The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Annual
Report
of the
FEDERAL
TRADE
COMMISSION
For the Fiscal Year Ended
June 30, 1965
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C., 20402 - Price cents (paper cover)
Federal Trade Commission
PAUL RAND DIXON, Chairman
PHILIP ELMAN, Commissioner
EVERETTE MACINTYRE, Commissioner
JOHN R. REILLY, Jr., Commissioner
MARY GARDINER JONES, Commissioner
JOIIN V. BUFFINGTON, Assistant to Chairman
JOSEPH W. SHEA, Secretary
PHILIP R. LAYTON, Program Review Officer
JOHN N. WHEELCOCK, Executive Director
FRANK C. HALE, Deputy Executive Director
JAMLES McI. HENDERSON, General Counsel
EDWARD CREEL, Director of Hearing Examiners
CHARLES A. SWEENY, Director, Bureau of Deceptive Practices
WILLARD F. MUELLER, Director, Bureau of Economics
SAMUEL L. WILLIAMS, Director, Bureau of Field Operations
CHALMERS B. YARLEY, Director, Bureau of Industry Guidance
JOSEPH E. SHEEHY, Director, Bureau of Restraint of Trade
HENRY D. STRINGER, Director, Bureau of Textiles and Furs
WILLIAM P. GLENDENING, Comptroller
JOHN A. DELANEY, Director, Office of Administration
WILLIAM F. JIBB, Director, Office of Information
ii
EXECUTIVE OFFICES OF THE FEDERAL TRADE COMMISSION
Pennsylvania Avenue at Sixth Street Northwest
Washington, D.C. 20580
Field Offices
30 Church Street, NewYork, N.Y., 10007
Room 486, U.S. Courthouse and Federal
Office Building, 219 South Dearborn Street,
Chicago, Ill.,60604
450 Golden Gate Avenue, Box 36005, San
Francisco, Calif., 94102
Room 1212, 215 West Seventh Street, Los
Angeles, Calif., 90014
Room 1001, 131 State Street, Boston, Mass.,
02109
Room 1000, Masonic Temple Building, 333
St.Charles Street, New Orleans, La., 70130
Room 10511, U.S. Courthouse Building,
P.O. Box 61165, Houston, Tex., 77061.
Room 511, U.S. Courthouse, Seattle, Wash.,
98104.
Room 1128, Standard Building, Cleveland,
Ohio, 44113
Room 2806, Federal Office Building,
Kansas City, Mo., 64106
Room 915, Forsyth Building, 86 Forsyth
Street, Atlanta, Ga., 30303 .
Anderson Building, 450 West Broad Street,
Falls Church, Va., 22046
Field Stations for Textiles and Furs in Addition to the Above Branch Offices
Room 400, U.S Court and Custom House,
1114 Market Street, St. Louis, Mo., 63101
Room 405, Thomas Building, 1314 Wood
Street, Dallas, Tex., 75202
Room 204, Cutter Building, 327 North
Tryon Street, Charlotte, N.C., 28202
Room 231, U.S. Courthouse, Portland,
Oreg., 97205
53 Long Lane., Upper Darby, Pa., 19082
18013 Federal Building, 1961 Stout Street,
Denver, Colo., 80202
Room 1631, New Federal Building, 51
Southwest First Avenue, Miami, Fla.,
33130
iii
Letter of Transmittal
FEDERAL TRADE COMMISSION,
Washington, D.C.
To the Congress of the United States:
It is a pleasure to transmit herewith the Fifty-First Annual Report of the Federal Trade
Commission, covering its accomplishments during the fiscal year ended June, 30, 1965.
By direction of the Commission.
PAUL RAND DIXON,
Chairman.
THE PRESIDENT OF THE SENATE.
THE SPEAKER OF THE HOUSE OF REPRESENTATIVES.
v
TABLE OF CONTENTS
Chapter
Page 7
I . Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
11. The Industry Guidance Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
111. Combatting Deception of the Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
IV. The Fight for Fair Business Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
V. Wool, Fur, and Textile Acts Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
VI. Follow Through in Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
VII. Legislation Needed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
VIII. The Role of Economic Studies and Violence . . . . . . . . . . . . . . . . . . . . . . . . 37
IX. Field Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
X. Appropriations and Financial Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
XI. Hearings Examiners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Appendix (A) FTC Cases in the Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Appendix (B)Penalty Enforcement Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Appendix (C) Textile and Fur Court Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
vii
Chapter I
INTRODUCTION
In fiscal 1965, the Federal Trade Commission went quietly but firmly about its purpose
to help businessmen comply with the trade laws, using persuasion if possible and prompt
adversary action whenever persuasion failed. With its staff trained in the use of recent
innovations to obtain faster, wider, and more equitable law enforcement, the Commision's
usefulness gathered momentum.
As more industries were alerted to the laws' requirements as applied to their particular
practices, the FTC could, by the year's end, devote ever more attention to individual firms
which though given ample opportunity to understand legal requirements chose to defy them.
Many are to discover that education and equitable enforcement of the law do not imply laxity
in FTC's vigilance.
The year also found the Commission demonstrating increasing concern for protection of
consumers, principally from false or misleading advertising. First priority as given to
advertising or selling practices which could adversely affect the health or safety of
consumers, and a close second priority was accorded deception in the sale of such products
as food, household equipment, home improvements, and other necessaries of special
significance to low income families and the aged. Altogether more than 600 deceptive practices investigations were launched, and over 300 violations were brought to a quick and
satisfactory conclusion by the Commission's receiving adequate assurance that the illegalities
would be halted without the delay and cost of formal orders. Formal action was necessary
in more than 130 other cases. Moreover, instead of merely swatting at the gnats and hornets
of deception as they were called to the Commission's attention, entire areas of deception were
probed in depth, and broad enough attacks were carried out to halt many forms of
competitively engendered hucksterism.
To safeguard the economy from illegal restraints and monopolization of trade, the
Commission found it necessary to expend even
798-047---66--2
1
more of its money and manpower in the restraint of trade field than for its deceptive practice
work. Not only did it receive 1,286 applications for complaint, principally from small
businessmen who believed they were being victimized by unfair method of competition, but
the Commission on its own motion initiated 242 formal investigations involving trade
restraints.
Here again, the Commission's policy of guiding business into legal channels as an
alternative to patternless clubing of offenders was followed whenever possible. This
decision supported the increasingly obvious truth that more compliance with the law can
achieved by clearly defining its requirements and persuading businessmen to abandon legal
practices without the delay and cost of litigation than to strive for casework statistics. Only
where persuasion promised to be fruitless did the Commission employ its mandatory
procedures.
Funds available to the Commission for fiscal 1965 totaled $13,459,107. This provided
for a staff of 1,175 to man Washington headquarters as well as 11 field offices and 1
suboffice. Nearly half of the funds ($6,246,000) was spent on the investigation and litigation
of antimonopoly cases, and about one-fourth ($3,373,000) for deceptive practice
investigation and casework, exclusive of $1,209,000 for enforcement of the textile and fur
acts. A total of $850,000 was spent for economic and financial reports, and $511,000 for
trade practice conferences, industry guides, and special efforts to assist small business.
