Giroux Co., Inc

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IN THE MATTER OF LE1VIS BLOCK,· FRANK BLOCK, MAC GOLDBERG, OTTO .· LANGER, MORRIS BLOCK, AND DORA BLOCK, TRADING? .. AS STYLE & MERIT BUYING SERVICE ' !'I CO:MPLAINT, FINDINGS, AND ORDER IN REGARD TO Tile ALLEGED VIOLAT~~4 OF SL'BSEC. (c) OF SEC. 2 OF AN ACT OF CONGR&SS APPROVED OCT. 15, l ' AS AMENDED . Docket 4249. Complaint, Aug. 21, 1940-Decision, Aug, 11, 1942 \Vhere six partners, who engaged in New York City in soliciting the b~siness of purchasing, free of charge, the merchamlise· requirements of retail organizfl· tlons in New York and other States, contacting a large number of manufac· turers of ladies' and children's ready-to-wear, leather goods and accessories. furs, and fur coats in New York, Pennsylvania, and other eastern States. and searching the market in order to obtain at the lowest possible prices tile exact merchandise ordered by retail buyer-clients- Received, from competitive sellers, manufacturers, and wholesalers of fur gar· ments for many retail fur outlets of client-buyers upon purchases made fo~ their said buyer-clients, brokerage fees which amounted to from 2 to 5 perceor of the price of the merchandise, while acting in fact for or in behalf of 0 under the direct or indirect control of such buyers and as their buying representatives: s lleld, That such receipt of compensation in the form of commission on purchase from competitiv~ sellers constituted a violation of subsection (c) of sect!Oll 2 of the Qlayton Act as amended by the Robinson-Patman Act. Mr. A. lV. DeBirny and Mr. Edw-ards. Ragsdale for the Conunis· sion.

Mr. Alfred McCormack, Mr. Harmon Dwncombe and llfr. Doibgl~ L. Hatch, of Cravath, De(}ersdorff, Swaine & 'Vood, of New Yot City, for respondents.

COMPLAINT The Federal Trade Commission, having re~son to believe that the parties respondent named in the caption hereof and hereinafter :more particularly described, since June 19,.1936, have violated and are I10'~ violating the provisions of subsection (c) of Section 2 of the Clayton~ Act, as amended by the llobinson-Patman Act, approved June 19, 19.3 (U. S. C. Title 15, Sec. 13), hereby issues its complaint stating 1t5 ' . charges with respect thereto as follows: PARAGRAPH 1. ·Respondents, Lewis Block, Frank Block, 1\fac Gold· berg, Otto Langer, 1\Iorris Block, and Dora Block, are copartners, ?o· ing business under the firm name of Style & :Merit Buying Sef'\' 1~ and have their office and place of busines& at 225 West Thirty-fourt Street, New York, N. Y.

STYLE & MERIT BUYING SERVICE 355 354 ' Complaint Articles of Copartnership are duly recorded and said firm name duly registered under the laws of the Sate of New York. Said Articles state the purpose of the formation of said copartnership to be: To conduct the bu~iness of buying and purchasing any and all commodities Of Whatsoever nature for the benefit of any and all account9, organizations, asso- <'lntions, manufacturers, department and retail stores, and other organizations Of a similar nature on a commission basis.

Said respondents will hereinafter be referred to as copartners respondent .

. PAn. 2. Since January of 1939 said copartners respondent have solic- Ited the business of purchasing free of charge the merchandise requirements of a number of retail stores and organizations located in New l:ork State and other States and have advertised to the trade generally a Performance by them of complete buying service. As a result of such 8?licitation and advertising a number of persons, firms, and corporahans owning and operating retail stores have engaged copartners respondent to purchase their requirements for them from various manllfacturers and sellers thereof. No ~uch purchases are ever made by · ~copartners respondent until and unless requisitions or orders for specie merchandise are received from said buyer clients of copartners respondent. After the receipt of such orders or requisitions it is the Consistent practice of copartners respondent to then search the market and contact various manufacturers and sellers in order to obtain the e:t~ct merchandise so ordei·ed by said buyers and at the lowest possible Prices. The sellers and manufacturers so contacted by copartners respondent comprise alarge number of persons, firms, and corporations engaged in the manufacture and sale of ladies' and children's ready-to~ :"ear, leather goods, and accessories, furs and fur coats, and are located 1n the States of New York and Pennsylvania and other States in the eastern part of the United States.

