George'S Radio and Television Company, Inc., et al.

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

and form in which each has complied with this order. Ix THE ).fATTR OF GEORGE' S RADIO AND TELEVISIOK CO::IPAKY, IKC. ET AL.

ORDBR, Erc., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COl\BIISSION AC' Docket 8134. Complaint, Oct. 1960-Decision, Ja- , 1.962 Order requiring retailers of electrical appliances' and other merchandise in Washington, D. , to cease representing falsely in newspaper advertising that a fictitiously high price or an excessive ":Mfr s. Sug. List" was the usual retail price in the \Vashington area and that purchasers of merchandise at the advertised sale price would save the difference between the two. CO:MPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal , .

Complaint GO F.

Trade Commissioll having reason to believe that George s Hnc1io and Television Comprmy, Inc., fL corporatjon, and George \Vasserman individually and as an offcer of the said corporation, hereiuafter referred to as respondents, have violated the provisions of said Act and it appearing that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, stnJing its charges as follo,,"s:

PAR. GRAPH 1. Respondent George s Radio and Television Company, Inc., is a corporation organized, existing and doing business lluder nnd by virtue of the Jaws of the State of :lfaryland with its principal offce and place of business at 2146-24th Place, Northeast Washington, D.C.

Individual respondent. George. 'Yasserman is an offccr of the. cor pornie respondent. lie formulates, directs and controls the acts and practices of the corporate respondent., inc.l1ding the acts and practices hereinafter set forth. His addrcEs is the sa.me as the corpora.te respondent.

PAR. 2. Respondents arc now, and for some tinw last paEt ha.ve been engaged in the advertising, offering for sale a.nd snJe of electrical applia.nces and other merchandise at retail to the public under the Inme "George s ,Varehousc Supermarts.

PAR. 3. In the course and conduct of their business, respondents now cause, and for some time last past ha.ve 'caused, their said mercha.ndise, when sold, to be shipped from their places of business in the States of Maryland and Virginia and in the District of Columbia to purchasers thereof located in States other than the States in which shipments originated, and in the District of Columbia, and ma,intain and at a,1J times mentioned herein have maintained a substantial course of trade in said merchandise, in commerce, as "commerce" is defined in the Federal Trade Commission Act.

PAR. 4. In the course and conduct of their business, RS aforesaid and for the purpose of inducing the purchase of their merchandise in commerce, respondents have engaged in the practice of TIEing fictitious retail prices in advertisements published in various newspapers. Among and typical of such practices, but not all inclusive thereof are the following statements:

H29.95 Westinghouse Laundromat 'Yasher Dryer Combination____$289 $269.95 'Vestinghouse Automatic Washer--__ $136 $669.95 16 Cu. Ft. Two Door Refrigerator Frf:ezer 'Vestinghouse- S399 $549.95 Westinghouse 17.6 eu. ft. Upright Freezer____$288 $429.95 Westinghouse 14.8 cu. ft. Upright Freezer____$227 Mfr s. Sug. List $499.95 'VESTIXGHOT.n::;E 12. 1 cu. ft. 2 Door Refrigerator- Freezer____$249 'GEORGE' S RADIO AND TELEVISION CO. , INC. , ET AL. 181 179 Complaint PAR. 5. Through the use of the aforesaid statements and others sinlilar thereto, not included herein, respondents I'epresented directly or by implication:

1. That the higher stated prices, when lllaccompanied by any descriptive language, ,were the prices at which the Inerchandise advertised was usually and customarily suld at retail by the respondents in the recent regular course of business.

2. That the mnount designated as ")ffr s. Sug. List" was the price at which the merchandise advertised was usually and customarily sold at retail in the trade area where the representations were made. 3. That purchasers of the products advertiscd were afforded savings of the differences between the higher stated prices unaccompanied by any descriptive language or the amowlt, designated " ifr s. Sug. List" and the ad vertisecl sales price.

PAR. 6. The aforesa.1d statements and representations .were false misleading and deceptive. In truth and in fact: 1. The higher stated prices, unaccompanied by any descriptive language, were substalltially in excess of the prices at which the advertised products were usually and customarily sold at retail by the respondents in the recent regular course of business. 2. The amount desigllated as " Jfr s. Sug. List" was substantially in excess of the price at which the advertised product vms usually and customarily sold at retail in the trade area where the representation was made.

3. Purchasers of the advertised product.s were not afforded savings of the differences between the higher stated prices, unaccompanied by any descriptive language or the amounts designat.ed ":\ifr s. Sug. List' and the advertised sales prices.

