Giant Food, Inc.

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IN THE ~1A TTER OF GIANT FOOD, INC.

.order, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 7773. Oornplaint, Feb. 4, 1960-Decision, July 1962 .order requiring a large chain store distributor of food and other merchandise, with more than 50 retail outlets in Maryland, Virginia, and the District GIANT FOOD, INC. 327 326 Complaint of Columbia, to cease representing falsely in advertising, by means of comparative price claims-such as setting forth a higher "Reg. Price" or "Mfr. or "Mfg. List" price together with a lower offered price-that the higher amounts were the usual retail prices in the trade area and that customers buying at the lower amounts were afforded savings in the amount of the difference between the two.

COMPL~UNT Pursuant to the provisions or the Federal Trade Commission Act nd by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Giant Food, Inc. a corporation, hereinafter referred to as respondent, has violated the provisions or said Act, and it appearing to the Commission that proceeding by it in respect thereof would be in the public interest hereby issues its complaint stating its charges in that respect as follows :

PARAGRAPH 1. Respondent Giant Food, Inc., is a corporation orgazed, existing and doing business under and by virtue or the laws or the State of Delaware, with its principal office and place of business located at 6900 Sheriff Road, Landover, :Md. PAR. 2. Respondent is now, and for some time last past has been, ngaged in the advertising, offering for sale, sale and distribution of food and other merchandise to the public.

PAR. 3. Respondent operates a chain or over 40 retail stores located in the States of l\1maryland and Virginia and in the District or Columbia. Most or said retail stores are designated as "Giant Food" stores however, a number or the stores are designated as "Super Giant" stores. The "Super Giant" stores differ from the other stores operated by respondent only in size and in the proportion or non-rood items carried. The "Super Giant" stores are all located in the States Mary land and Virginia; none being located in the District of Columbia.

In the course and conduct or its business respondent now causes~ and for some time last past has caused, said rood and other merchandise to be shipped from its place or business located in the State of l\iary land to its retail stores located in the State or Virginia and in the District or Columbia. Said retail stores are engaged in the sale or said products to purchasers located in a State other than that in which the shipments have, or had, their origin and to customers resjding within the District or Columbia.

Respondent maintains, and at all times mentioned herein has maintained, a substantial c.course or trade in said products in commerce as "Commerce" is defined in the Fede-ral Trade Commission Act. ..., Complaint 61 F.

PAR. 4. In the course or conduct or its business, and for the purpose or induc.ing the sale or its said pro duets, respondent has made certain statements with respect to the pricing of 3aid pro duets, in advertisements in The. ,Vashington Post, The Evening Star, and The DaiJy Ne,,' , newspapers having a wide circulation in the District or Columbia, the States of ~laryland and Virginia, and the various other States or the United States. Among and typical, but not all inclusive., of said statements are the rollowing:

(1) Regina Twin Brush Waxer #400 Reg'. Price $66.00. Adv. Price $35.47 (2) Regina Electric Broom #600 Reg. Price $49.95. Adv. Price $25. (3) Proctor Steam & Dry Iron #10010 Reg. Price $1:3.95. Ad". Price $8,47 (4) G.E. Steam, Spray & Dry Iron #F61 Reg. Price $21.95. Adv. Price $12. (5) Sunbeam #12 l\lixmaster Less Juicer Reg. Price $46. 95. Ad". Price $29. (6) Sunbeam Large Fry Pan Reg. Price $23.97. Ad". Price $14. (7) G, E. Spray Steam Iron-$13.97-l\Ifg. List $21.95 (8) G.E. Automatic Toaster-$13.27-Mfg. List-$19. (9) G.E. Portable l\lixer-$13.27-Mfg. List $19. (10) G.E. Peek- Brew Coffee Maker $13.47-l\Ifg. Hst $19. (11) Regina Twin Brush Waxer-$35.47-Mfg. List $66. (12) Regina Electric Broom-$25.97 -l\1fg. List $49. (13) Regina Polisher & Floor Waxer-$34.97-l\Ifg. List $64.;:;0 (14) Borg Bathroom Scales-$4.97-Mfr. List $7.95. (15) Sunbeam Automatic Electric Percolator-$18.97-:Mfr. List $27. (16) Sunbeam-Medium Fry Pan-..,..$13.37-Mfr. List $19.95-Large Size-- $15.97-l\Ifr. List $23.

(17) Sunbeam Hand l\1ixer-$13.97-l\Ifr. List $21. (18) Snnbeaml\lixmaster $24.88-Manufacturer List Price $37. (19) Sunbeam Toaster-Mfr. List $29.95-19.

(20) Revere Ware Complete Selection 35% off Yon Buy For Cash & Save: Regu~r Super Giant Price Low Prices. 1 qt. Covered Sauce Pan--_____------------------_n_- $5.25 $3.A. Ph qt. Covered Sauce Pan______---------------------- 6.25 4. 4. 87A. 2 qt. Covered Sauce Pan______------------------------ 7. 50B. Revere Egg Poacher______--------------------------- 10.95 7.C. Ph qt. Double Boiler____--_-------------------------- 10. 50 6. 82C. 2 qt. Double BoileL_-__------------------------------ 11. 75 7. 63 D. 8 in. Covered Skilled___---_------------------------- 7.75 5.D. 10 in. Covered Skilled--___-_------------------------ 10. 75 6. 98D. 12 in. Covered Skilled_--_--------------------------- 13. 50 8. 77E. 21h qt. Tea Kettle___-__------ 4. 95 3. F. 6 cup Coffee Maker--_____---------------------------- 11.50 7. 8. 12F. 8 cup Coffee Maker___--__---------------------------- 12. 50G. 6 qt. Dutch Oven____--_------------------------------ 13.95 9. In other advertisements the same prices R.re set forth in connection ,with the above Revere ,IV are with the higher pric.es designated as ~lrg. List" instead or "Regular Price . , GIANT FOOD , INC. 329 326 Complaint PAR. 5. Through the use or the aforesaid statements, and others similar thereto not included herein, respondent represe.ntec1 that: 1. The amounts designated as "Reg. Price" and "Regular Price were the prices at which the products advertised had been sold at retail by respondentin the recent, regular course or its business. 2. The amounts designated as "l\1rg. List' , "Mrr. List" and "Manufacturer List Price" were the prices at which the products advertised were usually and customarily sold at retail. :3. The purchasers or the procluets ;advertised ate a.fi'orded savings equal to the differences between the higher and Jower prices listed in said statements.

PAR. 6. Said statements and representations 'were false, misleading and deceptive. In truth and in ract:

1. Said products had not been customarily and usually sold at retail by respondent in the. rec.ent, regular course or its business for the a1110unts set out in the advertisements as "Reg. Price and "Regular Price 2. The amounts designated as "l\1rg. List" ~Irr. List" and "l\Ianufact.urer List Price~' were, and are, substantially in excess or the prices at which said products were, and are, usually and customarily sold at retail.

3. The purchasers or said products are not afforded savings equal to the differences between the higher and, Jowel' prires listed in said state.ments.

, PAR. 7. In the conduct. of its business, at all times mentioned herein respondent has been in substantial competition in commerce, \with corporations, firms and individuals in the sale or products or the same gene.ra.l kind and nature. as those sold by respondent. PAR. 8. The use by respondent or the aforesaid raise, misleading and deceptive statements, representations and practices has had, and HOW has, the capacity and tendency to mislead members or the purchasing public into the erroneous and Inistaken belief that said statements and representations were and are true and into the purchase or substantial quantities of respondent's products by reason or said e.rroneous and mistaken belief. As a consequence thereof, substantial trade in eommerc.e has been, and is being, unfairly di,erted to respondhas thereby beenent from its competitors and substantial injury and is being, done to competition in comn1e-rce. PAR. 9. The aforesaid acts and practices or respondent, as herein alleged, were and are an to the injury and prejudice. or the public and or respondents eompetitors and constituted, and now constitute, unfair and de~eptive acts and pra.etices and unfair methods or c.competi- Initial Decision 61 F.

tion, in commerce, within the intent and meaning or the Federal Trade Comll1ission Act.

Mr. Ames W. Willian18 for the Commission. Danzansky DicllJey, by flir. Raym,ond R. Di(Jkey, Mr. Bernard Gordon and Mr. Robed F. Rolni(Jk or "'Tashington, D. , for respondent.

INITIAL DECISION BY LEON R. GROSS HEARING EXA1\IINER Giant Food, Inc., respondent, has used raise, misleading and deceptive advertising in violation or the Federal Trade Commission Act, as charged in the complaint.. This deception should be stopped. A ceas€ and desist order is being issued for that purpose. PRELIl\fin ARY STA TEl\fENT The complaint, issued February 4, 1960, charges respondent Giant Food, Ine., with violating the Federal Trade Commission Act by the publication in its advertisements or 1\1anuracturer s List Prices, or Regular Prices~' as a comparative price in dose proximity to and juxtaposition to its actual sales price for housewares, electrical appliances and other merchandise in such a manner as to mislead and deceive the purchasers as to the actual savings to be made bJT purchasing at Giant~s sales price. Respondent's answer to the complaint asserted several special affirmative defenses, any one or which, if proven would have required the hearing examiner to dismiss the proceeding.

In formal hearings Giant presented in rull all or its evidence in support or the affirmative defenses. Therearter, the hearing exam~ iner, on July 15, 1960, in a formal written ruling rejected and denied all such affirmative defenses. The July 15, 1960, ruling is incorporated herein by reference and made a part hereof as though fully set forth.

Giant' s defense to its deceptive advertising pra,ctices is that the use or a "regular" price as a comparative price has been abandoned and the use or :Manuracturer s List Prices in the advertisements are for identifieation purposes only, and in fact do not mislead the prospective purchaser. A small print diselaimer to this effect was published in some of Giant' s advertisements and 'will be discussed later in this decision.

Counsel supporting the complaint completed his evidence in support. or the case-in-chier almost a year ago. The proceeding has been protracted by two interlocutory appeals or respondent's counsel These appeals were an asserted attempt to obtain a subpoena duces tecum GIANT FOOD, INC. 331. 326 Initial Decision which would have permitted Giant to examine confidential business records or "\Voodward & Lothrop, the Hecht Company, and S. I(ann Sons Co. The evidence was, for the n10st part, irrelevant to the chief issue in this case. After the Commission had ruled favorably on these stores' motions to quash and limit the subpoena, Giant, at a hearing on September 18, 1961, refused to take a return or the subpoenas and to examine witnesses and papers which had been brought into the' hearing room in response to the subpoena.

Giant' s overall tactics in this proceeding, its abuse or the subpoena power of the Comlnission, and attempts to obtain confidential inrormation from its competitors to which it is not entitled require no extensive' comment.

Giant has also reasserted in this proceeding a defense which it had unsuccessfully asserted on several previous occasions, and which was, rejected by the Federal Trade Commission, namely that Gia.nt is a packer under the Packers & Stockyards Act of 1921, as amended, and' therefore exempt from Federal Trade Commission jurisdiction. the time that it presented the "Packer" defense, Giant knew that the same defense had been rejected previously by the hearing exaIniner and the Federal Trade Commission in Docket No. 6459 G-iant Food') Inc. Giant' s subterfuge in purchasing 100 shares or Armour & COlnpany stock to lend color to its claimed exclusion from Federal Trade Commission jurisdiction under the Packers & Stockyards Ad apparent.

