Yardley of London, Inc.

Text (OCR of the scan at left; may contain errors)

IN THJ.i IATTER OF YARDLEY OF LONDOK, INC.

,TSENT ORDER, ETC. , IN REG AIm TO TH:F: ALLEGED VIQLA'!'lOK OF SEC. 2 (e) OF THE CLA ON ACT Docket 6442. Complai. , Not'. 196, Decision, Apr. , 1956 Consent order requiring a manufacturer of soaps, cosmetics, perfumes, etc.. "Vital principal place of business in TJnion City. K J., to cease discriminating in price in violation of Sec. 2 (e) of the Clayton Act through furnishing demonstrator services 01' allowances to some customers, when not according such services on proportionally equal terms to all their competitors. Before llfr. Everett F. EI ayc)'aft hearing exammcl'. Mr. Donald K. King for the Commission. Appell, Austin Gay, of New York City, for respondent. CO)'IPI., AI:NT The Federal Trade Commission having reason to be.lieve that Yardley of London, Inc., hereinafter designated as re-sponclent, has violated and is now violating provisions of Subsec6011 (8) of Section 2 of the Clayton Act as amended by the Robinson-Patman Act, approved June 19, 1936 (U.S.C. 15 , Section 13), hereby issues its complaint stating its charges with respect thereto as follows: PARAGRAPH 1. Respondent Yardley of London Inc. , is a corporation organized and doing business under and by virtilc of t.he laws of the State of New Jersey with its principal offce and place of business located at 620 Fifth Avenue, N ely York, New Yark. It also maintains plants and warehouses at Union City, Kew Jersey, Chicago, Illinois, Dallas, Texas, and San Francisco, California.

PAR. 2. Respondent is now and for a nmi1ber of years has been engaged in the business of manufacturing and sening soaps, cosmetics, perfumes, beauty aids and toilet preparations. Respondent divides its products into four different categories or lines as follows: The "A ' line which is its general line of merchandise; the B" line, consisting of skin treatment creams and allied products; the "Flair" line, consisting of pcrfurne, bath oil and dusting powder; and the "La vanes que" line, a perfume and toilet water preparation marketed under the brand name 01 "Lavanesque. These various lines are sold by respondent to some 12 000 retail cust.omers with places of busjncss located throughout the several YARDLEY OF LONDOK, INC. 1087 1086 Complaint States of the United States and the District of Columbia for resale to consumers within the United States.

PAR. 3. In the course and conduct of said business respondent has engaged in commerce, as "commerce" is defined in the Clayton Act as amended by the Robinson-Patman Act, having shipped its products or can sed them to be transported from its said places of business to said customers with places of business located in the several States of the United States and the District of Columbia. PAR. 4. In the course of said business in commerce respondent has furnished, contracted to furnish, or has contributed to the furnishing of certain services and facilities to some of its customers in connection with the processing, handling: sale or offering for sale of respondent's products by them; and respondent has not made such se.rvices and facilities (or in the alternative, equivalent payments or allowances) available on proportionally equal terms t.o all other of its customers competing in the sale and distribution of said products.

