Diener'S Inc

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In THe Marrer oF DIENER’S, INC, ET AL.

ORDER, EYC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT AND THE TEXTILE FIBER PRODUCTS IDENTIFICATION ACT Docket 8804. Complaint. Nov. 25. 1969—Decision. Dec. 21, 1972 Order requiring a carpeting chain in the Washington, D.C. area, among other things to cease misrepresenting its prices and savings claims; failing to maintain adequate records; misbranding and falsely advertising its textile fiber products.

ComMPrLaINT Pursuant to the provisions of the Federal Trade Commission Act and the Textile Fiber Products Identification Act, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that Diener’s, Inc., Diener’s of Virginia, Inc., Diener’s of Rockville, Inc., Diener’s of Lanham, Inc., Diener’s of Tysons Corner, Inc., and Mayfield Company, Inc., corporations, and Walter Diener, Milton Diener, and Harold Reznick, individually and as officers of each of said corporations, hereinafter referred to as respondents, have violated the provisions of said Acts, and the rules and regulations promulgated under the Textile Fiber Products Tdenti- 946 _ FEDERAL. TRADE . COMMISSION * DECISIONS Complaint 81. F.C.

fication Act, and it appearing to the Commission that a proceeding: ‘by it.in respect thereof would. be in the public interest, hereby issues ‘its ~ complaint stating its charges'in that respect as follows: : = Paracrapu. 1. Diener’s Inc., is a corporation organized; existing and.doing business: under and. -by virtue, of the laws of the’ State of Delaware, with its principal office and place of business located: at’ 4511 Rhode. Island Avenue, in: Brentwood, State of Maryland. , : Mayfield Company, Inc.; isa corporation organized, existing and doing business under and by. virtue of the laws.of the State:of Mary: land, :with its principal. office and. place of ‘business located. “at Aout Rhode Island Avenue, in Brentwood, State of Maryland.« : Diener’s of Lanham, Inc., is.a corporation organized, criti ‘and doing business under and by. -virtue-of the laws-of the State:ofMaryland,.-with: its: principal: office. and place of: business located at t 7450 Annapolis Road;.in Lanham, State of Maryland. . -Diener’s of Rockville, Inc.; is a corporation: Srganized; axisting aitd doing business under and by virtue of the laws of the State of Maryland, with its principal office and~place of business located at 1616 Rockville Pike, in Rockville, State:of Maryland. Diener’s of Virginia, Inc., is a corporation organized, existing and © doing business under and by vitttie of the laws of the Commonwealth of Virginia, with its principal office and place of business located at 6487 Arlington Boulevard, in Falls Church, Commonwealth of Virginia. — Diener’s of Tysons Corner, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the Commonwealth of Virginia, with its principal office and place of business located at: Tysons Center, in McLean, Commonwealth of Virginia. The coordinating office for the aforesaid corporations is located at 4511 Rhode Island Avenue, in Hyattsville, State of Maryland. Respondents Walter Diener, Milton Diener and Harold Reznick are individuals and are officers of each of the six corporate respondents. They formulate, direct and control the acts and practices of the corporate respondents, including the acts and practices hereinafter set forth. Their addresses are the same as the corporate respondent, Diener’s Inc., located at 4511 Rhode Island Avenue, in Brentwood, State of Maryland.

The respondents cooperate and act together in carrying out the acts and practices hereinafter set forth.

Par. 2. Respondents are now, and for some time last past have been, engaged in the advertising, offering for sale, sale, distribution and installation of rugs, carpets, and floor coverings to the public at retail. DIENER’S, INC., ET AL. 0 947 945-0 Complaint Par. 3. Inthe course’and conduct of’ their business: as’ aforesaid, respondents now cause, and for some time last past have ‘caused, their said merchandise, ‘when sold, to be shipped from their places of busi- . ness in: the States ‘of: Virginia and Maryland‘ to’ purchasers thereof located-in: various States of ‘the United. States and-in the: District of Columbia, and: maintain, ‘dnd’ at. all times- mentioned. herein - have maintained, a substantial course of trade in said merchandise in commerce, as “commerce” i is defined in the Federal Trade Commission Act. Par. ‘4.Inthe course and conduct of. their aforesaid’ ‘busitiess, and: for the-purpose of inducing the purchase of their merchandise, the respondents have made, and are now making, numerous ‘statements and representations in advertisements insetted:in newspapers of gen: _ eral interstate circulation, by-‘means of tadio and television: broadcasts and in :advertisements appearing: on: billboards: : ‘Typiéal and: illustra: tive of the foregoing, but not all inclusive thereof, ‘are the following: Diener’ s ‘and Monarch AT. YOUR SERVICE WITH A FANTASTIC 6 STORE FACTORY: INVENTORY | CLEARANCE. ‘THURSDAY, OPRIDAY AND ‘SATUR- DAY CARPET SAVINGS.OF 29%-61%» F : toe “Warehouse Carpet Sale-33% to.64% SAVINGS. | : hae ‘3 ; bs a Les a _ -DIENER’S STOREWIDE CARPET: SALES . 7 ‘CARPET STAIR TREAD SETS Reg. $24.95 ‘Set. Bnough5 1 2 2 17 9 1657 1590 56 48 95.523827 for5 1 2 2 17 10 1714 1595 40 44 85.941032 185 1 2 2 17 11 1768 1582 79 68 96.700653 steps5 1 2 2 17 12 1861 1594 25 52 92.570557 &5 1 2 2 17 13 1898 1595 98 57 95.029762 risers.2 1 3 0 0 0 664 1642 1332 212 -1 3 1 3 1 0 0 671 1642 1325 69 -1 4 1 3 1 1 0 673 1642 1323 69 -1 5 1 3 1 1 1 673 1642 105 26 96.620987 Choices 1 3 1 1 2 793 1645 32 23 96.665260 of5 1 3 1 1 3 838 1646 101 30 96.709961 colors,5 1 3 1 1 4 957 1653 113 20 93.288353 weaves5 1 3 1 1 5 1084 1650 22 24 93.288353 &5 1 3 1 1 6 1120 1652 147 28 95.734886 qualities.5 1 3 1 1 7 1283 1652 97 29 95.405289 $10.005 1 3 1 1 8 1396 1649 56 50 96.662979 Set.5 1 3 1 1 9 1469 1650 90 49 96.088379 Limits 1 3 1 1 10 1579 1656 57 30 69.832146 (1).5 1 3 1 1 11 1645 1657 63 38 70.966080 toa5 1 3 1 1 12 1723 1656 236 55 92.557793 customer/cash5 1 3 1 1 13 1974 1659 22 24 93.143456 &4 1 3 1 2 0 671 1692 94 22 -1 5 1 3 1 2 1 671 1692 94 22 93.922379 carry.3 1 3 2 0 0 664 1731 1331 123 -1 4 1 3 2 1 0 708 1731 1287 37 -1 5 1 3 2 1 1 708 1731 108 24 89.704468 SAVE:5 1 3 2 1 2 826 1723 81 38 94.029480 $3.505 1 3 2 1 3 928 1725 53 38 95.949989 SQ.5 1 3 2 1 4 1005 1736 58 23 96.640022 YD.5 1 3 2 1 5 1088 1736 192 25 95.603157 MONARCH5 1 3 2 1 6 1302 1738 159 25 95.536263 RUGGED5 1 3 2 1 7 1485 1740 128 24 96.338501 NYLON5 1 3 2 1 8 1636 1742 90 23 91.937233 PILES 1 3 2 1 9 1747 1742 133 25 91.937233 AREA’S5 1 3 2 1 10 1905 1738 90 30 91.388824 COM-4 1 3 2 2 0 672 1773 1323 49 -1 5 1 3 2 2 1 672 1773 182 26 95.922966 PETITIVE5 1 3 2 2 2 865 1776 116 24 96.060158 PRICES 1 3 2 2 3 992 1777 78 29 96.060158 $7.955 1 3 2 2 4 1081 1778 52 28 96.311920 SQ.5 1 3 2 2 5 1147 1779 59 24 79.133369 YD.5 1 3 2 2 6 1219 1781 58 23 49.773064 ands 1 3 2 2 7 1288 1780 79 29 49.773064 $4.455 1 3 2 2 8 1378 1781 52 28 92.387924 SQ.5 1 3 2 2 9 1444 1782 96 24 43.606705 YD.‘A5 1 3 2 2 10 1551 1783 131 25 92.694221 Diener’s5 1 3 2 2 11 1694 1785 156 24 96.534065 Exclusive5 1 3 2 2 12 1861 1785 134 37 52.307930 Policy—4 1 3 2 3 0 664 1815 1328 39 -1 5 1 3 2 3 1 664 1815 64 30 86.709824 buys 1 3 2 3 2 741 1817 200 29 90.838547 today—have5 1 3 2 3 3 954 1820 146 25 95.141518 delivered5 1 3 2 3 4 1114 1822 57 23 95.414955 ands 1 3 2 3 5 1185 1822 139 25 93.602936 installed5 1 3 2 3 6 1338 1824 97 29 96.792130 today,5 1 3 2 3 7 1450 1826 155 24 96.042931 tomorrow5 1 3 2 3 8 1617 1833 33 17 96.904633 or5 1 3 2 3 9 1663 1827 33 24 79.730621 at5 1 3 2 3 10 1709 1833 73 21 79.730621 yours 1 3 2 3 11 1792 1828 200 24 96.390274 convenience.2 1 4 0 0 0 1882 1476 67 58 -1 3 1 4 1 0 0 1882 1476 67 58 -1 4 1 4 1 1 0 1882 1476 67 58 -1 5 1 4 1 1 1 1882 1476 67 58 95.000000 2 1 5 0 0 0 1437 1574 48 10 -1 3 1 5 1 0 0 1437 1574 48 10 -1 4 1 5 1 1 0 1437 1574 48 10 -1 5 1 5 1 1 1 1437 1574 48 10 95.000000 2 1 6 0 0 0 667 1584 14 14 -1 3 1 6 1 0 0 667 1584 14 14 -1 4 1 6 1 1 0 667 1584 14 14 -1 5 1 6 1 1 1 667 1584 14 14 50.062538 a2 1 7 0 0 0 658 1872 1336 864 -1 3 1 7 1 0 0 667 1872 1327 201 -1 4 1 7 1 1 0 712 1872 1282 52 -1 5 1 7 1 1 1 712 1872 82 33 95.840973 Par.5 1 7 1 1 2 811 1877 28 28 94.169250 5.5 1 7 1 1 3 856 1875 55 41 96.468094 By5 1 7 1 1 4 926 1877 68 31 96.977264 ands 1 7 1 1 5 1010 1878 151 42 96.257874 through5 1 7 1 1 6 1176 1880 58 31 93.291389 thes 1 7 1 1 7 1251 1881 111 31 92.611206 use.of5 1 7 1 1 8 1376 1881 58 32 93.289925 thes 1 7 1 1 9 1450 1883 246 41 91.974625 above-quoted5 1 7 1 1 10 1711 1887 197 30 96.853867 statements5 1 7 1 1 11 1925 1886 69 32 96.926674 anda 1 7 1 2 0 669 1925 1323 52 -1 5 1 7 1 2 1 669 1925 296 42 96.430069 representations,5 1 7 1 2 2 989 1929 68 33 96.564240 ands 1 7 1 2 3 1079 1929 114 33 96.811653 others5 1 7 1 2 4 1216 1932 39 31 96.199402 of5 1 7 1 2 5 1276 1932 133 31 96.807182 similar5 1 7 1 2 6 1432 1932 129 42 96.906395 imports 1 7 1 2 7 1582 1934 69 32 96.163811 ands 1 7 1 2 8 1673 1935 162 42 96.163811 meanings 1 7 1 2 9 1855 1939 61 28 92.853676 not5 1 7 1 2 10 1938 1947 54 21 92.562920 ex-4 1 7 1 3 0 668 1975 1323 69 -1 5 1 7 1 3 1 668 1975 132 47 91.875031 pressly5 1 7 1 3 2 811 1980 50 27 96.961700 sets 1 7 1 3 3 871 1980 61 28 96.961700 outs 1 7 1 3 4 941 1977 126 43 96.967567 herein,5 1 7 1 3 5 1080 1981 223 40 96.860123 respondents5 1 7 1 3 6 1315 1982 85 32 96.274261 have5 1 7 1 3 7 1414 1986 214 52 96.951073 represented5 1 7 1 3 8 1641 1986 68 32 96.951073 ands 1 7 1 3 9 1722 1996 57 21 96.963219 ares 1 7 1 3 10 1791 1997 76 21 96.573601 now5 1 7 1 3 11 1879 1998 112 46 92.315445 repre-4 1 7 1 4 0 667 2025 745 48 -1 5 1 7 1 4 1 667 2025 146 43 95.343880 senting,5 1 7 1 4 2 824 2027 146 43 95.343880 directly5 1 7 1 4 3 980 2040 39 21 96.831024 or5 1 7 1 4 4 1029 2030 44 41 96.831024 by5 1 7 1 4 5 1084 2031 225 42 96.670952 implication,5 1 7 1 4 6 1320 2034 92 31 70.419464 that:3 1 7 2 0 0 663 2079 1328 341 -1 4 1 7 2 1 0 710 2079 1281 51 -1 5 1 7 2 1 1 710 2081 27 29 92.389923 1.5 1 7 2 1 2 761 2079 138 43 96.097244 During5 1 7 2 1 3 913 2082 58 31 96.637863 thes 1 7 2 1 4 988 2081 120 41 96.637863 periods 1 7 2 1 5 1124 2082 39 31 96.991974 of5 1 7 2 1 6 1179 2083 58 32 96.969200 thes 1 7 2 1 7 1253 2084 194 33 93.274429 advertised5 1 7 2 1 8 1464 2085 176 34 91.385490 “Diener’s5 1 7 2 1 9 1656 2087 188 33 92.513542 Storewide5 1 7 2 1 10 1862 2083 129 47 96.900589 Carpet4 1 7 2 2 0 667 2128 1324 51 -1 5 1 7 2 2 1 667 2128 110 42 96.312012 Sale,”5 1 7 2 2 2 793 2142 39 20 96.406937 or5 1 7 2 2 3 849 2131 199 33 96.623550 “Fantastic5 1 7 2 2 4 1065 2135 17 30 96.777954 65 1 7 2 2 5 1101 2133 100 34 96.595406 Stores 1 7 2 2 6 1217 2135 150 42 96.502151 Factory.5 1 7 2 2 7 1386 2137 164 31 95.642014 Inventors 1 7 2 2 8 1551 2149 22 30 88.833786 y5 1 7 2 2 9 1591 2137 214 41 96.266548 Clearance,”5 1 7 2 2 10 1823 2150 39 20 96.266548 or5 1 7 2 2 11 1879 2140 112 32 96.915009 words4 1 7 2 3 0 665 2180 1323 52 -1 5 1 7 2 3 1 665 2180 39 32 95.904335 of5 1 7 2 3 2 718 2180 133 33 95.904335 similar5 1 7 2 3 3 867 2181 129 42 96.905899 imports 1 7 2 3 4 1011 2184 68 31 96.940910 ands 1 7 2 3 5 1094 2184 172 43 96.545654 meaning,5 1 7 2 3 6 1281 2186 77 32 96.723877 that5 1 7 2 3 7 1372 2187 58 31 96.912270 thes 1 7 2 3 8 1447 2187 192 34 96.794060 advertised5 1 7 2 3 9 1655 2189 93 41 96.896439 prices 1 7 2 3 10 1765 2190 39 31 96.896439 of5 1 7 2 3 11 1820 2200 66 32 93.300812 any5 1 7 2 3 12 1903 2202 85 21 93.199516 mer-4 1 7 2 4 0 666 2230 1322 51 -1 5 1 7 2 4 1 666 2230 161 33 92.140686 chandise5 1 7 2 4 2 845 2237 189 38 96.473976 represents5 1 7 2 4 3 1051 2245 20 21 96.473976 a5 1 7 2 4 4 1089 2235 178 32 96.871323 reductions 1 7 2 4 5 1285 2236 91 33 96.141518 from5 1 7 2 4 6 1394 2239 57 31 96.870811 thes 1 7 2 4 7 1466 2238 97 42 96.610611 prices 1 7 2 4 8 1581 2242 36 28 96.091545 at5 1 7 2 4 9 1633 2239 113 32 96.091545 which5 1 7 2 4 10 1765 2241 223 40 97.000656 respondents4 1 7 2 5 0 663 2282 1325 42 -1 5 1 7 2 5 1 663 2282 86 32 96.761131 have5 1 7 2 5 2 763 2283 100 32 96.761131 made5 1 7 2 5 3 879 2295 20 20 96.336975 a5 1 7 2 5 4 913 2284 88 32 86.482460 bona5 1 7 2 5 5 1018 2285 66 32 86.482460 fide5 1 7 2 5 6 1099 2286 85 31 96.720062 offers 1 7 2 5 7 1199 2290 36 29 96.878494 to5 1 7 2 5 8 1251 2287 60 32 96.908653 sells 1 7 2 5 9 1328 2289 68 31 96.740227 ands 1 7 2 5 10 1412 2289 85 32 96.698273 have5 1 7 2 5 11 1513 2289 74 34 96.596107 sold5 1 7 2 5 12 1604 2290 75 33 96.392403 said5 1 7 2 5 13 1694 2292 234 32 96.202431 merchandise5 1 7 2 5 14 1944 2304 44 20 96.579536 on4 1 7 2 6 0 664 2334 1324 48 -1 5 1 7 2 6 1 664 2343 19 20 95.411369 a5 1 7 2 6 2 697 2334 136 40 95.411369 regular5 1 7 2 6 3 842 2334 91 32 96.606323 basis5 1 7 2 6 4 944 2335 57 32 96.523087 for5 1 7 2 6 5 1012 2346 19 22 96.523087 a5 1 7 2 6 6 1043 2337 200 43 96.844704 reasonably5 1 7 2 6 7 1255 2339 205 32 96.787025 substantial5 1 7 2 6 8 1472 2341 119 40 96.552505 periods 1 7 2 6 9 1603 2341 39 32 96.864731 of5 1 7 2 6 10 1653 2341 82 33 96.693703 times 1 7 2 6 11 1746 2341 38 33 96.616600 in5 1 7 2 6 12 1795 2343 58 31 96.616600 thes 1 7 2 6 13 1864 2347 124 35 96.808846 recent,4 1 7 2 7 0 663 2384 583 41 -1 5 1 7 2 7 1 663 2384 137 41 95.211296 regular5 1 7 2 7 2 808 2395 119 22 96.869080 courses 1 7 2 7 3 937 2385 40 33 96.748383 of5 1 7 2 7 4 985 2387 91 32 97.004677 theirs 1 7 2 7 5 1085 2387 161 34 96.957565 business.3 1 7 3 0 0 658 2435 1328 296 -1 4 1 7 3 1 0 703 2435 1283 50 -1 5 1 7 3 1 1 703 2436 28 30 95.376633 2.5 1 7 3 1 2 756 2435 208 32 96.701561 Purchasers5 1 7 3 1 3 976 2436 39 32 96.966171 of5 1 7 3 1 4 1026 2438 234 32 96.662880 merchandise5 1 7 3 1 5 1273 2439 193 34 96.713783 advertised5 1 7 3 1 6 1478 2442 109 31 96.948250 under5 1 7 3 1 7 1599 2442 56 31 96.635498 thes 1 7 3 1 8 1668 2442 156 41 95.279755 phrases:5 1 7 3 1 9 1827 2443 159 42 95.279755 “Carpet4 1 7 3 2 0 663 2484 1323 50 -1 5 1 7 3 2 1 663 2484 148 43 96.743553 Savings5 1 7 3 2 2 826 2487 40 31 92.968079 of5 1 7 3 2 3 880 2488 220 41 24.193756 29%-61%,”5 1 7 3 2 4 1115 2500 39 21 96.488129 or5 1 7 3 2 5 1169 2490 101 40 94.489517 “33%5 1 7 3 2 6 1288 2494 35 29 96.383842 to5 1 7 3 2 7 1339 2493 78 37 96.383842 64%5 1 7 3 2 8 1436 2492 180 42 96.410606 Savings,”5 1 7 3 2 9 1630 2505 40 20 96.334373 or5 1 7 3 2 10 1684 2498 104 29 95.460373 terms5 1 7 3 2 11 1802 2495 39 32 96.804916 of5 1 7 3 2 12 1855 2496 131 31 95.687370 similar4 1 7 3 3 0 660 2536 1325 51 -1 5 1 7 3 3 1 660 2536 128 41 96.155670 imports 1 7 3 3 2 804 2538 69 31 96.071899 ands 1 7 3 3 3 889 2539 171 41 96.915344 meaning,5 1 7 3 3 4 1075 2540 114 32 96.725784 would5 1 7 3 3 5 1207 2542 123 31 96.382729 realizes 1 7 3 3 6 1343 2553 20 20 96.902336 a5 1 7 3 3 7 1379 2542 138 42 96.931374 savings5 1 7 3 3 8 1532 2544 39 31 96.958885 of5 1 7 3 3 9 1585 2544 57 31 96.991333 thes 1 7 3 3 10 1657 2545 112 32 96.428383 stated5 1 7 3 3 11 1781 2550 204 37 96.428383 percentage4 1 7 3 4 0 659 2588 1325 44 -1 5 1 7 3 4 1 659 2591 141 28 96.591766 amounts 1 7 3 4 2 820 2588 94 32 95.580894 from5 1 7 3 4 3 932 2590 58 31 96.366272 thes 1 7 3 4 4 1010 2591 113 31 96.678375 actual5 1 7 3 4 5 1143 2591 93 41 96.549850 prices 1 7 3 4 6 1255 2594 37 29 96.360863 at5 1 7 3 4 7 1311 2593 112 32 96.551979 which5 1 7 3 4 8 1441 2594 58 32 96.063164 thes 1 7 3 4 9 1519 2595 232 32 96.455093 merchandise5 1 7 3 4 10 1770 2606 74 23 94.220963 was5 1 7 3 4 11 1857 2597 127 32 94.220963 offered4 1 7 3 5 0 658 2637 1326 65 -1 5 1 7 3 5 1 658 2637 58 32 96.907104 for5 1 7 3 5 2 736 2639 70 31 96.897537 sales 1 7 3 5 3 827 2650 39 21 96.899841 or5 1 7 3 5 4 886 2641 76 31 96.538315 sold5 1 7 3 5 5 983 2641 45 41 96.897087 by5 1 7 3 5 6 1048 2638 207 64 96.680901 respondents5 1 7 3 5 7 1278 2643 22 31 92.719902 15 1 7 3 5 8 1292 2654 36 21 96.536972 in5 1 7 3 5 9 1348 2644 90 40 96.536972 goods 1 7 3 5 10 1460 2644 92 33 96.548820 faith5 1 7 3 5 11 1573 2646 55 31 96.748215 for5 1 7 3 5 12 1648 2658 19 20 96.289330 a5 1 7 3 5 13 1689 2647 199 43 92.128738 reasonably5 1 7 3 5 14 1908 2647 76 32 91.133636 sub-4 1 7 3 6 0 658 2689 1324 47 -1 5 1 7 3 6 1 658 2689 141 33 97.013535 stantial5 1 7 3 6 2 816 2691 121 40 96.809784 periods 1 7 3 6 3 955 2692 39 31 97.007584 of5 1 7 3 6 4 1009 2692 82 32 95.677689 times 1 7 3 6 5 1108 2693 36 31 87.102570 in5 1 7 3 6 6 1161 2693 58 32 84.212303 thes 1 7 3 6 7 1237 2698 122 38 96.299561 recent,5 1 7 3 6 8 1376 2696 138 40 96.299561 regular5 1 7 3 6 9 1530 2707 116 21 96.991608 courses 1 7 3 6 10 1661 2698 40 30 96.984001 of5 1 7 3 6 11 1716 2697 90 33 97.006180 theirs 1 7 3 6 12 1822 2698 160 33 96.378731 business. 948 ‘FEDERAL. TRADE COMMISSION. : DECISIONS Complaint; 81 F.T.C.

