C. W. Baker & Sons

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FEDERAL TRADE COMMISSION v. C. W. BAKER & SONS.

COMPLAINT IN THE !'t£ATTER OF THE ALLEGED VIOLATION OF !lec· TION II OF AN ACT OF CONGRt~SS APPROVED SEPTE!\limit 26, 1914, Docket No. 194.-l\!uy 27, 1!H9.

SYT.LABUS.

Where a firm engaged In the sale, as exclui!lve agents, of canned goods under Its own brand- ( a) Entered Into contt·acts with jobbers and wholesalers by the terms of which It required of them:

(1) Not to r·resell Its products at prices less than tho!'!e fixed by It; (2) Not to sell, loan, or exchange such goods to or with any dealer who had not signed a similar contract or who, hu vlng signed one, bad violated It;

(3) To give suld firm, In case a violation of any such contract;~ was alleged, the name of the violator and other particulars respecting such vlolutlon; and, (4) To forfeit and pay a penalty of $100 for failure or refusal to make, upon request, an affidavit denying the violation of any :o~uch contracts;

(b) Agreed to pay the sum of $100 tor Information of the violation of any such contl'Ucts;

(c) Agreed to puy a rebate at a future date, In a<ldltlon to the usual discount for cnsh, corulltloned upon the terms of' such contracts hnvlng been adhere•! to; and, (d) Carried out the terms of )W.id eontruct!'l and enforeed the ohsel"V· aneP thereof by jobbers and wholesalers: Held, That a sclwme of' resale price maintenance, substantially as described, constituted lln unfair method of compelltlon In violation of' section fl of' the act of' September 26, 1914. COMPL.\TNT.

The Federal Trade Commission, having reason to believe from a preliminary investigation made by it that P. T. FEDERAL TRADE COMMISSIO~ DECJSIO~S. 453 Baker, F. E. Baker, and A. L. Baker, copartners, doing business under the firm name and style of C. Baker & "r· Sons, all of whom are hereinafter referred to ao; respondents, have been, and are using unfair met!tous of competition in interstate commerce in violation of tlw provision,..; of ::;eetion 5 of an act or" Congress appro,·ed Septe1uber :W, HJH, entitled "An act to create a Federal Trade Conllnission, to define its powers and duties. nnd for other purposes," and it appearing that a proceeding by it in respect thereto would he to the interest of the puulic, issues tilts C'complaint, stating its charges in that respect on information and belief as follows:

PARAI:HAPII 1. That the respondents, P. T. Baker, F. E. Baker, and A. L. Baker are copartners <loing business under the firm name nnd btyle of C."'· Baker & Sons, having their principal office and place of business located in the town of Aberdeen, State of ~Iarylund, and are now and were at all times hereinafter mentioned engaged in the business of selling canned goods and products throughout the Statrs of the United States, the Territories thereof, the District of Columbia, nnd foreign countries in direct comprtition with other per:-;ons~ firms, copartners, nnd corporations similarly engaged.

PAR. 2. TI1at in the conduct of tlwir hn~ines~ respondents purdulse the a.foresaid canned goods :md products in the various States of the United Stnt>s and Territories nnd transport the snme through other States nnd Territories in and to the town of Aberdeen, State of Maryland. which are !io]d nn<l shipped to pnrchusers thereof in different States and Territories of the Pnited Stutes nnd the District of Columbia. and there is contintlmJsly and has been at nil times herein mentioned a constant current of trade and commerce in said canned goods and products among and LetwPt'n the various States nnd Territories of the United Stutes, t.he District of Columbia and fon'ign countries. and <'specially to and through the tmm of .Aberdeen. State of ~Iaryland, and thej·eft·om to and through other States and Trl'l'itories of the Unitrfl States, the. District of Columbia and fm·eign countries. PAn. 3. That with thr intent. purpose. an<l effect of stifling and suppressing competition in the manufacture and sale of 454 FEDERAL TP..\DE CO:\IMISSION DECISIONS, their canned good,; and products in intet·state commerce, the t·respondents ha,·e adopted and maintain a system of fixing prices at which their products shall he resold by dealers, with the effect of securing the trade of dealers and of enlisting their active cooperation in Pnlarging the sale of their pricemaintained product, to the prejudice of competitors who do not fix and require tlw maintenance of resale prices of canned goods and products, and with the effect of eliminating competition in prices :unong the dealers in their canned goods and products and that'Phy depriving dealers of their right to sell su~h canned goods and products, nt such priers as they may d<'I'In adeqnatP and warrantl•d by their selling d!leiency, and with othm· efft>cls; and that for the purpose of maintaining said standard re:-,ale prices and of inducing and comp<'lling their customers to maintain and keep such standard prices, respondents have for more than two years lust past- ( a) Hefu:;ed und are still refusing to sell their canned goods and products to customers or dealers who will not agree to maintain such specified standard resale prices, or who do not resell such canned goods and products at the specified standard selling prices so fixed and detet·mined by the I:espondent as aforesaid.

(b) Made and entered into contracts with their customers by the terms of which a penalty of $100 is imposed upon such customers who do not maintain such specified.standnrd resale prices as set forth in said contract, or who do not resell such canned good" nnd products at the specified standard selling prices so fixed and determined by the respondents as afo1·esaid. (a) Made and entered into contracts and agreements with certain of their customers by the terms of which they pay such customers semiannually rebates varying from 10 to 12! cents per dozen of the totlll amount of canned goods and products purchased by them within such period, in consideration that such customers or dealers will maintain and keep such specified standard resale prices as set forth in said contracts, or who do not resell such canned goods and products below the ~specified standard selling pice so fixed and determined by the respondents as aforesaid. FEDERAL 'trade COMMISSION DECTSIONS. 455 REPORT, FINDINGS AS TO THE FACTS, AND ORDER.