PAR. 5. In dealing with its customers respondent furnished or contracted to furnish demonstrator services or allowances to some competing customers in amounts (based on respondent' s costs) not equal to the saine percentage of net purchase of respondent's products by such customers (and not proportionally equal by any other test) ; and respondent did not offer or make available such services (or in the alternative equal promotional allowances) in amounts equal to the largest of such percentages to al1 competing customers (and not proportionally equal by any other test). PAR 6. Specifically during the year 1954 respondent paid to each of its customers selling the .A line a promotionnJ allowance in the amount of 6% of such custOlner s anJ1uaJ net purchases in excess of $860 (all A line accounts ate furnished sales aids having a value equal to 6% of annual net purchases up to $860) with the exception of those customers selling both the A and B line. Respondent paid allmvances for or furnished to its customers selling both the A and B line a, sales person (known in the cosmetic industry as fl demonstrator) at II cost to respondent of $50 for salary a week pins it 5% commission on B line retail sales and a 2% commission on A line reta,il sales. As a condition to the receipt of demonstrator services such cust.omers ",were, each required to waive the 6% promotional allowance hereinbefore described. Allocation of the demonstrator s salary on the basis of ratio of percentage of r: line salessuch customer s retail " A': line sales to its total "A:' & " together with the otherpromotiona.l a.allowances applicable to the 1'0- A:' line merchandise results in a number of such customers ,,,, : ; : _ _ :_ ; . : ._ . :::::::!:: , , . , _ ?:_. Decision 52 F. 1'. C. ceiving larger contributions for the promotion of the line than competing customers, who sold only the "A" line: received. For example, in the 'Washington, D. C., trading area the onl)' account handling both the A and B lines received a combinatioll of promotional aue: demonstrator services and allowances at a cost to respondent equaling 16. 1% of that account's A line pUTcluEies while respondent's other accounts which carried only the A lille received from respondent promotional allowances equaling 6% of net purchases as is shown in the following computation: A" and " ;J,,(uunl account :;C :: ::r::::d - 00 $11 ::s ::::::i - i 07_ merc!JRndise - u_. 51, ti iI , GD 6 percent allowance on purchases over $S60_ j:3;: ise-- - - - - - i--u------ 1, n ::::: :::::::: ::--- ; 1- - -. ;;tOnCipu;Cfm' if:f i: ::::: i _ Similarly, in the Chicago, Illinois, trade area, the ODe A and B line account received 12.9% as is shown in the following computation: A" and " A" :: r"H1:::

account i !';et purchases on " A" line mercbandisc-- $13, 3iG. $2 7"1-1. S') -- H-- I -- ;:i: :f lin' ;ec' t!' . -.. 5L ::C! tig82 percent corumisslm on retail sales of " " line merchanilse_ nu_-- 2, 87 1-- A!1ocatc(1 r)OrtlOD of demonstrator S salmy_ ___--------u_---- 2B9. fi8 Totfll anowance____-- 724. 15 I 165. Percent of Bllowances t.o net purcba$CS_ 12. 9 I oJ 0 PAR. 7. The acts and practices of the respondent as above alleged violates Subsection (e) of Section 2 of the Clayton Act as amended by the Robinson-Patman Act CU. S. C. , Title 15, Section 13). INITIAL DECISION BY EVERETT F. HAYCHAFT, HEARI G EXAl'IINEIT;: The Federal Trade Commission issued its complaint flgainst the above-named respondent on November S , 1955, charging it with a violation of subsection (e) of Section 2 of the Clayton Act cI amended by the Hobinson-Patman Act.

After the issuance of sa.id complaint o.n(l 1h(- filing of its wt'r thereto, the respondent entered into an ;lgTP( mPllt with 1.i):1n fCupporting the complaint, dated Febrni"r:v (L H);-,C. Pl'()yj(li . lor YARDLEY OF LONDON, INC. 1089 1086 Decision the. entry of a consent order disposing of all the issues in this proceeding, which agreement was duly approved by the Director ana the Assistant Director of the Bureau of Litigation. It was expressly provided in said agreement that the signing thereof is for settlement purposes only and does not constitute an admission by the respondent that it has violated the law as alleged in the complaint.

By the terms of said agrecmcnt, the respondent admitted all the jurisdictional facts alleged in the complaint and agreed that the record herein may be taken as if findings of jurisdictional facts had been duly made in accordance with sllch allegations. By said agreement respondent's answer to the complaint shall be ,considered as having been withdrawn and the record on which the initial decision and the decision of the Commission shall be based shall consist solely of the complaint and thc said agreement. Respondent in the agreement expressly waives any further procedural steps before the hearing examiner and the Commission; the, making of findings of fact or conclusions of law; and all of the rights it may have to challenge or contest the validity of the order to cease and desist entered in accordance with the said agreeme.nt. It was further agreed that the agreement shall not become a part of the offcial record unless and until it becomes a pa.rt of the decjsion of the Commission.