PAR. 7. In the conduct of their business, at all times mentioned herein, respondents have been in substantial competition in commerce with corporations, firms and individuals in the sale of mercl1andise of the same. general kind and nature as that sold by the respondents. PAn. 8. The use by respondents of the false, misleading and deceptive statements, representations and practices, as aforesaid, has had and now has, the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that said statements and representations were, and are, true and into the purchase of substantial amounts of respondents' merchandise by reason of said erroneous and mistaken belief. As a consequence thereof substantial trade in commerce has been lUlfairly divert.ed to respondents from their competitors a,nd substantial injury has thereby been and is being done to competition in commerce. 19-603--64-- .: , Initial Decision 60 F.

PAR. 9. The aforesaid acts and practices of respondents, as herein alleged, were, and arc, all to the prejudice and injury of the public and of respondents' competitors, and constituted, and now 'constitute unfair and deceptive acts and practices and unfair methods of competition, in commerce, within the intent and meaning of the Federal Trade COlmnission Act.

ilr. Anthony J. Kennedy, .IT. supporting the complaint. Grossberg, Yochelson B,.ill by Aft. Irving B. Yochclson 'Vashington, D. , for respondents.

INITIAL DECISION BY \V ALTER IC BENNETT HEARING EXA fIXER This is a false and misleading advertising case involving the household appliance retail distribution field in the metropolitan area of Washington, D.C. It poses primarily the simple qncstion whether or not a manufacturer s suggested retail price, higher than the price nsnally charged by respondents or in the tmde area by similar establishments, may legally be advertised in juxtaposition with respondents' lower price. Claimed justification is that the suggested resale price of the manufacturer, whether identified as such, or not, is properly used as a means of identifying the product. The complaint was issued October 7, 1060, under Section 5 of the Federal Trade Commission Act. In addition to the formal allegations identifying the respondents, describing the interstate character and efiect of the acts on comlnerce, and competition and charging the violation; the complaint sets forth six typical examplcs of advertisements. Five of these set forth a price, ,a description of the article and a second lower price. The sixth has the first price preceded by the words "Mfr s Sug. List" The complaint then charges that the prices without the statement manufacturer s suggested list " constitute false representations that respondents usually sold the article at the higher price, that the price with such designation constituted a representation that such price was the usual sales price in the trade area, and that the purchasers were afforded savings equal to the difference between the prices placed in juxtaposition. Respondents in their answer deny that the prices are Inisrepresenta. tions and claim that they are used solely to identify the items sold. They also allege ablmdonment and state that the public is not injured. They arnnit the formal allegations identifying the parties. Following an informal conference with the hearing examiner, counsel stipulated substantially all of the facts allegcd in the complaint except the allegations concerning the price level of the articles sold in the trade area and the conclusion of misrepresentation. Both , GEORGE' S RADIO AND TELEVISION CO. , INC. , ET AL. 183 179 Initial Decision counsel ate to be commended for their cooperative efforts which materially reduced the record and emphasized their respective positions by dispensing with unnecessary proof. The Commission s case was introduced in two hearings held February 15 and 20, 1961, and the respondents' case was commenced J\iarch 29 and concluded :March 30, 1061. Proposed findings of fact and conclusions of law were submitted :May 26, 1061. Respondents made a motion to dismiss the complaint at the close of tho Commission ease for lack of proof. Decision was then reserved under amended Rule 38 (e). Thc motion is now denied.

All proposed findings of fact and conclusions of law not hereinafter specifically found or concluded are herewith rejccted andon the b.asis of consideration of the entire record, the hearing examiner makes the following findings as to facts, conclusions drawn therefrom and order.

FINDINGS OF FACT 1. Respondent George s Radio and Television Company, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Maryland with its principal offce and place of business a,t 2146-2'Hh Place, Xortheast Washington, D. 2. Individual respondent George 'Vasserman is an offceT of the corporate respondent. 1-Ie forrnulates, directs and controls the acts and practices of the corporate respondent, including the acts and practices hereinafter set forth. His address is the same as that of the corporate respondent.

3. In the course and conduct of their business, respondents now cause, and for some time last past have caused, their said merchandise when sold, to be shipped from their places of business in the States of Maryland and Virginia and in the District of Cohunbia to purchasers thereof located in States other than the States in which shipments originated, and in the District of Columbia, and maintain, and at all times mentioned herein have maintained a substantial course of trade in said merchandise, in commerce, as "cOlnmerce" is defined in the Federal Trade Commission Act.

4. George s Radio and Television Company, Inc., the corporate respondent in the subject case, currently doing business as "George , has bee.n incorporated for a period in excessWarehouse Supermarts ofthirty (30) years.

5. George 'Wasserman, the indivic\nal respondent in the subject case, has been and stil is Prcsident of the corporate respondent since its incorporation. The current offcers of the corporate respondent are:

_ ___ ___ 184 FEDERAL TRADE C01Thnssro DECISIOKS Initial Decision GO F. George 1Vasserman President and Treasure-r J aniee 1Vasscrman Vice President uth Casclon Secreta1'Y o. George V asserlnan is the sale stockholder of the corporate respondent and owns 100% of its stock.

