Luxurious Woollens, LTD.

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

IN THE MATTER OF LUXURIOUS WOOLLENS, LTD., ET AI,.

CONSENT ORDER , ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE :FEDERAL TRADE C01\DHSSION AND THE WOOL PRODVCTS LABELING ACTS Docket 6518. Complaint, Feb. 20, 19S6-Decision, May, 1956 Consent order requiring manufacturers in New York City to cease violating the Wool Products Labeling Act through misrepresenting the percentage of beaver fur in certain wool fabrics on sales invoices and shipping memoranda and on attached labels, and through furnishing similar labels to customers for attachment to garments manufactured from the fabrics; through furnishing false guaranties that certain of their wool products were not misbranded; and through failng to label certain wool products as required. Before Mr. Everett F. Haycraft hearing examiner. ilr. Donald R. Moore for the Commission. Mr. Frederick E. Jl. Bailon of New York City, for respondents. IPLAINT Pursuant to the provisions of the Federal Trade Commission Act and the 'Wool Products Labeling Act of 1939 and by virtue of the authority vested in it by said Acts, the Federal Trade Commission having reason to believe that Luxurious V oollens, Ltd., a corporation 1\iax "\Vasserman, individually and as an offcer of said corporation and Paul A. Haich, individually and as General )fanager of said c:orporation, hereinafter referred to as respondents, have violated the provisions of said Acts, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest hereby issues its complaint, stating its charges in that respect follows:

PARAGRAPH 1. Respondent Luxurious "\Voollens, Ltd., is a corporation, organized, existing and doing business under and by virtue of the laws of the State of New York. Respondent Max 'Wasserman is president and secretary, and respondent Paul A. Raich is general manager of the corporate respondent and they formulate, direct and control the acts, policies and practices of the corporate respondent. Respondents have their principal place of business at 234 West 37th Street ew York, K ew York.

P AU. 2. Respondents, in the course and conduct of their business are and were in competition with other corporations and with firms ind individuals likewise engaged in the sale of wool products :in commerce.

LUXURIOUS WOOLLENS LTD. , ET AL. 1329 1328 Complaint PAR. 3. Subsequent to the effective date of the Wool Products Labeling Act of 1939, and more specifically since January 1 , 1954 respondents have manufactured for introduction into commerce, introduced into commerce, sold, transported, distributed, delivered for shipment and offered for sale in commerce, as "commerce" is defined in that Act, wool products, as "wool products" are defined therein. PAR. 4. Certain of those wool products were misbranded by respondents, within the intent and meaning of Section 4 (a) (1) of the "IV 001 Products Labeling Act and the Rules and Regulations promulgated thereunder in that they were falsely and deceptivcly labeled cr tagged with respect to the character and amount of the constituent fibers contained therein.

Among such ,vool products were fabrics labeled or tagged by respondents as consisting of 650/ Beaver Fur and 350/ Wool; 60% Beaver Fur and 40% 'Wool; and 50% Deaver Fur and 50% "I'Vool; whereas, in truth and in fact, the products were not composed of 65% Beaver Fur and 35% "lVool; 60% Beaver Fur and 400/ "lVool; or 50% Be,area' Fur and 5070 ,y 001 , as represented by the respondents. PAR. 5. Certain of these wool products were further misbranded by respondents in that t.hey wpre not. stamped, tagged or labeled as required under the provisions of Section 4 (a) (2) of the "lVool Products Labcling Act and the Rules and Regulations promulgated thereunder.

PAIL 6. R.respondents ha,ve also furnished false gnaranties that certa.in of their \yool products were not misbranded, in violation of Section 9 of the 'Wool Products Labeling Act. Respondents furnished such guaranties, having reason to believ' that the wool products falsely guarantecd may be introduced, sold, transported or distributed In commerce.

PAR. 7. The acts and practices of the respondents, as set forth above are in violation of the "IV 001 Products Labeling Act of 1939 and the Rules and Regulations promulgated thereunder, and constitute unfair methods of competition and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

PAll. 8. In the course a.nd conduct of their business, as aforesaid and for the purpose of inducing the purchase of wool products by manufacturers of garments and other wool products for resale to retailers and distributors in commerce, respondents have: (a) Made various representations as to the fiber content of their wool products in sales invoices and shipping memoranda applicable thereto. Among and typical, but not all inclusive of such represent.- 1330 FEDERAL TRADE COM.\fISSION DECISIONS 52 F. T. Decision tions, are the following: 65% Beaver Fur and 35% Wool; 60% Beaver Fur and 40% Wool; 50% Beaver Fur and 50% Wool. (b) Furnished to customers labels to be attached to garments manufactured from certain of respondents' wool products, which labels represented the fiber content as follows: 60% Beaver Fur-40% Imported Lamb's Wool; 65% Beaver Fur 35% Imported Lamb's Wool. PAR. 9. The aforesaid statements and representations on invoices shipping memoranda and labels for use on garments manufactured from respondents' wool products, are false, misleading and deceptive. In truth and in fact, respondents' products do not contain beaver fur fibers and wool in the proportions represented; the products contain substantially smaller amounts of beaver fur fibers than represented and in addition appreciable quantities of undisclosed fur fibers; the products do not contain lamb's wool as represented. PAR. 10. The false, misleading and deceptive representations on invoices, shipping memoranda and on labels furnished to customers have tbe capacity and tendency to mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that such statements were and are true, and to induce the purchase of such products on account of such belief induced as aforesaid. As a result thereof, substantial trade in commerce has been diverted to respondents from the,ir competitors and substantial injury has thereby been done to competition in commerce. PAH. 11. By means of invoices, shipping memoranda and labels furnished to customers, as described in Paragraph Eight herein respondents place in the hands of others the means and instrumentalities whereby such others may mislead and deceive members of the purchasing public as to the character and amount of the constituent fibers in their wool products.

PAR. 12. The acts and practices of the respondents, as set forth in Paragraphs Eight through Eleven herein, were all to the prejudice and injury of the public and of respondents' competitors and constitute unfair and deceptive acts and practices and unfair methods of competition in commerce, within the intent and meaning of the Federal Trade Commission Act.