The agreement also provided that t.he order to c.ease and desist s\:ed jn accordance with said agreement shall have the same force and dfeet as if entered after a full hearing; that it may be altered mudified or set aside in the manner providecl for other orders; and that. the complaint and Rule 1 (VII) of the Amended Trade Practice Rules for the Cosmctic and Toilet Preparations Industry, prcmnlgated September 10 , 1954, (Title 16 C. R 221. (g)) may be used in construing the terms of the order. This proceeding having nO\y come on for final consideration by the, hearing examiner on the complaint and the aforesaid agreement for consent order, and it appearing that said agreement provides for an appropriate disposition of this proceeding, the aforesaid agreement is hereby accepted and is ordered fied upon becoming part of t.he Commission s decision in accordance with Scc60ns 3. flnd 3. 5 of the Rules of Practice, and in consonance with the terms or said agreement, the hearing e,examiner makes the follo\ving jurisdictional findings and order:

I, Re,spondent Yardley of London, Inc., is a corporation existing and doing business under and by virtue of the laws of the State of New Jersey, with its offce and principal place of business located at 600 Palisades Avenue, Union City, New Jersey. 1090 FEDERAL TRADE COlV:LvnSSIO DECISIONS Decision :32 F. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding, which is in the public interest, and of the respondent hereinabove named; the complaint herein states a cause of action against said respondent, under the provisions of the Clayton Act, as amended by the Robinson-Patman Act, approved June 19, 1936 (D. C. Title 15, Section 13). ORDER It is o1'dered That respondent, Yarclley of London, Ine.. a corporation, its offcers, employees, agents and repl'cscntativoo, directly or through any corporate or other device, in connection with the sale or offering for sale, of cosmetics, beauty aids, and toilet preparations in commerce, as "commerce" is defined in the Clayton Act as amended, do forthwith cease and desist from: Furnishing or contributing to the furnishing of demonstrator services to any purchaser of its products when such services are not accorded on proportionally equal terms to all other purchasers who resell such products in competition \\-it.h purchasers who receive such demonstrator services.

DECISION OF THE CO:\DIISSIOX AND ORDER TO FILE REPORT OF CO::lPLIANCr Pursuant to Section 3.21 of the Commission s Rules of Practice the initial decision of the hearing Lminer, as corrected by his order med March 26 , 1956 , shall, on the 19th day of April 1956 become the decision of the Commission; and, accordingly: It is ordered That the respondent herein shall, within sixty (60) days after service upon it of this order, file with the Commission a report in writing setting forth in detail the manner and form in which it has complied with the order to cease and desist. ' &,&, HAYR CHEMICAL CO. , INC., ET AL. 1091 Decision I X THE ~fatter OF HA Ylc CHF;MICAL CO., INC., ET AL.

ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE cO:.nnSSION ACT Docket 6157. Complaint, Jan. 1954-Dec sion, Apr. 24, 1956 Order requiring sellers in Kewark, N. J., to cease representing falsely in advertisements in newspapers and magazines that the blocking of hair follcles with foreign mattei' was a cause of diminished hair growth, excessive hair loss, baldness, and dandruff; and that removal of the foreign matter by use of their "Hayr Application for the Scalp and Hait'" would correct such conditions and cause hail' to grow on bald or partially bald heads. Mr. Jesse D. Ka.h, iJiT. William 111. King and Mr. John J. Me- N ally for the Commission.

Frank E. ATth"T Gettlmnan of Chicago, Ill., for Hayr Chemical Co., Inc., Phillip Kalcch athan Kalech and Myrtle L. Larsen. Harkavy Lied of ewark for Arthur IV. Herrigel assignee of assets.

INITIAL DECISION BY EARL J. KOLB HEAHLVG Ex.unxER This proceeding is before the undersjgnecl hearing examiner for final consideration on the complaint, ans\ver thereto, testimony and other evidence proposed findings as to the facts and conclusions presented by counsel including additions to proposed findings and conclusions submitted by counsel in support of the complaint, and the hearing examiner having considered the matter a,nd being now fully advised in the premises makes the following findings as to the facts and conclusions drawn therefrom and order: 1. Respondent Hayr Chemical Co. , Inc., is a corporation organized under the la\vs of the State of Delaware, having its offce and principal place of business located at 304-306 Mt. Pleasant Avenue Newark, New Jersey. Respondents Phillip Kaleeh, :Nathan Kalech and :Myrtle L. Larsen were, at the time of the filing of the complaint herein, officers of said respondent corporation. H.cspondent Dr. Joseph Caspe immediately prior to September 1953 was also " offcCl' of said respondent corporation, but at tl1a.t time severen. his connection with said respondent corporation and did not file an answer or appear in this proceeding. Respondent Louis F. I--Ierman is an individual, trading as Louis F. Herman Advertising Agency. Respondent Eugene Kesselman is an individual who placed advertising material submitted by the offcers of the respondent . .. . _ . ..