7. The respondents placed the following advertisements in the 'IV ashington Post and Times Herald and the Evening St"r, newspapers of gene""l eircnJation in the 'IVashington, D. , :\letropolitan area on the dates indicated, under the name of "George s 'IVarehouse Snpermarts (a) 429.95 \Vf'.'-tinghouse Launuromat "\Vasher Dryer Combination- $2S9. was advertised in the vVashingtoll Post and Tinles Herald on September 16 and 23, 1050, and in the Evening Star on September 16, and September 23, 1059.

(b) $269.95 'Vestinghouse Automatic Washer- $136 or $134. (The last amOlllt depending on the date of the advertisement) was advertised in the 'IVashington Post on July 23 , 28, and 30, 1059, and on September 2 , 18, ancl30, 1959, and in the Evening Star on./lugnst , 26, 28, and 30, 1050, and September 2, 4 , G , 9, 18, 23, and 30, 1050. (c) $GflO.fJ5 16 cu. ft. '1'wo Door Hefrigeratol' Freezer-\Vestinghouse-$399. in the 'II' ashingt.on Post on September 30 1059. (d) $54D. 95 Westinghouse 17.Q cu. ft. Lpright Freezer-$288 or $284. (The last amount depending upon the date of the advertisement.) was adve-rtised in the 1Vashil1gton Post 011 September 2, 4 , 6 , 11, and 13 1959, a.nd in the Evening Star on September 4 , G, 9, anclll, 1959. (e) $429.05 Westinghouse 14.8 cn. ft. Upright Frl'e;.er- 27 or $217. (The. last amolUlt depending on the date of the advertisement) "was advertised in tho ,Yashington Post on September :1 and G, 1959, and in the Evening Star on Septelnber 4, 5, and 16 , 1939. (f) :LUl"S Sug. List $499,95 TFcstinghouse 12. 1 cu. it. 2 Door Hefrigcrator 1fl"eezer-$24D.

was advertised in the "\Vashington Post on September 9, 1959. 8. The 'Yestinghouse Appliances described in the advertisements designated in finding Ko. 7, have been identified by the respondents ,with the following \Vostinghonsc models:

Model (a) ;;429.fJ5 \'' esLingllonse Lanndromat \"'asher Dryer Combination -- - \YD- (b) $269.95 \Vestinghouse Automatic Washers_ ___n_ - L 113 (c) $66D.95 16 Cu. ft. 2-Door Refrigerator Freezei' - DCl\ 1G (d) S549.05 17.G Cu ft. Upright Fl'eeZCL- VM 18 GEORGE' S RADIO AND TELEVISION CO. , INC. , ET AL. 185 179 Initial Decision (e) $-129.95 14.8 Cu. ft. Vpright Frcezer ---------------- L'l\ H (f) $"190. 95 Westinghouse 12. Cu. ft. 2-Door Refrigcrator- Freezer ---------------------- ------- T))L 12 0. The higher stated prices in the advertisements described in finding No. , unaccompanied by any descriptive language, were substantially ill excess of the prices at which the advertised products were usually and customarily sold at retail by the respondents in the recent regular course of business. Such advertised prices -were, however, the manufacturers' suggested retail prices in the three instances where the price sheets identify the model.

10. Respondent corporation has made ntunerous sales of equipment described in finding K o. 8 in commerce as "commerce)' is defined in the Federal Trade Commission Act.

11. Numerous sales of equipment of the Same general character have been made by others in C011merce in the Sa111e trade area in which respondent sells equipment.

12. There has been substantial competition in commerce between respondent corporation a,nd other persons, firms and corporations in the saJc of merchandise of the same general kind and nature as that sold by responclcnt corporation.

13. The advertisements issued by respondents, read as a whole convey to the reader an impression that the higher stated prices were prices at which the merchandise was usually and customarily sold at retail by the respondents in the recent regular course of business. 14. The twelve competitors called by counsel supporting the complaint, including discount houses, accessory shops and a depa.rtment store, established that each of these competitors had a policy of making sales of merchandise, of the same kind and nature as that sold respondent corporation, at prices substantially less than the manu. facturer s suggesteel resale price. Said witnesses appeared to con. stitute a fair cross section of the competition in the field. 15. One competitor witness for the Commission stated that certain of his customers had told him of sales by others of the same type of merchandise at the manufacturer s suggestcd list price. 1-lis test-i. molly, however, was confused and therefore, entitled to little weight. It is inferred from the testimony of the other competitors called by counsel supporting the complaint that rarely, if ever, were sales made a.t the manufacturer s suggested retail price. Sales were almost invariably made at prices below that figure, and it wa,s the pricing policy of such competitors to price their goods generally below manufacturer s suggested retail prices.

Initial Decision 60 F.