JXITIAL DEOISIOK BY EVERETT F. HAYCRAFT, HEARING EXAMI1\""H The Federal Trade Commission issued its complaint against the above-named respondents on February 20, 1956, charging them with having violated the Wool Products Labeling Act of 1939 and the Rules and Regulations promulgated thereunder and the Federal Trade Commission Act through the misbranding of certain wool products, the furnishing of false guaranties that wool products are LUXURIOUS WOOLLENS LTD. , ET AL. 1331 1328 Deison not misbranded, and the making of false, misleading and deceptive representations on invoices, shipping memoranda and labels for use on garments manufactured from respondents' wool products. . After being duly served with said complaint, the respondents, in lieu of submitting answer to said complaint, entered into an agreement on March 19, 1956, for a consent order with counsel supporting the complaint, disposing of all the issues in this proceeding in accordance with Section 3.25 of the Rules of Practice and Procedure of the Commission, which agreement has been approved by the Director and the Assistant Director of the Bureau of Litigation. Respondents, pursuant to the aforesaid agreement, have admitted all the jurisdictional facts alleged in the complaint and agreed that the record may be taken as if findings of jurisdictional facts had been duly made in accordance with such allegations. Said agreement also provides that the agreement disposes of all of the proceeding as to all parties. Respondents in the agreement waived 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 they may have to challenge or contest the validity of the order to cease and desist entered in accordance with this agreement. It was further provided that said agreement, together with the complaint, shall constitute the entire record herein; that the agreement shall not become a part of the offcial record unless and until it becomes a part of the decision of the Commission; that said agreement is for settlement purposes only and does not constitute an admission by the respondents that they have violated the law as alleged in the complaint. The agreement also provided that the order to cease and desist issued in accordance with said agreement shall have the same force and effect as if entered after a full hearing; that it may be altered, modified or set aside in the manner provided for other orders; and that the complaint may be used in construing the terms of the order. This proceeding having now come on for fial consideration by the hearing examiner on the complaint and the aforesaid agreement for consent order, and it appearing that said agreement provides Tor an appropriate disposition of this proceeding, the aforesaid agreement is hereby accepted and is ordered filed upon becoming part of the Commission s decision in accordance with Sections 3.21 and 3.25 of the Rules of Practice, and in consonance with the terms of said agreement, the hearing examiner makes the following jurisdictional fidings and order:

1. Respondent Luxurious Woollens, Ltd., is a corporation, organized, existing and doing business under and by virtue of the laws of the State of New York. Respondent Max Wasserman is president 1332 FEDERAL TRAE COMMSSION DECISIONS Order 52 F.

and secretary, and respondent Paul A. Raich is general manager of the corporate respondent and they formulate, direct and control the acts, policies and practices of the corporate respondent. Respondents have their principal place of business at 234 West 37th Street, New York, New York.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding, which is in the public interest, and of the respondents hereinabove named; the complaint herein stares a cause of action against said respondents under the provisions of the Federal Trade Commission Act and the Wool Products Labeling Act of 1939. ORDER It is ordered That the respondent, Luxurious Woollens, Ltd. , a corporation; its offcers; the respondent, Max Wasserman, individually and as an offcer of the corporation; the respondent, Paul A. Raich, individually and as General Manager of the corporation; and respondents' representatives, agents and employees, directly or through any corporate device, in connection with the introduction or manufacture for introduction into comnlerce, or the offering for sale, sale, transportation or distribution in commerce (as "commerce is defined in the Federal Trade Commission Act and the Wool Products Labeling Act) of piece goods or other "wool products " (as "wool products" are defined in the "I'Vool Products Labeling Act), do forthwith cease and desist from:

A. Misbranding such products by:

1. Attaching or using stamps, tags, labels or other means of identi fication ,,,which represent that such products contain a certain percentage of beaver hair or fiber which is contrary to fact; 2. Otherwise falsely or deceptively stamping, tagging, labeling or iclentifying such products as to the character or amount of their constituent fibers;

3. Failing to affx securely on each such product a stamp, tag, label cr other means of identification showing in a clear and conspicuous manner:

(a) The percentage of the total fiber weight of such wool product (exclusive of ornamentation not exceeding five percentmn of the total fiber weight) of (1) wool, (2) reprocessed wool, (3) reused wool ( 4) each fiber other than wool where the percentage of weight of such fiber is five percentmn or more, and (5) the aggregate of all other fibers;

(b) The maximmn percentage of the total weight of such wool product, of any non. fibrous loading, fillng or adulterating matter; (0) The name or the registered identification number of the manu- LUXURIOUS' WQOLLENSLTD. , ET'AL. 1333 1328 Desion factureI' of such wool product or of one or more persons engaged in introducing such wool product into commerce, or in the offering for sale, sale, transportation, distribution, or delivery for shipment of such wool product in commerce (as "commerce" is defined in the Wool Products Labeling Act of 1939).

B. Furnishing false guaranties that piece goods, or other wool products (as "wool products" are defined in the Wool Products Labeling Act) are not misbranded under the provisions of the Wool Products Labeling Act, when there is reason to believe that the wool product.c; so guaranteed may be introduced, sold, transported, or distributed in commerce.

Provided That the foregoing provisions concerning misbranding shall not be construed to prohibit acts permitted by Paragraphs (a) and (b) of Section 3 of the Wool Products Labeling Act of 1939; and Provided further That nothing contained in this order shall be construed as limiting any applicable provisions of said Act or the Rules and Regulations promulgated thereunder. It is further ordered That the respondent, Luxurious vV oollens Ltd. , a corporation; its offcers; the respondent, :\lax vVasserman iudividuaJJy and as an offcer of the corporation; the respondent Paul A. Raich, individual.lly and as general manager of the corporation; and respondents' agents, representatives, and employees, directly or through any corporate or other device, in connection with the oilering for sale, sale or distribution in commerce (as "commerce" is defined in the Federal Trade Commission Act) of piece goods, or other wool products, do forthwith cease and desist from: A. llisrepresenting in invoices, by labels separately furnished or in any other manner the character or amount of the constituent fibers contained in such products.

