Chips Distributing Co., Inc.

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In THe Matrer or CHIPS DISTRIBUTING CO., INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 7669. Complaint, Dec. 2, 1959—Decision, Feb. 20, 1960 Consent order requiring an independent Philadelphia distributor of phonograph records for several record manufacturers to retail outlets and jukebox operators in and around the area of eastern Pennsylvania, southern New Jersey, and Delaware, to cease disbursing concealed “payola"—payment of money or other valuable consideration to disc jockeys of radio and television programs—to induce the “exposure’’—playing of a record day after day and several times a day—and promotion of its records. Decision 56 FTC.

Mr. John T. Walker and Mr. James H. Kelley supporting the complaint.

Blane, Steinberg, Balder & Steinbrook by Mr. Sigmund H. Steinberg of Philadelphia, Pa., for respondents. Initia, Decision spy Epwarp Creel, Heartinc EXsaMINER The Federal Trade Commission issued its complaint against the above-named respondents on December 2, 1959 charging them with having violated the provisions of the Federal Trade Commission Act by unfairly paying money or other valuable consideration to induce the playing of phonograph records over radio and television stations in order to enhance the popularity of such records. On January 18, 1960 there was submitted to the undersigned hearing examiner an agreement between the above-named respondents, their counsel, and counsel supporting the complaint providing for the entry of a consent. order.

Under the foregoing agreement, the respondents admit the jurisdictional facts alleged in the complaint. The parties agree, among other things, that the cease and desist order there set forth may be entered without further notice and have the same force and effect as if entered after a full hearing and the document includes a waiver by the respondents of all rights to challenge or contest the validity of the order issuing in accordance therewith. The agreement further recites that it is for settlement purposes only and does not constitute an admission by the respondents that they have violated the law as alleged in the complaint.

The hearing examiner finds that the content of the agreement meets all of the requirements of Section 8.25(b) of the Rules of the Commission.

The hearing examiner having considered the agreement and proposed order, and being of the opinion that they provide an appropriate basis for settlement and disposition of this proceeding, the agreement is hereby accepted, and it is ordered that said agreement shall not become a part of the official record unless and until it decomes a part of the decision of the Commission. The following jurisdictional findings are made and the following order issued. 1. Respondent Chips Distributing Co., Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Pennsylvania, with its principal office and place of business located at 1415 North Broad Street, Philadelphia, Pennsylvania.

Respondent Harry Chipetz is the president and treasurer of this CHIPS DISTRIBUTING CO., INC., ET AL. 951 949 Decision corporate respondent and his address is the same as said corporate respondent.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents and the proceeding is in the public interest.

ORDER Jt ts ordered, That respondents Chips Distributing Co., Inc., a corporation, and its officers, and Harry Chipetz, individually and as officer of said corporation, and respondents’ agents, representatives and employees, directly or through any corporate or other device, in connection with phonagraph records which have been distributed im commerce, or which are used by radio or television stations in broadeasting programs in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Giving or offering to give, without requiring public disclosure, any sum of money, or other material consideration, to any person, directly or indirectly, to induce that. person to select, or participate in the selection of, and broadcasting of, anv such records in which respondents, or either of them. have a financial interest. of any nature.

2. Giving or offering to give, without requiring public disclosure, any sum of money, or other material consideration, to any person, directly or indirectly, as an inducement to influence any employee of a radio or television broadcasting station, or any other person, in any mannr, to select, or participate in the selection of, and the broadcasting of, any such records in which respondents, or either of them, have a financial interest of any nature.

There shall be “public disclosure” within the meaning of this order by any employee of a radio or television broadcasting station, or any other person, who selects or participates in the selection and broadcasting of a record, when he shall disclose, or cause to have disclosed, to the listening public at the time the record is played, that. his selection and broadcasting of such record are in consideration for compensation of some nature, directly or indirectly, received by him or his employer.

DECISION OF THE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant to Section 8.21 of the Commission’s Rules of Practice, the initial decision of the hearing examiner shall on the 20th day of February, 1960, become the decision of the Commission; and, accordingly :

/t vs ordered. That. respondents herein shall within sixty (60) days Decision 56 F.T.C.

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 order to cease and desist.