16. Testimony adduced by respondents failed to discredit the testimony offered by the Commission witnesses that there was little selling at the manufacturer s suggested retail price by cmnpetitors comparable to respondents. This testimony was that most sales by a few credit stores, or stores not specializing in the sale of appliances, were made at the suggested manufacturer s retail price or in Olle case some at higher prices. Neither party called witnesses from the manufacturer to testify how the suggested prices were est"blished. 17. Miss Sandburg of Thompson Brothers Furnitnre testified that the major line of that company was furniture. .When "asked whether it was in competition with respect to the sale of appliances, she said that in the sense of selling something that someone else was selling it was " CBJ (b)ut, as a major business endeavor I conldn t say that no . . . . Asked further, the witness testified that she seldom advertised appliances, did no comparison shopping and did not even check the advertising of appliances by others.

18. Thomas IV olking of Cameo Appliance Company testified that 05 or 90 percent (of sales) would be at the manufacturer s retail price." On cross-examination, however, he admitted his firm was a credit house and that "if we sell something on terms we may charge the list price, when we sell something for cash we may give something off, a larger trade or discowlt. . .." As to cash sales his testimony was: "\Vell, V\,8 get QUI' manufacturer s list price all a cash proposition occasionally.

19. David Franks, who was engaged in business sellng "records furniture, refrigerators, televisions and so forth/' testified that his prices were "the Est prices, and in SOlne cases higher than the list prices." On cross-examination, he admitted that the principal criterion in establishing this higher price is the fact that he has to sell on credit.

20. Carl Mirman, an employee of respondent George s Radio and Television Company, Inc., who was formerly employed by Slattery as a store manager on Naylor Road in Southeast 'Vashington, testified that the merchandise sold by that store was "ticketed by manufacturer s name, model number, and manufacturer s suggested list iirman admitted that theprice." On cross-examination, however exceptional retail price atmanufacturer s list price was by far the Slattery s. I-Ie said it was used "when we took a trade- , and referring to a hypothetical case of trading in a TV, testified that they would defmitely not get the allowed price when selling an article turned in; that the allowance was "inflated, bnt it is based on the manufacturer s price to give it that inflated appearance. GEORGE' S RADIO A.'D TELEVISION CO., INC., ET AL. 187 179 Initial Decision 21. Testimony adduced by respondent failed to lay the factual basis for respondents' claim that the manufacturer s suggested retail price was used for identification only and that the use of such prices was voluntarily discontinued under circurl1st.anccs rendering the case moot.

22. Wiliam G. I-Iills, Execntivc Director of Electric Institute of Washington, described a display of appliances maintained by his non-profit organization" which was organized "to promote the sale of products and services and to keep the public informed and educated on new developments in the industry and new uses of the products of the industry . The display on the ground floor of Potomac Electric Power Building in "\Vashillgton contains a "representative line of practically all types of electrical products for the home . Each item is tagged to show: description, the capacity, the manufacturer or suggested list price and a list of the association member retailers where the item may be purchased. If one of thc 90 000 to 05 000 odd yearly visitors e,xprcsses an interest in an item, the hostess demonstrates it and gives the visHor a tag showing a place or places in the visitor s vicinity where the item may be purchased and the model number of the item. W11en asked whether the price was put on the tag handed to the visitor, Hils testified he did not know, and that the lnstitnte was not interested in the price. The price might be placed on the tag attached to the appliance by either the mannfactllrer or a distributor depending on whose exhibit it was. Hils testified he had no knowledge of the actual selling price and that no study had been made of prices. Under such circumstances, the manufacturer suggested list price seems to have litte value as an identification of the item demonstrated.

23. David Galford who has been advertising manager of respondent George s Radio & Television Co., Inc., since September 8, 1959, testified that respondents had voluntarily ceased advertising a comparative price in October of 1060. On cross-examination, he stated that he had been instrncted by respondent George Wasserman to withdraw an advertisement prepared to show such comparative prices on Friday, October 21, 1060. Galford was not aware that the complaint had been mailed October 18, 1060, (as shown by the Commission s records) and could not say whether the action of the company was voluntary except that :.1:1'. ,V nsserman had told him that "inasmuch as a meeting had been held of some sort that he did not want any trouble 24. The manufacturer suggested retail prices are substantially higher than the prices at which stores of the same general character as respondents' in the 'Washington trade area have usually and 188 FEDERAL TRADE COMMISSIO DECISIONS Initial Decision 60 F, customarily sold 'Westinghousc appliances for cash at retail in the recent regular course of business.