The Federal Trade Commission having issued and served its complaint herein, wherein it is alleged that it had reason to believe that the above-named respondents, C. vV. Baker & Sons, have been and now are using unfair methods of competition in interstate commerce in violation of the provisions of section 5 of an act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and fully stating its charges in that r<>.spect and the respondents having entered tht~ir appearance by Stevenson A. Williams and ·philip H. Close, their attorneys, and having filed their answer herein, and said attorneys having signed and filed an agreed statement of facts wherein and whereby it was stipulated and agreed that said statement of facts, to~either with the exhibits thereto annexed, should be taken by the Commission as testimony and evidence herein, and that the Commission might forthwith proceed thereupon to adjudicate the above entitled matter in accordance With the law, the Commission now makes its report and findings as to the facts and cone! us ions, as follows: FDiDINGS AS TO THE FACTS.

PARAGRAPH 1. That respondents, P. Tevis Baker, Frank E. Baker, and A. Lynn Baker, at present constitute the firm of C. W. Baker & Sons, having their principal office and place of business located in the town of Aberdeen, State of Maryland; that for some years prior to the 1st day of January, 1918, said firm was composed of Charles W. Baker together with the said P. Tevis Baker and Frank E. Baker, and on said 1st day of January, 1918, the said A.. Lynn Baker was admitted as a partner in said firm, and thereafter in the month of June, 1918, the said Charles W. Baker departed this life; that for more than two years last past the said firm has been and now is engaged in the business of selling canned goods as factors and commission lllerchants throug-hout the States and Territories of the Dnited Stntt•s antl tile District of Columbia, in direct com- 456 FEDERAL TRADE COMMISSION DECISIONS, petition with other persons, firms, copartnerships, and corporations similarly engaged.

PAR. 2. That in the conduct of their said business respondents as such copartners as aforesaid have for more than two years last past Lrcn and still are acting as the exclusive selling agents of certain canned goous known as "Bakers' Canned Corn," which products are put up and canned by the owners of certain canning factories located in the States of Maryland and Delaware.

PAR. 3. That the quantity of such products so sold and distributed by respondents, as such exdusi ve agents of the manufacturers thereof, was and is substantial and the sa111e forms an important item of commerce among the several States and Territories of the United States and the District of Columbia, and respondents sell and distribute the same through wholesalers and joLhers residing and doing lmsiness in the several States and Territories of the United States and District of Columbia.

PAR. 4. That prior to the 1st day of .January, 1918, respondents in maldng sales of said "Bakers' Canned Corn" to wholesalers and jobbers required said purchasers, in many instances, to enter into agreements or contracts in the form de:-ignated "Contract governing sale of Bakers' canned corn," annexed to respondents' answer herein, nnd a copy of whi<·h is nnnext•d to and made a part of ~:aid agreed statement of fact.s niHl marked "Exhibit A." PAR. 5. That <'aeh of tlw purchasers signing such agreements was requireu to aud did agree not to sell or cause to be sold said "Bakers~ Canned Corn" for less than the prices spt>cified in said a~Jn•cmcnts, and said agreements were by the terms thereof 1lHHle equally bimling on all sales of said corn made by said purcha~ers r<•spcctivcly, whether said goods were on hand at the time of making said agreements or callle into purchasers' possession thereafter.

PAR. 6. That in and by said agrrements it was further provided that C. ,V, Baker & Sons~ the respondents, should have authority to order an incrrase or reduction in the selling price nmned thHein, and that upon receipt of such increar-.e or reduction the purchasers signing said agree- FEDERAL TRADE COMMISSION DECJSIONS, 457 ments agreed thereafter to sell said corn at the price named in said notices.

PAR. 7. That in and by said agreements said purchasers of said " Bakers' Canned Corn " were further required to agree that they would refuse to sell at any price or loan or oxchange for other goods, any of said "Bakers' Canned Corn" to any dealer who had not signed a similar agreement, or who had violated such agreement, or who was selling said goods for less than the price named therein; and each of sai(l pmchasers further agreed that in case a charge of violating said agreement should he made, he or they would, if reqnestNl by respondents, give the name of the person making such sale, and such other particulars as respondents might desire, and that refusal to do this should be conclusi,·e evidence against said purchaser that such charge was true.

PAR. 8. That each of said purehast>rs signing said ugn'ement agreed to pay respondents the smn of $100 in case any employee of said pmchaser refused, when requested by respondents, to make an affidavit denying an accusation of violating !:laid agreement, and such refu::;al was agreed to be conclusive evidence against said employee that said charge was true: and said respondents, C. '"· Baker & Son!>, agreed to pay the sum of $100 to the parties making or furnishing proof of any such charges.

PAR. fl. That respondents used a sales contract in connection with said ag-reement with purchasers of said "Bakers' C'nnnNl Corn," hereinbefore referred to, which sales con_tract Was in form similar to Exhibit B, attnehed to said agreed stah•ment of facts herein.

PAR. 10. That said sales Cill1tracts contained the following cia use:

Ter111s: Cash In 10 du~·s IPI'S 2 per ('Pill, with an nd«litionu I t•ehate ot ______ cPnt!'l per dflz. ----------· HIL_. on ('Oil(litlon only that your <-ontrnct bPnring I'VPn tl:t tt• herewith, has hrt•n kt>pt. PAn. 11. That at times respontlents made sales of snit! "Bakers' Canned Corn" to purchasers who oLjeetPu to (·ntering into said agreements, without requiring the executiuu ther·eof on the part of saiu purchasers. 458 FEDERAL TllADE COMMI::3SIO~ DECISIONS, PAR. 12. That at the close of the year 1917 the owners of said brand determined to discontinue the use of said contract, and have discontinued the use thereof, and do not intend to make use of it at any time in the future, and said owners have offered and are t·eady and willing to come into this proceeding and to stipulate het·ein that at no time hereafter shall sairl agreements or any agreement of like import and effect bt• made use of in the sale of the said" Bakers' Canned Corn." COXCI.USIOXS.

