Capitol Paint & Varnish Works, Inc.

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IN THE Marrer 01"

. CAPITOL PAINT & VARNISH WORKS, INC.

'CO},r .

PLAINT, FINDINGS, AND ORDER IN REGARD TO TIIE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEP'.r. 26, 1~14 Docket -9536. Complaint, July 9, 1941-Decision, .Aug. 31, 1942 Where a corporation, engaged in the manufacture anu interstate sale and distribu- , tion of a general line of paints and varnishes under the trade name "Capco ~louse raint," in competition with many who do not misrepresent their { Products- · a) llepresented and Implied, through use of words "Pure Lead-Pure Zinc- Pure Oil" in advertisements and labels referring to the ingredients· ln said Products, and which it featured as to place, type, and lettering as compared · With matter purportedly giving the actual composition, that such paints were composed wholly of lead, zinc, and oil, and did not contain additional ingre- . dients other than a normal percentage of drier; notwithstanding the fact that its said products contained excessive amounts of drier and ingredients other ' 'than those mentioned, and, in the case of some, contained no lend or zinc at aU; and (b) Set ·forth on labels statements purportedly showing the actual percentage · ·Of tile various ingredients used in paint concerned, which were not always accurate in that the percentage of lead, zinc, and oil present was much less wi tilan stated, and in some instances less than 50 percent of quantity stated; th effect of misleading and deceiving a substantial portion of the purchasing . llUblic into the mistaken belief that said representations were true, thereby · · cuu>Jing It to purchase paints in question i wbereby trade was unfairly diverted j1 1 f,rom competitors to It: . e d,. That such acts and practices, under the circumstances set forth, were all . to the prejudice of the public and competitors, and constituted unfair methods · · . Of competition in commerce and unfair and deceptive acts and ·practices · therein.

ill,., S. F~Rose for the Commission.

f J;fr., Prank E. Gettlematn and Mr. A. Schwm·zbaeh, of Chicago, Ill., 0 ~ 1:respondent. ' , .. Complaint b P~rsuant to the provisions of the Federal Trade Commission Act and "lllue of the authority vested in it by said act, the Federal TradeJ \Vlntnission, having reason to believe that' Capitol Paint & Varnish ll or~s, Inc., hereinafter referred to as respondent, has violated the (: ro~lsions of said act, nnd it appearing to" the Commission that a proi:eding by it in respect thereof would b'e in the public interest, hereby s~es its complaint, stating its charges in that respect as follows: ._ .. AJtAGRAPll 1. ~~spondent, Capitol Paint & Varn,ish Works, Inc., is . :?or~oration, organized, existing, and doing business_ under and by 400 ¥EDERAL TRADE COMMISSION DE'CISIONS Complaint 35F.T.C.

virtue of the laws of the State of Illinois, with its offices and princip~{ place of business located ·at 1346 West Concord Street, Chicago, I t PAR. 2. Said respondent is now and for more than 4 years la~t pasf has been engaged in the manufacture and sale of a general hne 0 f paints and varnishes, which products are manufactured at its place 0 business in theeity of Chicago, State of Illinois. . d The respondent causes its said products, when sold, to be transporte from its said place of business in the State of Illinois to the purcha~er~ thereof located at various points in the several States of the Untte States other than the State of Illinois and in the District of Columbi.~ Respondent maintains a course of trade in said products in sat commerce. t PAR. 3. In the course and conduct of its said business, the responden is in competition with individuals, partnerships, and other corp~r~· tions engaged in the sale and distribution of paint and paint materia 5 in commerce between and among the various States of the United States and in the District of Columbia. The products manufactured by the respondent are sold and distributed in said commerce under the trade name "Capco House Paint." · PAn. 4. In advertising matter used in soliciting the sale of said pai?~ in said commerce and on the labels attached to the containers in which said paints are delivered to retailers for resale and to ultimate use~s, Q'l" Illthe respondent uses the words "Pure Lead-Pure Zinc-Pure 1 'd designating, describing and referring to the ingredients found in sa~ · paints. The words "Pure Lead-Pure Zinc-Pure Oil" are placed lll such advertisements and on such labels in a conspicuous place in t~pe and lettering larger than and distinctive from the type and letterl1lg which purport to give the actual composition of such paints. . ,, Through the use of the words "Pure Lead-Pure Zinc-Pure Otl, the respondent represents and implies, and the purchasers and users of such paints are thereby led to believe, that such paints are ·co_rn· posed wholly of lead, zinc, and oil, and do not contain additional 1~j gredients other than the normal percentage of drier found in a paints of the type sold by respondent. d In truth and in fact, none of respondents' said paints are cornpose 11wholly of lead, zinc, oil, and the normal percentage of drier, for a of said paints contain an excessive amount of drier and ingredients other than lead, zinc, and oil. Some of said paints do not contain any lead or zinc at all. . · · The statements pla~ed on ~he labels by respondent. purportedly showing the actual percentage of the various ingredients used in thf paint imd are not always accurate in showing the actual composition. 0 t the paint in that the percentage of lead, zinc, or oil present in said P~~n · is much less than the percentage stated on the label. Iri ·some tn· CAPITOL PAINT & VARNISH WORKS, INC. 401 Findings ~~ances, said paints actually contain less than 50 percent of the quantty of lead, zinc, or oil stated on the label. tan. 5. There is a preference on the part of a substantial portion 0 , the purchasing public for paints composed wholly of lead, zinc, and 011 and the usual percentage of drier.

