Standard Motor Products Inc.

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IN THE .MATTER OF STANDARD MOTOR PRODUCTS INC.

Ducket 5721. Order and opinion, Jan. , .1954 Before Mr. E ad J. K olb hearing examiner. Jlfr. Eldon P. Schrup, Mr. James E. Corkey and Mr. Frwncis C. Mayer for the Commission.

Mr. Edwa:rd S. St. John of New York City, for respondent. ORDER DISPOSING OF Appeals FROM ORf)jeHS OF THE HEARING EXAMINER This matter having come on to be heard by the Commission upon appeals, under Hule XVI of the Commission s Rules of Practice, by P. Sorensen Manufacturing Co. , Inc. , P. and D. Manufacturing Co. Inc., and the respondent, Standard Motor Products, Inc., from orders of the hearing examiner pertaining to certain subpoenas duces tecum issued by him at the request of the respondent; and The Commission having duly considered said appeals, briefs of counsel, and pertinent portions of the record herein, and being of the opinion, for the reasons appearing in the accompanying opinion of the Commission, that the appeals of P. Sorensen Manufacturing Co. Inc. , and P. and D. J\Janufacturing Co. Inc., should be sustained and that the appeal of the respondent, Standard Motor Products, Inc. should be denied, and being of the further opllion that oral argument on the appeals, which was requested by P. Sorensen J\Tanufacturing Co., Inc. , and P. and D. J\fanufacturing Co. Inc., is unnecessary: It is ordered That the said appeals of P. Sorensen Manufacturing Co. Inc. , and P. and D. Manufacturing Co. Inc., be, and they hereby are, granted, and that the requests for oral argument on said appeals , and they hereby are, denied.

It is further ordered That the said appeal of respondent Standard Motor Products, Inc., be, and it hereby is, denied. That the subpoenas duces tecum issued by the It is further ordered hearing examiner on October 19, 1953, directing P. Sorensen Manufacturing Co. Inc. , and P. and D. Manufacturing Co. Inc., to produce specified documents and records be, and they hereby are, quashed but with the understanding that, if respondent so requests, new subpoenas, limited as indicated in the accompanying opinion, will be issued.

STANDARD MOTOR PRODUCTS , INC. 625 H24 Opinion OPINION OF THE COM:;USSION By CARRETTA, Commissioner:

During the course of the hearings in this matter, the hearing examiner, upon the request of the respondent, issued a subpoena duces tecum directing P. Sorensen Manufacturing Co., Inc. (herein referred to as Sorensen) to produce specified documents and records pertaining to Sorensen s transactions with certain of its customers during certain years. A subpoena duces tecum was also issued by the hearing examiner, at the request of the respondent, directing the P. and D. Manufacturing Co., Inc. (herein referred to as P. and D.) to produce similar documents and records pertaining to its transactions with certain of its customers during certain years. Upon the return of these subpoenas, Sorensen and P. and D. each med a motion with the hearing examiner requesting that the subpoenas be quashed; that respondent be required to establish which, if any, of the documents demanded are relevant and material to the respondent' s alleged defense; or that the subpoenas be limited in their scope and eiTect. After hearing argument on the motions, the hearing examiner entered orders on the record limiting the scope and effect of the subpoenas in certain respects and otherwise denying the motions. Appeals from these orders have been filed under Rule XVI of the Commission Rules of Practice by Sorensen and P. and D. and also by the respondent. Oral argument is requested in the appeals of Sorensen and P. and D.

Respondent Standard Motor Products, Inc., is charged in the complaint in this proceeding with violation of Section 2 (a) of the Clayton Act, as amended, by seJIing its automotive parts and supplies to some customers at higher and less favorable prices than it sold said products and supplies to other customers. As one of its defenses to the charge of price discrimination, respondent alleges that any discounts or . allowances granted by it were made solely for the purpose of meeting price competition from its competitors. Respondent contends that the documents and records demanded in the subpoenas as originally issued are necessary to enable it to establish its said defense. Sorensen and P. and D., competitors of the respondent, contend in their appeals that the subpoenas as originally issued, and also as subsequently limited by the hearing examiner, require them to produce documents and records which are in no way relevant or material to the issues in this proct'eding; that respondent should be required to establish which, if: all). of thc numerous documents demanded by the subpoenas are relevant and material to its defense; that the only records of theirs which are rele- 403443-57-- Opinion 50 . '1. C. vant to the respondent's defense are those pertaining to transactions with concerns who were customers of the respondent at the time and to whom the respondent gave a lower price than it gave to other custamers; and that any data which they are required to produce with respect to their transactions with such customers should be limited to the year in which the lower prices were given by the respondent. The respondent is entitled to subpoenas directing the producti!Ju of sllch docllnents and records as are relevant to its defense that its lower prices were nwde in good faith to meet a lawful equally low price of a competitor. Respondent is not entitled to access to documents and I"econls of its competitors which arc not relevant to that defense. The question for determination in these appen Is is whet.her or not respondent has made an adequate.e showing that the documents and records demanded by the subpoenas as originally issued, or as subsequently limited by the hearing examiner, are relevant to respondent's said defense.

In order to establish its defense under Section 2 (b) of the Clayton Act, respondent must show that the lower prices which constit.uted the basis for the price discrimiuation charge were made in good faith to meet a lawful equally low price of a competitor. The lower prices given by the respondent must be shown to have been the direct result of specific offers by respondent' s competitors to the customers receiving the lower prices. The subpoenas as originally issued, and also as limited by the hearing examiner, demand the production dat.a pertaining to trans LCtions with concerns which were formerly customers of the respondent as well as with con(oerns which have never been customers of the respondent. Respondent states that these documents and records are desired for the purpose of showing the pricing practices of its competitors. There is no showing as to how the pricing practices of its competitors with respect to customers to whom the respondent docs not sell and did not sell are relevant to the respondent's alleged defense.

