their bodies, it should be noted that not a single purchaser of the truss was produced by the attorney in support of the complaint to testify that the truss had slipped or had not held his hernia. In this connection it may be noted that since they started operations in 1947, respondents have manufactured 100 000 trusses, which have been distributed through mail-order houses, such as Scars Roebuck & Company; through approximately 600 drug stores; through approximately 200 doctors; and to direct purchasers through the mail. The only witness called by thc attUi'ney in support of thc complaint who had any actual experience with the truss was Dr. Richtmeyer, who, as already indicated, did not actually have a hernia, and apparently had not worn the truss suffciently tight. Even his testimony was modified considerably after he had had an opportunity to observe the truss in actual use on Harad' s body.

INDUSTRIAL ENGINEERING ASSOCIATES 311 300 Order On the present state of the record it is the opinion of the undersig' ned that the attorney in support of the complaint hils failed to establish by substantial evidence that respondents have made any misrepresentations in daiming that the truss will not slip and will hold a hcrnia under conditions of physical strain. In any event, the circumstances and conditions when it was suggested that there was a possibility that it might not hold are such that, in the opinion of the undersigned, no corrective action in the public interest is required.

3. Comfor-t of Tr-U88 and Confor-mance 10ith Natur-l Body StTuctUr- The complaint alleges that respondents have falsely represented that their truss " conforms to the natural body structure" and that it will be comfortablc at all times." In support of the allegation that the truss does not conform to the natural body structure, the attorney in support of the complaint cites tbe testimony of Dr. Richtmeyer previously alluded to, that the rubber pad did not touch thc inguinal region of his body when hc was in a seated, relaxed position, and further testimony to the effect that the truss would not conform to the body structure in thc case of exccssively stout people, or where there was marked change in body contour, or where a person had a tumor in the region of the grain or had a high thigh amputation. It is the opinion of the undersigned that the record fails to sustain the. charge that respondents' representation that the truss conforms to the natural body structure is false. As has alrcady been indicated, Dr. Richtmeyer s claim tlmt the truss did not conform to his body while in a seatcd, relaxed position appears to be attributable to the fact that he had not adjusted the straps tightly enough. In any cvent, thc doctor admitted on cross-examination, after having observed the truss on Harad' s body, that it "conforms to thc outlines of the body in that particular region." The fact that it does not conform to thc body in certain unusual situations, such as where the patient has a tumor in the region of the grain or has had a high thigh amputation, does not cstablish the falsity of respondents' claims. These and similar conditions can hardly be said to be typical of the natural body structurc " which the undersigned interprets as meaning the body in its normal state in a normal individual. cllLims be- In any evcnt, to insist that an advertiser qualify his cause of these unusual situations would he to require an unreasonable scrupulosity in advertising, and would place thc Commission in the position of an overzealous censor.

With respect to thc alleged falsity of the companion allcgation that the truss will be comfortable at all times, thc attorney in support of the 312 FEDERAL TRADE COMMISSION DECISIOKS Order 50 F. T. C.

complaint relies on the testimony of his experts that the continual wearing of a truss causes irritation and discomfort. He relies particularly on the testimony of Dr. Richtmeyer, who stated that after wearing the truss for four hours he observed perspiration dcveloping under the pad and noticed that the inguinal region was "slightly red. The doctor also testified that continuous pressure on the skin and fat would produce "atrophy" of thc tissues. Thc doctor further testified on cross-examination, after observing Harad's body with the truss removed, that there was "a little reddened area " and that there was " little indcntation" or "atrophy" where the pad hlld been placed on the body. From the undersigned' s observation of the redness on Harad' body, it may be noted that it was so slight as to be bllrely visible. Despite his claim thllt the truss left his own body "slightly red " the doctor conceded that "during the time I was wearing it Lit) was relllly amazingly comfortable." With respect to the so-called "lltrophy" or indentation " the doctor coneeded on cross-examination that this was not "a serious condition" and that it did not "mean very much " it being thc sort of thing that would occur from continuous pressure on the skin from the wearing of a ring or a wristwatch or eyeglasses. view of the insubstantial nature of thc evidence offered in support of this allegation of the complaint, thc undersigned regards it lls unnecessary to discuss the countervailing evidence offered by respondents particularly the testimony of thc witness Foster to the effect that he hlld worn the truss dllY llnd night for as much as ten days, even sleeping in it when he was on a hunting or fishing trip, and that he had experienced no discomfort from the truss.