That the methods of competition set forth in the foregoin~ findings as to the facts are, under the circumstances hereit1 set forth, unfair methods of competition in interstate commerce in violation of the provisions of section 5 of an act of Congress, approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

ORDER TO CEASE AND DESIST, The Federal Trade Commission, having issued and set·ved its complaint herein, and the respondents having entered their appearance by Stevenson A. Williams and Philip H. Close, the.ir attorneys, and having filed their answer and agreed statement of facts, wherein it was stipulated that the Commission shall forthwith proceed thereupon to adjudicate the abo\·e entitled matter in accordance with law, and the Commission having made and filed its report containing its findings as to the facts and its conclusions that the respondents have violated section 5 of an act of Congress approved St'ptembet· 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purpo~es," which said report is referred to and mad~ t\ part hereof: Now, therefore, It i8 ordered, That the respondents, C. W. Baker & Sons, of Abe(lrern, .Md., und the members, agents, sernwts, and employtws of said firm, cease an(l desist from- (1) Requiring purchasers of "Bakers' Canned Corn" to enter into uny ngrrements or contracts in the form designated as "Contract governing salr- of nakers' c:mnt>d corn," at- FEDERAL TRADE COM:\-IISSION DECISIONS. 459 tachcd to respondents' answer herein, or any agreements or contracts of like import or effect;

(2) Entering into or requiring purchasers of "R1kers' Canned Corn" to enter into any agreements or contracts in any form whatever to the effect that said purchasers will, in reselling said "Rakers' Canned Corn" adhere to or observe prices fixrd or determined by respondents, or by the owners of said brand:

(3) Heqniring purchasers of "Bakers' Canned Corn" to Pnter into any agrpements or contracts wherein or whereby said purchasers shall be required to promise or agree not to sell or cause to be sold said "Rakers' Canned Corn" ior less than the prices specified in said agreements; ( 4) Imposing any penalties what<>ver on such purchasers for fail me to adhere to or observe such prices: ( 5) Gmnting rebaws to such purchasers for adhering to or preserving such prices.

FEDERAL TRADE COMMISSION v. ALLEN SALES SERVICE (INC.), C. LOUIS ALLEN AND WILLIAM H. YETMAN.

COMPLAINT lN THE !\IATTI-:R Ot' THE ALLEGED \"IOLATlON OF SEC- TION 6 OF THE ACT OF CONGRESS, APPI!OVED SEI'TE~IBEU 26 1 1914. Docket No. 223.-May 27, 1919.

RYT.LADUB.

Where an em1)loyt>e of a corporation, ena"agl'd In the AAie and dl!!trlhutlon of fire extlngul;.hers and similar products, who had b~:>en an employe!' of a concern handling competitive goods- ( a) Secretly ahstraC'ted conftllentlal trade In forma tlon from the records of the Iutter concern while In Its employ; (b) Obtnl111~d the sole selling ugPncy of the I;001ls theretofore hun· rlled br tlw competing concern through fal,;e and misleading t·representutlons;

(c) Otrered to give and gave to employees of the rnlted Stat!'!'~ lntet·ested In the pnrchuse of goods for the Govl'rnment, A"rlltuitles, such as liquors, cigars, ments, theater tlckPts, and other pt·esents, as an Inducement to Influence them to pureha!'le good;; of the donor curporntlun:

Held, That such acts on the part of said emplo~·ee constltntt>d unfnlr methorls of competition in violation of section 5 of the act of SPptember 26, 1914.

460 FEDERAL TRADE COMMISSION DECISIONS. COl\IPLAINT.

The Federal Trade Commission, having reason to believe, from ll preliminary investigation made uy it, that the Allen Sales Service (Inc.), C. Louis Allen, and William H. Yetman, hereinafter refened to as respondeat:>, ha vc been, anJ are, using unfair methods of competition in interstate commerce in violation of the provisions of scetion 5 of an act of Congress, approved September ~6, lfll4, entitled "An act to Crrnte a Federal Trade Commission, to define its powers ancl duties~ and for other purposes," and it appearing that :t proceeding by it in rrspPct thereof would be to the interest of the public, issues this complaint, stating its charges in that respect on information amluelief as follows: PARAGHAPII 1. That the respondent, Allen Sales Service (Inc.), is a corporation organi:;wd, PXi:.:ting nn<l doing lmsiness under and by virtue of the laws of the State of Delaware, having its ofike and principal place of lmsiness in the city and State of New York. now, and ewr since the date of its ineorporntion, to wit: The first dny of April. 1918, engaged in the business of selling and distributing lire extinguishers, fire appliances, and simi Jar prod neb genemlly in commerce throughout the se,·eral States of the Vnited States, the Territories thereof, and the District of Cohunbia, in direct competition wit.h other persons, firms, copartnerships and corporations similarly engaged.