B. Furnishing to or placing in the hands of others stamps, tags or labels by means of which the respondents' products, or garments made from them, may be falsely or deceptively stamped, tagged labeled or otherwise identified, either as to the character or amount of their constituent libers or in any other respect. DECISlOX OF THE COMMISSION A::'T ORDER TO FILE HEPOHT OF COJ\IPLIAXCE Pursuant to Section 3.21 of the Commission s Rules of Practice, the initial decision of the hearing examiner, as corrected by his order fied April 13, 1956, shall on the 11th day of May 1956, become the decision of the Commission; and, accordingly:

It is ordered That the respondents herein shall 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 and form in which they have complied with the order to cease and desist. &; &;&;&; &;&; &; &; 1334 FEDERAL TRADE COMMSSION DECISIONS Appearances 52 F. T. C.

IN THE MATTER OF CORDAGE INSTITUTE ET AL.

CONSENT ORDER, ETC., IN REGAR TO THE ALLEGED VIOLATION OF THE FEDERA TRADE COMMISSION ACT Dooket 584.8. Oomplaint, Feb. 15, 1951-Decision, May 12. 1956 Consent order requiring 18 corporate manufacturers of hard fiber rope, cordage and wrapping twine and their trade association, to cease concertedly maintaining geographical price zones or zone price differentials in the sale of their products; and Dismissing for failure of proof charges of fixing uniform delivered prices and terms and conditions of sale; of concertedly classifying customers for pricing purposes and fixing discounts and terms and conditions of sales for each class; of disseminating among themselves through respondent Institute their current and future quotations of prices, terms and conditions of sales; and holding meetings at which prices and trade practices and policies designed to eliminate competition among themselves were discussed and acted upon.

Before J.1fr. lVilliam L. Pacle hearing examiner. Mr. Floyd O. Oollins and Mr. J. Wallace Adair for the Commission. Jackson, Nash, Brophy, Barringer Brooks of New York City, for Cordage Institute, R. C. Utess and H. ),1. Wall. M,.. Karl F. Steinmann of Baltimore 1d., for J. S. McDaniel. Gaston, Snow, Rice Boyd of Boston, Mass. , for Plymouth Cordage Co.

Mr. Danwl G. Oonnolly, of Brooklyn, :N. Y., for American Manufacturing Co. and Cupples Co., Inc.

Hiscock, Dowie, Bruce, Lee and Jlawhinney, of Syracuse, )Y, Y. for Cohnnbian Rope Co., The Edwin II Fit1er Co. and R. A. Kelly Co.

Kibwr' , Hervey Kibwr of Newark, Ohio, for The E. T. Rugg Co. Younge, Frederick Rutherford of Peoria, Ill., for Peoria Cordage Co.

Prescott, Bulla7'd AfcLeod of New Bedford, Mass., for New Bedford Cordage Co.

Pillsbury, Madison Sutro of San Francisco, Calif. , and Mr. Hugh Fullerton of Washington, D. C., for Tubbs Cordage Co. (Calif. ) and Tubbs Cordage Co. (Wash.

Clark, Brown, McOo"un, Fortenbaugh Young, of Philadelphia Pa., for Wall Rope Works, Inc.

Parsons, Closson McIlvaine of New York City, for \'itloek Cordage Co.

, . &;

CORDAGE INSTITUTE ET AL. 1335 133 Complaint Mr. Bernrd J. Ferguson of Woodside, N. Y., for Cating Rope Works, Inc.

Stevens, DeLong Dry, of Reading, Pa., for The Thomas Jackson & Son Co.

Shook, Lax 0180n of Washington, D. C., for Waterbury Rope Sales Corp.

Smith, McOallister Gibney, of Xenia, Ohio, for The Hooven & Allison Co.

Mr. Gladstone P. Lilicrapp, of Easton, Pa., for Rinck Cordage Co. CO:;PLAIN' 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 the Cordage Institute, a non-profit membership association, its offcers and members tnd employees J. S. j',,(cDaniel, R. C. utess, S. "I'V. Metcalf, W. S. Jiles Jr., E. G. Roos, H. M. "lVall, Plymouth Cordage Co., a corporation American fanufacturing Company, corporation, Columbian Hope Company, a corporation. The Edwin H. Fitler Company, a corporation, R. A. ICelly Company, corporation, The E. T. Rugg Company, a corporation, Peoria Cordage Company, a corporation, New Bedford Cordage COlnpany, a corporation, Tubbs Cordage Company, a corporation (Calif. ), Tubbs Cordage Company, a corporation ("I'Vash. "I'Vall Rope IV orks, Inc., a corporation, "lVhitlock Cordage Company, a corporation, Cating Hope IV o1'k8 , Inc. , a corporation, Cupples Company, Inc., a corporation, The Thomas Jackson & Son Company, a corporation, \Vaterbury Hope Sales Corporation, a corporation, The Hooven & Allison Company, a corporation, and Rinck Cordage Company, a corporation, have violated the provisions of said Act, a,nd it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. The products involved in this proceeding are rope cordage and twine made of fiber from abaca, agave and other plants from which hard fiber is obtained. Such products are commonly known and referred to as hard fiber rope, cordage and twine. Said products are used extensively by the Navy and all branches of the Armed Services; by steamship companies and those in the fishing industry; by railroads and other common carriers; by steel companies, coal companies, oil companies, farmers and ranchers. It is used by substantially everyone engaged in a productive enterprise or economic activity.

1336 FEDERAL TRADE COMMSSION DECISIONS Complaint 52 F. T. C.

PAR. 2. Respondent, Cordage Institute, hereinafter referred to as Respondent Institute, is an unincorporated non-profit membership association, whose membership is composed of corporations, partnership firms and individuals who are engaged in the Continental United States in the manufacture, sale and distribution of rope, cordage and twine wholly or in chief value of abaca, agave, or other hard fiber and commodities commonly known as tarred hemp. The home offce and principal place of business of said respondent is located at 350 Madison Avenue, New York, New York. Its Articles of Association state its purposes and objects to be:

(a) To promote the interest of the industry and improve its services to the public.

(b) To compile, distribute and exchange information; (c) To establish trade standards; and (d) To cooperate in handling all problems of common interest to the industry.

The offcers of Respondent, Institute are President Secretary, Treasurer, Executive Committeemen and members of such other committees as arc designated from time to time. The President of Respondent Institute is also Chairman of the Executive Committee and it.s Articles of Association declare his authority and duties to be coextensive ,,.ith and limited to those of Chajrman of the Executive Committee.