The complaint alleges that Giant's use in its advertisen1ents of "Regular" or "l\fanuracturer s List" prices as a basis for comparison with its actual sales price stated in such advertisements is raise, misleading and deceptive under the Federal Trade Commission Act. Counsel supporting the complaint has proven the material and essential allegations thereof by a preponderanee or reliable, probative and substantial evidence in this record. This decision is based upon a consideration or the whole record.

in ac- Counsel have filed proposed findings, conclusion and order cordance with Commission rules. The findings or fact and conclusions or law stated in this opinion are based upon a consideration of the entire record including the exhibits which have been received.. Any fu1dings or conclusions proposed by the parties which are not Inade in the precise form in which they were proposed, or in substantially that form, hereby ate rejected. The fact that no finding or conclusion in this opinion summarizes the evidence in the precise manner in which either or the paliies has requested such facts to be' summarized does not mean that the hearing examiner has not considered such evidence. It n1cans merely that the examiner deems the , Initial Decision 61 F.

evidence which has been summarized in the findings or facts to be sufficiently preponderant, probative, substantial and material when viewed in the light or the relevant law to dispose or the issues. All motions made by the parties which have not heretofore been ruled upon hereby are overruled and denied. Based upon the entire record the hearing examiner makes the rollowing:

FINDINGS OF FACT 1. Respondent Giant Food, Inc., a Delaware corporation, ,,'ith its principal office at 6900 Sheriff Road, Landover, ~1maryland, operates a chain or more than 50 retail groc.ery stores and supermarkets concentrated chiefly in the District or Columbia and in the adjoining counties in the States or :Mary land and Virginia, but it has stores as far north as Baltimore, Nlary land, and as far south as Richmond Virginia. Its annual sales for the fiscal year ended April 29, 1961 were $146 877 679. Respondent's earnings per share of common stock increased from $1.08 for the fiscal year ending April 29, 1960 to $1.46 Tor the fiseal year ending April 29, 1961.

2. Giant is principally engaged in the sale at retail or rood and non-food merc.handise to the eonslllning public in the \Vashington :Metropolitan Area, Tidewater Virginia, southern Nlaryland and the Baltimore J\letropolitan Area. The \Vashington Metropolitan Area generally means in this decision the District or Columbia, Arlington and Fairrax Counties, and Alexandria in the State or Virginia, and :NIontgomery and Prince Georges Counties in the State or J\iary land. 3. Giant sells at retail rood and rood products including meat meat food products, sausages, beer dinners, pot pies, meat loaf, dairy products (including ice cream), poultry, poultry products, including turkey and chicken dinners and turkey and ehieken pot pies, eggs and all or the other rood and non-rood items which are usually and customarily sold in the modern chain grocery store or supermarket in the \V ashington ~1metropolitan Area. Giant also sells at retail a variety or small durable consumer goods generically described as small housewares and electrical appliances. These include among other things, radios, toasters, waxers, irons, ironing boards, electric mixers pots and pans, percolators, and assorted varieties or coffee makers brooms, skillets, electric cloc.ks, glass\vare, flatware, dinnenval'e, and items in similar and related categories. Giant also sells other durable goods aild a variety or soft goods, including men women s and chilclren s clothing, household linens, cosmetics, drugs, soaps and detergents.

4. Respondent Giant is engaged in commerce as "commerce" is defined in the Federal Trade Commission Act as amended. This pro- , GIANT FOOD , INC. 333 32G Initial Decision eeeding is in the public interest. Counsel supporting the complaint has proven all or the material and essential allegations or the complaint by a preponderance or reliable, probative and substantial evidence in this reeorcl. The Federal Trade Commission has jurisdiction over the parties and the subject matter of this proceeding. 5. Giant maintains, and at all times relevant to this proceeding has maintained, a substantial course or trade in its products in commerce as "commerce'~ is defined in the Federal Trade Commission Act. 6. In the course and conduct or its business and for the purpose or inducing the sale or its eleetrical appliances and kitehen utensils Giant has made certain statements with respect to the pricing or saiel products, in advertisements in the ",Vashington Post, the ",Vashington Evening Star, and the Washington Daily News, newspapers having a wide interstate circulation in the"T ashington :Metropolitan Area. An10ng and typieal, but not all inclusive, or said statements are the following:

(1) Proctor Steam & Dry Iron #10010 Reg. Price $15.95. Adv. Price $8. (2) G-E Steam, Spray & Dry Iron #F61 Reg. Price $21.95. Adv. Price $12.

(3) Sunbeam #12 l\lixmaster Less Juicer Reg. Price $46.95. Ady. Price $29.

(4) Sunbeam Large Fry Pan Reg. Price $23.97. Adv. Price $14. (5) G.E Automatic Toaster $13.27. Mfg. List $19. (6) G.E. Portable l\lixer-$13.27. Mfg. List $19.95. (7) G.E. 'Peek- Brew' Coffee Maker $13.47. Mfg. List $19. (8) Regina Twin Brush Waxer Ady. price $35.47. reg. price $66. (9) Regina Electric Broom #600-24.97 Ady. price. Reg. Price $49. (10) Regina Polisher & Floor Waxer-$34.97. Mfg. list $64. (11) Borg Batbroom Scales-$4.97. Mfg. List $7. (12) Sunbeam Automatic Electric Percolator-$18.97. Mfr. list $27. (13) Sunbeam Handmixer-$13.65. mfr. list $21. (14) Sunbeam Mixmaster $24.88-mfr. List 37. (15) Sunbeam Toaster-mfr. list $29.95. $19. (16) Reyere Ware Complete Selection 35% off You Buy For Cash & Save: Regular Super Price Low PriceGiant A. 1 qt. Covered Sauce Pall______----------------------- $5. $3. A. Ph qt. Covered Sauce Pall______--------------------- A. 2 qt. Covered Sauce Pan______------------------------ B. Reyere Egg Poacher---__-_------- 10. C. 1112 qt. Double Boiler 10. C. 2 qt. Double BoileL__----------------- 11. D. 8 in. Covered Skilled_-__----------------------------- D. 10 in. Covered Skilled__-__--------------------------- 10. D. 12 in. Covered Skilled___----------------------------- 13. E. 2% qt. Tea Kettle_--_-_------------------------------ F. 6 cup Coffee Makes__---__--------------------------- 11. 50 F. 8 cup Coffee Maker___-__--------------- 12. G. 6 qt. Dutch Oven----___------------------------------ 13. 3:::4 FEDERAL TRADE COMMISSION DECISIONS Initial Decision 61 F.

In other advertisements the same prices are set forth in connection with the above Revere ware with the higher prices designated as l\1rg. List" instead or "Regular Price.

1. In Giant's aforementioned advertisements in which it used the lllanuracturer s list price as a means of comparison, the following disclaimer appeared at the bottom of the ad in fine print: The manufacturer s list prices referred to in this advertisement are inserted to assist you in identification of the products and to allow you to compare accurately the selling prices offered here and else,vhere. The use of the term manufacturer s list" or similar terminology in our advertising is not to imply that Giant has ever sold the advertised products at such list prices or that the products are being offered for sale generally in the area at such list price. .Many reputable national brand manufacturers issue to retailers, from time to time, suggested retail list prices that are intended to afford reasonable profits to all retailers based upon their traditional cost of marketing. Giant's emploYIPent of self-service, supermarket techniques enables it usually to sell below suggested list prices. Consumers, however, ha \'e come to recognize most brand merchandise by the ' list prices, rather than by model numbers. Consequently Giant includes these manufacturer s list prices so that you may make simple, intelligent comparisons between our selling prices and those of others. The evidence in this record rails to prove many or the statements made by Giant in the above disclaimer. Commission witnesses testified and the examiner finds as a fact that very few ir any or the persons who would read Giant' s advertisements would take the trouble to or did, read the fine print disclaimer. l\foreover, there is no proof in this record that the manufacturer s list price furnished a means and was used by the purchasing public as identification or the articles offered for sale. There is consumer evidence to the contrary, 'infr' The evidence proves and the examiner finds that there are non-deceptive identification designations such as model numbers and catalog descriptions which could have been used by Giant in its advertisements. All or Giant's items or merchandise advertised in the exhibits in this record were not usually and customarily sold for the manuraeturer list price or the suggested retail price in its trade area in the recent regular course or business but were in rad sold for less than such list price.

8. Through the use or the aforesaid advertisements and others similar thereto, respondent represented, contrary to the fact, that: (a) The amounts designated as "regular rormer" or "usual" prices were the prices at which the products advertised had been sold at retail by Giant in the recent, regular course or its business in the "T ashingtonl\fetropolitan Area;

(b) The amounts designated as "~1rg. List :Mrr. Suggested List" and "l\1manufacturer List Price" were the prices at which the products GIA....l\TT FOOD , INC. 335 :326 Initial Decision ft,advertised were usually and customarily sold by other retailers in the recent, regular course or business in the trade area involved; and ( c) Giant' s customers would save the difference between the sales price and the comparative price by purchasing the advertised articles from Giant in preference to any other retailer in Giant' s trade area. 9. Giant's own employees have admitted the deception inherent in its c.challenged advertisements. At page 357 the following colloquy between counsel supporting the complaint and :NIl'. Will Y. Belote (a buyer for Giant) took place:

Q. I think you testified with respect to respondent' s Exhibit No. 10, that the .comparable value stated on there was the manufacturer s list price of those Itarticular items? A. I think I stated that the prices shown as comparable value and the manufacturer Q. Arethe same? A. Yes, sir.

Q. Do you equate comparable value with manufacturer s prices or suggested list prices, or suggested retail list prices? A. Well, my opinion-if that is what you are asking for-show this type of ~ld.verti.sing i8 nwre misleading- Q. I didn t ask you that, I ask if you- Mr. DICKEY: Just a minute. He has a right to answer that question. He a~ked if he equates it, and that is an opinion, and he has a right to give his answer.

HEARING! EXAMINER: He may answer.

THE WITNESS: My opinion is that this type of adverti.sing is more misleading than if they had put the manufacturer s suggested list. You compare with what? 'Comparable T"value. Mrs. Consumer doesn t know what comparable value is in my way of thinking.

By Mr. Williams:

Q. But your answer is that you do equate it with list price? A. As an expert in the field, I do, yes. (Italic supplied. 10. The record contains substantial evidence in the form or testi- :mony or consumer witnesses, which is uncontradicted, to the effect that Giant's advertisements containing the manufacturer s list price ,or household electrical appliances placed in juxtaposition to the respondent' s lower offering prices for the same merchandise, lead readers is the price ,of such advertisements to believe that the higher price :at ,which the Inerchandise is usually and customarily sold by the respondent or others in the recent regular course or business in the trade area involved.

181 et seq. with reference 'Vitness Carroll D. 'Yade testified (Tr. to an advertisement or a "toastmaster toaster, $14.47, Manuracturer you are selling it for list, $21.00. 'Yell, by this I would think that :

Initial Decision 61 F.

$14.47 where it normally sells for $21. That this is a bargain, it is a savings.

The witness further indicated that he had not previously noticed the disdaimer in the advertisement (CX-8). Arter reading the disclaimer, the witness repeated that he thought the advertisement still meant a savings betwoonthe two prices given (Tr. 192). Donald L. Leavitt testified (Tr. 202) that the manuracturer s list price or $64.50 appearing in CX-4 "implied the normal selling price or the article. :' This price appears in juxtaposition to respondents offering price or $34.97. Upon eross-examination, this witness stated that the. disdaimer or resporidenfs advertisemellt was not the kind or thing one wonldnotice and that its meaning was "nncleRr (Tr. 210). ~lrs. Barbara Dilley (T. 216) testified that the advertisement ror the Cory Jewel Knire Sharpener, $8. , ~1:anuraeturer s Suggested List $19.95 (CX-8) meant that Giant sells knife shal'lJeners at a lower price than any other retailer would sell them. After reading Giant ~ s disclaimer, ~.frs. Dilley "as or the opinion that the advertisement meant to her that other retailers sold the knife sharpeners at approximately the manufacturer s list price and Giant sold it for less than the other retailers. "But on the bottom it said that you comp~re Ginnfs prices with those or others "which to me still suggests that they sell dose to the manufacturer s list price but Giant still sells lower:' ~lrs. Vera Davis (Tr. 237) testified that Gianfs' aclYertisell1ent meant to het that the lower prices would be what she would pay if she went to Giantj and the manuracturer s list prices would be what she ,yonld pay ir she "lent to other stores to buy the same article. After having been shmyn Giant' s disclaimer at the bottom or the ad, :Ml's. Davis testified (Tr. 245) : "1 can t answer that because 1 don t understand what that means." She testified on cross-examination that her opinion Gianfs disclaimer does not in any way ameliorate the deception in the advertisements.