PAn. 3. Said sellers and manufacturers are engaged in the sale and distribution in commerce of the v11rious merchandise hereinabove described to the buyers represented by copartners respondent and to other customers located in New York State a:nd other States and, purs~ant to purchases made by copartners respondent for their buyer <:hents, merchandise is shipped and caused to be transported by such Sellers and manufacturers from their respective factories and places of business into and through the State of New York and into ltnd through the various States of the United States to said buyers and to their competitors. - P;An. 4. Since January of 1939 said copartners respondent have purci:ased in interstate commerce in excess of $1,000,000 yearly merchandtSe for, and rendered buying services to, the said buyer clients and 356 FEIDERAL TRADE COMMISSION DECISIONS , Findings 35F. rr.c. 5upon the purchases so made brokerage fees or commissions of 2 to percent of the price of such merchandise, amou~ting in the aggregat~ to more than $16,000 per annum, have been charged and transinitte to and received by said copartners respondent from various sellers .and manufacturers. In some instances said brokerage fees or commisswns are remitted direct to copartners respondent by sellers of said merchan· dise and in other instances 'Said brokerage fees or commissions ~re deducted by said buyer clients from the sales price of such merchandise and are remitted by said buyer clients to said copartners respondent. A substantial part of said brokerage fees and commissions has been used by said copartners respondent to defray the expenses of and pay bills for some of their said buyer clients. . . d PAR. 5. In all of said purchasing transactions hereinabove describe a~d :eferred to in con~ection with w!iich the broke:age fees or co~d missions have been paid, and are paid and transmitted by the sttl d sellers and manufacturers to, and have been and are accepted an recei ved by, said copartners respondent, said copartners responde~1 have been and are agents a.acting ih fact fo~· and in behalf of their sa.l buyer clients and were and are generally rendering to such bu~er clients all of the buying services required by them ·and custOinarllY rendered by a buying agent to and for his principals. - d PAR. 6. The transmission and payment of the brokerage fees aJl commissions by the various sellers and manufacturers to, and the re· ceipt and acceptance thereof by, said copartners respondent· in ~he manner and in the circumstances hereinabove set forth, is in violation of the provisions of Section 2 (c) of the above mentioned Act of Con· gress, as amended (U. S. C., Title 15, Sec. 13). REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provision~1 of an act of Congress, entitled "'An net to supplement existing laws against unlawful restraints and monoro· lies, and for other purposes," approved October 15, 1914 (the Clayton Act), as amended by an act of Congress approved June 19, 1936 (th~ Robinson-Patman Act) (U. S. C. Title 15, Sec. 13), the Fedcrnd Trade Commission on August 21, 1940, issued and subsequently served its complaint in this proceeding upon the parties respondent naii18 iri the caption hereof, charging said respondents with violation of the provisions of subsection (c) o£ Section 2 o:f said Clayton Act, 115 amended. After the issuance of said cotnplaint and the filing of re· spondents' answer, the Commission entered its order granting respond· ents' motion for permission to withdraw said answer and to substitute therefor an answer admitting all the material allegations of fact sex forth in said complaint and waiving all intervening procedure an · STYLE & MERIT BB'YING SERVICE 357.: 354 Findings further hearings as to said. facts. The respondents have also waived ?ral argument and the filing of briefs.

Thereafter, this proceeding regularly came on for final hearing before the Commission on the said complaint and substitute answer, lind the Commission having duly considered the same and being now fully advised in the premises, makes this its findings as to the facts llnd its conclusion drawn therefrom.