25. The use, without desigllation as such, of the manufacturer suggested retail price in advertising in juxtaposition with lower price tends to lead readers or such advertising to believe that the higher price is the price at which the merchandise is usually and customarily sold by the advertiser in the recent. regular course or business. 26. The use with the designation "manufacturer s suggested list" price in advertising in juxtaposition with a lower price tends to lead readers of such advertising to believe that the higher price is the price at which the merchandise is usually and customarily sold in the trade area by stores comparable to that of the advertiser and that a. saving will be made of the difference between the two prices. 27. There ,,,as no reliable proof that the use of the manufacturer suggested retail price was solely for the purpose of -identifying the type of appliance.

28. The use of the l11manufacturer s suggested retail price is not an effective or the Hsna.l manner of identifying a product which has othet means of identification.

29. The fact that distributors as well as manufacturers suggested retail prices v.ere placed on items in the Electric Institute of 'V nshington display, makes the claim that the manuft":cturer s suggested retail prices were used by George s Radio & Television Company, Inc., to identify to prospective customers appli l1cesobscrved at such displu.y untenable.

30. TheTe 'influ no reliable evidence of voluntary discontlnmmce of the practice of advertising in the manner described in preceding findings prior to the issuance of the complaint. CLUSIONS 1. Tho Federal Trade Commission has jurisdiction of the subject matter and of the persons of respondents.

2. This proceeding is in the public interest, and the facts found were established by reliable, probative and substantial evidence. 3. The use of a manufacturer s suggested reta.il price in advertising in commerce when such price is placed in juxtaposition with a lower price, constitutes an unfair or deceptive act or practice where such suggestedreta,il price is neither the usual and customary price at which the advertiser sold in the recen t regular course of business nor the usual.l and customary price of a fair cross section of other comparable stores in the same trade area. Contrary to respondents' contention a written advertisement requires no public testimony as to its meaning. IGEORGE' S RADIO A."VD TELEVISION CO. , INC. , ET AL. 189 179 Initial Decision The examiner in the first instance, and the Comlnission, should it disagree, are quite capable of determining what a rcader might understand from the words and ligures in the advertisements here under consideration. Even though the "trade:' might not be confused Winsted Hos;ery v. 258 U. S. 483 (1022), the Federal Trade Commission is empowered to prevent advertising calculated to mislead the public Zenith Radio Oorpom.tion v. 143 F. 2d 20 (C. 1944). The use of a nlanufactnrer s suggested resale price in the free price rLrea of 'Vashington, where many buyers comb from states which make the manufacturers price Inandatory, is particularly susceptible of misconstrnction. A young bride newly arrived from a state permitting rigid manufacturer price control might very well suppose that the usual price was that suggested by the manufacturer. She would thus prefer the advertiser comparing that price with his own in the first instance, and would pass by another store offering the smne merchandise at the same price because she was Jed by the advertisement to enter the store offering a "bargain . It has long been clear that if the first contact is procured by misleading, it makes no difference if the consumer is later informed of the truth. 1'. O. v. Standard Ed1icat;on Society, 302 U. S. 112. OaTter PTod1icts, Inc. v. 186 F. 2rl 821, 824 (C.A. 7, 1051). It is equally clear that the Commission is as zealous of the rights of the unwary as of the sophisticated buyer. Oharles of the Ritz Distrib,do1'8 001'1" v. 143 F. 2d 676 (C.A. 2 , 1044). Bantam Books Inc. v. F. 275 F. 2cl680 (GA. , 1960). Further, contrary to respondents' contention, it was not necessary to establish actual deception or to measure the trade deviation caused by the respondents ' advertising, In the Matter of Lafayette Emss l1an1ifact1iring 00. Docket No. 6671, September 27, 1060. the ,Vatte!' of Main St1'eet F1irnit1ire Inc. Docket No. 7786 Nov. 16 1060. In the Matter of the Baltimore L1iggage Oompany, et al. Docket No. 7683, March 15 ID61.

Vhatcvcr the situation may be with respect to automobile pricing, Congress limited its enactment to remedying the abuses there found. Such rmnecly has no application here.

4. The use of a manufacturer s suggested retail price, without designation as such, in advertising in commerce, when such price is placed in juxtaposition with a lower price, constitutes an unfair or deceptive act or practice 'where the advertiser s usual and customary price made in the recent regular course of business has been less than the higher price.

5. The use of a manufacturer s suggested retail price, designated as such, in advertising in commerce when placed in juxtaposition with Initial Decision 60 F.

a lower price constitutes an unfair or deceptive act or practice where the manufacturer s suggested retail price bears little relation to the usual and customary price of comparable stores in the same trade area. As the Commission recently pointed out in The Baltimore Luggage Oompany, et al. Docket No. 7683, March 15, 1961, it is the trade area in which respondent operates that concerns the consumer. He wants to know that he is obtaining a bargain in the "rca in which he shopsnot some other area.

6. Respondents use of the manufacturer s suggested retail price in advertising was not calculated to identify particular appliances, bnt rather to emphasize that respondents engaged in selling below a theoretical base price.

