Germaine Monteil Cosmetiques Corporation

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IN THE MATTER OF GERMAINE MONTEIL COSMETIQUES CORPORATION CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3098. Complaint, Nov. 1982-Decision, Nov. , 1982 This consent order requires a New York City cosmetic manufacturer and seller to cease, among other things, attempting to fix and maintain the resale prices at which its products are advertised or sold, through coercion or otherwise. The firm is also prohibited from withholding any earned advertising credit or benefit from recalcitrant dealers; restricting the lawful use of its trademarks or brandnames; and seeking the identity of dealers who deviate from suggested resale prices. Additionally, for a two year period, the order precludes the dissemination of suggested resale prices unless accompanied by a statement advising that such prices are merely suggested; and requires the firm to mail a letter describing the provisions of the order to all present and future accounts.

Appearances For the Commission: Jeffrey Klurfeld and Ralph Stone. For the respondent: Stuart L. Friedel, Davis Gilbert New York City.

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 Germaine Montei! Cosmetiques Corporation, 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 in that respect as follows: For purposes of this complaint, the following definitions shall apply:

A, Product Product is defined as any item of cosmetic, fragrance or soap, any accessory containing any item of cosmetic, fragrance or soap, or any related accessory, including but not limited to, any applicator or brush, which is manufactured, offered for sale or sold by respondent. In addition to the foregoing, product is defined to include any item Complaint 100 F.

which is manufactured, offered for sale or sold by respondent for resale to consumers together with any product as defined hereinabove.

Dealer Dealer is defined as any person, partnership, corporation or firm which sells any product in the course of its business. C, Resale Price 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 , any suggested, established or customary resale price as well as the retail price in effect at any dealer. PARAGRAPH 1. Respondent Germaine Monteil Cosmetiques Corporation, is a corporation organized. existing and doing business under and by virtue of the laws of the State of Delaware with its offce and principal place of business located at 40 West 57th Street New York, New York.

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 cosmetics, fragrances, soaps and related accessories. 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 affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, as amended, PAR. 4. Respondent sells and distributes its products directly to retail dealers located throughout the United States who 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 or distribution of merchandise of the same general kind and nature as merchandise manufactured, advertised, offered for sale, sold or 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 to establish and maintain the resale prices at which certain of its dealers advertise offer for sale and sell its products.

PAR. 7. By various means and methods, respondent, in combination, agreement and understanding with certain of its dealers, and GERMAINE MONTEIL COSMETIQUES CORP 545 543 Decision and Order with the acquiescence of other of its dealers, has established maintained and pursued a planned course of action to establish and maintain certain specified uniform prices at which said products wil be resold, 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 said 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 of the relief herein requested.

Commissioner Bailey dissented.

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 attorneys, and counsel for the Commission 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 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 Germaine Monteil Cosmetiques Corporation is a corporation organized, existing and doing business under and by Decision and Order 100 F. virtue of the laws of the State of Delaware, with its offce and principal place of business located at 40 West 57th Street, in the City of New York, State of New York.

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 and order coverage shall apply:

A. Product Product is defined as any item of cosmetic, fragrance or soap, any accessory containing any item of cosmetic, fragrance or soap, or any related accessory, including but not limited to any applicator or brush, which is manufactured, offered for sale or sold by respondent. In addition to the foregoing, product is defined to include any item which is manufactured, offered for sale or sold by respondent for resale to consumers together with any product as defined hereinabove, Dealer Dealer is defined as any person, partnership, corporation or firm which sells any product in the course of its business. C. Resale Price 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 , any suggested, established or customary resale price as well as the retail price in effect at any dealer. D. Order Coverage Paragraphs IE and II of this Order shall not apply to any product as hereinabove defined, which is manufactured, offered for sale or sold under any brand of Tuvache, Inc. or Sonia Rykiel. It is ordered That respondent Germaine MonteiJ Cosmetiques Corporation, 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 543 Decision and Order sale, sale or distribution of products in or affecting commerce, as commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Fixing, establishing, controllng or maintaining, directly or indirectly, the resale price at which any dealer may advertise promote, offer for sale or sell any product, 2, Requesting, requiring or coercing, directly or indirectly, any dealer to maintain, adopt or adhere to any resale price, 3. Requesting or requiring, directly or indirectly, any dealer to report the identity of any other dealer who deviates from any resale price; 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 sellng 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, Conducting any surveilance program to determine whether any dealer is advertising, offering for sale or sellng any product at any resale price, where such surveilance program is conducted to fix, maintain, control or enforce the resale price at which any product is sold or advertised.

