Reo Products Manufacturing Corp.

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IN TUE MATTER OF REO PRODUCTS 1IAKUFACTURING CORP. ET AL.

CONSENT ORDER, ETC. , IN REGARD TO THE --\ALLEGED VIOLATIOK OF THE FEDERAL TIL\DE C01l0USSIOX ACT Docket 8054. Complai- , July 1960-Decision, Mav, 1961 Consent order requiring Brooklyn, N. Y., distributors of cutlery-engaged in fabricating steak knives and carving sets from English knife blades, Japa. nese fork tines, and American fork tines, sharpening steels, and handlesto cease placing in containers packaging such products, tags and labels bearing fictitious prices represented thereby as usual retail prices; and cease representing falsely-by their trade name and in catalogs, stationery, invoices, on containers, etc. that they were manufacturers, that they had a factory in Sheffeld, England, and that their aforesaid carving sets were MADE IN SHEFFIELD, ENGLAJ\ CO:l\PLAINT Pursuant to the provisions of the Fec1e.ral Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Reo Products Manufacturing Corp., a corporation, and filton Cohen, Sam Siegel Theodore Ribak, and Barnett L. Ribak, individual11y and as offcers of said corporation, hereinafter referred to as respondents, have violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its comphint, Llting its charges in that respect as follows:

PARAGRAPH 1. Respondent Reo Products Manufacturing Corp. is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York, with its principal offce and place of business located at 316 :l\cDonald A venue in the City of Brooklyn, State of X ew York.

REO PRODUCTS MANUFACTURING CORP. ET AL. 749 748 Complaint Respondents Milton Cohen, Sam Siegel, Theodore Ribak, and Barnett L. Ribak are offcers or the corporate respondent. They rormulate, direct and control the acts and practices or the corporate respondent, including the acts and practices hereinarter set rorth. Their address is the same as that or the corporate respondent. PAR. 2. Hespondents are now, and for some time last past have been, engaged in the advertising, offering for sale, sfllc and distribution or cutlery, rorks and sharpening steels to distributors and to retailers ror resale to the public.

PAR. 3. In the course and conduct or their business respondents now cause, and for some time last past have caused, their said products, when sold, to be shipped rrom their place or business in the State or K ew York to purchasers thereor located in various other States or the United States and in the District or Columbia, and maintain, and at an times mentioned herein have maintained, a substantial course of trade in said products in commerce, as "commerce" is defined in t11B Federal Trade Commission Act. PAR. 4. R.respondents purchase knife blades from an English manufacturer, certain forl;: tines from Japanese manufacturers and certain other fork tines from an American supplier, sharpening steels from an America,n supplier, and knife, fork and sharpening steel l1anc11es from American manufacturers.

Hespondents unite the said knire blades, rork tines and sharpening steels ,with the said handles, thereby fabricating steak knives and carving sets.

P AH. 5. In the said course and conduct of their business and for the purpose of inducing the purchase of said products, respondents have:

(a) Engaged in thepractice of using fictitious prices in connection therewith by placing tags and labels in the containers in which said products are packaged, on which said tags and labels rertain amounts are printed, thereby representing, directly or indirectly, that said amounts are the usual and regular retail prices charged ror said products.

(b) :\Iade certain statements and representations with respect to respondents' status and concerning the origin and composition of said pro(lucts. Such statements and representations have been, and are, made in respondents: cata.logs, stationery, invoices and other printed and promotional material, and in and on the containers in which said pl'dllcts are offered ror sale and sold to the purchasing public.

Complaint 58 F.

Typical of such statements and representations are the following: REO Products MFG. CORP.

Manufacturers REO PRODUCTS MFG. CORP.

320 Fifth Ave. ),T Y. 1 Y. SHEFFIELD, EKGLAND MADE IN SHEFFIELD, ENGLAND SHEFFIELD STAINLESS CARVER SET PAH. 6. By the aforesaid practice, and through the use of the aforesaid statements and representations, respondents have: (a) Placed in the hands of distributors and retrilers the means and instrumentalities by and through which they might mislead the public as to the uusaJ and regular retail prices of said products. (b) Uepresentcd, directly or by implication, that: . (1) Uespondents are manufacturers.