It is the duty of the Executive Committee to determine the policies supervise the carrying out of the purposes and objects, and direct the business and financial matters of Hesponclent Institute. The duties of the Secretary arc to keep the records of the Institute and of all the committees; keep informed as to conditions prevailing in the industry, the happenings of importance and of interest to the members, and to transmit to the members such information as is deemed helpful and instructive to them.

The Executive Committee and Respondent Institute ho,.e from time to time authorized and directed the Secretary to collect and disseminate among the members, at regular intervals, statistics and information such as:

(1) Monthly sales statistics in cordage business by products. (2) :lIonthly charts indicating (a) trend of business for the industry, and (b) trend of percentage of total business by each company. (3) :l\monthly statistics of Manila fibers showing stocks on hand consumption, etc.

(4) Monthly reports of sales of distress or obsolete merchandise. (5) Copies of printed price lists of the respective members. (6) Surveys of wages, hours and labor conditions. ;

CORDAGE INSTITUTE ET AL. 1337 1334 Complaint (7) Statistics on Manila fiber production. (8) List of brand names of various products. (9) Special studies and activities, such as cost accounting systems. Respondent, J. S. McDaniel, whose address is 350 Madison Avenue New York, I\ ew York, is now and has been since its organization the Secretary of Hespondcnt Institute, and haspcrformed and is now performing an the d nties of said offce.

Respondent, R. C. Utess, whose address is 11 oble and 'West Streets Brooklyn 22, X ew York, is President of Respondent Institute and Chairman of its Executive Comnlittee.

Respondent, S. "iV. Metcalf, whose address is 309 Genesee Street Auburn, K ow York, is a. member of the Executive Committee of Respondent Institute.

Hcspondent, "IV. S. Miles, Jr., whose address is 1502 South "iVash- Ington Street, Peoria 2, Illinois, is a member of the Executive Committee of the Respondent Institute.

espondcllt, E. G. RODS, ,yhose address is Korth Plymouth, J\1assnchusetts, is a member of the Execubve Commjttee of Respondent Institute.

sl)Ol:(kllt, I-I. ?- L \' c.ll hos2 address is 48 Sonth Street, New York, K ew York, i5 a member or the Executive Committee of Respondent Institute.

r All. 3. Respondent, Plymouth Cordage Co., hereinafter referred to as Respondent Plymouth, is a corporation organized and existing under and by virtue of the Jaws of the State of Massachusetts, wjth its home offce and principal place of business located at Plymouth :.Iassachusetts. Respondent is engaged in manufacturing and selling hard fiber cordage, wrapping twine, baler twine and binder twine and is a member of Respondent Institute. In addition to two wholly owned subsidiary corporations in Canada, respondent owns and operates as a division of respondent, The Federal Fiber Mills, located at 1101 South Peters Street, K ew Orleans, Louisiana. R.respondent American lanufacturing Company, hereinafter referred to as Respondent A_american, is a corporation organized and existing under and by virtue of the laws of the State of lassachusetts, with its horne offce and principal place of business located at Nobel and IV est Streets, Brooklyn 22, 11 ew York. Respondent is engaged in manufacturing and selling hard fiber cordage, wrapping twine, baler twine and binder twine. It is a member of Respondent Institute. It owns and operates a branch factory located at 11th and Lafayette Streets, St. Louis, :Missouri. Said branch factory is operated under the name, St. LOllis Cordage :l\i11s, and is also a Inembcr of Respondent Institute.

1338 FEDERAL TRADE COMMISSIOK DECISIONS 52 F. T. C. Complaint Respondent, Columbian Rope Company, hereinafter referred to as Respondent Colnmbian, is a corporation organized and existing under and by virtue of the laws of the State of New York, with its home offce and principal place of business located at 309 Genesee Street Auburn ew York. Said respondent is now and has been engaged in manufacturing hard fiber cordage, wrapping twine, baler twine and binder twine and is a member of Respondent Institute. Respondent, The Edwin H. Fitler Company, hereinafter referred to as Respondent Fitler, is a corporation organized and existing under and by virtue of the laws of the State of Pennsylvania, with its home offce and principal place of business located at 5625 Tacony Street Philadelphia 24, Pennsylvania. Respondent is now and has been engaged in manufacturing hard fiber cordage, wrapping twine and baler twine. Respondent is wholly owned by Respondent Columbian but functions as a separate corporation and is a member of Respondent Institute.

Respondent, R. A. Kelly Company, hereinafter referred to as Respondent Kelly, is a corporation organized and existing under and by virtue of the laws of the State of Ohio, with its home ollce and principal place of business located at Xenia, Ohio. Respondent is wholly owned by Respondent Columbian and is operated as a branch of Columbian. It is a member of Respondent Institute. Respondent, The E. T. Rugg Company, hereinafter referred to as Respondent Rugg, is a corporation organized and existing under and by virtue of the Jaws of the State of Ohio, with its home offce and principal place of business located at Newark, Ohio. Respondent is now and has been engaged in manufacturing hard fiber cordage, wrapping twine and baler twine. Respondent is a member of Respondent Institute.

Respondent, Peoria Cordage Company, hereinafter referred to as Respondent Peoria, is a corporation organized and existing under and by virtue of the laws of the State of Illinois, with its home offce and principal place of business located at 1502 South 'Washington Street Peoria 2, Illinois. Respondent is now and has been engaged in manufacturing hard fiber, cordage, wrapping twine, baler twine and binder twine. Respondent is a member of Respondent Institute. Respondent, New Bedford Cordage Company, hereinafter referred to as Respondent K ew Bedford, is a corporation organized and existing under and by virtue of the laws of the State of Massachusetts with its home ollce and principal place of business Jocated at Court and Ash Streets, New Bedford, Massachusetts. Respondent is now and has been engaged in manufacturing hard fiber cordage and wrapping twine. Respondent is a member of Respondent Institute. CORDAGE INSTITU' rE ET AL. 1339 1334 Complaint Respondent, Tubbs Cordage Company, is a corporation organized and existing under and by virtue of the laws of the State of California, with its home offce and principal place of business located at 225 Bush Street, San Francisco 4, California. Said Respondent owns and operates as a division of Respondent, a manufacturing plant located at Orange, California. Said division is operated under the trade name of Great Western Cordage. Respondent and its division Great Western Cordage, are both members of Respondent Institute. Respondent, Tubbs Cordage Company (of Washington) is a corporation organized and existing under and by virtue of the laws of the State of Washington, with its home offce and principal place of business located at 2021 15th Avenue, "\Vest, Seattle, Washington. Said Respondent is a subsidiary of the Respondent Tubbs Cordage Company of San Francisco, California, but is operated separate and apart from the parent corporation. Said Respondent is engaged in manufacturing, sellng and distributing hard fiber cordage and twine and is a member of Respondent Institute.

