Manchester Silver Company

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IN Tile MATTER OF MANCHESTER SILVER COMPANY, AND FRANKS. TRUM- BULL, FRANZ S. TIDERl\IAN AND EDWARD B. PALMER, INDIVIDUALLY AND AS OFFICERS THEREOF COMPLADIT, FI!IIDDWS, .\ND ORDER Dl REGARD TO THE .-\ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF ('0;\IGREI'S APPROVED SEPT. 26, 1914 Docl.,et 1,133. OrJmpla-imt, Jay 11, 191,0-Decisio-n, Nov. 6, 191,0 Wht>re a corporation and three individuals, who wt>re presidt>nt, vice president, and secretary thereof, and dirt>cted and controlled Its advertising policies and business activities and practices, engaged in manufactut·e and in sale and distribution of sterling sil>er flatware to wholesale and retail dealers, including retail dt>partment stores, and to. jobbers and other purchasers In various States and in the District of Columbia, in competition with others likewise engaged in sale and distribution of such products, and including many in such commerce who do not in any manner misrepresent their goods or matters pertaining thereto, and in long issuing, in the conduct of their bul'line&<;, and circulating among retailer~, wholesalers, and jobbers, their "Pink List," purportiug to show usual and regular retail prices or values of their said sih·t>rware, and In selling to ~ncb vendees at specified discounts from said list, in nccordnnce with pt·ices of which many retailers had offered and sold their said silvet· flatware and which bad, for many years, been used by retailet·s and, more particularly, large department stores, in conducting special sales of their said products, and to show so-called rt>gular prict>s thereof as compared '.with those at which their said silver flatware products were being sold, and amounting, in some instances, in the case of such "Sales Prices," to as much as 33 percent of! such "Pink List" prices;

In pursuance and furtherance of a plan devis-ed by them tor use by retailers to increase and promote the sale of their said products at such' special ~'ales through use of price list which they ue>;ignated as the "Blue List," and which had words "'Vholt>sale List" printed therpon, and which set forth prices which Wt>re substantially higher for identical articles than those shown on the ''Pink List," long used hy them In conducting their said business, and whi<'ll did not represent or refiPct pither the wholesale or retail prices or values of products lb;ted therein, but wt>re wholly fictitious and greatly ln excess of prices at which such protlucts were regularly and customarily o:ffered for sale and sold- (a) Issued and supplied to retailers, for usp in conducting so-called special sales of their said flat silwrware products, said "Blue List" as abo\·e described, and suggested and recommended that retailers make use thereof in promoting special sales of said flatware and display and give said "Blue List" to purchasing and consuming public and cause advt>rtisemcnts quoting said list to be inserted in newspapers In connection with so-called halfprice and comi)aratlve price sales, and that such dealers represent to purchasing and consuming public that prices shown on said Ust were the normal prices at which said silver flatware was regularly and customarily sold; and Syllabus 31F.T. C.

(b) Granted to certain large retail dealers special discounts in order to induce them to become parties to and participate in their said plan of using such "Blue List" and so-called special or comparative price sales of their said silver flatware products, and induced many retailers to participate in such plan and to purchase large quantities of their said wa1·e and to display and distribute said "Blue List" to consuming and purchasing public, and to cause advertisements setting forth prices shown therein a.s regular list prices to be inserted in newspapers in advertising such 8Peclal or comparative price sales of products in question, and Including, as typical, such newspaper advertisements, thus inserted by purchasers of said silverware for resale, as "SALE! LIMITED TIME ONLY SOLID STERLING SILVER-% OFF LIST PRICES. Not in Years Has Manchester Sterling Been Offered in Indianapolis at Any Such Startling Reduction! • • • Just Think! You can actually own this famous solid sterling silver and pay only 50% of the maker's long established regular list prices! • • • 26-Pc. Set Sterling-Regular Factory List Price $78.60. Sales Price $38.75 • • •," etc.;