7. Terminating or taking any other action to restrict, prevent or limit the sale of any product by any dealer because of the resale price at which said dealer has sold or advertised, is sellng or advertising, or is suspected of sellng or advertising any product. 8. 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, 9, Making any payment or granting any other consideration or benefit to any dealer because of the resale price at which any other dealer has sold or advertised any product, 1. For a period of two (2) years from the service of this Order orally suggesting or recommending any resale price to any dealer. 2. For a period of two (2) years from the service of this Order Decision and Order 100 r' suggesting or recommending in writing any resale price to any dealer; provided, however that after said two (2) year period respondent shall not suggest or recommend to any dealer any resale price on any list or order form, or in any catalogue or stock control book, unless it is clearly and conspicuously stated on each page thereof where any suggested or recommended resale price appears the following:

THE RETAIL PRICES QUOTED HEREIN ARE SUGGESTED ONLY. YOU ARE COMPLETELY FREE TO DETERMINE YOUR OWN RETAIL PRICES. II.

1. Nothing contained in this Order shall preclude respondent from publishing or printing any resale price which is specified by any dealer for use or inclusion in any advertising, mailer or promotional material which said dealer intends to disseminate to consumers; provided, however that for a period of two (2) years from the service of this Order, in connection with each advertising, mailer or promotional material which any dealer intends to disseminate to consumers, respondent shall make a written request to said dealer to specify its resale price(s), and shall disclose therein in a clear and conspicuous manner the following:

(GERMAINE MONTEIL OR ROCHAS PARIS) DEALERS ARE COMPLETELY FREE TO SPECIFY RETAIL PRICES OF THEIR OWN CHOOSING FOR INCLUSION IN THIS (ADVERTISING, MAILER OR PROMOTIONAL MATERIAL) PLEASE INSERT THOSE RETAIL PRICES YOU WISH TO BE PRINTED ON THIS (ADVERTISING, MAILER OR PROMOTIONAL MATERIAL I.

2. After said two (2) year period, respondent shall not suggest any resale price to any dealer for use or inclusion in any advertising, mailer or promotional material which said dealer intends to disseminate to consumers, unless respondent, in connection with each advertising, mailer or promotional material, makes a written request to said dealer to review said advertising, mailer or promotional material for its resale price(s), and discloses therein in a clear and conspicuous manner the following:

ur.r.ln.M1 -' nJ.'-.I J.J.J..L V""'' HU-'J.. V""u"". 543 Decision and Order (GERMAINE MONTEIL OR ROCHAS PARIS) DEALERS ARE COMPLETELY FREE TO SPECIFY RETAIL PRICES OF THEIR OWN CHOOSING FOR INCLUSION IN THIS (ADVERTISING, MAILER OR PROMOTIONAL MATERIAL). YOU MAY CHANGE ANY PRICE WE HAVE SUGGESTED. II.

It is further ordered That respondent shall: 1. Within sixty (60) 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 dealers who sell Germaine Monteil brand products or Rochas Paris brand products, An affidavit shall be sworn to by an official of respondent verifying that the attached Exhibit A was so mailed, 2. Mail under serparate cover a copy of the enclosure set forth in the attached Exhibit A to any person, partnership, corporation or firm that becomes a new dealer selling Germaine Monteil brand products or Rochas Paris brand products within two (2) years after service of this Order, 3. For a period of two (2) years from the date of service of this Order, mail annually under separate cover a copy of the enclosure set forth in the attached Exhibit B to each of respondent's then present dealers who sell Germaine Monteil brand products or Rochas Paris brand products, 4. Within sixty (60) days after service of this Order, distribute a copy of the enclosure set forth in the attached Exhibit C to each of its present dealers who sell Tuvache brand products or Sonia Rykiel brand products, An affdavit shall be sworn to by an offcial of respondent verifying that the attached Exhibit C was so distributed. IV, It is further ordered, That respondent shall forthwith distribute a copy of this Order to all operating divisions of said corporation; to all personnel, agents or representatives having sales, advertising or policy responsibilities with respect to the subject matter of this Order, and that respondent secure from each such person a signed statement acknowledging receipt of said Order; and, for a period of three years from the date of service of this Order, to all new personnel, agents, or representatives having sales, advertising or policy responsibilities with respect to the subject matter of this Order, and that respondent secure from each such person a signed statement acknowledging receipt of said Order. Decision and Order 100 F. 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 respective corporation which may affect compliance obligations arising out of the Order. VI.

It is further ordered That respondent shall within seventy-five (75) 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.

Commissioner Bailey dissented.

EXHIBIT A Dear Retailer:

This letter is being sent to all (Germaine Mantei! or Roehas Paris) accounts. On Ldate), Germaine Manteil Cosmetiques Corporation agreed to the entry of a Consent Order with the Federal Trade Commission concerning certain distribution practices. This Consent Order was entered into for settlement purposes only and does not constitute an admission that Germaine Mantei! violated the law. As part of that Consent Order, we are obligated to send you this letter. Germaine Manteil wants its (Germaine Manteil or Roehas Paris) accounts to know and understand the following;

1. You can advertise and sell (Germaine Monteil or Rochas Paris) products at any price you choose.

2. Germaine Mantei! wil not take any action against you, including termination because of the price at which you advertise or sell (Germaine Monteil or Rochas Paris products).