Respondent, "IV all Rope Works, Inc. , hereinaftr referred to as Respondent Wall, is a corporation organized and existing under and by virtue of the laws of the State of New .Jersey, with its home offce and principal place of business located at 48 South Street, New York 5, N ew York. Said Respondent is now and has been engaged in manufacturing hard fiber cordage and wrapping twine. Respondent is a member of Respondent Institute.

Respondent, \'itlock Cordage Company, hereinafter referred to as RBspondent \'itlock, is a corporation organized and existing under and by virtue of the laws of the State of New Jersey, with its home offce and principal place of business located at 46 South Street, New York 5, New York. Respondent is now and has been engaged in manufacturing hard fiber cordage and wrapping twine. Respondent is a member of Respondent Institute.

Respondent, Cating Rope Works, Inc., hereinafter referred to as Respondent Cating, is a corporation organized and existing under and by virtue of the laws of the State of N ew York, with its home offce and principal place of business located at 58-29 - 64th Street Maspeth, New York. Respondent is now and has been engaged in manufacturing hard fiber cordage and wrapping twine. Respondent is a member of Respondent Institute.

Respondent, Cupples Company, Inc. , hereinafter referred to as Respondent Cupples, is a corpora6on organized and existing under and by virtue of the laws of the State of Missouri, with its home offce and principal place of business located at 386 - 3rd Avenue Brooklyn, K ew York. Respondent is now and has been engaged in 1340 FEDERAL TRADE COMMISSIQI\T DECISIO Complaint 52 F.

manufacturing hard fiber cordage and wrapping twine. Respondent isa member of Respondent Institute.

Respondent, The Thomas Jackson & Son Company, hereinafter referred to as Respondent Jackson, is a corporation organized and existing under and by virtue of the laws of the State of Pennsylvania with its home offce and principal place of business located at Reading, PmIDsylvania. Respondent is now and has been engaged in manufacturing hard fiber wrapping twine. R,respondent is a member of Respondent Institute.

Respondent, Waterbury Rope Sales Corporation, hereinafter referred to as Respondent 'Waterbury, is a corporation organized and existing under and by virtue of the laws of the State of New York with its home offce and principal place of business located at 88 Wall- ,"about Street, Brooklyn 11, New York. Respondent is now and has been engaged in manufacturing hard fiber cordage and wrapping twine. Respondent is a member of Respondent Institute. PAR. 4. Respondent, The Hooven & Allison Company, hereinafter referred to as Respondent Hooven, is a corporation organized and existing under and by virtue of the laws of the State of Ohio, with its home offce and principal place of business located at Xenia, Ohio. Respondent is now and has been engaged in manufacturing ha-rd fiber cordage, wrapping twine, balerbvinc and binder twine. Respondent, Rinek Cordage Company, hereinafter referred to as Respondent Rinck, is a corporation organized and existing under and by virtue of the laws of the State of Pennsylvania, with its home offce and principal place of business located at Easton, Pennsylvania. Respondent is now and has been engaged in the manufacture of hard fiber cordage.

Respondent Hooven and Respondent Rinek are not members of Respondent Institute, but they have aided and abetted and participated in the carrying out and maintaining the wrongful and unlawful acts and practices herein alleged.

PAR. 5. The Respondent Institute and Respondent McDaniel and the members of the Executive COlllnittee of said Institute, are not engaged in the manufacture or sale and distribution of any commodity in commerce, but said respondents have aided, abetted, furthered and participate.c in some or an of the concerted actions, understandings and agreements herein described and actively cooperated and participated in the planning, maintaining and carrying out of some or all of rhe acts and practices done pursuant thereto and in furtherance thereof.

PAR. 6. In t.he course and conduct of their respective businesses the respondent manufacturers manufacture hard fiber rope, cordage and CORDAGE S'fI'l' rE ET' AL. 1341 133 Complaint twine and sell and distribute said products to purchasers thereof in various States of the United States, pursuant to which sales said products are shipped and transported, to the purchasers thereof across 'State lines into States other than the State of origin of said shipments. Each of said respondent manufacturers, in the manner aforesaid, maintains a constant current of trade in commerce among and between the various States of the United States. PAR. 7. Respondent Inanufacturers in the course and conduct of their respective businesses have at all times been in competition with other firms and individuals in the manufacture, sale and distribution of rope, cordage and twines in commerce among and between the various States of the United States, and have been and are now in competitioll ,with one another except to the extent to which such competition hasbeen restrained, lessened, injured and suppressed by the understandings, agreements and concerted actions herein set forth. PAR. 8; Respondent manufacturers manufacture and sell approximately 65 percent of all the hard fiber twine and approximately 80 percent of all the hard fiber rope and cordage manufactured Hnd sold in the Continental United States. Because of their dominant position in the industry, respondents are able to and do, to a substantial degree control the prices at which said products are sold and limit and eliminate the effects of other competitive elements. P,,\R. 9. For more than three years last past the respondent manufacturers- and Respondent Institute (including its offcers and various committees- and committee members) have been engaged in and carrying out an unlawful combination, understandings and agreements and a planned common course of action to fix and establish uniform identical delivered prices for hard fiber rope, cordage and twine and to lessen, - limit, restrict and restrain competition in price and other- ,visejftm(;mg and between respondents in the sale and distribution of hard fiber rope, cordage and twine in interstate commerce, and pursuant. to and in furtherance or said planned common course of action agreements and understandings respondents have done and performed,. and are now doing and performing among others, the following acts and practices:

(a) Agreed upon uniform identical delivered prices to be quoted and charged, and upon terms and conditions of sale to be imposed and have systematically quoted and charged such prices to and imposed such terms and conditions upon their customers and prospective customers;

(b) Classified customers for pricing purposes and fixed and agreed upon discounts and terms rmd conditions or sales applicable to sales to customers in each classification;

451024--59-- 1342 FEDERAL TRADE COMMSSION DECISIONS Complaint 52 F.