The record in this jJrocecrhng contains evidence that respondent has made sales to certain customers at prices lower than those charged other custonwrs. Under all the circmnstances, the Commission is of the opinion that unless and until the respondent show" the relevancy to its defense of data pertailling- to transactions by competitors with concerns other than those to whom the respondent has sol,l at the lower prices, any subpoenas llirectillg a competitor of the respondent to pro- (lnce documents and records should be limited to docl1nents and records pertaining to sales 'Iud ofrers to sell by such competitors to customers of the respondent ,,'110 the record shows were sold at the lower prices. (iU Opinion Any such subpoenas should be further limited to requiring the production of documents and records pertaining only to sales and offers to sell during the time period in which the responrlent sold at the lower prices which make out the prima facie case. In view of the foregoing, the Commission is of the opinion that subpoenas issued by the hearing examiner directing Sorensen and P. and D. to produce specified documents and records should be quashed but with the understanding that, if respondent so requests, new subpoenas, limited as herein indicated, wil be issued. The Commission is of the further opinion that oral argument on the \ppeaJs, which was requested by Sorensen and P. and D., is unnecessary.

, .

Decision 50 F. T. C.

IN THE MATTER CUSTOM UPHOLSTERING & CARPET CO., INC., ET AL. Docleet 6111. Oom.plaint, July :BI 1958-Decision Jan. SO, 19.54 Charge: Advertising falsely as to prices and free goods or service; in connect:ion with the business of sellng upholstery materials and upholstering furniture.

Before lJf'r. J. Earl Oox hearing exam.iller. Mr. Jesse D. Kash for the Commission. Mr. Frank A. Kaufman and Frank Oppenheimer of Baltimore Md., for respondents.

DECISION OF TI-IE COMJlHSSION Pursuant to Rule XXII of the Commission s Rules of Practice, the attached initial decision of the hearing examiner shall, on .J anuary , 1954, become the decision of the Commission. INITIAL DECISION BY J. EARL cox, HEARING EXAMINER Pursuant to the provisions of the Federal Trade Commission Act on the 27th day of July 1953, issuedthe Federal Trade Commission, upon theand subsequently served its complaint in this proceeding respondent Custom Upholstering & Carpet Company, Inc., a corporation, and respondents Charles D. 'Weisberg, Melvin Weisberg, and Seymour S. 'Weisberg, individually, charging them with the use of unfair and deceptive acts and practices in commerce in violation of the provisions of said Act. After the issuance of said complaint and the filing of respondents' answer thereto, hearings were held at which evidence in support of and in opposition to the allegations of said complaint was introduced before the above-named hearing examiner theretofore duly designated by the Commission, and said testimony and other evidence were duly recorded and filed in the offce of the Commission. Thereafter the proceeding regularly came on for final consideration by said hearing examiner upon the complaint, the answer thereto, testimony and other evidence, and proposed findings of fact and conclusion presented by counsel for the respondents, counsel in support of the complaint not submitting proposed findings of fact or conclusion.

The respondents are engaged in the business of reupholstering furniture with their main offce at 4103 Reisterstown Road, Baltimore Maryland, and branch offces in Washington, D. C., and Philadelphia , 628 Order special advertising.Pennsylvania. They have used three types of In the first type they offer big savings as much as $100," on reupholstery and slipcover work; in the second type they offer to reupholster a third chair free in connection with the reupholstering of a three-piece living room suite; in the third type they offer for $7. a chair valued up to $149 if the customer has a two-piece suite reupholstered at the regular price.

Since the imposition of price controls in 1951 by the U. S. Government, the respondents have maintained regular, uniform prices for products and services and approximately two-thirds of their business has been conducted at these regular prices. The balance of their business has been conducted pursuant to their special advertising offers and the evidence establishes clearly that during the periods when such advertising was effective sales were made and work performed strictly in accordance with the terms of the special offers. Numerous invoices of actual sales were presented in evidence which clearly establish that fact.

The advertising relating to "free" goods and services was discontinued in the latter part of 1952. However, respondents stated through their counsel, that it was their expectation in the future to make use of the word "free" and other similar words strictly in accordance with the decision of the Commission in the matter of Walter . Black, Inc. , Docket No. 5571, which use would be in conformity with the new trade practice rule on use of the word "free" as adopted by the Commission on December 3, 1953. Respondents' past use of the word also was in conformity with this rule. The reliable, probative and substantial evidence does not establish that the respondents have violated any of the provisions of the Federal Trade Commission Act and the complaint must therefore be dismissed. ORDER It is ordered That the complaint herein be, and the same hereby is dismissed as to an respondents.

630 FEDERAL TRADE COMMISSION DECISIONS- Order 50 F. T. C.

IN THE MATTER OF HEARN DEPARTMENT STORES, INC.

Docleet 3458. COn/plaint, June 1988-Qrder, Feb. , 1.954 Charge: Advertising falsely and misbranding as to nat.ure and composition of product; in connection with the sale of fabrics, garments, etc. Before llfr. Edward E. Reardon hearing examiner. Mr. George W. Williams and 11/1. R. P. Bellinger for the Commis- SIOn.

Mr. Jay Leo Rothschild of New York City, for respondent. ORDER DISMISSING COMPLAINT WITHOUT PRJi;,TUDlCE This matter coming on to be heard by the Commission upon a motion, filed by counsel in support of the complaint, requesting that the complaint herein be dismissed without prejudice, which motion was unopposed by the respondent; and It appearing from said motion and from the record that the complaint was issued in .J une 1938 and was based upon practices alleged to have been engaged in prior to that time; that the case was placed upon the Commission s suspense calendar on December 14 1944, pending the final disposition of Docket No. 4934, Celanese Corporation of A;nerica, and that the Celanese case was finally disposed of by the Commission on August 2, 1953; and The Commission being of the opinion that because of the lapse of time since the complaint was issued there is now insuffcient public interest in the subject matter to warrant a continuance of the proceeding at this time:

it is ordered that the complaint herein be, and it hereby is, dismissed, without prejudice, however, to the right of the Commission to take such further action against the respondent at any time in the future as may be warranted by the then existing circumstances. Opinion IN THE MATTER OF ASSOCIATED GREETING CARD DISTRIBUTORS OF AMERICA ET AL.