4. Self-fitting and Correct Wearability The complaint alleges that respondents have falsely represented that their device is "self-fitting," tlmt it wil "always fit the body," and that it "cannot be worn incorrectly. Respondents admit lllving made the first and last mcntionedrepresentations, which they claim to be truthful, but deny ever representing that the truss "wil alwllYs fit thc body. A review of their adverbsing literature docs not disclose that such a representation was ever actually made, except insofar as it may possibly be infcrred from the claims made regarding the "self-fitting character of thc device. Even with respect to thc alleged representation that the truss "cllnnot be worn incorrectly," it may be noted that while respondents apparently conccde having made it, it is doubtful whether such a broad claim can bc infcrrcd from their advertising litcrature. It is true that their directional leaflet states that the truss is "Automatically Sch-fitting" because of the fact that it has been designed in accordance with correct anatomical measurcmcnts. How- INDUSTRIAL ENGINEERING ASSOCIATES 313 300 Order ever, this reference is immediately followed by the cautionary statement:

If worn correctly and adjusted according to directions perfect fitting is assured.

A review of respondents' advertising literature indicates that the gravamen of their claim in this respect is that the truss is "Self-Fitting At Horne " that it requircs "No Personal Fitting" and that it may safely bc bought "Over The Counter." In short, what respondents are claiming is that, unlike some devices which are made to ordcr and fitting by an cxpcrt, their device can be purohased over-the-counter and fitted at home by the purchaser, who can thereby reasonably be assured of a correct fit because of the fact that thc truss is designed to the natural body structure. The undersigned does not construe this as a reprcscntation that customers who ignorc instructions are nevertheless assured of a correct fit.

The two dodors who testified in support of the complaint, while indicating the dcsirability of having the truss checked by an expert did not state that it could not be fitted by the wearer. Dr. Richtmeyer testified that the truss was not seh-fitting because he himself had at first put it on too low, and that it could also be put on too high, and it was "possible" for a lay person to put it on too far to the side. The doctor, who admittedly did not have a hernia, concedcd that patients with hernias get so they can, by lying down and pressing on the external part of the hernia, learn to reduce it themselves. The patient would then be able to apply the truss himself except that, according to Dr. Richtmcyer, it would be better "somewhere along t,he line" to have jt checked by a physician. The other doctor, while also stating that it was "possible " for the man in the street, not to know whether his truss had been properly applied, likewisc conceded most people know when their hernias have been reduced, since "they feel a lot better, and they know it is in the right place from repetition." Thc doctor suggested, however, that it would be "a lot safer" to have the truss applied by an expert.

In evaluating the truthfulness of respondents' claims, it should be noted that their instruction booklet contains detailed, ilustrated instructions on how to apply the truss, and recommends that it be fitted in a reclining position, similar to that referred to by the doctors who testified in support of the complaint. Likewise, it suggests that the wearer let his physician see the truss after it has been properly adjustcd to check its application.

The undersigned is not convinced, on the prescnt state of the record that it has been established that respondents' truss is not self-fitting or that the wearer cannot reasonably be assured of a correct fit if he Order 50 F.

