Knit-Firm, Incorporated

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In tre Marrer or KNIT-FIRM, INCORPORATED COMPLAINT (SYNOPSIS), FINDINGS, AND ORDER IN REGARD TO THN ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 1592. Complaint, Apr. 10, 1929—Deciston, Apr. 12, 1980 Where a corporation engaged In the gale to retailers of infants’ and children’s knitted outerwear, made for it under contract, with 1ts material, by indlviduals, and by knitting mills to which {t furnished machines, and made from material at times purchased by it from or through importers, along with finished articles; in its advertisements in trade publicatioris. (a) Falsely represented Itself as a manufacturer, the fact being that it neither operated nor controlled any mill or factorles where said products were made under its supervision and direction or by workmen employed by it or subject to its control or direction; and (b) Falsely represented itself os an importer of said knitted outerwear, the fact befng that none of the material was directly imported by it from forelgn countries;

With the capacity and tendency to mislead and decelve purchasera into belleving that sald outerwear was manufactured in a mill or mills operated or controlled by it, or was by it directly imported from one or more foreign countries, and into purchasing the same in reliance on such erroneous beliefs:

Held, That such practices, under the circumstances set fortlr, constituted unfair methods of competition.

Mr. James M. Brinson for the Commission.

Mr. Robert L. Turk, of New York City, for respondent. Synopsis oF Complaint Reciting its action in the public interest, pursuant to the provisions of the Federal Trade Commission Act, the Commission charge respondent, a New York corporation engaged in the sale of domestic knitted outerwear for infants and children, to purchasers in the various States, and with office and principal place of business in New York City, with misrepresenting business status or advertising falsely or misleadingly in regard thereto, in violation of section 5 of such act, prohibiting the use of unfair methods of competition in interstate commerce, in that respondent, engaged, as above set forth, and neither owning, controlling, nor operating any mills for the manufacture of the products dealt in by it, has represented by advertisements and otherwise, that it manufactures or imports the same, with the capacity and tendency to mislead and deceive the public, including retailers and consumers, into believing that in KNIT-FIRM, INO, 303 802 Findings purchasing from respondent, they are purchasing direct from the manufacturer, or that the commodities involved have been manufactured in a foreign country and imported by respondent into the United States, and to divert business from and otherwise injure competitors manufacturing or importing products and selling the same directly to retailers or consumers or both, and wholesalers and jobbers selling as such, domestic or imported commodities, to the prejudice of the public and said competitors. Upon the foregoing complaint, the Commission made the following Report, Frnprnes as To Tue Facts, AND OxpER Pursuant to the provisions of an act of Congress entitled “An act to create a Vederal Trade Commission, to define its powers and duties, and for other purposes,” the Federal Trade Commission duly issued and served a complaint upon Knit-Firm, Inc., a corporation hereinafter called respondent, charging that it has been for several years last past and is violating the provisions of said act of Congress. Thereupon respondent entered its appearance and filed its answer to the complaint, and formal hearings were had thereon before an examiner of the Commission theretofore duly appointed, and testimony and evidence were offered and received and duly recorded and filed in the office of the Commission; thereafter the proceeding came on for final hearing on the record, briefs and oral arguments, and the Commission having duly considered the same, now makes this its report in writing stating its findings as to the facts: FINDINGS AS TO THE FACTS Paracrapi 1. Respondent, Knit-Firm, Inc., isnow, and since January, 1922, has been, a corporation organized and existing under and by virtue of the laws of the State of New York, with its principal office nnd place of business in the city of New York in the State aforesaid. Jt has been, during said period, and now is, offering for sale and selling in commerce among or between the various States of the United States, to retail dealers, for resale, to the consuming public, knitted outerwear for infants and children 1 to 6 years of age, in competition with individuals, partnerships, and corporations offering for sale or selling such or similar commodities in like commerce. Par. 2. In the course and conduct of such business, and as inducement for the purchase of its said products, respondent has offered for sale and sold ther, in commerce, in the various States of the United States by and through advertisements in publications circulated in Findings “13 F. D.C.

the trade to which it sells, in which respondent has falsely represented itself as manufacturer and importer of such knitted outerwear for infants and children.

Par. 8. The word “manufacturer” signifies and means, and is understood to signify and mean, in the knitted goods industry and trade, including dealers, an individual, partnership, or corporation operating or controlling the mill, factory or other establishment in which are manufactured knitted goods offered for sale as products of such manufacturer, and among dealers in such commodities there is a preference for products so manufactured. Par. 4, It has been and is the practice of respondent to cause its products to be manufactured for it by various individuals under contracts, in pursuance of which respondent has furnished and furnishes the necessary material for the manufacture of such products. It has been and is its practice, under such contracts, for respondent to pay a specified price per dozen to such manufacturers of its products. Respondent causes about 25 per cent of them to be manufactured by ‘approximately 1,200 individuals in their own homes, and between 40 per cent and 50 per cent to be manufactured by the Bee Emm Knitting Mills of Brooklyn in the State of New York, to which respondent furnishes machines as well as material for the manufacture of its products.

None of respondent’s products has at any time been manufactured in a mill or mills, factory or factories, or other place operated, conducted, or controlled by the respondent or under its supervision and direction, or by workmen employed by it, or subject to its control or direction.

Par. 5. Respondent, Knit-Firm, Inc., has, at various times, purchased from, or through importers, materials for the manufacture of its products, and occasionally finished articles, but it has at no time directly imported from foreign countries into the United States any of the knitted outerwear for infants and children offered for sale or sold by it, or the material or any of it, used in the manufacture of such products.

Par. 6. The representation of respondent by, or through its advertisements, that is the manufacturer and importer of knitted outerwear for infants and children offered for sale by it, has had, and has, the capacity and tendency to mislead and deceive purchasers and prospective purchasers into the belief, either that such outerwear for infants and children so offered for sale by it has been, or is, manufactured in a mill or in mills operated or controlled by respondent, or that it has been, or is, directly imported by respondent from one or KNIT-FIRM, INO. 305 302 Order more foreign countries into the United States, and into the purchase of such outerwear for infants and children in reliance on such erroneous belief, CONCLUSION The practices and methods of respondent under the conditions and circumstances described in the foregoing findings are unfair methods of competition in interstate commerce and constitute a violation 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 This proceeding having been heard by the Federal Trade Commisison upon the complaint of the Commission, the answer of respondent, the testimony and evidence submitted, and briefs and argument of counsel, and the Commission having made its report stating its findings as to the facts with its conclusion that the respondent has violated the provisions of an act of Congress approved September 26, 1914, entitled “An act to create a Federal Trade Commision, to define its powers and duties, and for other purposes,” It is now ordered, That the respondent Knit-Firm, Inc., its officers, agents, and employees, cease and desist directly or indirectly: (1) From representing by advertisement or otherwise that it is the manufacturer of knitted outerwear for infants and children in connection with offering for sale or selling it in interstate commerce, unless that advertised or offered as such has been, or is, manufactured in a mill, or in mills operated or controlled by respondent. (2) From representing by advertisements, or otherwise, that it is the importer of outerwear for infants and children in connection with offering for sale or selling it in interstate commerce, unless that advertised or offered as such has been, or is, directly imported by respondent from one or more foreign countries into the United States. It is further ordered, That respondent, Knit-Firm, Inc., within 60 days from and after the service of this order, shall file with the Federal Trade Commission a written report setting forth in detail the manner and form of its compliance with such order. Syllabus 13 F. T, C.