1092 FEDERAL TRADE COM:nSSION DECISTO:NS Decision 52 F.

corporation through respondent Louis F. Herman Advertising Agency, which advertising was placed in three newspapers-the New York Sun News, New York World Telegram and the Chicago Snn Times. During the trial of this proceeding respondent Phillip Kalech departed this life and his death was duly suggested on the record in this proceeding.

2. The corporate respondent and its offcers lun-e been engaged in the sale and distribution, in interstate commerce, of a drug and cosmetic preparation for the hair and scalp designated "Hayr Application for the Scalp and Hair " which will hereinafter be referred to as "I-Iayr. " The formula and directions for use of said product "Hayr" are as tallows:

Formula;

50% Isopropyl Alcohol Extract of r- on-Alkoloidal Botanical.;; Worm Wood Herb, Chick Weed TIel') IV a ter -- -- 48.400% I soprop,y 1 Alcohol ----- 48.800% Thyroid Powder -- 035% esorcin -- 650% Oleic A.cid - --- 750% Neutronyx 333 -------- 350% Katurfil Oil of Cade - 050% Lllctic Acid V. P. 85% -- 820% Perfuuoe - - - 145% 100.000% Directions for use:

Apply daily, place fin er tips on head, iloYing SCfllp in cii-cular mution for one minute. Shampoo weekly.

3. The ingredients of respondents: preparation with the exception or thyroid powder: have been generally used by dermatologists in various combinations for the treatment of conditions of the skin and scalp. Thyroid powder is usually administered by month to control the secretions of the thyroid gland. It is of no value .when administered externally because of the inability of penetration and further because the glands in the scalp have nothing to do with the thyroid, which is a gland of internal secretion, and the glands in the scalp ate sebaceous glands.

4. In the course and conduct of the business of corporate respondent, respondents have disseminated and can sed the dissemination of, various advertisements concerning said drug anu cosmetic preparation by the "Gnited States mails and by varjous means in commerce, as "commerce" is defined in the Federal Trade Commission Act including advertisements inserted in various newspapers and magazines fat the purpose of inducing and which were HAYR CHEMICAL CO. INC. ET AL. 1093 1091 Decision likely to induce, directly or indirectly, thc purchase of said drug and cosmetic preparation; and respondents have disseminated and caused the dissemination of advertisements concerning said drug and cosmetic preparation for the purpose of inducing and which were likely to induce, directly or indirectly, thc purchase of said isdrug and cosmetic preparation in commerce, as "commerce" defined in the Federal Trade Commission Act. 5. In the advertising disseminated by the respondent.s it was represented that dirt, grime, oil sec.retions and bacteria become imbedded in the scalp, forming a tough gummy film which plugs the hair follicle preventing normal functioning of the glands and causing hair loss. dandruff itching scalp, ilncl eventual baldness; that the use aT respondents' preparation "I-IfLyr ' would remove, thc accumulations of such material from the scnJp and hajj' follicles increase lutir growth, prevent. excessive hair loss, eliminate (blldruff and cause hair to gro'" on bald or partially bf1Jd heads. 6. In their defense to this proceeding the respondents introduced evidence designed to support their contention that baldness is caused by the plugging of the ha.ir follicle and that in some Inysterious way their preparation was effective in removing sllch plugs and permitting the hair to grow.

cl by the respondents vas a 7. The first expert witness calle, specialist in dermatology in Chicago. lie attemptcel to give lip service to respondents' theory of plugging. but on 1:'" tn the, extent where such plugging is eansec1 by a diseased condition Qf the scalp, where either the hair follicle or the sebaceous glands have become infected and inflamed, causing an improper fllHctiOldng of the sebaceous glands, resulting in a condition known as folliculitis or inflammation of the hair follicle, In this connection this witness contended that inflammation of the sebaceous glands Gwses a thickening and congeaJing of the sebaceous oil that is 'within the hair follicle itself, which congealed material continues to thicken and to some extent to obstruct the follicle. While this witness testified that the cause of premat.ure baldness was net known and was affected by heredity, ago and metabolism, he neverthele.ss att.empted t.o give externally caused "infection ' a major role as a causative factor of baldness. ,Yhile supporting the plugging theory, this witness also testified tlmt dust and grime on the se-alp would not UDpl11ggiDg of the foilicle penetrate the hail' follicle and that In the absence oJ infection would not in itself cause hair to grow. it would appear from the testimony of this \Vitness that the scurf and scum which serves as a basis of respondents' theory of baldness, could be removed by ordinary hygienc. 1094 FBDERAL TRADE COMMISSION DECISIO Decision 52 F.