follows the simple instructions given. While it is possible that persons who do not properly follow instructions may not adjust the truss suffciently tight or place it on the correct spot, the resulting discomfort wil soon make them aware that the proper adjustment has not been made. The gravamen of the testimony in support of the complaint was not so much that thc wearer would not generally be able to fit himself, but that because, in some instances, it was "possible" he might not make the proper adjustment, it was advisable at some point to have the fit checked by a physician. However, respondents themselves make this same recommendation in their instruction booklet. With respect to the ability of the man in the street to fit himself with one of respondents' trusses, it may be noted that the witness Foster called by respondents, testified that he had had no diffculty in fitting himself after purchasing the truss at Sears Roebuck, and that when he later had it chccked by his physician, the latter advised him it was properly fitted. Likewise, one of the doctors testifying for respondents stated, with apparent truthfulness, that approximately 50 patients to whom he had rccommended the device had fitted themselves, and that when he later examined them he found the trusses to be properly fitted. Under all the circumstances, it is the opinion of thc undersigned that the attorney in support of the complaint has failed to establish by substantial evidence.e that respondents' claims regarding the self-fitting nature of their device. ttre false or unduly exaggerated. 5. Eff'ectivene88 Where Other Trusses Fail The complaint alleges that respondents have falsely reprosented that their device wil be effective where "all other trusses fail " it being alleged in thc complaint that thc device "is not so different in construcexpected to be tion and opcration than other trusses that it can be effective in conditions where other trusscs fail." Respondents deny having made any claim that their truss will function where all other trusses have failed, but asscrt that their claim of effcctivcness is that their truss will function where m08t trusses have failed. A review of respondents' advertising discloses that they have useel the word "most " not "all " in comparing the effectivencss of their device to other trusses. Insofar as the truthfulness of their rcpresentations is concerned, the record discloscs that the most common type of truss is the so-called "spring-type" truss consisting of a steel frame with a leather pad or ball on the cnd, which is applied to the inguinal region. In view of the concessions made by the expcrts testifying in support of thc complaint as to the effectiveness of respondents' device in holding a hernia, after observing it on Harael's body and after having prcviously testified to the limitations of most other types of trusscs Industrial EKGINEERING ASSOCIATES 315 3()O Order which they had seen in their practice, it is the opinion of the undersigned that the attorney in support of the complaint has failed to sustain the burden of proof on this issue. It is therefore unnecessary to discuss the testimony of respondents' two expert witnesses regardtruss as contrasted to the con-ing the effectiveness of respondents' ventional spring-type truss or to consider their qualifications as experts in the field of herniology as compared to the qualifications of the Commissions experts.

6. U8e Following 8urgent or Treatment by Injection The complaint states that respondents have falsely represented that their device will be beneficial following surgery or after treatmcnt by the injection method, it being alleged that, on the contrary, thc use of the device is not indicated under these conditions except upon advice and under supervision of a physician. Respondents admit having recommended the use of their device "post-operative" and "post-injection " but claim that this reference was made in an advertisement inserted in a journal circulated among medical men only. With respect to its use following the injection method of treating hernias, there was a difference of opinion among the experts called in support of the complaint. While one doctor thought its use following the injection method of treatment was contra-indicated, the other testified it would be advantageous to wear a truss or appliance to hold the hernia during the injection treatment. With respect to the device s use following an operation for hernia, the doctors seemed to agree that a truss, as such, was not indicated but that a form of webbed support might be prescribed by the physician. There was some difference in opinion between thc doctors who testified in support of the complaint and those called by respondents with respect to whether respondents' device, with the rubber pads detached, could furnish the necessary support.

The undersigned finds it unnccessary to resolve this difference of opinion. It seems clear that when a patient is undergoing treatment by thc injection method or has had an opcration performed, the form of support to be used, if any, is generally prescribed by his physician. It does not appear, thcrcfore, that any statement made by respondents in this regard can have any signiiicant influence on these patients. In any event, since thc representation made with respect to the postoperative or post-injection use of the device was concededly made in a publication intended for circulation among physicians only, who it can be assumed, will not be misled by anything respondents might say rcgarding their product, and since there is no substantial evidence that the general consuming public would be misled thereby, it is the Older 50 F. T. C.

opinion of the undersigned that the public interest does not require the taking of any corrective action based on the alleged falsity of any representation that respondents' device may be used post- operation or post- injection (ef. hwin, et al. vs. F. T. C. 143 F. 2d 316) The undersigned being of the opinion that, for the reasons above given, the evidence of record does not sustain the allegations of the complaint, and being of the further opinion that under the circumstanccs here prescnt the public interest docs not require any corrective action in this matter It is ordered That the complaint in this proceeding be, and the same hereby is, dismissed, without prejudice to the right of the Commission to take such further action against the respondents herein, in the future, as may bc warranted by the then existing circumstances. &, EASTMAN KODAK CO. 317 Interlocutory Order