~1rs. :Mary I~. Hunt testified (Tr. 250) that Giant advertisements Ineant to her that Giant sells the Toastmaster toaster for $14.47 and other stores se.ll it for the manuracturer s list price or $21 (CX-8). :Miss Dorothy Bonsall (Tr. 258) testified "with respect to the Toastmaster toasters advertisement in CX-8 that the $14.47 price is the sales price and that the article is supposed to sell for the $21.00 list price. )1:rs. Bonsall stated on cross-examination that she would not ordinarily, in reading Gianfs ad, pay any attention to the fine, print diselaimer on CX- , and that the disclaimer was, as far as she "Ins :concerned double talk" (Tr. 266).

_ ____ GIANT FOOD, INC. 337 326 Initial Decision ~Iiss Elsie 'Vilkerson (Tr. 269) testified with respect to CX-8 that the advertisement. for the toaster for $14 by Giant was "a great saving over the regular price that it sold for of $21-something." Miss VV'ilkerson, on cross-examination, testified (Tr. 283): "'Veil, on an ad, if I see the two figures and it has the manufacturer s list price or suggested list price I would think that it was normally sold at that price and whatever the other figure was, the. lower figure, was my saving by buying it through the Giant Food Store.

The testimony or each and all or the above witnesses makes it abundantly clear that the public was deceived by Giant advertisements into believing that the prices at which articles were sold by Giant represent a saving from the manufacturer s list price which was published in close proximity to the sales pric~, Lawrence Solomon of Giant's staff, admitted (Tr. 9-17) that Giant had used the term "regular price" as a comparative price in its advertisement when in fact this was not the price at which that artieIe had been sold by Giant in the recent, regular course or its business. Around October 1, 1959, the Use of the term was abandoned. There :is no evidence in this record to justify a finding that. the deceptive use of the words "regular rormer" or "usual" or synonyms therefor by Giant as a comparative price in its advertisements will not be resmned unless the practice is proscribed by a cease and desist order. It is probable even though irrelevant, and not proven in this record, that a few retailers in Giant's trade area do and did sell the advertised articles at the manufacturer s list price. The greater weight and preponderance of the evidence is to the contrary. 11. Giant has placed in the record as exhibits certain items of housewares, electrical appliances (and sales slips thereror). A representative or Giant testified that he purchased from The B. F. Goodrich Store, 350'0 North Fairfax Drive, Arlington, Virginia, and the Firestone Stores, 1100 North Hig~lland Street, Arlington, Virginia, during the course of this proceeding sneh items for the prices stated opposite the item:

14C36 Mixer S.B______------------------------------------------ $46. 1--14C35 ~lixer S.B______------------------------------------------- 37. 95 1--14A162 Coffee ~laker S.B______----------------------------------- 27. 14A364 Fry Pan, SB Large______--------------------------------- 23. 14C38 G.E. ~fixer______-------------------------~---------------- 19. 1--14A168 G.E. Peek Brew ------------------------------------------- 19. 14A17 SU Beam Toaster--_____----- 29. 95 Giant offered this evidence to prove that it was possible to buy the n,rtieIes advertised by it for the manufacturer s list price. , However Initial Decision 61 F.

Giant' s evidence does not support such finding. The best evidence' would have been to produce for interrogation representatives from Goodrich and Firestone who, could have testified from their own knowledge as to its sales practices and who would have been available' for cross~examina tion.

12. Representatives for the Hecht Company, S. I(ann s and "\Voodward & Lothrop (whom the examiner hereby finds to be competent and qualified to testify thereon) have testified, and that testimony is not contradicted, that the items advertised by Giant were nor usually and-CTIstomarily sold at retail in the recent, regular course of business in the trade area involved at the manufacturer s list prices advertised by Giant, but were sold for less. Allen Schweitzer, small appliance buyer for the Hecht Company, Mrs. Ethel Pillsbury, buyer of small appliances for I(ann, ~laurice L. Shofnos, buyer or housewares for Kann Renato De Vito, electrical appliance buyer for 1Yoodward & Lothrop, and Elmer N. Cornwell, buyer or household goods and kitchen utensils for "\Voodward & Lothrop, all testified to ,this effect. The exa.miner takes judicial notice or the fact and finds that vVoodward & Lothrop, Hecht' , and I(ann s operate in the aggregate more than 12 large modern department stores in the "\Vashington Metropolitan Area. These stores sold at less than manufacturer s list price the same items or electrical appliances and housewares which were advertised and sold by Giant.

The merchandise here involved was not sold at the "regular" or manuracturer s list prices" used in Giant's advertisements in the recent, regular course of business in the trade area involved either by Giant or by most or its competitors.

13. Giant acquired 100 shares or the common capital stock of Armour & Company on March 21, 1958, and continues to hold said shares. Armour & Company is a n1eat packer, as defined by the Packers & Stockyards Act or 1921, as amended. There is nothing in this record to indicate that Giant operates its Ineat departments any differently from the manner in which other large grocery chains and supermarkets (including but not limited etc..to I(roger, Safeway, A & P, Acme, Grand Union, Food Fair, operate their meat departments in Giant' s trade area. 14. Giant has voluntarily filed with the U.S. Department or Agriculture certain forms which are prescribed by that Department for business concerns seeking to register with that Department pursuant to the Packers & Stockyards Act or 1921, as amended (7 U. C. 191 et seq.

GIANT FOOD , INC. 339 326 Initial Decision 15. Giant is not a packer under the Packers & Stockyards Act of 1921, as amended, so as to be exempt from jurisdiction or the Federal Trade Commission in connection with the raise, misleading and deceptive acts and practices charged against it in this complaint. (See Examiner s Ruling dated July 15, 1960, on Respondent's Special Defenses; also the Commission s Opinion in Docket No. 6459, Giant Food Inc., which is incorporated herein by reference and specifically made a part hereor.

16. Giant competes with many other business establishments in its trade area in the sale or durable consumer goods, smail housewares and electrical appliances. Among Giant's cO111petitors are: George Todd' , Western Auto, Firestone, Goodyear, :Montgomery Ward Sears Roebuck, Peoples Hardware, n::ay-Frank-Ross, Hecht's (May Dept. Stores Company), ",Voodward & Lothrop, S. I(ann & Sons Co. Lansburgh' , Dalmo, Slattery, Drug Fair, Peoples Drug Stores "'V. Bell & Company, Fields & Company, Spiegel's. Giant also eompetes with wholesale distributors who retail small housewares and eleetrical appliances to employees of business firms through private arrangements with such firms. Giant competes with small independent neighborhood business concerns in the sale of small housewares and electrical appliances.

17. l\fanufacturers of durable goods, including small housewares and electrical appliances, publish docun1ents which they distribute to customers in which they designate the price at which such manuracturers suggest that their merchandise be sold at retail. These prices are interchangeably referred to as "manuracturer s list price manufacturer s suggested retail price suggested retail price " "list price or some abbreviations or synonYl11S therefor. These list prices are sometimes made known to retailers by means of catalogues, price sheets, and price lists. They are also in many instance.es attached by the manufacturer to the article to be sold by pretieketing sneh artiele with the suggested retail price. Except in those jurisdictions in which Fair Trade laws are in effect and are enforced by Ithe courts, the establishment and publication of a manufacturer s list price ereates no legal obligation upon the retailer to sell the article at the manuracturs suggested list price, whether that price is stated in a list, catalogue or by preticketing.

18. The manuraeturers advertised the meehandise here involved in the vVashington l\fetropolitan Area with the manufacturer s list price stated, in publications or national circulation such as Lire ~IcCan' , Look and The Saturday Evening Post. 19. The Eled.ric Institute or ",Vashington maintains a display room at Tenth & E Streets, N.'V. , V\Tashington, D. , in which many types Initial Decision 61 F.

or electrical appliances are displayed and demonstrated to the consuming public in the 1Vashington lVIetropolitan Area. The Institute isa trade association, the members or which include all segments of the ele~ctI'ical' applianc.e industry, that is manufactllrers' and distributors as well as retailers, Giant is not a member or the Institute. Attac.hed to the appliances displayed at the Institute there is ordinarily a tag upon which there is inscribed, among other things, a description or the article, the model number, catalogue number, and identifying marks other than the manufacturer s list. price or such atticle. The manufacturer s list prices shown upon the applianc.es displayed in the Institute are higher than the prices at which such artic.les are usually and customarily sold in the 1Vashington lVIetropolitan Area, and the Institute does not in any way represent that ' the list pi-ice shown is the usual and customary retail price in the 1V ashington ~fetropolitan Area.

20. l\fany of Giant's retail customers and many of the customers of its competitors live or work in l\1maryland, Virginia, or the District of Columbia but shop outside or the area in which they live or work. 21. In the conduct or its business at all times relevant to this proceeding, Giant has been in substantial competition in commerce with corporations, firms and individuals in the sale or products or the same general kind and character as those items of housewares and electrical appliances which are the subject matter or this proceeding. 22. Giant's use or raise, misleading and deceptive statements and representations in its advertisements has had, and now has the capacity and tendeney to mislead members or the purchasing public into the erroneous and mistaken belief that said statements and representations were, and are, true; and into the purchase of a substantial quantity or Giant's products by reason or said erroneous and Inistaken belief. As a consequence thereof, substantial trade in commerce has been, and is being, unra.irly diverted to Giant from its eompetitors and substantial injury has thereby been, and is being done to competition In con1merce.

23. The deceptive acts and practices of Giant which are described in this opinion were, and are, prohibited by the Federal Trade Commission Aet and the public interest requires that they should be proscribed by an appropriate cease and desist order. DISCUSSION Two separate price deceptions are involved in Giant's advertisements in this record, and they require the application, in part, of slightly differing ratio decidendi:

.. \.. y.

GIANT FOOD , INC. 341 326 Initial Decision The words "usual regular " Or "formerly,~' or even the words our price" all imply that the price to which these 'words are applied is the price at which Giant usually and customarily sold the identical merchandise in the recent, regular course of its business in the trade area involved. See CDll1mission s Opinion of January 17, 1961 , in Docket No. 7657 A7'7wlcZ-,Constable Corp.; Bankers Securities C07' Docket No. 7039; FTC v. ~landel Bros., Inc. 359 U.S. 355 (1959); The Fai7' FTC 272 F. 2d 609 (C.A. 7) ; and Bond Stores, Inc. Doeket No. 6789, Commission s Opinion of January 7, 1960. The record jn this ease is undisputed that these words were deceptively used by Giant in the light of the relevant legal precedents. How~ ever, Giant seeks to avoid the consequences of this deceptive adver, tising saying, "\V e ll never do it again. This is characterized as , plea of abandonment. In order for such plea to be allowed, there must be evidence in the record which would support it finding that the respondent will not. resume such practices at a later date. There is no evidence in this record to support such a finding and the plea of abandonment is rejected because the facts do not support such a plea nor do the accepted legal precedents. See A.'J' g1lS-Ca7nera, Inc. 405 (1954) ; Dietzge' n Co. v. FTC 2 F. 2d321 (C. . 7, 1944) ; Fh' estone Tite and Rubbe7' Co. Docket No. 7020; lV ild7'oot Co. , Inc. 49 F. C. 1578 (1953); Bell limcell 00. Docket No. 6729; United States v. lV. T. Gnt.nt Co. 345 U.S. 629 (1953). See also Commission s Opinion of :March 9, 1961, in Docket No. 7660 Colgate-Palntoll~' ve Co.

decision by another hearing examiner of this Commission on June 28, 1961, in Docket K o. 8134 George s Radio Television Co. et ((Z.. concludes:

The use of a. manufacturer s suggested retail price in advertising in commerce when such price is placed in juxtaposition with a lower price, constitutes an unfair or deceptfve act or practice where such suggested retail price is neither the usual and customary price at which the advertiser sold in the recent regular course of business nor the usual and customary price of a fair cross section of other comparable stores in the trade area. * * * That examiner issued a cease and desist order and the matter is now on appeal to the Commission. This examiner coneurs in the ratio decidendi in the George case, and adopts it legal yardstieks for measuring the deception in the use of manufacturer s list prices a comparative price in advertising.

