Motherhood Maternity Shops, Inc

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF MOTHERHOOD MATERNITY SHOPS, INC, CONSENT ORDER , ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-2974. Complaint, June 21, ).979 - Decision, June 21, 1979 This consent order, among other things, requires a Santa Monica, Calif. manufacturer and seller of maternity wearing apparel and related products and its corporate owner to cease establishing, maintaining and enforcing resale prices and sale periods for their products; soliciting, exchanging or disseminating price information; and compelling adherence to such prices and sale periods through persuasion or coercion, Respondents are additionally prohibited from withholding advertising allowances, or otherwise taking adverse action against recalcitrant retailers.

Appearances For t.he Commission: Sandra L. Bird and Elliot Feinberg. For the respondents: George Zachary, Rosenfeld, Meyer Susman. Beverly Hills, Calif.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Motherhood Maternity Shops, Inc., a corporation, has violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent Motherhood Maternity Shops, Inc, (hereinafter sometimes referred to as Maternity Shops) is a corporation organized, existing and doing business under and by virtue of the laws of the State of California with its principal office and place of business at 1330 Colorado Ave., Santa Monica, California. PAR. 2, Respondent. MMS of Delaware, Inc, is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at 1330 Colorado Ave., Santa Monica, California, MMS of Delaware, Inc. acquired all of the stock of Motherhood Maternity Shops, Inc. in July 1977, through the merger of Motherhood Maternity Shops, Inc. and MMS of California, Inc., a whollyowned subsidiary of MMS of Delaware, Inc, PAR. 3, Respondent Maternity Shops is now, and has been, engaged ,"uJoRAL TRADE COMMISSION DECISIONS Decision and Order 93 F, (2) advertising a prpduct at a price other than that which respondent ~aternity Shops has established or suggested, PAR, 9, The acts, practices and methpds pf competition engaged in, fpllowed, pursm,d or adopted by respondent, as hereinabove alleged, are unfair methpds of competition and unfair acts or practices becau.se they have the tendency tp, or the actual effect of: (a) fixing, maintaining pr stabilizing the prices at which respondent ~aternity Shops' products were resold; (b) suppressing pr eliminating price competition between or among resellers sellng respondent ~aternity Shops' products and between such resellers and resppndent ~aternity Shops; and (c) depriving cpnsumers of the benefits of competition, PAR, 10, The aforesaid acts, practices and methods of competition, cpnstitute unfair methods pf competitipn and unfair acts and practices in or affecting cpmmerce in violation pf Section 5 pf the Federal Trade Cpmmission Act, as amended, DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption herepf, and the respondents having been furnished thereafter with a copy of a draft of the complaint which the New York Regional Offce proposed to present to the Commission for its consideration and which, if issued by the Commissipn, would charge resppndents with violation of the Federal Trade Commission Act, as amended; and The resppndents, their attorney, and counsel for the Commissipn having thereafter executed an agreement cpntaining a consent order, an admission by the respondents pf all the jurisdictipnal facts set fprth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, and waivers and pther provisions as required by the Commission s Rules; and The Commission having thereafter considered the matter and having determined that it has reason to believe. that the respondents have violated the said Act, and that complaint should issue stating ts charges in that respect, and having thereupon accepted the ,xecuted consent agreement and placed such agreement on the IUblic record for a period pf sixty (60) days, now in further onfprmity with the procedure prescribed in Section 2,34 of its Rules MOTHERHOOD MATERNITY SHOPS, INC. 1081 1077 Decision and Order the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order: 1. Respondent Motherhood Maternity Shops, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of California with its offce and principal place of business located at 1330 Colorado Ave" Santa Monica, California. Respondent MMS of Delaware, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware with its office and principal place of business located at 1330 Colorado Ave" Santa Monica, California, Respondent Motherhood Maternity Shops, Inc, has been merged with MMS of California, Inc., a wholly-owned subsidiary of MMS of Delaware, Inc, The surviving corporation, Motherhood Maternity Shops, Inc., is a wholly-owned subsidiary of MMS of Delaware, Inc, 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER For purposes of this order, the following definitions shall apply: Product" is defined as any item of wearing apparel and any related accessory and any other merchandise, service or thing which is manufactured, offered for sale, or sold by respondents or any of their subsidiaries.

Reseller" is defined as any corporation, firm or person which sells or which requests to sell any product sold or distributed by respondents or any corporation or firm owned or operated by respondents, but excluding persons, partnerships or corporations operating retail outlets owned or operated by respondents or any of their subsidiaries.

Resale price" is defined as any price, price floor, price ceiling, price range, or any mark-up, formula, or margin of profit used by any reseller for pricing respondents' products. Such term includes but is not limited to any suggested, established or customary resale price as well as the retail price in effect for retail outlets or departments owned or operated by respondents or any of their subsidiaries.