~AR, 6. There are among respondent's competitors many who sell Paint and paint products and who do not misrepresent their products or matters pertaining thereto.

PAR. 7. The use by the respondent of the aforesaid false, misleading, llnd deceptive representations and implications has the tendency and ~~Pacity to, and does, mislead and deceive a substantial portion of l' e PUrchasing public into the erroneous and mistaken belief that said nepresentations and implications are true and causes a substantial t~tn.ber Of members of the public to purc~ase respondent's said paints, , it ereby unfairly diverting trade in said commerce to respondent from 8 competitors to· their injury and to the injury of the public. an'PAn. 8. The aforesaid acts and practices of respondent, as herein p E>.ged, are all to the prejudice of the public and of respondent's comehtors and constitute unfair methods of competition in commerce ~nd Unfair and deceptive acts and practices in commerce within thel lltent and meaning of the Federal Trade Commission Act. Report, FINDINGS As TO THE F Aors, AND ORDER th Pu~suant .to the provisi?n~ of the Federal Trade Commission Act, i" e Federal Trade Conumsswn, on the 9th day of July, A. D. 1941, rssued, and thereafter served its complaint in this proceeding upon c~Spo~dent, Capitol Paint & Varnish 'Vorks, Inc., a corporation, argmg it with the use of unfair methods of competition in com- 1 :erce, .and unfair and deceptive acts and practices in commerce, in c lolation of the provisions of said act. After the issuance of said 1°tn.Plaint and the filrng of respondent's answer, the Commission, t Y o~·der entered herein, granted respondent's motion for permission t? \\'lthdraw said answer and to substitute therefor an answer admit- ~n~ ~ll the material allegati?ns of fact set forth in said complaint a.t?-d st~ll"tng all procedure and further hearing as to said facts, which sub- ~;tute answer was duly filed in the office of the Commission. There-1 C ter, this proceeding regularly came on for final hearing before the rn~tn.!llission, on said complaint and substitute an~wer, and ,the Comv· Sston havmg duly considered the matter and being now fully adt~Sed in the premises, finds that this proceeding is in the interest of ..:~ e Public and makes this its findings as to the facts and its conclusion 4l' . . a ~n therefrom. · · 402 FEDERAL TRADE CO:MMISSION · DE.GISIONS Findings 35F. T.C.

