Universal Extract Company, Inc.

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IN THE MATI'ER OF UNIVERSAL EXTRACT COMPANY, INC.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. II OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket !948. Complaint, Mar. !9, 1935-Decision, Jan. :es, 1936 'Where a corporation engaged in the manufacture and sale of flavoring extracts- Set forth upon the labels thereof the Italian words "Soli representant! in .America per la preparazione del famosie genuinl estratti", and upon its letterheads, statements and invoices the words "Importers and Exporters", and represented through advertisements, labels and otherwise, that it imported and exported the flavoring extracts made and sold by it, and that such products, thus dealt in by it, were imported into the United States from foreign countries, the facts being it was not sole representative in .America of any famous or other preparations made in Italy or any other foreign country, and neither exported nor imported any of the products thus advertised and dealt in by it; With tendency and capacity to mislead and deceive purchasers and prospective purchasers into believing that said extracts were imported as above set forth and that it was an importer and exporter of such products, and thereby to induce the purchasing public, a portion of which prefers the imported extracts over and above the domestic and to buy such products from importers and exporters thereof, to purchase its said products from 1t in such beliefs, and thus divert trade to it from its competitors, .among whom there are those engaged in the manufacture in the United States of such products from ingredients purchased therein, without representing the same as imported, or themselves as importers or exporters, and those who in fact import such products from various foreign countries and export the same, and truthfully represent their operations as such importers and exporters, and their said products as imported from various foreign countries; to the substantial injury of substantial competition in interstate commerce:

lield, That such acts and practices were all to the injury and prejudice of the public and competitors within the intent and meaning of Section 5. Before Mr. Edward M. Averill, trial examiner. Mr. Edward L. Smith and Mr. John W. Hilldrop for the Commision.

Mr. Milton H. Goldstricker, of New York City, for respondent. COMPLAINT 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", the Federal Trade Commission having reason to believe that Universal Complaint 22F.T.C.

Extract Company, Inc., a corporation, hereinafter referred to as respondent, has been and is using unfair methods of competition in commerce as "commerce" is defined in said act, and it appearing to said Commission that a proceeding by it in respect thereof would be to the public interest, the Commission hereby issues its complaint, stating its charges in that respect as follows: PAUGRAPH 1. Respondent, Universal Extract Company, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York, with its principal office and place of business in New York City in said State. It is now and for more than two years last past has been engaged in the manufacture of flavoring extracts in New York City aforesaid and in the sale thereof between and among the various States of the United States. It now causes and for more than two years last past has caused such flavoring extracts, when sold by it, to be transported from its place of business in New York City aforesaid to the purchasers thereof located in the State of New York and to other purchasers located in various other States of the United States, and there is now and has been for more than two years last past a constant current of trade and commerce by respondent in said flavoring extracts. In the course and conduct of its business said respondent is now and has been for more than two years last past in substantial competition in commerce between and among various States of the United States, with other corporations and with individuals, firms and partnerships engaged in the sale of flavoring extracts between and among the various States of the United States. PAR. 2. In the course and conduct of its business respondent, in soliciting the sale of its flavoring extracts and in selling the same between and among the various States of the United States, has represented for more than two years last past and still represents in and by its advertisements, labels, stationery, and in other ways that it imports and exports the flavoring extracts which it manufactures and sells and that such extracts sold by the respondent are imported into the United States from foreign countries, when in truth and in fact said respondent is neither an importer nor exporter of flavoring extracts and when in truth and in fact the flavoring extracts made, offered for sale and sold by it are manufactured by it in the city of New York aforesaid from ingredients purchased by the said respondent in the said city of New York and in various other cities of the United States.