Feb. , 1951,Docket 5983. Complaint, !,lay 195.8-orde' , etc. , and opinion, Charge: Conspiring with respect to prices, terms and conditions of sale of greeting cards, gift-tying ribbons and gift wrapping paper. Before Mr. J. Earl Oow hearing examiner. Mr. Floyd O. Oollins for the Commission. D. for respondents. Dunning, Nellis Lundin of vVashington, ORDER DISPOSING OF Appeals From INITIAL DECISION OF HEARING EXAMINlm, AND DECISION m' THE COMJllISSION DIS1VIISSING COM- PLAINT This matter came before the Commission upon cross-appeals of counsel for respondents and counsel supporting the complaint from an initial decision of the hearing examiner dismissing all of the allegations of the complaint except those relating to respondents' alleged use of their combined purchasing power to secure discounts and advertising allowances.

For the reasons stated in the written opinion of the Commission which is issued herewith, the Commission is of the opinion that the appeal of counsel supporting the complaint should be denied and that respondents' appeal should be granted and the complaint herein dismissed.

The Commission has considered all of the exceptions of counsel and is of the opinion that the rulings of the hearing examiner are free of prejudicial error. In reaching its decision, Commission s Exhibit 126 for identification, which contains the opinion of the Secretary of the respondent Association that all of the large distributors in the field belong to the Association, was fully considered. It is ordered therefore, that respondents' appeal from the initial decision is hereby granted; that the appeal of counsel supporting the complaint is hereby denied; and that the allegations of the complaint are hereby dismissed.

OPINION OF THE COJIBIISSJON Chairman I-IoWREY delivered the opinion of the Commission: This case is before us upon cross appeals of counsel for respondents and counsel supporting the complaint from an initial decision of the hearing examiner dismissing all but one phase of the case. 632 FEDERAL TRADle COMMISSION DECISIONS Opinion 50 F. T. C.

Twenty-seven wholesale distributors of greeting cards and accessories throughout the United States, all members of the Associated Greeting Card Distributors of America, are charged with hindering and suppressing competition in violation of Section 5 of the Federal Trade Commission Act. Also named as respondents are the Association s Secretary-Treasurer, members of its merchandise committee and Charmeraft Publishers, Inc., a corporation owned by members of the Association through which they buy certain of their greeting cards and related products. This line of merchandise, which is especially designed and produced for respondents by a variety of manufacturers, is designated "Charmcraft" and is handled by Association members exclusively.

Respondent Association members compete with wholesalers who are not members of the Association and with manufacturers who sell directly to the retail trade. In some instances, members compete with each other in the buying and selling of their products. In an industry which does a total volume of approximately 250 million annually, respondents, whose total annual sales are something like $3 000 000 are not, as the Examiner found, in either a dominant or a monopolistic position.

The case involves six practices alleged in Paragraph Eight of the Complaint. At the completion of the case-in-chief of counsel sup- 3 that aporting the complaint, the hearing examiner ruled prima facie case had been made out on only one phase of the case; namely that respondents had obt tined favorable prices on Charm craft lines and were awarded discounts and advertising allowances based on their combined purchasing power. The examiner dismissed the remaining charges in the complaint, including the general allegation in the initial paragraph of Paragraph Eight to the effect that respondents had conspired to suppress competition.

An examination of the record shows that his ruling dismissing all of the other allegations of the complaint was correct.. lone Association member testified that Charmcraft cards accounted for 12% of his total requirements; another testified that about 15% of his needs were supplied by Charmcraft. 2 There are no figures in the record, however, indicating total annual sales by wholesalers and there are no figures showing the number of wholesalers of greeting cards in the United States.

2 The examiner s fallure to issue an initial decision following this ruling as requested by counsel in support of the complaint is subject to an exception by Commission s counsel. 70neHowever, we fail to see that has been prejudiced by the ruling. 4 The complaint alleges that respondents have falsely represented that they are publishers of Charmcraft cards. Counsel supporting the complaint was able to show that respondents salesmen had been furnished pictures of press rooms and printing equipment not owned by respondents. The examiner disregarded this evidence because there was no showing that uch pictures were ever used. In any event. however, while the use of such pictures might well imply that respondents own their own printing facilities, it does not establish tllat they are publishers as that term is used and understood in the greeting card trade. .

G:n Ol)inion After completion of respondents' case, the examiner filed his initial decision containing the same ruling in substance and an order which prohibited respondent from exerting the influence of their combined purchasing power to obtain any price discount or other preferential treatment not allowed, accorded or made available by such manufacturer or manufacturers to competitors of respondent or any of them. The examiner s order also prohibited respondents from misrepresent- 5 and from receiving any discounting the volume of purchasing power or other preferential treatment as a result of the use of such misrepresentation or combined purchasing power.

While the complaint charges respondents with misrepresenting themselves as publishers and with engaging in certain other unlawful practices, the crux of the case against respondents is that, by pooling their combined purchasing power to obtain favorable prices and terms on greeting cards, tying ribbons and wrapping paper, they have engaged in unfair methods of competition in violation of Section 5 of the Act.

We may assume that collusive activity.y by buyers to coerce a seller or sellers, through boycott., t.hreat. of boycot.t., int.imidation, or like means is unreasonable and t.therefore unlawful. See Eastern States Lumber Association v. United States 234 U. S. 600 (1914); Faddon Or-igina- 312 U. S,457 (1941) ; United tors' Guildv. Federal Trade Comlnission States v. 8m,them Oalifornia Grocers' Association 7 F. 2d 944 (S. D. Calif. 1925) ; Adcansas Wholesale Groeers' Assoeiation et al. v. F. T. C. 18 F. 2d 866 (C. A. 8 , 1927) (cert. den. 275 U. S. 533); 290 Fed. Southern Har&ware Jobbers ' Assoeiation et al. v. F. T. 0. v. F. T. 0. 277 773 (C. A. 5 , 1923); Wholesale (fl'oeers ' Assoeiation Fed. 657 (C. A. 5, 1922) .