Facts being that, as aforesaid indicated, prices stated in said "Blue List" did not represent any real, list or expected prices for said silver flatware, but were wholly fictitious and fantastically exaggerated, and designed to create a false opinion on the part of the consuming and purchasing public as to true list prices and values of their said silver flatware, and prices paid by wholesalers, retailers, and purchasing and consuming public, regardless ol' list used, were substantially the snme and they had not increased prices of their said products to extent indicated in. comparing regular "Pink List" and "Blue List" of fictitious prices; Wltlt result that said fictitious prices shown on such "Blue List" created false opinion on part of consuming and purchasing public as to true list prices and values of their said silverware and use of such prices, thus shown, enabled dealers to repre!"ent that purchasers at retail were securing up to as much as 50 percent off the regular list price of said flatware, Instead of the 33 percent disclosed by use of their "Pink List" or real price list in retailers' conduct of special or comparative price sales, and with further result, through their said acts and practices in compiling and circulating nnd distributing said "Blue List" among retailers and other purchaser& for resale, of placing in hands of such' various purchasers means and Instrumentality by which purchasing and consuming public was misled and rleceived, and with effect, as result of their said nets and practices, of falsely representing and arlvertising their products ns aforesaid, that substantial portion of purchasing public was misled and deceived tnto et·roneous and mistaken belief that said representations and advertisements were true, and that prices shown In said "Blue List'' represented the regular and customary prices of said products, and sub,;tantial number of members of said public, because of such erroneous and mistaken belief, were caused to purchase their said silver flatware, and trade was thereby unfairly diverted to them from their com{l('titors in commerce as aforesaid who truthfully represent thpir products; to their Injury and that of public:

Hell!, That such acts and prnctlces, under the circumstances set forth, were all to the prejudice and injury of the public and competitors, and constituted unfair methods of competition In commerce and unfair and deceptive acts and practices therein.

MANCHESTER SILVER CO. ET AL. 1307 1305 Complaint Before Mr. Lewis 0. Russell1 trial examiner. Mr. J olvn M. Russell, for the Commission.

M cLyman &: Day, of Providence, R. I., for respondents. Cm.IPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said act, the Federal Trade Commission, having reason to believe that Manchester Silver Co., a corporation, and Frank S. Trumbull, Franz S. Tiderman, and Edward B. Palmer, individually and as officers of Manchester Silver Co., a corporation, hereinafter referred to as respondents, have violated the provisions of said act, and it appearing to the Commission that a proceeding by it in resped thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows:

PARAGRAPH 1. Respondent, Manchester Sliver Co., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Rhode Island, and respondents Franks. Trumbull, Franz S. Tiderman, and Edward B. Palmer, are president, vice president, and secretary, respectively thereof. The individual respondents, both in their individual and official capacities, direct and control the advertising policies and business activities and practices of said corporate respondent, and all of said respondents have cooperated each with the other and have acted in concert in doing the acts and things hereinafter alleged. The principal office and place of business of all of the respondents is located at 49 Pavilion Avenue, in the city of Providence, State of Rhode Island. PAR. 2. Respondent, Manchester Silver Co., is now and has been for many years last past engaged in the business of manufacturing, selling, and distributing sterling silver flatware. Respondents sell said silver flatware to wholesale and retail dealers, including retail department stores, and to jobbers and other purchasers thereof situated in various States of the United States and in the District of Columbia, and respondents cause said silver flatware, when sold, to be transported from the aforesaid place of business in the State of Rhode Island to the purchasers thereof at their respective points of location in other States of the United Statps and in the District of Columbia.

Respondents maintain, and at all times mentioned herein have maintained, a course of trade in said silver flatware in commerce between and among the various States of the United States and in the District of Columbia.

Complaint 31F.';r.C. In the course and conduct of their said business in commerce, as aforesaid, respondents are in competition with corporations, individuals, and partnerships likewise engaged in the sale and distribution of sterling silver flatware. Among said competitors in sai,d commerce are many who do not in any manner misrepresent their products or matters pertaining thereto.

