Action Records, Inc.

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

In THE MatTTER OF ACTION RECORDS, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 7712. Complaint, Dec. 30, 1959—Decision, Apr. 1, 1960 Consent order requiring independent distributors of phonograph records for several manufacturers in New York City to cease giving concealed “payola” to dise jockeys of radio and television programs to induce them to “expose,” or play frequently, certain of their records to increase sales thereof.

Mr. John T. Walker and Mr. James H. Kelley for the Commission. Dannenberg, Hazen & Lake, of New York, N.Y., by Mr. Leonard M. Lake, for respondents.

Initiat Decision By Wituiam L. Pacx, Heartne Examinun The complaint in this matter charges the respondents with violation of the Federal Trade Commission Act in connection with the sale and distribution of phonograph records. An agreemeiit has now been entered into by respondents and counsel supporting the complaint which provides, among other things, that respondents admit all of the jurisdictional allegations in the complaint; that the record on which the initial decision and the decision of the Commissicn shall be based shal] consist. solely of the complaint and agrecinent; that the inclusion of findings of fact and conclusions of law in the decision disposing of this matter is waived, together with any further procedural steps before the hearing examiner and the Commission; that 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 specifcaliy waiving any and all rights to challenge or contest the validity of such order; that the order may be aliered, modified, or set aside in the manner provided for other orders of the Commission; that the complaint may be used in construing the terms of the order; and that the agreement is for settlement purposes only and does not ACTION RECORDS, INC., ET AL. 1185 1184 ‘Order 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 appropriate disposition of the proceeding, the agreement is hereby accepted, the following jurisdictional findings made, and the following order issued :

1. Respondent Action Records, Inc., is a corporation organized, existing and doing business under the laws of the State of New York, with its principal office and place of business located at 452 West 46th Street, New York, New York. Respondents Louis Klayman, Morris Price, and Herbert. Cohen are president, treasurer and secretary, respectively, of the corporation. The address of the individual respondents is the same as that of said corporate respondent.

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 ts ordered, That. respondents Action Records, Inc., a corporation, and its officers, and Louis Klayman, Morris Price, and Herbert Cohen, individually and as officers of said corporation, and respondents’ agents, representatives and employees, directly or through any corporate or other device, in connection with phonograph records which have been distributed in commerce, or which are used by radio or television stations in broadcasting programs in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist. from:

1. Giving or offering to give, without requiring public disclosure, any sum of money, or other materiai consideration, to any person, directly or indirectly, to induce that person to select, or participate in the selection cf, and broadcasting of, any such records in which respondents, or any of them, have a financial interest. of any nature. 2. Giving or offering to give, without requiring public disclosure, any sum of money, or other material consideration, to any person, directly or indirectly, as an inducement to influence any employee of a radio or television broadcasting station, or any other person, i any manner, to select, or participate in the selection of, and the broadcasting of, any such records in which respondents, or any of them, have a financial interest of any nature. There shall be “public disclosure” within the meaning of this order by any employee of a radio or television broadcasting station, 1186 FEDERAL TRADE COMMISSION DECISIONS.

Decision 56 F.T.C.

or any other person, who selects or participates in the selection and broadcasting of a record, when he shall disclose, or cause to have disclosed, to the listening public at the time the record is played, that his selection and broadcasting of such record are in consideration for compensation of some nature, directly or indirectly, received by him or his employer.

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 Ist day of April, 1960, become the decision of the Commission; and, accordingly :

fi is ordered, That 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.