(c) Established and maintained identical geographical zones for pricing purposes and systematically applied agreed upon uniform identical zone price differentials in the sale of their products; (d) Computed or averaged delivery or transportation costs within each price zone from some agreed upon shipping point or points to all delivery points therein and used the amount thus obtained in calculating selling prices in order to prevent differences in delivery costs from the various plants of respondents to their customers creating differences in prices of the products laid down at the customer place of business;

(e) Agreed to disseminate and have disseminated among themselves and by and through Respondent Institute at frequent intervals current and future quotations of prices, terms and conditions of sales offered to the trade by various respondent manufacturers; and (f) Have held meetings at which prices, terms and conditions of sales and trade practices and policies designed to eliminate competition in price and otherwise between respondents were discussed and acted upon.

PAR. 10. Each respondent manufacturer, in calculating, making and announcing delivered price quotations, terms and conditions of sale at which it offers to sell and does sell hard fiber rope, cordage and twine, does so by dividing the continental United States into six Geographic Zones. Thereafter, subject to the customer classification herein alleged, each respondent manufacturer quotes to each customer in a given zone identical delivered prices to those it quotes to each of its other customers in said zone, irrespective of the places of delivery in the zone or differences in delivery costs. Each respondent manufacturer has adopted and uses an arbitrary zone price differential for each of the six zones. The zone price differentials, zone numbers and zone boundaries used by each respondent manufacturer are identical to the zone price differentials, zone nmnbers and zone boundaries used by each of the other respondent manufacturers, regardless of the geographic location of the factory of such respondent. Each of the respondents, through the use of said pricing system charges and collects a false amount as freight or delivery costs on substantially every sale made by it. On some sales the amount charged is more and on the others it is less than the actual freight or delivery cost, and only in very few instances is the amount charged and collected as delivery cost identical with the actual delivery cost. The actual differences in delivery costs between two zones are not identical to the zone differentials used by the respondents; neither do the differentials used bear any reasonable relationship to the actual differences in outbound freight or transportation costs between said zones. CORDAGE INSTITUTE ET AL. 1343 1334 Order Said pricing system enables respondents to match, and has resulted in the matching of delivered prices by all of said respondents at every destination in the united States, thereby nullifying the effectiveness of differences in delivery costs as an element of competition between the respondents, and has precluded purchasers and prospective purchasers from finding or obtaining any price advantage in dealing with one respondent manufacturer as against another. Each of said respondents, has adopted and is using the acts, practices and methods described in this Paragraph 10 for the purpose and with the effect of contributing to the hindrance, Jessening and injury to com petition in price and otherwise between and among said respondents in the sale and distribution of their products, and thereby furthers and helps the carrying out of the purposes and objects of the agreements and understandings between the respondents, as herein alleged.

PAR. 11. The capacity, tendency and effect of said understandings agreements, combination and plannf'Al c.ommOll course of action and the acts and practices of the respondent-5 and each of them, done and performed pursuant thereto and in furtherance thereof, are no,". and have been to substantially Jcsse. , restrict, restrain and injure competition among and between respondent.s in the saJe Rnd distribution of hard fiber rope, cordage and twine in commerce \vit.hin the intent and meaning of the Federal Trade Commission Act; have a dangerous tendency.y to a,nd have actually hjnc1elect restricted, and prevent.ed price competition between and mnong said respondents in the sale and distribution of said products in said commerce; have empowered and enahled respondents t.o R subst.ant.ial degree, to control the market and enhance the prices of said products above the prices which would prevail under a condition of natural, normal and free competition among said respondents and deprived the purchasing public of a free and open competitive market in which to purchase said products. PAR. 12. The acts and practices of the respondents and each of them as herein alleged, are al1 to the injury and prejudice of the public and competition and constitute unfair methods of competition in commerce within the int.ent and meaning of Section 5 of the Federal Trade Commission Act.

ORDER REl\IA l)!NG CASE TO HEARING EXA1tIXER Counsel in support of the complaint and the respondents both having filed appeals from the hearing examiner s initial decision dismissing the complaint in this proceeding at the close .of the case in chief, and the matter having been heard on briefs of counsel (oral 1344 FEDERAL TRADE COMMSSION DECISIONS Appeal 52 F. T. C.

argwnent not having been requested), and the Commission having rendered its decision vacating and setting aside the initial decision: It is order' That the case be, and it hereby is, remanded to the hearing examiner for further proceedings in conformity with the Commission s decision.

o~ APPEAL FRO:\1 IX!T'AL DECISIO Chairman Howrcy delivered the opinion:

This case is before the Commission upon an appeal, filed by counsel in support of the complaint, from the hearing examiner s initial decision, issued at the close of the case in chief, dismissing the complaint. The basis of the decision was that a prima facie case had not been established. The respondents also appealed, contending that the examiner was in error in finding that the respondents, during the A. period, agreed upon and put into operation a zone plan for pricing their products, and that they have continued its use dovl"n to the present time.

vYe believe that counsel in support of the complaint have established a prima facie case with respect to that portion of the complaint which cluLrged that the respondents collusively and wllawfully csta,lJlishec1 geographical zones and freight differentials for pricing purposes. As hereinabove indicated, the hearing examiner found that respondents had agreed upon a zone plan which fixed freight differentials and that they had continued to use such plan down to the present time. He conceded that if this were part of a price fixing combination there would be no doubt of its illegality, but held that "* * * in the circmnstances here existing the plan is not a price fixing device but is simply a convenient method of charging freight." The hearing examiner erred, we think, when he held that the zone plan ,vas not a price fixing device.