PAR. 3. For many years respondents ha ,.e issued and circulated, and now issue and circulate, among retail dealers, wholesalers, and jobbers a price list known as the "Pink List." This list purports to show the usual and regular retail prices or values of respondents, said silver flatware. Sales ha ,.e been and are made to retailers, wholesalers, an.d jobbers at specified discounts from said "Pink List." l\Iany retail dealers have offered for sale and sold respondents' said silver flatware at the prices shown on said "Pink List," and for many years retail dealers, and more particularly large department stores, have used said "Pink List" in conducting special sales of respondents' said products, the "Pink List" being used by such retailers to show the so-called regular prices of said products were being sold. The "Sales Prices" in some instances were as much as 33 percent off the "Pink List" prices.

PAR. 4. Respondents, on or about January 1, 1939, devised a plan for use by retailers to increase and promote the sale of their said products at said special sales, pursuant to and in accordance with which they issued and supplied to retailers and wholesalers for use in conducting so-called special sales of respondents' said products, a price list referred to as the "Blue List," which has the words "\Vholesale List" printed thereon. The pric{JS shown in said "Blue List" for identical a.articles of silver flatware, are subf:ltantially higher than the prices shown in the "Pink List" which has long been used by the respondents in the conduct of said business. The prices shown on the "Blue List" j(lo not represent or reflect either the wholesale or retail prices or values of the products listed therein, but are wholly fictitious and are greatly in excess of the prices at which such products are regularly and customarily offered for sale and sold. Respondents, as alleged, supply said "Blue List" to wholesalers and retailers and suggest and recommend that retail dealers use this list in promoting "Special Sales" of said silver flatware, and that they display and give said "Blue List" to the purchasing and consuming public, and cause advertisements quoting said "Blue List" to be inserted in newspapers in connection with so-called half-price and comparative price sales, and that said dealers represent to the purchasing and consuming publia that the prices shown on said "Blue List" are the normal prices at which said silver flatware is regularly and customarily sold. In fur- MANCHESTER SILVER CO. ET AL. 1309 130G Complaint therance of said plan, r!:'~pondents grant to certain large retail dealers special discounts in order to induce such retailers to become parties to and participate in respondents' plan of u~_ing said "lllue List" in socalled special or comparati,·e price sales of respondents' said products. Hrspondents have induc!:'d many retailers to participate in said plan an(l to purchase large quantities of sai,d sih·er flatware and to display and distribute said "Blue List" to the consuming and purchasing public, and to cause advertisements, setting forth the prices shown in said "lllue List" as regular list prices, to be inserted in newspapers in advertising said spl'cial or comparative price sales of respondents' said products. Among and typical of the adwrtisements an.d representations inserted in newspapers by purchasers of respondents' silverware for resale, is the following:

SALE! UMITED TIME ONLY SOUD STERUNG SILVER % OFF UST PRICES Not in Years Has Mauchestrr Sterling Been Ot'f!'red in Indianapolis at Any Sneh Startling Reduction! 21 Beautiful Patten1s All Open Stock! Regardless of Dt>sign, .All the Same Price! None Discontinued! Fill-ins 1\Iay Be Had Any Time! Just think! You can actually own this famous solid sterling silver and Pay only GO% of the maker's long established regular list prices! MANCHESTE~ :sn4tling Is guaranteed as advertised in Good Housekeeping. * * * 26-Pc. Set Sterling-Regular Factory List Price __________ $78. 60 Sale Price----------------------------------------------- $38. 75 34-Piece Set Stt'ruling-Factory List Price _________ $09 $49. 50 Open Stock Sterling-% PRICE List Pr. Sales Pr. 6 II. H. Dessert Knives ________________________ 21. 15 10. 58 The prices stated in said "lllue List" do not represent any real, list, or expected prices for said silver flatwn-re, but are wholly fictitious and fantastically exaggerated, and are designed to and do create a false opinion on the. part of the consuming and purchasing Public as to the true list prices and values of respondents' silver flatware.