8. The sec.ond expert witness for the respondents, a dermatologist located in Newark, New J ersey, attempted to place a larger cause of hair loss upon scurf and scum present on the scalp. He claimed to have used this preparation with satisfactory results on a number of patients whose case histories he failed and refused to produce although he had promised to produce these records. This witness who was partially bald, claimed to have used the preparation on his own head ''with satisfactory results, although these results were not readily discernible to the hearing examiner. On the basis of his limited experience, covering a period of five or six months, this witness was very emphatic on the eiIediveness of the product Hayr" and asserted that respondents' preparation, because of the mixture of the ingredients, has an unusual and ullexplained buffering action which causes the various ingredients to become more effective than when ordinarily used by other competent physicians bnt that he did not know how this buffering action took place but based his testimony entirely upon information given to him by the chemist employed by the respondents. In attempting to explain the penetration of the thyroid powder the witness used what might be termed a certain amount of medical jargon in stating that re spondents' preparation is bnffcred to a clinical pH or a pH of an isoeledric pI-I of the skin " neutralizing the "dielectric set-up by the skin." The theories advanced by this witness were completely disproved by a rebuttal witness, J. I-I. Draizc, a well-qualified pharmacologist. After observance of this witness on the witness stanel and noting his testimony, the hearing examiner is of the opinion that his testimony is not worthy of consideration and has no value as probative evidence in this proceeding. 9. The third expert witness called by the respondents was their medical advisor, formerly a professor of pathology at Temple University, 'who had a fine he td of skin with a narrow border of fringe connecting the ears. He stated that he was no longer concerned with appearance of his head and for that reason did not attempt to use the product "Hayr" to accomplish any hirsute adornment for his scalp. "\Vhile not R dermatologist and although his experience with dermatology of the scalp was limited to his connection with respondents, he attempted to testify generally as to the theory of plugging of the l1air follicles, but did not go into the so-called buffering action of respondents' preparation. He attempted to draw certain conclusions from enlarged photographs of slides. These conclusions were completely dissipated by a witness called in rebuttal. Dr. Hans Elias, a professor of anatomy of the Chicago Jfedical School whose chief field was microscopic anatomy and histology. HAYR CHEMICAL CO. , INC, ! ET AL. 1095 1091 Decision 10. In the ease in chief in support of the complaint, three wellqualified physicians were called who were specialists in dermatology, and they were all in agreement that the plugging of the' hail' follicle is not one of the causes of baldness; that dust, grime and dandruff seales would not penetmte the hair follicle suffciently cause any obstruction; that the hair had the ability to force its way through obstructions; and that the use of respondents' preparation, while effective in the temporary rcmoval of dandruff sca.1es and the clearing up of certain scalp conditions because of its antiseptic properties, would not be effective in preventing hair loss or in causing hair to grow on bald or partially bald he lds. 11. The most frequent type of baldness or partial baldness, accounting for from gO to 95 percent of all cases and constituting the type at issue in this proceeding, is alopecia prematura, sometimes referred to as "male pattern baldness." The exact cause OT this condition is not definitely IG10wn to the medical profession. It is believed, however, that this condition results from the interaction of thre,e causative factors, namely, age, heredity and endocrine imbalance. According to the overwhelming weight of the reliable probative a.ncl substantial evidence of this record, it is found as a fact that there is no cure, effective treatmpnt, remedy or relief known to medical science for this type of hail' loss. H.respondents preparation used as directed, or other.rwise: or any other prepa.ration consjstjng of the same or similar ingredients will accordingly have no effect whatsoever on cases of baldnpss or partial baldness of this type. The remaining 5 to 10 percent of the cases of baldness or partial baldness are outward manifestations of certain dise lses such as syphilis or conditions such as trauma. In the majority of such cases, when the disease or such ululerlying condition has been cured or has run its course, the outw lrd manifpstation of loss of hair disappears. R.esponc1e,nts' product used as directed, or otherwise, or a.ny other product consisting of the same or similar ingredients will have no effect whatever upon cases of baldness or partial baldness that are outward manifestations of such diseases Dr conditions.