PAn. 2. That the re$pondents, C. Louis Allen and William H. Y ctman, were the organizers, and are now, and have lwen since the date of its incorporation, the president and govemment representative, respectively, of the respondent, Allen ~ales Sen ice (Inc.), and had b<'rn for a long period of time immediately prior to its incorporation the president and manager of the fire appliance dPp:.trtment, rPsprctively, of the Pyrene Co., a corporation organized, existing and doing business under and by virtue of the laws of the !"itnte of D<'lawnre, having its principal office :.tnd place of lmsiness in the city and State of Xew York, now, an<l for more than two years lust p:.tsL engaged in the salt> and di..;trial:motion of fire extingui~her:;. gL·m·r·al fire appliances, and similar products generally in commerce throughout the seYrral States of the FEDERAL TRADE COMMISSION DECISIONS. 461 United States, the Territories thereof, and the District of Columbia, in direct competition with other persons, firms, copartnerships, and corporations similarly engaged. PAR. 3. That the respondents, C. Louis Allen and William H. Yetman, by reason of the positions and offices of trust held by them in the said Pyrene Co., had access to and were in possession of said company's lists of customers and agents, and prospective customers and agents, lists of manufacturers from which the Pyrene Co. obtained its products and supplies, confidential price lists at which such products and supplies were purchased and sold, and other ('Onfidential information upon which to a large extent depended the successful continuance and gi"Owth of the business of the said Pyrene Co.

PAR. 4. That during the month of March, 1918, while still in the employ of the said Pyrene Co., the respondents, C. Louis Allen and William H. Yetman, disregarding the trusts imposed upon them by reason of their po.;itions and offices, and with the intent, purpose, and effect of stifling and suppressing competition in the sale of fire extinguishers, general fire appliances, and similar products in commerce aforesaid. and for the pnq)ose of obtaining for themseh·es and the respondents, Allen Sales Service (Inc.), which they at that time were organizing, an undue and unfair adnmtage in the sale of such products, took, carried out, nnd appropriated to their own use and benefit, without the knowledge or consent of said Pyrene Co., the matter rontnined in the aforesairl lists of cn:-;tomers, agents, prospects, manufact11rers, and prices, and other confid<>ntial information and trade secrt>ts, and thereafter respondt>nts used, and have attempted to use, said lists, confi<lential information, and trade secrets, for the purpose of srenring exdnsiw contracts for the purchase of the product:; of the Ynrious manufacturers from whom the said Pyrene Co. had been accustomed to purchase its stock in trade, and for the purpose of securing the customers and prospective enstolllers, and the agents and prostwcti,·e agents theretofore helonging to the said Pyrene Co. PAR. 5. That, with the intent, purpose, and effect of stifling and suppressing competition in the sale ann di..;tribntion of fire exting11ishers, fire appliances, and similar pl"Od- 462 FEDERAL TRADE COMMISSION DECISIONS, ucts in commerce· aforesaid, respondent, Allen Sales Service (Inc.), within the year last past, by means of false and misleading statements regarding the business plans of the said Pyrene Co., made by and through the respondents, C. Louis Allen and ·william H. Yetman, while said C. Louis Allen and William H. Yetman were in the employ of, and druwing salaries from, said Pyrene Co., and otherwise, emlea vorcd to, and did, induce and persuade certain manufacturers, with whom the Pyrene Co. had contracts for obtaining its fire extinguishers and general fire appliances, to break and rescind said contracts and sell their entire products exclusively to the respondent, Allen Salei'i Service (Inc.), thereby cutting off the source from which said Pyrene Co. might, and did, obtain its supplies.

PAR. 6. That, with the intent, purpose, and effect of stifling and suppressing competition in commerce aforesaid in the sale of fire extinguishers, general fire appliances, and similar products, the respondent, Allen Sales Ser\'ice (Inc.), within the year last past placed its employees in the office of a manufacturer, with whom the aforesaid Pyrene Co. had contracts for obtaining its fire extinguishers and other products, and from whom the respondent, Allen Sales Servi<'e (Inc.), was endea,·oring to secure a contract for said manufacturer's entire output, for the purpose of securing knowledge and information concerning all the business dealings had between the said manufacturer and the said Pyrene Co., thereby enabling and assisting the respondent, Allen Sales Service (Inc.), in its efforts to learn and obtain the names of the customers and other trade secrets and information helonging to and concerning the said Pyrene Co. PAR. 7. That the respondents, Allen Sales Service (Inc.), C. Louis Allen and William H. Yetman, within the year last past, with the intent, purpose, and effect of stifling and suppressing competition in the sale and distribution of fire extinguishers, general fire appliances, and similar products in commcree aforesaid, have in<lucNl employees of the said Pyrene Co. to leave their employment by offering such employees pmployment with respondents at and for higher wages, and by divers other means nnd methods, all of which was enlculated nnd designed tD harass an~ re"train said Py- FEDERAL TRADE COMMISSION DECISIONS. 463 rene Co. in the conduct of its business and demoralize aml break down it~ organization.

PAR. 8. That, within the year last pnst, it was determined by certain purchasing departments of the P united States Government that henceforth nil supplies were to be purchased direct from the manufacturers thereof, and not through jobbers or manufacturers' agents, and the effect of this determination or ruling was to exclude persons, firms, copartnerships, and corporations, including the respondent, Allen Sales Service (Inc.), and said Pyrene Co., engaged in the sale but not the manufacture of fire extinguishers, general fim appliances, and other products, from further sales of the same to the Government, and thereafter the respondent, Allen Sales Senice (Inc.), with the intent, purpose, and effect of stifling and suppre~sing competition in the sale and distribution of fire extinguishers, general fire appliances, and other products in commerce aforesaid, caused various manufacturers to establish branch offices in the offices of the respondent, Allen Sales Service (Inc.), whereby said respondent was enabled to contract with the United States Government in the sale of its prOflncts in the names of such manufacturers and earn and receive large commissions on such sales, without thp knowledge or consent of the United States Govprnment, and that such practices were calculated, designed to, and did, cause the United States Government to believe that it was obtaining the lowest net prices from manufacturers and not paying for the services of commission men, brokers, middlemen, or jobbers. PAR. 9. That, with the intent, purpose, and effect of stifling and suppressing competition in interstate commerce in the sale and distribution of fire extinguishers, general fire appli1mces, and like products, in commerce aforesaid, the respondents, within the year last past, have been systematically and on a large scale giving and offering to give to the employees of both its customers and prospective customers and to officers of the armed forces of the United States and other persons concerned in the conduct of the war as an inducement to influence their employers and the United States Government to purchase. or contract to purchase, from the respondents fire extinguishers, general fire appliances, and 464 FEDERAL TRADE COMMISSION DECISIONS. like products, without other consideration therefor, gratuities, such as liquor, cigars, meals, theater tickets, valuable presents, and other personal property. REPORT, FINDINGS AS TO THE FACTS, AND ORDER.

