Sewing Machine Sales Corporation et al.

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IN THE iatter OF SEwr"G MACHIKE SALES COHPOHATIOK ET AL.

onnEn, ETC. , IN REGARD TO THE ALLEGED VIQL\TION OF THE FEDERAL TRADE COl\DnSSlOX ACT Docket 6149. CornjJlL'nt, Dec. 1953-Dectsion, Aug. 195J, Order requiring a corporate seller with main offce in Kew York City and branch in Atlanta, Ga. , to cease sellng se\ving machines, heads of which were imported from Japan, without adequate disclosure thereon of the country of origin, and to cease misrepresenting the maker of the machines by prominent use of the brand nalle "Admiral" on the main horizontal arm.

Before Afr. William L. Pac1e hearing examiner. Mr. H aI' old A. Kennedy for the Commission. Afr. Samuel W oolan of" ew York City, for respondents. DECISIO OF THE CO)BllSSIO Pursuant to Rule XXII of the Commission s Hules of Practice and as set forth in the Commission s "Decision of the Commission and Order to File Heport of Compliance " dated August 3, 1954, the initial decision in the instant matter of hearing examiner 'Villiam L. Pack, as set out as follows, became on that date the decision of the Conllnission.

ITIAL DECISIO BY WILLTAl\( L. rack, HEARING EXAl\IlNER 1. The complaint in this matter charges respondents with the use of certain unfair and deceptive practices in violation of the Federal Trade Commission Act. After the filing of respondents' answer hearings were held at which evidence in support of the complaint was introduced, no evidence being ouered by respondents. Counsel for all parties elected not to file proposed findings and conclusions, and oral argument was not requested. The Hmtter now comes on for final consideration on the merits.

2. Respondent Sewing :Machine Sales Corporation is a corporation organized and existing under and by virtue of the laws of the State of ew York, with its offce and principal place of business located at 1435 Doone A venue, :' ew York, New York. A branch establishment is located at 128 Marietta Street, N. 'Y. , Atlanta, Georgia. Respondents Samuel S. Cohen, Herman Smith and Eli Cohen are President, Treasurer and Secretary: respectively, of the corporation and formulate its policies and direct and control all of its acts and practices. SEWIXG MACHINE SALES CORP. ET AL.

Decision 3. I respondents are engaged in the sale of sewing machines and sewing machine heads, their sales being made either to retail dealers who resell to the consuming public or to wholesale distributors who in turn resell to such retailers. The business is interstate in character respondents selling and shipping their products to numerous purchasers located in various States of the "Gnited States other than Kcw Yark and Georgia. Respondents are thus engaged in commerce as that term is defined in the Federal Trade Commission Act. In the conduct of their business, respondents arc in competition in such commerce with other corporations and individuals engaged in the sale of similar products.

4. The complaint conblins two charges: first, that the "heads" used by respondents in their sewing machines, that is, the mechanical part of the machine or the entire machine except the cabinet, are imported from ,Tapan; that this fact is not disclosed or is not suffciently disclosed to the public; and as a result the public purchases or is likely to purchase respondent's machines under the erroneous impression that the machines arc manufactured in the United States; and second, that respondents use as a trade name for their machines the word "Admiral" or the \words "Admiral Crescent " thus causing the public to believe that such machines are products of another company, which sells household appliances under the trade name ".Admiral." 5. The heads used in respondents' machines are in fact imported from Japan. When sold by respondents, the machines bear on the front of the machine or head a medallion on which there appears in large type the legend "Reg. Appld. For" and in somewhat smaller type the words "The Family Sewing 1\lachine." There also appears, in type much smaller than that used in either of the above, the legend J apan " or ")facie in .Tapan." Only as a result of a very close examination would a member of the public see this last legend and thereby become apprised of the fact that the machine was made in Japan. There is testimony from a substantial number of customers that when purchasing respondents' machine they did not notice the legend, and that it was not until much later, when the legend was specifically called to their attention, that they became aware that the machine \vas not manufactured in the United States but in Japan. In the absence of adequate disclosure to the contrary, the public assumes that sewing machines are of domestic rather than foreign origin, and there is a preference on the part of the public for sewing machines manufa.ctured in the 1:Tnitec1 States over those ma,c1e in Japan. Upon examination of the medallion in question and in the light of the testimony, FEDERAL TRADE COM:\ISSIOX DECISIOKS Conclusions 51 F, 'l' it is concluded that here the disclosure of foreign origin was not suffciently conspicuous to inform the public.