7. The case is not moot. The dismissal of complaints in abandonment cases is not the usual procedure and while the Comnlission is vested with discretion to determine whether or not a practice is surely stopped, where, as here, the practice continued until after the filing of the complaint and the respondents clainl the right to continue, dis missal should not be ordered. In the Mattet of ATnold Oonstable OOTpomtion Docket 1\0. 7657, January 12, 1961, and cases cited therein. In the Matter of Damar PTodllcts, et al. Docket 1\0. 7760, 1fay 3 1061; Art National Mamljactll1'rs DiRtj'ibllting 00. , Inc., et al. Docket 1\0. 7286, May 10 , 1061; TV a1'd Baking Oompany v. , 1010 (1058).

8. Respondents have engaged in unfair or deceptive acts or practices in commerce in violation of Section 5 of the Federal Trade Commission Act through the use of manufacturer s E;uggestcd retail prices placed in juxtaposition in advertising with respondents' lower current prices.

9. The use of such acts and practices have had and now have the capacity and tendency to mislead members of the purchasing public into the erroneous belief that the lower prices quoted represent a saving in cost and thus into the purchase of appliances from respondents. As a consequence, substantial commerce may be diverted to respondents from their competitors causing them and the public substantial injury.

ORDER It is ordered That respondents, George s Radio a,nd Television Company, Inc., a corporation, and its oiUcers and George \Vasserman individually and as a,n offcer of said corporation, and respondents agents, representatives, and employees, directly, or as George s 1Varehouse Supermarts, or through any corporate or other device, in connection with the offering for sale, s tle and distribution of electric.aT GEORGE' S RADIO A."D CfELEVISION CO., INC. , ET AL. 191 179 Opinion appliances or any other merchandise in comIneree, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Representing, directly or by implication: (a) Through the usc of the term "Manufacturer s Suggested List" or any other term of the same import, or in any other manner, that any amount is the price of merchandise in respondents' trade area when it is in excess of the price at which merchandise is usually and customarily sold at retail in said trade area. (b) That any price, when accompanied or nnaccompanied by any descriptive Iltuguage, was the price at which t118 merchandise advertised was usually and customarily sold at retail by the l' respondents 11n1es8 such aclve,rtisecl merclul.uc1ise ,vas in fact usually and customarily sold at retail at such price by the respondents in the recent past.

(0) That any saving is offered in the purchase of merchandise from t.he respondents: price or the price in the respondents' trade area unless the price at which the merchandise is offered const.itutes a reduction from the price at -which said me.rchnndise is usually and customa,lily soJel at ret.a,iI by the respondent or at which said merchandise. is usually and customarily sold at retail in sa.id trade area.. 2. :i\isrcprescnting, in any manner, the amount of snvings available to purchasers of respondents' merchandise or the amount by which the price of sa-id merchandise has been reduced frolll the price at which it is usual.lly and customarily sold at leta.il by the respondents or in the trade area or areas \\:here the representations an; made. OPINION OF THE COl\BIISSION By DIXON Oornmissioner:

Respondents were charged by the complaint in this procecding with false representations as to price in violation of Section 5 of the Federal Trade Commission Act. The hearing examiner in his initial decision filed June 20, 1061, found that the charges were sustained by the record and ordered respondents to cease and desist the challenged practices. Respondents have appealed, raising questions as to the suffciency of the evidence and as to certain conclusions drawn by the examiner.

There is no dispute about the essential facts in this case except with reference to the nsnal and customary prices of the advertised products in the Washington trade area, a point to be further discussed hereafter. Respondents are engaged in the advertising, offering for sale and sale of electrical appliances and other merchandisc at retail to the 192 FEDERAL TRADE CO:MISSION DECISIONS Opinion 60 :B public under the name "George s .Warehouse Supermarts" (hereinafter referred to as George s). In the course of their business, respondents advertised in the vVashington Post and Times Herald and the Evening Star newspapers in 'Vashington, D.C., at various times in 1050, making the following representations: 429. 95 Westinghouse Laudromat 'Vasher Dryer Combination-$289. 269. 95 Westinghouse Automatic ,Vasher-$136 or $134. 6G9.05 16 cu. ft. 'lwo Door Refrigerator Freezer-Westinghouse-$399. 549.95 'Vestinghouse 17. 6 cu. ft. Upright Freczer-$288 or $284 429.95 'Vestinghousc 14. 8 cu. ft. Upright Freezer- $227 or $217. Mfr s Sug. List $499.95 Westinghouse 12.1 cu. ft. 2 Door Refrigeratol'- Freezer- $249.

The complaint alleged that through the USe of these and other similar statemcnts, respondents represented:

1. That the higher stated prices, when unaccompanied by any descriptive language, were the prices at which the merchandise advertised ,,-as usually and customarily sold at retail by the respondents in the recent regular course of business.

