Rubinstein, Inc., Helena

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IN THE 1\fATI'ER OF HELENA RUBINSTEIN, INCORPORATED COMPLAINT (SYNOPSIS), FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1014 Docket 1884. Complaint, Dec. lf, 1930-Deaision, Oct. 19, 1931 Where a corporation engaged in the manufacture of cosmetics and toilet preparations and In the sale and distribution thereof to retailers throughout the United States; in pursuance of a merchandising system adopted by it and directed to fixing and maintaining prices specified by it for resale of its products, in cooperation with its dealers, (a) Fixed uniform prices nt which Its dealers should resell its products to the public and made It generally known to the trade that it expected and required all dealers handling said products to resell same at such fixed prices; and (b) Entered into contracts, agreements, and understandings with its dealers for the maintenance by them of said resale prices as a condition of opening accounts with them or continuing their supply of its products; With the result that competition among its dealers in the distribution and sale of its products was suppressed, dealers were constrained to sell the same at the prices fixed by it and prevented from selling said products at such lower prices as they might desire, and purchasers thereof were deprived of the advantages In price which they would otherwise obtain from a natural and unobstructed flow of commerce under methods of free competition: Held, That such practices, under the conditions and circumstances set forth, were to the prejudice of the public and competitors and constituted unfair methods of competition.

JJ!r. Alfred JJ!. Craven for the Commission. Mr. Henry M. Flateau, 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 charged respondent, a New York corporation, engaged in the manufacture of cosmetics and toilet preparations and in the sale and distribution thereof to retailers, and to some extent to wholesalers, and with principal office and place of business in New York City, with maintaining resale prices, in violation of the provisions of section 5 of such act, prohibiting use of unfair methods of competition in interstate commerce.

Respondent, as alleged, for many years last past, has enforced and enforces a merchandising system adopted by it directed to the fixing and maintaining of uniform minimum resale prices specified HELENA RUBINSTEIN, INO. 315 314 Complaint by it for the sale of its said products, in the enforcement of which system it enlists and secures support and cooperation of retail and wholesale dealers, and of its officers, agents, and employees, and employs "the following means whereby it and those cooperating with it undertake to prevent and endeavor to prevent dealers from selling its products to the public at prices less than aforesaid retail prices established by " it, to wit:

" (a) Respondent fixes uniform minimum prices at which its products shall be resold to the public by its dealers and makes it generally known to the trade that it expects and requires all dealers handling said products to resell same at such fixed prices. "(b) Respondent enters into contracts, agreements, and understandings with its dealers for the maintenance by them of said resale prices as a condition of opening accounts with such dealers, or con- I tinuing their supply of said products.

"(c) Respondent seeks and secures from dealers handling said products, information concerning and evidence of the failure of other dealers to observe and maintain said resale prices, and also employs its own salesmen and agents and employees to investigate and secure information and evidence of the failure of dealers to maintain said prices. The information thus obtained by respondent is used by respondent in exacting promises and assurances from price-cutting dealers that they will in the :future maintain said resale prices, and in discontinuing business with those refusing to give such promises and assurances.

" (d) Respondent refuses to further supply said product to dealers who have failed to maintain said resale prices unless and until such dealers have given respondent satisfactory promises and assurances that they will in the future maintain and observe such resale prices." According to the complaint, as a result of said acts and practices, ~aid resale prices have been and are generally maintained, and, further, "the direct effect and result of said alleged acts and practices of respondent has been and now is to suppress competition among dealers in the distribution and sale of respondent's said products;I to constrain dealers to sell said products at the prices fixed by respondent, and to prevent them from selling the product at such less prices as they may desire, and to deprive the purchasers of said products of the ad-vantage in price which otherwise they would obtain from a natural and unobstructed flow of commerce of said products under methods of free competition," all to the prejudice of the public.

Upon the foregoing complaint, the Commission made"the following Findings HiF.T.O.