The Federal Trade Commission, having issued and served its complaint herein, in which it is alleged that it had reason to believe that the above-named respondents, Allen Sales Service (Inc.), C. Louis Allen, and "\'Villi am H. Yetman, have been and now are using unfair methods of competition in interstate commerce in violation of the provisions of section 5 of an act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and that a proceeding by it in this respect will be to the interest of the public and fully stating its charges in this respect and the re~pondents, Allen Sales Service (Inc.) and C. Louis Allen, having entered their appearance by Jesse C. Adkins, their attorney, duly authorized and empowered to act in the premises, and having filed their a\1swer admitting certain of the matters and things alleged and set forth in the said complaint and denying others therein contained, and it being desirous to bring the matter to a conclusion as expeditiously as possible, an agreed statement of facts was entered into, wherein it was stipulated and agreed that the Federal Trade Commission should take such agreed sttttement of facts and affidavits supplementary thereto as the evidence in this case, same to be taken in lieu of testimony and upon the same to forthwith make aud enter its report, stating its findings as to the facts and its conclusions and its order, and the said agreed statement of facts and affidavits having been heretofore duly filed with this Commission, the Commission now makes this, its report and findings as to the facts and conclusions.

FINIHNOS AS TO THE 1-'ACTS, PAR.\ORAPU 1. That the respondent, Allen Sales Service (Inc.), is now and for more than one year last p~tst has been a (!ol·poration, org·anized, exi.-:;ting, and doing businei'>S under FEDERAL TRADE COMMISSION DECISIONS, 465 and by virtue of the laws of the State of Delaware, having its principal office and place of business located at the city of New York, ill the State of New York. That since its organization said respondent has been engaged in the business of selling and distributing in commerce throughout the United States a general line of labor-saving devices, firefighting applian<:!es, and other products, in direct competition with other corporations, partnerships, and persons similarly engaged; that the respondent, C. Louis Allen, is now and has been continuously since its organization the duly qualified and acting president of said Allen Sales Service (Inc) ; that the respondent, William H. Yetman, was prior to October 14, 1918, the duly qualified and acting vice president of said Alle11 Sales Service (Inc.), but on said date said Yetman resigned as vice president of said Allen Sales Service (Inc.) and on N onmber 15, 1918, sold all his stock in said corporation and entirely severed his connections with said respondent, Allen Sales Service (Inc.). PAR. 2. That irnmediately prior to the organization of thfl Allen Sales Service (Inc.) the respondents, C. Louis Allen and \Villium H. Yetman, were, respedively, president and manager of the fire appliance department of the Pyrene Manufacturing Co., a corporation organized unclct· the law~ of the State of Delaware, with principal place of business in the city and State of New York; that said Pyrene Manufacturing Co. wa.s engaged in the sale and distribution in commerce throughout the United States of a general line of fire appliances, including a 1-quart fire extinguisher on which it speciali~ed: that the Allen Sales Service (Inc.) is not interested in either1· the manufacture or sale of a 1-quart extinguisher.

PAn. 3. That said respondents, C. Louis Allen, and Willi;ml H. Yetman, imm~diutely prior to April1, 1918, in the course of their duties as ofti1·ials in the corporate organizations of the Pyrene Manufacturing Co. had access to the books, records, and files of that corporation, and the responclPut, \Villiam H. Yetman, took from the files of said corporation certain card r£'cm·Js of the prices of commodities pnrchnserl by him while an officer of that corporation; that the taking of said r!'cords by sairl I'P:'lHHllll'llt, ·william H. Yetman, was at 147430°--~V----3u 466 FEDERAL TRADE COMMISSION DECISIONS, the time unknown to the respondent, C. Louis Allen, and upon the matter being brought to the attention of said Allen, the said records and copies thereof were returned to the Pyrene Manufacturing Co.

PAR. 4. That prior to April1, Hl18, the Pyrene Manufacturing Co. 'vas selling and distributing a line of fire fighting appliances, made by a manufactmer in Illinois, and in April of said year, the respondent, ·william H. Yetman, acting as an ufficer of the re~ponclent, Allen Sales Service (Inc.), and in ib behalf, entered into a contract with said manufacturer, wht>rt>by said Allen Sales Service (Inc.) became the sole selling agent for the appliances theretofore sold and distributed by said Pyrene Manufacturing Co.; that said manufacturer in entering into said contmct with the respondent, Allen Sales Senice (Inc.), relied upon certain misstatements, made by the respondent, William H. Yetman, to the effect, among other things, that the Pyrene Manufacturing Co. was about to discontinue handling such articles, but upon learning the facts, as !'itated, the respondent, C. Louis Allen, returned said contract to the said manufacturer and same was canceled by mutual consent and a new contract was made by the terms of which the respondent, Allen Sales Service (Inc.), became the selling agent for said munufacturer, for its said appliances except such as should be sold by it directly to the said Prrene Manufacturing Co., which contract is still in force.