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Capital Paint & Varnish Works, Inc., is a corporation, organized, existing, and doing business under an~ b~ virtue of the laws of the State of Illinois, with its offices and princip~ place of business located at 1346 "\Vest Concord Street, Chicago, Il ~ PAn. 2. Respondent is now, and for more than 4 years last pasf has been, engaged in the manufacture and sale of a general line 0 paints and varnishes, which products are manufactured at its place of business in the city of Chicago, State of Illinois. The respondent causes its said products, when sold, to be trans· ported from its said place of business in the State of Illinois to th~ purchasers thereof located at various points in the several States ,0 t the United States other than the State of Illinois and in the Distrl~­ of Columbia. 1.!-respondent maintains a course of trade in said P~ 0 d nets in commerce among and between the various States of the Unite States and in the District of Columbia. · PAR. 3. In the course and conduct of its said business, the respondent is in competition with individuals, partnerships, and other corp~r~· tions engaged in the sale and distribution of paint and paint mater.1a ~ in commerce between and among the various States of the United States and in the District of Columbia. The products manufacture by the respondent are sold and distributed in said commerce under the trade name of "Capco House Paint." . · 'd PAn. 4. In advertising matter used in soliciting the sale of .sal. paints in said commerce and on the labels attached to the, contained".:i. in which said paints are delivered 'to retailers for resale and to ultitnate users, the respondent uses the words "Pure Lead-Pure Zinc-Pur~ Oil" in designating, describing, and referring to the ingredients faun . in said paints. The words "Pure Lead-Pure Zinc-Pure Oil" are placed in such advertisements and on such labels in .a conspicuous place in type and lettering larger than and distinctive from the typ~ and lettering which purport to give the actual composition of sue · paints. . . ,,. -Through the use of the words "Pure Lead-Pure Zinc-Pure Qd,. the respondent represents and implies, and the purchasers and users of such paints are thereby led to believe,· that such :paints __ are ·coJlli posed wholly of lead, zinc, and oil, and do not contain addition~1 ingredients other than the normal percentage of drier found in a paints of the type sold by respondent. . d , In truth and in fact, none of respondent's said paints is compose11 wholly of lead, zinc, oil, and the normal percentage of drier, for a . of said paints contain an excessive amount of drier and ingredients CAPITOL PAINT & VARNISH WORKS, INC. 403. 399 ' Order other than lead, zinc, and oil. Some of said paints do not contain uny lead or zinc at all.

The statements placed .on the labels by respondent purportedly sh?wing the actual percent~ge of the various ingredients used in the Palnt ·are not always accurate in showing the actual composition of. the paint in that the percentage of lead, zinc, or oil present in sald paint is much less than the percentage stated on the label. In some instances, said paints actually contain less than 50 percent of the quantity of lead, zinc, or oil stated on the label. - PAn. 5. There is a preference on the part of a substantial portion of the purchasing public for paints composed wholly of lead, zinc, and oil and the usual percentage of drier.

~AR, 6. There are among respondent's competitors many who sell Paint and paint products and who do not misrepresent their products or matters pertaining thereto. .

. PAn. 7. The use by the respondent of the aforesaid false, mislead- Ing, and deceptive representations and implications has the tendency and capacity to, and does, mislead and deceive a substantial portion of. the purchasing public into the erroneous and mistaken belief that ~~Jd representations and implications are true, and causes a substanla.l number of members of the public to purchase respondent's said Paints, thereby unfairly diverting trade in said commerce to respondent from its competitors to their injury and to the injury of the J)Ublic. · CONCLUSION 11The aforesaid acts and practices of respondent, as herein found, are a to the prejudice of the public and of respondent's competitors and :onstitute unfair methods of competition in commerce and unfair t~d deceptive acts and practices in commerco within the meaning of e Federal Trade Commission Act.

ORDER TO CEASE AND DESIST I . Thi& proceeding having been heard by the Federal Trade Commisli. 81011 Upon the complaint of the Commission and the answer of re-i ~~10ndent, in which answer respondent admits all the material allega- I .ions of fact set forth in said complaint and states that it waives all ~tervening procedure and further hearing as to said facts, and the thonunission having made its findings as to the facts and its conclusion Cat said respondent has violated the provisions of the Feueral Trade 01llmission Act.

l 1t is ordered, That respondent, Capitol Paint & Varnish 'Works, nc., a corporation, its officers, representatives, agents, and employees, . 404 FEDERAL TRADE COMMISSION DECISIONS Order 35F. T.C.

directly or through any corporate or other device, in connection with the offering for sale, sale, and distribution of its paints in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Using the words "Pure Lead-Pure Zinc-Pure Oil," or ot~er words of like import, to designate, describe, or refer to any pau:t not exclusively composed of lead, zinc, and oil, except for the ad~l· tion of the usual and customary quantities o£ tinting material, thj.ll· ner, and drier.

2. Representing, directly or by implication, that any paint con· tains any material or ingredient which it does not actually contain. 3. Representing, directly or by implication, that any paint con· tains materials or ingredients in quantities or proportions different from the actual quantities or proportions o£ such materials or ingre· dients in such paint.

It is further ordered, That the respondent shall, within 60 da.Y: after service upon it of this order file with the Commission a repo~ in writing setting forth in detail the manner and form in which 1t has complied with this order.

' I '' MERIT HEALTH APPLIANCE CO. 405 Syllabus