PAR. 3. There are among the competitors of the respondent and have been for more than two years last past, manufacturers of flavoring extracts in the United States who manufacture such extracts UNIVERSAL EXTRACT CO., INC. 99 97 Findings from ingredients purchased in the United States but who do not represent that the extracts sold by them are imported or that such competitors are importers or exporters; there are also among such competitors, persons, firms, and corporations who import such extracts from various foreign countries and export the same from the ~united States and who truthfully represent themselves to be Importers and exporters and that the flavoring extracts sold and offered for sale by them are imported from various foreign countries. PAR. 4. There is a portion of the purchasing public in the United States who prefer imported flavoring extracts over and above flavoring extracts not imported from foreign countries. There is also a Portion of the purchasing public who prefer to buy flavoring extracts from importers and exporters thereof. The acts and practices of the respondent as described in paragraph 2 hereof, have the tendency and capacity to mislead and deceive purchasers and prospective Purchasers into the beliefs that the flavoring extracts sold and offered for sale by the respondent are imported into the United States from foreign countries, that the respondent is in fact an importer of such flavoring extracts and an exporter thereof and thereby to induce the purchasing public to purchase flavoring extracts from respondent in such beliefs." Thereby trade is diverted to respondent from its competitors who do not misrepresent the origin of the flavoring extracts dealt in by them and thereby substantial injury is done by the respondent to substantial competition in interstate commerce. PAn. 5. The above alleged acts and practices of the respondent are all to the injury and prejudice of the public and competitors of respondent in interstate commerce, within the intent and meaning of Section 5 of an Act of Congress entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes", approved September 26, 1914. REPORT, FINDINGs As To THE FA errs, 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", the Federal Trade Commission, on the 29th day of March 1935, issued and served its complaint in this proceeding upon respondent, Universal Extract Company, Inc., a corporation, charging it with the use of unfair methods of competition in commerce in violation of the provisions of said act. After the issuance of said complaint, and the filing of respondent's answer thereto, testimony and evidence in support of the allegations of said complaint were introduced by John 5889fim--38--VOL22----9 Findings 22F.T.C.

W. Hilldrop, attorney for the Commission, before Edward M. Averill, an examiner of the Commission theretofore duly designated by it, and in defense of the allegations of the complaint by Milton H. Goldstricker, attorney for the respondent; and said testimony and evidence was duly recorded and filed in the office of the Com· mission. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint, the answer thereto, testimony and evidence, briefs in support of the complaint and in defense thereto (oral arguments being waived) ; and the Commission having duly considered the same, and being fully advised in the premises, finds that this proceeding is in the interest of the public, and makes this its findings as to the facts and its conclusion drawn therefrom:

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Universal Extract Company, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York, with its principal office and place of business in New York City in said State. It is now and for more than two years last past has been engaged in the manufacture of flavoring extracts in New York City aforesaid and in the sale thereof between and among the various States o£ the United States. It now causes and for more than two years last past has caused such flavoring extracts, when sold by it, to be trans· ported from its place of business in New York City aforesaid to the purchasers thereof located in the State of New York and to other purchasers located in various other States of the United States, and there is now and has been for more than two years last past a con· stant current of trade and commerce by respondent in said flavoring' extracts. In the course and conduct of its business said respondent is now and has been for more than two years last past in substantial competition in commerce between and among various States of the United States, with other corporations and with individuals, firms and partnerships engaged in the sale of flavoring extracts between and among the various States of the United States. PAR 2. In the course and conduct of its business respondent, in soliciting the sale of its flavoring extracts and in selling the same between and among the various States of the United States, has represented for more than two years last past and still represents in and by its advertisements, labels, stationery, and in other ways that it imports and exports the flavoring extracts which it manu· factures and sells and that such extracts sold by the respondent are UNIVERSAL EXTRACT CO., INC. 101 Findings inlported into the United States from foreign countries, when in truth and in fact said respondent is neither an importer nor exporter of flavoring extracts and when in truth and in fact the flavoring extracts made, offered for sale and sold by it are manufactured by it in the city of New York aforesaid from ingredients purchased by the said respondent in the said city of New York and in various other cities of the United States. On the bottles containing the flavoring extracts of respondent, which respondent sells and distributes in interstate commerce, labels are fixed containing the following words in Italian, to wit: "Soli representanti in America per la preparazione dei famosie genuini estratti", the English translation of which is as follows: "Sole representative in America of the famous preparations of this extract." On the letterheads, statements and invoices of respondent there appear the words "Importers and Exporters". The foregoing advertisements, statements and representations by respondent are false and misleading. In truth and in fact, respondent is not the sole representative in America of any famous or other preparation or preparations made in Italy or any foreign country, and neither exports nor imports any of the goods, wares or merchandise by it advertised, sold and distributed in interstate commerce.