The use of the fictitious prices shown on the "Blue List" enable dealers to repres{'nt that purchaset·s at retail are securing up to as much as 5.0 perc{'nt off the r{'gular list price of respondent's said silver flatware, whereas when the ''Pink List," that is, the real price list of the respondents, is used, I"{'tailers in conducting special or comparatice price sales are unable to represent that the purchasers are securing discounts off the. list price. in excess of 33 percent. The prices paid by wholesalers, retailers, and the purchasing and consuming Findings 31F.T.C.

public, regardless of the list that is used, are substantially the same and respondents have not increased the prices of their said products to the extent indicated in comparing the regular "Pink List" and the "Blue List" containing· the. fictitious prices. PAR. 5. The acts and practices of the respondents in compiling said "Blue List" and in circulating and distributing it among retailers and other purchasers for resale place in their hands a means and instrumentality by which the purchasing and consuming public is mislead and deceived.

PAR. 6. The acts and practices of the respondents in falsely representing and advertising their products in the manner above alleged, have the tendency and capacity to and do mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that said representations and advertisements are true, and that the prices shown in said "Blue List" represent the regular and customary prices of said products, and have caused a substantial number of members of the purchasing public, because of said erroneous and mistaken belief, to purchase respondents' said silver flatware, and as a result thereof trade has been and is unfairly diverted to respondents from their competitors in said commerce, who truthfully represent their products to their injury and to the injury of the public. · PAR. 7. The- aforesaid acts and practices of the respondents, as herein alleged, are all to the prejudice and injury of the public andrespondents' competitors, and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act~ the Federal Trade Commission on the 11th day of May 1940, issued and subsequently served its complaint in this proceeding upon respondents, Manchester Silver Co., a corporation, and Franks. Trumbull, Franz S. Tiderman, and Edward B. Palmer, individually and as officers of Manchester Silver Co., charging them with the use of unfair methods of competition in commerce and unfair and de<!epth·e acts and practices in commerce in violation of the provisions of said act. On May 28, 1940, the respondents filed their answers in this proceeding. Thereafter, a stipulation was entered into whereby it was stipulated and agreed that a statement of facts, signed and executed by the respondents and ,V. T. Kelley, chief counsel for the Federal Trade Commission, subject to the approval of the Commission, may be taken MANCHESTER SILVER CO. ET AL. 1311 1305 Findings as the facts in this proceeding and in lieu of testimony in support of the charges as stated in the complaint, or in opposition thereto, and that the said Commission may proceed upon the said statement of facts to make its report, stating its findings as to the facts and its con· elusion based thereon and enter its order disposing of the proceeding without the filing of a report upon the evidence by the trial examiner, the presentation of arguments or the filing of briefs. Thereafter, this proceeding regularly came on for final hearing before the Commission on said complaint, answer and stipulation, said stipulation having been approved, accepted and filed, and the Commission having duly considered the same and being now fully advised in the premises, finds that this proceeding is in the interest of the public and makes its findings as to the facts and its conclusion drawn therefrom. FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Manchester Silver Co., is a corporation organized, existing, and doing business under and by virtue o:f the laws of the State of Rhode Island, and respondents Franks. Trum· bull, Franz S. Tiderman, and Edward B. Palmer, are president, vice president, and secretary, respectively, thereof. The individual respondents, both in their individual and official capacities, direct and control the advertising policies and business activities and practices of said corporate respondent, and all of said respondents have cooperated each with the other and have acted in concert in doing the acts and things hereinafter alleged. The principal office and place of business of all of the respondents is located at 49 Pavilion A venue, in the city of Providence, State of Rhode Island. PAn. 2. Respondent, Manchester Silver Co., is now and has been for many years last past engaged in the business of manufacturing, selling, and distributing sterling silver flatware. Respondents sell said silver flatware to wholesale and retail dealers, including retail department stores, and to jobbers and other purchasers thereof situated in various States of the United States and in the District of Columbia, and respondents cause said silver flatware, when sold, to be transported from the aforesaid place of business in the State of Rhode Island to the purchasers thereof at their respective points of location in other States of the United States and in the District of Columbia. Respondents maintain, and at all times mentioned herein have maintained, a course of trade in said silver flatware in commerce between and among the various States of the United States and in the District of Columbia.