12. The hair on the scalp consists in the main of terminal hair and also of lanugo hair, which forms of hair differ greatly from each other. Though terminal hair is thicker and harder, has body texture and pigment, gro-.vs to a greater length nnd has a longer life, lanugo- or fuzz is softer, downier, finer, colorless, unpigmented grows, to a short length only and has a much shorter life. Lanugo is not true hair and it rarely gets beyond the stage of fuzz, is of short duration and never develops into true hail'. It is not at all an , , 1096 FEDERAL TRADE COMMISSIO:\ DECI IONS Decision 52 F. T. C.

unusual occurrence for new lanugo growth to occur on bald 3scalp areas, particularly when the scalp has been irritated by such means as, light, massage, sunburn or chemicals. Such newly stimulated lanugo growth is of particularly short life. , 1nsting up to about six or eight weeks as a rule.

13. Respondents' preparation is mildly irritnting to the ;1_1p, particularly when applied with massage as directetl. As a con::quence thereof it may, in some instances, like scalp irritants, re,sult in new lanugo growth. It has never resulted in ne'iV hair grvwt h nor can it ever do so. The lanugo growth caused by the irriLlllt properties of respondents' product undoubtedly accounts for the fuzz sometimes seen on the hopeful prospect's head a.after U:O'2 of respondents' preparation.

14. In addition to the expert testimony, the respondents introduced a number of individuals having varying degrees of b,llunes.3 who claimed to have used respondents' preparation with SlH'cess. These varied from a shining pate resembling a ripe tod1n.to to partial frontal baldness. The Commission in turn introduced 01, number of witnesses with varying degrees of ba.ldness who clfl:l led to have used respondents' prepara60n without any appreciable effect. A number of these individual llsers testified to the pre e:lce and disappearance of fuzz on the head.

15. Respondent: Nathan I(a1E , president of respondent corp !ration, testified that through the use or t.he preparation he had :):' ('11 successful in growing curly hair, bushy hair and t.hick: b ' on stone-bnJd individuals. None of the \\-it.npsses produced. ho ;l'J' could qualify for any more than a bald pate so far as the examiner could ascertain. In fact, :Mr. Kalech himself had a bald ring 011 the crown of his head which he covered by combing back the hair from the front instead of growing hair with his o\vn prepal'f1bon. 16. Based upon the testimony of the witnesses in this p1'oceeding, it is apparent that the respondents mixed a certain amOllT, psychology with the irritating propert.es of the preparation. The' advertised for individuals, sometimes offering a supply of " 1;1)'1" for the working of a puzzle. vYhen the inc1ivic1r;al c.alled at their place of business the,y gave him a bottle of respondent.s' prep::that:on and asked him to come bu. k fol' eXflmina i()n at. p8riodicnl inLt'!. vals, usually about the time that the first bowe would be ",.,d. It was explained to the individual that when his hair be.gan to grow it would be immediately ac1j acent to the existing hair hne and would gradually proceed onr the baJd area. When the subject caned at respondents' place of business for a check-up, he was th€Il placed under a very bright light and a number of persons would HAYR CHE:yICAL CO. ISC. ET AL. 1097 lorl;. Conclusions then examine his head and become enthusiastic over the ha,-jr growing, particularly along t.he hair line, and fuzz appearing at various portions of the scalp. The witness was then askeo to see for himself and under the bright light would see hair or lanugo, some of which had prohabJy gone unnoticed by him prior to his approach to the respondents. 1Vhile the subject was in the state of enthnsiasm and was convinced that he was growing hair, he W lS then requested to sign a questionnaire stating ,,,hat the condition of his hair was and whether the prodnet was growing hair. By this means a number af questionnaires were obtained from individuals stating that the product was growing hair, when, in fa, , they were seeing hair which they already had and had not . noticed, and also were seeing lanugo which after a short period of time would disappear. J7. Based upon the appearance of the witnesses, their demeanor on the witness stand, and considering the.ir testimony in connection with other testimony in this proceeding, the hearing examiner is of the opinion that none of the consumer witnesses produced by the respondents had been sllccessful in growing hair through the us of rrspondents' preparation.