The record in t.his case, however, cont.ains none of these elemellt.s of illegality. There is no evidence, moreover, showing injury to competing wholesalers or t.o t.he mrdlUfact.uring segment. Likewise, there is no evidence that retailers have been adversely ai1ected. The facts indicate nothing more than a relatively simple practice of joint purchasing by small business wholesalers in an industry marked by the predominant use of other distribution methods. These small concerns have purchased Charmer aft greeting cards and accessories as a result of open bargaining, and such purchases have been made from numerous manufacturers. Furthermore, individual association I) \Ve find no allegation in the complaint affording any basis for this part of the order except the reference to the use of "pretense of cooperative purchasing" in Paragraph Eight (B). The examiner found, however, and we think properly so, that "The record docs not establish'" that'" pretense of cooperative purchasing (was) used by respondents $I". We conclude, therefore, that there is no basis for a provision in the order prohibiting misrepresentations of the volume of purchasing power. 634 FEDERAL TRADE CO;\IMISSIOX DECISIONS Opinion 50 F. T. C.

members hah coutinued to buy frolll the regular stock of manufacturers, including many that have never produced Charmcraft merchandise.

con- In brief, this appears to be an instance in which a few small cerns have joined together as buyers in It non-collusive effort to wage competition, not to restrict it.

United States v. New Yorh: Great Quite unlike the present case was A. P. Tea Co. In F. 2d 7D (C. A. 7 194D), (affrming 67 F. Supp. (;26), in which it was the use of monopoly power to obtain preferences in price and other terms tllltt brought the grocery chain s buying See also Unitedpractices within the purview of the Shenmm Act. States v. Crescent Amu8cement Company et al. 323 U. S. 173 (1944) ; , , et al. v. United States 334 U. S. 110Schine Chain Theatres, Inc. 334 U. S. 100 (1948) ; United States (1948) ; United States v. Griffth v. Paramount Pictures, Inc. 334 U. S. 131 (1948), which involved the use of mass buying power to obtain first runs and other preferences in the motion picture industry.

At the hearing, evidence was adduced in an attempt to show that certain of the discounts and allowances received by respondents were justified by savings in cost. However, the hearing examiner found that these discounts and allowances were not justified by savings in view of the fact that, while they were based upon the total purchases of an members of the association, there was no single billing or delivery point. Assuming these facts as found by the examiner to be Section 5 of the correct, we are unable to agree that it follows that Federal Trade Commission J"-ct has been violated. This is not a case If there is reason tobrought under Section 2 (f) of the Clayton Act. received thebelieve that respondents have knowingly induced or granting of a discriminatory price in violation of the Clayton Act then such a violation should be pleaded and proved. Suffce it to say that the evidence does not persuade us tllltt Section 5 of the Federal Trade Commission Act has been violated.

It should be noted that the case involves no issue as to intermediaries or of brokerage, or discounts in lieu thereof, under Section 2 (c) of the Clayton Act., as amended.

The complaint. should be dismissed.

G The Commission s order in the Southern Jobbers' Hardware case supra which involved a conspiracy among the members of a hardware jobbers association to dominate the wholesale and jobbing trade, was issued to protect an association of retail dealers who, like the respondents in this case, were organized for the purpose of obtaining their supplies from manufacturers to effect savings.

'I The Supreme Court in the Crescent Amusement case appears to have had in mind the kind of situation before us here and! intimates that it would not consider it unlawful. it win not do to analogize this to a case where purchasing power is pooled so that the buyers may obtain more favorable terms. The plan here was to crush competition and to build a support for the exhibitors. 1323 U. S. at page 183. Consent Settlement IN THE MATTH MEL VIN MARCUS, DOING BUSINESS AS TELERON COM- ANY AND CECIL C. HOGE ET AL., DOING BUSINESS AS HUBER HOGE AND SONS CONSENT SETTLJ MENT IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docleet 6083. Complaint, Feb. 1953-Decision, Feb. 4, 1954 Where an individual, and an advertising agency and mail order promotion house, engaged, under an agreement entered into between them, in the competitive interstate sale and distribution of a television accessory originally designated as an "Interference Absorber" and later as a "TV Wave Trap" or "Teleron TV Wave Trap; in advertising their said product in newspapers and other perioclcals- (a) Represented that the same was a new invention or development, notwithstanding the fact that high pass filters, the technical name of the device had been in use since 1946 and was standard equipment. on some TV sets; (b) Represented that the use of said product would immediately and permanently eliminate all forms of TV interference and enable owners of TV sets to get picture-clear reception at all times; The facts being that while it would block out certain types of interference, there were a number of forms that it would not eliminate and some that it would only partially eliminate; and since they could not. determine the forms of interference that might. be present. in the case of any owner, they could not truthfully claim that the use of their product would enable any owner t.o get picture-clear reception at any time; and (c) Represented that the regular price of their jJrodnct. was $5; not.withstanding the fact that the price thereof was $3 and not $5 Held That such acts and practices constituted unfair and deceptive acts ",nd practices in commerce and unfair methods of competition therein. Before Mr. Earl J. K olb hearing examiner. Mr. W. J. Tompkins for the Commission. Mr. Joseph A. Mitschel of Ridgewood, Queens, N. Y., for Melvin Marcus.

M1'. George Landesman, Mr. James R. Withrow, Jr., Mr. Thomas J. M of adden and Donovan, Leiswl'e, Newton Irvine of N ew York City, for Huber Hoge and Sons.

CONSENT SETTLEMENT 1 Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Commission on February 19, 1953, issued and subsequently served its complaint on the respondents named in the cap- J See footnote on following page.

Consent Settlement. 50 F. T. C. tion hereof, charging them with unfair and deceptive acts and practices and unfair methods of competition in commerce within the intent andmeaning of said Act.