It is helpful to measure the deception in using manufacturer s list prices for comparison in advertising by restating certain legal shibboleths:

728-122~65---y.

Ini tial Decision 61 F.

It is in the public interest to prevent the sales of commodities by the use of false and misleading statements and representations. Capacity to deceive and not actual deception is the criteria by which practices are tested under the Federal Trade Commission Act.2 To tell less than the whole truth is a well-known method of deception; and he who deceives by resorting to such method cannot excuse the deception by relying upon the truthfulness per se of the partial truth by which it has been accomplished.s "A statement may be deceptive even if the words may be literally or technically construed so as not constitute a misrepresentation * . The buying public does not weigh each word in an advertisement or misrepresentation. It important to ascertain the impression that is likely to be created upon the prospective purchaser." 4 Advertisements are not to judged by their effect upon the scientific or legal mind, which will dissect and analyze each phrase, but rather by their effect upon the average member of the public who more likely will be infiueneed by the impression gleaned from a first glanee. There is ample testimony in this record as to the meaning of the representations in the Giant advertisements but even had there not been any such consumer testimony such omission would not materially affect the results.6 The law is violated if the first contact or interview is secured by deception 7 even though the true facts are made known to the buyer before he enters into the contract for purchase. In Olin ton Watch 00. , et ale FTO 291 F. 2d 838 (June 19, 1961 A. 7), which was a preticketing case, the court inter alia stated: Misrepresentation as to the retail value of merchandise by means of attached, fictitious price and deception as to savings afforded by the purchase of the product at a substantially lower price than that indicated thereon con. stitute unfair methods of competition. Nil' esk Industries, Inc. v. Federal Trade Oommission. 278 F. 2d 337, 340 (7th Cir. 1960), cert. denied 364 U. S. 883; Bar. sam Distributors, Inc. v. Federal Trade Commission 263 F. 2d. 396, 397 (2d air. 1959).

The explosive growth of "Discount" establishments in our national business life has, along with other drastic changes in retailing methods, posed as never before the importance of maintaining truthful advertising, particularly in the area of the use of comparative prices. Parke, Austin Lipscomb v. FTC, 142 F. 2d 437 , citing L. E. Mayer Co. v. FTC 97 F. 2d 365, 367.

Goodman v. FTC, 244 F. 2d 584, 604 (C. A. 9th 1957). sp. Lorilla,' d Co. v. FTC, 186 F. 2d 52, 58 (C.A. 4th 1950). Kalwajtys v. FTC 237 F. 2d 654, cere. den. 352 U. S. 1025. Ward Laboratories, Inc. et al. v. FTC 276 F. 2d 952, 954 (C.A. 2d 1960). Charles-o(-the-Ritz v. FTC, 143 F. 2d 676 at 680.. FTC v. Standm"d Education Society, 302 S. 112., 25 F. C. 1715. Progress Tailoring Co., et al. v. FTC 153 F. 2d 103, 104, 105 (7th Clr. GIANT FOOD, INC. 343 :326 Initial Decision The entire thrust or the "Discount" idea is that,the 180 million a verage Americans who buy at discount-' houses are getting a discount from Something. Just what is being discounted ~ The same legal principles which have been restated above will eventually have to be applied with metieulous care to discount house advertising if the Congressional intent with reference to deceptive practises is to be carried out. But that is not before us at this time. It serves only to emphasize the basic problems posed by the use of comparative pricing in advertising, regardless of whether the comparative prices are designated as "regular usual " "formerly," or manufacturerlist. " It should be further noted that there is presently pending before a hearing examiner of this Commission, Docket No. 8232, The Regina Corporation, et aI., in which the companion problem is presented of whether the manufacturers who promulgate manufacturers' list prices do not furnish the means and instrumentalities by which the retailer is able to practice the deception which has boon proved against Giant in this record.

The facts in this record measured against the applicable law justify the following:

CONCLUSIONS 1. The Federal Trade Commission has jurisdiction over the parties and the subject matter of this proceeding, and this proceeding is in the public interest.

2. Counsel supporting the complaint has proven the material and essential allegations of said complaint by a preponderance of the reliable, probative and substantial evidence in this record. 3. Giant's advertising practices as proven in this record are false misleading and deceptive within the intent and meaning of the Federal Trade Commission Act as amended, and ought to be proscribed. It is ordered That respondent, Giant Food, Inc., a Delaware corporation, and its officers, agents, representatives, and employees directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of household electrical appliances, kitehen utensils, or any other merchandise, in commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

(1) Representing in any manner that certain amounts are the regular and usual retail prices of merchandise when such amounts are in excess of the prices at which such merchandise has been usually and regularly sold by the respondent at retail in the recent, regular course of its business;

Opinion 61 F.

(2) Representing, through the use of the words "manufacturer s list price suggested list price " "factory suggested retail price': or words of similar import and meaning, or in any other manner that any amount is the usual and customary retail price of n1erchandise, ,vhen such amount is in excess of the price at "which said merchandise is usually and customarily sold in the trade area or areas where the representation is made; (3) Representing, directly or by implication, in its advertisements, or otherwise, that any of its prospective retail customers ~an save the differencebe,bveen respondent:s stated sales price and any other pi-ice used for comparison with said sales price unless the comparative price used represents the price at which said Inerchandise is usually and customarily sold at retail the trade area involved, or is the pric.e at ,,"which respondent sold said merchandise in the recent, regular course of its business. OPINION OF THE CO:\DIISSION By ELl\IAN (/Olnnvi8sione1' This is an appeal from a hearing examiner s initial deeision that respondent, a corporation engaged in the sale of food and other merc.handise through a chain of more than 50 retail stores in :Maryland, Virginia, and the District of Columbia, has violated Seetion 5 of the Federal Trade Commission Act (38 Stat. 719, as amended 15 U. C. 45) by publishing advertisements setting forth comparative prices in such a way as to mislead and deceive prospective purc.hasers as to the savings to be made by purchasing at respondent'stated prices. Among many other products, respondent markets a variety of electrical appliances and kitchen utensils. In advertising these products in newspapers having a wide interstate circulation in the 'Yashington , metropolitan area, respondent has frequel1tly compared its actual selling prices with other prices sty led by the designations "Regular l\rlanufacturer s List " and words of similar import. For example: E Steam, Spray & Dry Iron #F61 Reg. Price $21.95. Adv. Price $12.97. Sunbeam Large Fry Pan Reg. Price $23.97. Adv. Price $14. Regina Electric Broom #600-24.97 Adv. Price. Reg. Price $49. E. Automatic Toaster $13.27. ~1fg. List $19. Sunbeam Handmixer-$13.6:3. mfr. list $21.00 Regina Polisher & Floor Waxer-$34.97. Mfg. list $64. In the advertisements in which respondent used a "manufacturer list pric.e" as the basis for comparison, the following disc.laimer appeared at the bottOl11 of the ad in fine print: GIANT FOOD , INC. 345 326 Opinion The manufacturer s list prices referred to in this advertisement are inserted to assist you in identification of the products and to allow you to compare accurately the selling prices offered here and else,,'here. The use of the term manufacturer s list or similar terminology in our achertising is not to imply that Giant bas ever sold the advertised products at such list prices or that the products are being offered for sale general,ly in the area at such list prices. :Many reputable national brand manufacturers issue to retailers, from time to time, suggested retail list prices that are intended to afford reasonable profits to all retailers based upon their traditional costs of marketing. Giant's employment of self-servi-ce, supermarl~et techniques enables it usually to sell below suggested list prices. Consumers, however, have come to recognize most brand merchandise by the list prices, rather than model numbers. Consequently Giant includes these manufacturer s list prices so that you may mal~e simple, intelligent comparisons between our selling 11rices and those of others. The hearing examiner found that through the use of the advertising described above, and other similar representations, respondent had created the erroneous impression that amounts designated "regular former " or "usual" ",ere prices at which respondent had sold the products in the recent, regular course of business; that amounts designated ":M::fg. List :Mfr. Suggested List " and ":Thfanufacturer s List Price" were prices at ",which the products ",ere usually and customarily sold by other retailers in the recent, regular course of business in the trade area; and that, by purchasing the advertised articles from respondent, its customers would save the difference bebyeen its current prices and the higher comparative prices. The examiner l rejected respondent' s elaim that its lengthy diselaimer cured any tendency.y that its "manufacturer s list pric.e" advertising might deceive the reader and he denied respondent's defense of abandonment in connection ,with its "regular price" representations.

The principal issue contested is the meaning of the term "~1anufadurer s Suggested List Price" and expressions of similar import. Respondent contends that they mean simply "list price suggested by the manufacturer;" and that to interpret them, as the exmniner did is "to mean "usual and customary retail price" in the trade area redefinition ofcurious and absurd concept" involving revision or words which have a commonly accepted meaning in the English language." (Respondent's Brief, p. 3) The Commission agrees with the examiner and adopts his finding similar ex-as to what ":Manufacturer s Suggested List Price" and pressions may be understood by many members of the public to mean. In attempting to ascertain the impression which advertising makes on the general public, the Commission does not sit in an ivory tower , p, , p Opinion 61 F.

perusing dictionaries and encyclopedias for literal or technical definitions. We try to put ourselves, as much as possible, in the position of those to whom the advertising is addressed. Some may read the advertisement carefully; others may give it no more than a glance reading as they rW1. More than two centuries ago Addison observed that "The great art in writing advertisements is the finding out a proper method to catch the reader s eye (The T atler, No. 224). The art may perhaps have been perfected since then, but its essence remains the same.

Accordingly, as we have recently stated The Commission is concerned with protecting the trusting as well as the suspicious, the casual as well as the vigilant, the naive as well as the sophisticated. Oolgate- Palmolive 00. Docket 7736 (59 F. C. 1452J, decided December 29 1961, opinion 1464. The Commission inay insist "upon a form of advertising clear enough so that, in the words of the prophet Isaiah wayfaring men, though tools, shall not err therein. General Motors Oorp. v. Federal Trade 007n1nission 114 F. 2d 33, 36 (C.A. 2), cert. denied 312 U.S. 682. The likely impact on those who view the advertising even casually or distracted by other activities must be taken into account. Oolgate-Palmolive 00., supra opinion 1463. Thus it is immaterial here that, as respondent contends, the words Manufacturer s Suggested List Price" might be taken literally as meaning that the price is merely one suggested by the manufacturer and having no relation at all to that actually charged retailers. what matters is the meaning which that expression and others like it have to the man in the street or the housewife scanning the ads as she prepares her shopping list. For the Commission this is not a new problem. In a long series of decisions which have been incorporated in "Guides Against Deceptive Pricing," adopted October 2, 1958, we have held that the meaning which many consumers nowadays ascribe to the term ":M:manufacturer s Suggested List Price" and the like is that it represents the "normal " the "going," the "generally prevailing," or the "usual and customary" price at which the product is being sold in the area.

