Revlon Products Corporation

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IN Tile l)L\TTER OF REVLON PRODUCTS CORPORATION' Docket 5685. Complaint, Aug. 1949-order, Nov. , 1954- Order denying respondent's motion to reopen proceedings for ne\"v evidence that respondent' s exclusive-dealing agreements did not stop a competitor from emerging as ODe of the leaders in the field, since even if this were provcn respondent' s coniracts stil had the requisite likelihood of a(lversely affect iEg tlw power of smaller cosmetic companies to compete; and denying as not in the public interest respondent's alternative motion for reargument becr1l e of a change in memlJership of the Commission. Before 1111'. Earl J. I(olb hearing examiner. lit. ,Vill.lam C. J(em and l,iT. Lin,hew C. Goodhope for the Commission.

B1U1nberg, Singer, Heppen Blumenthal of ew York City, and Davies, Richbe1'g, Tydings, Beebe Landa of "Washington, D. for respondent.

orlXlOX OF THE CO IlIlSSION By GWYX);E, Commissioner:

This opinion relates to respondent s motion to reopen this proceed iug for the reception of further evidence or in the alternative to grant reargnment before the Commission. It was filed after the C0ll11is- 810n s decision denying respondent's appeal from the hearing exalnillBl"S decision holding that respondent had violated section 3 of the Clayton Act, but prior to receipt of the decision by respondent. By a supplementary memorandum filed after its receipt of the Commissioll S decision, respondent urges that its motion be granted to admit newly discovered and additional evidence relating to the effect of its exclusive dealing agreements on competition. Counsel supporting the complaint opposes this motion in its entirety. Responllent's motion for reargument points out, among other considerations, that there has been a change in the membership of the Commission since the oral argument in this matter. It notes that Commissioners 110wrey and Gwynne have succeeded Commissioners Carson and Spingarn and that Commissioner Carretta was being succcedell by Commissioner Secrest on September 27, 1854. In fact, this matter was decided unanimously on September 23 1954, by Commissioners :1\ason, )Ieac1 and Carretta, each of whom initial decisionheard oral argument. Hespondents appeal hom the 1 Order to cease ilnd (1esi, .oIIPI" , p. 2GO. REVLO)/ PRODUCTS CORP. 467 466 Opinion and an career motion by respondent for reargument on substantia.lly the same grounds were both denied in that decision. R.espondentnow urges that the matter be reopened to allow it to present cvide,nce as to the economic effect of respondent's exclusive dealing contracts. It points out that counsel support6ng the complaint urged that evidence as to the effect of the exclusive dealing agreements should be limited to a showing of the substantiality of the volume of business done through the foreclosed outlets of distribution. However, this view did not prev"i!. Respondent was permitted to present fully evidence "s to the lack of effect of its exclusive dealing agreements on competition. The record in this proceeding contains 224 pages of transcript of hearings. Of this, over 1 000 pages contain defensive matter presented by respondent. The Commission in reaching its decision considered the entire record and concluded that the greater weight of t118 evidence established that respondent's agrec4 ments had a substantial probability of lessening competition. 1VJ1cre, as here, the parties have been given a full opportunity to present defensive evidence, it is not in the public interest to retry the same issues because of a change in membership of the Commission or because additional evidence, available at the time of trial, may be relevant. At some stage there must come an end to litigation jf Our regulatory processes are to be effective. Respondent' s contention that vidence relating to conditions in 1949 and before is obsolete, is re jected as the complaint on which the proceeding is based alleged violation of the Clayton Act prior to the date of its issuance on August , 1949.

The request for reopening for presentation of newly discovered evidence presents a different question. The newly discovered evidence relates to the emergence of Hazel Bishop, Inc., as an important competitor, especially in the lipstick field, since tlle issuance of the complaint in this proceeding. Respondent claims that this company, with no sales in 194IJ, has risen to where its sales by the end of this year wii total $9 800 000 annnally. It contends that this company s ability to grow to this exient establishes that respondent's exclusive dealing agreements ,,-ith beauty supply jobbers, in fact, did not and do nol foreclose its competitors from the market.

As an order to cease and desist is of a continuing nature, an absolute prohibition against use of exclusive dealing agreements entitles respondent to move to modify it if in fact conditions have so changed that t11e exclusive dea.ling agreements no longer have the requisite likelihood of adverse effect on competition. Thus, the question before the Commission is: Accepting the findings of' fact and decision that Opinion ;:1 F. T. C. respondent violated section 3 of the Clayton Act prior to August 1. 1949, as alleged, would prove that Hazel Bishop, lne., has been able to emerge as a leading competitor in the face of respondent' s exclusive dealing agreements establish that these agreements do not have the requisite likelihood of adversely aiIeeting competition at the present time? If not, there is no necessity for reopening this proceeding. In support of its motion, respondent has filed an affdavit of one of its attorneys as to the facts it could prove if this proceeding were reopened. For the purposes of this decision, the Commission has considered the facts stated in the affdavit as if they were proven. states that Hazel Bishop, Ine., since 1949 has risen to be a leading competitor in the lipstiek field, that it is making heavy inroads in the beauty parlor field in the sale of lipsticks, that it entered the nail enamel field in 1953, and that it is making similar illoads in the beauty parlor fields in the sale of nail enamel. It further shows that Hazel Bishop, Inc., has spent millions of dollars annually in the advertising of its products and has a complete jobbing setup from coast to coast.

From these facts, it is clear that respondent's exclusive dealing agreements did not have the power to stop Hazel Bishop, Inc., from emerging as one of the leaders in the lipstick field and from making inroads into the nail enamel field. However, this is far diffcrcnt from finding that these exclusive dealing agreement,S with respondenes beauty)' supply jobbers do not have a substantial restrictive effect on sma.ller competitors who do not have suffcient resources to spend millions for advertising or to establish a complete jobber setup for their products from coast to coast. The Clayton Act is concerned with helping small business. The fact that a company with a large advertising budget and an equally strong jobber organization is not foreclosed from the market, does not remove the fact that smaller companies are denied access to a substantial part of the beauty supply jobber market by respondent' s agreements. As to the smaller cosmetic compa.nies, respondent's exclusive dealing contracts still have the requisite likelihood of adversely and substantially affecting their power to compete.

For these reasons, the Commission is of the opinion that respolldenfs newly discovered evidence, if established, would not justify a retrial or a modification of the order to cease and desist. The 11060n, therefore is de-nied.

REVLON PRODUCTS CORP. 469 466 Order Denying, etc. ORDER DENYING SPONDEI\"' MOTION TO REOPEN PROCEEDING OR FOR REARGUMENT This matter having come before the Commission upon respondent' alternative motion for reopening of proceedings for reception of further evidence or for reargument before the Commission on respondent' s appeal from the ini6al decision, the answer of counsel supporting the complaint opposing said motion, and respondent's memorandum and affdavit in support of said motion; and The Commission having fully considered the matter and, for the reasons stated in the written opinion of the Commission issued simulw taneously herewit.h, being of t.he opinion that said motion should be denied;

It is m'dered That said motion is hereby denied. 470 FEDERAL TRADE COMMISSION DECISIOXS Decision 51 F. T. C.