:.3,.'Fhe higher: prices, accompanied, by the. words “Regular,” “Reg.,” or words of similar import and, meaning, were the prices that: the advertised merchandise was offered for sale. or. sold by the: respondents in good faith for-a reasonably substantial period. of time inthe recent, . regular course of their business. Purchasers of such merchandise would. save .an amount. equal to the. difference, between. respondents’ higher selling prices and the corresponding advertised lower selling prices.

4, ‘The higher prices, accompanied by the words, “area? ) competitive price, or words of similar import.and meaning,. were prices which do not appreciably exceed prices at. awhich substantial sales of the same merchandise were made in respondents’ trade area. _ 5. The represented reduced prices are. offered only during the limited period. of .the-sale and: such reduced prices will..be returned, to: respondents’ pre-sale bona. fide offering price or to some other substantially.higher amount. immediately. after completion of the sale, -6. During the regular, course: and. conduct: of respondents’ business, purchasers of rugs, carpets and floor coverings:in ‘all instances when so desired will receive delivery. and’ installation of said merchandise within 48 hours after ‘such ~ ‘merchandise is “purchased from the respondents. i Par. 6. In truth and in fact: , 1. During the period of the advertised “Diener’s Storewide Carpet Sale,” or “Fantastic 6 Store Factory Inventory Clearance” or words of similar import and meaning, the advertised price of any merchandise did not represent a reduction from the price at which respondents have made a bona fide offer to sell or have sold said merchandise on a regular basis for a reasonably substantial period of time in the recent, regular course of their business.

2. Purchasers of merchandise advertised as “Carpet Savings of 29%-61%,” or “83% to 64% Savings,” or terms of similar import and meaning, did not realize a savings of the stated percentage amount from the actual price at which the merchandise was offered for sale or sold by respondents in good faith for a reasonably substantial period of time in the recent, regular course of their business. 3. The higher prices, accompanied by the words “Regular,” “Reg.,” or words of: similar import and meaning, were not the prices that the advertised merchandise was offered for sale or sold by respondents in good faith for a reasonably substantial period of time in the recent, regular course of their business, and purchasers thereof, would not save amounts equal to the difference between respondents’ higher selling prices and the corresponding advertised lower selling prices. | DIENER’S, INC., ET AL. — ~ 949 945 Complaint 4, The higher prices, accompanied by the words, ‘area’s competitive price,” or words of similar import and meaning, were pricés which do appreciably. exceed prices at which substantial sales of the same mnerchandise were made in respondents’ trade area. 5. The represented reduced prices are not offered for a limited , period of time, but are the prices which respondents sell or offer to sell their merchandise on a: ‘regular basis for a ‘reasonably substantial period of time in the recent, régular course of their business. . 6. During the regular course and conduct. of respondents’, business, purchasers of rugs, carpets and floor coverings ‘in all instances when so desired cannot receive delivery and installation of said merchandise within 48 hours after ‘such. merchandise is purchased ‘from the respondents.

Therefore the statements and representations as set forth in 1 Paragraphs Four and: Five hereof, were: e and | are ° false, misleading and deceptive. © :

_ Par. ‘7. In. the: condyet of their business at’ all times meritioned herein, respondénts have been’ in substantial competition, in: com: merce, with corporations, ‘fitms and individuals ‘engaged 1 in the sale of mérchandise of the same general kind and’ nature a as the aforesaid merchandisé sold by the respondents. ' :

Par. 8. The use by the respondents of the aforesaid false, mislead: ing and deceptive statements, representations, acts and practices has had, and now has, the capacity and tendency to mislead members of the purchasing public concerning the savings available to them on. respondents’ merchandise and, more generally, to mislead them into the erroneous and mistaken belief that said statements and representations are true and into the purchase of substantial quantities of respondents’ merchandise by reason of said erroneous and mistaken belief.

‘Par. 9. The acts and practices of the respondents as set forth above were, and are, all to the prejudice and injury of the public and of respondents’ competitors and constituted, and now constitute, unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce in violation of Section 5 of the Federal Trade Commission Act. ' Par. 10. Respondents are now, and for some time last past have been, engaged in the introduction, delivery for introduction, sale, advertising, and offering for sale, in commerce, and in the transportation or causing to be transported in commerce, and in the importation into the United States, of textile fiber products; and have sold, offered for sale, advertised, delivered, transported and caused to be transported, 950 FEDERAL. TRADE COMMISSION: DECISIONS Complaint, 81 F. T.c:

textile fiber products, which have been ‘advertised, or offered: for sale in: commerce; and have sold, offered for sale, advertised, delivered, transported. and caused to be transported, after ‘shipment i in commerce, textile fiber products, either in their. original state or. contained’ in other textile fiber. products ;.as.the terms “commerce” and “textile fiber product” are defined in the Textile Fiber Products Identification Act. Par. 11. Certain of said textile fiber products were misbranded by respondents within the intent. and meaning of Section 4(a). of the Textile Fiber Products Identification .Act.and. the rules: and regulations promulgated . thereunder; in ‘that: they. were falsely. and deceptively stamped, tagged, labeled, invoiced, advertised, or otherwise identified as to the name or amount of. constituent fibers « contained therein.

-Among such misbranded: textile -fiber products,. but not limited thereto, were floor coverings, which. were. falsely - and deceptively advertised in the Washington Post and the Evening Star, newspapers published in the city of Washington, District of Columbia, and having a wide. circulation in said: District of Columbia, and various States. of the United States, in.that the respondents i in. disclosing. the fiber.content.information. as to floor coverings containing exempted backings, fillings, or paddings, failed to set forth such fiber. content information in such a manner as to indicate that it applied only to the face, pile, or outer surface of the floor coverings and not to the exempted backings, fillings, or paddings.

--Par. 12. Certain of said. textile fiber products were: » falsely and deceptively advertised in that respondents in making disclosure or implications as to the fiber content of such textile fiber products in written advertisements used to aid, promote and to assist, directly or indirectly, in the sale or offering for sale of said products, failed to set forth the required information as to fiber content as specified by Section 4(c) of the Textile Fiber Products Identification. Act and in the manner and form prescribed by the’ rules and regulations promulgated under said Act.

Among such textile fiber products, but not limited thereto, were carpets which were falsely and deceptively advertised. by means of printed matter, in newspapers, distributed by the respondents throughout the United States to customers and salesmen. The aforementioned carpets were described by such fiber-connoting terms among which, but not limited thereto, were “Acrilan,” “Kodel,” and “Herculon” and the true generic name of the fiber contained in ‘such products was not set forth.

Par. 13. By means of the aforesaid advertisements and others of similar import and meaning not specifically referred to herein, re- ' DIENER’S, INC., ET AL. © 951 945-0 Initial. Decision spondents have falsely and deceptively advertised textile fiber’ products in violation of the Textile Fiber Products Identification Act in that said textile fiber.products were not. advertised in accordance with the rules and regulations promulgated thereunder in the following respects:

(a), In disclosing the fiber content information as to floor ¢ coverings containing. exempted. backings, fillings, or paddings, such disclosure was not.made in such a.manner as to indicate-that such fiber: content information related. only to the face, pile or outer surface of the floor covering and. not. to the backing, filling or. padding, i in. violation: ot Rule II of the aforesaid rules and regulations. .: (b) A fiber trademark was used. in advertising textile. fiber tireducts, without a full disclosure of the fiber content information required by. said Act,;-and the regulations: thereunder:in at least. one instance in said. advertisement, -in violation of: Rule wal (a) of the > siforesaid rules. and regulations. - -(c): A fiber. trademark w was ‘used j in: advertising textile fiber products containing only one fiber and-such fiber trademark did not appear, at least. once in.the said advertisement, in immediate: proximity and conjunction, with -the. generic name of: the. fiber, in plainly legible and conspicugus.type, in violation of the Rule 41(¢) of the:aforesaid niles and regulations.

Par. 14, The acts and practices of respondents as set forth in » Paragraphs Eleven through ‘Thirteen above were, and. are, in violation of the Textile Fiber Products Identification Act and the rules and regu: lations promulgated thereunder, and constituted, and now constitute unfair methods. of competition in commerce and unfair and deceptive acts and practices in commerce, under the Federal Trade Commission Act.

Mr. Edward D. Steinman and Mr. Donald L. Bachman supporting the complaint.

M r. Jacob A. Stein, Stein & Mitchell, Washington, D. C, for respondents.

Initial Decision By Joun B. Pornpexrer, Heartnc Examiner JULY 12, 1971 PRELIMINARY STATEMENT The complaint in this proceeding, issued on November 25, 1969, charges that Diener’s, Inc., Diener’s of Virginia, Inc., Diener’s of Rockville, Inc., Diener’s of Lanham, Inc., Diener’s of Tysons Corner, Inc., Mayfield Company, Inc., corporations, and Walter Diener, Milton 952 FEDERAL. TRADE..COMMISSION! ‘DECISIONS Initial Decision 81 F.T.C:

Diener, and Harold Reznick, individually andas officers of each of said corporations, violated: the provisions of the’ Federal ‘Trade’ Comiiis: sion Act. and the’ Textile Fiber Products Identification Act in’ ‘the advertising, sale: and installation: of rugs, carpets and floor coverings to the public at retail.

The respondents answered the: complaint, admitting the existence of the. corporate respondents as allegéd in Paragraph One of the complaint, but’ denied that the individual respondents formulate, direct, control and act together in carrying out the acts and practices of corporate, respondents as. alleged. Respondents also denied thie’ other allegations of the complaint.

After séveral postpornements, the hearing begat 0 on guly 2, 197 0, and the record. for the reception of evidence was closed on August 4, 1970. _Proposed.-findings of fact, conclusions: of Jaw::and*briefs' were originally scheduled tobe 'filed'on or before September 18,1970. However, due to the loss by the reporter of more than‘100 Céminission’ ex-. hibits, consisting of newspaper: advertisements ‘which ‘had been: placed. in the. Washington: Post and the Evening Star by: respondents during the.period; April 19,.1967:through October 12, 1968, complaint counsel filed several. separate requésts for extensions of' time ‘withiti which’ to file proposed ‘findings of fact, etc. These requests for extertisions of'tinie were based on the absence of these exhibits. These requests extended the filing date for proposed findings, etc., to November. 19, 1970. On November 17, 1970, complaint counsel ‘filed a motion to reopen the record so as to receive in evidence reproductions of the lost Commission exhibits. Complaint counsel stated that the reproductions had been. made from microfilm of newspapers contained in the files of the Library. of Congress, and requested that these reproductions be received in evidence and substituted for the original exhibits, CX 49 through CX 150, which had been lost.’ On November 19, 1970, counsel for respondents filed an opposition to complaint counsel’s motion to reopen the record to receive in evidence reproductions of the lost exhibits. Also, on November 19; 1970, counsel for respondents filed proposed findings of fact, conclusions of law, and brief on behalf of respondents.

On November 23, 1970, complaint counsel filed their proposed findings of fact, conclusions of law, brief, and a proposed order. By order dated November 24 and filed November 25, 1970, the hearing examiner granted complaint. counsel’s motion to reopen the record for the stated purpose of affording complaint counsel an opportunity to offer and substitute in evidence reproductions from microfilmed copies of respondents’ newspaper advertisements (CX 49-150), which -DIENER’S, INC., ET AL. - 953 945 Initial Decision had been received in evidence at hearings but subsequently lost by the reporter; a reopened hearing for this purpose was scheduled for December 15, 1970. - .

On November QT, 1970, complaint counsel filed a “Motion to Supplement the Purpose For Reopening the Record” in this proceeding. (The original motion to reopen the record filed on November 17, 1970. was for the stated purpose of affording complaint counsel an opportunity to offer and there be received. in evidence reproductions of the lost-Commission exhibits.) The Motion to Supplement the Purpose for Reopening the Record, filed on November 27, 1970, requested, among other things, that, at the reopened hearing, in addition to receiving :in evidence reproductions of the lost Commission exhibits, the: hearing examiner, consider, making certain. written reports-of a Commission attorney-investigator, who,, at the original hearing, had testified asa Commission witness, available.to. counsel for respondents for examina- _tion prior. to cross-examining the attorney- -investigator in: the event counsel for, respondents should desire to cross-examine this witness at the reopened hearing. - On December 3, 1970, counsel for respondents filed an opposition t to complaint counsel’s Motion to Supplement the Purpose for Reopening the Record and, on December 8, 1970, complaint counsel filed a reply to respondents’ opposition to complaint counsel’s Motion to Supplement the Purpose for Reopening the Record.

On December 9, 1970, pursuant to the request of complaint counsel, the hearing examiner rescheduled the date for the reopening of the hearing from December 15, 1970 to December 11, 1970. At the reopened hearing on December 11, 1970, the reproductions of the lost Commission exhibits were received in evidence and certain investigation reports made by Mr. Joseph J. Koman, Jr., an attorneyinvestigator in the employ of the Commission, who made the investigation of this matter and testified as a Commission witness at the original hearing, were produced by complaint counsel and made available to counsel for respondents for his examination pursuant to complaint counsel’s Motion to Supplement the Purpose for Reopening the Record, filed on Novernber 17, 1970. lowever, upon complaint counsel’s refusal to produce a summary memorandum prepared by Mr. Koman in connection with his investigation of respondents and about which he had testified at the hearing, and the production of which had been requested by counsel # or respondents, the hearing examiner struck the testimony which Bir. Koman had given at the heari ing. At the request of complaint counsel, the hearing examiner held the record open while complaint counsel cought to file an interlocutory appeal to the Commission from the ruling ef the hearing examiner striking the testimony. 954 FEDERAL ‘TRADE COMMISSION: DECISIONS Initial’ Decision 81 RTC, In a majority opinion and order issued February 8, 1971, the Commission decided that the ruling of the hearing examiner was correct and denied complaint counsel’s request for permission to file an intérlocutory appeal from the ruling of the hearing examiner striking the testimony of Mr. Koman, the attorney- investigator. In the majority opinion, after ruling that the hearing examiner was correct in striking the testimony and denying an interlocutory appeal, the Commission stated, among other things, that “* * * the examiner might find it ap- . propriate to reopen the record ‘to give complaint counsel an opportunity to-produce the Koman summary memorandum and, if produced, to afford respondent his full ‘Jencks’ rights.” __ On February 25, 1971, complaint counsel filed a Motion to Reopen the Record “to allow the production of the summary mémorandum a and if such is desired cross-examination of Attorney Koman.” On March 8, 1971, counsel for respondents filed an opposition to the motion to reopen, and on March 4, 1971 complaint counsel filed their reply to respondents’ opposition to complaint counsel’s motion to reopen.

' Pursuant to notice, a further hearing was held on April 12, 1971, at ‘which time complaint counsel produced and delivered to respondents’ counsel for his perusal the summary memorandum written by Mr. Koman, which complaint counsel had previously refused to produce. Complaint counsel also produced Mr. Koman and he was crossexamined by counsel for respondents. At the conclusion of his crossexamination that same day, April 12, 1971, the record for the reception of evidence was again closed.

Supplementary Proposed Findings of Fact and Conclusions of Law have been filed by counsel for respondents. All proposed findings of fact and conclusions of law not found or concluded herein are denied. Upon the basis of the entire record, the hearing examiner makes the following findings of fact and conclusions of law, and issues the following order:

FINDINGS OF FACT 1. Diener’s, Inc., is a corporation organized and doing business under the laws of the State of Delaware, with its office and place of business located at 4511 Rhode Island Avenue, Brentwood, Maryland. 2. Diener’s of Virginia, Inc., is a corporation organized and doing business under the laws of the Commonwealth of Virginia, with its office and place of business located at 6437 Arlington Boulevard, Falls Church, Virginia.