Under the plan the United States was divided into six zones. Zone 1 comprised roughly New England and the North Atlantic States. Moving wesbvarcl, provision was made for the other five zones, with Zone 6 comprising the Pacific Coast States. Under the plan, as presently operated, varying freight differentials were established to be added to or deducted from list prices. The plan had the effect of equalizing delivered list prices on rope and twine so that each respondent, regardless of its location, had the same delivered list price in each zone. By delivered list price ,ve mean the quoted cost to the eol1sumer, namely, the list price plus or minus the established freight differential.

A comparison of the price lists and zone differentials shows how the plan worked. For example, most 1952 price lists of companies ........................................................................................,................................................... CORDAGE INSTITUE ET AL, 1345 1334 App located in Zones 1 and 6 , listed a price of $.50 per pound for %" diameter, best grade, Manila rope and showed freight zone differentials for less-than-carload shipments as follows: Zones:

1 ....................................... List Prices 2 ....................................... :1 lb. over List Prices 3 ....................................... 1 lb. over List Prices 4....................................... I1fc lb. over List Prices 5 ....................................... 1 if lb. over List Prices 6 -............"..,..................... List Prices At the same time an Ohio company, located in Zone 2, had a list price on comparable rope of $. ;(,. Its freight differentials were as follows:

Zones:

2 ........ Printed List prices 34.................. 111; Covcroverprintedprintedpricesprices 5 ............ %, C over printed prices lh land e... if under printed prices Thus, the seller on the Pacific Coast charged more for shipments to nearby Colorado than to more distant Kansas, and more for shipments to Kansas than to Ohio, and 11lore for shipments to Ohio than to J\1assachusctts. In other words, with one exception (Zone 5), the further the shipping distance the less the freight chn rge. Likewise, some of the differentials of t.he K northeast seller bore little relationship to differing freight costs. He sold in California, for example\ at. his :Massachusetts list price, that is, he charged no freight at all for his longest shipment. On the other hand, he charged 1% for deliveries to less distant K evada and l1/zif for deliveries to still less distant Colorado.

The seller in Ohio (Zone 2) had different freight differentials. He started with a list price of l/if more than the sellers on the two coasts that is, the deJivercd cost for the customer across the street in Xenia Ohio, was more than for customers located in either California or New York. On shipments to the two coasts, that is, the two farthest points from his plant, he not only charged no freight but in fact made a deduction for fre,ight. Some of his in-between shipments were also unrelated to freight costs. He charged less, for example, for shipments to Nevada than for shipments to points nearer his Ohio mill. As we have indicated, the net result of thc varying differentials and varying list prices, generally speaking, was that most respondents quoted the same delivered price to all customers in each zone. Respondents concede that post-World vear II price lists show that most of the respondents used an identical zone plan for charging Decision 52 T. C. freight, but deny there is any evidence of a post- war agreement to use such plan. They contend, assuming arguendo that there may be evidence of use of the plan by agreement up to World War that war time controls are a complete insulation from any presmnption that an agreement continued post war.

\'ile the hearing examiner did not deal specifically with this argument, he met the issue by holding that the zone plan was established many years ago pursuant to an agreement and respondents had continued its use down to the present time. It should be added, it seems to us, that it is unlikely the present plan could have been worked out except in pursuance of some sort of an agreement or understanding. The artificiality and arbitrariness of the zone differentials are such that the plan cannot, prima facie, at least, withstand the inference of agreement. See Fort Howard Paper 00. , et al v. Federal Trade Oommission 156 F. 2d 899, 907.

"lve think the case should be remanded for further proceedings consistent with this opinion, that is, to permit the respondents to show if they can, that the zone plan was not established pursuant to agreement or was not a price fixing device. The hearing examiner s initial decision dismissing the complaint is accordingly vacated and set aside INITIAL DECISION BY WILLIA:\r L. PACK, HEARING EXAMIKEH. The complaint in this matter charged the respondents with entering into a combination in restraint of trade, in violation of the Federal Trade Commission Act. At the conclusion of the reception or evidence in support or the complaint, the hearing examiner granted a motion made by respondents seeking dismissal of the complaint for failure of proof, and issued his initial decision dismissing the complaint. Upon appeal to the Commission by counsel supporting the complaint the Commission in effect affrmed the decision of the hearing examiner except as to one issue raised by the complaint, that involving the use by respondents of geographical zones. As to this issue, the Commission held that a prima facie case had been established and the matter was remanded to the hearing examiner for further proceedings in regular course.

An agreement with respect to this remaining issue has now been entered into by respondents and counsel supporting the complaint which provides, among other things, that respondents admit all the jurisdictional allegations ill the eompbint; that respondents' iLuswers to the complaint shall be considered as having been withdrawn; that the inclusion of findings of fact and conclusions of law in the decision disposing of this matter is waived, together with any further proced ural steps before the hearing examiner and the Commission; that , .

CORDAGE INSTITUTE ET AL. 1347 1334 Deison the order hereinafter set forth may be entered in disposition of the proceeding, such order to have the same force and effect as if entered after a full hearing, respondents specifically waiving Rny and all rights to challenge or contest the validity of such order; that the order may be altered, modified or set aside in the manner provided for other orders of the Commission; and that the agreement is for settlement purposes only and does not constitute an admission by respondents that they have violated the law as alleged in the complaint. The hearing examiner having considered the agreement and proposed order and being of the opinion that they provide an adequate basis for an appropriate disposition of the proceeding, the agreement is hereby Rceepted, the following jurisdictional findings made, and the following order issued:

1. Respondent Cordage Institute is an unincorporated non-profit membership association, with its offce and principal place of business located at 350 Madison Avenue cw York, New York. Respondent J. S. McDanie) , an individual, was secretary of respondent Institute for a period of more than twenty-five years immediately preceding March 1950.

Respondent R. C. Utcss, an individual, was president of the respondent Institllteand chairman 01 its Executive Committee from March 1949 to January 1950.

Respondent S. W. Metcalf, an individual, was a member of the Executive Committee or the respondent Institute from !J anuary 1949' to January 1950.

Respondent \V. S. yIiles Jr., an individual, was a member of the Executive Committee of the respondent Institute from January 1949 to January 1950.

Respondent E. G. Roos, an individual, \yas a member of the Executive Committee of the respondent Institute from .J anuary 1949 to January 1950.