Fi!Jdings 31F. T.C.

In the course and conduct of their said business in commerce, as aforesaid, respondents are in competition with corporations, individuals, and partnerships likewise engaged in the sale and distribution of sterling silver flatware. Among said competitors in said commerce are many who do not in any manner misrepresent their products or matters pertaining thereto.

PAR. 3. For many years respondents have issued and circulated, and now issue and circulate, among retail dealers, wholesalers, and jobbers a price list known as the "Pink List." This list purports to show the usual ami regular retail prices or values of respondents' said silver flatware. Sales have been and are made to retailers, wholesalers, and jobbers at specified discounts from said "Pink List." Many retail dealers have offered for sale and sold respondents' said silver flatware at the prices shown on said "Pink List," and for many years retail dealers, and more particularly large department stores, have used said "Pink List" in conducting special sales of respondents' said products, the "Pink List" being used by such retailers to show the socalled regular prices of said products as compared with the prices at which said products were being sold. The "Sales Prices" in some instances were as much as 33 percent off the "Pink List" prices. PAR. 4. Respondents, on or about January 1, 1939, devised a plan for use by retailers to increase and promote the sale of their said 1)roducts at said special sales, pursuant to and in accordance with which they issued and supplied to retailers and wholesalers for use in conducting so-called special sales of respondents' said products a price list referred to as the "Blue List," which has the words "Wholesale List" printed thereon. The prices shown in said "Blue List" for identical articles of silver flatware, are substantially higher than the prices shown in the "Pink List" which has long been used by the respondents in the conduct of said business. The prices shown on the "Blue List" do not represent or reflect either the wholesale or retail prices or values of the products listed therein, but are wholly fictitious and are greatly in excess of the prices at which such products are regularly and customarily offered for sale and sold. Respondents, as alleged, supply said "Blue List" to wholesalers and retailers and suggest and recommend that retail dealers use this list in promoting "Special Sales" o£ said silver flatware, and that they display and give said "Blue List" to the purchasing and consuming public, and cause advertisements quoting said "Blue List" to be inserted in newspapers in connection with so-called half-price and comparative price sales, and that said dealers represent to the purchasing and consuming public that the prices shown on said "Blue List'' are the normal prices at which said silver flatware is regularly MANCHESTER SILVER CO. ET AL. 1313 1305 Findings and customarily sohl. In furtherance of said plan, respondents grant to certain large retail dealers special discounts in order to induce such retailers to become parties to and participate in respondents' plan of using said "Blue List'' in so-called special or comparative price sales of respondents' said products. Respondents have induced many retailers to participate in said plan and to purchase large quantities of said silver flatware and -to display and distribute said "Blue List" to the consuming and purchasing public, and to cause advertisements, setting forth the prices shown in said "Blue List" as regular list prices, to be inserted in newspapers in advertising said special or comparative price sales of respondents' said products. Among and typical of the advertisements and representations inserted in newspapers by purchasers of respondents' silverware for resale, is the following:

Sale! LIMITED TIME ONLY SOLID STERLING SILVER :fh OFF LIST PRICES Not in Years Has Manchester Sterling Been Offered ln Indianapolis at Any Such Startling Reduction ! 21 Beautiful Patterns All Open Stock! Regardless of Design, All the Same Price! !None Discontinued! Fill-ins May Be Had Any Time! Just think! You can actually own this famous solid sterling silver and pay Only 50% of the maker's long established regular list prices! MANCHESTER ster- LING is guaranteed as advertised in Good Housekeeping. • • • 26-Pc. Set Sterling Regular Factory List Prl~e _____________ $78. 60 Sale Price _______________________________________________ $38. 75 34-Piece Set Sterling Factory List Price _________ $99 $49. 50 Open Stock Sterling % PRIOE List Pr. Sale Pr.