6. (a) On the issue as to the trade name, the evidence fails to establish use by respondents of the single word "Admiral." Respondents have, however, llsed the name "Admiral Crescent " the word "Admiral" being prominently displayed in very large type on the front of the main horizontal arm of the machine, and the ",yord "Crescent" appearing immediately below in ITluch smaller and much less conspicuous type. On the top of this horizontal arm but in relatively small and inconspicuous type appears respondents' corporate name "Sewing :Machine Sales Corp.

(b) Some nine members of the public who had purchased respondents' machines from a dealer in Pittsburgh, Pennsylvania, testified that upon seeing the word "Admiral" on the machine they assumed the machine to be a product of the well known American company which sells household appliances under the trade name "Admiral." The company in question is the Admiral Corporation, and the word Admiral" is the trade name or mark of that company. For many years the company has advertised and sold its products, particularly television sets, radios and refrigerators, under this trade name, and the name and products are well and favorably known to the public. There is no connection between the Admiral Corporation and respond cnts or their machines.

(c) The use by respondents of the word "Crescent" in connection with the wor9 "Admiral" and the imprinting of respondents' corporate name on the machine is not suffcient to prevent the erroneous impression of the public as to the identity and origin of the machines. is evident from the testimony that prospective purchasers either do not notice these additional words at all or attach no significance to them. CONCL"CSlONS It is concluded:

1. The proceeding is in the pu blie interest. 2. The failure of respondents to cbsclose adequately on their sewing machine heads that such products are ma.de in Japan, and the use of the ''lord Ac1miral" as a part of the trade name for their machines have the tendency and capacity to mislead and deceive a substantial portion of the public as to the origin and identity of respondents products, and the tendency and capacity to eau e such members of the public to purchase such products as a result of the erroneous and mistaken belief so engendered. In consequence, substantial trade has been diverted unfairly to respondents from their competitors. He- SEWIXG MACHINE SALES CORP. ET AL.

Order spondents' practices serve also to place in the hands of ret.ail dealers means and instrument.alities whereby such dealers may be enabled to mislead and deceive the public. Such practices are all to the prejudice of the puhlic and of respondents' competitors, and constitute unfair and deceptive acts and practices and unfair methods of competition in commerce within t.he intent and meaning of the Federal Trade Com. mission Act.

ORDER It is ordered that the respondents, Sewing ::machine Sales Corporation, a corporation, and its officers and Samuel S. Cohen, Herman Smith and Eli Cohen, individually, and respondents' rcpresentatives agents and employees directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of sewing machines or sewing machine heads in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Offering for sale, selling or distributing foreign-made sewing macl1inc heads, or sewing machines of ",hieh foreign-made heads are a part, \vithout clearly and conspicuously disc.osing on the heads in such manner that it will not be hidden or obliterated, the country of origin thereof.

. L sing the word "Admiral" or any simulation thereof, either alone or in connection with any other word or words, to designate describe or refer to respondents' se",ing machines or se, wing machine heads; or representing through the use of any other \\-ord or words or jn any other manner, that sajd sewing machines or sewing machine heads arc manufactured by anyone other than the actual manufacturer. ORDER TO FILE REPORT OF CDlIfl'LIANCE It i8 o?'dered that the respondents herein shall within sixty (60) days after service upon them of this order, me with the Commission a report in \writing setting forth in detail the manner and form in which they have complied with the order to cease and desist (as required by said declaratory decision and order of August 3, 1954J. &;&; &; &; &; &; , Appearances 51 T. C. Ix THE L.1TTER H. J. HEIKZ CmIPAXY ET AL.

Docket 5991,. Dl"der an(l opinion, August 10, 1954 Order denying appeal from initial decision holding evidence insuffcient to Slip port allegations of concerted action to follow a price leadership plan Before 1111. Everett F. H aycrajt hearing examiner. 1111. Leslie S. ililler, ilr. Wiliam J. Boyd, h., Ah. Floyd O. Oollns and Ah. Wilmer L. Tinley for the Commission. Covington Burling, of \Vashington, D. for various corporations, individuals and offcers of said corporations, and along with- Reed, Smith, Shaw &; 11/ cOlay, of Pittsburgh, Pa., for I-I. ,J. Heinz Co. , Joseph J. "Wilson, Howard E. McKinley, Eyeritt E. Hichard and Cyril P. Hoberts;

1la1'hall, 1lelhoTn, Block Belt of Toledo, Ohio, for Campbell Soup Co. Joseph Campbell Co. Walter A. Scheid, Edgar vI'. Mantell and Harold R. Collard;

Barnes, Hickam, Pantzer Boyd of Indianapolis, Ind., for Stokely Van-Camp, Inc., Herbert F. Krimendahl and A. A. Ehrman; 1111. G. Lincoln Lewis of Indianapolis, Ind., for Stokely Van- Camp, Inc., Herbert F. Krimendahl, Samuel Hammond, Russell Kline and A. A. Ehrman;

Holloway, Peppers Romanoff, of Toledo, Ohio, for Foster Canning, Inc.