The allocation for FTC's guidance program is by no means a true measure of the emphasis
being given this phase of the Commission's work. The reason is that a very considerable
amount of the investigational work both for deceptive practice and antimonopoly cases
discloses illegalities of a character and scope that can be countered effectively at less cost by
the issuance of Industry Guides, Trade Practice Rules, or Trade Regulation Rules. Thus, the
investigational funds allocated to FTC's enforcement bureaus frequently serve to turn up
factual information that dictates a feasible and more equitable handling of the problem by the
guidance procedures. In addition, staff attorneys and others assigned to the enforcement
bureaus are called upon frequently to contribute their expertise on particular problems to the
staff of the Bureau of Industry Guidance.
2
This is not to imply that the enforcement responsibilities of the Commission were given
secondary emphasis. More than enough illegalities neither require nor lend themselves to
broadscale treatment, and defiance is all too frequently the response to persuasion. For
example, in enforcing the anti-trust laws, the FTC found it necessary to issue 26 formal
complaints and 39 orders to cease and desist. Significant such cases are discussed in the text
of this report.
In addition to halting law violations by voluntary or mandatory processes, the
Commission made more use than ever before of advisory opinions by which businessmen
who seek advice on the legality of proposed courses of action are accommodated. Fifty-eight
opinions were rendered by the Commission, and another 152 requests for advice were
handled satisfactorily at staff level. It is significant that the questions posed were sufficiently
difficult that the business firms thought authoritative answers were needed. Had illegalities
not thus been averted, the Commission's casework statistics undoubtedly would have been
increased. Here again is emphasized the Commission's policy of helping business comply
with the law as a less costly and happier alternative to cracking down on offenders.
The increased emphasis on voluntary and industry-wide compliance with the law also was
reflected in the work of the General Counsel's Office. While cases instituted and pending
in the courts and the number of consent settlement negotiations and orders declined, the
quality and importance of the casework remained high. Moreover, while the number of cases
declined, this lessened workload was more than offset by increased demands on the General
Counsel's Office for assistance in rulemaking proceedings, subpoenas and orders to file
special reports, and the development of technical procedures required for industrywide
investigations and actions.
In policing the Wool, Fur, Textile Fibers, and Flammable Fabrics Acts, the Commission,
despite a smaller staff of inspectors, increased the total number of inspections. The number
of items spot-checked increased over fiscal 1964 from 46 to 67 million, due to checking of
larger manufacturers and larger retail stores. The total number of cases disposed of in fiscal
1965 was 285, an 8 percent increase over the preceding year.
One of the most important of the year's accomplishments was the Commission's fact
finding and analysis of trends in the field of corporate mergers. This involved updating to
1964 the examination
3
of merger activity last assessed by the FTC in 1955. The study by FTC's Bureau of
Economics showed that merger activity has accelerated at a rapid pace; indeed, the present
rate is higher than at any time during the past 30 years. The study also revealed that
acquisitions made by manufacturing and mining companies with assets of $100 million or
more accounted for 25 percent of mergers in 1964 as compared to but l6 percent 10 years
earlier. Firms making electrical machinery and chemical products were responsible for about
one-fourth of the recorded acquisitions. Other large acquiring industries were: nonelectrical
machinery, food and kindred products, and transportation equipment.
The study also showed, among other things, that over the period 1948-64, a total of 720
major mergers took place, and in the year prior to their acquisition, the acquired companies'
assets totaled more than $23 billion.
During the fiscal year, the third and final report of the Commission's economic inquiry
into food marketing was published. This report examines production and consumption
patterns, concentration, diversification, and integration in merger activity, product promotion,
and entry barriers in the canned fruit, juice, and vegetable industry. The report showed that
larger canners are doing an expanding share of total business, and smaller canners are
becoming less capable of offering effective competition to the leaders.
The Commission also undertook two studies for the National Commission on Food
Marketing. The studies, expected to be completed in fiscal 1966, are: Market Structure,
Conduct, and Performance in Food Retailing, dealing primarily with the changing market
structure of grocery retailing during the past two decades, and Concentration, Integration, and
Diversification in Food Manufacturing, which will describe and evaluate the structures and
structural trends of food manufacturing industries including an analysis of market
concentration, degrees of product differentiation, and conditions of entry. Both studies will
undertake to assess the degree of monopolistic power being exercised in the two areas.
The Commission's Division of Economic Evidence continued to study current corporate
mergers and investigated 50 thoroughly. The study revealed that the present merger
movement is the most prolonged and serious in recent American history. The Division also
undertook two comprehensive investigations to assist in planning
4
the merger enmforcement program for the plastics and textile industries.
A more detailed summary of the Comniission's accomplishments and objectives follows.
(Particular attention is invited to section titled "Legislation Needed.")
5
Chapter II
THE INDUSTRY GUIDANCE
PROGRAM
The Commission's entire staff, including those assigned to the enforcement Bureaus,
participated in unprecedented efforts during fiscal 1965 to guide business into legal channels
with the least liti- gation necessary. If more observance of the law could be achieved, and
faster,by giving a a businessman opportunity to halt an illegal act or practice without
litigation, that is the way it was done. And while this resulted in fewer litigation statistics,
it not only achieved wider compliance with the law, but enabled the Commission to
concentrate its force on the defiant violator.
However, persuading businessmen to comply with the trade laws calls for more than the
threat of adversary action. It also requires enlightenment on what the law prohibits,
confidence that it is being administered as fairly as possible, and the tools and assistance
needed for effective self policing.
In a full-scale effort to accomplish these objectives, all of the guidance procedures, both
old and new, were brought to bear.
Under the trade practice conference program, rules affording detailed guidance for
complying with requirements of the Clayton Act were promulgated for the $7.5 billion fresh
fruit and vegetable industry and the $693 million phonograph record industry. For the latter,
attention also was given to misbranding, misrepresentation, and other deceptive selling
methods. Trade Practice Rules for the hearing aid industry were revised and extended to
afford additional protection to the hard-of-hearing from various deceptive practices in their
purchases of hearing aids. Revision also was made in the rules for the sunglass and corset,
brassiere, and allied products industries.
Three new guides were issued under the guides program. One is concerned with
deceptive labeling and advertising of adhesive com7
positions, products intended primarily for home use in repairing, patching, or mending
articles made of metal, plastic, porcelain, rubber, or other materials. Another draws
guidelines for members of the textile industry in avoiding deceptive use of the word "Mill"
in their trade names and in advertising. The third guide is directed at deception in the
collection of debts.
Under the program for obtaining voluntary compliance with trade practice rules and
guides, 283 violation matters were disposed of oil assurances that the unlawful practices
would be discontinued. At the close of the fiscal year, 423 matters were receiving attention
under this voluntary compliance program.
In addition to the regular compliance work, an industrywide compliance survey, involving
nearly 1,000 firms, was initiated under the Guides for Shoe Content Labeling and
Advertising.
A special compliance project concerned the failure of many advertisers to disclose the
conditional nature of their guarantees in telephone directory advertising. Through the
cooperation of the telephone companies publishing these directories, correction of this
advertising has been assured. Involved in this undertaking are some 5,000 different
telephone directories published in cities and towns throughout the United States.
Another special project dealt with describing refrigerators as "frost free" without clearly
disclosing that only the freezer section or the refrigerator section, as the case may be, did not
have to be defrosted. As a result of this industrywide compliance check, assistances were
received that the necessary disclosure would be made.
More than 1,500 inquiries from businessmen seeking advice on the application of rules
or guides to their business practices were answered by the staff.