1 Commissioner MacIntyre dissented, and filed a dissenting statement. DIENER’S, ING., ET AL... *- 955 945 Initial Decision 8. Diener’s of Rockville, Inc., is a corporation organized and doing business under the laws of the State of Maryland, with its office and place of business located at 1616 Rockville Pike, Rockville, Maryland. 4, Diener’s of Lanham, Inc., is a corporation organized and doing business under the laws of the State of Maryland, with its office and place of business located at 7450 Annapolis Road, Lanham, Maryland. 5. Diener’s of Tysons Corner, Inc., is a corporation organized and doing business under the laws of the Commonwealth of Virginia, with its office and place of business located at Tysons Center, McLean, Virginia.

6. “Mayfield Company, Ine., is a corporation organized and doing business under the laws of the State of ‘Maryland, with its office and -place of business located at 4511. Rhode Island Avenue, Brentwood, Maryland.

7. The executive office for the aforesaid corporations is located at 4511 Rhode Island Avenue, Brentwood, Maryland (admitted in Ans. “5 Par. 2).

8. The respondents, Walter Diener, Milton Diener, and Harold Reznick, are stockholders and officers of each of the six corporate respondents. Mr. Milton Diener is president; Mr. Walter Diener is secretary-treasury; and Mr. Reznick is executive vice president and general manager of Diener’s, Inc., the parent of the subsidiary corporations named in Paragraph numbered 1 above. Messrs. Milton and Walter Diener and Harold Reznick are members of the boards of directors of the respondent corporations. However, due to illness, including a serious heart ailment, Mr. Walter Diener has not been active in the business of the corporations for several years and does not share full responsibilities in the management with his brother, Milton Diener, and Mr. Reznick. He visits and spends a few hours at his office each day he feels able to do so (Tr. 27, 148-149). As executive vice president and general manager, Mr. Reznick controls the operation of the respondent corporations (Tr. 21, 26-27, 159-160, 164). The business offices of the five subsidiaries are located at the office of the corporate respondent, Diener’s, Inc., 4511 Rhode Island Avenue, Brentwood, Maryland (admitted in Ans., Par, 2).

9. Respondents Diener’s are now, and for some time last past have been, engaged in the advertising, offering for sale, sale, distribution and installation of floor covering, including rugs and carpets, to the public at retail (Tr. 21).

10. In the course and conduct of their business as aforesaid, respondents Diener’s now cause, and for some time last past have caused, their said merchandise, when sold, to be shipped from their places of 956: FEDERAL ‘TRADE. ‘COMMISSION’ DECISIONS _ Initial ‘Decision 81 FTC.

business in the States of Virginia‘and Maryland to purchasers thereof located:in various States of the United States and in the ‘District of Columbia, and maintain, and at all:'times mentioned herein have main- ‘tained, a substantial course of trade'in said merchandise in commerce, 28 “commerce” i is defined 3 in. the Federal Trade Commission Ket! (Tr. 11. The complaint i is directed toward i improper use of the terms “regular” and “area’s:competitive:price,” and also toward representations in newspaper advertisements with. respect to the time of delivery and installation of carpets, which are alleged to be false, misleading-and ‘deceptive. The complaint also: alleges violations of the Textile -Fiber Products Identification: Act in some of the Diener’s newspaper’ adver- .tising. Specifically, the complaint: alleges that, in the course and conduct ‘ot their aforesaid business, and for the purpose of inducing ‘the purchase. of their ‘merchandise; the respondents:have made, ‘ahd -are now making, numerous: statements ‘and ‘representations’ in ‘advertisements inserted in newspapers of general interstate circulation. Typ- ‘ical:and illustrative of the representations: anid advertisements 2 are other following: © (0 i hee be ae eel [A] Diener’s ‘and’ Monareli AT YOUR. ‘sukvicn WITH “A FANTASTIC 6 STORE FACTORY INVENTORY CLEARANCE THURSDAY, FRIDAY AND SATURDAY CARPET SAVINGS. OF 29%-61% (The above representations are contained in CX 90.) [B] Warehouse Carpet Sale 33% to 64% SAVINGS (This representation is contained in CX 85 and 86.) [C] DIENER’S STOREWIDE CARPET SALE , (This representation is contained in CX 61 and 88.) [D] CARPET STAIR TREAD SETS Reg. $24.95 Set Enough for 13 steps & risers. Choice of colors, weaves & qualities. $10.00 Set Limit (1) to a customer/ cash & carry.

(The representation in [D] above is contained in CX 74, 77, 105, 115, 118-120, 129-181, and 149-150.) [E] SAVE $3.50 SQ. YD. MONARCH RUGGED NYLON PILE ARWBA’S COM- PETITIVE PRICE $7.95 SQ. YD. 4.45 8Q. YD.

(The representations in [E] above are contained in CX 68, 104, and 135.) {F] A Diener’s Exclusive Policy—buy today—have delivered and installed today, tomorrow or at your convenience (The representation set out in [F] above is not contained in any of the nimerous Commission exhibits received in evidence.) DIENER’S, INC., ET AL. | 957 945 Initial. Decision — 12, The complaint further.alleges that, through the use of the above-: quoted statements and representations, ‘respondents have represented: and are how representing, directly or:by implication, that: (1) During.the period. of the advertised “Diener’s Storewide Carpet: Sale,” or “Fantastic 6.Store Factory: Inventory Clearance,” or words of similar import ‘and: meaning, that the advertised price. of any merchandise represents a. reduction from the price: at which respondents lave made a.bona fide offer to sell:and have sold said merchandise on:ai regular basis fora reasonably substantial: period of time in the recent,: regular:course of their business, whereas, in truth and in fact, the ad-: vertised. price .of. any merchandise didnot: represent a reduction from the. price at. which ‘respondents: have:trade a bona. fide offer. to. sell: or have seld-said merchandise ona regular basis for.a reasonably substan:: tial period. of time im the recent, regular course.of their business. ..(2); Purchasers of. merchandise: advertised under the phrases: “Car-. pet. Savings of 29%-61%, or $33.% to 64% Savings,” or terms of sim: ilar import: and; meaning; -wou]d realize a savings. of: the stated :per-: centage amount, fromthe actual price: at- which: the merchandise was, offered for sale or sold by. respondents in: good: faith. for.a reasonably. substantial period of time in the recent, regular course of their business, whereas, in truth and in fact, purchasers: of such advertised mérchandise did not realize a savings of the stated percentage amount from the actual price at which the merchandise was offered for sale or sold by: respondents j in good faith for a reasonably substantial period of time in the recent, reg oul ar course of their business. (8) The higher prices, accompanied by the words “Regular,” “Reg.,’ or words of similar import and meaning, were the prices that the advertised merchandise was offered for sale. or sold by the respondents in good faith for a reasonably substantial period of time in the recent, regular course of their business. Purchasers of such merchandise would save an amount equal to the difference between respondents’ higher selling prices and the corresponding advertised lower selling prices, whereas, in truth and in fact, the higher prices were not the prices that the advertised merchandise was offered for sale or sold by respondents in good faith for a reasonably substantial period of time in the recent, regular course of their business, and purchasers thereof would not save amounts equal to the difference between respondents’ higher selling — prices and the corresponding advertised lower selling prices. - (4) The higher prices, accompanied by the words, “area’s competitive price,” or words of similar import and meaning, were prices w which do not appreciably exceed prices at which substantial sales of the same merchandise were made in respondents’ trade area, whereas, in truth and in fact, the higher prices were prices which do appreciably exceed Initial Decision 81 FTC.

prices at which substantial sales of the same merchandise were made i in respondents’ trade area.

(5) The represented reduced prices are offered: only during the limited period of the sale and such reduced prices will be returned to respondents’ pre-sale bona fide offering price or to some other substantially higher amount immediately after completion of the sale, whereas, in truth and.in fact, the represented reduced prices are not offered for a limited period of time, but are the prices which respondents sell or-offer to.sell their merchandise on a regular basis for.a reasonably - substantial period of time in the recent, regular course of their business. (6) During the regular course and conduct of respondents’ business, purchasers of rugs, carpets:and floor coverings in all instances when so desired will receive delivery and. installation of said merchandise within 48 hours after such merchandise is purchased from the respondents, whereas, in truth and. in fact, during the regular course and conduct of respondents’ business, purchasers of rugs, carpets and floor coverings. in all instances when so desired cannot receive. delivery and installation of said merchandise within 48 hours after such merchandise is purchased from:the respondents. . Wherefore, the complaint alleges, the statements and representations as set forth in Paragraphs Four and Five of the complaint (Paragraph numbered 12 above) were and are false, misleading and deceptive.

13. Mr. Joseph J. Koman, Jr., an attorney-investigator for the Federal Trade Commission, who made the investigation and recommended the issuance of the complaint in this proceeding, was the principal witness offered by complaint counsel to establish the greater part of the allegations contained in the complaint. Mr. Koman’s testimony is based upon information obtained by Mr. Koman from his examination of the Diener’s records, invoices, more than 100 newspaper advertisements which appeared in the Washington Post and the Evening Star during the years 1967-1968, and statements allegedly made to Mr. Koman by Mr. Harold Reznick, vice president and general manager of Diener’s, Inc., the principal corporate respondent herein, during Mr. Koman’s first visit to the main office of Diener’s on January 24, 1968 (Tr. 168; 225). The statements allegedly made by Mr. Remick to Mr. Koman included the identification by Mr. Reznick of the quality or pattern designation of floor covering or carpeting and padding which were advertised by Diener’s in a full-page newspaper advertisement in the Washington Post on Thursday, June 29, 1967 (CX 68; Tr. 168-169).

DIENER’S, INC., ET AL. 959:

945 Initial Decision 14. Ordinarily, Diener’s and other retailers of floor covering and carpeting located in the District of Columbia metropolitan:area do — not identify the quality designation of the carpet advertised in news-: papers (Tr. 431). A carpet advertisement, describing the carpet as “NYLON PILE,” “ACRILAN: ACRYLIC PILE,” or “ALL, WOOL PILE,” for example, but giving the name of the manufacturer, is not’ sufficient information by which the carpet can be identified by quality;. and thus determine the price (Tr. 260). Carpet. manufacturers gener-. ally produce more than one grade or quality of carpeting, and give each. grade or quality a name designation so that it can be identified. The . quality designation for the carpeting advertised for sale by Diener’s. in CX 68 was not given in the advertisement so, in order to determine. the accuracy or truthfulness of the representations in ‘the advertisement with respect to price, it was necessary for Mr. Koman to identify the various carpets referred to in the advertisement by obtaining their respective name designations. Mr. Koman-testified that, during his first interview with Mr. Reznick on January 24, 1968, pursuant to Mr- Koman’s request, Mr. Reznick identified the-carpeting- by giving to Mr. Koman-the-quality name designation of each of the carpets advertised in the seven segments of the main carpet portion of the advertisement, which appears in the center portion of the advertisement (CX 68; Tr. 168-169). At the hearing, Mr. Koman then proceeded to identify by quality name designation the carpet advertised in each of the seven segments of CX 68 from the information and identification which Mr. Koman testified that Mr. Reznick had previously given to him.

15. Beginning with the carpet advertised in the first segment of the advertisement, Mr. Koman identified the “MONARCH RUGGED NYLON PILE AREA’S COMPETITIVE PRICE $7.95 SQ. YD. 4.45 SQ. YD.” as being either Garland or Benton, which Diener’s call Princess or Westernaire. Mr. Reznick advised Mr. Koman that the Garland and the Benton were discontinued merchandise, and that the Westernaire was a regular pattern or quality (Tr. 167-170). 16. Mr. Koman then proceeded to the second segment of the advertisement (CX 68), counter-clockwise, referred to in the advertisement as featuring “A QUALITY ASSURED CARPET FROM DIENER’S SAVE $428 SQ. YD. Luxury Quality MONARCH NYLON PILE * * * AREA’S COMPETITIVE PRICE $10.95 SQ. YD. 6.67:SQ. YD.” as being “* * * either Park West plush or Luxurious, which they purchased for $3.80 a square yard, or Glen Contessa, which he now calls Penfield, at $3.95 a square yard” (Tr. . 170).

960: FEDERAL TRADE COMMISSION DECISIONS Initial Decision . SL ETC.

17..Mr. Koman then identified the carpeting listed in the third seg- ~ ment of the advertisement: (CX 68), counter-clockwise; referred to in _ the advertisement: as “A: QUALITY: ASSURED‘ CARPET FROM: DIENER’S SAVE: $3.39 TO-$4:39: SQ: YD. CUSTOM QUALITY: ‘SOLID .COLOR’ GRACIOUS: PLUSH: 'ACRILAN ‘ACRYLIC PILE * * * AREA’S COMPETITIVE PRICES $13.95 TO $14.95 SQ: YD. 10.56:'SQ:' YD.” as being “Monarch Langston; *'* * Mon arch’s.:Classic,: pattern ' and. quality, oe, and “Monareh’s- ‘Royalits and Colonnade” (Tr: 172). ms -18..Mr: Koman then: identified the: caipet adver tised 4 an the fount tly and:bottom ségment ofthe advertisement: (CX 68): 5-“Ae QUALITY: ASSURED: CARPET: FROM: DIENER’S' SAVE $5.06" SQ.“ YD. LEES .*:ALDON: *: MOHAWK Ultra “Phish 100% >» ALL? WOOL PILE:RANDOM PLUSH *:SHAG **EWIST: OR SOLID COLOR’ PLUSH PILES AREA’S COMPETITIVE PRICE $17.95: SQ: YD- 12:89 SQ: ¥D.,” ‘as: beitig: “Lee's Grand. Parade: atid Tabor Island, * &.*) Alden: Duchess Desiree," arid: ‘Camelot ‘and Moha He Avalon quality:or'pattern” (Bri:172) : 8 tie dh /19» Mr..Koman: identified the carpet! adver tised inthe: fife: seginerit of OX68; “A QUALITY ASSURED: CARPET FROM DIENER’S SAVE: : $2. 06 SQ. YD. “FROM: THE WORLD'S - LARGEST CARPET MAKER Luxury Quality ACRILAN Acrylic Pile * * * AREA’S COMPETITIVE PRICE $10.95 SQ. YD. 8.89 SQ. YD.,” as being “Monarch Plantation, * * * Delta, * * * and Monarch’s Carefree” (Tr. 172). :

20. Mr. Koman identified the carpet advertised: in the sixth segment of CX 68, “A QUALITY ASSURED CARPET FROM DIENER’S SAVE $2.17 TO $4.17 SQ. YD. MOHAWK * MON- ARCH ACRILAN ACRYLIC PILE * * * AREA’S COMPETI- TIVE PRICES $9.95 TO $11.95 SQ. YD. 7.78 SQ. YD.,” as being “Monarch Kenesaw or Fairway quality patterns * * * Mohawk Mayflower or Glencairn” (Tr. 178).

21. Mr. Koman then identified the carpet advertised in the seventh seoment of CX 68, “A QUALITY ASSURED CARPET FROM DIENER’S SAVE $4.39 SQ. YD. FABULOUS ‘50’ NYLON PILE * * * AREA’S COMPETITIVE PRICE $9.95 SQ. YD. 5.56 SQ. YD.,” as being “Monarch Twin Star, * * * Alden Contessa or Glen” (Tr. 178).

92. Mr. Koman further testified that Mr. Reznick also identified the © “HEAVY WAFFLE RUBBERIZED PADDING Reg. $1.49 Sq. Yd. 76¢ SQ. YD.” advertised in CX 68 as being Orange Supreme, 42 cunce, manufactured by Crown, and at times it was the Diplomat DIENER'S,; INC:, ET AL. - 961 945 °° Initial Decision padding, 88 ounce. With respect’ to the “FHICK LUXURY WAFFLE FOAM RUBBER PADDING Reg. $1.95 Sq. Yd. $1.16 SQ. YD.,” advertised in CX 68, Mr. Koman testified that Mr. Reznick identified this as either the Golden Sparkle or Somerset. padding manufactured by Crown, or the Washingtonian or rubber top. padding from the Allen-Company (Tr. 175-176). _ 23. Mr. Koman further testified that Mr. Reznick identified the carpet stair tread sets advertised. in the lower left-hand. corner of CX 68, “Reg. $24.95 Set 10.66 SET” as being manufactured by Montauk Rug and Carpet Co: of New York: City, and. were offered by Diener’s at prices. ranging from $10.66+$10.88 on an advertised basis, and at unadvertised times for not more than ‘$13.00 per.set: In answer to a question: by: complaint counsel as to whether Mr. Reznick made “any explanation as to:why there was a regular $24.95 representation on the ad,” Mr..Koman. replied: “Outside of the fact that the stair tread sets.at other locations, competitors might be selling: for — $24.95 a set. But, as far as Diener’s regular retail. price, they. never ‘sold. it for* more than $13. He admitted that, that that: particular segment carpet stair. tread was in error, and that should be changed” (Tr. 178). :

24. In reply to a question by complaint counsel as to whether Mr. Reznick offered any explanation as to how he determined the “area competitive price” for the carpeting advertised in CX 68, Mr. Koman replied as follows:

Yes, he advised me that with respect to either the representation “regular” or the representation “area’s competitive price,” or to obtain the other saving. represautations contained in such ads, they would normally take or he would take the distrifuter’s cost on a cut or raw basis, and with this price he would times it by a 60 percent markup. which he stated was the normal markup for most carpeting concerns located in the Metropolitan D.C. Area, and that the cut order price plus the markup would equal either the regular or the area's competitive price (Tr. 179). - 25. Mr. Koman testified that he then examined sales tickets from each of the Diener’s stores covering the period from June through October and, for some stores, through November, 1967, to determine the actual prices at which Diener’s were selling the identified carpeting and padding (Tr. 179-180) ; and that, after examining the sales tickets, he found no evidence of sales of the carpeting, padding, and stair treads advertised in CX 68 at the higher, regular prices set forth in the various segments of CX 68 (Tr. 180; 516). Mr. Koman further testified that. he then made a selection “* * * of certain merchandise that was featured on the sales tickets at either the advertised price, or the price higher, but not the higher regular price. A sampling of these 962 FEDERAL TRADE COMMISSION. DECISIONS Initial Decision; 81 FTC.

sales tickets appears as Commission. Exhibits 1 through 44” (Tr. 180- 181). Mr. Koman further testified that, due to the fact that Diener’s use various colors of sales tickets for each of their stores, such as pink, blue, etc., photostatic representations of some of these sales tickets are not legible, and it was not until he received the photostats of the sales tickets (CX 1-44), during his visit to Diener’s on February 27, 1968, did he become aware that some of the sales tickets were not legible (Tr. 180-181; 190). (This hearing examiner has examined each ‘of the copies of sales invoices which are in evidence (CX 1-44), and approximately 23 of the 44 copies are illegible. ) 26. Mr. Koman also ‘testified that he questioned Mr. Reznick concerning some of the. representations of Diener’s in an advertisement in the J uly 20, 1967 issue of the Washington: Post (CX 71). In this advertisement. Diener’s announced that. they ‘had purchased from James Lees & Sons Company its entire roll inventory of Romantica carpeting and: Diener’s were offering this carpeting.as follows: AREA’S COMPETITIVE PRICE $1195 SQ. YD. SOLD FOR AS LOW AS $9.95-SQ: YD. DIENER’S SPECIAL: PURCHASE PRICE ONLY 6.68 SQ. YD. Mr. Koman testified that he questioned Mr. Reznick with regard to the representation in this advertisement, “SOLD FOR AS LOW AS $9.95 SQ. YD.,” and that Mr. Reznick replied that, “* * * if Reznick made purchases during 1966 and the early part of 1967 that it would have been sold by Diener’s for as low as $9.95 a square yard” (Tr. 215). Mr. Koman further testified that Diener’s did not purchase Romantica carpeting in 1965, and only offered it through special order at their Rhode Island Avenue store (Tr. 217). With respect to the representation of “AREA’S COMPETITIVE PRICE $11.95 SQ. YD.” in CX 71, Mr. Koman testified that Mr. Reznick explained that Diener’s arrived at the area’s competitive price “* * * if the merchandise was purchased at distributor cut order price and if the retailer took a 60 per cent markup on the cut order price, it would be the area’s competitive price” (Tr. 217).