PAR. 5. That after April15, 1918, and prior to October 14, 1918, the, respondent, William H. Yetman, then in charge of the office and business of the respondent, Allen Sales Service (Inc.), offered ancl gn \'e to officers of the armed forces of the Pnited States and other persons concerned in the conduct of the war and who hnd to do with purchases of supplies for saiu nrmed force;;, gratuities such as liquors, cign,rs, ments, theater tickets, and other presents as an in<lucement to influence such persons to purchase appliances from said Allen Sales Ser\'ice (Inc.).

CON('I.l'AIONS.

That the methods of competition of the respondent, W'illinm H. Yetman, ~et forth in the foregoing findings ns to the facts are, under the circumstances therein set forth, unfair FEDERAL TRADE COMl\HSSION DEClSlONS, 467 tnethods of competition in interstate commerce in violation of the pro,·isions of section 5 of an act of Congress, approved September 26, 1914: entitled, "An act to creat a Federal Trade Commission, to define its powers and duties, and for other purposes."

OimER TO CEASE A:SD DESJ,.;T, The Federal Trade Commission having issued and sernd its complaint herein, and the respondents~ Allen Sales Sen-ice (Inc.), and C. Louis Allen: having entered their appearance hy Jesse C. Adkins, their attomey. duly authorized and empowered to act in the premises, and ha,·ing filed their answers admitting certain of the matters and things alleged and set forth in the said complaint, and denying others therein contained, and thereafter ha ,-iug made and ext>cnted an ugree~l stat~:>ments of facts, wherein it was stipulnte<l nnd agreed by and between the Comlllission und the said rpspondents that; the Commis,ion shonhl forthwith proceed upon sneh agreeu statement of facts nnd affidavits filed thHewith, to make and enter its report and findings ns to facts, and its conclusions and its order disposing of this proceeding, and the respondlnt, William H. Yetman, being duly sened with 11 copy of the complaint herein: and having faih•d to m11ke and enter his appenrnnee herein, and being now in dPfnult, and the Commission having made and C'entered its report stating its findings of fact and its conclusions that the respondent, William H. Yetman: has violated section 5 of an act of Congref:>s, ·approved September 26, 1914, entitled, "An act to create a 'Federal Trade Commission, to define its powers and duties, and for other purposes," which said report is hereby referred to and made a part hrreof: Now, therefore, it is ordel·ed, That the respondent, ·william H. Yetman, and his agents, senants, rl'presentatiYes, and employees, eeas£> and desist from directly or indirectly- 1. Secretly taking or procuring the card records of the Price of commodities ot· other confidential information from the t·ecords and tiles of any competitor of the respondent, Allen Sales Service (Inc.).

2. From making false and misleading statements to any customer or prospeetiYe cu~tomer of any competitor of the respondent, Allen Sales Sen ice (Inc.), concerning the con~ 468 FEDERAL TRADE COMMISSION DECISIONS. duct of such competitor's business, which might have a. tendency to cause such customer Ol' prospective customer to refrain from doing business or entering into contracts of purchase with such competitor.

3. From giving and offering to give to officers of the armed forces of the United States and to other persons concerned in the conduct of the war, who have to do with pnrclmses by the United States, gratuities such as liquors, cigars, meals, theater tickets, and other presents as an inducement to inltiuence them to purchase or to contract to pmchase from the respondent, Allen Sales SPrdee (Inc.). It i.~ furtlu~r orrlerPd, that the complaint herein be dismissed without prejudice as to the re:-ipondents, Allen Sales Service (Inc.), and C. Louis Allen.

FEDERAL TR~\DE COMMISSION v. WALL ROPE ·would (INC.).

CO:\IPLAINT IN THE :\L\TTER OF THE ALLEGED VIOLATION OF SEC- TION II OF THE ACT OF CONGRESS APPROVED SEPTEMBER 26 7 1914.

llockPt No. 232.-Muy 27, 1!)1!).

SYLLABUS.

\\'her·e a corporutlou engagell In the manufacture and sale of rope, oalmm, nnd cordage gn\·e and oft"ered to give to employees of customers, without the knowiNige nnrl consent of their employers, sum~'~ of money, as nn ln(lucement for them to Influence their employer:'! to purehuse its goods or to refrain fJ"Om dealing with Its competitors: Held, 'that such gifts and on·er>:l to give, U11ller the clrcumslll.nces set forth, coustltutt>d an unf11.ir nwthotl of competition lu violation ot section a of the act of Septt>mber :!H, 1!)1-l, COl\IPL.\I~T.

The FNleral Trade Commission, having reason to believe from a preliminary investigation made by it that the \Vall Hope 'Yorks (Inc.) hereinafter refer'l'ed to as respondent, has been, for more than a year last past, using unfair method::; of competition in interstate commerce in violation of the provisions of section 5 of the act of Congress, approved Septelll· ber :w, 1914, entitled" .An act to create a Federal Traue Colll- FEDERAL TRADE COMMISSION DECISIONS. 469 mission, to define its powers and duties, and for other purposes," and it appearing that a proceeding by it in respect thereof would be to the interest of the public, issues this complaint, stating its charges in that respect on information and belief as follows:

PARAGRAPH 1. That the respondent, the 'Vall Rope '''orks (Inc.) is a corporation, organized, and existing and doing business under and by virtue of the laws of the State of ~ew Jersey, having its principal office and place of business at the city of Xew York, in the State of New York, and is now and for more than one year lust past h!1.s been engaged in manufacturing and selling rope, oakum, and cordage throughout the Stutes und Territories of the United States, and that at all times hrr~inafter mentioned the rrspondent hrs carriell on and conducted such business in direct competition with other persons. firms, copartnerships, and corporations manufacturing and selling like products.