One of the newer methods, the trade regulation rule, also played all important role in
making the guidance program fully effective. Three new trade regulation rules, each directed
at a widespread unlawful practice, were promulgated or approved for promulgation during
the fiscal year. Of special significance to the public is the rule requiring disclosure that
lubricating oil has been previously used. This disclosure is required to be made in all
advertising, sales promotional material, and oil the front panel of all containers. Another rule
prohibits representations that an electric sewing machine is "automatic" or "fully automatic."
Under the rule if any attach8
ment or component is in fact "automatic" it may be so described. The third rule requires that
the finished size of tablecloths and related products be stated whenever their cut size is given.
Comprehensive compliance surveys were conducted to insure that trade regulation rules
are being fully observed.
At the close of fiscal 1965 there were pending a number of proceedings looking toward
the promulgation of trade regulation rules, including those dealing with the following
industries and subjects:
Light Bulb Industry.-Deception as to wattage, useful life, and lumens produced.
Television Industry.-Deception as to the size of television tubes and pictures.
Table Lamp Industry.-Deceptive representations as to composition.
Automobile Tire Industry.-Deception as to size and quality.
Automatic Merchandising Vending Machine Industry.--Unlawful acquisitions and
mergers.
Another of the newer procedures, the advisory opinion method, was utilized more
extensively than ever before. Two hundred and six requests from businessmen asking for
advice as to the legality of proposed courses of action were received. This was the largest
number of requests received in any year since the advisory opinion program was initiated.
The 59 Commission opinions rendered also represented a substantial increase over the
preceding year. In all, 211 requests were disposed of by Commission or staff action. Fortyfour matters were pending for disposition at the close of the fiscal year.
The requests covered virtually the entire area of the statutes which the Commission
administers. The questions presented included, among others, the legality of proposed
mergers and acquisitions, cooperative buying arrangements, tripartite promotional plans,
exclusive dealings proposals, cooperative advertising programs, and advertising claims for
a wide variety of products.
798-047--66--2
9
Chapter III
COMBATING DECEPTION
OF THE CONSUMER
Because deception in advertising and selling works a double hardship in not only fleecing
customers but in undermining faith in legitimate claims for products and services, the
Commission mounted an increasingly heavier attack on this evil during the fiscal year.
A further reason for intensification of the effort is that in the global war of ideologies, our
system of free enterprise cannot tolerate an image smeared with sharp practice and deceit.
And while such chicanery is very much the exception, any of it is too much, particularly
when enemies of our economic system are eager to trumpet it to the world.
So that the staff's efforts would not be spread too thinly and without sufficient
concentration in troublesome areas to be really effective, the enforcement program was
planned carefully. Top priority was given to halting deception in the sale of products
involving public health. Actions were taken not only under FTC's specific authority to
prevent false advertising of food, drugs, medical devices, and cosmetics, but also under its
general authority to prevent unfair and deceptive acts and practices in commerce. Following
are highlights of the actions taken.
Health Products
Hearings were completed in a vigorously litigated case where the advertiser of a health
book is charged with falsely claiming that ideas and suggestions contained in this book are
effective in preventing and treating cancer, tuberculosis, infantile paralysis, heart disease,
arthritis, and mental illness. Also challenged in this litigation are claims that the book will
enable the reader to free himself of common colds; prevent and cure constipation; and
prevent ulcers, fatigue, goiter, and high blood pressure.
11
was pending on appeal before the Commission at year end (D.8619).
The advertising of hemorrhoid remedies was attacked in five complaints (D. 8640-8644).
Contrary to claims made in advertising, the Commission charged that use of the products
would not shrink hemorrhoids, or relieve all pain, or do more than afford temporary relief.
Some of the complaints attacked claims that the advertised product would heal piles or avoid
the need of surgery as a treatment for them. Hearings had commenced in one of these cases
and the others were awaiting trial at the yearend. A consent order involving similar claims
was accepted during the year (C-821).
False claims that a drug product would prevent or cure arthritis or rheumatism and would
restore normal structure or function to parts of the body crippled by those diseases, were
prohibited in another typical action during the year (D. 8601). Also, claims that a hearing
aid would cure persons with 85 percent hearing loss were prohibited in another typical case
(C-849).
A complaint was issued in an important case involving charges that television advertising
of throat lozenges falsely implied that the product would be effective to treat throat
infections in children, including infections caused by streptococcal and staphylococcal germs
(D.8635). The matter was pending on appeal before the Commission at yearend.
Part of a continuing campaign to stamp out deceptive and false advertising which
victimizes aged persons, were two complaints and initial decisions involving charges that
sellers of vitamin-mineral preparations had falsely claimed that the products increase and
stimulate sexual vitality and activity, and exaggerated the likelihood that the products would
be of benefit in the treatment of nervousness, depression, loss of happiness, and loss of a
sense of well being (D. 8636 and D. 8637). Also challenged were claims that the products
would prevent colds and other infections, increase a person's intelligence and prevent
discomfort and anxieties due to menstruation, menopause, and old age. A consent order
involving similar claims was accepted during the year (C-855).
A drug store chain was ordered to stop using false claims of endorsement or approval of
its merchandise by an independent consumer-protection organization and claims it owned
manufacturing and laboratory facilities (D. 8576).
12
Pending at year-end for further attention were projects involving advertising of analgesics
and pain relievers, arthritis and rheumatism remedies, food supplements and vitamins,
stomach antacids and treatments for ulcers, smoking deterrents, weight reducing products and
devices, dentifrices and denture aids, health books, cookware, air purifiers, bedwetting
preventives, contact lenses, home treatments for ear trouble, physical fitness courses,
agricultural pesticides, and hair and scalp preparations.
Cigarette advertising was being monitored on a continuing basis to carry out the
Commission's responsibility of preventing use of any ads which might be misleading or
deceptive under established standards of illegality.
Food and Freezer Plans
False claims that meat bad been inspected by the U.S. Department of Agriculture, that the
meat was all "USDA Prime" or "USDA Choice", and that coffee was being sold at
"wholesale prices", were typical of the practices prohibited in the sale of food and foodfreezer plans (C-907, C-912). A common type of misrepresentation is that purchasers of a
food-freezer plan will be acquiring their food requirements and a freezer for the same or less
money than they have been paying for food alone. False designation of sales personnel as
"Home Economists" and misleading guarantees are frequently employed. On May 28, 1965,
the Commission issued an "Advertising Alert" to warn consumers about the foregoing and
some 30 other forms of deceptive practice prevalent in the sale of food-freezer plans.
Work in this area was continuing at year's end. Also being investigated was the
advertising of animal and pet foods, and the advertising of agricultural pesticides.
Radio and Television Advertising
Monitoring.—The Commission staff continued to monitor broadcast continuities of radio
and television broadcasters (both networks and stations) and review advertising in a
representative sampling of newspapers and magazines. During the year, 897,609
advertisements were examined, of which 34,107 were set aside for further study. Of 632,167
radio and television advertisements which were
13
examined, 26,735 were set aside for further consideration. Of 265,442 newspaper and
magazine advertisements which were examined, 7,372 were set aside. A total of 6,089
advertisements of alcoholic beverages were referred to the Internal Revenue Service.
TV Demonstrations.—The Supreme Court having affirmed the Commission's order in the
Colgate-Palmolive case to prevent the use of deceptive television advertising of the nature
or significance of product performance tests or demonstrations, the Commission was at
yearend considering the application of these principles to other radio and television
advertising matters.