Tme il eyer of Port Clinton, Ohio, for Lake Erie Canning Co. of Sandusky, ,J. Weller Co. and George Wenger. Jla/'chal 1lm-chal of Greenyil1c, Ohio, for Beckman & Gast Co. Inc. , Greenville Canning Co. Inc., St. :Mary s Packing Co. Inc. , Robert H. Timmer, Thomas G. Timmer, Luke F. Beckman and Charles F. Stemley Canning Co.

Area' y&; Avery, of Bowling Green, Ohio, fol' Buckeye Canning Co. Inc.

Estabrook, Finn &J il cK ee of Dayton, Ohio, for Gibsonburg Canning Co. Inc. and St. )iary s Packing Co., Inc. lift. Joseph R. H momon of Fullerton, Calif. , and Fulle,., If an'inqton Seney&; HenTY, of Toledo, Ohio, for Hunt Foods, Inc. and Hunt Foods of Ohio, Inc.

ShOTt Dull of CeJina, Ohio, for Sharp Canning Co. Ham &J Ham of vY"useson, Ohio, and lift. Carl C. Leist of Circleville, Ohio, also for ",Vinory Canning Co. and George 'V. Conelly. &;

H. J. HEI:\Z CO. ET AL.

Opinion Gebhard H 09"e of Bryan, Ohio, for Hichard C. Boucher. Lus1c 8hao of \Vapakoneta, Ohio, for Henry A. Diege1. ORDER DE:XYI G Appeal FRo r INITIAL DECISION This matter coming on to be heaTcl by the Commission upon the appeal of counsel in support of the compla.int from that portion of the initial decision of the he,aring examiner dismissing the price fixing allegations contained in subparagraphs 8 and 9 of Paragraph Ten of the complaint herein, and the respondents' briefs in opposition to sajd appeal; and The Commission having considered the entire record, including the exceptions raised by counsel in support of the complaint, and having determined that the hearing examiner s initial decision was correct: It is ordered in conformity with the written opinion of the Commission being issued simultaneously herewith, that the appe,al of counsel in support of the complaint be, and it hereby is, denied. It i8 further oTdel'ed that the case be, and it hereby is, remanded to the hearing examiner for further proceecbngs in regular course. Commissioner Carretta not participating.

Ol'IXIOK OF THE CO Diission BY mVYKNE , C01lDIISSlOXER Respondents include 24 companies engaged in the processing of tomatoes in Ohio, the Ohio Canners' Association, Inc. (a trade association), individuals who are officers, directors, employees, or owners of the above companies, and oiIcers or directors of the Ohio Canners :\association, Inc. or the Indiana Canners: Association (also a trade association) .

Briefly stated, the complaint charges respondents with violation of Section 5 of the Federal Trade Commission Act by entering into an understanding, agreement and combina.tion to restrain trade interstate commerce in ra,\" tomatoes, and as a part of said understanding, with engaging in a planned common course of action to first, boycott and otherwise illegally interfere with said tomato growers, and second, to fix and mainta.in prices to be paid for raw tomatoes.

At the conclusion of the evidence in support of the complaint, the hearing examiner dismissed the entire complaint as to the Ohio Canners: Association, Inc., its offcers and directors, the secretary-treasurer of Indiana. Canners: Association, Inc.: and certain eanning companies and individuals named in the initial de( ision. He also c1ismissec1 FEDERAL TRADE COM ISSION DECISIONS Opinion 51 F. T. C.

the complaint as to the allegations in Subparagraphs 2 , 6, 8 and 9 of Paragraph 10 as to all respondents. Counsel supporting the complaint appealed from the decision only insofar as it dismissed the allegations in Subparagraphs 8 and 9 of Paragraph 10 as to the remaining respondents " that is, the respondents not included in the list set out in the initial decision as to whom the complaint was dismissed in its entirety. The appeal was submitted on vn'itten briefs without oral argument.

