Gant, Inc

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

IN THE MATTER OF GANT, INC.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-2996. Complaint, Nov. 6, 1979—Decision, Nov. 6, 1979 This consent order, among other things, requires a New Haven, Conn. manufacturer of wearing apparel and related accessories, to cease fixing, maintaining or compelling adherence to suggested resale prices and sale periods for its products. Respondent is prohibited from soliciting the identity of dealers who fail to conform to such prices, and from taking any adverse action against them. Additionally, the firm is prohibited from restricting the use of product trademarks or other identification in the sale or advertising of its products; and barred from suggesting retail prices and sales periods for its products for a period of two years.

Appearances For the Commission: Jeffrey Klurfeld.

For the respondent: M. Topofsky and S. Bosme, Heller, Ehrman, White & McAulife, San Francisco, 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 Gant, Inc., a corporation, hereinafter sometimes referred to as respondent, 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 as follows: For purposes of this complaint, the following definitions shall apply:

“Product” is defined as any item of wearing apparel or related accessory which is manufactured, offered for sale or sold by respondent.

“Dealer” is defined as any person, partnership, corporation or firm which sells any product in the course of its business. “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 dealer for pricing any product. Such term includes, but is not limited to, any suggested, established or customary resale price as well as the retail price in effect at any dealer. “Sale Period” is defined as any time during which any dealer offers to sell any product at resale prices lower than those in effect during the usual and ordinary course of said dealer’s business; or any suggested, authorized or customary time for selling or advertising any product at prices lower than the suggested, established or customary resale prices.

PARAGRAPH 1. Respondent Gant, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Connecticut, with its office and principal place of business located at 40 Sargent Drive, New Haven, Connecticut. Par. 2. Respondent is now, and for some time last past, has been engaged in the manufacture, advertising, offering for sale, sale and distribution of men’s, women’s and children’s wearing apparel and related accessories. Sales by respondent for fiscal year 1978 exceeded $50 million.

Par. 3. Respondent maintains, and has maintained, a substantial course of business, including the acts and practices ‘as hereinafter set forth, which are in or affect commerce, as “commerce” is defined in the Federal Trade Commission Act.

Par. 4. Respondent selis and distributes its products directly to more than 5,000 retail dealers located throughout the United States who in turn resell respondent’s products to the general public. Par. 5. In the course and conduct of its business, and at all times mentioned herein, respondent has been, and now is, in substantial competition in or affecting commerce with corporations, firms and individuals engaged in the manufacture, advertising, offering for sale, sale and distribution of merchandise of the same general kind and nature as merchandise manufactured, advertised, offered for sale, sold and distributed by respondent. Par. 6. In the course and conduct of its business as above described, respondent has for some time last past effectuated and pursued a policy throughout the United States, the purpose or effect of which is and has been to fix, control, establish, manipulate and maintain the resale prices at which its dealers advertise, offer for sale and sell its products.

Par. 7. By various means and methods, respondent has effectuated and enforced the aforesaid practice and policy by which it can and does fix, control, establish, manipulate and maintain the resale prices at which its products are advertised, offered for sale and sold by its dealers. To carry out said practice or policy, respondent adopted and employed, and still employs, the following means and methods among others:

(a) It requires prospective dealers as a condition of becoming dealers, and requires dealers as a condition of remaining dealers, to Decision and Order 94 F.T.C.

enter into oral agreements or understandings with respondent, or to give oral assurances to respondent, that they will sell products at prices suggested by respondent.

(b) It requires prospective dealers as a condition of becoming dealers, and requires dealers as a condition of remaining dealers, to enter into oral agreements or understandings with respondent, or to give oral assurances to respondent, that, in the event they sell any product at less than respondent’s suggested retail price, they will not identify such product in any advertisement as having been manufactured by respondent.

(c) It warns, harasses and uses various forms. of coercion and discipline against dealers who sell, or are suspected of selling, products at prices other than those respondent has established or suggested.

