Totes Incorporated

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IN THE 1\ATTEROF totes incorporated CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-3040. Complaint. Sept. 12. 980-Decision. Sept. 12, 1980 This consent order requires, among other things, a Loveland, Ohio manufacturer of umbrellas and related rainwear, to cease withholding cooperative advertising credits or allowances, or in any way limiting or restricting dealers from participating in any cooperative advertising program because of the resale price at which the dealer has advertised or sold a product or because the dealer has used price comparisons in the advertising and sale of a product. Appearances For the Commission: Jeffrey A. Klurfeld. For the respondent: William Baskett and Foston Jacobs, Cincinnati, Ohio.

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 totes incorporated, 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 which is manufactured, offered for sale or sold by respondent.

Dealer" is defined as any person, partnership, corporation or firm which is authorized by respondent to purchase any product. Resale Price" is defined as any price, price floor, price ceilng, 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 , any retail price suggested or established by respondent, any customary resale price, or the retail price in effect at any dealer. PARAGRAPH 1. Respondent totes incorporated is a corporation organized, existing and doing business under and by virtue of the laws of the State of Ohio, with its office and principal place of business located at 10078 East Kemper Road, Loveland, Ohio. Complaiitl 96 YT.

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 rubber footwear, umbrellas, hats, scarfs and other wearing apparel.

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.

directly to PAR. 4. Respondent sells and distributes its products more than 3 000 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 administered and conducted cooperative advertising programs which contain a limitation or restriction denying cooperative advertising credits or allowances to dealers for advertisements which do not feature respondent' s suggested retail prices.

PAR. 7. The administering or conducting by respondent of cooperarestriction de- tive advertising programs with the limitation or scribed in Paragraph Six hereinabove has the capacity, tendency and effect of establishing, maintaining, stabilizing or otherwise ilegally influencing the resale prices of dealers in respondent' s products, and has had and stil has the capacity, tendency and effect of hindering, suppressing or eliminating competition between or among those dealers selling respondent' s products.

PAR. 8. 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 respondent as herein alleged, are continuing and wil continue in the absence ofthe relief herein requested. totes inc. 337 335 Decision - and Order- 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 thereafter with a copy of a draft of complaint which the San Francisco Regional Offce proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent with violation of the Federal Trade Commission Act; and The respondent, its attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondent of al1 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 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 totes incorporated is a corporation organized existing and doing business under and by virtue of the laws of the State of Ohio, with its offce and principal place of business located at 10078 East Kemper Road, in the City of Loveland, State of Ohio. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER For the purposes of this Order, the following definitions shall apply:

Product" is defined as any item which is manufactured, offered for sale or sold by respondent.

Dealer" is defined as any person, partnership, corporation or firm which is authorized by respondent to purchase any product. 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 338 EDERAL TRADE COMMISSION DECISIONS Decision and -Order 96 F. dealer for pricing any product. Such term includes, but is not limited to, any retail price suggested or established by respondent, any customary resale price, or the retail price in effect at any dealer. It is ordered, That respondent totes incorporated, 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 designing, implementing, conducting, administering or auditing any cooperative advertising program, or portion thereof, in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, shall cease and desist from: Threatening to withhold or withholding 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 advertise or sell any product.

2. Threatening to withhold or withholding 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 said dealer has advertised or sold, or proposes to advertise or sell, any product using or featuring any resale price comparison. It is further ordered, That respondent shall within thirty (30) 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. Respondent, however, need not send said enclosure to any account of its "XIIX Karat " A , Bergren, Eastman Products, or L. P. Henryson divisions. An affdavit shall be sworn to by an offcial of respondent verifying that the attached Exhibit A was so mailed. It is further ordered That respondent shall forthwith distribute a copy of this Order to each of its operating divisions; and, for a period of three (3) years from the date of service of this Order, to each of its personnel, agents or representatives having sales, advertising or totes inc. 339 335 Decision - and Orde policy responsibilities with respect to the subject matter of this Order.

It is further ordered, That respondent notify the Commission at least thirty (30) days prior to any proposed change in the 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.

It is further ordered, That respondent shall within sixty (60) days after service upon it of this Order, fie with the Commission a report in writing, setting forth in detail the manner and form in which it has complied with this Order.

EXHIBIT A Dear Retailer:

totes incorporated, without admitting any violation of the law, has agreed to the eniry of an Order by the Federal Trade Commission regulating its cooperative advertising programs. In connection therewith, the Company ha-':; agreed to send you this letter describing the Order.

The Order provides, among other things, as follows: You are free to participate in, and receive reimbursement under, any totes incorporated cooperative advertising program regardless of the retail price you feature in otherwise qualifying advertisements. If you have any questions regarding the Order or this letter, please call at totes.

for totes incorporated 340 FEDERAL TRADE COMMISSION OgCISJONS Complaint -