Simmons Company

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IN THE MATTER OF SIM1fOKS COMPANY COKSENT ORDER , ETC. , IX REGARD TO THE ALLEGED VIOLATION OF SEC. 2 (d) OF THE CLAYTON ACT Docket 8116. Complaint Sept. 16, 1960-Decision, Mar. 4, 1961 Consent order requiring a manufacturer of mattresses, box springs, upholstered sofas, and other household furniture, with headquarters in New York City, to cease violating Sec. 2(d) of the Clayton Act by paying favored customers for advertising or other services furnished in connection with the sale of its products, whHe not making such payments available on Complaint 58 F' proportionally equal terms to their competitors paying, for example amounts exceeding $2 400 and $4 000, respectively, to John Wanamaker and to Lit Bros., both of Philadelphia, for such services. COMl'LAINT The Federal Trade Commission, having reason to believe that the party respondent named in the caption hereof, and hereinafter more particularly described, has been and is now violating the provisions of subsection (d) of Section '2 of the Clayton Act, as amended (U. Title 15, Section 13), hereby issues its complaint, stating its charges "ith respect thereto as follo"s:

PARAGRAPH 1. Respondent Simmons Company is a corporation organized, existing ttnd doing business under and by virtue. of the la"s of the State of Dela"are, with its offce and principal place of business located at 300 Park Avenue in the City of N e" York, State of Ne" York.

PAIL 2. Respondent is now and has been engaged in the Inanufactnre and sale of mattresses, box springs, dual purpose upholstered sofas and other household furniture. Sales are made by respondent directly to department stores, fmniture stores and other retailers throughout the United States. Net sales by respondent for the year ended December 31, 1959 , "ere in excess of $132 600 000. PAR. 3. In the course and conduct of its busine:'s, respondent has engaged, and is now engaging in commerce, as "commerce" is defined in the Clayton Act as amended. Respondent operates 11 plants and 60 warehouses in various cities throughout the United States and causes its products to be transported from their place of manufacture and storage to its customers in various states throughout the United States and in the District of Columbia. PAR. 4. In the course and conduct of its business in commerce during the years 1959 and 1960 respondent paid or contracted for the payment of something of value to or for the benefit of some of its customers as compensation or in consideration for services or facilities furnished by or t.through such customers in connection with their offering for sale or sale of products sold to them by said respondent and such payments were not made available on proportionally eflllflJ terms to all customers competing in the sale and distribution of products purchased from respondent. For example since .January 1 1950 respondent has been using the Simmons Cooperatiw Advertising Plan, also kno"n as SCAP, the terms of which are tailored to exclude all but respondent's larger customers. As an example of this plan, during the year 1959, respondent contracted to pay, and did pay, to .John Vanamaker and to Lit Bros. both of Philadelphia, Pennsylvania, amounts exceeding 400 and SIMMONS CQMP A1ry 279 277 Decision 000 respectively, as compensation or as allo"ances for advertising or other services or facilities furnished by or through said John V anamaker and Lit Bros., in connection ,with their offering for sale or sale of products sold to them by respondent. Such compensation or allowances were not offered or othenyise made available on proportionally equal terms to all other customers competing with John IVanam"ker and Lit Bros. in the sale and distribution of products purchased from respondent.

Responde,nt has similarly favored other large customers in Philadelphia and in other cities over competing customers in such cities. PAR. 5. The acts and practices of respondent as alleged above. violate subsection (d) of Section 2 of the Clayton Act, as amended by the R.obinson-Patman Act.

Frede1'ic T. Suss, Esq. and Philip F. Zeidman, Esq. Supporting the Complaint.

Jarnes B. B1lrl,c, Esq. , of B1lrke B1lrke of Ne" York, N. , for respondent.