The respondents, desiring that this proceeding be disposed of by the consent settlement procedure provided in Rule V of the Commission Rules of Practice, solely for the purpose of this proceeding, any review thereof and the enforcement of the order consented to and conditioned upon the Commission s acceptance of the consent settlement hereinafter set forth and in lieu of the answers to said complaint heretofore filed and which, upon acceptance by the Commission of this settlement, are to be withdrawn from the record, hereby: 1. Admit all the jurisdictional allegations set forth in the complaint.

2. Consent that the Commission may enter the matters hereinafter set forth as its findings as to the facts, conclusion and order to cease and desist. It is understood that the respondents in consenting to the Commission s entry of said findings as to the facts, conclusion and order to cease and desist specifically refrain from admitting or denying that they have engaged in any of the acts or practices stated therein to be in violation of law, or that such acts and practices, if engaged , would be in violation of la w.

3. Agree that this consent settlement may be set aside in whole or in part under the conditions and in the manner provided in Paragraph (f) of Rule V of the Commission s Rules of Practice. 4. Severally assert:

(a) That the respondent copartners have ceased advertising and selling the product here involved, namely, a television accessory designated "Teleron TV Wave Trap (b) That the respondent Melvin Marcus, although still engaged in selling the said product has eliminated from his advertising" matter relatmg thereto the statements and representations alleged in the complaint herein to be false, deceptive and misleading. The admitted jurisdictional facts, the statement of the acts and practices which the Commission has reason to believe are unlawful the conclusion based thereon and the order to cease and desist, all of which the respondents consent may be entered herein in final disposition of this proceeding, are as follows:

1 The Commission s "Notice" announcing and promulgating the consent settlement as published herewith, follows:

The consent settlement tendered by the parties in this proceeding, a CODy of which is served herewith, was accepted by the Commission on Webrllary 4, 1\)54 , and ordered entered of record as the Commission s finuings as to the facts, conclusions, and order disposition of this proceeding-.

The time for tiling report of compliance pursuant to the afo1'('said order Jonns from the dntf' of sf'rvice hereof 63G Findings IT:\lJXUS - S TO THE F,ICTS PARAGRAPH 1. Respondent Melvin Marcus is an individual doing business under the trade name of Teleron Company, with his offce and principal place of business located at 21-02 122nd Street, College Point, Long Island, New York. Respondents Cecil C. Hoge, John Hoge, Sidney C. Hoge and Barbara Obolensky are individuals and copartners and, prior to October 1, 1952, were engaged in business as an advertising agency and mail order promotion house under the trade name of I-lubeI' Hoge and Sons, with their offce and principal place of business at 699 Madison Avenue, New York, New York. Effective October 1 , 1952, the business known as Huber Hoge and Sons was incorporated under the laws of the State of New York as Huber Hoge & Sons, Inc., with respondents Cecil C. Hoge, Sidney C. Hoge and J olm Hoge as directors and president, vice president and secretary, respectively.

PAR. 2. In the year 1950 respondent 1\1:elvin Marcus began ach-el'tising and sening a television accessory originany designated as an Interference Absorber and later denominated as a TV Wave Trap or Teleron TV Wave Trap. In February 1952 respondent Melvin Marcus entered into an agreement with respondents Cecil C. Hoge John Hoge, Sidney C. Hoge and Barbara Obolensky, doing business as Huber I-oge and Sons, whereby he agreed to give the latter the exclusive right to advertise the aforesaid product. Respondent Melvin Marcus further agreed to purchase from the respondent copartners an of the orders they received for the product at a price of $1.75 per order, later reduced to $1.65 per order. Beginning in February, 1952, the respondents engaged in the sale and distribution of the said TV accessory under the aforementioned agreement. Ut. 3. At aU times mentioned herein, respondents htlVe been in substantial competition with other firms and individuals and with corporations in the sale and distribution of similar television accessones In commerce.

PAR. 4. In the course and conduct of their respective businesses respondents caused their said product, when sold, to be transported from the State of 1\ ew York to purchasers thereof located in other states of the United States and in the District of Columbia. Respondents all times mentioned herein have maintained a substantial course of trade in their said product in commerce, as "commerce" is defined in the Federal Trade Commission Act.

PAR. 5. In the course and conduct of their respective businesses, as aforesaid, and for the purpose of inducing the purchase of their TV accessory, respondents have made numerous statements and repre- U..'IO638 FEDERAL TRADE COMMI88W.N l.l0 Findings 50 F. T. C.

sentations concerning their said product by means of advertisements caused to be published in newspapers and other periodicals having a large circulation outside the State of N ew York. Among and typical of such statements and representations, but not all inclusive thereof are the following:

STOP TV INTERFERENCE AT ONCE STOP IT FOR GOOD 2 WAYS TO STOP TV INTERFERENCE FOR GOOD before The only way t.o permanently remove your interference is to block it out, blocked out byit reaches your set, in exactly the same way sunlight glare is ung-lasses before it reaches your eyes! Either you can go out and purchase a cust.om-made electronic interference absorber and have it installed in your set by your repairman. This wil ,;top your TV interference. It wil cost yon anywhere from $30 to $40. Or you can do what thousands of other TV owners did-you can fix your set yourself in just 45 seconds-simply by clipping onto the back of your set a newly invented bypass filter called the Teleron Wave Trap. This new miracle of canmodern science, automatically biocks out interference waves before they reach your set, and is guaranteed to stop TV interference once and for all. WANT TO STOP FOR WHICH OF THESE TV HEADACHES DO YOU GOOD-IN JUST 5 MINUTES? (Here follow six picturizations of TV interferences designated as Streaks Distortion, Wavy Lines, Borer Effect, Snow and TV St.atic. PICTURE-CLEAR RECEPTIOK 365 DAYS A YEAR! ORDER TODAY Ai\'D SAVE $2.

