Hudnut Sales Co., Inc.

Text (OCR of the scan at left; may contain errors)

IN THE TTER OF HUDNUT SALES CO., INC.

CO:\SEKT ORDER , ETC. , IX REGARD TO THE ALLEGED VJOLATlO:i 0)" SEC. 2 (d) OF THE CLAYTQX ACT Docket HO. Cornpla,int, Not". 1955-Decision, Apr. 4, 1956 Consent order requiring a New York City manufacturer of cosmetics, beauty aids, and toilet preparations, sold under tt'ade names "Richard Hudnut Could"tley, DuBarry," and " Chen Yu." to cease violating Sec. 2 (d) of the Clayton Act, through entering into cooperati\"e advertising arrangements with certain favored customers whereby it paid all, or a portion of the cost of newspaper advertisements of its products run by them. Before Ilfr. Robert L. Piper hearing examil1pr. Mr. Donald K. King for the Commission. Mudge, Stern, Baldwin Todd of Kew York City, for re:spondent.

COMPLAINT The Federal Trade Commission, having reason to believe that Hudnut Sales Company, Inc., hereinafter designat.ed as respondent has violated and is now violating the provisions of snb-section (d) of Section 2 of the Clayton Act (U. C. Title 15, Section 13), "' amended by the Robinson-Patman Act, approved Jnne 19, 1936 hereby issues its complaint, stating its charges with respect thereto as follows:

PARAGRAPH 1. Respondent Hudnut Sales Company, Inc. , is a corporation organized and doing business under and by virtue of the laws of the State of New York, with its offce and principal place of business located at 113 West 18th Street, Ncw York, New York" PAR. 2. The respondent is now and for a number of years has been engaged in the business of manufacturing and selling cosmetics beauty aids, and toilet preparations under va.riol1s trade names such as Richard Hndnnt, Conrtley, DnBarry and Chen Yn. Said products are sold to customers with places of business located thronghont the several states of the United States and in the District of Columbia for resale to consumers within the 1Jnited States.

PAR. 3. In the course and conduct of said business, respondent has engaged in commerce as "comme.rce" is defined in the Clayton Act, as amended by the Robinson-Patman Act, having shipped its products' or caused them to be transported from its said place of business to said customers with places of business located in the _ HUD UT SALES CO., I 1065 106 Complaint several states of the United States and in the District of Columbia. PAR. 4. In the course of said business in commerce, particularly during the past two years, respondent has paid or contracted to pay, money, goods, or other things of value to or for the benefit of some of their customers as compensation or in consideration for services and facilities furnished, or contracted to be furnished, by ,or through such customers, in connection with the processing, handling, sale or offering for sale of said cosmetics, beauty aids a.nd toilet preparations which respondent manufactures, sells, or offers for sale; and respondent has not made, or contracted to make such payments or consideration available on proportionally equal terms to all other of their customers competing in the sale and distribution of said products.

PAR. 5. Specifically respondent has entered into cooperative advertising arrangements with some of its favored customers whereby respondent has paid ail or a portion of the cost of newspaper advertisements dealing with l;espondellt' s products run by such customers.

The percentage of cost reimbursed or paid by respondent to such customers for sllch newspaper advertisements was arbitrarily determined by negotiations between respondent and such individual customers.

Such custOlllers were in competition \with other customers of respondent in the resale of responclenfs products. Such payments were not made available on proportionally equal V:'TilS or were not made available on any terms at all to certain other customers of respondent.

PAR. 6. Illustrative of the practices described in Pa.ragraph Five of his complaint 'were respondent s dealings with its cllstomers located in Chicago, Illinois during the last half of 1054. Of the large number of c.customers respondent has in that city only eight received an advertising allowance from respondent. These favored customers, the amount.s paid to them by respollc1ent and the percentage of such payments to the customer s total newspaper advertising cx;enst's with rt'gard to rpspowlent' s products may be listed as follows: Custom!'l, Also\\jupe Prl' c8ntagr Clbwmrr nt. IAllC,,"

, 4011. 00 100 ' jd(' Scott- ros_ The Fair_ 658. 110 100 -- 2 _"eal' S Roebu k - I 2 750.91K40 100Stineway-Ford Napkim_- 4, 631. 00 100 -Wab:ree 240. too '\fHofS':H.Jl Field-- 1. OJO 89 100. WLeboldt' , :2, 959. iO 9lJ PAR. 7. The acts and practices of the respondent as above alleged viola,te subsection (d) of Section 2 of the Clayton Act, as amended by he HobinsOll-Patman Act (U. S. C. Title 15, Seetioll18). 1066 FEDERAL TRADE COMMISSION DECISIO Decision 52 F.

