Maxwell Distributing Company, Inc.

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IN THE ~IA TTER OF ~iAX'VELL DISTRIBUTING CO~IP ANY, INC., ET AL. ORDER, ETC., IN REGARD TO THE ALLEGED VIOLA Tlon OF THE FEDERAL TRADE CO:i\UnSSlON ACT Docket 6"-15. Complaint, Mar. 22, 195, Decisio-n, Sept. 5, 1957 Order requiring sellers in Newark, N. of perfumes, toilet waters, and colognes to cease represenUng falsely in advertisements on the labeling of their prollucts that fictitious and excessive " list prices" were the usual retail prices and that their products were compounded in France. illi'. H alty E. ill iddleton, Jp. for the Commission. INITIAL DECISION BY LOHEN I-1. LAUGHLIN, I-IEARING EX.;DIINER This proceeding involves alleged violations of the Federal Trade Commission Act, as amended, it being charged, in substance, that the respondents have committed unfair and deceptive acts and practices and unfair methods of competition in commerce by misrepresenting the origin and prices of cosmetics, such as perfumes, colognes, and toilet 'ilaters which it sells directly or indirectly to the purchasing public. This decision is rendered against all respondents upon the default of all such respondents.

From the record it appears that each of the respondents, other tlus1 I-Iyman Greenglass, was duly served "\with a copy of the complaint, either on ~Iarch 29, 1957, or on ~Iarch 30, 1957, and that the respondent Hyman Gre.englnss was duly served there"\with on April 29 1957. Although each of such respondents, other than I-Iyman Greenglass, were in default of answer, other pleading or other appearance eit.her in person or by counsel, because of delay in obtaining service on said respondent I-Iyman Greenglass, the initial hearing as set in the "Notice" portion of the complaint for ~Iay 28, 1957, in N e\\ark New Jersey, was indefinite.1y postponed on ~Iny 14, 1957, by an order providing for a subsequent resetting of such hearing on at least ten days' notice to the parties, as provided by Section 3. 16 (e) of the Federal Trade Commission s Rules of Practice for Adjudicative Proceedings, with the precise time and place. thereof to be designated therein. On ~ une 3 , 1957, each and all of the respondents then being in default of answer, other pleading or other appeanll1ce either in person or by counsel: the hearing examiner issued an order setting a hearing for June 21, 1957, at ten o clock a.m. (local time), in Room 358, Federal Trade Commission Building, Sixth and Pennsylvania Avenue, N.",Y., 'V ashington, D. , for the purpose of .

MAX\VELL DISTRIBUTING CO. , INC. , ET AL. 261 260 Decision conducting a. hearing to hear the evidence. to be presented by the attorney for the Commission, to find whether the facts are as alleged in the complaint, to make proper findings on the evidence presented, and to determine the form of order to be issued under said complaint and evidence in the initial decision thereafter to be entered. Each of the foregoing orders ,vas duly and timely served upon each of the respondents. On Jnne 21 , 1957, at the time and place designated therefor, the hearing examiner conducted such a hearing. No appearance was entered or made at or prior to such hearing by any of the respondents, either in person or by counsel and on motion of counsel for the Commission, their respective defaults "ere each taken and entered of record by the hearin!! examiner. I-Iearing then proceeded upon the evidence presented by the attorney for the Commission, \'\ho also presented a proposed form of order to the hearing examiner, and the proceeding "-as then taken under advisement.

Upon due consideration of the whole record herein and the hearing examiner being fully advised in the premises, it is found as follmys:

The Federal Trade Commission hns jurisdiction of the person of each of the respondents j\laxwell Distributing Company, Inc. , a corporation, and ::\Iorris Siegel, Abe Goldberg, Selma Siegel, I-Iyman Greenglass, and ~Iax Greenglass, individually and as officers nnd directors of said corporation, and each of them are found and adjudged to be in default of answer, other pleading, or other appearance, either in person or by counsel; and the material facts set forth in the complaint are true as hereinafter specifically found. Respondent :Maxwell Distributing Company, Inc., is a corporation organized and existing under and by virtue of the la"s of the State of New Jersey, with its principal place of business located at 161 'Yashington Street, Newark, Ne,,- ~Tersey. Individual respondents :i\lorris Siegel, Abe Goldberg and Selma Siegel, are president, vicepresident and secretary-treasurer, respectively, of the corporate respondent, with their office and principal place of business at the same address as the corporate respondent.. In addition to being officers, individual respondents :i\lorris Siegel and Abe Goldberg, together \'\ith respondents l-Iyman Greenglass and :Max Greenglass are. the directors of the corporate respondent. All five of the individual respondents formulate, direct and control the policies, acts and practices of said corporate respondent.