1 See Nationa.l Silver Company, 27 F. C. 596; Fh' cstone Tire Rubber. 33 F. 282; Goodyear Tire ancl Rubber 00. 33 F. C. 298; B. F. Goodrich 00., 33 F. C. 312; Sears, Roebuck 00., 33 F. C. 334; Western Auto Supply 00. 33 F. C. 356; Plaza Luggage Supply 00., 44 F. C. 443; MalDwell Dis,tributing 00., 54 F. C. 260; Morris Lober Associates, Inc., 55 F.T. C. 209. The principle of this line of cases was recently reaffirmed in George s Radio and Television 00., Docket 8134 (60 F. C. 179), January 19, 1962, pp. 192, 193, in which the Commission stated:

The representation 'Mir s Sug. List' creates the impression that there is a usual and customary retail price for the product in the trade area, and that that price is the specified 'Mfr s Sug. List' price. 'The soundness of this interpretation is settled law. See , GIANT FOOD, INC. 347 826 Opinion Consumers, or at least a substantial number of them, naturally and justifiably presume that a manufacturer determines a "suggested" resale price not in the abstract but on some concrete basis related to the actual conditions existing in the retail market for his product. Rightly or wrongly, many people believe that a manufacturer s "suggested list price" expresses his considered and expert judgment as to the approximate retail value of his product, a judgment which neeessarily would be inexpert and unsound if it did not in fact reflect his knowledge of what the product actually and generally does sell for in the area.

Accordingly, where the advertised "manufacturer s suggested list price" is not in fact the usual or regular price generally prevailing in the area, the public may be misled. As we recently had occasion to point out in Rayew Corporation Docket No. 7346 (60 F. C. 664), decided April 2, 1962, opinion, p. 676 In appraising the capacity of a business practice to deceive and mislead, it is not the understanding or purpose of the manufacturer or distributor or dealer that is of critical importance; rather, it is the public impression created by that practice. In finding a public understanding that the term "Manufacturer Suggested List Price" reflects the usual and customary retail price the trade area, the examiner stated that this finding rested on "substantial evidence in the form of testimony of consumer witnesses. (Initial Decision, p. 335.) If anything, the examiner has engaged in understatement. The consumer testimony supporting his conclusion is not merely "substantial;" it is overwhelming. Olinton Watch CO. V. Federal Trade Commission, 291 F. 2d 838 (7th Cir. 1961) : Baltimore Luggage Co. v. Federal Trade Commission 296 F. 2d 608 (4th Cir. 1961.)" The position taken in George was reiterated in RayeiC Corp., Docket 7346 (60 F. 664)., April 2, 1962, and Regina Corp., Docket 8323 (p. 983 herein 1. Oct. 11 , 1962. The Commission s authority-indeed, its responsibility-to make the factual determination of the impression on the public that advertising creates is equally well settled. See, g., Ni,'esk Industries, Inc. V. Federal Trade Commission 278 F. 2d 337 (C.A. 7) : Kalwajtys v. Federal Trade Commission, 237 F. 2d 654 (C. A. 7) : Rhodes Pharmacal Co. v. Federal Trade Commission 208 F. 2d 382 (C.A. 7). Further, it is not necessary to prove actual deception but only tendency or capacity to deceive. g" Royal Oil Corp. v. Federal Trade Commission 262 F. 2d 741 (C.A. 4) ; Charles oj the Ritz Distributing Corp. V. Federal Trade Commission, 143 F. 2d 676 (C.A. 2). 2 In referring to the consumer testimony in the record here, we do not imply that was either necessary or desirable that such evidence be adduced. On the contrary, the Commission s determination of the meaning of expressions in advertising like "manufacturer s list price" need not be based on specific supporting evidence in each proceeding that is brought. "This is an area of administration that has evolved to a point at which the accumulated experience and knowledge of the Commission may properly be invoked in exercising its fact-finding function. '" '" '" Further, the requirement that such proof be adduced anew in each case entails, as it did here, the introduction of an abundance of consumer testimony, needlessly delaying the progress of the proceedings and taxing the resources of respondents as well as the Commission. Manco Watch St,'ap Co., Docket 7785 (60 F. C. 495), decided March 13, 1962, opinion, pp. 511, 512. , , , , Opinion 61 F.

One witness, for example, was asked 'what the advertisement "Toastmaster toaster, $14.47, l\fanufaeturer s list $21.00 " meant to hiin. I-Ie replied 1Vell, by this I would think that you are selling it for $14.47 where it normally sells lor $21. That this is a bargain, it is a savings. Another witness "as questioned 'with reference to a comparison between respondent's price of $34.97 for an item and a manufacturer list price of $64.50. He stated To me it implies the normal selling price of the article. Counsel asked 1Vhat is the normal selling price of the article?" The 'witness answered 1Yell, the manufacturer list as stated here as $64.50.

secretary testified that an advertisement for the Cory knife sharpener at $8.97 with a manufacturer s suggested list of $19.95 meant to her "that they sell it at a lo"er price thnn any other retailing c.ompany would. Another witness, when asked about the Toastmaster toaster ad previously mentioned, testified as follows: Q. What is your impression from those prices? A. That $14 or whatever it was, would be what I 'yo111d pay if I went to that store.

Q. And how about the manufacturer s list? A. Some otherplace.

Concerning the same toaster ad, another 'woman expressed the belief that the manufacturer s list price "is the price that it sold at usual stores " while "$14.00 is the one that Giant is selling it for." Another testified, as to this ad, that the $21.00 list price is the price "the article is supposed to sell for * * * (eJvery,yhere." A typist, also asked about the toaster ad, answered:

'Yell, if I read the ad and was interested in the Toastmaster I would have thought that $14, whatever the figure was, was a great saying over the regular price that it sold for of $21-something. That would have been my interpretation of the ad.

Normally I would pay $21 or $22-whate,er it ,vas, and I was getting it atthe Giant for $14. It is apparent, therefore, that the hearing examiner s interpretation of the disputed language '\Ias fully justified by both the precedents and the evidence of rec.ord.

II.

1Ve also agree '\with the examiner that respondent's fine-print disclaimer, quoted above, was inadequate to correct the deceptive impression that may be created by its price representations. The examiner found that "very few if any of the persons ,yho would read Giant' advertisem:ents would take the trouble to, or did, read the fine print disclaimer. (Initial Decision, p. 334. ) This finding is supported by GIANT FOOD , INC. 349 326 Opinion consumer testimony. For example, one witness stated that the diselaimer was "not the sort of thing I would notice." He said he believed the Commission investigator wanted him "to read it much as I read any advertisement in the newspaper, and I didn t read it word for word and didn t examine the fine print. " Another witness, referring to the disclaimer in an ad shown her, said she "would not go reading real small print like down in that corner there. N or does respondent's disclaimer have the clarifying effect claimed for it even when carefully reac1. One witness stated that, even as qualified by the diselaimer, respondent's use of "manufacturer s list" would indicate that a saving was being made available. Another characterized the disclaimer as "a little unclear." A third agreed with respondent' s counsel that the diselaimer says that the advertisement does not mean that Giant has sold at the manufactlll~er s list price nor that the manufacturer s list price is the pric.e generally prevailing in this area " but she also stated "on the bottom it said that you c.an compare Giant' s prices with those of others which to me still suggests that they sell close to the manufacturer s list price but Giant still sells lower. Another witness testified that she did not "understand too much what it (i. respondent' s disclaimer) meant." Still another said of the disclaimer, "it was double talk to me. The last-mentioned characterization of the diselaimer is not surprising. One may well sympathize with its draftsman, who had a herculean if not impossible assignment set before him, comparable to drafting a brief arguing that "blaek" does not necessarily mean "black" and can also mean "white." The draftsman s problem, of course, arose from the fact that the Commission had already made abundantly cleaT its view that the term "manufacturer s list price may popularly be understood as meaning the generally prevailing price for the product in the area, and can truthfully be used as a basis for price comparison only when it is in fact that price. It was thus essential, for the draftsman s purposes, that the disclaimer should speeifically disavow any such implication. And this it does, in the middle of the paragraph:

The use of the term "manufacturer s list" or similar terminology in our advertising is not to imply that Giant bas ever sold the advertised products at such list prices or that the products are being offered for sale generally in the area at such list prices.

This statement-which, taken in itself, would be a caveat to the careful reader that he should not use the list prices as a basis for price comparison-is sandwiched, however, between two directly contradictory assertions in the same paragraph. At the beginning the reader g., ) ;

Opinion 61 F.

is told that the manufacturer s list pric.es are used in the ad "to allow you to compare accurately the selling prices offered here and elsewhere " and at the end that they are included "so that you may make simple, intelligent comparisons between our selling prices and those of others.

Thus, the disclaimer is indeed a curious composition, expressing par'VU1n in 1nu.lto. \Written in what laymen would derisively call lawyer s English " it is ineonsistent and contradietory in substance confusing if not unintelligible. Respondent states in one breath that. it does not imply that the list prices are being charged by other retailers, and in the next that it is publishing them so that readers may make simple, aecurate, and intelligent comparisons between its selling prices and those of others. Small wonder, therefore, that some readers thought it "a little unclear" and "double talk." If price comparisons are to be made in advertising a product offered for sale, protection of the c.onsuming public requires that they be clear and honest, not rigged or couehed in equivocations. It may be that where "list prices" are so used in advertising, the drafting of an effeetive diselaimer is not an impossible task, but its enormous, if not insuperable, diffieulties are certainly manifest. For one thing, such a diselaimer would have to be so lucid, simple, understandable, and complete as to prevent the advertising from supporting two interpretations, one of which is false and hence deceptive.3 Further, if the qualifying lallguage contradicts, rather than merely modifies, the price and savings representations made, it will fail adequately to avoid the possibility of deception.4 In any event, it is apparent that diselaimers such as that here cannot alleviate the misleading tendency of list-price advertising, where the "list price" is not in fact a reliable and truthful index of price comparisons.

Respondent states in its disclaimer, and argues here, that list-price advertising has utility as a means of product identification. This may be so, although to what extent is unclear from the record. But there are obviously other, readily available ways of identifying products that do not contain the same potentialities for consumer deception. For example, respondent's own advertising, quoted at the outset of this opinion, shows the high degree of specificity that c.an be attained through description by name and model number. oN ot only are there various alternatives to "list price" as means of proc1uet identification 3 Compare, Rhodes PIla,'macal Co., supra note 1; Fo,' d Motor Co. v. Fede,' Trade Commission 120 F. 2c1175 (C.A. 6), cert. denied 314 U. S. 668. 4 Compare. g., Unitell States Navy Weekly, Inc. v. Federal Trade Commission 207 F. 2d 17 (C. El Moro Cigar Co. v. Federa.l T,"ade Comntission 107 F. 2d 429 (C. 4),; Federal Tmde Co1nlltiss'ion v. Ar1ny and Navy Trading Co., 88 F. 2d 776 (C. _ GIANT FOOD , INC. 351 326 Opinion they are obviously already in extensive commercial use. In view of the serious deceptive potential of "manufacturer s list price" and similar expressions, and the apparent ease of identifying products by other nondeceptive methods, we think proteetion of the public requires that respondent be remitted to the latter course. III.

Respondent points out that proof of violation of Section 5 requires not only a showing that "manufacturer s suggested list price" is understood to mean "usual and customary retail price " but also that the manufacturer s list price advertised is not the usual and customary retail price. 'Vhile this is true, it does not help respondent; for the record shows a consistent disparity between respondent's advertised manufacturer s list prices and actual selling prices in the trade area. The testimony on this point was obtained from buyers of electrical appliances and housewares for the Hecht Co., S. I(ann Sons Co., and vVoodward & Lothrop, Inc, three large retail sales concerns operating department stores in vVashington, D. , and branch stores in nearby suburbs. These buyers testified that it was part of their job to compare the prices of their stores with those of competitive establishments, including major department and discOlmt stores. All considered respondent a competitor. A sample of the evidence they gave concerning their prices on items advertised by respondent appears in the table below.