If you order your TELERON WAVE TRAP today, you do not pay the $5 that :150 000 other TV owners paid. Due to mass demand and mass production for the TELERON WAVE trap this amazing invention is now yours for only guarantee.$2.98 wit.h this amazing no-risk PAR. 6. By and through the use of the foregoing statements and representations, and others of similar import but not specifically set out herein, respondents have represented, either directly or by implication, that their product, technically known as a high pass filter, is a immediately and perma-new invention or development; that it will interference; that it wiu enablenently eliminate all forms of TV owners of TV sets to get picture-clear reception at all times; and that the regular price of their product has been $5.00. PAR. 7. The aforesaid statements, representations and impli ations as set forth in Paragraph Five hereof, are false, misleading and deceptive. In truth and in fact, respondents' product is not a new invention or development. High pass fiters have been in use since the year 1946 635 Order and are standard equipment on some TV sets. There are a number of forms of TV interference that will not be eliminated by respondents product and some forms that will be only partially eliminated. It will, however, block out certain types of interference. Respondents cannot determine the forms of interference that may be present in the case of any television owner and consequently cannot truthfully claim that the use of their product will enable any TV owner to get pictureclear reception at any time. The regular selling price of respondents product has been $3.00 and not $;"5.00.

PAH. 8. The nse by respondents of the foregoing false, misleading and deceptive statemcnts and representations had the tendency and capacity to mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that such statements and representations were true and to induce the purchasing public to purchase substantial quantities of respondents' product as a result of such erroneous and mistaken belief. As a consequence thereof, substantial trade in commerce has been unfairly diverted to respondents from their competitors and substantial injury has been done to competition in COlllnerce.

CONCLUSION The aforesaid acts and practices of the respondents, as herein found were all to the prejudice and injury of the public and of respondents competitors and constituted unfair and deceptive acts and practices and unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commission Act. ORDER TO CEASE AND DESIST It is ordered That the respondent Melvin Marcus, doing business as Teleron Company, or under any other name, and respondents Cecil C. Hoge, John Hoge, Sidney C. Hoge and Barbara Obolensky, individually and as copartners doing business as Huber Hoge and Sons or under any other name, and said respondents' agents, representatives and employees, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution in commerce, as "commerce" is defined in the Federal Trade Commission Act of their TV accessory designated as Interference Absorber, TV Wave Trap or Teleron TV Wave Trap, or designated by any other name or any other product of substantially similar design, do forthwith cease and desist from representing directly or by implication: 1. That the said product is a new invention or development; 2. That the use of said product will eliminate or reduce interference with television reception irrespective of the form of interference; Order 50./' . T. C. 3. That the use of said product will result in picture-clear television reception, irrespective of circumstances;

4. That any price is, or was, the customary or usual price for said product which is in excess of the price at which it is, or was customarily sold by respondents in the usual course of business. It is further ordered That the respondents shall, within sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with this order.

(Sgc1. ) Melvin Marcus MELVTN MAHCUS, doing business as Teleron Company.

Dated: Nov. 10, 1953.

(Sgd. Cecil C. Hoge CECIL C. IIoGE.

Dated: Oct. 20, 1953.

(Sgd. John Hoge TOHN I-Iom:.

Dated: Oct. 21 , 1953.

(Sgd. Sidney C. Rage SIDNEY C. HOGE.

Dated; Oct. 23 , 1953.

(Sgd. Barbara Obolensky, BARBARA OnOLENSKY Individually and as copartners doing business as Huber Hoge and Sons.

Dated Oct. 23, 1953.

The foregoing consent settlement is hereby accepted by the Federal Trade Commission and ordered entered of record on the 4th day February, 1954.

640 FEDERAL TRAD ; COMMISSION DECISIONS Order GO r. C. 3. That the use of said product will result in picture-clear television reception, irrespective of circumstances;

4. That any price is, or was, the customary or usual price for said product which is in excess of the price at which it is, or was customarily sold by respondents in the usual course of business. It is further ordered That the respondents shall, within sixty (60) days after service upon them of this order, fie with the Commission a report in writing setting forth in detail the manner and form in which they have complied with this order.

(Sgd. ) Melvin :Marcus JlIEI,vIX MAHGCS, doing business as TeJeron Company.

Dated: Nov. 10, 1953.

(Sgd. ) Cecil C. Rage CECIL C. lIoGE.

Dated: Oct. 20, 1953.

(Sgd. John H age Ten IN I-Tom:.

Dated: Oct. 21 , 1953.

(Sgd. ) Sidney C. Rage SIDNEY C. HOGE.

Dated: Oct. 23 , 1953.

(Sgd. Barbara ObolenSk), BARBARA OBOLEXSKY Individually and as copartners doing business as Huber Hoge and Sons.

Dated Oct. 23 , 1953.

The foregoing consent settlement is hereby accepted by the Federal Trade Commission and ordered entered of record on the 4th day of February, 1954.

:;: .

CARDNER SUPPLY CO. 641 Decision IN THE :MATTER OF DALE A. GARDNER DOING BUSINESS AS CARDNER SUPPL Y COMPANY IJECIRION IN REGARD TO THE ALLEGED Violation OF THE FEDERAL 'trde COJlIMISSION ACT , Feb. 4, 1.954 Docket !ills. Oonipla.r:nt 1ug. 1953-- Decision '\There an individual engaged in the interstate sale and distribution of drug and cosmetic preparations for thc treatment of thc hair and scalp; in advertising a eombination of his said pn parations under the designation "Bash' formula Eight" in circulars, leaflets, radio continuities, and other advertising mat:er, directly and by implication- (a) Falsely represented that the use thereof would eliminate the cause of fallng hair, prevent baldness or partial baldness, and cause the growth of hair on bald and partially bald heads;

(b) Falsely represented that baldness was caused only by fungus infection; (c) Falsely represented through the use of the designation "Doctor" or the abbreviation "Dr." that said preparations had been made according to the formula or under the supervision, advice, or control of a doctor of medicine; (d) Falsely represented that the manufacturer of said "Bash' s Formula Eight" was an outstandinp; authority on fungus Infections of the hair: Held That such acts and practices, under the circumstances set forth, were all to the prejudice and injury of the public and constituted unfair and deceptive acts and practices in commerce.