27. By and through the use of the representations “DIENER’S STOREWIDE CARPET SALE” in CX 61 and 88, for example, and “FANTASTIC 6 STORE FACTORY INVENTORY CLEAR- ANCE” in CX 90, for example, Diener’s represented that, during the period of “DIENER’S STOREWIDE CARPET SALE” and “FANTASTIC 6 STORE FACTORY INVENTORY CLEAR- ANCE,” the advertised price of any merchandise contained in the said advertisements represents a reduction from the price at which respondents have made a bona fide offer to sell, and have sold, said merchandise on a regular basis for a reasonably substantial period DIENER’S, INC., ET AL. _ 963 945 Initial Decision ) of time in the recent, regular course of their business. And, in this connection, Mr. Reznick testified that, when Diener’s used the words “regular price” in an advertisement, Diener’s meant that Diener’s “* “* * had previously sold merchandise for the regular price” (Tr. 420). When such representations are used in connection with the words - “regular price,” Diener’s thereby represent that they have, in the past, made a bona fide offer to sell, and have sold, said merchandise on a regular basis. However, the evidence shows that the advertised price of certain merchandise did not represent a reduction from the price at which Diener’s have made a bona fide offer to sell, or have sold, said merchandise on a regular basis for a reasonably substantial period of time in the recent, regular course of their business. For example, in CX 79, 80, 85, and 86, Diener’s advertised Romantica carpeting, a selfidentifying pattern or quality, as follows: “* * * REG. $9.95 Sq. Yd. * * * ONLY 7.88 SQ. YD.” Mr. Koman testified, among other things, that he obtained all sales receipts or invoices for each store operated by Diener’s for the period, June through November, 1967 (CX. 1-44), for the specific purpose of ascertaining whether Diener’s ever sold the carpeting at the higher. regular price and found no sales at the advertised regular price (Tr. 179-180;.516)..An examination of the legible copies of the sales receipts (CX 1-44), which are in evicence, do not show any sales of Romantica at the advertised regular price of $9.95 per square yard, and, at the hearing, respondents did not offer any sales receipt or otherwise go forward with evidence to rebut or contradict the evidence offered by complaint counsel to the effect that an examination of the Diener’s sales invoices for the period, June through November, 1967, did not show any sales of Romantica at the advertised higher regular price of $9.95 per square yard. Sales receipts or invoices CX 7, 10 and 36 do list sales of Romantica at $6.63 per square yard, and CX 43 lists a sale of Romantica at $7.00 per square yard. It is found, therefore, that the representation of Diener’s that $9.95 is their regular price for Romantica carpeting is false. 28, Other examples of deceptive use by Diener’s of the word “Regular” or “Reg.” are their regular price representations with respect to carpet stair tread sets, “* * * Reg. $24.95 Set $10 SET,” as advertised in CX 74, 77, 105, 115, 118-120, 129-181, and 149-150. (See Paragraph numbered 23 of this decision as to Mr. Koman’s testimony with regard to Mr. Reznick’s explanation as to the use by Diener’s of the representation “Reg. $24.95 Set” for their stair tread sets.) None of the legible copies of sales receipts (CX 1-44), which are in evidence, show any sales of carpet stair tread sets for $24.95 (Tr. 180). However, CX 18 reflects a sale of stair tread sets at $10.88. Upon the basis of 964: FEDERAL TRADE COMMISSION’ DECISIONS Initial: Decision. 81 FEC.

the’ testimony, itis: ‘found ‘thatthe representation by Diener’s: that $24. 95 is their 1 regular’ price for stair: tread sets is false and. misleading. . ; ;

“29. The representation of Diener’s with: respect to the. “regular” price being false; the representations of Diener’s in their advertisements-of carpet savings: of “34% to 63%” in CX: 79 and 80, and “33% to 64%” in CX.85 are also: false and misleading since a purchaser of the advertised. Romantica:carpet would not realize a ‘savings of the stated percentage amount from the actual. price at. which the carpet was offered for sale or sold by Diener’s in good faith fora reasonably substantial. period: ‘of ‘time in ) the recent, regular’ course: of: ‘their business. 5 1 2 1 12 3 1378 1175 5 6 54.952690 >4 1 2 1 13 0 811 1168 1299 83 -1 5 1 2 1 13 1 811 1202 135 33 0.000000 80.:In5 1 2 1 13 2 967 1204 49 31 86.651108 an5 1 2 1 13 3 1030 1175 126 64 40.638371 effort:5 1 2 1 13 4 1152 1202 49 34 94.206184 to:5 1 2 1 13 5 1182 1170 201 78 48.015015 establish.5 1 2 1 13 6 1390 1176 58 62 96.909668 thes 1 2 1 13 7 1438 1171 2 2 32.300476 »5 1 2 1 13 8 1467 1168 218 81 67.166862 allegations.5 1 2 1 13 9 1684 1182 178 59 64.538895 ‘contained5 1 2 1 13 10 1883 1175 17 42 91.029480 i5 1 2 1 13 11 1891 1214 37 27 95.045509 in5 1 2 1 13 12 1920 1178 2 2 0.000000 :5 1 2 1 13 13 1950 1184 160 67 41.894680 subpata-4 1 2 1 14 0 784 1217 1326 103 -1 5 1 2 1 14 1 784 1217 135 103 78.465576 graphs5 1 2 1 14 2 926 1251 81 35 79.592216 4-of5 1 2 1 14 3 1014 1252 223 51 93.296379 Paragraphs5 1 2 1 14 4 1249 1254 168 35 25.949753 Fiveand5 1 2 1 14 5 1432 1256 62 34 96.999313 Six5 1 2 1 14 6 1507 1257 119 33 1.581413 ofthe5 1 2 1 14 7 1630 1258 197 42 32.059410 complaint:5 1 2 1 14 8 1831 1259 86 32 32.059410 with5 1 2 1 14 9 1926 1259 136 43 96.699265 respects 1 2 1 14 10 2072 1264 38 29 96.699265 to4 1 2 1 15 0 787 1301 1324 92 -1 5 1 2 1 15 1 787 1302 133 41 48.964500 “area’s'5 1 2 1 15 2 928 1301 226 76 90.366447 competitive5 1 2 1 15 3 1164 1306 131 77 81.231155 Price,”5 1 2 1 15 4 1303 1304 198 72 48.641357 complaint’5 1 2 1 15 5 1505 1305 144 71 67.751434 counsel:5 1 2 1 15 6 1656 1307 128 69 91.900764 offered5 1 2 1 15 7 1798 1307 72 64 85.699127 the:5 1 2 1 15 8 1831 1304 26 89 31.743164 we5 1 2 1 15 9 1871 1308 201 81 64.014915 testimony5 1 2 1 15 10 2071 1309 40 61 96.761559 of2 1 3 0 0 0 762 1413 1351 1309 -1 3 1 3 1 0 0 762 1413 1351 1205 -1 4 1 3 1 1 0 789 1413 1324 96 -1 5 1 3 1 1 1 789 1422 73 66 63.837589 19495 1 3 1 1 2 899 1413 110 84 56.495567 (Te5 1 3 1 1 3 998 1417 104 82 31.692474 48),5 1 3 1 1 4 1130 1426 72 64 55.682144 Mr:5 1 3 1 1 5 1215 1424 136 67 84.993118 ‘Berlin5 1 3 1 1 6 1374 1426 149 80 93.422073 testified5 1 3 1 1 7 1541 1458 99 34 67.798630 ‘that:5 1 3 1 1 8 1638 1425 138 82 48.985348 ‘Kann’5 1 3 1 1 9 1769 1467 25 26 12.003693 S!5 1 3 1 1 10 1797 1425 97 83 78.459595 ‘sold5 1 3 1 1 11 1901 1425 212 70 39.535961 “Monaich’s5 1 3 1 1 12 2089 1459 22 50 55.934151 Ss4 1 3 1 2 0 783 1501 1326 66 -1 5 1 3 1 2 1 783 1502 226 53 35.001518 “Langston”5 1 3 1 2 2 1016 1501 145 66 95.694717 patterns 1 3 1 2 3 1168 1509 266 42 65.029739 carpet:in:19675 1 3 1 2 4 1440 1509 49 33 65.029739 at5 1 3 1 2 5 1492 1507 94 41 96.755516 $9.955 1 3 1 2 6 1596 1511 78 31 94.359688 ands 1 3 1 2 7 1678 1511 119 38 9.501350 $10.955 1 3 1 2 8 1805 1523 63 30 93.112656 pers 1 3 1 2 9 1879 1509 230 46 66.069687 square-yard:4 1 3 1 3 0 787 1555 1324 46 -1 5 1 3 1 3 1 783 1552 83 36 93.631546 Thes 1 3 1 3 2 875 1555 206 44 67.044891 Langston.5 1 3 1 3 3 1072 1569 40 23 67.044891 is5 1 3 1 3 4 1117 1558 72 33 87.440048 ones 1 3 1 3 5 1195 1559 48 32 87.440048 of5 1 3 1 3 6 1254 1560 62 32 81.926689 thes 1 3 1 3 7 1326 1561 158 40 94.198814 patterns5 1 3 1 3 8 1492 1560 131 36 94.198814 which:5 1 3 1 3 9 1631 1562 69 31 93.236923 Mr:5 1 3 1 3 10 1710 1562 149 32 89.258286 Koman.5 1 3 1 3 11 1870 1563 155 40 96.966515 testified5 1 3 1 3 12 2032 1562 79 34 96.745361 that4 1 3 1 4 0 784 1606 1327 49 -1 5 1 3 1 4 1 784 1602 67 37 93.298676 Mr:5 1 3 1 4 2 873 1606 151 35 92.244965 Reznick5 1 3 1 4 3 1045 1608 193 33 95.849190 identified5 1 3 1 4 4 1235 1617 58 25 48.518333 ‘as’5 1 3 1 4 5 1300 1611 112 41 19.626610 being:5 1 3 1 4 6 1422 1610 158 33 19.626610 referred5 1 3 1 4 7 1594 1616 37 28 96.558815 to5 1 3 1 4 8 1650 1611 46 33 53.890724 in:5 1 3 1 4 9 1705 1613 58 31 53.890724 thes 1 3 1 4 10 1783 1612 103 32 96.621399 third:5 1 3 1 4 11 1898 1613 156 42 96.112450 segments 1 3 1 4 12 2071 1614 40 33 96.112450 of4 1 3 1 5 0 762 1640 1346 61 -1 5 1 3 1 5 1 762 1676 3 1 90.862808 -5 1 3 1 5 2 787 1657 67 33 95.483276 CX5 1 3 1 5 3 869 1660 51 31 95.944527 68,5 1 3 1 5 4 936 1659 148 32 93.120201 wherein.5 1 3 1 5 5 1099 1659 154 33 91.709503 Diener’s5 1 3 1 5 6 1268 1662 170 31 95.887215 advertises 1 3 1 5 7 1452 1662 53 31 94.486000 “A5 1 3 1 5 8 1520 1662 222 39 94.486000 QUALITY5 1 3 1 5 9 1756 1640 227 57 96.576248 ASSURED5 1 3 1 5 10 1997 1665 111 33 92.046341 CAR-4 1 3 1 6 0 785 1708 1326 44 -1 5 1 3 1 6 1 785 1708 96 32 96.302650 PETS 1 3 1 6 2 897 1709 137 33 93.215355 FROM5 1 3 1 6 3 1050 1710 225 34 88.709274 DIENER’S5 1 3 1 6 4 1293 1712 126 33 96.474571 SAVES 1 3 1 6 5 1435 1712 93 38 94.403969 $3.395 1 3 1 6 6 1544 1713 63 33 96.617897 TO5 1 3 1 6 7 1622 1713 92 37 84.375824 $4.895 1 3 1 6 8 1730 1713 69 39 95.759743 SQ.5 1 3 1 6 9 1817 1715 77 31 93.477448 YD.5 1 3 1 6 10 1912 1714 199 35 83.769440 CUSTOM.4 1 3 1 7 0 785 1758 1325 49 -1 5 1 3 1 7 1 785 1758 222 39 96.642113 QUALITY5 1 3 1 7 2 1042 1761 145 33 96.049469 SOLIDS 1 3 1 7 3 1221 1762 159 33 96.470093 COLORS 1 3 1 7 4 1414 1763 249 44 96.212540 GRACIOUS5 1 3 1 7 5 1697 1764 162 34 91.847672 PLUSH5 1 3 1 7 6 1891 1765 219 33 90.939323 ACRILAN4 1 3 1 8 0 785 1809 1323 45 -1 5 1 3 1 8 1 785 1809 216 35 95.309151 ACRYLIC5 1 3 1 8 2 1018 1812 113 31 92.706688 PILES 1 3 1 8 3 1151 1813 16 17 89.907417 *5 1 3 1 8 4 1188 1812 16 18 89.907417 *5 1 3 1 8 5 1233 1813 6 17 91.934021 *5 1 3 1 8 6 1257 1812 172 35 91.669899 AREA’S5 1 3 1 8 7 1448 1814 339 34 95.752182 COMPETITIVE5 1 3 1 8 8 1805 1816 174 33 90.566238 PRICES5 1 3 1 8 9 1995 1816 113 38 90.566238 $13.954 1 3 1 9 0 784 1860 1325 49 -1 5 1 3 1 9 1 784 1860 65 34 96.520134 TO5 1 3 1 9 2 865 1860 112 39 94.816505 $14.955 1 3 1 9 3 995 1861 69 39 95.445274 SQ.5 1 3 1 9 4 1082 1863 76 31 95.445274 YD.5 1 3 1 9 5 1177 1865 91 35 96.502678 10.565 1 3 1 9 6 1285 1863 68 39 95.899338 SQ.5 1 3 1 9 7 1371 1865 99 31 95.245880 YD.”5 1 3 1 9 8 1493 1865 86 41 92.869598 (CX5 1 3 1 9 9 1594 1867 54 39 92.869598 68;5 1 3 1 9 10 1666 1866 58 31 94.650833 Tr.5 1 3 1 9 11 1741 1866 76 40 96.077560 172;5 1 3 1 9 12 1835 1868 177 41 93.279427 249-250).5 1 3 1 9 13 2030 1868 79 32 70.906387 It.is4 1 3 1 10 0 786 1890 1323 69 -1 5 1 3 1 10 1 786 1922 77 21 69.504913 seen5 1 3 1 10 2 878 1912 78 32 95.083305 that5 1 3 1 10 3 971 1912 58 32 93.093353 thes 1 3 1 10 4 1046 1914 132 31 90.818344 Kann’s5 1 3 1 10 5 1195 1914 93 40 96.705948 prices 1 3 1 10 6 1305 1914 57 32 95.178452 for5 1 3 1 10 7 1378 1915 58 32 96.217804 thes 1 3 1 10 8 1452 1916 177 41 95.985252 Langston5 1 3 1 10 9 1641 1890 33 58 80.765724 is5 1 3 1 10 10 1687 1917 247 42 70.949707 considerably:5 1 3 1 10 11 1944 1918 65 32 70.949707 less5 1 3 1 10 12 2023 1919 86 31 95.632828 than4 1 3 1 11 0 785 1962 1324 48 -1 5 1 3 1 11 1 785 1962 61 31 95.824615 thes 1 3 1 11 2 870 1962 192 35 43.490158 “AREAS5 1 3 1 11 3 1090 1965 339 34 95.707291 COMPETITIVE5 1 3 1 11 4 1457 1967 175 32 95.087234 PRICES5 1 3 1 11 5 1659 1967 111 38 91.590172 $13.955 1 3 1 11 6 1798 1968 64 33 95.962257 TO5 1 3 1 11 7 1888 1968 133 37 94.412102 $14.95”5 1 3 1 11 8 2047 1979 62 31 96.688675 per4 1 3 1 12 0 785 2014 1324 43 -1 5 1 3 1 12 1 785 2014 144 41 96.385147 squares 1 3 1 12 2 932 2014 74 32 96.594894 yards 1 3 1 12 3 1019 2016 216 39 96.759567 represented5 1 3 1 12 4 1248 2016 44 41 93.296730 by5 1 3 1 12 5 1306 2016 154 33 91.421799 Diener’s5 1 3 1 12 6 1473 2017 36 32 96.706688 in5 1 3 1 12 7 1523 2017 68 33 96.811592 CX5 1 3 1 12 8 1603 2019 48 30 96.327019 68.5 1 3 1 12 9 1666 2018 65 32 96.327019 Mr.5 1 3 1 12 10 1745 2019 120 31 96.783882 Berlin5 1 3 1 12 11 1877 2019 71 31 96.852112 also5 1 3 1 12 12 1961 2019 148 33 96.604202 testified4 1 3 1 13 0 783 2063 1325 44 -1 5 1 3 1 13 1 783 2063 78 32 93.019249 that5 1 3 1 13 2 880 2065 133 33 41.154541 Kann’s5 1 3 1 13 3 1033 2066 74 32 93.162376 sold5 1 3 1 13 4 1126 2067 194 32 92.285110 Monarch’s5 1 3 1 13 5 1340 2067 116 33 95.034401 “Parks 1 3 1 13 6 1474 2068 116 33 96.062531 West”5 1 3 1 13 7 1610 2068 35 32 88.224213 in5 1 3 1 13 8 1665 2069 80 32 88.224213 19675 1 3 1 13 9 1765 2073 36 28 95.860611 at5 1 3 1 13 10 1818 2064 89 42 96.561348 $4.955 1 3 1 13 11 1928 2070 69 31 95.636925 ands 1 3 1 13 12 2015 2070 93 37 96.327049 $5.954 1 3 1 14 0 783 2113 1326 46 -1 5 1 3 1 14 1 783 2113 62 43 96.883492 pers 1 3 1 14 2 861 2126 120 31 96.665550 squares 1 3 1 14 3 995 2116 97 42 95.814728 yard.5 1 3 1 14 4 1109 2117 197 42 96.127747 According5 1 3 1 14 5 1318 2122 37 28 96.127747 to5 1 3 1 14 6 1370 2119 66 31 92.549278 Mr.5 1 3 1 14 7 1453 2118 148 41 91.872086 Koman,5 1 3 1 14 8 1615 2120 66 31 93.260704 Mr.5 1 3 1 14 9 1697 2120 150 32 91.506386 Reznick5 1 3 1 14 10 1861 2120 175 32 96.666214 identified5 1 3 1 14 11 2050 2121 59 31 96.416916 thea 1 3 1 15 0 785 2166 1324 45 -1 5 1 3 1 15 1 785 2166 93 38 96.273361 Parks 1 3 1 15 2 898 2167 96 32 95.980415 West5 1 3 1 15 3 1012 2178 38 25 96.616325 as5 1 3 1 15 4 1068 2167 102 42 95.910477 beings 1 3 1 15 5 1189 2179 62 21 96.288284 ones 1 3 1 15 6 1269 2169 40 31 96.214371 of5 1 3 1 15 7 1327 2169 56 31 96.258453 thes 1 3 1 15 8 1402 2173 118 38 94.190872 carpets 1 3 1 15 9 1539 2173 154 38 94.190872 patterns5 1 3 1 15 10 1711 2170 128 33 96.271393 offered5 1 3 1 15 11 1857 2171 35 32 96.465225 in5 1 3 1 15 12 1910 2172 59 31 96.356049 thes 1 3 1 15 13 1986 2172 123 31 96.376534 second4 1 3 1 16 0 783 2217 1326 44 -1 5 1 3 1 16 1 783 2221 152 36 95.678299 segments 1 3 1 16 2 959 2217 38 31 96.127113 of5 1 3 1 16 3 1022 2218 68 33 91.718208 OX5 1 3 1 16 4 1110 2220 53 40 84.504654 68,5 1 3 1 16 5 1189 2219 38 17 84.504654 “*5 1 3 1 16 6 1255 2219 58 25 63.405678 *.*5 1 3 1 16 7 1339 2220 142 40 95.645790 Luxury5 1 3 1 16 8 1505 2220 144 41 95.963692 Quality5 1 3 1 16 9 1673 2221 243 34 95.606842 MONARCH5 1 3 1 16 10 1940 2223 169 33 96.766937 NYLON4 1 3 1 17 0 785 2267 1324 43 -1 5 1 3 1 17 1 785 2267 113 33 88.367531 PILES 1 3 1 17 2 916 2269 16 16 64.332054 *5 1 3 1 17 3 953 2269 15 17 64.332054 *5 1 3 1 17 4 987 2269 17 16 66.974564 *5 1 3 1 17 5 1042 2269 150 34 88.960304 AREA’S5 1 3 1 17 6 1225 2270 317 34 94.795044 COMPETITIVE5 1 3 1 17 7 1568 2272 145 33 96.635857 PRICES 1 3 1 17 8 1729 2272 112 37 96.847778 $10.955 1 3 1 17 9 1858 2272 67 38 95.862892 SQ.5 1 3 1 17 10 1942 2274 77 31 95.323830 YD.5 1 3 1 17 11 2036 2274 73 32 96.863373 6.674 1 3 1 18 0 784 2316 1324 49 -1 5 1 3 1 18 1 784 2316 69 40 92.851929 SQ.5 1 3 1 18 2 876 2319 98 31 90.511169 YD.”5 1 3 1 18 3 1000 2319 86 41 95.732613 (CX5 1 3 1 18 4 1105 2322 55 39 96.027939 68;5 1 3 1 18 5 1182 2321 58 32 92.637627 Tr.5 1 3 1 18 6 1262 2320 75 42 96.691200 172;5 1 3 1 18 7 1358 2322 93 42 96.263573 250).5 1 3 1 18 8 1472 2321 106 42 96.326302 Thus,5 1 3 1 18 9 1597 2322 26 32 96.602219 it5 1 3 1 18 10 1642 2334 145 31 96.617958 appears5 1 3 1 18 11 1807 2324 76 31 96.886169 that5 1 3 1 18 12 1901 2324 57 32 92.863701 thes 1 3 1 18 13 1986 2324 122 32 91.163330 Kann’s4 1 3 1 19 0 784 2369 1324 47 -1 5 1 3 1 19 1 784 2369 93 41 88.664803 prices 1 3 1 19 2 896 2370 56 32 96.764938 for5 1 3 1 19 3 968 2371 58 31 96.764938 thes 1 3 1 19 4 1044 2371 93 32 96.917595 Parks 1 3 1 19 5 1154 2372 96 33 96.552376 West5 1 3 1 19 6 1267 2372 28 32 96.905441 is5 1 3 1 19 7 1312 2373 101 32 95.831131 much5 1 3 1 19 8 1430 2374 63 31 95.831131 less5 1 3 1 19 9 1510 2373 84 32 96.779991 than5 1 3 1 19 10 1611 2374 57 32 96.839737 thes 1 3 1 19 11 1686 2385 77 21 94.705238 areas 1 3 1 19 12 1780 2374 218 42 96.423172 competitive5 1 3 1 19 13 2014 2375 94 41 96.805901 price4 1 3 1 20 0 785 2419 1324 72 -1 5 1 3 1 20 1 785 2419 215 42 93.296005 represented5 1 3 1 20 2 1014 2421 213 43 88.319160 by-Diener’s5 1 3 1 20 3 1241 2422 36 33 96.923416 in5 1 3 1 20 4 1290 2424 57 31 96.120041 thes 1 3 1 20 5 1355 2424 127 31 96.120041 seconds 1 3 1 20 6 1494 2428 153 38 90.081772 segments 1 3 1 20 7 1658 2424 39 32 96.700287 of5 1 3 1 20 8 1711 2425 28 66 70.809349 C5 1 3 1 20 9 1732 2425 46 31 38.278206 Xx5 1 3 1 20 10 1791 2427 50 30 91.262070 68.5 1 3 1 20 11 1878 2425 65 31 91.664703 (Mr.5 1 3 1 20 12 1958 2427 151 31 88.338326 Reznick4 1 3 1 21 0 783 2472 1325 58 -1 5 1 3 1 21 1 783 2472 146 32 96.783234 testified5 1 3 1 21 2 949 2472 77 32 96.119102 that5 1 3 1 21 3 1043 2473 58 32 96.573021 thes 1 3 1 21 4 1120 2474 112 32 96.511322 words5 1 3 1 21 5 1251 2474 98 32 76.575287 “areas 1 3 1 21 6 1369 2475 200 55 88.836243 competitiv5 1 3 1 21 7 1571 2487 17 20 44.759998 @5 1 3 1 21 8 1605 2475 114 43 95.353989 price”5 1 3 1 21 9 1738 2487 35 20 96.836487 as5 1 3 1 21 10 1791 2475 82 33 94.972427 used5 1 3 1 21 11 1891 2475 44 43 93.300346 by5 1 3 1 21 12 1954 2476 154 33 90.254433 Diener’s4 1 3 1 22 0 784 2523 1324 45 -1 5 1 3 1 22 1 784 2522 36 32 95.803940 in5 1 3 1 22 2 840 2523 89 31 95.351234 theirs 1 3 1 22 3 949 2524 213 42 96.404961 advertising5 1 3 1 22 4 1180 2536 105 21 65.903122 mean:5 1 3 1 22 5 1295 2526 59 31 65.903122 thes 1 3 1 22 6 1372 2526 94 40 96.729813 prices 1 3 1 22 7 1483 2527 150 41 96.632545 charged5 1 3 1 22 8 1651 2527 45 39 93.293976 by5 1 3 1 22 9 1715 2527 154 31 91.431229 Diener’s5 1 3 1 22 10 1888 2527 220 41 96.919830 competitors4 1 3 1 23 0 781 2557 988 64 -1 5 1 3 1 23 1 781 2573 60 32 93.017975 for5 1 3 1 23 2 857 2574 57 31 96.645638 thes 1 3 1 23 3 929 2584 91 22 96.344467 same5 1 3 1 23 4 1033 2586 40 20 96.730194 or5 1 3 1 23 5 1087 2576 216 39 96.571640 comparable5 1 3 1 23 6 1317 2577 238 32 96.494156 merchandise5 1 3 1 23 7 1568 2557 77 64 23.761002 I'Tr.5 1 3 1 23 8 1660 2577 109 41 83.734512 420].)3 1 3 2 0 0 784 2626 1324 96 -1 4 1 3 2 1 0 825 2626 1283 36 -1 5 1 3 2 1 1 825 2626 49 30 78.722740 31.5 1 3 2 1 2 898 2626 66 30 94.692177 Mr.5 1 3 2 1 3 989 2626 120 31 91.734413 Berlin5 1 3 2 1 4 1135 2627 137 32 96.518112 furthers 1 3 2 1 5 1295 2627 147 32 83.661751 testified5 1 3 2 1 6 1465 2628 77 31 83.661751 that5 1 3 2 1 7 1566 2629 132 31 91.695869 Kann’s5 1 3 2 1 8 1721 2628 70 31 96.211609 also5 1 3 2 1 9 1815 2629 74 31 76.704300 sold5 1 3 2 1 10 1912 2629 196 33 86.949799 Monarch’s4 1 3 2 2 0 784 2676 1324 46 -1 5 1 3 2 2 1 784 2676 132 41 96.410538 quality5 1 3 2 2 2 932 2687 38 20 96.626572 or5 1 3 2 2 3 988 2680 137 38 96.116875 patterns 1 3 2 2 4 1141 2681 120 38 96.257744 carpets 1 3 2 2 5 1274 2678 109 32 95.104584 called5 1 3 2 2 6 1400 2679 233 31 93.053062 “Kennesaw”5 1 3 2 2 7 1648 2682 37 28 95.397110 at5 1 3 2 2 8 1700 2679 91 37 93.273315 $6.955 1 3 2 2 9 1810 2680 196 41 53.476887 per‘squares 1 3 2 2 10 2020 2680 88 42 96.422775 yard .. DIENER’S, INC., ET AL. «> - 965 945 Anitial Decision and at an installed: price of. $9.00. per square yard..The Kennesaw pattern carpet is one-of the patterns which Mr. Koman testified that Mr. Reznick identified as. being referred. to in the sixth segment.of . CX 68, “* * * MOHAWK * MONARCH ACRILAN ACRYLIC ‘PILE * * * AREA’S COMPETITIVE. PRICES $9.95 TO $11.95: SQ..YD. 7.78 SQ. YD.” (CX 68; Tr. 178 ;.250). It is plainly evident that the Kann’s-price of $6.95 per square*yard for the Kennesaw is considerably less than the “AREA’S COMPETITIVE PRICES $9.95 TO $11.95 SQ.-YD.” represented by Diener’s in. the sixth segment of . 82. Another witness offered by complaint counsel was Mr. Kenneth Mink, buyer of: fioor coverings at Woodward & Lothrop; a department store, located in- Washington, D.C., with branch stores in Maryland and. Virginia: Mr. Mink testified as follows: In :1967, Woodward & Lothrop sold three’ patterns of carpeting manufactured. by, Monarch, “Delta,” “Royalite,”: and “Classic.”.. Woodward & Lothrop sold. the Delta pattern at $7.12 per square yard in 1967, without padding or installation. Woodward. &:Lothrop sold the Royalite at $8.12 per square ‘yard, and: the. Classic pattern at $10.12 per square yard: in 1967 (Tr. 267). The Delta is one of the patterns which Mr. Koman testified that Mr. Reznick identified as being referred to in the fifth segment of CX 68, “* * * Luxury Quality ACRILAN Acrylic Pile * * * AREA’S COMPETITIVE PRICE $10.95 SQ. YD. 8.89 SQ. YD.” (CX 68; Tr. 172). The Classic and Royalite are two of the patterns which Mr. Koman testified that Mr. Reznick identified as being referred to in the third segment of CX 68, “* * * CUSTOM QUALITY SOLID COLOR GRACIOUS PLUSH ACRILAN ACRYLIC PILE * * * AREA’S COMPETITIVE PRICES $13.95 TO $14.95 SQ. YD. 10.56 SQ. YD.” (CX 68; Tr. 172). It is plainly evident that Woodward & Lothrop’s prices for these three patterns of carpeting are considerably less than the area competitive prices as represented by Diener’s in | the third segment of CX 68.