Price s. Kann Woodward advertised Item Hecht Co. SODS Co. & Lothrop, as mfr' Inc. list by respondent E. spray, steam and dry iron, F-6L $14. 79 $14. 79 $14. 97 $21. 95 E. portable mixer----____-------- 15. 13. 19. E. Peek-a-Brew coffeemaker -- 15. 15. 19. Sunbeam large frypan- - -- - -- - - 17. 99 15. 15. 23. Sunbeam hand mixed______-------- 16. 14. 13. 21. 00 Sunbeam automatic electric percola tor - - - - - - - - - - - - - - - - - - - - - - - - - 21. 49 18. 27. Sunbeam toaster--_- - - -- - - 20. 22. 29. *One-quart covered saucepan__---- -- 4.

Two-quart covered saucepan- - 5. 87 One-and-one-half quart double boiler 7. 97 10. Eight-inch covered skillet_- - - 5. 87 Ten-inch covered skillet- - -- - -- -- -- -I 7. 17 10. Egg poacheL - - - - - 10. Six-cup coffeemaker____- - - 11. 50 Six-quart dutch oven___- --- 10. 10. 13. *This item and all following are Revere- ware. 5 It should be emphasized that neither in this case nor in previous decisions (see note Bupm)' does the Commission hold that list-price advertising is pe1' Be deceptive. As Is p. p., Opinion 61 F.

The striking contrast between the manufacturer s list prices, published by respondent and these actual prices charged by competing stores speaks for itself. However, respondent attacks the significance and validity of these figures on two grounds. It contends, first; that this evidence proves no more than that some retailers in the washington area sold the listed items for less than the manufaeiurer s suggested list prices. But it is difficult to know what more Commission counsel could have proved. Certainly, he did not have the burden of showing that no retailer in the trading area sold at the list prices. Commission counsel chose instead the eminently sensible course of questioning representatives of concerns competing with respondent on a large scale. l\loreover, he took eare to elic.it from all of the five buyer witnesses an explanation that they eontinually study the prices of other retailers in order to keep their prices "competitive. If the prices set forth in the table were thus de.emed "competitive" by these experts in the field, it is highly unlikely that a preponderant or even substantial segment of the ",Vashington retailing community ,vas cha.rging the inflated manufacturer s list prices advertised by respondent. ",Ve are satisfied from the evidence, therefore, that the manufacturer s list prices used in respondents advertising were not the usual and customary retail prices in the trading area. IV.

Alternatively, respondent argues that the evidence of all of the buyer witnesses should have been strieken from the record. A proper understanding of this contention requires a brief excursion into the chronology of the ease.

Examination of the five buyer witnesses took place on November 8 1960. After the first witness had testified, counsel for respondent also true of the comparable practice of manufacturer price preticketing, its legal significance "depends on the factual setting into which it is introduced. Rayex COI" note 1 sup,' a, opinion (60 F. C. 675). "The danger inherent in (list-price advertising) is that, whatever other purpose it may serve, it gil"es many consumers the impression that the stated price is the retail ,price generally prevailing in the area. * * * It may be. for example, that the industry in which the practice is undertaken is characterized b~' price rigidity or uniformity. That is to say, all dealers of a particular product ma~' be con ten t to sell at the same price. If a manufacturer of such a product pretickets (or lists) it at what is in fact the uniform retail price in the area, he is not engaging in false or misleading pricing. Id. p. 675.

C/., Co II BrlLmel', Sa.levi Co,' V. Federal Trade Commiss, ion, 198 F. 2di 404 (C.A. 2) in which the court rejected respondent's argument that the Commission s case was incomplete because only fourteen housewives were called to testify although thousands of sales were made.

&, , GIANT FOOD , INC. 353 326 Opinion contended that he could not. cross-examine effectively because he had not ooen given time to secure background information. Subject to this objection, however, he agreed to cross-examine to the extent that he was able to do so without further outside investigation. He aseertained that all of the buyer witnesses had obtained their information by reviewing company reeords, such as "ad books" and "order files. He therefore asked that such rec.ords be subpoenaed for use in crossexamining the witnesses. The examiner denied this request. Subsequently, respondent submitted a written n10tion to the examiner, asking that the originals or c.copies "of all documents, books records, memoranda or other doc.uments in the possession, custody, or control" of the companies employing the buyer witnesses "from which may be computed the prices at which the following items (i. those cover~d in ~their testimony) were advertised and/or sold" in their respective stores during the period November 1, 1958, to Decem,ber 31 1960, be subpoenaed. The motion was denied by an order of the hearing examiner dated February 13, 1961. However, respondent appealed this ruling to the Commission and, by order of April 20, 1961 the appeal was granted as to those records of the three department stores "which would disclose the prices at which certain merchandise had been sold by such stores.

The hearing examiner issued the subpoenas requested by respondent but the Hecht Co. (and its parent, The ~iay Department Stores Co. and ",Voodwarc1 Lothrop filed motions to limit them, claiming that they were in part irrelevant and unduly burdensome. The examiner granted these motions, stating that since the buyer witnesses had testified for the limited purpose of proving that the published,d manufacturer s list prices were higher than prices usually c.charged in the vieinity, respondent was entitled only to records bearing on that point. Again respondent appealed to the Commission. By order of August 4, 1961, the appeal was denied. The order recited that "the only issue to which said reeords are relevant is whether specific. articles merchandise were usually and customarily sold by the (department stores J at prices less than certain amounts designated in responde,nt' advertising as ' ~1fg. List' l\1fr. List' and 'l\Ianufacturer List Price and the subpoenas as limiteel "require the production of documents disclosing the prices at which said articles of merchandise were sold by the (department storesJ.

Opinion 61 F.

when the hearing reconvened on September 18, 1961, the three department stores had witnesses on hand to produce the material called for by the subpoenas, but counsel for respondent declined to take the return of the subpoenas on the ground that he had not been afforded adequate opportunity to cross-examine the buyer witnesses. He moved to strike the testimony of these witnesses and shortly thereafter rested his case.

The position taken by counsel for respondent had been debated at perhaps excessive length at a hearing before the examiner on June 19 1961. Counsel for respondent repeatedly protested that he should be able to confront the buyer witnesses with their companies' records not as witnesses of his own but as Commission witnesses whom he could cross-examine. Time and again the examiner responded by assuring counsel that it did not matter to him whose witnesses they were form. He explained that he was interested only in determining the truth and that, to that end, he would allow counsel to employ leading questions and otherwise treat his interrogation as cross-examination. He also stated that there was no basis for counsel's concern that would be "bound" by what the witnesses said if he called them as his own, since the case was being tried not before a jury but before an examiner whose sole interest was in an objective appraisal of the value of their testimony. These assurances were repeated at the September 18 hearing.

In summary, the matter comes down to this. "\Vhen the five buyer witnesses were examined by Commission counsel, counsel for respondent argued that he needed company records to conduct adequate crossexamination. The examiner denied this request but allowed such other cross-examination as counsel wished. The record shows that, as to four of the five, counsel thereupon made full and thorough use this opportunity. Only such light as could be provided by the department store sales records remained to be shee1. Subsequently the Commission ordered the necessary records made available, but the examiner had hitherto ruled cross-examination closed. when respondent' counsel protested, the examiner explieitly offered him all the privileges of cross-examination but he refused to proceed. We cannot escape the conelusion that respondent' s objeetion, viewed in the context and perspective of the entire record, is an insignificant quibble over a matter not affecting substantial rights or impairing the fairness of the proceedings. Respondent was accorded the usual right of cross-examination in every respect save one, and in that respect it was aecorded every right except the right to call it "cross-examination. It is perhaps difficult to see why the hearing examiner balked at using GIANT FOOD, INC. 355 326 Opinion the label "cross-examination" to describe the procedure he was allowing respondent to follow, when he was in fact withholding from it none of the substance of the right of cross-examination. But it is far more difficult to see why respondent refused to conduct such crossexamination when the opportunity to do so was made available to it in all except name. Accordingly, the contention that the testimony of the buyer witnesses should have been stricken, because respondent was denied adequate opportunity to impeach or controvert it, is insubstantial and must be rejected.

Respondent argues that the Commission cannot restrict its use of manufacturer s list price" and similar language to indicate only usual and customary price in the trading area while at the same time allowing another respondent to use "manufacturer s list price" if " is the current list price of the manufacturer for the identical merehandise to which such price is applied. Filderman Gorp. Docket No. 7572 C56 F. C. 685J, December 30 1959, p. 688. The contention is that "The Commission s action in Filde'l' Trwn estops the Comnlission from entering the Examiner s order against respondent." (Respondent' s Brief, p. 5. This argument has no merit, for a number of reasons.

First, it erroneously assumes that the Commission concern with the Filderman proceeding has ended. In fact, the Commission has issued another complaint (Docket No. 7878) against that firm dealing, inter alia with the same problem of "manufacturer s list price" representations. Second, the gravamen of the complaint in the first Filderman proceeding was that the "manufacturer s list" prices published were higher than the actual list prices obtained from the manufacturers. That is not the issue in dispute here. Third, the first Filderman proceeding ended in a consent order. It thus lacks the precedent value of a litigated case. Fourth, respondent cannot claim to have relied to its detriment upon the Commission action in first Filderrnan because the Commission decision was issued on Deeember 30, 1959, and many of the advertisements here in evidence were published months before that date. Finally, even if the facts were otherwise, respondent' s argument would be without basis in law. "The administrator is expected to treat experience not as a jailer but as a teacher. Slw/Lmnut Ass v. Secur"ities Exchange GO?n'Jnission 146 F. 2d 791, 796-797. (C.A. 1). The Commission is not "bound * * to deal with all cases at all times as it has dealt with some that seem Opinion 61 F.

comparable. Fede1' al 007n,munications 007nmi8sion v. WOKO, Inc. 329 U.S. 223 228.

VI.

The hearing examiner s order also prohibits respondent from representing "that certain amounts are the regular and usual retail prices merchandise when such amounts are in excess of the prices at which such merchandise has been usually and regularly sold by respondent at retail, in the recent, regular course of its business. (Initial Decision, p. 343). Respondent protests neither the finding that it has misused the term "regular" in the past nor the a ppropl'iateness of the form of order drafted to prevent future violations.s Rather, it contends that since it has abandoned the term and promised never again to use it except in eonformity with the Commission s standards this provision of the order is not in the public. interest and should not Issue.