REPORT, FINDINGS As TO THE F Aors, AND ORDER Pursuant to the provisions 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" (38 Stat. 719), the Federal Trade Commission on the 12th day of December, 1930, issued its complaint against the respondent, Helena Rubinstein, Inc., charging it with the use of unfair methods of competition in rommcrce, in violation of the provisions of said act. Respondent having entered its appearance and filed its answer to the said complaint, hearings were had before ·a trial examiner theretofore duly appointed, testimony was heard and evidence was received in support of the charges of the complaint and in opposition t thereto. Thereafter this proceeding came on regularly for final hearing on briefs and oral argument of respective counsel, and the Commission having duly considered the record and being now fully advised in the premises, makes this its report, stating its findings as to the facts and its conclusion drawn therefrom: FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent Helena Rubinstein, Inc., is a corporation organized and existing under the laws of the State of New York with its principal place of business in the City of New York in said State. It is engaged and has been engaged since its incorporation in the maunfacture of cosmetics and toilet preparations, and the sale and distribution thereof from its principal place of business to retailers of such products throughout the United States. It causes its products, when sold, to be transported from its principal place of business in interstate commerce into and through States of the United States other than the State of New York to the purchasers thereof at their respective locations. In the course and conduct of its said business respondent has been and is in competition with other individuals and corporations located in the United States and engaged in the manufacture, sale, and transportation of cosmetics and toilet preparations in interstate commerce between and among the various States o£ the United States and in the District of Columbia.

PAn. 2. Respondent has for many years last past, in the course and conduct of its said business, enforced and now enforces a merchandising system adopted by it, of fixing and maintaining certain prices fixed and specified by it at which its products shall be sold by the dealers purchasing such products from respondent, and respondent HELENA RUBINSTEIN, INO. 317 814 Order enlists and secures and has enlisted and secured the cooperation of its dealers in enforcing said system. · .In order to carry out said system respondent has employed and still employs the following means whereby it and those who are cooperating with it have undertaken to prevent and have prevented dealers from selling said products to the public at prices less than the prices specified and established by the respondent: (a) Respondent fix.es uniform prices at which its dealers shall resell said products to the public and makes it generally known to the trade that it expects and requires all dealers handling said products to resell same at such fixed prices.

(b) Respondent enters into contracts, agreements, and understandings with its dealers for the maintenance by them of said resale prices, as a condition of opening accounts with such dealers, or con· tinuing their supply of such products. . PAR. 3. The direct effect and result of the above acts and practices of respondent have been and are to suppress competition among its dealers in the distribution and sale of respondent's products, to constrain dealers to sell said products at the prices fixed by respondent Rnd to prevent them from selling such products at such lower prices as they may desire, and to deprive the purchasers of said products of the advantage in price that they would otherwise obtain from a natural and unobstructed flow of commerce in said products under methods of free competition.

CONCLUSION The practices of the said respondent under the conditions and circumstances of the foregoing findings are to the prejudice of the public and of respondent's competitors and constitute a violation of the 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 Com~ mission upon the complaint of the Commission, the answer of the respondent, the testimony and briefs, and oral argument by respective counsel, and the Commission having made its findings as to tho facts and· its conclusion that said respondent has violated the provisions 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", FEDER.A.L TRADE COMMISSION DECISIONS318 Order 15 F. T.O.

It is now ordered, That the respondent, Helena Rubinstein, Inc., its officers, agents, and employees, in connection with the sale or offering for sale of its products in interstate commerce between and among the various States of the United States and in the District of Columbia, cease and desist from entering into or procuring from its dealers contracts, agreements, understandings, promises, or assurances that respondent's products, or any of them, are to be resold by such dealers at prices specified or fixed by respondent. It i<J further ordered, That the said respondent shall, within 30 days after the service upon it of a copy of this order, file with the Commssion a report in writing, setting forth in detail the manner and form in which it has complied with the order to cease and desist hereinbefore set forth.

LENAPE HYDRAULIC PRESSING & FORGING CO, 319 Complaint