Respondent H. M. "I'VaJl, an individual, was a member of the Executive Committee of the respondent Institute from January 1949 to January 1951.

Respondent Plymouth Cordage Co. is a corporation, existing and doing business under and by virtue of the laws of the State of Massachusetts, with its offce and principal place of business located at Plymouth, Massachusetts.

Respondent American Manufacturing Company is a corporation existing and doing business under and by virtue of the laws of the State of Massachusetts, with its offce and principal place of business located at Noble and West Streets, Brooklyn, New York. , 1348 FEDERA TRAE COMMSSION DECISIONS Decision 52 F. T. C.

Respondent Colmnbian Rope Company is a corporation, existing and doing business under and by virtue of the laws of the State New York, with its offce and principal place of business located at 309 Genesee Street, Auburn, New York.

Respondent The Edwin H. Fitter Company is a corporation, existing and doing business under and by virtue of the laws of the State of Pennsylvania, with its offce and principal place of business located at Devereaux and MiJnor Streets, Philadelphia, Pennsylvania. Respondent R. A. KeJJy Company is a corporation, existing and doing business under and by virtue of the Jaws of the State of Ohio with its offce and principal place of business located at Xenia, Ohio. Respondent The E. T. Rugg Company is a corporation, existing and doing business under and by virtue of the laws of the State of Ohio, with its offce and principal place of business located at Newark Ohio.

Respondent Peoria Cordage Company is a corporation, existing and doing business under and by virtue of the laws of the State of IJJinois, with its offce and principal place of business located at 1502 South IVashington Street, Peoria, Illinois. Hesponclent Kew Bedford Cordage Company is a corporation existing and doing business under and by virtue of the laws of the State of Massachusetts, with its office and principal place of business located at Court and -\sh Streets, New Bedford, J11asSfLchusetts. Respondent Tubbs Cordage Company is a corporation, existing and doing bnsinese ,mder and by virtue of the la we of the State of Caefornia, with its offce and principal place of business located at 200 Bush Street, San Francisco, California.

Respondent Tubbs Cordage Company (Washington) is a corporation, existing and doing business under and by virtue of the Jaws of the State of IVashington, with its offce and principal place of business located at 2021 - 15th Avenue West, Seattle, Washington. Respondent IV all Rope IVorks, Inc., is a corporation existing and doing business under and by virtue of the laws of the State of New J ersey, with its offce and principal place of business located at 48 South Street ow Yark, New York.

Respondent vYhitlock Cordage Company is a corporation, existing and doing business lUldel' and by virtue of the laws of the State of cw J ersey, ,,' ith its offee and principal place of business located at 46 South Street, Kew York, New York.

Respondent Cating Rope "\Vorks, Inc. , is a corporation, existing and doing business under and by virtue of the laws of the State New York, with its offce and principal place of business located at 58-29 64th Street, :Ylaspeth, New York.

CORDAGE INSTITUTE ' ET AL. 1349 1334 Order Respondent Cupples Company Manufacturers (named in the com. plaint as Cupples Company, Inc. ) is a corporation, existing and doing business under and by virtue of the laws of the State of Missouri, with its offce and principal place of business located at 440 South Brentwood Boulevard, St. Louis, :l1missouri. Respondent The Thomas Jackson & Son Company is a corporation existing and doing business under and by virtue of the Jaws of the State of Pennsylvania, with its offce and principal place of business located at Reading, Pennsylvania.

Respondent 'Vaterbury Rope Sales Corporation is a corporation existing and doing business under and by virtue of the laws of the- State of New York, with its offce and principal place of business located at 88 "I'Vallabout Street, Brooklyn, ?"ew York. Jtcspondent The Hooven & Allison Company is a corporation, existing and doing business under and by virtue of the laws of the State of Ohio, with its offce and principal place of business located at Xenia, Ohio.

Respondent Rinck Cordage Company is a corporation, existing and doing business under and by virtue of the laws of the State of Pennsylvania, with its offce and principal pia,co of business located at Easton, Pennsylvania.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is ordered That respondents, Cordage Institute, 8.n unincorporated membership association, J. S. IeDHniel, inclividua.lly and as Secretary of Cordage Institute, R. C. 1) less, individually and as President and Chairman of the Executive Committee of Cordage Institute, S. "Iv. :l1etcalf, individually and as a member of the Executive Committee of Cordage Institute, "IV. S. :'iiles, .Tr., iudi,'idually and as a member of the Executive Committee of Cordage Institute E. G. Roos, individually and as a member of the Executive Committee of Cordage Institute, H. 1U. \Vall, individually and as a member of the Executive Committee of Cordage Institute, and Plymouth Cordage Co., American J\fanufactllring Company, Columbian Hope Company, The Edwin H. Fitlel' Company, R A. Kelly Company, The E. T. Rugg Company, Peoria Cordage Company, New Bedford Cordage Company, Tubbs Cordage Company, Tubbs Cordage Company (Washington), Wall Rope Works, Inc., l'itlock Cordage Company, Cating Rope Works, Inc., Cupples Company Manufacturers The Thomas Jackson & Son Company, "lVaterbury Rope Sales Corporation, The Hooven & Allson Company, and Rinek Cordage Com. Decision 52 F.

pany, corporations, and their offcers, agents, representatives, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, and distribution of hard fiber rope or hard fiber wrapping twine in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from entering into, continuing, cooperating in, or carrying out any planned common course of actjon, agreement, understanding, combination, or conspiracy between or among any two or more of said respondents, or between anyone or more of said respondents and others not parties to this proceeding, to establish or maintain geographical price zones or zone price differentials in the sale of hard fiber rope or hard fiber wrapping twine.

It is further ordered That the remaining charges of the complaint , and they hereby are, dismissed.

DECISIO~ OF TI-IE COMl\ISSION AXD ORDER TO FILE REPORT OF CO:1IPLIAXCE Pursuant to Section 3.21 of the Commission s Rules of Practice, the initial decision of the hearing examiner shall, on the 12th day of May, 1956, become the decision of the Commission; and, accordingly: It is ordered That the respondents herein shall 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 and form in which they have complied with the order to cease and desist. Commissioner Kern not participating.

&, PIONEERS, INC. , ET AL. 1351 Decision