33. Mr. Quinn M. Cardwell, general manager of Cardwell’s, Inc., a carpet specialty store in Arlington, Virginia, testified, among other . things, as follows: In 1967, Cardwell’s, Inc. carried several qualities of Monarch carpeting, including “Park West,” priced at $6.00 per square yard; “Langston” priced at $10.00 per square yard; “Classic,” at $10.00 per square yard, and “Delta” at $7.50 per square yard during the early part of 1967, and raised to $8.00 per square yard during the year 1967 (Tr. 277). Cardwell’s, Inc. also sold several lines of carpeting manufactured by James Lees and Sons Company, including “Romantica,” which Cardwell’s, Inc. retailed at $8.50 per square yard. Initial Decision 81 F-T.C.

34. Mr. John Taylor, carpet buyer for the Hecht Company, with stores in Washington, D.C., Maryland, and Virginia, testified as follows: In 1967, the Hecht Company sold several qualities of floor covering manufactured by Monarch, including “Delta” and “Kennesaw” at $8.09 per square yard; “Langston” at $10.95 or $11.95 per square yard; “Park West” at $5.00 per square yard; and “Royalite” at $9.95 per square yard. The Hecht.Company also sold a floor covering manufactured by Mohawk called “Avalon” at $14.95 per square yard. 35. Mr. Stanley Rochlin, buyer of floor covering for Giant Food, was another witness offered by complaint counsel, and testified as follows: In 1967, Giant Food offered‘and sold a floor covering manufactured by James Lees and Sons. Company by the name of “Roman- ‘tica” at $9.99 per square yard (Tr. 339). Giant Food also sold a quality of carpeting called “Contessa” at $12.99 per square yard (Tr. 340). Under a preponderance of the evidence, it is found that the allegations in subparagraphs 4 of Paragraphs Five and: Six of the complaint ‘have been: sustained.

.86. Complaint counsel contend that, through the use of the quoted statement “A Diener’s Exclusive Policy—buy today—have delivered and installed today, tomorrow or at your convenience,” set out.in Para- graph Four of the complaint, Diener’s represent that purchasers of floor coverings and carpets “in all instances when so desired will receive delivery and installation of said merchandise within 48 hours after such merchandise is purchased from respondents.” Complaint counsel contend that advertisements of Diener’s contain statements to the effect “that purchased merchandise will be delivered and installed the same or following day of the purchase,” which complaint counsel contend amounts to 48 hours. (See complaint counsel’s Eighteenth Proposed Finding of Fact.) This hearing examiner has examined each of the reproductions of the newspaper advertisements of Diener’s in the record and does not find an advertisement identical with the quoted statement set out in Paragraph Four of the complaint. As a matter of fact, the statements used by Diener’s in most of the advertisements in the record with respect to the Diener’s delivery and installation policy are as follows:

A DIENER’S EXCLUSIVE DELIVERY AND INSTALLATION POLICY— BUY TODAY—HAVE TODAY, TOMORROW OR AT YOUR CONVENIENCE (CX 68-89.) 37. A reasonable interpretation of the above statement does not support the contention advanced by complaint counsel that Diener’s were, by the above representation, obligated to install and deliver floor covering within 48 hours after purchase—such a construction - DIENER’S, INC., ET AL. 967 945 . Initial Decision would be strained and distorted. Complaint counsel offered the testimony of several customer purchasers of floor coverings from Diener’s, © but their testimony is unrelated to a claim of 48-hour delivery. The first witness testified that the carpet was not delivered within two weeks after its purchase as the salesman had promised at the time of purchase (Tr. 323-324). Another witness testified that he purchased carpet during the week in February 1968, and the salesman promised delivery on the following Saturday, but delivery was not made until five days later (Tr. 352-853). Another witness happened to be in Wheaton, Maryland, with her husband and daughter, and walked into the Diener’s store to look at carpeting. They decided to purchase a carpet and the salesman promised delivery in two to three weeks (Tr. 356-357). The carpeting was not delivered as promised (Tr. 359). The final witness testified that he purchased carpeting on September 2, 1968, and the salesman agreed to deliver and install it by the time the witness and his wife took possession of a new apartment on the first of October (Tr. 368). By the time the witness moved into the apartment on October 3, the padding had been installed but not the carpeting (Tr. 369).

38. Complaint counsel also contend that the alleged 48 hour delivery representation was violated even in instances of special orders of carpeting from the factory, which normally requires several weeks and, in some instances, several months for delivery, and also where the customer made application to a bank for a loan with which to pay for a carpet purchase. In cases of special order and bank loan applications, the salesman gives the customer an estimate as to the time the special order is expected from the factory (Tr. 74-75), and agrees to notify the customer as soon as Diener’s receive notification by the bank of its action on the customer’s bank loan application. This hearing examiner finds no merit in complaint counsel’s contentions with respect to the alleged 48 hour delivery representation. 39. With respect to the allegations that Diener’s mishandled, certain textile fiber products in violation of Section 4(a) of the Textile Fiber Products Identification Act and the rules and regulations thereunder, it is found that certain floor coverings advertised by Diener’s in the Washington Post and the Evening Star were falsely and deceptively advertised as to the name or amount of constituent fibers contained therein in that Diener’s, in disclosing the fiber content information as to floor coverings containing exempted backings, fillings, or paddings, failed to set forth such fiber content information in such a manner as to indicate that it applied only to the face, pile, or outer surface of the floor coverings and not the exempted backings, fillings, or 968 FEDERAL. TRADE COMMISSION DECISIONS Initial: Decision; 81 F-T.C.

paddings. In many of their newspaper advertisements which are in evidence herein, Diener’s failed to use the word “pile” or similar word So 'as to indicate: that the fiber information pertained: to the top or outer. surface of the floor covering: advertised. Some examples of the failure by Diener’s to 'so indicate in:advertisements of Oriental Rugs are CX: 49, 51, 54-63, 65, 66, 68-73 and many. others. Some examples with respect to Nylon Rugs.are CX 49, 52,.79, 80, 85, 86 and many others. Examples with respect: to Acrilan-Acryli¢ carpeting are OX 72, 78, 81; 87-90 and many others. Somé examples with respect to Fortrel Polyester or: Kodel Polyester. carpeting are CX 98, 94; 101, 102, 106 and others: Examples with respect to Herculon-Olefin carpeting are-CX 88, 89,96, 97, 99-102 and others. Examples with respect to 100% Imported. Wool ‘carpeting are CX 95.and 144, in violation of Section: 4(a) and ‘Rule: 11 of: the. ‘Textile Fiber Products Identification Acct. ‘ » 405: Certain. of, the Diener’ Ss: floor ¢ coverings ‘were falsely and deceptively advertised:in that Diener’s failed to set:forth the required; information. asto fiber content-as specified:in Section 4(c). of the Textile Fiber Products Identification Act and the rules and regulations there- .under im that in some: newspaper advertisements the carpeting’ was — ‘described by such:fiber-connoting terms as “Acrilan,” “Kodel,” and ‘““Herculon,” and the true generic name of the fiber contained in such carpeting was not. set forth, in violation of Section 4(c) and Rule 41 of the Textile Fiber Products Identification Act. In many of their newspaper advertisements, when offering the fiber trade name Acrilan, Diener’s failed to use the generic name Acrylic, such as in CX 49, 50, 52-57, 60, 63, 65, and others; failed to use the generic name Polyester when advertising the fiber trade names Kodel or Fortrel, in CX 76, 100-110, 123-128, and others, and the generic name Olefin when advertising the fiber trade name Herculon, as in CX 73, 74, 77, 78, and others, in violation of Section 4(c) and Rule 41 of the Textile Fiber Products Identification Act. Also, in many of the Diener’s newspaper advertisements in evidence, asterisks and abbreviations are used in an apparent attempt to provide the fiber content. information required by Section 4(a) and Rule 41 of the Textile Fiber Products Identification Act. The use of asterisks or abbreviations is specifically prohibited by Rule 5 of the regulations promulgated under the Act. 41. By means of the aforesaid advertisements and others of similar import and meaning not specifically referred to herein, respondents have falsely and deceptively advertised textile fiber products in violation of the Textile Fiber Products Identification Act in that said textile fiber products were not advertised in accordance with the rules and regulations promulgated thereunder in the following respects: DIENER'S, INC., ET AL. 069 945 Initial. Decision (a) In disclosing the fiber.content information as to floor coverings containing exempted backings, fillings, or paddings, such disclosure was not made in such a manner as to indicate that such fiber content information related only to the face, pile or outer surface of the floor covering and not to the backings, fillings, or paddings, in violation of Rule 11 of the'aforesaid rules and Tegulations. (b) ‘A fiber trademark was used in advertising textile fiber products, without a full disclosure of the fiber content information required by said Act, and the regulations thereunder’ in at least one instance in said advertisement, in violation of Rule #(a) of the aforesaid rules and regulations. | -(c) A fiber trademark was “used i in advertising textile fiber products, containing only one fiber and such fiber trademark did not appear, at Iéast once in the said‘ advertisement, in immediate proximity and conjunction with the generic name of the fiber, in plainly legible and conspicuous type, in violation of the Rule 41(c) of the aforesaid rules and regulations.