PAR. 2. That in the course of its business of manufacturing and selling rope, oakum, and cordage throughout the States and Territories of the United States, the respondent, for more than one year last past, has been secretll' paying and offering to pay, to employees of both its customers and pro- ~>peetive customers, and its competitors' cutitomers and prospective customers, without the knowledt.re and consent of their employers, sums of money as an inducement to inflnence their said rmployers to purchase or contract to purchase from the r<'spondent, rope, oakum, and cordage, or to influence such customers to refrain from dealing, or contracting to deal with competitors of the respondent. REPORT, FINDINGS AS TO THE FACTS, AND ORDER.

The Federal Trade Commission having issued and served its complaint herein, wherein it alleged that it had reason to believe that the above-named respondent', ".all Rope 'Vorks (Inc.), has been and is now using unfair methods of competition, in interstate commerce, in violation of the provisions of section 5 of the act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to de- 4 70 FEDERAL TR.\DE CO::.\DIISSION DECIBIONS, fine its powers and duties, and for other purposes," and that a proceeding by it in that respect would be to the intere,;;t of the public, and fully stating its charges in this respect, and the respondent hu ,·ing duly filed its answer, admitting certain allegations of said complaint and denying certain others thereof, and the Commission having offered testimony in support of its charges in said complaint, and the respondent h<n·ing waived the right to ofler testimony in its behalf, and the attorneys for the Commission and the respondent having r;submitted their briefs as to the law and the facts in said proceedings, the Commission now makes this report and findings as to the fact:s and cone) usions:

.HXDINOS AS TO Tlie facts.

First. That the respondent, Wall Rope Works (Inc.), is a corporation, organized, existing, and doing business under and by vit·tue of the laws of the State of New Jersey, hu\·ing its principal office at Beverly, said State; that it also has an office and place of business in the city of New York, State of X ew York, and is now, and for more than one yetn· last past, has been engaged in mnnufacturing and selling rope, onlwm, and cordage throughout the various States and Territories of the United States, and that all times hereinafter mentioned said respondent has carried on and conducted said business in direct competition with other persons, firms, copartnerships, and corporations manufacturing and selling like products.

Second. That the said respondent, \Vall Rope Works (Inc.), in the course of its business of manufacturing and se-lling rope, oakum, and cordage throughout the States and Territories of the United Stutes for more than one year lust past, has been paying to employees of customers without the know ledg-e and consent of their employers and without other consitleration therefor, sums o£ money as un inducement to influence their employers to purchase or contract to put·chase from said respondent, rope, oakum, and cordage, or to influence such customers to refrain from dettling or contmcting to deal with competitors of the respondent. FEDERAL TRADE COMMISSION DECISIONS. 471 CO~CLUSIONS.

That the methods set forth in the foregoing findings of fact under all the circumstances therein set forth, ar·e unfair methods of competition in violation of the provisions of section 5 of the act of Congress approved September 213, 1914, entitled " An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes.'' ORDER TO CEASE AND DESIST.

The Federal Trade Commission, having issued and ser·ved its complaint herein, and the respondent having filed its answer, admitting certain allegations of the complaint and denying certain others thereof, and the Commission having offered testimony in support of itl:i charges in said complaint, and the respondent having waived the right to offer testimony in its behalf, and the attorneys for the Commission and the respondent having submitted their briefs us to the law and the facts in said proceeding, and the Commission having made and filed its report containing its findings as to the facts and its conclusions that the respondent has violated section 5 of the act of Congress nppro\·ed September 26, 1914, entitled, "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," which said report is hereby referred to and made a part hereof: Now, therefore, It is ordered, th:lt the said respondent. Wall Rope Works (Inc.), and its officers, directors, agents, representatives, servants, and employees cease and desist from directly or indirectly- Giving or offer·ing to give to the employees of its customers or prospective customers, or those of its competitors' customers or prospecti \'e customers, without the know ledge awl consent of their employers, gmtuities, such ns money, cash bonuses or commissions, without other consitlerution therefor·, as an inducement to intluence their employers to purchase or to contract to purchase from the said respondent, "'all Rope \Yorks (Inc.), rope, oakum, or cordage, or to cause such customers to refmin from dealing, or contracting to deal with competitors of the said respondent, 472 FEDERAL TRADE COJ\Il\ission DECISIONS, FEDERAL TRADE CO~fMISSION 1·. THE NEW JER- SEY ASBESTOS CO.

COMPLAINT IN THE MATTER o~· THE ALLEC:ED VIOLATION OJ<' SEC- TION 5 OF AN ACT OF CONGRESS APPROVED SEI'TElllllER 26, 1914. Doeket No. 233-May 27, 1919.

SYLLABUS.

Where a corporation engaged in the manufacture and sale of engine paeklngs gave and offered to give to employees of customers gratuities and entertainment as an Inducement to influence their employer!; to purchase Its goods or to refrain from dealing with its competitors:

Held, 'that such gifts and offers to give, under the circumstances set forth, constituted au unfair method of competition In violation of section 5 of the act of September 26, 1914. COMPLAINT.

The Fede.ral Trade Commission, having reason to believe from a preliminary investigation made by it that the New Jersey Asbestos Co., hereinafter referred to as respondent, has been for more thnn a year last past, using unfair methods of competition in interstate commerce in Violation of the provisions of section 5 of nn act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and it appearing that a proceeding by it in respect thereof would be to the interest of the public, issues this complaint, stating its charges in that respect on information and belief as follows:

PARAGRAPH I. That the respondent, the New Jersey Asbestos Co., is a corporation organized and existing and doing business under and by virtue of the laws of the State of New Jersey, having its principal office and place of business at the city of New York, in the State of New York, and is now and for more than one year last past has been engaged in manufacturing and selling engine packings composed of asbestos, metal and asbestos, flax, wood fiber, and kindred products, throughout the States and Territories of the United States, and that at all times hereinafter mentioned, the respondent has carried on and conducted such business in direct competition with other persons, firms, copartner- FEDERAL TRADE COMMISSION DECJSIO~S. 4i3 ships~ and corporations manufacturing and selling like products.