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondents, Lewis Block, Frank Block, Mac Goldberg, Otto Langer, Morris Block, and Dora Block, are copartners doing business under the firm name. of Style & Merit Buying Service, and have their office and place of business at 225 West Thirty-fourth Street, New York, N. Y. · Articles of Copartnership are duly recorded and said firm name duly registered under the laws of the State of New York. Said Articles ~tate the purpose of the formation of said copartnership to be: 'l'o conduct the 'business of buying and purchasing any and all commodities Of Whatsoever nature for the benefit of any and all accounts, organizations, ~.~soeiations, manufacturers, department and retail stores, and other organiza- . lons of a similar nature on a commission basis. Said respondents will hereinafter be referred to as copartners respondent. . PAn. 2. Since January of 1939 said copartners respondent have Solicited the business of purchasing free of charge the merchandise :equirements of a number of retail stores and organizations located 111 N"ew York State and other States and have advertised to the trade generally a performance by them of· complete buying service. As a result of such solicitation and advertising a number of persons, firms, ll.nd corporations owning and operating retail stores have engaged copartners respondent to purchase their requirements' for tl~em from ~arious manufacturers and sellers thereof. No such purchases are ~"er made by copartners respondent until and unless requisitions or Ordeys for specific merchandise are received from said buyer clients of copartners respondent. .A:after the receipt of such orders or requisitions it is the consistent practice of copartners respondent to then search the market and contact various manufacturers and sellers in Order to obtain. the exact merchandise so ordered by said buyers and nt the lowest possible prices. The sellers and manufacturers so contacted by copartners respondent comprise a large number of persons, 6.rtns, and corporations engaged in the manufacture and sale of ladies' llncJ children's ready-to-wear, leather goods, and accessories, furs and 358, FEIDERAL TRADE COMr.flSSION DECISIONS Conclusion 35F.'f,C· fur coats, and are located in the States of New York and Pennsylvania. and other States in the eastern part of the United States. , PAR. 3. Said sellers and manufacturers are engaged in the sale and I distribution in commerce of the various merchandise hereinabove de· I I I scribed to the buyers represented by copartners ·respondent and ~ I other ,customers located in New York State and other States an ' i'I pursuant to purchases made by copartners respondent for their buyer( dients, merchandise is shipped and caused to be transported by sue 1 Eellers and manufacturers from their respective factories and place~ of business into and through the State of New York and into an through the various States of the United States to said buyers and to their competitors.

