Jesse W. Lawson, doing business as National Enterprises

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IN THE :vATTER OF JESSE W. LAWSON DOING BUSINESS AS NATIONAL ENTERPRISES CONSENT ORDER, ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-l027. Complaint, Dec. 30, 1965-Decision. Dec. , 1965 Consent order requiring an individual in I\1arietta, Ga., doing business under the name of :Kational Enterprises, to cease making false health claims Complaint 68 F.

for stainless steel cooking utensils and falsely disparaging such products made from other materials COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Jesse W. Lawson individually and trading and doing business as National Enterprises, hereinafter referred to as respondent, has violated the provisions of 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 Jesse W. Lawson is an individual trading and doing business under the name of National Enterprises. His business is presently operated from his home which is located at 416 Aviation Road, :varietta, Georgia. PAR. 2. Respondent is now, and for some time last past has been engaged in the sale and distribution of stainless steel cookware which he purchases from the manufacturer or from a distributor of the manufacturer and then sells to the public. In the course and conduct of his business respondent has caused, and now causes said products when sold to be transported from the State of Georgia to purchasers thereof located in various other States of the United States. He maintains, and at all times mentioned herein has maintained, a substantial course of trade in said products in commerce, as "commerce" is defined in the Federal Trade Commission Act. PAR. 3. In the course and conduct of his business, as aforesaid respondent is now, and has been, in substantial competition with other individuals and with firms and corporations engaged in the sale and distribution of stainless steel cookware in commerce. PAR. 4. In the course and conduct of his said business, and for the purpose of inducing the purchase of stainless steel cooking utensils, respondent through the oral statements of his sales agents and representatives, and through pamphlets, brochures and other advertising literature has represented, and is representing, directly or by implication that:

1. The use of respondent's stainless steel cooking utensils is more conducive to good health than is the use of cooking utensils manufactured from materials other than stainless steel regardless of the method of cooking used.

NATIONAL ENTERPRISES 1163 1161 Deci"ion and Order 2. The use of cooking utensils manufactured from materials other than stainless steel is injurious to health or otherwise constitutes a hazard to health.

3. The use of respondent's stainless steel cooking utensils wil prevent disease or ilness.

PAR. 5. In truth and in fact:

1. The use of no cooking utensil is more conducive to good health than is the use of other commercially available utensils when an efficient method of cooking is used.

2. The use of cooking utensils manufactured from materials other than stainless steel is not injurious to health nor does it otherwise constitute a health hazard.

3. The use of respondent's stainless steel cooking utensils wil not prevent disease or illness, nor wil the use of any other cooking utensils.

Therefore, the statements and representations referred to in Paragraph Four hereof were and are false, misleading and deceptive. PAR. 6. The use by respondent and his sales agents and representatives of the above-mentioned false, misleading and deceptive statements and representations has had, and now has, the tendency and capacity to mislead members of the purchasing public into the erroneous and mistaken belief that all of said statements and representations were and are true and into the purchase of substantial quantities of respondent's stainless steel cooking utensils by reason of said erroneous and mistaken belie!.

PAR. 7. The aforesaid acts and practices of respondent, as herein alleged, were and are, all to the prejudice and injury of the public and of respondent's competitors and constituted, and now constitute, unfair and deceptive acts and practices in commerce and unfair methods of competition, in commerce, in violation of Section 5 of the Federal Trade Commission Act.

DECISION AND ORDER The Commission having heretofore determined to issue its complaint charging the respondent named in the caption hereof with violation of the Federal Trade Commission Act, and the respondent 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 respondent and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by respondent of all the jurisdictional facts set forth in the Decision and Order 68 F.

complaint to issue herein, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as set forth in such complaint, and waivers and provisions as required by the Commission s 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 Jesse W. Lawson is an individual trading and doing business under the name of National Enterprises. His business is presently operated from his home which is located at 416 Aviation Road, Marietta, Georgia.

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

ORDER It is ordered That respondent Jesse W. Lawson, individually and trading and doing business as National Enterprises, or trading under any other name, and respondent's agents, representatives and employees, directly or through any corporate or other device in connection with the offering for sale, sale or distribution in commerce, as "commerce" is defined in the Federal Trade Commission Act, of cooking utensils made of stainless steel or of any other composition, design, construction or purpose, do forthwith cease and desist from:

1. Representing directly or by implication that: (a) The use of such cooking utensils is more conducive to good health than is the use of cooking utensils manufactured from other materials.

(b) The use of cooking utensils manufactured from materials other than the materials in respondent's cooking utensils is injurious to health or otherwise constitutes a hazard to health.

(c) The use of respondent's cooking utensils wil prevent disease or illness.