CONCLDSIONS 1. The adverLisCInents disseminated by the respondents as herein found were misleading in material respects and constituted frdse advertisements as that term is eJefined in the Federal Trade COjT1 mission Act.

2. The use by the respondents of said advertisements containing materially mislcf1ding statements and misrepresentations has had and nmv has the tendollcy and capacity to mislead a. substantia) number of the purchasing public into the erroneous and mistaken belief that such statements and representations a.re true' and to induce the purchase of substant.ial quantities of said preparation because of such erroneous and mistaken belief. i1. The acts tnd practices of the respol1clents as herein found are all to the prejudice and injury of the public and constitute unf lir and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission j\ct. 4. The participation of the respondents Louis F. Herman Eugene Kesselman in the acts and practices hereinabove described is not such as would warrant a finding that said respondents nad disseminated false advertisements in violation of the Federal Trade Commission Act.

fJ. The death of Phillip Kalech during the course of these 'Procreelings having been suggested upon the record, the complaint should be dismissed as to this respondent. 1098 FEDERAL TRADE COldMISSIO:: DECIEIOJ\S Decision 52 F. '1' . C. ORDER It is o1'dered That the respondents Hayr Chemical Co. , Inc.. a corporation, and its offcers: and the individual responucnts Dr. Joseph Caspe, N "than Kalech and Myrtle L. Larsen, and their respective representatives, agents and employees, directly or through any corporate or other device in connection with the offering for sale, sale or distribution of a drug and cosmetk preparation designat.ed "trays' Application for the Scalp and Hair " or any other preparat.ion of substantially similar composition or possessing sllhstantially similar properties, whether sold under the same name or under any other name, do forthwith cease and desist from: 1. Disseminating or causing to be disseminated any advertisement by means of t.he United States mails or b:r any means in commerce as "commerce" is defined in the .Federal 'l' trade Commission Act which advertisement represents, directly or by implication: (a) that the plngging of hair follicles with foreign matter is a cause of diminished hair growth, exccssive hair loss or baldness. (b) that the removal of foreign matter from the hair follieles by the use of respondents' preparation will correct a cause of diminished hair growth, excessive hair loss or baldness. (c) that the removal of foreign matter from the hair follicles by the use of respondents' preparation will increase hair growth. prevent excessive hair loss or baldness.

(d) that the use of respondents' preparation fls directed or otherwise will cause hair to grow on bald or partially bald heads. (e) that the use of respondents' preparation has any effed upon dandruff other than the temporary removal of dandruff' scales. 2. Disseminating or causing to be disseminated, by any means for the purpose of inducing or which is likely to iJlduce directly or indirectly, the, purchase of said preparation in commerce commerce" is defined in the Federal Trade Commission Act any advertisement which contains any of the represent.ations prohibited in Paragmph 1 of this order.

It is fU1'ther ordered That the complaint be, and it hereby is dismissed as to respondents Phillip Kalsch, Louis F. Herman, and Eugene Kesselman.

DY-CISIQ1\ OF THE CO:lDUSSlON \ND ORDER TO FILE REPORT OF COMPLIANCE The date on which the hearing examiner s jnitial decision in this matte.r would have otherwise become the decision of the Commission under S 3.21 of the Commission s 1\u 1es 01 Practice having been HAYR CHEMICAL CO, ) INC., ET AL. 1099 1091 Decision stayed by order issued J\ltrch 1, 1956 , for the reason that service of said decision had not been effected on all the parties; and It appearing that service of said document has now been completed; and The Commission being of the opinion that the aforesaid initial decision is adequate and appropriate to dispose of this proceeding: It is ordered That the initia.1 decision 01 the hearing examiner fied January 16 , 1956, did on April 2J, 1956, become the decision of the Commission.

It ;8 further ordered That the respondents shltl1 , within sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner a.nd form in which they have complied with the order contained in said decision.

1100 FEDERAL TRADE CO:\GlISSION DECISIONS :B"'indings 52 F.