(d) It prohibits any dealer from being reimbursed pursuant to respondent’s cooperative advertising program for any advertisement offering any product at a price other than that which respondent has established or suggested.

Par. 8. By means of the aforesaid acts and practices and more, respondent, in combination, agreement, understanding and conspiracy with certain of its dealers and with the acquiescence of other of its dealers, has established, maintained and pursued a planned course of action to fix and maintain certain specified uniform prices at which products will be resold. .

Par. 9. The aforesaid acts and practices of respondent have been and are now having the effect of hampering and restraining competition in the resale and distribution of respondent’s products, and, thus, are to the prejudice and injury of the public, and constitute unfair methods of competition in or affecting commerce or unfair acts and practices in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act. The acts and practices of respondents, as herein alleged, are continuing and will continue in the absence of the relief herein requested. DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent named in the caption hereof, and the respondent having been furnished with a copy of a draft of complaint which the San Francisco Regional Office proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge the respondent with violation of the Federal Trade Commission Act; and The respondent, its attorney, and counsel for the Commission 1114 Decision and Order having thereafter executed an agreement containing a consent order, an admission by the respondent. of all the jurisdictional facts set forth 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 the respondent that the law has been violated as alleged in such complaint, and waivers. and other provisions as required by the Commission’s Rules; and The Commission having thereafter considered: the matter and having determined that it had reason to believe that the respondent has violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. Respondent Gant, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Connecticut, with its office and principal place of business located at 40 Sargent Drive, in the City of New Haven, State of Connecticut. 2. Gant Corporation. 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 400 Pike St., in the City of Cincinnati, State of Ohio. 3.. Gant Corporation has recently purchased the business and certain of the assets of respondent Gant, Inc. 4. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding, of. respondent Gant, Inc., and of Gant Corporation, and the proceeding is in the public interest. Do ORDER For the purposes of this order, the following definitions shall apply: ' a “Product” is defined as any item of wearing apparel. or related accessory which is manufactured, offered for sale or sold by respondent.

“Dealer” is defined as any person, partnership, corporation or firm which sells any product in the course of its business. “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 dealer for pricing any product. Such term includes, but is not limited Decision and Order 94 F.T.C.

to, any suggested, established or customary resale price as well as the retail price in effect at any dealer. “Sale Period” is defined as any time during which any dealer offers to sell any product at resale prices lower than those in effect during the usual and ordinary course of said dealer’s business; or any suggested, authorized or customary time for selling or advertising any product at prices lower than the suggested, established or customary resale prices.

It is ordered, That respondent Gant, Inc., a corporation, its successors and assigns, and respondent's officers, agents, representatives and employees, directly or indirectly, or through any corporation, subsidiary, division or other device, in connection with the manufacture, advertising, offering for sale, sale or distribution of any product in or affecting commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

I 1. Fixing, establishing, controlling or maintaining, directly or indirectly, the resale price at which any dealer may advertise, promote, offer for sale or sell any product, or the sale period of any dealer.

2. Requesting, requiring or coercing, directly or indirectly, any dealer to maintain, adopt or adhere to any resale price or sale period. 3. Requesting or requiring, directly or indirectly, any dealer to report the identity of any other dealer who deviates from any resale price or sale period; or acting on any reports or information so obtained by threatening, intimidating, coercing or terminating said dealer.

4. Requesting or requiring that any dealer refrain from or discontinue selling or advertising any product at any resale price. 5. Hindering or precluding the lawful use by any dealer of any brand name, trade name or trademark of respondent in connection with the sale or advertising of any product at any resale price. 6.. Making any payment or granting any consideration, service or benefit to any dealer because of the resale price at which any other dealer has advertised or sold any product. 7. Conducting any surveillance program to determine whether any dealer is advertising, offering for sale or selling any product at any resale price, where such surveillance program is conducted to fix, maintain, control or enforce the resale price at which any product is sold or advertised.