Home Improvement Products
False claims of reduced prices, bait and switch tactics., and deceptive guarantees were
among the most prevalent practices receiving attention in the home improvement field during
the year. For example, a seller of insulation material was prohibited from using deceptive
savings and guarantee claims (D. 8598). A seller of aluminum siding was ordered to stop
claiming that in attempting to sell siding to other prospective purchasers he would show them
the customer's house, and if as a result of this showing, the prospective purchaser bought the
siding, a bonus would be given the customer owning the "model home." In that case, the
seller did not only not pay the bonuses, but did not even bother to show the "model home"(D.
8614).
False claims that siding material was new and revolutionary and would last a lifetime, and
that a building material was of "stone" when it was not genuine stone, also were prohibited
(D. 8662, C-817).
Household Furniture and Equipment
Considerable effort was made to stop the use of false advertising and other deceptive
practices in connection with the sale of furniture, appliances, and household equipment. For
example, a leading manufacturer of washing machines was ordered to cease misrepresenting
the extent to which its machines have been proved superior in comparative tests (C-795). A
seller of furniture was ordered to cease use of false pricing, savings, and guarantee claims
and from claiming that the advertised furniture had been obtained f rom model homes or
apartments (D. 8645). Sellers of radios, television sets,
14
and phonograph equipment were ordered to cease use of fictitious prices, deceptive saving
claims and misleading guarantees (C-788, C-869).
Used Products Sold As New
Action was taken to require disclosure of previous consumer use in the sale of
reconditioned and rebuilt golf balls (D. 8528, D. 8529, C-848, C-860, C-863). A marketer
of previously used motor oil was required to disclose clearly and conspicuously, on front
panels of containers, the prior use of motor oil (D. 8589). Books sold under new titles
without disclosure of prior publication under another title, and failure to disclose that books
offered for sale were abridgements also continued to require attention. (D. 8613).
Correspondence Schools
Deceptive use of "help wanted" ads implying offer of employment with the real purpose
was to obtain prospects, for sale of correspondence courses received attention during the
year. False claims for the type of training offered, likelihood of employment after
completion of the course, earnings achieved by graduates, and assistance offered toward job
placement as used in sales talks by correspondence school field agents also were prohibited.
Such claims were used to sell courses for airline stewardess, professional model, and
operation of automatic data processing equipment (C-793, C-840, C-884). With the
increasing use of correspondence training by legitimate institutions of learning, and the
importance of permitting persons to upgrade their skills by available means, it is important
to curb any chicanery that would discourage well-spent initiative. Very often these falsely
touted courses are sold to poor people or the relatively uneducated who can ill afford to lose
the sums involved, let alone be disillusioned in their efforts to improve themselves.
Origin and Qualities of Merchandise
False claims as to origin or qualities of merchandise, and failures to disclose the origin
require an appreciable amount of time. For example, a perfume seller was ordered to cease
simulating the trade name, labeling, packaging, and other distinctive characteristics of wellknown brands (C-829). Sale of watch cases deceptively
15
colored to simulate the appearance of gold and failing to disclose the foreign origin of such
cases was prohibited, as were false claims that a watch contained 110 functioning jewels (D.
8597 and C-826). Use of false testing, guarantee and "user" claims in the sale of so-called
"long life" light bulbs was prohibited (C-894). Also, use of false claims that sewing
machines advertised at low come-on prices were "repossessed", as part of a bait and switch
scheme, required attention (C-789).
Carpeting and Other Floor Coverings
An industrywide investigation involving alleged misrepresentation of rug sizes by
domestic rug and carpet manufacturers was in progress at yearend.
In the retailing of carpets, there appears to be widespread use of bait and switch
advertising, especially by sellers and installers of wall-to-wall carpeting. An analysis of
some 500 newspaper carpet advertisements appearing in practically every major market in
the United States was made during the year to ascertain the extent of this problem and the
best means of dealing with it.
Work-at-Home Opportunities
The practices of some 25 concerns engaged in the advertising of vork-at-home schemes
were being investigated at yearend. This type of deception is particularly important for it
exploits the aged and the poor, who can least afford to waste their funds.
Consumer Financing
Misrepresentation is to rate of interest on conditional sales contracts and amount of
finance charge was involved in a hotly contested case at yearend (D.8550), and five matters
involving allegedly deceptive "debt consolidation" schemes were under investigation, along
with various types of misunderstanding or confusion as to terms and conditions of
installment sales. This type of matter is of increasing importance and prevalence.
House-to-House Sale of Magazine Subscriptions, Encyclopedias and Photographs
False claims of being connected with religious or educational institutions, that caller is
not selling anything but is taking a "sur16
vey”, that prospect has been specially selected to receive the product at special or reduced
price, that the offering is for purposes of establishing scholarship or other nonprofit fund, are
among the types of practices which continue to be used in door-to-door selling of magazine
subscriptions, encyclopedias, and photographs (C-819, C-847, C-859), despite the fact that
the Commission and the courts, including the Supreme Court, have condemned these
practices for at least 25 years.
Assurances of Voluntary Compliance
The Commission may terminate an investigation upon acceptance of assurances of
voluntary compliance when it appears that that method of disposition will fully safeguard the
public interest. A total of 313 assurances were accepted to terminate deceptive practice
investigations during the year.
Compliance With Deceptive Practice Orders
Newly issued orders require each respondent to submit a written report supported by
relevant documentary material demonstrating the manner and form of compliance with the
order. Conferences with respondents and their attorneys are frequently required, together
with considerable following correspondence. In many cases the Commission directs that
reports be augmented by supplemental reports or investigations.
Once an order to cease and desist has been issued all general complaints and inquiries are
referred to the Compliance Division for action. Such complaints and inquiries generally refer
to orders issued many years ago. In many instances a satisfactory reply requires the staff
attorney to examine all appropriate files of the particular case.
Under the Commission rule pertaining to compliance matters, any respondent subject to
an order may request and receive advice from the Commission as to whether a proposed
course of action will constitute compliance.
In fiscal 1965 the Compliance Division processed a total of 696 complaints of violations
of orders, public inquiries, requests for advisory opinions, and requests for informal advice
from respondents. There were 101 investigations in an active status during the year,
798-047-66—4
17
many of which will necessitate the institution of civil penalty proceedings.
The statistics regarding the Division's caseload during fiscal 1965 are as follows:
Total pending July 1, 1964 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Received during fiscal 1965 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Total for disposition during year - - - - - - - - - - - - - - - - - - - - - - - - - Disposed of during year - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
447
293
740
322
Total pending June 30, 1965 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 418
The 293 orders to cease and desist which were received represent 67 new orders issued
during the year and 225 old orders which were activated because of complaints from outside
sources indicating possible violations and for other reasons. During the year 322 cases were
processed. This figure involved 788 separate reports of compliance which required analysis
and disposition and 614 complaints of violations, etc.
Division of Scientific Opinions
This Division gave attention to a wide variety of foods, drugs,. cosmetics, devices and
related commodities. In many areas, intensive scientific and medical investigation and
research were carried out on a group of closely related preparations or devices with a view
to dealing with the advertising of these articles on an industrywide basis. A number of
previously initiated projects were carried forward, including those concerned with
preparations offered for the treatment of hemorrhoids or piles, vitamin and mineral
preparations offered as dietary supplements, with particular emphasis on such preparations
represented to be of value because of their hematinic properties, and analgesic drugs, whose
claims with respect to speed and duration of relief provided as well as their safety, were in
question. Substantial attention was given to the advertising of products offered as cures for
the smoking habit and to denture reliners and denture repair materials promoted for use by
the general public.