3. Germaine Monteil wil 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 (Germaine Monteil or Roehas Paris) products wil not affect your right to lawfully use (Germaine Mantei! or Rochas Parish trademarks or other identification in your sale or advertising of products bearing (Germaine Monteil or Rochas Paris) trademarks or identification. 5. You are free to participate in any cooperative advertising program sponsored by Germaine Mantei! for which you would otherwise qualify, and to receive any advertising credit or allowance allowed thereunder regardless of the price at which you advertise a (Germaine Monteil or Rochas Paris) product. 6. Germaine Mantei! will continue to publish or print mailers, advertising and other promotional materials which you intend to disseminate to consumers containing retail prices which you specify. Until (2 years from the date of service of this Order), in connection with each advertising, mailer or promotional material we wil publish for you to disseminate to consumers, we will be requesting in writing that you specify the retail prices you wish to be printed on these materials. 543 Decision and Order After (2 years from the date of servce of this Order), we wil send you materials for your review which may contain QUI' suggested retail prices. You are completely free however, to change these prices, and we wil then print the materials with the retail prices which you have specified.

7. The price at which a store sells or advertises a (Germaine Monteil or Roehas Paris) product is its own business. Germaine Manteil does not want to be informed by a (Germaine Manteil or Rochas Paris) account of the price at which any other store sells or advertises any (Germaine Mantei! or Roehas Paris) product. If you have any questions regarding the Consent Order or this letter, please call for (Germaine Manteil Cosmetiques Corporation or Rochas Paris) EXHIBIT B Dear Retailer:

We wish to remind you of the following:

1. You can advertise and sell (Germaine Monteil or Rochas Paris) products at any price you choose.

2. Germaine Manteil wil not take any action against you, including termination because of the price at which you advertise or sell (Germaine Monteil or Rochas Paris products).

3. Germaine Monteil wil 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 (Germaine Monteil or Rochas Paris) products wil not affect your right to lawfully use (Germaine Monteil or Rochas Paris) trademarks or other identification in your sale or advertising of products bearing (Germaine Monteil or Rochas Paris) trademarks or identification. 5. You are free to participate in any cooperative advertising program sponsored by Germaine Monteil for which you would otherwise qualify, and to receive any advertising credit or allowance allowed thereunder regardless of the price at which you advertise a (Germaine Monteil or Rochas Paris) product. 6. Germaine Mantei! will continue to publish or print mailers, advertising and other promotional materials which you intend to disseminate to consumers containing retail prices which you specify. Until (2 years from the date of service of this Orders, in connection with each advertising, mailer or promotional material we wil publish for you to disseminate to consumers, we wil be requesting in writing that you specify the retail prices you wish to be printed on these materials. After (2 years from the date of service of this Order), we wil send you materials for your review which may contain our suggested retail prices. You are completely free however, to change these prices, and we wil then print the materials with the retail prices which you have specified.

7. The price at which a store sells or advertises a (Germaine Monteil or Rochas Paris) product is its own business. Germaine Monteil does not want to be informed by a (Germaine Monteil or Rochas Paris) account of the price at which any other store sells or advertises any (Germaine Monteil or Rochas Paris) product. Decision and Order 100 F. If you have any questions please call for (Germaine Manteil Cosmetiques Corporation or Rochas Paris J EXHIBIT C Dear Retailer:

This letter is being sent to all (Tuvache or Sonia Rykiel) accounts. On (date). Germaine Manteil Cosmetiques Corporation agreed to the entry of a Consent Order with the Federal Trade Commission concerning certain distribution practices. This Consent Order was entered into for settlement purposes only and does not constitute an admission that Germaine Monteil violated the law. As part of that Consent Order we are obligated to send you this letter. Germaine Manteil wants its lTuvache or Sonia RykielJ accounts to know and understand the following:

1. You can advertise and sell (Tuvache or Sonia Rykiel) products at any price you choose.

2. Germaine Monteil wil not take any action against you, including termination because of the price at which you advertise or selllTuvache or Sonia Rykiel) products. 3. The price at which you sell or advertise (Tuvache or Sonia Rykiel) products will not affect your right to lawfully use (Tuvache or Sonia RykielJ trademarks or other identification in your sale or advertising of products bearing (Tuvache or Sonia Rykiel) trademarks or identification.

4. You are free to participate in any cooperative advertising program sponsored by Germaine Monteil for which you would otherwise qualify, and to receive any advertising credit or allowance allowed thereunder regardless of the price at which you advertise a (Tuvache or Sonia Rykiel) product. 5. The price at which a store sells or advertises a (Tuvache or Sonia RykielJ product is its own business. Germaine Monteil does not want to be informed by a (Tuvache or Sonia Rykiel) account of the price at which any other store sells or advertises any (Tuvache or Sonia Rykiel) product. If you have any questions regarding the Consent Order or this letter, please call for (Tuvache, Inc. or Sonia RykielJ .., ..

553 Complaint