Defore ",, Early. J( olb hearing examiner. Mr. Michael J. Vitale for the Commission. 1111' . Don 111m1in of Los Angeles, Calif., for respondent. DECISION OF THE COJ1JlTSSION Pursuant to Rule XXII of the Commission s Rules of Practice, and as set forth in the Commission s "Decision of the Commission and Order to File Report of Compliance, dated February 4, 1954, the initial decision in the instant matter of hearing examiner Earl J. Kolb lis set out as follows, uecarne on that date the decision of the CommlSSlOn.

INITIAL DECISION BY EARL J. KOLn, IlEARIKG EXAMINER Pursuant to the provisions of the Federal Trade Commission Act the Federal Trade Commission on August 7, 1953, issued and subseclIrently served its complaint in this proceeding upon respondent, Dale A. Cardner, an individual doing business as Cardner Supply Company, dunging him \yjth the use of unfair and deceptive acts and prae- 40;::.t - 4:' Findings 50 F. T. C.

tices in commerce in violation of the provisions of said Act. The respondent filed his answer which was later amended upon the record in which answer as amended, he admitted ajj material allegations of fact set forth in said complaint and waived ajj intervening procedure and further hearings as to the said facts. Thereafter, the proceeding regularly came on for final consideration by the abovenamed hearing examiner theretofore duly designated by the Commission upon said complaint and answer thereto, all intervening procedure having been waived and said hearing examiner having duly considered the record herein finds that this proceeding is in the interest of the public and makes the following findings as to the facts, conclusion drawn therefrom, and order:

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent Dale A. Cardner is an individual, doing business under the name of Cardner Supply Company with his principal offce and place of business located at 14516 South Ibex Avenue, in the city of Norwalk, State of California.

PAR. 2. Respondent for more than two years immediately prior the fiing of the complaint herein was engaged in the sale and distribution of drug and cosmetic preparations for the treatment of the hair and scalp of human beings as drug and cosmetic preparations are defined in the Federal Trade Commission Act. Subsequent to the issuance of the complaint herein respondent discontinulcd said business and is no longer disseminating or causing the dissemination of any advertisements by means of the United States mails or by any means in commerce as "commerce" is defined in the Federal Trade Commission A ct.

PAR. 3. The designation used by respondent for the drug and cosmetic preparations for the hair and scalp sold and distributed by him as aforesaid and the formula and directions for said preparations are as follows:

Designation: "Bash' s Formula Eight"

Formula: Detergent Shampoo 1 Gallon Acidolate 8 ounces rriacetin Solution No.

lib. Sodium Perborate lib. Urea 1 ()t. Triethanolamine Phenolpbtha1eill e(l as color indicntol'. 5 gal. Distiled Water.

Solution NO.

1 % Aminoacetic Acid 1 % Acetylsalicylic )j CARDNER SUPPLY CO. 643 641 Findings Fonnnla: Detergent Shampoo-Continued Solution No. Continued 1 % Glacial Acetic Acid 10 c. c. Thiamin Chloride (100 mgs. to 1 c. c. 10 c. c. Ascorbic Acid (100 mgs. to 1 c. c. 10 c. c. B Complex (Vil. E, 10 mgs. to 1 c. c.

(Vil. B, 10 mgs. to 1 c. c.

(Niacin 10 mgs. to 1 c. c.

(Vil. B, 10 mgs. to 1 c.

1 c. c. Pituitary Substance (Antuitrin 500 units per c. e. c. c. 1 c. c. Anterior Pituitary Substance (Pituitrin 10 I units per 1 gal. Solution 777 (an emulsion) and water suffcient to make one gallon Lotion 777;

Cetyl alcohol-- -- 30 grams Urea 10 grams Benzoic Acid-- 2 grams Defattcd Lanolin 15 grams 10 c. c. Oil of sweet almonds Mineral Oil 10 c. c. Water to rnake-- 1000 c. c. Solution No.

1 gal. of Jimulsion 777 10 c. c. Rubramin (Vitamin B,,-30 Micrograms pcr c. c. S oz. Wheat Gcrm Oil 4 oz. Triacetin Directions:

First: Use Special Shampoo twice weckly. Moisten hair first, then rub a lite Special Shampoo in well. Allow to dry for 2 to 3 minutes, then rinse with warm water.

Second: Apply Solution No. 1 of Formula Eight to the scalp each morning. Apply directly to the scalp with medicine dropper, fingertips, or dab or cotton and allow to dry.

Third: Apply thin coat of Special Booster every day, any time between morning and night solutions, over thinning and denuded areas and massage gently until completely absorbed. Best results obtained if steamed in with warm towels for approximately 15 minutes.

ourlh: Apply Solution No. 2 of Formula Eight to the scalp at night before retiring. Apply directly to the scalp with medicine dropper, fingertips or 'dab of cotton and allow to dry.

PAR. 4. Respondent caused said drug and cosmetic preparations designated "Bash' s Formula Eight " when sold, to be transported from his place of business in the State of California to purchasers thereof located in various other States of the United States. At aU times mentioned herein respondent has maintained a course of trade in said preparations in commerce between and among the various States of the United States.

PAR. 5. In the course and conduct of the aforesaid business, the respondent has rlisseminated and has caused the dissemination of CO::fMISSION DIcCISIONS644 FEDERAL TRADE Findings 50 F. T. C.

advertisements concerning his said prepaxations "Bash' s Formula Eight" by the United States mails, and by various other means in commerce, as "commerce" is defined in the Federal Trade Commission Act, including but not limited to circulars, leaflets, radio continuities and other advPltising matter for the purpose of inducing and which were and are likely to induce, directly or indirectly, the. purchase of said preparation; and the I'respondent has also dissmnina,ted, and has caused the dissemination of advertisements concerning said preparations, by various means, including but not limited to the means aforesaid for the purpose of inducing, and which were and are likely induce, directly or indirectly, the purchase of said preparation in COJJnnerce, as "eoJJnnerce" is defined in the Federal Trade Commission Act.