In laying the groundwork for these industrywide projects, it was necessary to search
thoroughly the published medical and scientific
18
literature pertinent to the problems, and also to locate and confer with medical specialists and
other scientists who have firsthand knowledge of the properties and limitations of the
preparations or devices under consideration. Some aspects of these projects present problems
which are sufficiently unique that the authorities in a particular field are of the opinion that
further laboratory or clinical testing must be conducted in order to provide a firm basis for,
a regulatory position.
In addition to scientific and medical research and investigation, professional personnel
of the Division participated in the drafting of complaints and other legal documents in
specific cases and participated in the trial of contested cases.
A statistical summary of the Division's work follows:
Products covered in written opinions - - - - - - - - - - - - - - - - - - - - - - - - - - - - 227
Oral opinions - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 261
Analyses and tests - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6
Hearings attended - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 64
Prehearing conferences attended - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 9
Expert witnesses secured - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 42
The subject matter of the written opinions was as follows:
Foods - - - - - - - - - - - -
39
Devices - - - - - - - - -
41
Drugs - - - - - - - - - - - -
71
Economic poisons -
37
Cosmetics - - - - - - - - -
13
Miscellaneous - - - -
26
19
Chapter IV
THE FIGHT FOR FAIR
BUSINESS COMPETITION
To maintain free and fair competition in the Nation's marketplace, presents the
Commission with its most difficult responsibility.It must cope with the never ending eftorts
of predatory businesses to defy or circumvent the antitrust laws in order to take unfair
advantage of their competitors. The stakes are usually high, and the victims are all too
frequently small businessmen.
Hard-core violations were attacked during the year with all the force FTC could muster,
but when competitively engendered violations could be halted faster and more equitably on
a broader scale without litigation, this course was followed. Indeed, the Coinmission made
an effort, unprecedented in degree, to encourage businessmen to comply with the law by
defining its requirements and by persuading those violating the law, and their equally
culpable competitors, to halt the violations simultaneously so that none would be hurt
competitively in the process-and the public interest would be served. The immediate effect
of such an advanced program is fewer formal cases and cease-and-desist orders to show for
the Commission's efforts. However, the Commission's basic purpose to halt unfair practices,
by persuasion, if possible, and by enforcement, if necessary, is being strenuously pursued.
During fiscal 1965, FTC's Bureau of Restraint of Trade received 1,286 applications for
complaint, principally from small businessmen who believe that unfair methods of
competition are being utililizcd. Those applications for complaint which appeared to have
merit and over which the FTC had jurisdiction were entered for investigation. In addition,
the FTC began investigations on its own motion, with the result that a total of 242 formal
investigations involving trade restraints were initiated, and 729, including those from
previous years, were completed. The Commission issued 26 antimonopoly complaints and
39 orders to cease and desist. This work
21
resulted from enforcement of general trade restraint provisions contained in section 5 of the Federal
Trade Commission Act and of sections 2, 3, 7, and 8 of the Clayton Act.
In the enforcement of the Robinson-Patman Act, continued emphasis was given to the business
community and its need to take corrective action and discontinue illegal practices without the
necessity of resorting to formal litigative processes. Toward that end a number of matters involving
a variety of industries were handled through the execution of Assurances of voluntary compliance.
Continuing investigation in the wearing apparel industry resulted in 12 additional consent
agreements and orders prohibiting manufacturers from discriminating among competing customers
in the payment of promotional allowances. Efforts in this industry continue and a number of
additional orders are anticipated which will result in a total of approximately 300 orders prohibiting
discriminatory promotional allowances in this industry. The manner in which this project has been
handled illustrates the effective results which can be achieved by the broad approach to an industry
and its problems.
The Commission undertook to define and declare the requirements of the Robinson-Patman Act
and to provide businessmen with a similar opportunity to comply with it while avoiding protracted
legal proceedings when it set aside proceedings against 17 drug and sundry suppliers through the
issuance of declaratory orders whose findings would be a blinding guide to future conduct.
Similarly, consent orders were issued by the Commission prohibiting discriminatory pricing
practices in individual cases involving such diversified products as liar coloring products, Clairol,
Inc., (C.832); and railroad signaling equipment, General Railway Signal Company, et al. (C. 837).
Not all Robinson-Patman Act matters were concluded without the need for formal litigation.
After fully contested hearings the Commission issued final orders to cease and desist in several
individual matters. These included two automotive parts cases involving discriminatory pricing
practices, Monroe Auto Equipment Co., (D. 8543), and the Dayton Rubber Co., (D.7604) ; a citrus
fruit and produce case involving unlawful brokerage, Garrett-Holmes & Co., Inc., (D. 8564) ; a
publication case and a ladies' undergarment case, both involving discriminatory promotional
allowances, Ace Books,
22
Inc., et al. (D. 8557) and The Lovable Company, et al. (D. 8620). A current proceeding
against Associated Merchandising Corporation, et al. (D. 8651) ; charges that organization,
a subsidiary, and 15 large department stores with unlawfully inducing and receiving
discriminatory prices from their suppliers.
In enforcing section 5 of the FTC Act, relative to general trade restraints constituting
unfair methods of competition or unfair acts or practices, the Commission's primary
objectives and accomplishments involved (1) prevention of anticompetitive practices
including conspiracies to fix prices and boycott; (2) prohibition of previously unchallenged
restrictive selling and purchasing practices; and (3) cooperative and amicable adjustments
of incipient violations of section 5 of the FTC Act through administrative procedures.
Several industries received substantial attention in investigations and in formal cases. These
industries included floor coverings, steel reinforcing bars, tobacco, trading stamps, television
tubes and parts, ball and roller bearings, footwear, and food.
Ninety-nine new investigations were instituted; and 94 matters were formally closed. The
newly instituted investigations involve a considerable variety of potential violations including
price fixing conspiracies, sales below cost, resale price maintenance, tying arrangements,
refusal to deal, and allocation of territories.
Of the several matters involving the issuance of cease-and-desist orders, a consent
agreement was obtained in Albany Felt Company, et al. (C. 828), together with an order
which required manufacturers of papermakers felts and their association to discontinue
agreements to fix prices and other unreasonable restraints in the manufacture, distribution,
and sale of felts used by manufacturers of paper. Significantly, the order in the Albany
matter required the independent establishment by each of the respondent manufacturers of
new prices. Bakers of Washington, Inc., et al. (D.8309), was litigated on price-fixing charges
resulting in the issuance by the Commission of a decision and cease-and-desist order
prohibiting national and local bakeries from fixing the price of bread. Another price-fixing
case, Falstaff Brewing Corporation, et al. (D. 8618), resulted in the Commission's affirming
a hearing examiner's initial decision, and issuing a cease-and-desist order that not only
inhibited price fixing and other unlawful restraints in the distribution and sale of beer by
brewers, but further directed the dissolution of the
23
association that had been the instrumentality for the collusive activities.
Substantial efforts were made to investigate and terminate illegal boycotts. One such case
was litigated while two others were disposed of by consent orders. In Television Association
of Delaware Valley, et al. (D. 8623), the Commission prohibited an organized boycott by the
association and its television repair service dealer members to prevent and limit competition
in the repair and servicing of television, radio, and electronic devices. Television Service
Dealers Association of Delaware County, et al. (C. 881), involving a similar boycott by and
between three associations and their memberships, also was disposed of by a consent order.