Respondents are no\'\, and have been for more than b,o years last past, engaged in the business of selling various perfumes, toilet waters and colognes, which are "cosmetics" as that term is defined andllsed ,, Decision 54 F.

in the Federal Trade Commission Act, as amended. TI;1e cosmetics offered for sale and sold by respondents, among others, are designated as: Discovery, Caprichio, Sables and Pearls, Pagoda, 'Vhite Christmas Perfume, 'Vhite Christmas Toilet "'Vater, La Vie en Rose and Scheme.

Respondents cause their said products when sold to be transported from their place of business in the State of New Jersey to purchasers thereof located in various other States of the United States and in the District of Columbia. Respondents maintain, and at all times mentioned herein have maintained, a substantial course of trade in said products in commerce among and between the various States of the United States and the District of Columbia. In the course and conduct of the aforesaid business, respondents hate disseminated, and caused the dissemination of, advertisements concerning their aforesaid products by the United States mails and by various means in commerce, including but not limited to circulars catalogs, and order blanks, for the purpose of inducing, and which were likely to induce, directly or indirectly, the purchase of said products; and respondents have disseminated and caused the dissemination of their advertisements by various means, inc.luding but not limited to the means aforesaid, for the purpose of inducing and hieh ,were likely to induce, directly or indirectly, the purchase of said products in commerce, as "commerce~' is defined in the Federal Trade Commission Act, as amended.

In certain of their advertisements, respondents represented that certain of their cosmetics were sold or had been sold at various list prices; thereby represe.nting that such prices were the usual and customary retail prices, and further represented, through the use of such statements as "The fragrance ereated in France blended in the French Tradition Paris-N my York Perfume essence compounded in France expressly for S~travel'~ and through the use of brand names such as "La Vie en Rose" and "Le Couturier " that. said cosmetics were compounded in France.. The said advertisements statements, and representations "-ere misleading in material respects and constituted "false Rdvertisements~' as that term is defined and used in the Federal Trade Commission Act, ns amended. In truth and in fact, the list prices as set out in the nc1vertisements "-ere and are fictitious and greatly in excess of the prices at ,,-which respondents products usually or customarily sold at retail, and further, respondents' proc1uets "- ere not compounded in Franee but. were manufactured or compounded in the United States. 'Vhile some imported ingredients may have been contained in the essence used in compounding some of the respondents' products, the major portion of the ingredients thereof ,yns of domestic origin. MAXWELL DISTRIBUTING CO. , INC., ET AL. 263 260 Decision In addition to the foregoing, and for the purpose of inducing the sale of their products in commerce, respondents have set forth the labels or in the labeling of their products certain amounts or prices, thereby representing, directly or by implication, that such amounts or prices were the usual and customary retail prices of said products; and they have also used on the labels or in the labeling of some of their products French names or words, such as "La Vie en Rose" and "Le Courturier" and the ,vord "Paris" and the Tricolor of France, thereby representing, directly or by implication, that said products "'ere compounded in France.

Like the statements and representations made in the advertisements above referred these statements and representations were false misleading and deceptive. In fact, the amounts or prices set out on the labels or in the labeling were fictitious and greatly in excess the prices at ,which said products were usually and customarily sold at retail; and, further, the products in connection with which the representations were made "'ere not compounded in France, but were compounded in the United States. 'Vhile some imported ingredients may have been contained in the essence used in compounding some of the said products, the major portion of the ingredients thereof was of a domestic origin.

There is a preference on the part of the purchasing public for perfumes, colognes, and toilet waters manufactured or compounded in foreign countries and imported into the United States. This is particularly true regarding c.osmetics which are manufactured or compounded in France.

In the course and conduct of their said business, respondents are no'" and have been at all times mentioned herein in substanbal competition in commerce with other corporations, firms and individuals likewise engaged in the sale and distribution of like products. By means of the said labeling practices of respondents they have furnished means and instrumentalities to dealers and others through and by ",which the.y may mislead and deceive the public with respect to the origin and retail prices of the.ir products. The dissemination by respondents of the advertisements containing the said false, misleading and deceptive statements and representations, and their use of the said labeling practices have had and now have the tendency and capacity to mislead and deceive the purchasing public into the erroneous and mistaken belief that such stn tements and representations ",ere true and such public has thereby been induced to purchase substantial quantities of the respondents products. As a result of the said practices, trade has been and is being unfairly diverted to respondents from their competitors and . .