INITAL DECISION BY ROBERT L. PIPER, HEARING EXAMINER The Federal Trade Commission issued its complaint against the above-named respondent on November 8 , 1955 , charging it with having violated Section 2 (d) of the Clayton Act, as amended by the Robinson-Patman Act. After being served with said complaint respondent appeared by counsel nnclenterccl into an agreement dated February 1. 1956 containing a consent order to cease and desist, disposing of all the issues in this proceeding without hearing. Said agreement has been submitted to the undersigned, heretofore duly designated to act as hearing examine)' herein. for his consideration in accordance with Section 3.25 of the Rules of Practice of the Commission.

Respondent, pursuant to t.he aforesaid agreement, has admitted all of the jurisdictional allegations of the complaint and agreed that the record may be taken as if findings of j11isdictional facts had been duly made in accordance with such allegations. Said agreement further provides that respondent \mives all fnrthcr procedural steps before the hearing examiner or the Commission, including the making of findings of fact. or conclusions of la,,, and the right to challenge or contest the validity of the order to cease and desist entered in accordance with such agreement. It has also been agreed that the record herein shall consist solely of the complaint and said agreement, that the agreement shflJl not become a part of the offcial record unless and until it becomes a part of the decision of the Commission, that said agreement is for settlement purposes only and does not constitute an admission by respondent that it has violatcd the Jaw as ,,1lcg-ed in the complaint that said order to cease and desist shall have the, same force and effect as if entered after a full hearing and may be altered modified, or set aside in the manner provic1e,d for other orders, and that the complaint and Tmcle Practice Rule 16 C. R. 221.1 (g) may be used in construing the t.terms of the order. This proceeding having no\\' come on for final consideration on the complaint ancl the aforesaid agreement containing the consent order, and it appearing that the orcle,l' and agreement cover an of the allegations of tbe complaint and provide for appropriate disposition of the proceeding, the same are hereby accepted and ordered filed upon becoming part of the Commission s decision pursuant to Sections 3.21 and 3.25 of the Rules of Practice, and the hearing examiner accordingly makes the following find-ings for jurisdictional purposes, a.nd order:

HUDNUT SALES CO, ) INC. 1067 10G4 Drcision 1. Respondent Hndnut Sales Co. , Inc. ' is a corporation existing and doing business under and by virtue of the laws of the State of New York, with its offce and principal place of business located at 113 ,Vest 18th Street, Kew York, New York. 2. The Federal Trade Commission has jllrisdict10n of t.he subject matter of this proceeding and of the respondent above named. The complaint states a cause of nction agnillst said respondent under the Clayton Act as amended by the Robinson-Patman Act, and this proceeding is in t.he interest of t.he public. ORDER It is ordered That respondent, Huc1nl1t Sales Co. Inc. , a corporation, its offcers, employees, age.nts and representatives, directly or through any corporate or other device, in connection with the sale or offering for sale of cosmetics beauty aids and toilet preparations in commerce, as "commerce" is defined in the Clayton Act as amended, do forthwith ceflse and desist from: Paying, or contracting to pay, to, or for the benefit of, any customer of respondent anything of value HS compensation or in consideration for advertising, display, demonstrat.or, promotional or other services or facilities furnished by or through such customer in connection with the handling, processing sale, or oifering for sale of respondent's products unless such payment or consideratlon is made available on proportionally equal terms to an other customers competing 1n the resale of such products. DEClSlOX OF THE CO?rn:ISSIO Axn ORDER TO EILE REPORT OF COMPLIANCE Pursuant to Sec.ioll 3. 21 of the, Commission s Bules of Practice the initial decision of the hearing examiner shall, on the 4th day of April 1956, become the decision of the Commission; and, accordingly:

It i8 ordered That respondent Hllrlnnt Sales Co. Inc., a corporation, shall, within sixty.y (60) days after service upon it of t.his order, file 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.

1 Incorrectly referred to as Hudnut Sales Company, Inc. , in the caption of the complaint and other documents.

J068 FEDBRAL 'trade CO:\LLvTISSION DEC EIOXS Decision ::1:2 F.