42. The use by Diener’s of the. aforesaid false, misleading and deceptive. ‘statements, representations, acts and practices has had, and now has, the capacity and. tendency . to mislead members of the purchasing public as to the savings available to them on floor covering and carpeting from Diener’s, and misleads them into the mistaken and erroneous belief that said statements and representations are true and into the purchase of substantial quantities of respondents’ merchandise by reason of said erroneous and mistaken belief. 43. In the conduct of their business, Diener’s have been in substantial competition, in commerce, with corporations, firms and individuals engaged in the sale of floor covering and carpeting of the same general kind and nature as that.sold by Diener’s. The aforesaid acts and practices of Diener’s as found herein were, and are, all to the preju- - dice and injury of the public and of respondents’ competitors and constituted, and now constitute, unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce in violation of Section 5 of the Federal Trade Commission Act. 44, The acts and practices of respondents as herein found in Findings 39-41 herein were, and are, in violation of the Textile Fiber Products Identification Act and the rules and regulations promulgated thereunder, and constitute unfair methods of competition in commerce, and unfair and deceptive acts and practices in commerce, under the Federal Trade Commission Act.

494-841— 75 62 Initial Decision 81 F.T.C. , CONCLUSIONS 1. The Federal Trade Commission has jurisdiction over the subject matter of this proceeding and over the respondents, and this proceeding 1s in the public interest.

2. Complaint counsel request that any order to be issued herein be directed to the individual respondents, Milton Diener, Walter Diener, and Harold Reznick, in their capacities as individuals, as well as officers and directors of the corporate respondents. The evidence shows, and it has been found, that Mr. Walter Diener has not been active | in recent years in management responsibilities of the corporate respondents due to ill health. Although he visits his office on days when he feels physically able to do so, he does not participate in full management responsibilities. For this reason, the order herein will not be directed toward Mr. Walter Diener as an individual. ORDER:

It is ‘ordered, That respondents Diener’s, Inc., Diener’s of Virginia, Inc., Diener’s of Rockville, Inc., Diener’s of Lanham, Inc., Diener’s of Tysons Corner, Inc., and Mayfield Compariy, Inc., corporations, and their officers, and Milton Diener and Harold Reznick, individually and as officers of said corporations, and respondents’ agents, representatives and employees, directly or through any corporate or other device, in connection with the advertising, offering for sale, sale or distribution of rugs, carpets, floor coverings, or any other articles of merchandise, in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Using the words “Diener’s Storewide Carpet Sale,” “Fantastic 6 Store Factory Inventory Clearance” or any other word or words of similar import or meaning unless the price of such merchandise being offered for sale constitutes a reduction, in an amount not so insignificant as to be meaningless, from the actual bona fide price at which such merchandise was sold or offered for sale to the public on a regular basis by respondents for a reasonably substantial period of time in the recent, regular course of their business.

2. Using the words “Save” or “Savings” or any other word or words of similar import or meaning in conjunction with a stated dollar or percentage amount of savings, unless the stated dollar or percentage amount of savings actually represents the difference between the offering price and the actual bona fide price at which such merchandise had been sold or offered for sale on a regular DIENER’S, INC., BT AL. 971 Initial Decision basis to the public by the respondents for a reasonably substantial period of time in the recent, regular course of their business. 3. Using the words “Regular, ” “Reg..” or any other words of similar import and meaning, to refer to any price amount which is in excess of the price at which such merchandise has been sold or offered for sale in good faith by respondents for a reasonably substantial period of time in the recent, regular course of their business and unless respondents’ business records establish that said amount is the price at which such merchandise has been sold or offered for sale in good faith by respondents for a.reasonably substantial period of time in the recent, regular course of their business. Lo 4. Using the words “area’s: ‘competitive price,” or words of similar import and meaning, to refer to any price amount which is appreciably in excess of the prices at which substantial sales of the same merchandise have been made in respondents’ trade area -and unless respondents have in good faith conducted a market survey which establishes the validity of the trade area prices; or misrepresenting, in any manner, the price at which merchandise has been.sold in respondents’ trade area.

5. (a) Representing, in any manner, that by purchasing any of said merchandise, customers are afforded savings amounting to the difference between respondents’ stated price and respondents’ former price unless such merchandise has been sold or offered for sale in good faith at the former price by respondents for a reasonably substantial period of time in the recent, regular course of their business.

(b) Representing, in any manner, that by purchasing any of said merchandise, customers are afforded savings amounting to the difference between respondents’ stated price and a compared price for said merchandise in respondents’ trade area unless a substantial number of the principal retail outlets in the trade area regularly sell said merchandise at the compared price or some higher price.

(c) Representing, in any manner, that by purchasing any of said merchandise, customers are afforded savings amounting to the difference between respondents’ stated price and a compared value price for comparable merchandise, unless substantial sales of merchandise of like grade and quality are being made in the trade area at the compared price or a higher price and unless respondents have in good faith conducted a market survey or obtained a similar representative sample 972 _ «FEDERAL TRADE. COMMISSION ‘DECISIONS -Initial: Decision 81 FEC.

of prices in their tradé-area ‘which establishes the validity of . said compared pricé ‘and it is clearly and conspicuously dis- ‘closed that the compar ison is with ‘merchandise of like gradé and quality. me 6. Misrepresenting, in‘any manner, the amount of savings available to purchasers or prospective pur chasers of respondents’ mer- - chandise at retail.

7 Failing to maintain adequateé records (a) which disclose the -- facts upon which ‘any savings claims, including former pricing ‘claims and comparative’ value claims, and similar representations of the type described in Paragraphs 2-6 of this order are based, and (b) from which the validity of any savings claims, including former pricing claims and: comparative value claims, and similar representations of the type described 4 in Paragraphs 2 2-6 of this --order can be-determined. ~ | - 8. Representing, ‘directly or by. implication, that any offer is limited in: point of time or restricted, i in any manner, unless the represented limitation or restriction is actually iniposed and in good faith adhered to by respondents.

9. Failing to deliver .a copy of this order to cease and desist to all present and future-salesmen or other persons engaged in the sale of respondents’ products or services, and failing to secure from each such salesman or other person a signed statement acknowledging receipt of said order.

It ts further ordered, That respondents Diener’s, Inc., Diener’s of Virginia, Inc., Diener’s of Rockville, Inc., Diener’s of Lanham, Inc., Diener’s of Tysons Corner, Inc., and Mayfield Company, Inc., corporations, and their officers, and Milton Diener and Harold Reznick, individually and as officers of said corporations, and respondents’ representatives, agents and employees, directly or through any corporate or other device, in connection with the introduction, sale, advertising, or offering for sale, in commerce, or the transportation or causing to be transported in commerce, or the importation into the United States of any textile fiber product; or in connection with the sale, offering for sale, advertising, delivery, transportation or causing to be transported, of any textile fiber product which has been advertised or offered for sale, in commerce; or in connection with the sale, offering for sale, advertising, delivery, transportation, or causing to be transported, after shipment in commerce, of any textile fiber product, whether in its original state or contained in other textile fiber products, as the terms “commerce” and “textile fiber product” are defined in the _ DIENER'S, INC., ET AL. 973:

945 Initial Decision ©:

Textile Fiber Products Identification Act, do forthwith .cease :and desist from: , a ' A. Misbranding textile fiber products by falsely or deceptively stamping, tagging, labeling, invoicing, advertising or otherwise ‘identifying such products as to the name or amount of constituent fibers contained therein.

' iB. Falsely and deceptively advertising textile fiber products by: _ 1, Making any representations by disclosure or by impli- “cation, as to fiber content of any textile fiber product in any written advertisement which is used to aid, promote or assist, directly or indirectly, in the sale, or offering for sale of such textile fiber product unless the same information required to be shown on the stamp, tag, label or other means of identifi- ‘cation under Sections 4(b)_ ( 1) and (2) of the Textile Fiber Products Identification Act is contained in the said advertisement, except that the percentages of the fibers present in the textile fiber product need not be stated. © 2, ‘Failing to set forth in disclosing fiber content, ‘informa- ‘tion as to coverings containing exempted ° backings, fillings or paddings, that such disclosure relates only to the face, pile or outer surface of such textile fiber products and not to the exempted backings, fillings, or paddings.

3. Using a fiber trademark i in advertising textile fiber products without. a full disclosure of the required fiber content information in at least one instance in said advertisement. 4. Using a fiber trademark in advertising textile fiber products containing only one fiber without such fiber trademark appearing at least once in the advertisement, in immediate proximity and conjunction with the generic name of the fiber, in plainly legible and conspicuous type. Li 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. . [tis further ordered, That vespondents notify the Commission at least thirty days prior to any proposed change in any of the corporate respondents such as dissolution, assignment or sale resulting in the emergence of-a successor corporation, the creation or dissolution of ‘subsidiaries or any. other change in the corporations, or any of them, which may affect compliance obligations arising out of this order. tis further ordered, That the respondents shall forthwith distribute a copy of this order to each of their respective operating divisions. 974 FEDERAL: TRADE COMMISSION DECISIONS Dissenting Statement: 81 F.T.C.

Dissenting STATEMENT OF COMMISSIONER Mary GARDINER JONES I agree with the Commission’s decision to sustain the hearing examiner’s findings and conclusions on liability. I dissent from the order which the Commission is entering in this -case. Its provisions do no more than direct the respondent “to sin no more” in language which is to me incomprehensible. It promises virtually no relief at all for the deceptions in this case which have bilked consumers of hundreds of dollars and unfairly injured honest: advertisers. Moreover, entry of this type of essentially meaningless order renders useless. the sizable Commission resources expended in bringing this case.

- While I recognize that the meaning of these order provisions can be clarified in compliance, it is this type of order which the Commission has been historically entering: and which has accounted in such large part. for the essential ineffectiveness of so many Commission enforcement activities in the past. Its entry at this time seems a strange and unaccountable throwback to an earlier. phase of the Commission’s life which some of us had hoped would not again be repeated. Orrvt0n OF “THE » Comatrssion By Kirxrarricn, Commissioner:

This matter is before the Commission on respondents’ appeal from the initial decision of the administrative law judge. The Commission’s complaint of November 25, 1969, alleged that the respondents? had violated Section 5 of the Federal Trade Commission Act by deceptively advertising their rugs, carpets, and floor coverings. The complaint also alleged violations of Sections 4 (a) and (c) of the Textile Fiber Products Identification Act. Respondents filed an answer denying the allegations. And on July 12, 1971, the administrative law judge issued | an initial decision upholding the charges of the complaint and entered an order to cease and desist. Respondents are now appealing from this decision.

As this. Commission observed quite some time ago, “people love a bargain.” ? And one of the most effective ways of selling them some- 1 Respondent, Diener's, Inc., is the parent of ‘the five other subsidiary corporations named in the complaint: Diener’s of Virginia, Inc., Diener’s of Rockville, Ine., Diener’s of Lanham, Inc., Diener’s of Tysons Corner, Inc. and Mayfield Company, Ine. The respondents, Walter Diener, Milton Diener, and Harold Reznick, are stockholders and officers of each of the six corporate respondents. Mr. Milton Diener is president; Mr. Walter Diener is secretarytreasurer; and Mr. Reznick is executive vice-president and general manager of Diener’s, Inc. Messrs. Milton and Walter Diener and Harold Reznick are members of the boards of directors of the respondent corporations. The complaint was dismissed as to Walter Diener and no appeal was taken from that decision. 2 Revco N. 8., Inc., et al., 67 F.T.C. 1239 (1965). DIENER’S, INC., ET AL. 975 945 Opinion thing is to tell them that they are getting a bargain price. A misrepre-. sentation of the existence or extent of the bargain either by comparison with “regular” prices or with the prices of competitors has long been held a violation of Section 5. Both such types of comparative price claims were challenged by the complaint in this proceeding. And, as corollary to the “regular” price charges, the complaint also alleged that certain “savings” claims were also deceptive.’ Respondents are appealing from the initial decision of the adminis. trative law judge on essentially two grounds. First, they content that the administrative law judge improperly relied upon the testimony of the Commission attorney, Joseph J. Koman, who investigated the . case. And second, they contend that complaint counsel failed to make a prima facie case both as to the “regular” price allegations and the “area competitive price” allegations. ‘They contend that complaint. counsel failed to prove that they did not make substantial sales at the advertised regular prices. Nor, they contend, did he prove that the | advertised “area competitive prices” were above those prices actually — charged by their competitors. os: - . I. THE EVIDENCE Most of the essential elements of complaint counsel’s case were contained in the testimony of Mr. Joseph J. Koman, Jr., the Commission attorney who investigated the matter. Koman testified that on February 23 and 27, 1968, he interviewed Mr. Harold Reznick, vice president and general manager of Diener’s Inc. At these interviews, Koman had with him a set of the newspaper advertisements run by Diener’s from March through December 1967. According to Koman, Reznick went through these advertisements, and in a number of instances, identified the specific types of carpet and floor covering material that were advertised. , Reznick’s assistance in identifying the specific items featured in the advertisements was essential to Koman because of the curious practice of retailers (at least in the Washington area) of advertising carpet without disclosing its grade or quality.* All that is usually given is color, the material from which the carpet is made, the price and, on occasion, the manufacturer’s name. Since each carpet manufacturer produces several grades or qualities of carpet that could fit 3 Respondents were also charged with misrepresenting the time in which their merchandise would be delivered and installed. This charge was dismissed by the administrative law judge and no appeal has been taken from that ruling, ‘Tr. 260, 269. This aspect of the respondents’ advertising was not challenged in this proceeding.

976 FEDERAL TRADE COMMISSION: DECISIONS Opinion. 81 FVEC:

such a hmited description, Koman, not to say the poor customers, had no. way of knowing which type of car pet.had been advertised. Obviously, if he.did not. know what. carpet: was being advertiséd, he could not determine whether it had ever been‘sold at the-advertised “regular” price. Manufacturers, however, designate each of the. various grades or qualities with a. name so that it. can easily be identified. It was this essential information which Reznick gave to. Koman, and; with one exception, Koman’s testimony, as to. what: Reznick. told. him, : is the only record evidence connecting the advertisements with specific types of carpeting and floor covering material. . -Koman specifically. testified, at. considerable. length, concerning Commission Exhibit 68, which. was a full page. ady ertisement run in the Washington Post.on J une.29,.1967..

He testified-that Reznick went. over the various floor: covering items advertised on this page and identified each one by the manufacturer’s name. Koman also testified that, Reznick had explained that the items advertised on this, page were the same .items'that Diener’s advertised throughout 1967. Being able to identify’the. carpets advertised on this page, one could identify the carpets featured in any of the 1967 advertisements. Once Koman knew which:specific, grades of carpet were featured in the advertisements, he was then able to examine the respondents’ sales records in order to determine whether any sales were actually made at the higher “regular” prices. A. Regular Price Claims Koman took the Washington Post advertisement of June 29, 1967, and compared the advertised “regular” prices with prices on the sales tickets from each of the réspondents’ stores during the period from June through October, and for some stores, June through November. Koman testified that he could find no evidence that any of the essential carpet or floor covering material had sold at the advertised “regular” prices, ;

Koman made copies of a sampling of the tickets that reflected the prices at which the advertised items had actually sold during this c period. The tickets, however, were printed on colored papers and 23 out of 44 of the sample copies Koman made turned out to be illegible. With regard to one type of carpet in Diener’s advertisements, Koman did not have to rely on Reznick’s identification. This carpet manufactured by James Lee & Sons Company was actually advertised under its quality designation “Romantica.” In a number of advertisements (CX 79, 80, 85 and 86) , the respondents advertised “Romantica” carpeting as:

* * * Reg, $9.95 Sq. ¥d. * * * ONLY 7.88 Sq. Ya. DIENER’S, INC., ET AL. O77 945: : Opinion And in two of the advertisements they represented: that savings of “34% to 63%” could be realized by purchasing “Romantica.” In ‘the other two advertisements the savings were represented as being 339% to 64%.” Koman testified that he could find no evidence in the ‘repondents’ sales records “covering J une’ through ‘November 5 1 2 1 5 10 1786 818 91 41 87.012794 1967,5 1 2 1 5 11 1896 811 77 40 95.887848 that4 1 2 1 6 0 643 861 1333 41 -1 5 1 2 1 6 1 643 857 108 38 74.153610 it‘had5 1 2 1 6 2 760 863 77 34 96.018181 sold5 1 2 1 6 3 845 859 60 36 96.018181 for5 1 2 1 6 4 912 854 103 48 96.052498 $9.95.5 1 2 1 6 5 1142 866 83 8 5.695114 mo5 1 2 1 6 6 1958 868 18 18 0.000000 .4 1 2 1 7 0 687 883 1292 80 -1 5 1 2 1 7 1 687 908 140 48 95.880234 Among5 1 2 1 7 2 844 914 59 32 96.815987 thes 1 2 1 7 3 922 915 123 48 96.592659 legible5 1 2 1 7 4 1066 915 121 42 79.473206 copies5 1 2 1 7 5 1198 917 40 31 81.120758 of5 1 2 1 7 6 1258 917 58 32 96.518196 thes 1 2 1 7 7 1335 883 89 77 96.245491 sales5 1 2 1 7 8 1441 917 126 42 97.002144 tickets5 1 2 1 7 9 1587 918 83 32 34.976410 that’5 1 2 1 7 10 1687 928 87 23 93.460892 were5 1 2 1 7 11 1795 917 151 49 87.169121 placed’5 1 2 1 7 12 1945 919 34 42 89.770073 in4 1 2 1 8 0 645 962 1328 58 -1 5 1 2 1 8 1 645 962 176 45 96.368668 evidence,5 1 2 1 8 2 832 964 107 33 90.213867 there5 1 2 1 8 3 945 961 86 37 83.848938 were5 1 2 1 8 4 1046 966 99 45 90.227486 thrée5 1 2 1 8 5 1165 967 103 53 30.673698 (Cx5 1 2 1 8 6 1266 960 36 48 53.404381 7,5 1 2 1 8 7 1322 970 50 38 93.871742 10,5 1 2 1 8 8 1391 957 69 42 64.731346 ands 1 2 1 8 9 1479 967 57 43 57.570610 36)5 1 2 1 8 10 1553 964 121 47 76.877914 ‘which5 1 2 1 8 11 1686 963 182 49 92.774734 indicated5 1 2 1 8 12 1887 964 86 47 96.948380 sales4 1 2 1 9 0 643 1007 1331 56 -1 5 1 2 1 9 1 643 1013 51 32 96.490616 of5 1 2 1 9 2 698 1013 247 34 88.490891 “Romantica”5 1 2 1 9 3 952 1006 160 47 16.038521 at:$6:635 1 2 1 9 4 1110 1020 71 42 19.175812 per’5 1 2 1 9 5 1189 1022 122 47 19.175812 squares 1 2 1 9 6 1318 1017 103 42 93.306015 yard.5 1 2 1 9 7 1430 1017 92 33 80.244408 One’5 1 2 1 9 8 1527 1009 105 52 96.805862 others 1 2 1 9 9 1638 1018 88 33 96.805862 sales5 1 2 1 9 10 1739 1019 136 42 61.697460 receipt’5 1 2 1 9 11 1886 1007 88 56 85.225174 (OX4 1 2 1 10 0 645 1059 1331 54 -1 5 1 2 1 10 1 645 1064 80 47 65.994995 43),5 1 2 1 10 2 733 1061 175 47 65.994995 indicated5 1 2 1 10 3 920 1076 21 21 96.652054 a5 1 2 1 10 4 955 1058 78 40 42.773338 sale’5 1 2 1 10 5 1035 1067 39 31 42.773338 at5 1 2 1 10 6 1087 1067 170 46 64.670998 $7.00'pers 1 2 1 10 7 1272 1070 122 43 96.646515 squares 1 2 1 10 8 1405 1069 100 41 92.302589 ‘yard.5 1 2 1 10 9 1521 1059 138 42 92.100197 Koman5 1 2 1 10 10 1675 1069 153 44 94.161064 testified5 1 2 1 10 11 1838 1070 83 39 78.863243 that’5 1 2 1 10 12 1929 1070 47 41 80.225990 he4 1 2 1 11 0 642 1104 1336 72 -1 5 1 2 1 11 1 642 1106 201 54 83.262772 questioned:5 1 2 1 11 2 859 1115 161 33 16.422409 Rezniek:5 1 2 1 11 3 1027 1104 214 64 93.863861 specifically5 1 2 1 11 4 1253 1116 114 33 0.000000 about5 1 2 1 11 5 1369 1116 263 35 0.000000 “Romantica”5 1 2 1 11 6 1639 1110 80 41 93.423958 ‘ands 1 2 1 11 7 1726 1120 88 42 91.697861 ‘that’5 1 2 1 11 8 1822 1118 156 58 90.022758 Reznick4 1 2 1 12 0 644 1165 1332 47 -1 5 1 2 1 12 1 644 1165 81 32 54.130409 told5 1 2 1 12 2 728 1165 87 32 57.431149 hiri5 1 2 1 12 3 822 1159 248 40 6.064804 that~Diener’s5 1 2 1 12 4 1083 1168 78 32 85.733452 had5 1 2 1 12 5 1168 1170 71 30 61.689537 not’5 1 2 1 12 6 1249 1168 355 33 3.657104 sold:“Romantica”5 1 2 1 12 7 1603 1163 111 38 8.339600 ‘fora5 1 2 1 12 8 1721 1177 82 35 96.157372 years 1 2 1 12 9 1815 1170 103 42 90.902191 prior5 1 2 1 12 10 1934 1165 42 38 96.292320 to4 1 2 1 13 0 645 1213 1327 50 -1 5 1 2 1 13 1 645 1211 189 52 59.367096 featuring’5 1 2 1 13 2 841 1216 32 32 64.791000 it5 1 2 1 13 3 896 1217 42 31 84.360947 in5 1 2 1 13 4 948 1208 110 41 92.814667 theirs 1 2 1 13 5 1065 1218 97 33 54.477974 ‘19675 1 2 1 13 6 1176 1217 307 34 90.243103 advertisements.5 1 2 1 13 7 1493 1220 159 31 65.008072 Between5 1 2 1 13 8 1678 1222 95 30 86.878189 1965°5 1 2 1 13 9 1786 1220 81 33 62.816143 and’5 1 2 1 13 10 1879 1220 93 43 96.159668 1967,4 1 2 1 14 0 644 1247 1328 66 -1 5 1 2 1 14 1 644 1261 156 37 48.437214 Reznick5 1 2 1 14 2 812 1263 175 37 14.742821 admitted’5 1 2 1 14 3 994 1260 38 39 14.742821 to5 1 2 1 14 4 1050 1265 147 46 48.810768 Koian5 1 2 1 14 5 1204 1269 90 31 54.951073 that’5 1 2 1 14 6 1302 1268 165 34 82.228683 Diener’s5 1 2 1 14 7 1476 1269 130 42 90.448746 offéred5 1 2 1 14 8 1619 1263 256 48 96.398018 “Romantica”5 1 2 1 14 9 1889 1247 83 66 94.648453 only4 1 2 1 15 0 643 1316 1333 46 -1 5 1 2 1 15 1 643 1316 37 31 96.156128 in5 1 2 1 15 2 697 1316 58 32 96.829353 thes 1 2 1 15 3 770 1327 95 22 96.815659 senses 1 2 1 15 4 880 1318 75 32 96.807365 that5 1 2 1 15 5 972 1329 20 21 96.777267 a5 1 2 1 15 6 1007 1308 189 53 94.319351 sampling5 1 2 1 15 7 1193 1323 80 28 77.860367 ‘was5 1 2 1 15 8 1285 1319 88 43 20.580971 képt'5 1 2 1 15 9 1384 1321 37 30 95.249573 at5 1 2 1 15 10 1437 1331 20 21 65.620270 a5 1 2 1 15 11 1473 1312 259 50 65.620270 headquarter’s5 1 2 1 15 12 1745 1320 106 33 70.582832 store:5 1 2 1 15 13 1855 1319 70 47 96.807541 ands 1 2 1 15 14 1935 1316 41 37 79.244843 ‘it4 1 2 1 16 0 640 1366 1328 45 -1 5 1 2 1 16 1 640 1366 115 32 93.068123 could5 1 2 1 16 2 761 1367 104 37 0.000000 .have’5 1 2 1 16 3 876 1367 91 37 92.526627 been,5 1 2 1 16 4 984 1368 304 43 17.872513 ordered..special.5 1 2 1 16 5 1300 1370 72 33 91.048698 for5 1 2 1 16 6 1379 1371 372 40 26.763489 .ariy..customer..who.5 1 2 1 16 7 1772 1371 144 35 87.955833 wanted,5 1 2 1 16 8 1926 1371 42 32 71.090622 it.4 1 2 1 17 0 643 1409 1303 70 -1 5 1 2 1 17 1 643 1413 166 49 47.261833 Reznick-:.5 1 2 1 17 2 805 1409 179 52 49.146194 -explained5 1 2 1 17 3 1001 1419 11 32 49.146194 .5 1 2 1 17 4 1020 1410 134 46 72.624634 that.,if5 1 2 1 17 5 1173 1420 165 36 92.129204 Diener’s5 1 2 1 17 6 1356 1420 86 36 61.376198 had.5 1 2 1 17 7 1450 1422 191 44 96.276947 purchased5 1 2 1 17 8 1657 1422 262 57 31.863495 ‘Romantica”.5 1 2 1 17 9 1933 1434 13 20 79.409149 15 1 2 1 17 10 1936 1422 7 5 68.464294 j4 1 2 1 18 0 618 1467 1358 48 -1 5 1 2 1 18 1 618 1468 117 41 0.000000 1966,5 1 2 1 18 2 745 1467 28 34 93.180984 it5 1 2 1 18 3 781 1468 116 39 93.180984 would5 1 2 1 18 4 903 1467 89 39 96.719490 have5 1 2 1 18 5 1000 1470 92 34 96.169884 been5 1 2 1 18 6 1093 1470 78 36 96.169884 sold5 1 2 1 18 7 1181 1473 38 43 96.872002 at5 1 2 1 18 8 1227 1470 95 39 94.861282 $9.955 1 2 1 18 9 1330 1482 62 30 94.861282 pers 1 2 1 18 10 1398 1482 127 33 96.260063 squares 1 2 1 18 11 1533 1472 113 41 93.170906 yard.5 1 2 1 18 12 1635 1463 15 57 50.471741 ,5 1 2 1 18 13 1798 1499 2 3 14.577255 ;5 1 2 1 18 14 1892 1488 84 15 14.263458 Hie3 1 2 2 0 0 638 1492 1334 266 -1 4 1 2 2 1 0 670 1492 1298 74 -1 5 1 2 2 1 1 670 1493 152 67 32.047501 “Koman5 1 2 2 1 2 826 1519 162 38 92.103584 testified5 1 2 2 1 3 992 1520 99 31 85.847862 that5 1 2 2 1 4 1078 1531 40 25 71.907990 in5 1 2 2 1 5 1130 1521 60 33 96.947746 thes 1 2 2 1 6 1197 1530 130 27 58.048290 courses 1 2 2 1 7 1326 1521 151 33 58.048290 .of.these5 1 2 2 1 8 1489 1514 205 48 96.637894 interviews,5 1 2 2 1 9 1707 1496 158 70 86.215950 Reznick5 1 2 2 1 10 1870 1492 98 65 96.930534 made4 1 2 2 2 0 643 1548 1329 65 -1 5 1 2 2 2 1 643 1548 143 56 96.987152 another5 1 2 2 2 2 797 1569 192 34 91.789551 admission.5 1 2 2 2 3 1000 1570 445 43 70.963776 concerning-some.carpets 1 2 2 2 4 1459 1572 87 32 51.191353 stairs 1 2 2 2 5 1553 1572 104 32 51.191353 tread5 1 2 2 2 6 1671 1572 115 33 96.330841 which5 1 2 2 2 7 1801 1573 74 35 68.230164 had.5 1 2 2 2 8 1886 1573 86 32 96.094398 been:4 1 2 2 3 0 640 1614 1328 49 -1 5 1 2 2 3 1 640 1619 193 31 96.275650 advertised5 1 2 2 3 2 866 1626 37 25 95.383919 as5 1 2 2 3 3 935 1614 175 48 96.676254 regularly5 1 2 2 3 4 1141 1621 126 41 96.583672 selling5 1 2 2 3 5 1298 1620 37 33 96.110291 at5 1 2 2 3 6 1366 1621 123 38 96.110291 $24.95.5 1 2 2 3 7 1523 1622 198 41 96.273239 According5 1 2 2 3 8 1752 1626 36 28 93.116325 to5 1 2 2 3 9 1811 1623 157 39 93.116325 Koman,4 1 2 2 4 0 641 1669 1328 45 -1 5 1 2 2 4 1 641 1669 150 32 91.332474 Reznick5 1 2 2 4 2 809 1669 166 41 96.006149 admitted5 1 2 2 4 3 991 1671 78 31 96.621758 that5 1 2 2 4 4 1084 1671 58 32 96.886497 thes 1 2 2 4 5 1159 1671 86 32 96.525185 stairs 1 2 2 4 6 1262 1672 98 32 96.682076 tread5 1 2 2 4 7 1378 1683 68 21 96.896088 was5 1 2 2 4 8 1463 1683 103 21 96.570587 never5 1 2 2 4 9 1584 1673 74 31 96.317703 sold5 1 2 2 4 10 1674 1674 46 40 93.296921 by5 1 2 2 4 11 1739 1674 154 31 85.161957 Diener’s5 1 2 2 4 12 1912 1674 57 30 97.015099 fora 1 2 2 5 0 638 1720 320 38 -1 5 1 2 2 5 1 638 1729 93 22 96.397690 more5 1 2 2 5 2 741 1720 85 32 96.762726 than5 1 2 2 5 3 835 1711 123 47 94.896286 $13.00.3 1 2 3 0 0 639 1745 1329 218 -1 4 1 2 3 1 0 685 1745 1282 68 -1 5 1 2 3 1 1 685 1770 136 32 90.946716 Koman5 1 2 3 1 2 847 1782 69 21 96.565384 was5 1 2 3 1 3 939 1771 198 41 96.030502 questioned.5 1 2 3 1 4 1162 1772 46 41 96.426033 by5 1 2 3 1 5 1234 1773 58 31 96.697227 thes 1 2 3 1 6 1315 1773 190 40 96.627930 complaints 1 2 3 1 7 1531 1773 136 32 91.898804 counsels 1 2 3 1 8 1693 1784 34 21 91.898804 as5 1 2 3 1 9 1753 1776 37 28 95.553398 to5 1 2 3 1 10 1815 1745 152 60 96.804611 whether4 1 2 3 2 0 642 1821 1326 42 -1 5 1 2 3 2 1 642 1821 148 31 92.713837 Reznick5 1 2 3 2 2 811 1821 127 32 96.007385 offered5 1 2 3 2 3 961 1833 66 30 96.700241 any5 1 2 3 2 4 1048 1822 224 41 95.535820 explanations 1 2 3 2 5 1294 1833 37 21 96.604408 as5 1 2 3 2 6 1353 1827 35 27 96.733688 to5 1 2 3 2 7 1411 1824 76 30 95.748451 how5 1 2 3 2 8 1510 1824 41 30 95.748451 he5 1 2 3 2 9 1575 1824 211 31 96.390030 determined5 1 2 3 2 10 1809 1824 59 31 96.919243 thes 1 2 3 2 11 1889 1835 79 21 95.999969 area4 1 2 3 3 0 641 1870 1327 61 -1 5 1 2 3 3 1 641 1870 218 42 95.213585 competitive.5 1 2 3 3 2 873 1872 92 40 95.213585 prices 1 2 3 3 3 979 1872 56 31 96.978439 for5 1 2 3 3 4 1048 1873 58 31 96.353096 thes 1 2 3 3 5 1118 1877 145 54 95.888268 carpets5 1 2 3 3 6 1268 1873 216 33 96.569229 advertised5 1 2 3 3 7 1490 1885 23 20 96.712517 in5 1 2 3 3 8 1529 1874 66 33 92.429741 CX5 1 2 3 3 9 1609 1876 39 30 92.429741 685 1 2 3 3 10 1665 1875 67 31 95.941299 ands 1 2 3 3 11 1748 1875 65 31 91.448196 Mr.5 1 2 3 3 12 1830 1875 138 31 91.448196 Koman4 1 2 3 4 0 639 1922 339 41 -1 5 1 2 3 4 1 639 1922 129 41 85.060547 rephed5 1 2 3 4 2 780 1933 35 21 96.765800 as5 1 2 3 4 3 827 1922 151 32 96.647789 follows:3 1 2 4 0 0 635 1991 1332 342 -1 4 1 2 4 1 0 676 1991 1290 32 -1 5 1 2 4 1 1 676 1991 62 29 96.553963 Yes,5 1 2 4 1 2 757 1992 37 25 96.432907 he5 1 2 4 1 3 811 1992 123 25 96.655754 advised5 1 2 4 1 4 953 1999 44 18 96.921066 me5 1 2 4 1 5 1017 1993 66 24 93.134933 that5 1 2 4 1 6 1096 1993 79 24 89.745514 .with5 1 2 4 1 7 1195 1995 112 27 95.916145 respects 1 2 4 1 8 1327 1995 28 23 95.916145 to5 1 2 4 1 9 1375 1995 95 23 96.185013 either5 1 2 4 1 10 1492 1995 49 23 96.792244 thes 1 2 4 1 11 1561 1995 233 28 95.321571 representations 1 2 4 1 12 1814 1995 152 28 84.466980 “regular”4 1 2 4 2 0 640 2037 1327 31 -1 5 1 2 4 2 1 640 2042 32 17 96.804504 or5 1 2 4 2 2 691 2037 49 23 96.176880 thes 1 2 4 2 3 757 2037 232 28 92.951103 representations 1 2 4 2 4 1009 2037 111 25 92.293190 “area’s5 1 2 4 2 5 1140 2039 185 28 96.135185 competitive5 1 2 4 2 6 1344 2039 104 28 93.581688 price,”5 1 2 4 2 7 1469 2045 32 17 95.762810 or5 1 2 4 2 8 1521 2040 29 23 95.762810 to5 1 2 4 2 9 1570 2039 100 24 95.961075 obtains 1 2 4 2 10 1690 2039 50 24 96.750748 thes 1 2 4 2 11 1759 2040 85 23 96.423393 others 1 2 4 2 12 1864 2039 103 29 96.503021 saving4 1 2 4 3 0 640 2081 1327 30 -1 5 1 2 4 3 1 640 2081 247 28 95.858948 representations5 1 2 4 3 2 907 2082 154 24 96.243584 contained5 1 2 4 3 3 1081 2082 30 24 96.243584 in5 1 2 4 3 4 1131 2082 71 24 96.277763 such5 1 2 4 3 5 1220 2083 63 28 96.485092 ads,5 1 2 4 3 6 1305 2083 68 28 96.633942 they5 1 2 4 3 7 1394 2083 95 24 96.724770 would5 1 2 4 3 8 1510 2084 145 27 95.647491 normally5 1 2 4 3 9 1675 2084 67 23 96.356750 takes 1 2 4 3 10 1762 2089 33 18 96.654388 or5 1 2 4 3 11 1816 2084 35 23 96.654388 he5 1 2 4 3 12 1870 2083 97 24 96.318535 would4 1 2 4 4 0 640 2124 1326 32 -1 5 1 2 4 4 1 640 2124 68 25 96.938988 takes 1 2 4 4 2 725 2124 48 25 92.690651 thes 1 2 4 4 3 790 2125 198 25 90.626938 distributor’s5 1 2 4 4 4 1006 2127 62 23 96.592522 costs 1 2 4 4 5 1084 2133 37 17 96.741547 on5 1 2 4 4 6 1138 2133 17 17 96.865181 a5 1 2 4 4 7 1173 2127 50 23 96.827690 cuts 1 2 4 4 8 1240 2133 32 18 96.034790 or5 1 2 4 4 9 1290 2133 61 18 96.658417 raw5 1 2 4 4 10 1370 2127 87 28 96.738876 basis,5 1 2 4 4 11 1475 2127 58 24 96.483986 ands 1 2 4 4 12 1552 2128 70 23 96.806480 with5 1 2 4 4 13 1642 2127 59 24 95.908516 this5 1 2 4 4 14 1718 2127 80 29 95.993187 prices 1 2 4 4 15 1817 2128 36 24 93.254333 he5 1 2 4 4 16 1870 2127 96 25 95.880058 would4 1 2 4 5 0 640 2166 1321 34 -1 5 1 2 4 5 1 640 2169 84 25 96.584564 times5 1 2 4 5 2 737 2169 24 24 96.595238 it5 1 2 4 5 3 774 2169 36 29 96.612122 by5 1 2 4 5 4 823 2166 16 28 96.910355 a5 1 2 4 5 5 853 2169 34 25 96.917747 605 1 2 4 5 6 901 2172 118 27 96.088478 percent5 1 2 4 5 7 1031 2171 132 29 96.088478 markup,5 1 2 4 5 8 1180 2171 94 24 96.277359 which5 1 2 4 5 9 1289 2172 35 23 96.720985 he5 1 2 4 5 10 1338 2172 98 24 28.827553 stated5 1 2 4 5 11 1451 2178 60 18 94.582573 was5 1 2 4 5 12 1527 2172 49 24 96.641701 thes 1 2 4 5 13 1591 2172 112 24 93.263649 normal5 1 2 4 5 14 1720 2172 153 28 90.535614 marketup5 1 2 4 5 15 1892 2171 69 28 96.508881 [sic]4 1 2 4 6 0 638 2212 1329 32 -1 5 1 2 4 6 1 638 2212 47 24 96.224823 for5 1 2 4 6 2 706 2214 75 23 96.279892 most5 1 2 4 6 3 800 2214 152 29 96.057983 carpeting5 1 2 4 6 4 972 2220 137 19 96.140259 concerns5 1 2 4 6 5 1129 2215 115 24 95.933449 located5 1 2 4 6 6 1266 2216 29 23 95.933449 in5 1 2 4 6 7 1318 2216 50 24 95.696823 thes 1 2 4 6 8 1390 2216 208 28 80.281174 Metropolitan5 1 2 4 6 9 1621 2215 67 25 95.190041 D.C.5 1 2 4 6 10 1713 2216 83 28 89.143684 Area,5 1 2 4 6 11 1820 2216 58 24 94.827888 ands 1 2 4 6 12 1900 2214 67 25 96.361610 that4 1 2 4 7 0 640 2258 1325 32 -1 5 1 2 4 7 1 640 2258 49 24 96.551933 thes 1 2 4 7 2 702 2259 49 22 94.896286 cuts 1 2 4 7 3 766 2259 84 24 94.896286 orders 1 2 4 7 4 863 2259 79 28 96.736885 prices 1 2 4 7 5 956 2259 64 29 96.414368 plus5 1 2 4 7 6 1036 2259 49 25 96.414368 thes 1 2 4 7 7 1100 2260 125 29 96.310043 markups 1 2 4 7 8 1238 2260 96 24 95.775818 would5 1 2 4 7 9 1350 2261 85 28 96.027466 equals 1 2 4 7 10 1451 2260 95 24 96.027466 either5 1 2 4 7 11 1561 2261 49 24 96.634033 thes 1 2 4 7 12 1624 2261 118 29 40.662636 regular5 1 2 4 7 13 1758 2266 33 17 96.215248 or5 1 2 4 7 14 1807 2261 49 23 93.281792 thes 1 2 4 7 15 1870 2259 95 25 91.161224 area’s4 1 2 4 8 0 635 2302 450 31 -1 5 1 2 4 8 1 635 2302 186 29 95.862190 competitive5 1 2 4 8 2 829 2303 87 29 89.631546 price.5 1 2 4 8 3 934 2303 61 29 65.514877 (Tr.5 1 2 4 8 4 1006 2304 79 29 65.514877 179).3 1 2 5 0 0 637 2359 1329 348 -1 4 1 2 5 1 0 680 2359 1286 44 -1 5 1 2 5 1 1 680 2359 246 41 91.432953 Respondent’s5 1 2 5 1 2 943 2360 159 32 96.112419 evidences 1 2 5 1 3 1120 2371 43 21 95.396477 on5 1 2 5 1 4 1174 2361 63 32 95.396477 thes 1 2 5 1 5 1256 2361 180 42 92.709633 “regular”5 1 2 5 1 6 1454 2361 95 41 96.435646 prices 1 2 5 1 7 1564 2362 88 32 96.469292 issues 1 2 5 1 8 1669 2361 169 33 96.080093 consisted5 1 2 5 1 9 1854 2361 38 32 96.545280 of5 1 2 5 1 10 1908 2360 58 32 97.016869 thea 1 2 5 2 0 638 2407 1326 46 -1 5 1 2 5 2 1 638 2409 183 43 96.308807 testimony5 1 2 5 2 2 838 2410 40 33 93.284576 of5 1 2 5 2 3 895 2411 159 40 91.772560 Reznick,5 1 2 5 2 4 1071 2412 77 31 96.223831 who5 1 2 5 2 5 1165 2412 75 31 96.223831 said5 1 2 5 2 6 1259 2407 75 36 96.025261 that5 1 2 5 2 7 1353 2412 180 41 91.034286 “regular”5 1 2 5 2 8 1554 2412 91 41 95.976860 prices 1 2 5 2 9 1663 2412 36 32 96.786293 in5 1 2 5 2 10 1719 2424 43 20 91.251419 an5 1 2 5 2 11 1782 2412 182 32 91.251419 advertise-4 1 2 5 3 0 637 2461 1327 43 -1 5 1 2 5 3 1 637 2463 94 28 96.277351 ments 1 2 5 3 2 757 2464 115 28 96.026009 meant5 1 2 5 3 3 898 2461 76 32 93.061554 that5 1 2 5 3 4 1003 2462 153 32 93.061554 Diener’s5 1 2 5 3 5 1183 2463 70 31 95.004326 had5 1 2 5 3 6 1282 2463 197 41 96.266396 previously5 1 2 5 3 7 1507 2464 75 31 96.144020 sold5 1 2 5 3 8 1609 2464 77 31 96.615646 that5 1 2 5 3 9 1715 2463 81 31 95.345543 items 1 2 5 3 10 1826 2463 55 32 96.705627 for5 1 2 5 3 11 1907 2463 57 31 96.705627 thea 1 2 5 4 0 638 2511 1328 45 -1 5 1 2 5 4 1 638 2511 193 33 96.654915 advertised5 1 2 5 4 2 851 2512 180 42 94.169067 “regular”5 1 2 5 4 3 1050 2513 102 41 96.443413 price.5 1 2 5 4 4 1174 2514 55 31 96.947647 He5 1 2 5 4 5 1250 2514 111 31 96.720963 stated5 1 2 5 4 6 1382 2515 77 30 96.960968 that5 1 2 5 4 7 1480 2525 36 21 96.501213 as5 1 2 5 4 8 1538 2526 18 20 96.712273 a5 1 2 5 4 9 1578 2515 134 41 96.429558 general5 1 2 5 4 10 1736 2514 75 31 65.754997 rules 1 2 5 4 11 1832 2517 134 37 95.248672 carpets4 1 2 5 5 0 638 2562 1327 43 -1 5 1 2 5 5 1 638 2562 158 33 96.368790 featured5 1 2 5 5 2 818 2563 36 31 92.299423 in5 1 2 5 5 3 877 2563 279 36 96.505112 advertisements5 1 2 5 5 4 1180 2575 59 22 95.620956 ares 1 2 5 5 5 1260 2569 60 27 95.620956 not5 1 2 5 5 6 1344 2565 195 32 96.296005 advertised5 1 2 5 5 7 1563 2576 92 20 96.253906 more5 1 2 5 5 8 1678 2565 85 34 95.511253 than5 1 2 5 5 9 1788 2575 61 21 95.511253 ones 1 2 5 5 10 1873 2565 92 40 96.762245 time,4 1 2 5 6 0 638 2614 1328 42 -1 5 1 2 5 6 1 638 2614 67 30 96.790337 ands 1 2 5 6 2 730 2614 143 32 95.055511 claimed5 1 2 5 6 3 896 2614 77 32 95.743805 that5 1 2 5 6 4 994 2615 49 32 95.743805 all5 1 2 5 6 5 1068 2615 135 32 96.384171 records5 1 2 5 6 6 1228 2615 39 32 96.259636 of5 1 2 5 6 7 1291 2615 112 32 96.415520 which5 1 2 5 6 8 1429 2616 163 40 96.679817 products5 1 2 5 6 9 1617 2626 58 21 96.617531 ares 1 2 5 6 10 1701 2615 158 32 49.096100 featured5 1 2 5 6 11 1885 2615 35 32 95.631927 in5 1 2 5 6 12 1946 2626 20 21 96.062363 a4 1 2 5 7 0 638 2663 1327 44 -1 5 1 2 5 7 1 638 2663 188 43 96.672943 particulars 1 2 5 7 2 839 2665 268 42 96.179398 advertisements 1 2 5 7 3 1125 2677 57 21 96.179398 ares 1 2 5 7 4 1201 2666 180 41 95.874786 destroyed5 1 2 5 7 5 1399 2677 37 21 95.874786 as5 1 2 5 7 6 1454 2677 81 21 96.832146 soon5 1 2 5 7 7 1555 2673 36 25 96.773201 as5 1 2 5 7 8 1608 2668 57 36 96.889572 thes 1 2 5 7 9 1684 2665 281 33 96.267250 advertisements Opinion 81 FT.C:

are forwarded to the advertising agency.. However, Mr... Reznick was unable to recall any of the details of his conversation with Mr. Koman. _ B. Area Competitive Price Claims.

To establish their case regarding ‘the jmisrepresentations, of. area prices, complaint counsel again had to rely on the identification. of the grade or qualities of the advertised carpets which were given to Koman by Reznick. Complaint counsel called, as witnesses, five. carpet. buyers from other stores in the Washington area. Each of these was questioned about the prices that their respective firms charged. in.1967, for particular lines of carpet that were identified as having been advertised by Diener’s. In each case, a comparison showed that “these prices were: considerably less than the “area competitive price” advertised by Diener’s. Each buyer also testified on the measures that he or. his firm took to insure that their prices were competitive. ‘Respondents’ evidence on ‘the’ “area competitive price” ‘issue ‘con- sisted of testimony by Reznick who said that he shopped “at. least eight to ten” competitors every Saturday. On cross- -examination, however,' Reznick was unable to recall what stores he visited. And, at . another. place.in the-record,.Reznick..described. a. ‘procedute.s ‘somewhat van more consistent with that attributed to him by Koman: Q. Who determines the comparative prices that are offered for ‘sale in those ads? A. Sometimes the manufacture [sic], sometimes I do. (TR. 89). Il TESTIMONY OF THE COMMISSION INVESTIGATOR Presumably, respondents are not challenging Koman’s competence to testify. The issue of his competence does not appear to have been raised at trial and their brief appears to concede the point.’ Apparently, the issue they are attempting to raise is that of the weight which should be given his testimony in view of his status as a Commission employee. But since they cite no record evidence of bias, they are apparently asking us to assume the existence of bias in Koman’s testimony from the mere fact of his employment. The testimony ofa Commission employee, like any other witness, may contain bias. And that bias may even be a product of his employment, but this is a matter for the administrative law judge to determine. As one court bluntly put it, “The credibility of witnesses must be left in large part to the SAt one point in their brief, respondents appear to concede Koman’s competence to testify, but further on, they claim that the trial judge erred in even admitting Koman’s testimony at all. And in their Reply Brief, respondents contend that “the central issue in this case [is] the weight to be given the testimony of the attorney-investigator, Mr. Koman.”

DIENER’S, INC., ET AL. - 979:

945° Opinion hearer of the testimony, a proposition too elementary to requiré citation of authority.” [Communist Party of U. S.v. SACB, 254, F. 2d 314 at 831 (D.C. Cir. 1958) ].° A party seeking to overturn an initial decision on the grounds that the administrative law judge improperly evaluated the credibility of a witness ought to be able to cite a solid record basis for its contention. But the respondents cite no error on the part of the administrative law judge except a simple failure to find that Koman’s status as an employee alone rendered his testimony unbelievable. Nor do they now présent any persuasive reason as to why the Commission should find, as a matter of law, that-its employees are less credible than the general run of mankind. Respondents also attack Koman’s testimony as conclusionary : - The testimony of the attorney-investigator shows that he made‘an on-sight inspection of certain documents and concluded that the respondents. were guilty of. various charges. The function of examining the documents and drawing inferences therefrom is conferred on the Hearing Examiner and not the staff investigator. If the course of conduct adopted by staff counsel is approved by the Commission we-can look for'more Star Chamber- proceedings justified-in the name’ of Consumerism. If the end justifies the means. there ‘is really no need for any testi-: mony other than the attorney-investigator. He can-decide what he wants to prove and then by his on sight. inspection merely report that he concludes there has been a violation. The staff's theory is that ence the attorney-investigator.. concludes that there is a violation the burden shifts to the respondent to disprove what an employee of the Commission has decided in an ex parte investigation. (Respondents’ Reply Brief, p. 2.) If Koman’s testimony was conclusionary, as the respondents contend, then it was indeed improper for the administrative law judge to rely on it. Conclusionary testimony is as improper coming from a Commission investigator as it is coming from any other witness. If Koman had expressed any opinions as to whether or not the respondents violated the law, they would have been simply irrelevant and should not have been relied upon by the administrative law judge in any way. We find, however, after a careful review of the record, that Koman’s testimony was in no way conclusionary. He testified, as any other witness, about those things he physically heard and saw. Nor do we find any indication that the administrative law judge improperly relied on Koman’s testimony.

There is a more serious question here, however, and it deserves some examination even though it was not expressly raised by the respondents. It is whether it is fair to permit complaint counsel to base his prima facie case on testimony by a Commission employee. Without 8 This ruling was affirmed by the Supreme Court, Communist Party of U.S. v. SACB, 367 U.S. 1, 28-29, after remand to Board, 277 F. 2d 78 (1959). . 980: FEDERAL TRADE COMMISSION ; DECISIONS Opinion. 81 ETC.

deciding whether. or. not.such procedure could, under some. circum-: stances, “be unfair, -we find-that, there was.no unfairness here. Koman’ s testimony hardly. involved matters about which respondents would. have had difficulty producing evidence. On the contrary, his testimony. concerns matters, which,, but..for, his investigation, were. exclusively. within the, respondents’. knowledge and _,control., Sheer facetiousness must have inspired . respondents’, counsel . to suggest. that, complaint counsel: should: have, ,proved.-his case. wholly by documents after his own, client, testified. that the. documents. necessary to connect, the adver: tisements. with: the advertised items.were. routinely. destroyed. of..the, Commission's: AGuides: “Against. Deceptive Pricing.” “Guide. A provides, ivitér-alia that: “If the: former :pricé is:th actual ‘bond fide: price at which the article wasoffered tothe public on: aregularbasis for reasonab y substahitial ‘period « of, time, it ‘provides a legitimate’ basis for the advertising of a price comparison. * Respondents cite Reznick’s testimony. that “regular price”: meant. “that we had previously sold merchandise for the regular price.” They contend that the only evidence. introduced by complaint counsel to show that no sales were made. at the “regular” price were the 23 legible invoices or tickets which covered a period of only three or four months. Respondents also ciaim that, the invoices do not reflect the date of purchase, nor do they identify the carpet purchased and, therefore, they cannot be related to the advertisements. Respondents. also make much of the fact that 20 some receipts copied by Koman turned out: to be illegible. It is a little difficult to find much substance in the quibble over these | invoices. The only way for complaint counsel to have proved that there were no. sales of the items in question at the “regular” prices was to produce evidence as to all of the respondents’ sales records. Hence, the crucial part of complaint counsel’s evidence on this point was Koman’s testimony that he examined ad/ respondents’ sales tickets and found none that reflected sales at the higher “regular” prices. It is hard to see how twenty-three or even forty-four tickets could add much to this. Koman did, of course, represent that the tickets reflected the prices at which the advertised items had actually been sold. But the tickets themselves do not. establish this, independent of his testimony. . We find no error in the administrative law judge’s decision to give DIENER’S, INC., ET AL: © 981 945 Opinion greater weight to Koman’s testimony over Reznick’s éryptic and selfserving statement.

Respondents protest that Koman examined only four months worth of invoices. From this, they claim, one cannot conclude that the regular price claims were deceptive.” Koman, however, testified that. while his examination of sales tickets went back only four months for some stores, it went back six months for many others, depending only upon what was available in the respondents’ files. Since it is most unlikely the “regular” prices would have prevailed at some stores and not others, the question then becomes whether it is fair to’make a regular price claim when that “regular” price has not prevailed for six months. Even the > Tespondents seem unwilling’ to ‘endorse such a Proposition. IV ‘AREA.COMPETITIVE PRICE’ ‘CLAIMS’:

Respondents, also, contend. that complaint counsel failed to present a prima facie case concerning the “area. competitive price’ ’ claims. They say. that. complaint counsel’s proof. falls short of the standard established in Guide II of. the. “Guides Against Deceptive Pricing.” This Guide, they insist, requires complaint, counsel to Prove their “area competitive prices” exceeded the prices at. which ‘ ‘substantial sales” of the article were being made in the area. ‘The only evidence as to area prices was the testimony of the six buyers who testified only as to their own prices and not the prices prevailing in the area. This evidence was insufficient under the Commission’s decision in Revco, where it was held that evidence of the prices of three chains with some seventy-five drugstores was insufficient evidence as to the prevailing prices in a market with over 600 drugstores. This argument is unpersuasive for a number of reasons.® All of the TRespondent’s counsel rather disingeniously claims that Koman testified that he found _ Sales tickets showing advertised items being sold at the higher “regular” prices. This claim is clearly contradicted by the record of Koman’s testimony : “By My. Stein:

“Q. I believe you testified, sir, that you saw some sales tickets in the Diener’s files which supported their claim that they were offering a bona fide sale but you also added to that they were few in number, you said few. Is that a fair paraphrase of your testimony? “A. If I could go back again, the investigation, the sales tickets examination dealt with regular pricing. I went through four months supply of sales tickets that was furnished to try to find out whether Diener’s ever sold the merchandise at the higher regular price. I found no such sales.

“The next thing is what prices was Diener’s selling this merchandise for during this time period. It was either at the advertised price or slightly higher than the advertised price.

“}HIWARING EXAMINER POINDEXTER: The advertised sale price or reduced price? “THE WITNESS : Right.”

whey are what they say they are: “practical aids to the honest businessman who seeks mapufacturer’s Hist prices obtained by respondent.” 982 FEDERAL TRADE COMMISSION-.DECISIONS Opinion 81 F-T.C.

six buyers testified that they took serious measures to know the prices of their competitors and to insure that their own prices were com- | petitive. In comment on similar testimony in Giant Food, Ine. [61 F.T.C. 326], the Commission said: “If the prices * * * were thus deemed ‘competitive’ by these experts in the field, it is highly unlikely that a preponderant or even substantial segment of the Washington retailing community was charging the inflated manufacturer’s list prices advertised by respondent.” (p._352). This reasoning is particularly applicable here where, as the respondents themselves have pointed out, two of the buyers that testified represented firms that made no special effort to undersell their competitors.’One of these, Mr. Vern Miller of Carpets, Inc., testified (on respondents’ cross-examination) that his firm preferred to compete on the basis of service rather than price. He testified. that:his firm never ran an advertisement in a newspaper nor displayed a sale sign in 16 years. _ Similarly,"Mr. Quinn M. Cardwell of Cardwell’s Inc., testified that his firm was a specialty store and while he attempted to keep his prices competitive, he did not deal with ‘a particular price conscious trade and therefore simply used a mechanical markup procedure. Yet, even the prices of these firms were below the “area competitive prices” advertised by the respondents.

~The evidence of other buyers is significant for the same reason. And again, it was the testimony elicited by respondents’ counsel which established that the department stores use a conventional markup procedure that reflects a higher overhead. Yet again, the prices charged by the department stores were lower than the prices represented by the respondents as the “area competitive prices.” In the face of such evidence, we are compelled to agree with the administrative law judge that complaint counsel clearly established a prima facie case.

On the basis of advertisements placed in evidence, the administrative law judge found that the respondents violated certain provisions ° “Basically speaking, I use a fairly mechanical procedure in markup that my retail price is a function of my delivered cost price on the merchandise, and the material either is successfully sold at the retail price or if we have a situation occurring where one manufacturer’s line we have repeated difficulty in selling or some particular fabrics we have repeated difficulty in selling because of price and where the problem where interested consumers literally don’t buy the carpet because they say it is available at a better price elsewhere exists, we may review to make sure we don’t have some error in our pricing structure and if we find we have no error and this continues, my general procecure [sic] is to discontinue the fabric where we are high in price.” (Tr. 278). DIENER’S, INC., ET AL. » 983 945 Final Order of the Textile Fiber Products Identification Act.1° Respondents are appealing from this ruling on the grounds that “there is no finding indicating that these technical offenses occurred after the first part of 1968, of that there is any likelihood that these offenses will be repeated in the future.”

The Commission has dealt with this argument many times. Quite recently we said:

It is well established that the mere fact that the offending practices have been discontinued prior to the issuance of a complaint does not provide, by itself, the requisite assurance that an order is unnecessary and not in the public interest. As the courts have noted, it is the timing and circumstances of the claimed abandonment which is of importance to the issue of the necessity for an order. Where, as here, the abandonment took place only after the Commission’s hand was on the respondent’s shoulder, the courts are clear that abandonment of the practices under such circumstances will not support a conclusion that the practices will not be resumed.”

Wesee no reason to abandon this rule in the present case. The Initial Decision and Order of the administrative law judge is affirmed.

Finat Orper This matter is before the Commission on the appeal of respondents from the initial decision and order of the administrative law judge issued July 12, 1971. Upon examination of the record, the brief, and after full consideration of the issues of fact and law presented, the Commission has concluded that the initial decision of the administrative law judge should be adopted and issued as the decision of the Commission. Accordingly, It is ordered, That respondents’ appeal from the initial decision of the administrative law judge be, and.it hereby is, denied. It is further ordered, That the initial decision of the administrative law judge be, and it hereby is, adopted as the decision of the Commission.

By the Commission, without the concurrence of Commissioner MacIntyre. He did not concur because he said it is apparent to him that much of the decision of the majority rests upon the testimony of 10 We found that respondents (1) failed to disclose the fiber content information in such a manner as to indicate that it applied to the face, pile or outer surface of the floor covering and not to the backings, fillings, or paddings; (2) failed to set forth the required information ag to fiber content as specified in Section 4(c) of the Textile Fiber Products Identification Act and the rules and regulations thereunder in that in some advertisements carpeting was described by such fiber-connoting terms as ‘“‘Acrilan,” ‘“‘Kodel,” and “Herculon,” and the true generic name of the fiber was not disclosed; (3) falsely and deceptively advertised textile fiber products in violation of the Textile Fiber Products Identification Act.

Zale Corp., Docket No. 8810 (1970).

Complaint. : 81 F.T.C.

witness Koman. It isthe view of Commissioner MacIntyre that the testimony of witness. Koman. should have been stricken for the reason stated.in a dissenting opinion by him in January 1971 [78 F.T.C. 1564], during the course of an. interlocutory appeal proceeding herein. Commissioner Jones agreed to the opinion on liability, but dissented to the order, and submitted a dissenting statement.