National Decorating Products Association, Inc

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IN THE MATTER OF NATIONAL DECORATING PRODUCTS ASSOCIATION, INC., ET AL.

CONSENT ORDER, ETC. , IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket 9192. Complaint, April 1985-Decision, June, 1986 This consent order requires, among other things, a St. Louis, Mo. wallcovering industry trade association and its New England regional affliate based in Westport, Conn. to cease any conduct having the effect of fixing prices, terms or conditions of sale of wall coverings. Further, respondents are prohibited from: (1) coercing any seller or supplier of walle overing to use or not use any prices, terms or conditions of sale , distribution p-ethods or policy of choosing customers, and (2) assisting any affliate or member who use any of the prohibited practices. Appearances For the Commission: Kevin T. Cronin. For the respondent: George D. Webster, Webster, Chamberlain & Bean Washington, D.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act as amended 15 U. C. 41 et seq. and by virtue ofthe authority vested in it by said Act, the Federal Trade Commission, having reason to believe that the respondents named in the above caption have 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 this complaint stating its charges as follows: PARAGRAPH 1. For purposes of this complaint, the following definitions shall apply:

A. Wallcoverings means flexible materials used to cover residential and commercial walls, such as simple wallpapers, vinyls, fabrics, and foils.

Supplier means a manufacturer or a distributor of wall coverings or an entity engaged in the sale of wall coverings for resale by others to consumers.

PAR. 2. Respondent National Decorating Products Association, Inc. NDP A") is a New Jersey corporation with its principal place of business at 1050 North Lindbergh Boulevard, St. Louis, Missouri. 498 Complaint NDP A is composed of full voting members, which are retail businesses engaged in the promotion and sale of wallcoverings, and nonvoting associate members, which are suppliers of wallcoverings. NDP A's membership consists of approximately 4000 firms, over 99 percent of which are independent decorating products retailers operating some 7000 retail stores, or about one-third of all the stores that sell wallcoverings, and constituting about 75 percent of the independent decorating products retailers in the United States. PAR. 3. NDPA was organized inter alia to facilitate the exchange of information among its members concerning methods for conducting business in the sale and distribution of wallcoverings, and to encourage the formation of regional and local affliates composed of retail sellers of wall coverings. There are about 24 local affliates and three regional affliates ofNDPA. Approximately one-third ofNDPA members are members of a local affliate. NDP A's policies are determined, and its aflairs are directed, by an 18 member board of directors, which includes a minimum of one member from each of nine geographic zones.

PAR. 4. Respondent Eastern Decorating Products Association EDPA") is an unincorporated association with its principal place of business at 10 Bay Street, Suite 134, Westport, Connecticut. EDPA is a regional affliate ofNDPA and is composed of members from nine local affliates of NDPA in the New England and Middle Atlantic states.

PAR. 5. Respondent Decorating Products Dealers Association of Greater New York, Inc. ("DPDA-NY") is a New Yorkcorporation with its principal place of business at Bell Plaza, 42-0 Bell Boulevard Bayside, New York. DPDA-NY is a local affliate ofNDPA. PAR. 6. Full voting members of respondents are engaged in the operation of retail decorating products stores where wallcoverings are sold. Annual retail sales of wallcoverings in the United States are approximately $1.5 bilion. Except to the extent that competition has been restrained as herein alleged, full voting members of respondents have been and are now in competition among themselves and with other sellers of wallcoverings.

PAR. 7. Respondents engage in substantial activities which further the pecuniary interests of their members. By virtue of their purposes and their activities, respondents are corporations within the meaning of Section 4 of the Federal Trade Commission Act, as amended, 15 C. 44.

PAR. 8. Respondents, and their members, engage in acts and practices, including the acts and practices described below, which are in or affect commerce within the meaning of the Federal Trade Commission Act, as amended.

Complaint 107 F.

COUNT I PAR. 9. Members of respondents NDPA, EDPA, and DPDA-NY are wallcovering retailers. To permit consumers to select from a wide variety of wall coverings, retailers display in their showrooms sample books most of which contain manufacturers' suggested retail prices and product identification numbers. Some wallcovering retailers, including mail order houses, offer percentage discounts from manufacturers' suggested retail prices. Consumers use suggested resale prices both to comparison shop between retailers offering percentage discounts and as one indication of quality differences between various wallcovering samples.

