B & C Distributors Co.

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

IN THE MATTER OF B & C DISTRIBUTORS CO. ET AL.

ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 7077. Complaint, Feb. 1.958-Deci.,;ion, Dec. , 1.58 Order requiring a Paterson, N. , distributor of radio and television tubes principally to jobbers, to disclose clearly on cartons, in advertising', invoicing, and shipping memoranda, when the tubes sold were used, pull-outs, factory rejects, or .TAN surplus. All other respondents in the proceeding signed a consent agreement with the same provisions on Nov. 18 , 1958, p. 741, preceding. Mr. Kent P. Kmtz for the Commission. B1"en1nan and Susser by 1111'. Herbert Susser of Paterson, N. for all respondents except Edward Chernela. INITIAL DECISION AS TO RESPONDEKT EDWARD CHERNELA BY.J. EARL Cox, HEARING EXAMINER The complaint charges respondents with failure to disclose the true nature of the used, pull-out, factory reject and J AN surplus radio and television tubes which they sell and distribute in commerce, thereby misleading and deceiving the public into the erroneous belief that sllch tubes are unused, new, and first quality tubes, in violation of the provisions of the Federal Trade Commission Act.

In this proceeding, all respondents except Edward Chernela entered into an agreement containing consent order to cease and desist, and an initial decision based thereon has heretofore been issued.

Respondent Edward Chernela vvas duly served with a copy of the complaint, but filed no answer thereto. On August 2 , 1958 said respondent was served with a copy of a notice that a hearing for the reception of evidence upon the issues as they rei ale to him would be held, beginning at 10:00 a,m. on September 26 1958, in Room 332, Federal Trade Commission Building, Washington, D. C. "0 appearance was made at this hearing by Edward Chernela or by anyone else in his behalf. Said respondent is therefore, in default for answer and appearance in this proceeding, and, under the Rules of Practice of the Federal Trade Commission the hearing- examiner is authorized \vithout further notice to B & C DISTRIBUTORS CO. ET AL. 867 866 Decision respondent to find the facts to be as alleged in the complaint, and to enter an initial decision containing such findings, appropriate conclusions and order.

Accordingly, the following findings are made, conclusions reached, and order issued:

1. Respondents B & C Distributors Co. and Revere Labs., Inc. are New Jersey corporations with their principal offce and place of business located at 840 Main Street, Paterson, N.J. Individual respondent Edward Chernela is treasurer of respondent B & C Distributors Co., and exercises a substantial degree of control and direction over the policies, affairs and activities of said respondent corporation. His offce and principal place of business is located at 840 Main Street, Paterson, N. 2. Respondent corporations and individual respondent Edward Chernela, through his exercise of control and direction of the policies and activities of B & C Distributors Co., are now, and for more than two years Jast past have been, engaged in the sale and distribution of radio and television tubes principally to jobbers. In the course and conduct of such business they have caused and now cause their products, when sold, to be shipped from their place of business in the State of New Jersey to customers located in other States of the lJnited States; and they maintain, and at all times mentioned herein have maintained, a substantial course of trade in said products in commerce, as commerce" is defined in the Fech,ral Trade Commission Act. 3. Said respondents are now, and at all times mentioned herein have been, in substantial competition with firms, persons, corporations and partnerships engaged in the sale and distribution of television and radio tubes in commerce, betvi'cen and among the various States of the United States.

4. In the course and conduct of their business, said respondents have offered for sale, sold and distributed a large number of used, pull-out, factory reject and JAN surplus radio and television tubes without disclosing on the tube, box, carton, invoice or in advertising the nature of these tubes. By failing to disclose these material facts, said respondents place in the hands of their customers, and others, means and instrumentalities by which the purchasing public may be misled into believing that said tubes are new, unused and first quality tubes, 5. When such tubes are offered to t.he purchasing public without being clearly and conspicuously marked, labeled and advcrtised as used, pull-outs, factory rejects or J A" surplus tubes Decision 55 F.

they are readily accepted by members of the purchasing public as new, unused and first quality tubes. 6. The failure of said respondents to disclose the true nature of their tubes as aforesaid has had and now has the tendency and capacity to mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that such tubes were new, unused and first quality tubes, and into the purchase of respondents' products by reason of such erroneous and mistaken belief. As a consequence thereof, substantial trade in commerce has been unfairly diverted to respondents from their competitors ann substantial injury has thereby been done to competition in commerce.

7. The aforesaid acts and practices of said respondents, as herein found, were and are all to the prejudice and injury of the public and' of respondents ' competitors, and constituted and no\\' constitute unfair and deceptive acts and practices and unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commission Act. 8. This proceeding is in the public interest. Therefore It is ore/ered That respondent Edward Chernela, individually and as an offcer of B & C Distributors Co. , a corporation, and respondent' s representatives, agents and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, or distribution of television or radio tubes in commerce, as "commerce " is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Selling, offering for sale, or distributing used, pull-outs factory rejects or JA"N surplus radio or television tubes without clearly disclosing on the tubes or on individual cartons in vvhich each tube is packaged when sold this \vay, and in advertising, , pull-outs invoices and shipping memoranda that they are used factory rejects, or ,JAK surplus tubes as the case may be; 2. Selling, offering for sale, or distributing any radio or television tube which is not new or first quality without clearly and conspicuously disclosing that fact on the tube or the individual carton in which such tube is packaged when sold this way, and in auvertising, invoices and shipping memoranda. DECISION OF THE CO'i:lission AND ORDER TO FILE REPORT OF CO:vPLIAJ\CE Pursuant to Section 3.21 of the Commission s Rules of Practice the initial decision of the hearing examiner shall, on the 13th B & C DISTRIBUTORS CO. ET AL. 869 866 Decision day of December 1958, become the decision of the Commission; and, accordingly:

It is oTdenrl That respondent Edward Chernela, individually and as an offcer of B & C Distributors Co. , shall, within sixty (60) days after service upon him of this order, file with the Commission a report in writing, setting forth in detail the manner and form in which he has complied with the order to cease and desist.

Decision 55 F.