6 II. H. Dessert Knives-------------------------21.15 10.58 The prices stated in said "Blue List" do not represent any real, list, or expected prices for said silver flatware, but are wholly fictitious and fantastically exaggerated, and are designed to and do create a false opinion on the part of the consuming and purchasing Public as to the true list prices and values of respondents' silver flatware. · The use of the fictitious prices shown on the "Blue List" enables dealers to represent that purchasers at retail are securing up to as ll_luch as 50 percent off the regular list price of respondents' said s~lver flatware, whereas when the "Pink List," that is, the real price hst of the respondents, is used, retailers in conducting special or comparative price sales are unable to represent that the purchasers are securing discounts off the list price in excess of 33 percent. The CO~LMISSION DECISIOKS1314 FEDERAL TRADE Order 31F.T.C.

prices paid by wholesalers, retailers, and the purchasing and consuming public, regardless of the list that is used, are substantially the samf\ and respondents have not increased the prices of their said products to the extent indicated in comparing the regular "Pink List" and the "Blue List" containing the fictitious prices. P .AR. 5. The acts and practices of the respondents in compiling said "Blue List" and in circulating and distributing it among retailers and other purchasers for resale place in their hands a means and instrumentality by which the purchasing and consuming public is misled and deceived.

PAR. 6. The acts and practices of the respondents in falsely repre· senting and advertising their products, in the manner above set forth, have the tendency and capacity to, and do, mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that sajd representations and advertisements are true, and that the prices shown in said "Blue List" represent the regular and customary prices of said products, and have caused a substantial number of members of the purchasing public, because of said erroneous and mistaken belief, to purchase respondents' said silver flatware, and as a result thereof trade has been and is unfairly diverted to respondents from their competitors in said commerce who truthfully represent their products to their injury and to the injury of the public.

CONCLUSION The aforesaid acts and practices of the respondents, as herein found, are all to the prejudice and injury of the public and of respondents' competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of respondents and a stipulation as to the facts entered into between the respondents herein and ,V. T. Kelley, chief counsel for the Federal Trade Commission, which provides, among other things, that without further evidence or other intervening procedure the Commission may issue and serve upon the respondents herein findings as to the facts and conclusion based thereon and an order to cease and desist disposing of the proceeding, and the Commission having made its findings as to the facts and its conclusion that the MANCHESTER SILYER CO. ET AL. 1315 1305 Order said respondents have violated the provisions of the Federal Trade Commission Act.

It is ordered, That the respondents, Manchester Silver Co., a corporation, its officers, representatives, agents, and employees, and Frank S. Trumbull, Franz S. Tiderman, and Edward B. Palmer, their representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of sterling silver flatware, in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Representing as the customary or regular retail prices for such products prices which are in fact fictitious anu in excess of the prices at which said products are regularly and customarily offered for sale and sold.

2. Using, or supplying to wholesalers, retailers, and others purchasing said silverware for resale for use, in connection with the sale of said silverware, purported wholesale, retail, or other price lists, when such lists contain fictitious prices which are in excess of the price at which said silverware is regularly and customarily offered for sale and sold.

3. Representing that the regular price of any article of said silver- Ware is in excess of the price at which such article is customarily offered for sale and sold.

4. Using, or supplying to wholesalers, retailers, and others purchasing such silverware for resale for use, in connection with special sales of said silverware, any price list which does not correctly set forth the true price at which said silverware is customarily offered for sale and sold.

It is further ordered, That the respondents shall within 60 days after service upon them of this order, file with the Commission a report in writing, setting forth in detail the manner and form in Which they have complied with this order.

Syllabus 31F. T. C.