The only question involved in this appeal has to do with the suffciency of the evidence to make a prima facie case as to the following allegations in Paragraph 10 of the complaint: The respondents herein have been, and are now, engaged in unfair methods of competition and unfair acts or practices in commerce, as commerce' is defined in the Federal Trade Commission Act, in that they have entered into an understanding, agreement flnd combination to restrain trade and interstate commerce in raw tomatoes. The respondents, as a part of the aforesaid understanding, agreement fwd combination, have engaged in a planned common COllrse of action: 8. To fix and establish, and in fixing and establishing, prices to be paid by respondent processors to the growers for their raw tomatoes; and 9. To adopt and use, and in adopting and using, as a part of the aforesaid understanding, agreement and combination to fix and estab !ish prices, a price leadership pion whereby respondent, H. J. Heinz Company, respondent Campbell Soup Company, or respondent Joseph Campbell Company, or two or more of said respondents, at times have led in the announcement and publication of their price or prices for raw tomatoes, after which, pursuant to mutunJ understanding among all respondent processors, the other respondent processors adopted, announced, published, and follmved the same prices. All of the companies included among the remaining respondents operate tomato processing plants in Ohio. Most of the raw tomatoes to be processed are bought from individual grmvers under written contracts entered into just prior to the planting season, although some are bought later on the open market from growers or brokers. It is the practice for individual processors to announce their prices shortly before contracts are ofiered to the growers. In determining its opening price, each processor takes into consideration many circumstances often including prices already announced by other processors. Late in 1949, certain tomato growers formed a cooperative organization known as Cannery Growers, Inc. L nder the contract between II. J. HEI),TZ CO. ET AL.

Opinion Cannery Growers, Inc. and its members, the cooperative was designated as the sole agent of the members to negotiate contracts with the processors for the growing and selling of t.omatoes and the members agreed not to enter into a contract with any processor unless such contract had previously been approved by Cannery Growers, Inc. In January 1951, Cannery Growers, Inc. notified the processors that it was ready to negotiate contracts in behalf of its members at a price of $40-$34, that is, $40 per ton for U. S. Government Grade 1 and $34 for Grade No. 2. Most of the processors did not negotiate with the cooperative for various reasons, among which was that the asking price was too high. Early in 1951 various processors announced their prices and began the effort to sign up growers. The prices announced by some processors were identical. For example Joseph Campbell Company (buying agent for Campbell Soup Company), H. .J. Heinz, I-Iunt Foods, Inc., and 'Vinorr Canning Company, announced $33-$21. Other opening prices varied from $36 to $33 for Grade 1'0. 1 and from $26 to $20 for Grade No. In their appeal brief, counsel supporting the complaint "do not contend that the record establishes that the prices announced at the meetings ,were agreed upon in advance by the respondent companies; nor * :I * that the record establishes that there was uniformity among the respondents as to those prices or a,s to prices they actually paid for tomatoes. " They do contend, h01)ever, that there was cooperation and agreement among the respondents to adopt and adhere to the prices previously announced by certain of them and that such cooperation and agreement was for the purpose of negotiating with the growers for advance contracts during the critical period, that is, the "contracting season." In other words, the claim is that there was concerteel action to adhere to the prices individually announced (even though different) to further the boycott of Cannery Growers, Inc.

The record in the case is very voluminolls both in regard to the allegations of boycotting and price fixing. The evidence shows that meetings were held on March 17, March 31 and April 13, of 1951, at which most of the respondents were represente(l. At these meetings many things of mutual interest were discussed and some mention was made of prices already announced by some processors. Among the many exhibits are letters from the manager of the Toledo, Ohio plant of respondent Jlunt Foods, Inc. to his immediate superior giving a running account of the situation as the local manager observ8cl it. After the opening price announcements, some processors chnnged their price,s. For exa.mple, after announcing $33 $21 in farch FEDERAL 'trade COMMISSION DECISIONS Opinion 51 F. T. C. Hunt Foods, Inc. went to $34-$22.50 in April, and to $3&-$26 in May. Other respondents also made changes, although some did not occur until after the normal contrncting season was over. The hearing examiner held that there was not suffcient competent evidence in the record to support the "!Jeg-ations of Subparagraphs 8 and 9 of Paragraph 10 of the complaint. After considering the record, we conclude that the hearing examiner decided this issue correctly.

The appeal is therefore denied and it is directed that an order issue accordingly.

Commissioner Carretta did not participate herein. SANITARY FEATHER CO. , INC. , ET AL.

Complaint