2. Misrepresenting the construction, efficacy or any other feature of respondent's products.

3. Supplying to or placing in the hands of any distributor dealer, or salesman brochures, sales manuals, charts, pamphlets, or other advertising material which are displayed, or may be displayed, to the purchasing public which contain any NATIONAL ENTERPRISES 1165 1161 Decision and Order of the false or misleading representations prohibited in Paragraphs 1 and 2 hereof.

4. Furnishing or supplying to distributors, dealers or salesmen such products for resale to the public when such distributors, dealers or salesmen refuse to, or do not, comply with aU of the prohibitions set forth in Paragraphs 1, 2 and 3 of this order.

It is further ordered That the respondent herein shaU, within sixty (60) days after service upon him of this order, file with the Commission a report in wri ting setting forth in detail the manner and form in which he has complied with this order. INTERLOCUTORY, VACATING, AND MISCELLANEOUS ORDERS FRUEHAUF TRAILER COMPANY Duchet 6608. Order. ,July, 1965 Order denying respondent's request for modification of order which required divestiture of assets of acquired company and other plant equipment suffcient to restore the firm 8S an effective competitor. ORDER DE:\'Yu.:C PETITIONS FOR RECONSIDERATIO On June 16, 1965, complaint counsel filed a motion for clarification of the Commission s decision of May 28, 1965 (67 F. C. 878J, in the above-captioned proceeding. On July 2 , 1965, respondent filed an answer to complaint counsel's motion, and included in its answer a motion that the Commission s final order of May 28, 1965, be modified. The Commission has decided to treat both motions as petitions for reconsideration within Section 3. 25 of the Commission s Pro ccdures and Rules of Practice (effective August 1 , 1963). Paragraph 5 of the part captioned "Conclusions" in the Commission s decision states: "Divestiture of the acquired assets is necessarv and appropriate to remedy the anti-competitive effects of the unlawful acquisitions." Complaint counsel request that this con elusion be clarified in view of the fact that the Commission s final order requires divestiture not only of the assets acquired from Hobbs but also so much of the plants, machinery, and other property that respondent has added to or placed on the premises formerly owned by Hobbs as may be necessary to restore Hobbs as a going concern and effective competitor in all of the lines of commerce in which it was engaged at the time of the acquisition; and also requires divest iture of respondent's Strick Trailers Division, rather than merely the particular assets acquired from Strick. Respondent argues that the order is improper in requiring divestiture of its Strick Trailers Division, and requests that it be modified to include only the assets actually acquired by respondent from Strick together with such additional assets as may be necessary to restore Strick "to the same relative competitive standing" it bad at the time of the acquisition. 1. We see no need to change the language that appears in conclusion 5 of the Commission s decision. That conclusion was intended not to define the scope of the order, but simply to express the Commission s determination that divestiture was the appropriate remedy for the ilegal acquisitions. "Acquired assets" in that conclusion should be understood as a shorthand term embracing all assets which must, under the Commission s order, be divested. 2. In formulating a remedy for an ilegal acquisition, the Commission strives to restore, so far as is practicable and equitable the state of competition in the relevant market as it would have been but for the acquisition. Ekco Products Co. C. Docket 8122 (decided June 30, 1964), p. 16 (65 F. C. 1163 , 1204J, aff' 7th Cir, No. 14773, June 21, 1965 (7 S.&D. 1278J. This requires, in the present case, an order that wil recreate an independent Strick and an independent Hobbs as viable and effective competitors in the truck-trailer industry with approximately the competitive strength and standing they would have enjoyed had they remained independent and not been ilegally acquired by respondent. A divestiture order limited to the precise assets acquired by respondent nine and ten years ago, when the illegal acquisitions took place, would, as respondent itself concedes, fall short of this objective. Respondent acquired in Hobbs and Strick, going concerns; if the Comnlission order is to be effective, respondent must divest suffcient assets) in. cluding assets added after the acquisition, to reconstitute them as going concerns. Even respondent concedes that an order embracing not only the acquired assets, but additional assets necessary to restore Hobbs and Strick to their preacquisition state, is necessary and proper, assuming the Commission s finding that the acquisitions were unlawful is correct.

Complaint counsel argued in their appeal brief (pp. 49-52) that to restore Strick as a going concern and efiective competitor in the Jines of commerce in which it was engaged at the time of the acquisition, respondent's Strick Trailers Division should be ordered divested. Complaint counsel pointed out that the Strick Division which had been created as a unit of respondent specifically to carry on the Strick business, represented the Jikeliest approximation of what the independent, preacquisition Strick would look Jike today had the ilegal acquisition not supervened, though of course respondent had sold or abandoned some of the acquired assets, and added other assets, in the nine years since the acquisition. Logic and practicality dictated that respondent be required to divest the existing unit, Strick Division, rather than scattered assets. It is ordered That the petitions for reconsideration of the Commission s decision and order of May 28 , 1965, be, and they hereby are, denied.