Sale period" is defjned as any time period during which retail outlets or departments owned or operated by respondents or any of their subsidiaries offer any product for sale at resale prices lower than those in effect during the usual and ordinary course of business; or any suggested, authorized or customary time for selling or Decision and Order 93 F, advertising apparel at prices lower than suggested, established or customary resale prices.

Company-owned store" is defined as any retail outlet owned or operated by respondents or any of their subsidiaries, It is ordered, That respondents ~otherhood ~aternity Shops, Inc" , theira corporation, and MMS of Delaware, Inc. , a corporation successors and assigns, and respondents' officers, their agents, representatives and employees, directly or indirectly, or through any corporation, subsidiary, division or other device, in connection with the manufacture, offering for sale, sale, distributing or advertising of any product in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, shall forthwith cease and desist from:

Fixing, establishing, controllng, stabilizing, maintaining or enforcing, directly or indirectly, the price at which any reseller may advertise, promote, offer for sale or sell any product. 2, Establishing, exacting assurances to comply with, continuing or enforcing any contract, agreement, understanding or arrangement with any reseller to fix, establish, control, stabilize, maintain or enforce, directly or indirectly, the price at which any product is to be resold or advertised, 3. Establishing, exacting assurances to comply with, continuing or enforcing any contract, agreement, understanding or arrangement with any reseller to tie any resale price of any reseller to any resale price in effect at any company-owned store, 4, Suggesting, communicating, publishing, disseminating, circulating or providing by any means any information concerning resale prices or sale periods to any reseller. The advertising to consumers of actual resale prices by any company-owned store shall not be deemed as violation of this paragraph, 5, Soliciting, gathering or exchanging, directly or indirectly, information concerning any resale price or sale period of any reseller.

6, Establishing, exacting assurances to comply with, continuing or enforcing any contract, agreement, understanding or arrangement with any reseller to fix, establish or control the form, content or timing of the advertising of any product by any reseller. 7, Suggesting, recommending, advising, persuading, inducing or coercing any reseller to establish, maintain, issue, adopt or adhere to MOTHERHOOD MATERNITY SHOPS. INC. 1083 1077 Decision and Order any resale price, or to establish, maintain, issue, adopt or adhere to any sale period.

8. Communicating with any reseller concerning any deviation or alleged deviation from any resale price or sale period, 9. Suggesting, recommending, advising, persuading, inducing or coercing any reseller to refrain from or to discontinue advertising any product at a certain resale price.

10. Representing directly or by implication that any action may or wil be taken against any reseller who deviates from any resale price or sale period.

11, Securing or attempting to secure any promise or assurance from any reseller regarding the price at which such reseller wil or may advertise or sell any product; or requesting or requiring any reseller to obtain approval from respondents for any price at which such reseller mayor wil advertise or sell any product. 12. Threatening to withhold or withholding advertising allowances or any other assistance, payment, service or consideration from any reseller, or limiting or restricting eligibilty of any reseller to receive such benefits because said reseller advertises or sells any product at certain resale prices.

13. Taking any action to hinder or preclude the lawful use by any reseller of any trademark of any respondent in conjunction with the sale or advertising of any product.

14, Terminating, suspending, delaying shipment.s to, or taking or threatening any action against any reseller because the reseller has, or was alleged to have sold or advertised any product at a certain resale price, or because the reseller may engage in any such activity in t.he future, It is further ordered, That respondents shall: 1. Within thirty (30) days after the date of service of this order, mail under separate cover a copy of this order to every past reseller. An affdavit of mailing shall be sworn to by an offcial of respondents verifying that said mailng of this order was completed, 2. Mail a copy of this order to any reseller t.hat purchases any products from respondent.s within five (5) years after the date of service of this order, The mailing required by this provision shall occur within thirty (30) days after the first purchase by said reseller. 3. Within thirty (30) days after the date of service of this order distribute a copy of this order to each oftheir operating divisions and subsidiaries and to all offcers, supervisory sales personnel, sales Decision and Order 93 F, agents and representatives selling to resellers, and to advertising agencies retained by respondents and secure from each entity or person a statement acknowledging receipt of said order, It is further ordered, That respondents: Notify the Commission at least thirty (30) days prior to any proposed change in the respondents such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation of or dissolution of subsidiaries or any other such change in the corporations which may affect compliance obligations arising out of this order, 2, ~maintain complete business records which fully disclose the manner and form of respondents' compliance with the Order including but not limited to any records referring or relating, in whole or in part, to:

(a) any communication between any respondent and any reseller relating to any price at which any reseller, person or firm is selling, proposes to sell, is advertising or proposes to advertise any product; (b) the termination of any reseller for any reason; or (c) the refusal to deal with any reseller for any reason, Respondents shall maintain the records required by this paragraph for at least three (3) years from the date such records were created or received by respondents, The records required by this paragraph shall be made available to Commission staff upon reasonable notice, 3, 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, 108, Interlocutory Order