8. Terminating or taking any other action to restrict, prevent or 1114 Decision and Order limit the sale of any product by any dealer because of the resale price at which said dealer has sold or advertised, is selling or advertising, or is suspected of selling or advertising any product. 9. Threatening to withhold or withholding earned cooperative advertising credits or allowances from any dealer, or limiting or restricting the right of any dealer to participate in any cooperative advertising program for which it would otherwise qualify, because of the resale price at which said dealer advertises or sells any product, or proposes to sell or advertise any product. il 1. For a period of two (2) years from the date of service of this order, orally suggesting or recommending any resale price or sale period to any dealer.

2. For a period of two (2) years from the date of service of this order, communicating in writing any resale price or sale period to any dealer; provided, however, that after said two (2) year period, respondent shall not suggest any resale price or sale period on any list, or in any advertising, book, catalogue or promotional material, unless it is clearly and conspicuously stated on reach page where any suggested resale price or sale period appears, the following: THE [RESALE PRICES OR SALE PERIODS] QUOTED HEREIN ARE SUGGESTED ONLY. YOU ARE FREE TO DETERMINE YOUR OWN [RESALE PRICES OR SALE PERIODS}.

ii It is further ordered, That respondent shall: 1. Within thirty (80) days after service of this order, mail under separate cover a copy of the enclosure set forth in the attached Exhibit A to each of its present accounts. An affidavit shall be sworn to by an official of the respondent verifying that the attached Exhibit A was so mailed.

2. Mail under separate cover a copy of the enclosure set forth in the attached Exhibit A to any person, partnership, corporation or firm that becomes a new account within three (3) years after service of this order.

IV It is further ordered, That respondent shall forthwith distribute a copy of this order to all operating divisions of said corporation, and to present or future personnel, agents or representatives having sales, advertising or policy responsibilities with respect to the subject Decision and Order 94 F.T.C.

matter of this order, and that respondent secure from each such person a signed statement acknowledging receipt of said order: Vv It is further ordered, That respondent notify the Commission at least thirty (80) days prior to any proposed change in the corporate respondent, 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 corporation which may affect compliance obligations arising out of the order. VI It is further ordered, That respondent shall within sixty (60) days after service upon it of this order, file with the Commission a report, in writing, setting forth in detail the manner and form in which it has complied with this order.

vil It.is further ordered, That for purposes of this order, and for no other purpose, Gant Corporation:

(1) Is a successor to respondent Gant, Inc.. (2) Shall refrain from performing any act which respondent Gant, Inc., is prohibited form performing by said order; and shall perform _ all acts which respondent Gant, Inc. is required to perform by said order.

(3) Will be required to file one or more compliance reports showing that it has fully complied with said order, and may be liable for civil penalties in the amount provided by law for each violation by it of said order.

Vill It is further ordered, That a copy of said Order served upon Gant, Inc. shall be mailed by the Federal Trade Commission to Gant Corporation at its above-stated address simultaneously with such service on Gant, Inc.

Exuisit A Dear Retailer:

Without admitting any violation of the law, Gant, Inc. has agreed to the entry of an Order by the Federal Trade Commission regulating certain distribution practices. In connection therewith, the Company is required to send you this letter describing the Order.

1114 , Decision and Order The Order provides, among other things, as follows: 1. You can advertise and sell Gant products at any price you choose. 2. Gant will not take any action aganst you, including termination, because of the price at which you advertise or sell Gant products. 8. Gant will not suggest retail prices for any product until [2 years from the date of service of the Order].

4. The price at which you sell or advertise Gant products will not affect your right to use Gant trademarks or other identification in your sale-or advertising of products bearing Gant trademarks or identification. 5. You are free to participate in any cooperative advertising program sponsored by Gant for which you would otherwise qualify, and to receive any advertising credit or allowance allowed thereunder regardless of the price.at which you advertise the Gant product. ;

If you have any questions regarding the Order or this letter, please call for Gant, Inc.

Decision and Order 94 F.T.C.