2. That the amount designated as "Mfr s. Sug. List" ,vas the price at which the merchandise advertised was usually and customarily sold at retail in the trade area ,,,here the representations were made. 3. That purchasers of the products advertised were afforded savings of the differencf's bebyccn the higher stated prices unaccompanied by a descriptive language or the amount, designated "Mfr s, SUg. List," and the advertised sales prices.

It "\yas further alleged t.hat such statements and representations were false, misleading and deceptive because t.he higher prices were substantially in excess of what they were representpd to be and Plllchasers wero not afforded the savings represented.

Tho hearing exanliner fOlUlcl in part that the, use of t.he manufac. turer s suggested retail price with the designation ':manufadurer suggested list" (abbreviated " I:r s Sug. List" ) in advertising in juxtaposition with a lo, er price tends to lead readers of such advertising to believe that the higher price. is the price at which the merchandise is usually and customarily sold in the trade area by st.ores comparable to that of the advertiser when in fact such price is substantia.lly higher than the prices at which stores of the same general character as respondents' in the \Vashington trade area have usually and customarily sold "'Vesting-house appliances for cash at re.tail in the recent regular course of business. \Vhile this holding is essentially sound, we think it unduly restrictive in one minor respect. That is, it should not have been limited only to stores "comparable" to George s. The representation "::Ifr &; &; &; GEORGE' S RADIO A. D TELEVISION CO. , INC. , ET AL. 193 179 Opinion Sug. List" creates the impression that there is a usual and customary retail price for the product in the trade area, and that that price is the specified "Mfr s. Sug. List" price. The soundness of tlus interprctation is settled law. See Olinton Watch 00. Federal Trade OO'wmission 291 F. 2d 838 (7th Cir . 1061); Baltimore Luggage 00. F edeml Trade 0 ommission 206 F. 2d 608 (4th Cir. 1061). Substantial probative evidence in the record here shows that the products in question were being widely sold in the trade area at a varicty of retail prices significantly lower than the higher comparative prices advertised by respondents. It is clear from the record that the instances in which certain retailers sold at or above the manufacturer s suggested prices were exceptions rather than the general rule. The hearing examiner found to this effect and we agree. 'Vo therefore reject respondents' contentions as t.o the suffciency of the evidence and the conclusions to be drawn therefor0111 on this question. The initial decision will be modified to conform to our views.

vVe additionally note that the hearing examiner has not clearly found that respondents represented in their advertising a saving to purchasers in those instances in which the higher price was not designated as manuf,tcturer s suggested list. Furthermore, he has failed to clearly find that the savings represented in all cases would not be realized by purchasers of the products. The initial decision will also be modified to correct these deficiencies.

Misrepresentation as to the usual and customary retail prices of articles and the savings to be obtained over such usual prices by those selling to the ultimate consumer has been challenged and prohibited by the Commission in a. number of cases.

In Macher Watch Jewel1-y 00. , etc. 32 F. C. 763 (1041), the Commission prohibited inter alia representa60ns that respondents prices represent any substantial discount from the customary retail prices of such merchandise. In Plaza Luggage Supply 00., Inc. et al. 44 F. C. 443 (1048), the Commission in prohibiting price misrepresentation held that respondents ' so-called catalog or list pdces were not prices at all but arbitrarily fixed amounts which, when reduced by the stated discounts, were approximately the regular and customary prices. Using the term "List Price or any other term of similar import or meaning to refer to prices not the bona fide reg1l1ar established selling prices of tires and tubes advertised and offered for sale, as established by the usual and customary sales in the normal COUfse of business was ordered prohibited by the Commission in the following cases: The Firestone Tire (6 Rubber 00. , et a'!. 33 F. 282 (1941); The Goodyea" Tire Rubber 00" et al. 33 F. C. 298 &; &, Opinion 60 F.

(1041); The B. F. Goodrich Oompany, 33 F. C. 312 (1041); and Sears, Roebuck Co. 33 F. C. 334 (1041). Additional Commission cases involving the use of fictitious prices or price misrepresentation inelude MarIJ1ell Dist,'ibuting Co., Inc., et al. 54 F. C. 260 (1057); Hutchinson Chemical Oorp. , et al. 55 F. C. 1042 (1950); Bond Stores, Inc. Docket No. 6780 (January 7 , 1060) ; Arnold Oonstable Corporation Docket No. 7657 (January 12 , 1961) ; Art National Manufacturers Distributing 00., Inc. , et al. Docket No. 7286 (May 10, 1961) ; and many others.