In Universal Business Forms Company (C.888), involving a concerted refusal to deal in the
distribution and sale of business forms, the Commission issued a consent order prohibiting
such action.
In a different area of general trade restraints, several Commission matters involving
previously unchallenged selling and purchasing restrictions were examined because of the
possible impact on business arrangements. One such matter, Wear-Ever Aluminium Inc., (C.
842), resulted in a consent order requiring that respondent refrain from conditioning (the sale
of its "Wear-Ever" brand aluminum pots and pans upon dealer purchases of the company's
professional cutlery products. In another, the Commission issued a complaint charging Sun
Electric Corporation (D. 8659), with an allegedly illegal attempt to monopolize the repair of
its automotive testing equipment by refusing to sell needed parts and accessories for the
repair of its equipment to independent repair businesses.
The Commission continued its concern with anticompetitive restrictions governing the
allocation of selling time in tobacco auction warehouses. It ordered Mountain City
(Tennessee) Tobacco Board of Trade, et al. (D. 8638), to cease various attempts to dominate
and control the sale at auction of burley tobacco on the Mountain City market. Also during
the year, the Commission, at the request of U.S. District Courts in North Carolina and
Virginia, submitted advisory opinions for use by the courts as guidelines in three civil suits
involving allocations of auction time in various tobacco markets.
Substantial effort continued to be devoted to competitive problems in the marketing of
gasoline. An industrywide inquiry was conducted complete with public investigational
hearings. At the year's
24
end, the information thus obtained was being studied for the purpose of determining the best
course of future action.
Responding to the need for a procedure to settle small-scale antitrust violations before
they assumed major and costly proportions, the Commission authorized its Division of
General Trade Restraints to investigate such matters primarily by correspondence with the
parties. During the year, more than half of the approximately 150 practices complained about
were voluntarily stopped with assurances of voluntary compliance obtained. This procedure
permits action in matters where the Commission formerly was unable to assist the business
community and the public for lack of an adequate procedure.
In enforcing the Cellar-Kefauver Anti-Merger Act, the Commission concentrated upon
the competitive problems presented by mergers in a number of important industries, and upon
providing businessmen with guidance as to the requirements of the act.
In the dairy industry, the Commission decided the fourth of its cases challenging-numerous acquisitions by the largest dairy companies Beatrice Foods Co. (D. 6653). The
Commission found that a number of acquisitions by Beatrice violated section 7 of the
Clayton Act and in its opinion set out guidelines as to the legality of future acquisitions in
this industry.
In the vending industry, cases challenging acquisitions by Automatic Retailers of
America, Inc. (C. 809), and ABC Vending Corp. (D.7652), were terminated by consent
orders requiring substantial divestiture and limiting future acquisitions by the respondents.
As an apparent result of the Commission's action in this industry, acquisitions of the 10
largest vending companies declined markedly in 1964.
The continued concern of the Commission with the present trend toward vertical
integration through acquisitions in the cement industry was reflected in consent orders
against Lone Star Cement Corp. (D. 8585); and Permanente Cement Company (D. 7939);
which required divestiture of substantial ready-mixed concrete facilities acquired by these
companies and limited future acquisitions by them. In addition, the Commission issued its
complaints in four new proceedings challenging acquisitions of ready-mixed concrete
companies by U.S. Steel Corp. (D. 8655); National Portland Cement Co. (D. 8654) ; Texas
Industries, Inc. (D. 8656) ; and Mississippi River Fuel Corp. (D.8657)
798-047-66--G
25
The Commission issued final orders of divestiture in proceedings challenging acquisitions of
producers of corrugated containers by The Mead Corp. (C. 880); Union Bag-Camp Paper Corp. (D.
7946) ; and Inland Container Corp. (D. 7993).
The first Commission merger case to reach the Supreme Court, F.T.C. v. Consolidated Foods
Corp., resulted in a landslide decision holding that the acquisition by Consolidated of Gentry, Inc.,
violated section 7 of the Clayton Act because of the opportunities it created for the operation of
anticompetitive reciprocity. Following this decision of the Supreme Court, the Commission is
conducting investigations of acquisitions which may create similar opportunities for the use of
reciprocity in other industries.
The Commission found that the acquisitions by Fruehauf Trailer Co. (D. 6608), of two of its
largest competitors in the manufacture of truck trailers violated section 7 of the Clayton Act, and
issued its order of divestiture.
During the past year the Commission has also intensified its enforcement of section 8 of the
Clayton Act. Starting from a survey conducted by the Bureau of Economics, which revealed a
substantial number of interlocking directorates among the Nation's 1,000 largest corporations, the
Commission conducted investigations to determine which of these interlocks might violate section
8 of the Clayton Act. As a result of these investigations, a number of such interlocks have been
voluntary terminated.
More than $82,000 in civil penalties for violations of restraint of trade orders was collected
during the year. In addition, the Compliance Division succeeded in effecting compliance with over
100 cases with a relatively limited staff. In fiscal 1965 the Compliance Division processed over 250
inquiries relating to restraint of trade orders. It also rendered advisory opinions and effectuated
divestitures of over 13 business entities pursuant to provisions of section 7 of the Clayton Act, as
amended.
The Division of Accounting, during the past fiscal year, utililized, to a great extent, electronic
data processing equipment for the tabulation of invoices and other accounting data showing price
discrimination in the sale or purchase of various household products. The emphasis on the use of
electronic data processing equipment expedited considerably the preparation of tabulations as
evidence of price discrimination.
26
Chapter V
WOOL, FUR, AND TEXTILE ACTS ENFORCEMENT
By means of an effective combination of legal action, persuasion, and industry
counseling, the 96-man staff of F.T.C.'s Bureau of Textiles and Furs undertook to protect the
American consumer in his dealings with the Nation's third largest industry. This was done
through enforcement of four laws: The Wood Products Labeling Act, the Textile Fiber
Products Identification Act, The Fur Products Labeling Act, and the Flammable Fabrics Act.
In carrying out this responsibility the Bureau worked closely with 40 major trade
associations and more than 140 smaller trade associations with a combined membership of
more than 465,000 textile and fur manufacturers, distributors, and retail establishments.
Although the number of FTC's textile and fur investigators declined during fiscal 1965,
the total number of inspections showed a slight increase over fiscal 1964. The number of
items spot-checked increased considerably from about 46 to 67 million. This increase was
brought about through inspections of larger manufacturers and larger retail stores
During fiscal 1965, the Bureau's Division of Enforcement handled 502 investigations.
Two hundred and eighty-three were on hand at he start of the year and 219 new
investigations were undertaken. A total of 275 cases were disposed of and 227 were carried
over to fiscal year 1966.
Fifty-five recommendations for complaint were forwarded to the Commission. Sixty-nine
cease-and-desist orders were issued. While the number of investigations closed rose from
177 to 215. One hundred and forty-four of this number were closed by assurances of
voluntary compliance. Although the total number of investigations disposed of in fiscal 1965
was 275, or an 8-percent increase over the preceding fiscal year.
27
Efforts were continued to prevent the misbranding of imported wool products, such as
mohair and wool sweaters and hand-knitting yarns. Forty-five mohair sweater cases have
been formally lally opened since January 1963, whale recommendations for complaint were
made. The Commission has acted on these recommendations by issuing 11 cease-and-desist
orders and one complaint. Nine cases are still under investigation; 14 have been closed by
virtue of an assurance of voluntary compliance; 6 respondents abandoned the practice, and
3 cases were closed due to insufficient evidence of misbranding.
