Al. Morris Lober & Associates, Inc.

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IN THE MATTER OF AL. MORRIS LOBER & ASSOCIATES, INC., ET ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Aug. 14, 1958 Docket 7003. Complaint, Dec. 19, 1957-Decision, Order requiring two associated corporations in New York City to cease misrepresenting prices of the power lawn mowers they sold to dealers and others for resale to the public, by suggested list prices far in excess of the actual selling prices, disseminated in newspaper advertisements and reprints of customers' advertising, on distributors' price sheets furnished their retail customers, and on shipping cartons. Mr. Eugene Kaplan for the Commission. Sego.,n Cullwne of New York, N. , for respondents. INITIAL DECISION BY FRANK HIER, HEARING EXAMINER issued by the On December 19, 1957, complaint herein was Commission charging respondents \with violation of the Federal prices in the saleTrade Commission Act in the use of fictitious resellers the of its lawn mowers by furnishing retailers and n1cans and instrumentalities whereby the retailers may mislead and deceive members of the purchasing public as to the regular and usual prices of their lawn mowers. Answer was filed and thereafter four hearings were held at which testimony and other com- evidence was received in support of the allegations of the of defense plaint. Respondents presented no evidence.e by way or dismiss, all relying instead on a number of motions to strike consists of 297 of which, save one, were denied. The record pages of transcript and 41 exhibits. At the close of the hearings counsel for the Commission submitted proposed findings of fact although counsel for respondents did not. Upon the entire record, as so constituted, and from his observati.on of the witnesses findings of fact. the undersigned makes the following FINDINGS OF FACT 1. Respondents l\iorris Lober & Associates, Inc., and Handy Andy Products, Inc., are corporations organized, existing and of the laws of the State of doing business under and by virtue Delaware, with their principal office and place of business for- Findings 55 F.

merely at 730 Fifth Avenue, New York 19, N. , and currently at 7 Central Park West, New York, N.

Respondents l\iorris Lober Leona Lober and Marcia Wilner (subsequently married and presently Marcia Wilner Pava) are president and treasurer, vice president, and secretary, respectively, of both corporations. The individual respondent Morris Lober formulates, directs and solely controls the policies, acts and practices of the corporate respondents. His address is the same as that of the corporate respondents.

Leona Lober and Marcia Wilner Pava are vice president and secretary in name only and do not formulate, direct or control the policies, acts and practices of the corporate respondents. 2. Respondents are now, and have been for several years last past, engaged in the sale and distribution of power lawn mowers to various dealers and others for resale to the public. In the regular and usual course and conduct of their business respondents cause, and for the past several years have caused their products, when sold, to be transported from places in the States of Ohio and Indiana., among others, to purchasers thereof located in various other States of the United States and in the District of Columbia.

Respondents maintain, and at all times mentioned herein have maintained, a substantial course of trade in said products in con1merce, as "commerce" is defined in the Federal Trade Commissi~n Act, among and between the various states of the United States and the District of Columbia. Respondents' volume of business in said po.wer lawn mowers in said commerce is, and has been, substantial.

3. Respondents at all times mentioned herein have been in competition with other corporations, firms and individuals engaged in the sale of power mO\vers in commerce between and mnOl1g the various States of the United States and the Districtof Colu111bia. 4. In the course and conduct of their business as outlined and for the purpose of inducing the purchase and promoting the sale of theil~ power lawn mowers in commerce, respondents have placed in the hands of their purchasing retailer customers, who resell these power lawn mowers to the public, a means and instrumentality whereby such retailers or resellers may mislead and deceive members of the purchasing public as to the usual and regular retail prices of their lawn mowers. 5. These instrumentalities consist of newspaper advertise- MORRIS LOBER & ASSOCIATES, INC., ET AL. 211 209 Findings ments placed by the respondents in various newspapers for circulation and dissemination in the trade, all of which carry the manufacturer s list prices or suggested list prices. Typical of these is an advertisen1ent placed by respondents in Retailing Daily, Thursday, October 18, 1956, as follows: Big New '57 Models with 4-Cycle Clinton Engines. Recoil Starters. 19" Mower, 1 %, H. P. Suggested list $109.95 can retail with full markup for only $59.95.

21" Mower, 2% H.P. Suggested list $139.95 can retail with full markup for only $69, 23" Mower, 2%, H. P. Suggested list $154.95 can retail with full markup for only $79.95.