PAR. 10. Respondents NDPA, EDPA, DPDA- , and others, have combined or conspired between and among themselves, and with at least some oftheir members, to restrain price competition in the sale of wall coverings, to fix or stabilize prices, and to prevent discounting from manufacturers' suggested retail prices by suppressing, or attempting to suppress, information concerning manufacturers' suggested retail prices. PAR. 11. Respondents NDPA, EDPA and DPDA- , and at least some of their members. have engaged in various acts or practices in furtherance of this combination or conspiracy, including, one or more of the following:

A. Removing or otherwise concealing, or urging members to remove or otherwise to conceal the suggested prices in wallcovering sample books;

B. Attempting to pressure, and urging members to pressure, suppliers into publishing wallcovering sample books without suggested prices by, among other things, agreeing to give favored treatment to products of suppliers that do not include suggested retail prices in wallcovering sample books;

C. Offering to provide assistance to members to determine what retail prices to charge in the absence of manufacturers' suggested retail prices.

PAR. 12. The combination or conspiracy and the acts and practices alleged in Paragraphs Ten and Eleven have had, or have the tendency or capacity to have, the following effects, among others: A. Fixing, maintaining, or stabilizing prices of wallcoverings; B. Restraining competition in connection with the sale and distribution of wallcoverings;

C. Depriving consumers of the benefits of additional price, quality, and service competition in connection with the purchase and sale of wallcoverings.

498 Complaint PAR. 13. The combination or conspiracy and the acts and practices alleged in Paragraphs Ten and Eleven constitute unfair methods of competition or unfair or deceptive acts and practices by respondent in violation of Section 5 of the Federal Trade Commission Act amended.

COUNT II PAR. 14. Wallcoverings are packaged in double rolls, although some manufacturers price and sell wall coverings in single rolls. Some suppliers impose a cutting charge when processing orders for single rolls. PAR. 15. Respondents NDPA and DPDA- , and others have combined or conspired between and among themselves, and with at least some of their members, to restrain competition by attempting to fix or restrain the prices paid to wall covering suppliers by retailers. PAR. 16. Respondents NDPA, DPDA- , and at least some of their members and others have engaged in various acts or practices in furtherance of these combinations or conspiracies, including, one or more of the following:

A. Threatening, and urging members to threaten, to refuse to deal with suppliers that imposed cutting charges; B. Refusing to pay, or urging members to refuse to pay, cutting charges imposed by suppliers;

C. Publishing and circulating to suppliers, and others, letters stating or implying that members would refuse to deal with suppliers imposing cutting charges, or urging members to refuse to pay cutting charges imposed by suppliers.

PAR. 17. The combination or conspiracy and the acts and practices alleged in Paragraphs Fifteen and Sixteen have had, or have the tendency or capacity to have, the following effects, among others: A. Fixing, maintaining, or stabilizing prices of wallcoverings; B. Restraining competition in connection with the sale and distribution of wallcoverings;

C. Depriving consumers of the benefits of additional price, qualiy, and service competition in connection with the purchase and sale of wallcoverings.

PAR. 18. The combination or conspiracy and the acts and practices alleged in Paragraphs Fifteen and Sixteen constitute unfair methods of competition or unfair or deceptive acts and practices by respondents in violation of Section 5 of the Federal Trade Commission Act as amended. These combinations or conspiracies, as well as those alleged in Count I, are continuing and wil continue in the absence of appropriate relief.

Decision and Order 107 F. T. DECISION AND ORDER AS TO NATIONAL DECORATING PRODUCTS ASSOCIATION, INC. AND EASTERN DECORATING PRODUCTS ASSOCIATION The Commission having heretofore issued its complaint charging respondents National Decorating Products Association Inc. NDP A"), a corporation, and Eastern Decorating Products Association ("EDP A"), an unincorporated association, named in the caption hereof with violation of Section 5 of the Federal Trade Commission Act, as amended, and the respondents having been served with a copy of that complaint, together with a notice of contemplated relief; and The respondents, their attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order an admission by the respondents 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 respondents 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 Secretary ofthe Commission having thereafter withdrawn this matter as to these respondents from adjudication in accordance with Section 3.25(c) of its Rules; and The Commission having considered the matter 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 3.25(1) of its Rules, the Commission hereby makes the following jurisdictional findings and enters the following order:

1. Respondent NDP A is a corporation organized, existing and doing business under and by virtue of the laws of the state of New Jersey, with its offce and principal place of business located at 1050 North Lindbergh Boulevard, St. Louis, Missouri.