(2) Respondents own, operate or control a factory in Shefleld, England.

(3) R.esponc1ents' products are of English origin in thr.ir entirety. PAR. 7.

(a) The said printed amounts are, in truth and in fact fictitious and in excess of the usual and regular prices charged for said products.

(b) Said statements and representations are false, misleading and deceptive. In truth alll in fact:

(1) Respondents perform no ma,nllfacturing functions but are merely assemblers of components mrllllfactured by and purchased from others;

(2) Respondents do not own, ope.rate or control a factory in Sheffield, England.

(3) Only knife blades utilized by respondents in the assembly complete knives are of English origin.

PAR. 8. There is a, preference on the part of a substantial number of the purchasing public to deal with manufacturers of products in the belief that there arc certain advantages in doing so, inclurling but not limited to the re.ceiving of lower prices. PAn. 9. In the conduct of their business, and at all times mentioned herein, respondents have been in substantial competition, in commerce, with corporations, firms and individuals engaged in the sale of cutlery, forks and sharpening steels. PAR. 10. The use by respondents of the aforesaid false, misleading and deceptive statements, representations and practices has had, and now has, the capacity and tendency to mislead d members of the purchasing public into the erroneous and mistaken belief that said statements and representations were and are true and into the pur- REO PRODUCTS MANU)1'ACTURING CORP, ET AL. 751 748 Decision chase of substantial quantities of respondents' products by reason of said erroneOllS and mistaken belief, As a consequence thereof substantial trade in commerce ha,s been, and is being, unfairly diverted to respondents from their competitors and substantial injury has thereby been, and is being, done to compet.ition in commerce. PAn. 11. The aforesaid acts and practices of respondents, as herein a11egcd, were and are a11 to the prejudice and injury of the public and of respondents' competitors and constituted and now constitute, unfair and deceptive acts and practices and unfair methods of competition, in commerce, within the iute,nt and meaning of the Federal Trade Commission Act.

Mr. Berryman Davis supporting the complaint. J1r. Seyrnou1' L. 11orse of New York, N. Y., for respondents. INITIAL DECISION BY JOHN LEWIS , 1-IEARIXG EXA)IIXER The Federal Trade Commission issued its complaint against the above-named respondents on July 26 1D60 charging them with the use of unfair and deceptive acts and practices and unfair methods of competition, in commerce, in violation of the Federal Trade Commission Act, by the use of false, misleading and deceptive statements concerning their business statllSj and the origin, composition and prices of the cutlery and other products sold by them. After being served with said complaint, respondents appeared by counsel and entered into an agreement dated 1Iarch 1 1061 containing" a consent order to cease and desist purporting to dispose of all of this proceeding as to all parties. Sa,id agreement, which has been signed by a11 respondents (except Barnett L. Hibak), by counsel for said respondents and by counsel supporting the complaint, and approved by the Director, Associate Director and Assistant Director of the Commission s Burea.u of Litiga.tion, has been submitted to the abovenamed hearing examiner for his consideration, in accordance with Section 3.25 of the Commission s R.ules or Practice for Adjudicative Proceedings.

Respondents, pursuant to the aforesaid agreement, have admitted a11 the jurisdictional facts alleged in the complaint and agreed that the record may be taken as if findings of j urisdidional facts had been duly made in accord1nllce with such allegations. Said agreement further provides that respondents waive any further proce-dural steps berore the hearing examiner and the Commission of thethe making or findings of fact or conclusions or 1ay",' and al1 rights they may have to challenge or contest the validity or the order to ceflse and desist entered in Rccordance with such agreement. Decision 58 F.