The Bureau discovered that a large amount of wool knit socks were being imported into
this country from England for the purpose of reclaiming the fibers. The socks appeared to
have been worn and so when reduced back to a fibrous state would have to be labeled
“reused wool”. Investigation has revealed that the fibers were being disposed of as “wool”,
so the respondents were warned that they would be in violation of the Wool Act if they so
disposed of this material. Eight concerns are involved, and the investigation is continuing.
A total of 119 formal cases were considered under the Fur Act during the year. Emphasis
has been directed particularly at false and deceptive pricing and record keeping and, as a
result, violations in these categories have decreased considerably.
Particular attention has been paid to manufacturers of fur-trim coats and suits. After a
long period of education, persuasion, and exhortation, it has been necessary to proceed
formally against a number of these merchants.
The number of formal cases under the Textile Act increased during the past year from 76
to 85 as it became apparent that many firms, although having ben repeatedly advised
regarding the requirements of the act, have, through continued evidence of violations,
indicated they do not intend to comply voluntarily. This is particularly true with regard to
the advertising requirements of the Textile Act and several cases have been opened against
department stores for falsely and deceptively advertising the content of textile fiber products.
Complaints were received that braided wool rugs are being imported from the Orient and
are being labeled as 100 percent wool whereas the wool content is substantially less and the
rugs contain considerable amounts of other fibers. These wool rugs are exempt from the
Wool Act but they are included under the Textile ct among
28
those articles that have to be properly labeled and identified. It is anticipated that formal
cases will be opened against some 14 to 15 respondents.
Three cases under the Textile Act involving the importation of hosiery from Italy (which
hosiery was originally made in Yugoslavia) without disclosing the country of origin have
been opened and are being investigated.
Certain firms engaged in applying a highly flammable nitrocellulose lacquer finish to
netting material have been investigated. This netting material generally is used in millinery,
draperies, and for other nonapparel purposes, but because of the highly flammable and
dangerous nature of nitrocellulose, action was brought, under section 5 of the Federal Trade
Commission Act, against the respondent for applying this dangerous substance to fabric and
then failing to notify purchasers of its presence. One firm has signed an affidavit of
voluntary compliance and a second firm has signed a consent order to cease and desist.
During the year, emphasis was placed on the inspection of manufacturers of fur hats.
Investigations indicated that in many cases fur hats were being made from used furs without
the disclosure of this information on labels and in advertising material. These manufacturers
will be reinspected before their products are shipped to retail establishments to determine if
compliance has been obtained.
When it is determined to enter a case for investigation, it is assigned to trial attorney, who
is responsible for the development of the investigation and subsequent analysis, processing,
and disposition. The average number of cases on each trial attorney's docket was 47. The
average number of cases disposed of was 231/2 per month, or approximately 4 cases per
attorney per month.
The Compliance Section of the Division of Enforcement, composed of four attorneys, had
a productive year which commenced with 128 compliance cases. During the year 102 cases
were added to the calendar (69 new orders and 33 matters reopened for compliance
investigation) and 120 cases were completed.
During fiscal 1965, compliance orders generally became more comprehensive than
formerly. Increasingly, these orders embraced violations of two and three of the acts
administered by the Bureau, and several involved chain store operations. Particularly in the
latter instances the staff encouraged respondents to prepare, for the
29
guidance of store and department managers, detailed instructions regarding compliance with
the orders, and has cooperated by reviewing and correcting such instructions prior to
distribution. This is an extension of the policy of counseling respondents to the end that they
may avoid further violations, not only of the orders but also of matters not covered by orders.
Emphasis was placed upon the enforcement of orders involving respondents engaged in
the importation of wool products suspected of being misbranded. One such case seeking
penalties of $60,000 was filed in the U.S. district court and another involving sweaters
charged as being misbranded as to mohair content was in preparation for certification to the
Attorney General. This matter of misbranding imported wool products is particularly
significant because of the unfair competitive impact it has upon domestic producers.
Additionally, a case charging willful violation of the Wool Act was certified to the Attorney
General with an 18-count suggested form of information.
An up-dating of the Bureau's active files resulted in placing 10,000 files into inactive
status. This makes the filing system more efficient and enables staff attorneys to handle
correspondence with greater dispatch.
30
Chapter VI
FOLLOWTHROUGH IN LAW
ENFORCEMENT
The statistical profile of the General Counsel’s work in fiscal 1965 reveals the
Commission’s greater emphasis on obtaining industry-wide voluntary compliance with the
law as an alternative, where possible, to the bringing of individual lawsuits.
While the number of cases instituted and pending in the courts and the number of consent
settlement negotiations declined, the quality and importance of the casework remained high.
Nor was there any diminution in total work-load, for the lessened casework was more than
offset by services required of in support of the industrywide approach to compliance. The
General Counsel contributed importantly to the work of the operating Bureaus in their
rulemaking proceedings, preparation of subpoenas, and orders to file special reports, and in
the development of technical procedures in the acquisition of evidence in connection with
industrywide procedures.
In addition, the year witnessed a step-up in the work of the General Counsel's Division
of Export Trade, calling for more advisory services required for the Nation's export
expansion program. Also, the Division of Legislation encountered a heavy workload,
reflecting in part a rising trend in recent years to designate the FTC to administer proposed
regulatory programs for greater consumer protection.
Court proceedings which involve the Federal Trade Commission arise in a number of
ways. Any individual or company against which the FTC has issued an order to cease and
desist may petition a U.S. court of appeals to review and set aside the order. The FTC may
apply in a U.S. district court for enforcement of a subpoena, or may request the Attorney
General to institute civil proceedings to compel the filing of a special or annual report
ordered by the Commission and to recover forfeitures for failure to comply with the
Commission's order. Disobedience to a court's decree enforcing a Commission’s order or
subpoena may be punished by the court as a contempt.
31
Collateral suits challenging the Commission's jurisdiction or methods of procedure may be
brought under certain circumstances in U.S. district courts. The Commission's interests in
these and all related matters are presented and defended by the General Counsel.
In fiscal 1965, the General Counsel, through the Division of Appeals, handled 119 cases.
Litigation was completed in 43 of these, of which 7 were restraint of trade matters, 19
involved deceptive business practices, 3 concerned the FTC's subpoena powers, 5 were suits
to com el the filing of special reports, and 9 were extraordinary matters such as suits against
the Commission for injunction or declaratory judgment. At the year's end, there were 76
cases open for further action or pending final disposition.
(The status of the more important court cases at the year's end is outlined in app. A of this
report.)
The Division of Consent Orders of the General Counsel's Office supervises the
negotiation of consent orders to be entered in appropriate cases. These cases constitute in
numbers the great majority of FTC formal enforcement proceedings. A total of 116 executed
agreements containing consent orders to cease and desist were forwarded to the Commission
for its consideration in fiscal 1965. In addition 303 review, interim report, or special
assignment matters were completed. The Division of Consent Orders uniquely serves the
interest of the public and the business community by affording a means whereby the law is
enforced and business is not required to endure expensive, time-consuming, marketdisrupting litigation.
The General Counsel's Division of Export Trade supervises administration of the WebbPomerene (Export Trade) Act (15 U.S.C. sees. 61-65) for the Commission, performs
necessary investigative functions in connection with the Commission's general authority
under section 6(h) of the Federal Trade Commission Act to inquire into foreign trade
conditions, coordinates the Commission's jurisdiction over foreign commerce, advises other
offices of the Commission on export trade, and serves as liaison with other Government
agencies having complementary jurisdiction over foreign trade.