PAR. 2. That in the course of its business of manufacturing and selling engine packings composed of asbestos, metal and asbe.stos, flax, wood fiber and kindred products throughout the Stater; and Territories of the United Stt\tes, the re- ~'poudent, for more than one year last past has been giving and offering to give, to employees of both its customers and prospective customers, and its competitors' customers and prospective customers, as an inducement to influence their Pmployers to purehnse or contract to purchase from the respondent, engine packings compo~ed of asbestos, metal and asbestos, flax, wood fiber and kindre'd products, without other consideration therefor, gratuities such as liquor, cigars, ml'als, theater tickets, valuable presents and entertainment.

PAR. 3. That in the course of its business of manufacturing and selling engine packings composed of asbestos, metal and asbestos, flax, wood fiber, and kindred products, throughout the States and Territories of the United States, the respondent, for more than one year last past, has been paying and offering to pay, to employees of both its customers and prospective customers, and its competitors' customers and prospective customers, without the knowledge and consent of their employers, sums of money as an inducement to influence their said employers to purchase or contract to purchase from the respondent, engine packings composed of asbestos, metal and asbestos, flax, wood fiber, and kindred products,· or to influence such customers to refrain from dealing or contracting to deal with competitors of the respondent.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER.

The Federal Trade Commission, having reason to believe from a preliminary investigation made by it that the New Jersey Asbestos Co., hereinafter referred to as the respondent, has been for more than one year last past, using unfair methods of competition in interstate commerce in violation of the provisions of section 5 of an act of Congress, 474 FEDERAL TRADE COMMISSION DECISIONS. approved September 26, 191!, entitled, ".An act to create a Federal Trade Commission, to define its powers and duties. and for other purposes," and it appearing that a proceeding by it in respect thereto would be to the interest of the public, and fully stating its charges in that respect, and the respondent ha,·ing filed its answer admitting that certain matters and things alleged in said complaint are true in the manner and form therein set forth, and denying other1·s therein contained, and the Commission having offered testimony in support of its charges in said complaint, and the respondent having waived the right to offer testimony in its behalf, and the attorneys for the Commission and the respondent having submitted their briefs as to the law and the facts, the Commission makes this report and findings as to the facts and conclu,;ions.

FINDINGS AS TO THE I•'ACTS.

First. That the respondent, the New Jersey A,;bestos Co., is a corporation, organized, existing and doing business under and by virtue of the laws of the State of New Jersey, having its principal oflice and place of business at the city of New York, in the State of New York, and is now, and for more than one year last past has been, engaged in manufacturing and selling engine paekings composed of asbestos, metal and asbestos, flax, wood fiber, and kindred protlucts, throughout the Statt>s and. Territories of the United States, and that at all times hereinafter mentioned, the respondent has carried on and conducted such business in direct competition with other persons, firms, copartnerships and corpora-. tions manufacturing and selling like products. Second. That said respondent, the New Jersey Asbestos Co., in the course of its business of manufacturing and selling engine packings composed of asbestos, metal and nsbestos, flux, wood fiber, and kindred products throughout the States and Territories of the United States, for more than one year last past has been lavishly giving gratuities, such as liquor, cigars, meals, theater tickets, and entertainment to employees of customers as an inducement to influence their employers to purchase or to contract to purchase from the said respond- .FEDEI:L\L TRADE COMl\II~:ision DECISION;;. 4 75 cnt, the New Jersey Asbestos Co., engine packings composed of asbestos, metal and asbestos, flax, wood fiber, and kindred products, without other consideration therefor. CO"CLUSION.

That the methorls set forth in the foregoing findings of fact, under all the cit'CHmstances therein set forth, are unfair methods of competition in Violation of the provisions of section 5 of the act of Congress approved September 26, 1914, entitled" An act to create a Federal Trade Commission, to define its power::; and u11ties, anrl for other purposes." ORJH:R TO CB.\SE AND DESIST.

The Federal Trade Commission, having issued and served its complaint herein, and the said respondent, the New Jersey Asbestos Co., having filed its answer admitting certain allegations of the complaint and denying certain others thereof, and the Commission having offered testimony in support of its charge~ in said complaint, and the re:::.pondent having waived the right to offer testimony in its behalf, and the attorneys for the Commission and the respondent having shlmitted their briefs as to the law and the facts in said proceeding, and the Commission having made and filed its report containing its findings as to the facts and its conclusion that the respondent has violated se('tion 5 of the act of Congress approved September 26, 191±, entitled ".An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," which said report is hereby referred to and made a part hereof: Now, therefore, It is ordered, that the respondent, the New Jersey Asbestos Co., it..'l officers, directors, agents, representatives. servants, and employees, cease anrl desist from, directly or indirectly- Giving or offering to give to employees of its customers or prospective customers2 or employees of any of its competitors' customers or prospective customers, as an inducement to influence their employers to purchase or to contmct to purchase from the respondent engine packings of asbestos, metal 4 7() FEDERAL TRADE C0~1Mls8ION DEC'ISIO~S. and u<,:bt>sto!'~ flax~ wood fiber, and kindred products, or to infhrl'nee such elllployPrs to refrain from dealing or contracting to deal with eompetitors of the respondent, without other consideration therefor, grntuitil's such as liquor, cigars, Ill en Is~ theater t i(·kets, nduable presents, or entertainment, consisting of amusements or diversions of any kind whatsoever.