PAn. 3. There are among the competitors of the respondent and have been for more than two years last past, manufacturers of flavoring extracts in the United States who manufacture such extracts from ingredients purchased in the United States but who do not represent that the extracts sold by them are imported or that such competitors are importers or exporters; there are also among such competitors, persons, firms, and corporations who import such extracts from various foreign countries and export the same from the United States and who truthfully represent themselves to be importers and exporters and that the flavoring extracts sold and offered for sale by them are imported from various foreign countries. PAR. 4. There is a portion of the purchasing public in the United States who prefer imported flavoring extracts over and above flavoring extracts not imported from foreign countries. There is also a portion of the purchasing public who prefer to buy flavoring extracts from importers and exporters thereof. The acts and practices of the respondent as described in paragraph 2 hereof, have the tendency and capacity to mislead and deceive purchasers and pros- Pective purchasers into the beliefs that the flavoring extracts sold and offered for sale by the respondent are imported into the United States from foreign countries, that the respondent is in fact an importer of such flavoring extracts and an exporter thereof and thereby Order 22F.T.C.

to induce the purchasing public to purchase flavoring extracts from respondent in such beliefs. Thereby trade is diverted to respondent from its competitors who do not misrepresent the origin of the flavoring extracts dealt in by them and thereby substantial injury is done by the respondent to substantial competition in interstate commerce.

CONCLUSION The above alleged acts and practices of the respondent are all to the injury and prejudice of the public and competitors of respondent in interstate conunerce, within the intent and meaning of Section 5 of an Act of Congress entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes", approved September 26, 1914.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of respondent, testimony and evidence taken before Edward M. Averill, an examiner of the Commission theretofore duly designated by it, in support of the charges of said complaint and in opposition thereto, briefs filed herein by John W. Hill drop, counsel for the Commission, and Milton H. Goldstricker, attorney for the respondent (oral argument being waived), and the Commission having made its findings as to the 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 Commisison, to define its powers and duties, and for other purposes." It is ordered, That the respondent, Universal Extract Company, Inc., a corporation, its agents, servants and employees, in the advertising, sale and distribution in interstate commerce of its commodity, to wit, flavoring extracts, cease and desist from: (1) Advertising and representing by labels on bottles and other containers, letterheads, invoices, in newspapers, journals, periodicals, through radio broadcasts, or by any other method, means or device : (a) That it imports or exports the flavoring extracts which it manufactures and sells in interstate conunerce, as aforesaid; that such extracts or the ingredients composing the same arc by respondent imported into the United States from foreign countries; that respondent is either an importer or an exporter; or that respondent is the sole representative in America for its said commodity.

UNIVERSAL EXTRACT CO., INC. 103 97 Order (b) That any of the aforesaid flavoring extracts or other merchandise which respondent manufactures, advertises, sells and distributes in interstate commerce, or any of the ingredients composing same, are manufactured in any foreign country or imported into the United States until and unless the said products are so manufactured or imported.

(2) Using on the labels placed on its bottles or other containera in which respondent's flavoring extracts are shipped and distributed in interstate commerce the words "Soli representanti in America per la preparazione dei famosie genuini estratti", or words in any language which state, import, or imply that respondent is the sole representative in America of the famous preparations of the extract contained, labelled and advertised in said bottles or containers. And it is hereby further ordered, That the said respondent, Universal Extract Company, Inc., a corporation, shall within 60 days after the service upon it of this order to cease and desist, file with this Commission a report in writing setting forth in detail the manner and form in which it shall have complied with the order to ceaso and desist hereinbefore set forth.

Complaint 22F.T.C.