That discontinuance of an unlawful practice, of itself, does not nec.essarily preclude the issuance of a c.ease and desist order is so well settled as to preelude further argument. il1a.1'lene's Inc. v. Federal Trade 0077'wnission 216 F. 2d 556, 559 (C.A. 7). This being so, it was incumbent upon respondent to show something more. It has failed to do so. It has not, to take examples from eases cited by respondent demonstrated that the order prohibits "practices long discontinued and as to which there is no reason to apprehend renewal Federal T1'ade 007n7nission v. Civil Service T1'ai-ning Blt.reau. 79 F. 2d 113 116 (C.A. 6), or that respondent "is no longer engaged in the industry in which the unlawful practice oceurred * * * National Lead 00. v. Fede1'al T7'Clde 007nmission 227 F. 2d 825, 840 (C.A. 7). The discontinuance relied on by respondent here did not oeeur until after it bec.ame aware that its use of the term "regular" ,vas being investigated by the Commission. J\ioreover, we are not assured by respondent that it will never use the term again, but only that it will not use it deceptively. \Vhen the very practic.e that has, until recently, been pursued in an illegal manner may otherwise be freely 7 And see, g., National Labor Relationa Board Y. National Contained/" Corp. 211 F. 2d 525, 534 (C.,A. 2)~; Davis, Administrative Law Treatise, 'Vo1. , pp. 526-527 (1958). The cases cited by respondent- United States v. W-illard Tablet Co. 141 F. 2d 141 (C.,A. 7) ; George H. Lee CO. Y. Federa,l Trade Commission 113 F. 2d. 583 (C.A. 8) ; United States Y. Pillma 40 F. Supp. 119 (D. C. S. D. Cui. ), aff' , 126' F. 2d 601 (C.,A. 9), ce/"t. denied 317 U. S. 637- are inappo site. All involve successive f'uits against the same party and are therefore concerned with the entirely different problem of es judicata as to which see Manco Watch Strap Co., Docket 7785 (60 F. C. 495), decided March 13, 1962, opinion, pp. 505-507, and authorities there cited. 8 See, , Bankers Sec/wines Corp. v. Federal Trad.e CO11wdssion No. 13, 538, Dec. 18, 1961 (C.,A. 3). upholding an order couched in substantially similar terms. , GIANT FOOD , INC. 357 , 326 Opinion resumed at any time, it is not only appropriate but necessary in the public interest to require by order that its future manifestations be fully in accordance with law. Finally, we note that the publication of "regular" prices in the past has been only one facet of a general comparative-price advertising progran1 conducted by respondent. That form of advertising eontinues, and an order designed to prevent deception of the public involved in such a program would be inadequate and incomplete without a speeifie provision dealing with improper advertising of "regular" prices. Unlike the cases cited by respondent, here "no assurance is in sight that (respondent J, if it c.ould shake (the Commission sJ hand from its shoulder, would not continue its former course. Seats, Roebuck ill Co. v. Fede1'al T1'ade c07n1nission 258 Fed. 307, 310 (C.A. 7). Respondent's plea of abandonment is thus out of place on the facts presented. VII.

Of respondent' s specific exceptions to findings of the hearing examiner, only two of significance have not yet been discussed. The first is that the policy of the Commission in regard to deceptive use of manufacturer s list prices runs counter to that underlying Congressional enaetment of the Automobile Information Disclosure Act. (72 Stat. 325, 15 U. C. 1231), which requires automobile manufacturers to put stickers on new cars showing suggested retail prices. To this it is enough toans,ver, as the Court of Appeals for the Fourth Circuit recently did, that the indicated Aet "is not a statute of general application, but applies solely and speeifieally to the sale of new automobiles. * * * Balti17Wre Luggage Co. v. Fede1Yll T1Ylde c07n1nission 296 F. 2d 608, 611 (C..A.. 4). After reviewing the pertinent legislative history, the court concluded It is quite obvious that the ~automobile Information Disclosure Aet was enacted in the effort remedy a situation peculiar to the automobile industry brought about by wide-spread fraudulent or deceptive practices principally indulged in by retailers." (IeZ. p. 612) Secondly, respondent argues that it "is exempt from regulation by the Federal Trade Commission inasmuch as it is a packer as defined by the Packers and Stockyards Act of 1921, as amended, 7 V. C. 181 et seq." (Respondent' s Exceptions to Initial Decision, p. 5. Respondent made the same argument in Giant Food, Inc. Doeket No. 6459 (58 C. 977J JlU1e 1, 1961. In two opinions canvassing the relevant ma- 0 To the same effect, see the Commission s recent decisions in Art National Manfacf1wers Distl'ibuUng Co. Docket No. 7286 (58 F. C. 719), "'lay 10, ID61 , p. 3; SHop-On Tools Corp. Docket No. 7116 (59 F. C. 1035). ::\0'\". , 1D61 , pp. 12-13. 72S-122~65---- ;358 FEDERAL TRADE COMMISSION DECISIONS 61 F. Findings terials (Dec. 19, 1957, and Feb. 10, 1959), the Commission concluded that respondent "clearly is not a member of the industry group whose :practices Congress sought to regulate" in the Packers and Stockyards Act. (Opinion of Dec. 19, 1957, 54 F. C. 1881, 1884. vVe reaffirm that conclusion. Respondent is not exempt from Commission jurisdiction. Giant Food, Inc. v. Federal T?'ade Oomrnission No. 16 507 (C. , June 14, 1962).

VIII.

Finally, respondent asserts that "The order proscribes conduct un- (related to that which the proof disclosed and to that extent is invalid." (Respondent's Brief, p. 6. This assertion is not supported by the record. The proof shows that by the use of "regular" and similar terms respondent has misrepresented its own prior prices; that by the use of "manufacturer s list" and similar terms respondent has misrepresented the prices of others; and that by the use of these practices respondent has misrepresented to prospective purchasers the :savings to be obtained by buying at respondent's advertised selling prices. These are precisely the misrepresentations prohibited by our order. A tailor.n1ade order such as this is well within the bounds of the Commission s authority "to preclude the revival of the illegal practices Federal Trade Oomrni8sion v. National Lead 00. 352 U. 419 430.

For the reasons stated in this opinion, respondent' s appeal is denied. The Commission is issuing its own findings as to the facts, conclusions :and order in accordance with the views set forth herein. Commissioners Anderson and H.:ern concur in the result. FINDINGS AS TO THE FACTS 1. Respondent Giant Food, Inc., is a corporation organized and ,existing under the laws of the State of Delaware, with its principal office at 6900 Sheriff Road, Landover, l\1d. 2. Respondent is primarily engaged in the retail sale of food and other merchandise through a chain of more than fifty (50) retail stores concentrated chiefly in the District of Columbia and in nearby counties of the States of l\1a.ry land and Virginia, but extending as far north Jts Baltimore, Mary land, and as far south as Richmond, Virginia. In the course and conduct of its business, respondent maintains a substantial course of trade in commerce, as "commerce" is defined in the Federal Trade Commission Act, and is in competition in "commerce 10 And see, e. , Federa.l Trade Commission V. Mandel B1' OS., Inc., 359 U.S. 385, 393; jli'ederal Trade Commission v. Ruberoid Co. 343 U.S. 470, 473. GIANT FOOD, INC. 359 326 Findings as defined in the Federal Trade Commission Act, with other firms selling similar products.

3. Included among the merchandise sold by respondent is a variety of small durable consumer goods known as housewares and electrical appliances, such as radios, toasters, waxers, irons, ironing boards, electric mixers, fry pans, percolators, coffee makers, skillets, clocks, pots and pans, and so forth. For the purpose of facilitating the sale of its housewares and electrical appliances, respondent has caused the publication in newspapers having a wide interstate circulation in the Washington, metropolitan area, of advertisements containing certain statements with respect to the pricing or its products. Among and typical, but not all inclusive, of such statements are the following: E Steam, Spray & Dry Iron #F61 Reg. Price $21.95. Adv. Price $12. Sunbeam Large Fry Pan Reg. Price $23.97. Adv. Price $14. Regina Electric Broom # 600-24.97 Adv. price. Reg. price $49. E. Automatic Toaster $13.27. Mfg. List $19. Sunbeam Handlllixer-$13.65. mfr. list 21.

Regina Polisher & Floor Waxer-$34.97 Mfg. list $64. 4. Through the use of these statements, and similar statements not here set out, respondent has ereated the impression that: (a) Amounts designated by the terms "Reg. price " "Regular price " and words of similar import were the prices at which the products advertised had been sold at retail by respondent in the recent regular course of business;

(b) Amounts designated by the terms "Mfg. List JHfr. List Nfanufaeturer s List Price " and words of similar import were prices at which the products advertised were usually and customarily sold at retail in the recent, regular course of business in the trade area; and (c) Purehasers of the products advertised were afforded savings .amounting to the differences between the actual selling prices and the higher comparative prices set out in the advertisements. 5. In fact, the impressions created by respondent's comparativeprice advertising are false, misleading and deceptive. (a) Amounts designated by the terms "Reg. price " "Regular price " and words of similar import were not prices at which the products advertised had been sold at retail by respondent in the recent regular course of business.

(b) Amounts designated by the terms "Mfg. List Mfr. List "~fanufacturer s List Price " and words of similar import were not prices at which the products advertised were usually and customarily sold at retail in the recent, regular course of business in the trade area. (c) Purchasers of the products advertised were not afforded savings Findings 61 F.

amounting to the differences between the actual selling prices and the higher comparative prices set out in the advertisements. 6. Respondent has offered an assurance that it will not heneeforth use "Regular price" and words of similar import except in a lawful manner. Respondent did not abandon such terms until after it was aware of the investigation leading to the issuance of the complaint in this case. Further, respondent does not promise total discontinuance of regular-price advertising and it forms only one facet of its more general practice of comparative-price advertising. Respondent's assurance of discontinuance is inadequate to protect the public interest. 7. In conjunction with its advertisements containing pricing representations designated by :NIfg. List " and words of similar import respondent publishes the following disclaimer in fine print at the bottom of each advertisement:

The manufacturer s list price~ referred to in this advertisement are inserted to assist you in identification of the products and to allow you to compare accurately the selling prices offered here and elsewhere. The use of the term manufacturer s list" or similar terminology in onr advertising is not to imply that Giant has eyer sold the adyertised products at such list prices or that the products are being offered for sale generally in the area at such li:;t prices. Many reputable national brand manufacturers issue to retailers, from time time, suggested retail list prices that are intended to afford reasonable profits to all retailers based upon their traditional costs of marketing", Giant's cmployment of self-service, supermarket techniques enables it usually to sell belm" suggested list prices, Consumers, however, have come to recognize most brand merchandise by the list prices, rather than model numbers, Consequently Giant includes these manufacturer s list prices so that you may make simple, intelligent comparisons between our selling prices and those of others, This disclaimer is inadequate to correct the misleading impression created by respondent's manufacturer s list price advertising. ~fany readers of the advertisements will neglect to read the disclaimer, and mnong those who do read the disclaimer, many will find it unclear and confusing. Further, comparative-price advertising is not. necessary to ide.notify products advertised. Other means of nondeceptive product identification are readily available and are being used by respondent and other sellers.

8. Respondent was aeeorded ample opportunity in substance and effect to cross-examine witnesses offered by counsel supporting the complaint. Its failure to do so in some instances is attributable its own choiee rather than to unfairness or defect in the hearing procedure. No substantial rights have been denied respondent; nor was the proceeding in any respect unfair to it. 9. Respondent has taken steps-including voluntary registration with the United States Depa-rtment of Agriculture and purchase of GIANT' FOOD , INC. 361 326 Final Order one-hundred (100) shares of the capital stock of Armour & Companyintended to bring it within the Packers & Stockyards Act of 1921 (42 Stat. 159, as aInended, 7 U. C. 181). However" respondent is not by reason of that Act exempt fronl the jurisdiction of the Comlnission. 10. In Filde')'l.man 001'1)" Docket No. 7572 (56 F. C. 685), December 30, 1959, p. 688, the Commission prohibited the use of "manufacturer s list price" unless "it is the eurrent list pric.e of the manufacturer for the identical merchandise to which such price is applied." For the reasons stated in the accompanying opinion, the Commission is not estopped by the Filde1'7nan case to enter an order prohibiting respondent from using "manufacturer s list price" and language of similar import except to indicate usual and customary price in the trade area. 11. Respondents use of false, misleading, and deceptive pricing . representations in its advertisements has had, and now has, the c.apacity and tendency to n1mislead members of the purchasing public into the mistaken belief that those representations were, and are, true, and into the purchase of a substantial quantity of respondent' s products by reason of that lnistaken belief. As a consequence, substantial trade in comnlerce has been, and is being, unfairly diverted to respondent from its competitors and substantial injury has been, and is being, done to c.ompetition in commerce.