Order 54 F.

substantial injury has been done and is being done to competition in commerce.

CONCLUSIONS OF LAW 1. The Federal Trade Commission has jurisdiction over all of the respondents ~ acts and practices hereinbefore found to be unlawful. 2. The public interest in this proceeding is clear, specific, and substantial.

3. The aforesaid acts and prac.tices of respondents, as hereinbefore found, ,were and are all to the prejudice and injury of the public and of respondents competitors and c.onstituted and nmy c.onstitute unfair and deceptive acts and practic.es and unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commission A. , as amended.

On the foregoing findings of fact and conclusions of la,,' , the following order is hereby entered:

ORDER is oide1'ed That the respondents, :Maxwell Distributing Company, Inc.., a corporation, :Morris Siegel, Abe Goldberg, Selma Siegel l-Iyman Greenglass and :J\Iax Greenglass, individually and as ofilcers and directors, or as officers, or as directors, of said corporation, and said respondents' agents, representatives and employees, directly or through any corporate or other device, in connection with the offering for sa.le, sale or distribution of perfumes, toilet ,,-aters, colognes or any other cosmetic, as "cosmetic ~' is defined in the. Federal Trade Commission Act, do forthwith c.ease and desist from: 1. Disseminating or causing to be disseminated, by means of the United States mails, or by any means in commerce as "commerce.e'~ is defined in the Federal Trade Commission Act, any advertisement for the purpose of inducing or which is likely to induce, directly or indirectly, the purchase of said products, which advertisement: (a) Contains or lists prices or amounts when sneh prices or amounts are in excess of the prices at which the products are usually and customarily sold at retail;

(b) Uses the statements or ,words "The fragrance created in France blended in the French tradition Paris-X ew Yod:: Perfume essence compounded in France expressly for Sarn.veF in connection with any product not manufactured or compounded France: or ,,-which otherwise represents, directly or by implication that. any such product was manufnetnred or compounded in France: (e) rses any French name or word as a trade or brallrl name, or as a part thereof, or any i1ame, ,yord, term, or depiction indicative ,, MAXWELL DISTRIBUTING CO. , INC. , ET AL. 265 260 Order of French origin in connection with any product manufactured or compounded in the United States, unless it is clearly and conspicuously revealed in immediate connection and conjunction therewith that such product was manufactured or compounded in the United States.

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

It is f1.l-1',thel' onlel' That. said respondents and their agents, representatives and employees, directly or through any corporate or other device, in connection "ith the offering for sale, sale or distribution of perfumes, toilet waters, colognes 01' any other cosmetic in commerce, as ';commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Setting out prices or amounts on the labels or in the labeling of their products ,,-hen such amounts are in excess of the prices at which such products are usually and customarily sold at retail. 2. Using any French name or \YOI'd as a trade or brand name, or as tt part thereof, or the ,yord "Paris " or the Tricolor of France, or any other name, word, term, or depiction indicative of French origin on the label or in the labeling of any product manufactured or compounded in the United States, unless it. is clearly and conspicuously reveal1ed in immediate connection and conjunction therewith that such product \Yas manufactured or compounded in the United States. ORDER l\10DIFYIXG IXITL-\L DECISION AXD DIRECTING REPORT OF CO~II)LL-\X CE The hearing examiner having filed n11 initial decision in this proeeeding on June 27, 1957, containing his findings of fact, conclusions dra.,,-n therefrom, and order to cease and desist, and this case having been placed on the Commission s own docket for review and having come on for final consideration by the Commission; and It appearing that whereas the complaint charges the respondents with having misrepresented the retail prices and the place of compounding of their cosmetic products, in part, thl'011g:h the dissemination of false. advertisements, in violation of Section 12 of the Federal Trade Commission Act, and, in part, through the use of statements and representations on labels and in labeling, in violation of Section 5 of said Act, the initial decjsion deals with the case as tholl~'h all of the chanres had arisen under Section 5; and Order 54 F.