Among and typical of the statements and representations contained in said advertisements, disseminated and caused to be disseminated as hereinabove set forth, are the following: Almost beyond belief, at the end of the six months' contest, was the announcement that hair had started to grow again on evcry one of the bald heads. :B'formula Eight has caused hair to grow again on thousands of bald heads in all age groups, both men and women! Actually, we have yet to find a condition of balduess that has failcd to respond to proper application of Formula Eight: . . * Then you wil understand why we sincerely believe that Formula Jeight holds a promise of hope to milions aflietcd with baldness-Why we believe that Formula Eight wil restore normal healthy hair to bald scalp areas.

Bash' s Formula Eight is so compoundcd that it not only arrests incipient baldness but can help recovery from partial oj' complete baldness regardless of how long the- condition has existed.

It will, properly used, eli1ninute the cause of falling hair very promptly, and v faithful and continued use wil help natuJ'e regain its proper balance and help pl"onwte the regrowth of hail'.

'" " "' a substance that will actually p;row hair ou bald heads, Illy barber gave my new hail' its first "haircut" last week! The B::ush theory-that baldness is caused by an invisihh! fungus infedioll of the s('ul1J-now establishes that baldness is not hereditary-that falling hair :Jnd other scali) conditions leading to lmldness rail be quickly stopped and hair eells 11elJJcd to grow hair agnin.

fps; nash s F'onnnla Eight TwILls a IJr01nisc of hope to millions now aHiicted with partial or COlllIJTet.e baldnps;: , rpg-arclless of holy long the condition has ('xi tc:d.

rile story of Dr. Bash' s Formula Eight.

Dr. 1. .J. Bash has, through intensiye research in Bio-chenlistry, emerged as an outstanding author'Hy on the subject of fl1ng;us infection of the hair- Dr. Bash's Fonnula Eight is the rcvolutionary new product that actually helps nature restore hail' oils tu fUIH:lioll as natUrt: intended-to gTO\\' healthy !Jall" again! PAR. 6. Through the usp 01' the aforesaid statemPJJts aud representations and others of similar import and meaning, not spec;iiieally set CAIWNER SUPPLY CO. 645 641 Conclusion out herein, respondent represented, directly and by implication, that the use of his preparations wiJJ eliminate the cause of failing hair; wiJJ prevent baldness or partial baldness and cause the growth of hair on bald and partially bald heads; and that baldness is caused only by fungus infection.

PAR. 7. The aforesaid representations are misleading in material respects and constitute "false advertisements " as that term is defined in the Federal Trade Commission Act. In truth and in fact, the use of respondent's hair preparations wiJJ not eliminate the cause of facting hair, wiJJ not prevent baldness or partial baldness and will not cause the growth of hair on bald or partially bald heads. Baldness is not caused solely by fungus infection.

PAR. 8. Respondent, by the use of the designation "doctor " or the abbreviation thereof "Dr. " in advertisements and representations referring to the manufacturer of his preparations designated as Bash' s Formula Eight" thereby represents or implies that such preparations have been made according to the :formula or under the supervision, advice or control, of a doctor of medicine. In truth and in fact, the manufacturer of the preparations designated as "Bash' Formula Eight " is not a physician or doctor of medicine duly licensed as such to pmctice medicine by a recognized governmental authority, and does not possess any degree, or title of doctor, nor have the preparations designated as "Bash' s Formula Eight" been made according to the -Formula or under the sllpervision, advice or control, of a doctor or medicine or any doctor. Further, respondent's statement that the manufacturer of "Bash' s Formula Eight" is an outstanding authority on fungus infections of the hair is false for the reason that the person referred to is not an authority in any sense on said subject. PAR. 9. The use by the respondent of the foregoing false, deceptive and misleading statements and representations, disseminated as aforesaid, has the capacity and tendency to mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that said statements und representations were true and into the purchase of substantial quantities of respondent's preparations because of such erroneous and mistaken belief. CONCLUSION The acts and practices of respondent, as herein found, are all to the prejudice and injury of 1he public and of respondent's competitors and constitute un-fir and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. Order 50 F. T. C.

ORDER It is ordered, That the respondent, Dale A. Cardner, an individual other namedoing business as Cardner Supply Company or under any and his representatives, agents or employees, directly or through any corporate or other device, in connection with the offering for sale sale or distribution of the preparations known as "Bash' s Formula substantially similar compo-Eight " or any other preparations of whether soldsition or possessing substantially similar properties, do forthwith ceaseunder the same name or under any other name, and desist from:

1. Disseminating OJ causing to be disseminated, any advertisement means in commerceby means of the United States mails or by any as "commerce" is defined in the Federal Trade Commission Act, which advertisement represents, directly or by implication: (a) That the use of said preparations wil eliminate the cause of failing hair; wiJ prevent baldness or partial baldness; or wiJ promote growth of hair on bald or partially bald heads. (b) That baldness or partial baldness is caused only by fungus infection.

2. Disseminating, or causing to be disseminated, by any means, any advertisement, for the purpose of inducing or which is likely to induce, directly or indirectly, the purchase of said preparations in commerce, as "commerce" is defined in the Federal Trade Commission Act, which advertisement contains any of the representations prohibited in paragraph 1 of this order.

I t is further order' That the respondel't, Dale A. Cardner, an individual, doing business as Cardner Supply Company or under any other name, and his representatives, agents and employees, directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of the prepr"rations known as "Bash' Formula Eight " or any other drug or cosmetic preparation for treatment of the hair or scalp, in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: (1) Using the word "Doctor " or any abbreviation or simulation thereof, to designate, describe or refer to any such preparation not supervision of amade in accordance with the formula or under the member of the medical profession; or otherwise representing, directly or by implication, that any such preparation has been so made. (2) Representing, directly or by implication, that the manufacturer of said preparations is an authority on fungus infections of the hair. CARDNER SUPPLY CO. 647 641 Order ORDER TO Flu" REPORT OF COMPLIANCE It is ordered That the respondent, Dale A. Cardner, an individual doing business as Cardner Supply Company, shall within sixty (60) days after service upon it of this order, fie 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 (as required by said declaratory decision and order of February 4, 1954 J. &\ 648 FEDERAL TRADE CONIMISSION DECISIONS Order 50 F. T. C.