CONCLUSIONS The Federal Trade Commission has jurisdiction of the subject matter of this proc.eeding and of the respondent. The aforesaid ads and practices of respondent, as herein folmd and as described in the accompanying opinion, were all to the prejudice and injury of the public and constituted unfair and deceptive acts and practices and unfair methods of competition in comlnerce in violation of Section 5 of the Federal Trade Conllnission Act.

FINAL ORDER It 'is onlered That respondent Giant Food, Inc., a Delaware corporation, and its officers, directors, agents, representatives, and employees, directly or through any corporate or other device, in connee- *NOTE-This order is issued subject to Section 4.22(c) of the Commission s Rules of Practice, which provides as follows:

In any case where the Commission s, decision contemplates the entry of an order against a respondent broader in its, prohibitions than those, if any, contained in the initial decision, or where the Commission s decision differs from the initial decision in any substantial respect affecting the scope or content of the order which should properly he entered, the Commission will cause a copy of its decision, together with a proposed form of order, to be served upon all parties. Within twenty days after service upon it of the Commission s decision find proposed order, the respondent may file with the Com- Final Order 61 F.

tion with the offering for sale, sale, and distribution of household electrical appliances, kitchen utensils, or any other merchandise, in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

(1) Using the words "regular price " or words of similar import, to refer to any amount which is in excess of the price at which such merchandise has been usually and regularly sold by the respondent at retail in the recent, regular course of its business; or otherwise misrepresenting the respondent's usual and c.ustomary retail selling price of such n1erchandise; (2) Using the words "manufacturer s list price suggested list price factory suggested retail price " or words of similar import, to refer to any amount which is in excess of the price or prices at which such merchandise is usually a,nd customarily sold in the trade area where the representation is made; or otherwise misrepresenting the usual and customary retail selling price or prices of such merchandise in the trade area; (3) Representing in any :manner that, by purchasing any of its merchandise, customers are afforded savings amounting to the difference between respondent' s stated selling price and any other price used for comparison with that selling price, unless the comparative price used represents the price at which the merchandise is usually and customarily sold at retail in the trade area inyolyed, or is the price at which such merchandise has been usually and regularly sold by respondent at retail in the recent, regular course of its business.

I t 'is jU'f'the1O O1odered That respondent Giant Food, Inc. , shall within sixty (60) days after servic.e upon it of this order, file with the COlwnis;sion a report, in writing, setting forth in detail the manner and found in which it has complied with the order to cease and desist. Commissioners Anderson and Kern concurring in the result. ORDER ENTERING :FINAL ORDER UNDER RULE 4.22(c) Respondent having filed, lU1der Rule 4.22(c) of the Commission Rules of Practice for Adjudicative Proceedings, exceptions to the mission its exceptions to any of the provisions of the proposed order, a statement of its reasons in support thereof, and a proposed alternative form of order appropriate to the Commission s decision. If no exceptions to the Commission s proposed order are filed within twenty days, such proposed order shall become the final order of the Commission. If exceptions to the proposed order are filed by the rei"pondent, counsel supporting the complaint may within ten days after service of such exceptions upon him file a statement in reply thereto, supporting the proposed order. The Commission will thereafter enter its final order.

ROYAL PUBLICATIONS , INC. , ET AL. 363 326 Complaint proposed order in this proceeding and a statement of its reasons in. support of those exceptions; and It appearing that respondent's exceptions and reasons in support thereof are without merit; and It further appearing that respondent has failed to submit a proposed alternative form of order, as required by Rule 4.22 ( c) , I t is o1'dered That the propoced order issued with the decision of the Commission in this proceeding be, and it hereby is, entered and. adopted as the Final Order of the Commission. IN THE MA'ITER OF ROYAL PUBLICATIONS, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF SEC. 2( OF THE CLAYTON ACT Docket 0-201. COmlJlaint, A1lg. 1962-Decision, Aug. 1962 Consent order requiring New York City publishers of "Cars" and "Swanklf magazines and paperback books, to cease violating Sec. 2 ( d) of the Clayton Act by making payments-and on the basis of individual negotiation and not proportionally equal-to certain operators of chain retail outlets in railroad, airport, and bus terminals and outlets in hotels and office buildings, while not offering such allowances on proportionally equal terms to all competitors of such outlets, including drug and grocery chains and other newsstands.

COMPLAINT The Federal Trade Commission, having reason to believe that the parties respondent named in the caption hereof and hereinafter more particularly designated and described, have violated and are now violating the provisions of subsection (d) of Section 2 of the Clayton Act (U. C. Title 15, Sec. 13), as amended by the Robinson-Patman Act, hereby issues its complaint stating its charges with respect thereto as follows:

PARAGRAPH 1. Respondent Royal Publications, Inc., is a corporation organized and doing business under the laws of the State of New York, with its office and principal place of business located at 26 ,Vest 47th Street, New York, N.Y. Said respondent, among other things, has been engaged and is presently engaged in the business of publishing and distributing various publications including magazines under copyrighted titles including "Cars" and "Swank". Respondent' s sales of publications during the calendar year 1960 exceeded three hundred fifty thousand dollars.

Complaint 61 F.

PAR. 2. Respondent Lancer Books, Inc., is a corporation organized and doing business under the laws of the State of New York, with its office and principal place of business located at 26 'Vest 47th Street New York, N.Y. Said respondent, among other things, has been engaged and is presently engaged in the business of publishing and dispaperback books under copyrightedtributing various publications ineludingtitles. , PAR. 3. Respondents 'Valter Zacharius, Irwin Stein and Seth J. Solomon, all individuals, are President, Vice President and Treasurer respectively, of respondent Royal Publications, Inc., and Secretary, President and Treasurer, respectively, of respondent Lancer Books Inc. They formulate, direct and control the acts and practices of said corporate respondents and their address is the same as that of the corporate respondents.

PAR. 4. Publications published by respondents Royal Publications Ine., and Lancer Books, Inc., are distributed by said respondents to customers through their national distributor, Publishers Distributing Corporation, hereinafter referred to as PDC. PDC has acted and is now acting as national distributor for the publications of several independent publishers, including respondent publishers. PDC, as national distributor of publications published by said c.corporate respondents and other independent publishers, has performed and is now performing various services for these publishers. Among the services performed and still being performed by PDC for the benefit of these publishers are the taking of purchase orders and the distributing, billing and collecting for such publications from customers. PDC also has negotiated various promotional and display arrangements with the retail customers of such publishers with the knowledge and approval of such publishers, including said responden ts.

In its c.apacity as national distributor for said respondents, in dealing '\with the c.customers of respondents, PDC served and is now serving as a conduit or intermediary for the sale, distribution and promotion of publications published by respondents.

m. 5. Respondent Royal Publications, Inc., and Lancer Books Inc., through their conduit or intermediary, PDC, have sold and distributed and now sell and distribute their publications in substantial quantities in commerce, as "commerce" is defined in the Clayton Act, as amended, to competing customers located throughout various States of the United States and in the District of Columbia. PAR. 6. In the course and eon duct of their businesses in commerce respondents Royal Publications, Inc., and Lancer Books, Inc., have paid or contracted for the payment of something of value to or for ROYAL PUBLICATIONS , INC. , ET AL. 365 363 Complaint the benefit of some of their customers as compensation or in consideration for services or facilities furnished, or contracted to be furnished by or through such custOlners in connection with the handling, sale or offering for sale of publications sold to them by respondents. Such payments or allowances were not made available on proportionally equal terms to all other customers of respondents eoll1peting in the distribution of such publications.

PAR. 7. As an example of the practices alleged herein, respondent Royal Publications, Inc., has made payments or allowances to certain retail customers who operate chain retail outlets in railroad, airport and bus terminals, as ",veil as outlets located in hotels and office buildings. Such payments or allowances were not offered or otherwise made available on proportionally equal terms to all other customers (including drug chains, grocery chains and other newsstands) competing with the favored customers in the sale and distribution of the publications of said respondent. Among the favored customers receiving payments in 1960 which were not offered to other competing customers in connection with the purchase and sale of respondent' publications were:

ppro.rim ate Customer: /IlOllllt Received Greyhound Post Houses, Forest Park, Ill___-------------------- 81 030. ABC Vending Gorp., Long Island City, N.Y_--_------------------ 365. Fred Harvey, Chicago, Ill-_____-------------------------------- 1 10:10. Barkalow Bros., Omaha, Nebr--_____---------------------------- 1 38. 1 Recei ved in 1961.

Respondent Inade said payments to its favored customers on the basis of individual negotiations. Among said favored customers such payments were not made on proportionally equal terms. As a further example of the practices alleged herein, respondent Lancer Books, Inc., has made payments or allowances to c.certain retail c.customers who operate drug chains. Such payments or allowances were not offered or otherwise made available on proportionally equal terms to all other customers (including newsstands, groc.ery cnains and other drug chains) competing with the favored customers in the sale and distribution of the publications of respondent publisher. Among the favored customers receiving payments in 1961 which were not offered to other competing customers in connection with the purchase and sale of respondent's publications were: Approximate Customer: Amolll1t Received Drug Fair, Washington, D.C__---------------------------------- $501. Sun Ray Drug, Philadelphia, Pa____--_------------------------- 550. Decision and Order 61 F.

Respondent made said payments to its favored customers on the basis of individual negotiations.

PAR. 8. The ads and practices of respondents as alleged above are in violation of the provisions of subsection (d) of Seetion 2 of the Clayton Act, as amended.

DECISION AND ORDER The Commission having heretofore determined to issue its complaint charging the respondents named in the caption hereof with violation of subsection (d) of Section 2 of the Clayton Act, as amended, and the respondents having been served with notice of said determination and with a copy of the complaint the Commission intended to issue together with a proposed form of order; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the complaint to issue herein, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the 1a w has been violated as set forth in such complaint, and waivers and provisions as required by the Commission rules; and The Commission, having considered the agreement, hereby accepts same, issues its complaint in the form contemplated by said agreement makes the following jurisdictional findings, and enters the following order:

1. Respondent, Royal Publications, Inc., is a corporation organized existing and doing business under and by virtue of the laws of the State of New York, with its office and principal place of business located at 26 west 47th Street, in the city of New York, State of New York.

Respondent, Lancer Books, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York, with its office and principal place of business located at 26 1Vest 47th Street, in the city of New York, State of New York. R.respondents, vValter Zacharius, Irwin Stein and Seth J. Solomon are officers of said corporations and their address is the same as that.of said corporations. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents. ORDER I t is o1Ylered That respondents Royal Publications, Inc., and Lancer Books, Inc., both corporations, their respective officers, and Walter VARIETY, INC. 367 363 Syllabus Zacharius, Irwin Stein and Seth J. Solomon, individually and as officers of said corporations, and respondents' employees, agents and representatives, directly or through any corporate or other device, in connection with the distribution, sale or offering for sale of publications including magazines and paperback books in commerce, as "commerce" is defined in the amended Clayton Act, do forthwith cease and desist from:

Paying or contracting for the payment of an allowance or anything of value to, or for the benefit of, any customer as compensation or in consideration for any services or facilities furnished by or through such customer in connection with the handling, offering for sale, sale or distribution ,of publications including magazines and paperback books, published, sold or offered for sale by respondents unless such payment or consideration is affirmatively offered and otherwise made available on proportiona.lly equal terms to all of their other customers eompeting with such favored customer in the distribution of such publications including magazines and paperback books. The word "customer ~' as used above shall be deemed to mean anyone who purchases frolll a respondent, acting either as principal or agent, or from a distributor or wholesaler where such transaction with such purchaser is essentially a sale by such respondent, acting either as principal or agent.

1 t is further ordered That the respondents herein 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 this order.