The courts have upheld the Commission orders banning fictitious pricing practices and the making of blse savings claims. L. Mayers 00. , Inc. v. Federal Trade Oommission 07 F. 2d 365 (2nd Cir. 1938) ; OOn8urnersllorne Equipment 00. , et al. v. Federal Trade Oommission 164 F. 2d 072 (6th Cir. 1047); Ni,' esk Industries, Inc., et Ii. v. Federal Trade Oommission 278 F. 2d 337 (7th Cir. 1960), cert. denied 364 U. S. 883 (1060); Kalwajtys, et al. v. Federal Trade Commission 237 F. 2d 654 (7th Cir. 1056), Cel.t. denied 352 U.S. 1025 (lG57) ; Progress Tailoring 00. v. Federal Trade Oommission 153 F. 2d 103 (7th Cir. 1046) Clinton Watch Oompany, et al. v. Federli Trade Commission, supra.

The use by the respondents in this case of manufacturers' suggested list prices and other higher prices in compadson with Imver adver tised sales prices were misrepresentations as to usual and customary prices and as to savings aiIorded purchasers and were unfair acts or practices and unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act. See Clinton Watch Oompany, et al. v. Federal Trade Oommission 201 F. 2d 838 (7th Cir. 1961), where the court, at page 840 stated that misrepresentation as to the retail value of merchandise by means of an attached fictitious price and deception as to savings afforded by the purchase of the product at a substantially lower price than that indicated thereon constitntc unfair methods of competition.

The argument to the eiTect that the Automobile Information Disclosure Act, Public Law 85-506, 72 Stat. 325 (1058), indicates Congressional approval of the type 01 practice here engaged in is rejected. See The Baltinw1'e Luggage Company, et al. v. Fedeml Tmde Oommission, supra.

R.respondents' appeaJ is denied. The hearing cxmniner s initial decision, except as modified to conform to the views of the Commission herein expres.sed, ""ill be adopted as the decision of the Commission. An appropriate order wil be entered.

GEORGE' S RADIO TELEVISION CO. , L1IC., ET AL. 195 179 Order FINAL ORDER This matter having been heard by the Commission upon respondents' appeal from the hearing examiner s initial decision, and upon briefs and oral argument in support thereof and in opposition thereto; and The Commission having rendered its decision denying respondents appeal and directing that the initial decision, except as modified to conform to the Commission s views therein expressed, be adopted as the decision of the COllnission :

It i8 ordered That paragraphs 13 and 24 of the findings of fact in the initial decision be, and they hereby ,ue, stricken. It i8 further ordered That paragraphs 25 and 26 of the findings of fact in the initial decision be, and they hereby are, redesignated 24 and 25, respectively, and modified to read as follows: 24. The use, without designation ns such, of the manufacturer suggested reta.il price in advertising in juxtnp.position with a lower price, represents and tends to lead ren,ders of such advertising to believe that the higher price is the price at which the merchandise is usually and customarily sold by the advertiser in the recent regular course of business and that a saving will be made of the difference between lhe two prices.

25. The use with the designation "l\I.frs. Sug. List'j or "l\Ianufacturer s Suggest.ed List" price in advertising in juxtaposition with a lower price represents and tends to lead readers of such advertising to believe that the higher price is the price,at which the merchandise is usually and customarily sold in the 'Washington trade area and that a saving will be made of the difference between the two prices. It is further ordered That a new paragraph, designated 26 , be and it hereby is, inserted in the findings of fact in the initial decision immediately following redesignated paragraph 25, as follows: 26. The "l\ianufacturer s Suggested List:: prices of "\Vestinghouse including those contained in the advertisements set out in Finding No. , whether so designated or not, are substantially higher than the prices at which stores in the 'Washington trade area have usually and customarily sold the Westinghouse appliances to which they refer. Purchasers of the advertised products were not afforded sa,vings of the differences between the higher stated prices, unaccOlnpanied by any descriptive langua,ge, or the amount designated "l\ifrs. Sug. List" and the advertised lower sales prices.

It is furthe?' oreleTed That the first senlcnce of the first subparagraph of paragraph 3 of the conclusions in the initial decision be, and it hereby is, modified to read as follows:

Syllabus 60 F.'l'.

The use of a manufacturer s suggested retail price, so designated in advertising in commerce when such price is placed in juxtaposition with a lower price, constitutes an unfair or deceptive ,act or practice where such suggested retail price is not in fact the price at which the merchandise is usually and customarily sold in the trade area. The use of such a price, without designation, constitutes an unfair or deceptive act or practice where such price is not the usual and customary price at which the advertiser sold in the recent regular course of business.

It is further ordered That the first sentence of paragraph 5 of the conclusions in the initial decision be, and it hereby is, modified by striking therefrom the \vord "comparable It i8 further OJ'dered That paragraph 0 of the conclusions in the initial decision be, and it hereby is, modified by inserting at the end the following new sentence: Respondents, therefore, have also engaged in unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act.

It i8 further OJ'dered That the initial decision, as so modified, be and it hereby is, adopted as the decision of the Commission. It is further ordered That the respondents SlulD, 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 thc order to cease and desist.