The Commission being of the opinion that in this respect the initial decision is deficient and should be modified: I t ~:8 rdered That the initial decision be, and it hereby is, modifiedas follows: 1. By striking the words "and labels " appearing in the first line and the words "and the '\words 'Paris' and a portrayal of the Tricolor of France " appearing in the tenth and eleventh lines, of the first full paragraph on page 4;

2. By inserting the following two paragraphs between the first and second full paragraphs on page 4 In addition to the foregoing, and for the purpose of inducing the sa.le of their products in commerce, respondents hate set forth on the labels or in the labeling of their products certain amounts or prices thereby representing, directly or by implication, that such amounts or prices were the usual and customary retail prices of said products; and they have also used on the labels or in the labeling of some of their products French na.mes or words, such as 'La Vie en Rose' and Le Couturier' and the word 'Paris' and the Tricolor of France, thereby representing, directly or by implication, that said products were compounded in France.

Like the statements and representations made in the a(hertisements above referred to, these statements and representations ,\were false, mislead.ding and deceptive. In fact, the amounts or prices set out on the labels or in the labeling were fictitious and greatly in excess of the prices at which said products "-ere usually and customarily sold at retail; and, further, the products in connection with which the representations were made were not compounded in France but were compounded in the United States. ",Vhile some imported ingredients may ha.ve been contained in the essence used in compounding some of the said products, the major portion of the ingredients thereof was of a domestic origin. 3. By striking the six Jines of the second paragraph on page 5 beginning with the words "There being jurisdiction" and ending '\with the words "conclusions of law:/' and inserting in lieu of said lines the subheading "ConeIusions of Law.

4. By substituting the following order for the order contained on pages 5 and 6:

t is o7Ylered That the respondents, ~Iax"'ell Distributing Company, Inc., a corporation, l\lorris Siegel, Abe Goldberg, Selma Siegel Hyman Greenglass and :Max Greenglass, individually and as oflicers and directors, or as officers, or as directors, of slid corporation, and said respondents' agents, representatives and employees, directly or through any corporate or other device, in connection with the offer- MAXWELL DISTRIBUTING CO. , INC. , ET AL. 267 260 . Order ing for sale, sale or distribution of perfumes, toilet waters, colognes or any other cosmetic, as 'cosmetic' is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Disseminating or causing to be disseminated, by means of the United States mails, or by any means in commerce as 'commerce' is defined in the Federal Trade Commission Act, any advertisement for the purpose of inducing or 1which is likely to induce, directly or indirectly, the purchase of said products, which advertisement: ( a) Contains or lists prices or amounts when such prices or amounts are in excess of the prices at which the products are usually and customarily sold at retail;

(b) Uses . the statements or 1yorc1s 'The fragrance created in France blended in the French tradition Paris-New York Perfume essence compounded in France expressly for Saravel' in connection with any product not manufactured or compounded France; or which otherwise represents, directly or by implication that any such product was manufactured or compounded in France; ( c) Uses any French name or word as a trade or brand name ,or as a part thereof, or any name, word, term, or depiction indicative .of French origin in connection .with any product manufactured or compounded in the United States, unless it is clearly and conspicu- ,ously revealed in immediate connection and conjunction therewith that such product was manufactured or compounded in the United 'States.

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

said responde.nts and their agents is further o.rdered That Tepresentatives and employees, directly or through any corporate or clis-other device, in connection with the offering for sale, sale or tribution of perfumes, toilet waters, colognes or any other cosmetic in commerce, as 'commerce' is defined in the Federal Trade Comlnission Act., do forth,,'ith cease and desist from: the. 1labels or in the labeling 1. Setting out prices or amounts on excess of the prices at.of their products when such amounts are in which such products are usually and customarily sold at retail. 2. Using any French name or word as a trade or brand name, or as a part thereof, or the word 'Paris ' or the Tricolor of France, or 1yord, term, or depiction indicative of Frenchany other name, -origin on the label or in the labeling of any product manufactured 528577-60- Order 54 F.

or compounded in the United States, unless it is clearly and conspicuously revealed in immediate connection and conjunction therewith that such product was manufactured or compounded in the United States.

It i.s fu'J'th(3T ordered That the initial decision of the hearing examiner, as modified herein, did on the 5th day of September become the decision of the Commission.

I t is furth(3'J' O1Yle1' That the respondents, j)Iaxwell Distributing Company, Inc., j)lorris Siegel, Abe Goldberg, Selma Siegel, Hyman Greenglass and l\iax Greenglass, 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 the terms of said order. AZOME UTAH MINING CO. , INC., ET AL. 269 Findings