6. Second among these instrumentalities disseminated by the respondents are glossy prints picturing respondents' power mow- , each of which contains suggested list prices for the respective mowers far in excess of the actual selling price of these mowers. 7. Third among these instrun1entalities disseminated by respondents are reprints of retail store advertisements placed in local newspapers by customers of respondents containing a suggested list price' together with the actual selling price in each advertisement. These advertisements or copies thereof, and tear sheets, are apparently collected by respondents for dissemination to new custo1l1ers indicating \-vhat respondents' other customers are doing in the sale of respondents' power lawn mowers. 8. Fourth among these instrumentalities are cartons in which respondents' power lawn mowers are shipped, imprinted with the model number or the cutting width, and respondents' corporate HalneS together with the suggested list price, which again is far above that at which the mowers are in fact sold or to be sold.

9. The fifth means used by respondents to disseminate their fictitious prices was by way of distributor s price sheets and other literature each of which conveys the suggested list prices to potential resellers.

10. The testimony of several purchasers from respondents who were officials of department stores, indicates that the individual respondent l\iorris Lobel' on sales visits discussed suggested list prices as well as actual resale prices indicating clearly knowledge of the use to which his suggested list prices were being put and for which they were designed to be used by him. 11. The testimony of the buyers who appeared as witnesses is unanimous, with the exception of one or two instances, that Conclusions 55 F.

respondents' power lawn mowers were never sold at or anywhere near these suggested list prices. These exceptions were new sample models which \were sold at the full suggested price off the floor by happenstance.

12. In 1110St instances, purchasers for resale of respondents mowers used respondents' suggested list prices to compare \with the price at which they actually resold the mowers. It matters not that several others shaved the suggested list price to a figure different and 100ver than that of respondents' suggested list price. The resultant figure \vas, nevertheless, far higher than the sale price advertised.

13. The testimony is also unanimous that the use of these fictitious suggested list prices disseminated by respondents was a potent sales aid in moving these power lawn mowers into the record that thehands of the consumer. It is also clear from the normal markup for power la\vn mowers runs from 25 to 40 percent above purchase cost depending upon seasonal demand and that respondents were well aware of this. In any event respondents' suggested list price \-vas far in excess not only of the actual consumer sales price, but also of this normal markup in the trade. Thus, a mower bought from respondents for $47 and resold for $77 at the start of the season, and at $68 as a close-out price at the end of the season, nevertheless, carried repondents' suggested list price of $154.95. This \vas typical of these price relationships throughout several years in a number of stores and localities. 14. Respondents' suggested list prices are fictitious and exaggerated constituting a powerful inducement and enticement to to the consumer public to buy at what they think therefrom is a great bargain, and the consumer public is as a result repeatedly deceived and mislead thereby.

15. Use by the respondents of the aforementioned false, misleading and deceptive representations and statements has had, and now has, the capacity and tendency to mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that such statements and representations were, and are, true and into the purchase of a substantial number of respondents' power mowers because of said erroneous and mistaken belief that they are acquiring such mo,vers at great bargains.

CONCLUSIONS 1. It is immaterial whether or not respondents' suggested list MORRIS LOBER & ASSOCIATES, INC., ET AL. 213 209 Decision prices represented, in comparison with other competitive lawn mowers, the value or true value of respondents' lawn mowers. 7J,1a-Ro Hosiery Co., Inc. Docket No. 6436. 2. It is likewise immaterial that respondents' purchasers were free to use or not use respondents' suggested list prices. (Orlo.ff Company, Inc. Docket No. 6184.

3. This proceeding is in the public interest. 4. The aforesaid acts and practices of respondents, as herein alleged, are all to the prejudice and injury of the public 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. ORDER It is ordered That respondents Morris Lober Associates, Inc., Handy Andy Products, Inc., corporations, and Morris Lober individually and as an officer of said corporations, and respondents' agents, representatives, employees, successors and assigns directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of power mowers or other merchandise in commerce, as "commerce" is defined in the Act, do forthwith cease and desist from: 1. Representing in any manner that certain amounts are the regular and usual retail prices of their power mowers, or other merchandise, when such amounts are in excess of the prices at which such products are regularly and usually sold at retail. 2. Putting any plan into operation \vhereby retailers or others may misrepresent the regular and usual retail prices of merchandise.

It is further onle'/'ed That the complaint be, and the same hereby is, dismissed as to Leona Lober and Marcia Wilner Pava individually and as officers of the corporate respondents. DECISION OF THE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant to Section 3.21 of the Commission s Rules of Practice the initial decision of the hearing examiner shall, on the 14th day of August 1958, become the decision of the Commission; and, accordingly:

It is ordered That the respondents Morris Lober & Associates, Inc., and Handy Andy Products, Inc. , corporations, and Morris Lober, individually and as officer of said corporations, shall, within Decision 55 F.

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.

GERSHCOW FUR COMPANY ET AL. 215 Decision