INITIAL DECISION BY LEON H.. GROSS, HEARING EXA fIKER The complaint ,,-as issued in t.his proceeding on Septmnber 16 , charging respondent "ith violating 2(d) of thc Clayton Act as amended by the Robinson-Patman Act (U. C. Title 15 1;)) by contracting for the payment of something of value to or for the benefit oJ some of its customers as compensation or in consideration for services or facilities furnished by or through such customers in connection Yi'ith the.ir ofiering for sale or sale of products sold to them by respondent without making such payments available on proportiollnJly equal terms to all customers competing in the sale or distribution of products purchased from respondent. . . true and correct copy of the complaint was served upon respondent as required by la". Thereafter respondent appeared by counsel and agreed to dispose of this proceeding ''lit-hout a formal hearing pursuant the terms of an agreement dated December 6 1960, containing consent order to cease and desist. The tgreement was submitted to the undersigned hearing examiner on January 5 1961 , in accordance with 83.25 of the Coml1ission s Rules of Practice for Adjudicativc Proceodings. The agreement purports to dispose of this proceeding as to the respondent and contains the form of a consent cease-anddesist ardor ,,,which the parties ha"e represented is dispositive of the issues involved jn this proceeding. The agreement has been signed by the Executive Vice President and General lana.ger of respondent corporation llnd by the attorneys for the parties and has been appron d by t.he --\.ssociate Director and Director of the Bureau of Findings 58 F.

Litigation of the Federal Trade Commission. In said agreement respondent admits all of the jurisdictional facts alleged in the complaint. and agrees that t.he record may be taken as if findings of jurisdictional fact.s had been made in accordance "ith such allegations. In the agreement the respondent waives: (a) any further procedural steps before the hearing examiner and the Commission; (b) the making of findings of fact or conclusions of law; and (e) all rights respondent may have to challenge or contest the validity.y of the order to cease and desist entered in accordance with the agreement.

The parties further agree, in said agreement, that the record on which the initial decision and the decision of the Commission shall be based shall consist solely of the complaint and the agreement; that the agreement shall not. become a part of the offcial record unless and until it becomes a part of the decision of the Federal Trade Commission; that the order to cease and desist entered in this proceeding by the Commission may be entered without further notice t.o respondent, and "hen so entered such order will have the same force and effect as if entered after a full hearing. Said order may be altered, modified or set aside in the manner provided for other orders. The complaint may be used in construing the terms of the order.

The parties have covenanted that the said agreement is for settlement purposes only and does not constitute an admission by respondnt that it has violated the la" as alleged in the complaint. This proceeding having now come on for fial consideration on the complaint and the aforesaid agreement containing consent order and it appearing that the order "which is approved in and by said agreement disposes of all the issues presented by the complaint as to all of the parties involved, said agreement is hereby accepted and approved as complying "ith gg3.21 and 3.25 of the Commission Rules of Practice for Adjudicative Proceedings. The undersigned hearing examiner, having considered the agreement and proposed order and being of the opinion that the acceptance thereof wil be in the public interest, makes the following findings and issues the following order:

FINDINGS 1. The Federal Trade Commision has jurisdiction over the parties and the subject matter of this proceeding; 2. Respondent Simmons Company is a corporation existing and doing busines under and by virtue of the la"s of the State of Dela- \Vats, with its offce and principal place of business located at 300 Park Avenue ew York, Kmv York.

H. APPEL & SONS J INC. J ET AL. 281 277 Syllabus iL R.respondent is engaged in commerce as "commerce" is defined in the Federal Trade Commission and the Clayton Acts; 4. The complrint filed herein states a cause of action against the respondent, under both the Federal Trade Commission and the Clayton Acts; and this proc.eeding is in the public interest. No'\ therefore It is oTdCi' That Simmons Company, a corporation, its offcers employees, agents or representatives, directly or through any corporate or other device, in or in connection with the sale in commerce as "commerce" is defined in the Clayton Act, as tnlended, of mattresses, box springs, upholstered sofas and other furniture, do forthwith cease and desist from:

::Inking or contracting to make, to or for the benefit of any customer, any payment of anything of value as compensation or in consideration for advertising or other services or facilities furnished by or through such customer.r, in connection wit.h the handling, offering for resale, or resale of the respondents' products, unless such payment is mode available on proportiomllly equal terms to all other customers competing in the distribution or resale of such products.

DECISION OF THE CO::DITSSIOX AXD ORDER TO FILE REPORT OF CO?lIPLIANCE Pursuant to Section 3.21 of the Commission s Rules of Practice the initial decision of the hearing eXflminer shall, on the 4th day of :\la1'ch 1961 , become the decision of the Commission; and accordingly:

It -is ol'dei'erl That respondent Simmons Company, a corporation shall, ,within sixty (60) days after service upon it of this 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.