PAn. 4. Since January of 1939 said copartners respondent have pur· chased in interstate commerce in excess of $1,000,000 yearly mer· charidise for, and rendered buying services to, the said buyer client~ and upon the purchases so made brokerage fees or commissions of to 5 percent of the price of such merchandise, amomiting in the aggre· gate to more than $16,000 per annum, have been charged and trans· mitted to and received by said copartners respondent from various sellers and manufacturers. In some instances s:iid brokerage fees 0~ commissions are remitted direct to copartners respondent by sellers 0 said merchandise and in other instances said brokerage fees or conl• missions are deducted by said buyer clients from the sales price of such merchandise and are remitted by said buyer clients to said copartn~rs respondent. A substantial part of said brokerage fees and cownns· s~ons has been used by said copartners respondent to defray thtl expenses of and pay bills for some of their said buyer clients. • PAR. 5. In all of said purchasing transactions hereinabove described and referred to in connection with which the br?kerage fees or co~d missions have been paid, and are paid and transmitted by the sal d sellers apd mapufacturers to, and have been and are accepted an received by, said copartners respondent, said copartners rcsponde~l1 have been and are agents acting in fact for and in behalf of their sal buyer clients and were and are generally rendering to such bu~er clients all of the buying services required by them and custon1arllY rendered by 11 buying agent to and for his principals. CONCLUSION ' / , Under the facts and circumstances set forth in the foregoing findin~s as to the £acts, the Commission concludes that the respondents, LeWl~ Block, Frank Block, Mac Goldberg, Otto 'Langer, l\Iorris Block, an Dora Block, copartners, doing business under the firm name Style & STYLE & MERIT BUYING S·ERVICE 359 Order ~~e~it lluying Service individually and as copa;tners, are engaged in Usinesfl in commerce as agents, buying representatives, or other inter- ~ediaries in connection with the buying, from rep~esentative competitive sellers, manufacturers, and wholesalers of fur garments for many retail fur outlets or client buyers and have acted in fac;t for, or in behalf ~f, or under the direct or indirect control of such buyer1:s in purchasing t ur garments from said representative competitive sellers, manufacur~rs, and wholesalers, and that in the course of such commerce and Wlnle acting in fact ·as agents, buying representatives or other interlllediaries in connection with the buying of fur garments or other commodities for such purchasers did receive remuneration in the forlll of commissions or otherwise from such representative competitiv~ sellers, manufacturers and wholesalers from whom respondents pur- ~based such fur garments for such retail fur outlets or client buyer~ In '\'violation of the nrovisions of subsection (c) of Section 2 of "An act to supplement existing .laws against unlawful restraints and ~onopolies, and for other purposes," approved October·15, 1914 (the layton Act), as amendedby an act of Congress approved June 19, .1936 (the Robinson-Patman Act) (U.S. C., Title 15, Sec. 13). ORDER TO CEASE AND DESIST . This proceeding having been heard by the Federal Trade Commis- Slon upon the complaint of the Commission and the substitute answer ~respondents, Lewis mock, Frank mock, Mac Goldberg, Otto Langer, fi Orris mock, and Dora mock, copartners, doing busii}ess under the rlll name Style & Merit Buying Service, individually and as copartners, which answer admits· all of the material allegations of the comilaint to be true and waives all other intervening procedure and fiUrt!ler hE>aring as to said facts, nnd the Commission having made its Ln(h.ngs as to the facts and conclusion herein that said respondents, ew1s mock, Frank mock, Mac Goldberg, Otto Langer, Morris Block, and Dora Block, copartners, doing business under the firm name Style ~Merit Buying Service, individually nnd as copartners, have violated e provisions of "An act to supplement existing laws against unlawful ~estraints and monopolies, and for other purposes," approved October }' 1914 (the Clayton Act),·as amended by an act of Congress approved Une 19,1936 (the Robinson-Patman Act) (U.S. C., Title 15, Sec. 13). G It is ordered, That the respondents, Lewis Block, Frank Block, Mac 0.ldberg, Otto Langer, Morris Block, and Dora Block, copartners, ~0lng business under the firm name Style & Merit Buying Service, llld'lVldually. and as copartners, or under any other name, jointly or !>everally, their agents,. e~ployees, and representatives, directly or 360 Felder AL TRADE COMMISSION DECISIONS a5F. rr.a. Order thrcugh any corporate or other device, in or in cormection with the purchasing of furs, fur garments, or other commodities in commerce, as commerce is defined in the aforesaid Clayton Act, as amended, do forthwith cease and desist from:

Receiving or acc~pting directly or indirectly anything of value .ns brokerage, conimission or other compensation, or any allowance or dis· count in lieu thereof from any seller on or in connection with pur· chases made from such seller (a) when such purchases are made for respondents' .own account, ?r (b) when such purchases nre ~ade ~~ ·agent or buymg representative of the purchaser, br (c) when Ill ma ing such purchases respondents are acting in fact for or in behalf or are subject to the direct or indirect control, of the purchaser. It is further ordered, That the respondents shall, within 60 days aft?r service upon them of this order, file with the Commission a report 1n writing, setting forth in detail the manner an<\ form in which they ' have complied with this order.

J. FREIDSION SHOE CO •. 361 Syllabus