It has been agreed that the order to cease and desist issued in accordance with said agreement shall have the same force and effect as if entered after a full hearing and that the complaint may be used in construing the terms of said order. It has also been agreed that the record herein shall consist solely of the complaint and said agreement, and that said agreement is for settlement purposes only and does not constitute an admission by respondents that they have violated the law as alleged in the complaint. The order which has been agreed upon provides that the complaint shall he dismissed as to respondent Barnett L. Rihak. The basis for such a disposition as to said respondent is set forth in an affdavit by him which has been submitted together with, and as part of, the above-mentioned agreement containing consent order. Said affidavit, which was subscribed Hnd sworn to on February 28 1061 recites that respondent Barnett L. Hibak ceased to be an offcer of the corporate respondent on April 23 , 1960 (prior to the issuance of the complaint in this proceeding), and has since been inactive in the operations of said corporate respondent, and that even prior thereto said individual respondent was not active in its operations having been made an offcer because of his inn:stment of money t herein. The parties hate recommendecl that the complaint be dismissed as to respondent Barnett L. Ribak for the reasons set forth in the aforementioned flffc1avit.

This proceeding having now come on for final consideration on the complaint and the aforesaid agreement containing consent order, together with the affdavit of Barnett L. Ribak which has been made a part or said agreement, and it appearing th lt the order provided for in said agreelnent covers an of the allegations or the complaint and provides for an appropriate disposition of this proceeding as to all parties, said agreement is hereby accepted and is ordered filed upon this decision s becoming the decision or the Commission pursuant to Sections 3.21 and 3.25 or the Commission Rules of Pradice for Adjudicative Proceedings, and the hearing examiner, accordingly, makes the following jurisdictional findings and order:

1. Respondent, Reo Products l\:fanufnctnring Corp., is a corporation existing and doing business under' and by virtue of the laws the State of New York, with its offce and principal place of business located at 316 J\IcDonalc1 AYenlle, in the Cit.y of Brooklyn State of Xew York.

Hespondents I\lilton Cohen, Sam Siegel a.nd Theodore Ribak are individllals and offcers of the corporate respondent, and they formulate, direct and control the policies, acts and practices of sa.id ('01'- ( , REO PRODUCTS MA:qUFACT1;RING CORP. ET AL. 753 748 Dccision porate respondent. Their offce and principal place of business is the same as that of thc corporate rcspondcnt. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents hereinabove named. The complaint states a cause of action against said respondents under the Federal Trade Commission Act, and this proceeding is in t.he interest of the public. OTIDEH It is ordered That respondent Reo Products :lIanufaeturing Corp., a corporation, and its officers, and respondents J\liHon Cohen Sam Siegel, and Theodore Ribak, individuaDy and as offcers of said corporation, and each of them, and respondents' agents, representatives and employees, directly or through any corporate or other device, in connection with the offering for sole, sale, or distribution of cutlery, forks, sharpening steels or other merchandise, in commerce, as "commerce" is defined in the Federal Trade Commission Act, do fortlnvith cease and desist from: 1. 'Using the word "manufact.uring:' or any other ,yard of the same or similar import 01' meaning as a part of their earp orate or t.trade name or names in connection with products not manufactured by them; or H"presenting in any manner or by any means hat they manl1factlll'e any article or product that is not manufactured in a factory owned, openlted or controlled by them. 2. Hepresenting, directly or indirectly:

(a) By preticketing, or in any other manner, that any amount is the usual and regular retail price of merchandise when such amount is in excess of the price at which said merchandise is usually and regularly sold at retail in the trade area or areas where the represent.ations are made.

(b) That respondents, or any of tJ1em, own, operate or control a hctory in Shcffc1d, England, or in any other place where they not own, operate or control a factory.

(c) That any merchandise offered for sale, sold or distributed by them or any or the, , containing parts not manufactured in Eng- , is of English origin, or otllenYlse misrepresenting the, origin of merchandise.

It 'is further o'idered That thc complaint be, and the same hereby , dismissed as to respondent Barnett L. Hibak. DECISION OF THE CO)DIISSlON AXD ORDER TO FILE REPORT OF CO IPLlANCE Pursuant to Section 3.21 of the Commission s Rules of Practice the initial decision of the hearing examiner shall, on the 16th day of 6S1-237--63--9 754 FEDERAL TRADE CQ1\L\IISSION DECISIONS Complaint 58 F.

May 1961, become the decision of the Commission; and, ac,"ordingJy: I t is ordered That the respondents herein, except respondent Barnett L. RibaJr, shan within sixty (60) days after service upon them of this order, file wit.h the Commission a report in wri t.ing setting forth in detail the manner and form in which they have cornp1ied with the order to cease and desist.