2. Respondent EDP A is an unincorporated association with its office and principal place of business located at 10 Bay Street, Suite 134 Westport, Connecticut.

3. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and ofthe respondents, and the proceeding is in the public interest.

NAT' L DECORATING PRODUCTS ASSOC., INC., ET AL. 503 498 Decision and Order ORDER It is ordered That for purposes of this order the following definitions shall apply:

A. NDPA means the National Decorating Products Association Inc., its offcers, directors, committees, representatives, agents, employees, successors and assigns.

B. EDPA means the Eastern Decorating Products Association, its offcers, directors, committees, representatives, agents, employees successors and assigns.

C. Wallcoverings means flexible materials used to cover residential and commercial walls, such as simple wallpapers, vinyls, fabrics and foils.

II.

It is further ordered That NDP A and EDP A, individually or in concert with any other person, directly or indirectly, or through any corporate or other device, shall cease and desist from: A. Conduct having the purpose or effect of: 1. fixing, maintaining, or stabilizing prices, terms or conditions of sale of wallcoverings;

2. coercing any seller of wall coverings to adopt, abandon, or refrain from adopting or abandoning any practice or policy concerning prices terms or conditions of sale, or distribution methods or choice of customers.

B. Expressly or impliedly advocating, suggesting, advising, or recommending that any ofNDP A's or EDP A' s members refuse to deal with any seller of wall coverings on account of, or that any ofNDPA's or EDP A's members engage in any other act to affect, or to attempt to affect, the prices, terms or conditions of sale, or distribution methods or choice of customers of any seller of wallcoverings. C. Publishing or circulating the results of any survey of, or otherwise identifying, prices, terms or conditions of sale, or distribution methods or choice of customers of any seller of wall coverings in order to coerce, compel or induce any seller of wallcoverings to adopt or abandon or to refrain from adopting or abandoning any practice or policy concerning prices, terms or conditions of sale, or distribution methods or choice of customers.

Decision and Order 107 F. D. Aiding or assisting any affliates of NDP A or NDP A members in engaging in any of the acts prohibited by this Part II. It is further ordered That this order shall not be construed to prevent NDPA or EDPA from publishing written materials or sponsoring seminars, or otherwise providing information or its members views on topics including but not limited to cost accounting principles and suggested prices and product identification numbers in wallcovering sample books to other sellers of wall coverings provided, howevthat the information or views are not presented in a manner constituting a violation of any provision contained in Part II of this order.

IV.

It is further ordered That NDP A shall:

A. Within 30 days following service ofthis order, mail a copy ofthis order to each of its members.

B. Within 60 days following service of this order, publish this order in an issue of Decorating Retailer in the same type size normally used for articles in Decorating Retailer.

C. For a period ofthree years provide each new NDP A member with a copy of this order at the time the new member is accepted into membership.

D. Terminate for a period of one year its affliation with any affliate organization within 60 days after learning or having reason to believe that said affliate organization has engaged, after the date this order becomes final, in any act or practice that, if engaged in by NDPA, would be prohibited by Part II of this order. It is further ordered, That NDPA and EDPA shall: A. Within 60 days following service of this order, fie a written report with the Commission, setting forth in detail the manner and form in which they have complied with this order. Thereafter, additional reports shall be fied at such other times as the Commission may, by written notice to NDPA and EDPA, require. B. For a period of 3 years following service of this order, maintain in their fies copies of all correspondence received from, or sent to sellers of wallcoverings, associations of sellers of wallcoverings, or NATL DECORATING PRODUCTS ASSOG, lng, ET AL. 505 498 Decision and Order NDP A affliates or members, and make such copies available for inspection by representatives of the Federal Trade Commission upon written request. However, NDP A and EDP A need not maintain copies of press releases received from sellers of wallcoverings. C. Notify the Commission at least 30 days prior to any proposed change in NDP A's or EDP A's organization or operations, such as dissolution, assignment, or sale resulting in the emergence of a successor corporation or association, or any other change that may affect compliance obligations arising out of this order. Chairman Oliver did not participate.

Decision and Order 107 F.