The 1918 Webb-Pomerene Act, entitled "An Act To promote export trade, and for other
purposes", qualifiedly exempts registered American associations from the provisions of the
Sherman Act of 1890 and the Federal Trade Commission and Clayton Acts of 1914 insofar
as their activities relate solely to export trade. Under the
32
provisions of this act, associations are permitted to fix prices and quotas, pool products for
shipment, and establish terms and conditions of sales to foreign markets. Thirty-four
associations were registered with the Commission in 1964, and they exported
$1,103,394,518.91 worth of goods.
With the acceleration of the Commission's industry guidance programs, and with the
development of procedures for handling vastly increased caseloads, the General Counsel has
assigned, on a selective basis, members of his staff to assist the operating bureaus in their
conduct of rulemaking proceedings, preparation of subpoenas and orders to file special
reports, and the development of technical procedures in the acquisition of evidence in
connection with industrywide procedures and single causes.
The General Counsel's Division of Legislation furnished advice and comment to the
Commission on 107 bills which were pending in Congress, 10 draft bills submitted to the
Bureau of the Budget by other governmental agencies, and 6 enrolled bills pending
presidential signature or veto. There has been a continuation of the introduction in Congress
of proposed legislation of a regulatory nature in which the Commission is either designated
singularly or jointly with another agency to administer the proposed law. Examples of such
proposed legislation are the, "Truth-In-Packaging" bill and the "Truth-In-Lending" bill.
Also, a number of bills, which name the Commission as administering agency, have been
introduced requiring the labeling of goods imported into the United States in order to show
foreign origin.
From the experience of the Commission in its daily administration of the law and from
studies made in the General Counsel's Office, it appears that certain additional legislation is
needed.
33
Chapter VII
LEGISLATION NEEDED
The Commission has urged the enactment of laws which would:
1. Amend section 7 of the Clayton Act (15 U.S.C. 18) by requiring proper notice to the
Federal Trade Commission and other appropriate agencies of proposed mergers of
corporations of significant size, at least one of which is engaged in interstate commerce, and
to provide adequate means of preventing illegal mergers.
2. Amend section 2(e) of the Wool Products Labeling Act (15 U.S.C. 68 (e)), which
defines a wool product, so that it will read as follows:
The term “wool product” means (1) any fiber or fibrous materials, including fibers
or fibrous materials reclaimed from other products, which are, contain, or in any way
are represented as containing wool, reprocessed wool, or reused wool, and (2) any
yarn, fabrics or other product containing or made in whole or in part of such fibers or
fibrous materials.
3. Amend section 2(d) of the Flammable Fabrics Act (15 U.S.C. 1191 (d)) so as to
include blankets which are dangerously flammable.
4. Amend section 5(a) of the Clayton Act (15 U.S.C. 16 (a)) so as to include a final order
of the Federal Trade Commission; that is, amend section 5(a) to read:
A final judgment, decree or final order to cease and desist of the Federal Trade
Commission heretofore or hereafter rendered in any civil or criminal proceeding
brought by or on behalf of the United States under the antitrust laws to the effect that
defendant or respondent has violated said laws shall be prima facie evidence against
such defendant or respondent in any action or proceeding brought by any other party
against such defendant or respondent under said laws or by the United States under
section 4A, as to all matters respecting which said judgment, decree or order would
be an estoppel as between the parties thereto: Provided, That this section shall not
apply to
35
consent judgments, decrees or orders entered before any testimony has been taken or to
judgments or decrees entered in actions under section 4A.
36
Chapter VIII
THE ROLE OF ECONOMIC STUDIES
AND EVIDENCE
Some of the Commission's most important instruments of antimonopoly action are
factfinding and economic reporting, coupled with well reasoned economic analysis. As the
Nation's industrial organization becomes more complex and business concerns become
larger, it is imperative to have information which will permit an early exploration of the basic
causes of poor economic performance. Proper corrective action is dependent upon facts and
their accurate analysis —whether the corrective action is new legislation or a cease-anddesist order by the FTC. The chief function of the Commission's Bureau of Economics is to
gather and analyze economic facts.
The Bureau of Economics is divided into three divisions: The Division of Industry
Analysis conducts inquiries into the developments of particular industries, as well as broad
trends reflecting changes in the structure of American industry to determine how competition
is affected; the Division of Economic Evidence provides economic information and analyses
needed for the prosecution of casework; and the Division of Financial Statistics collects and
prepares, in cooperation with the Securities and Exchange Commission, financial reports
covering various manufacturing industries.
Industry Analysis
In addition to a number of individual industry studies, considerable effort in 1965 was
devoted to studies relating to broad changes in concentration, diversification, and integration
in American manufacturing industry, and to the factors responsible for such changes. In
particular, special emphasis has been devoted to an analysis of recent merger activity.
Merger Studies.—The Commission's last full-scale examination of the importance of
merger activity was released in 1955. During
37
fiscal year 1965, two studies illustrated in some detail the extent and economic impact of recent merger
activity over the period 1955-64. Following a complete reexamination of merger data for the past 10 years,
the Commission released revised merger series for years since 1954. The revised series is shown in table
I below.
TABLE 1. NUMBER OF MANUFACTURING AND MINING
CONCERNS ACQUIRED, BY ASSET SIZE OF ACQUIRING
COMPANY, 1955-64
Asset size of acquiring company (in millions of dollars)
Year
$50 to
$99.9
$10 to
$49.9
$5 to
$9.9
$1 to
$4.9
Other1
Total
109
125
111
122
202
172
166
161
200
207
87
79
66
73
119
103
100
76
92
73
237
214
216
187
265
261
261
244
287
283
80
88
66
71
87
102
152
130
101
99
73
72
67
70
115
1115
149
146
120
101
97
95
59
66
47
91
126
96
61
91
683
673
585
589
835
844
954
853
861
854
1,575
868
2,455
976
1,023
829
7,731
$100 and
over
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
---------------------------------------------------
1955 to
1964. .
1
Includes companies with assets of less than $1 million and those where the asset size of the acquiring company was
unknown.
Source: Data limited to mergers and acquisitions reported by Moody’s Investors Service and Standard Corporation
Records. Bureau of Economics, Federal Trade Commission.
The trend of mining and manufacturing merger activity since 1940 is shown in chart 1.1
The chart shows that merger activity accelerated at a rapid pace starting in 1955. Between
1945 and 1949, for example, an average of 301 mining and manufacturing mergers
_________
1
The acquisitions recorded are limited to those reported in selected trade and business newspapers, and in two
reporting services, Moody’s Industrials and Standard Corporation Records. The recordings are compiled primarily for
the purpose of following the trend in the merger, or as including all of the acquisitions which were actually consummated.
38
Chart I
MERGERS IN MANUFACTURING AND MINING
1940-64
CHART - SEE IMAGE
occurred each year. Between 1950 and 1954, this average fell slightly to 285 per year. However,
an average of 673 mining and manufacturing companies were acquired between 1955 and 1959, and
an average of 873 a year between 1960 and 1964. The present level of merger activity is higher than
at any time during the past 30 years.
In addition to the absolute increase in merger activity, the data in table 1 show that an increased
number of acquisitions were made by large companies between 1955 and 1964. In 1955, for
example, companies with assets of $100 million or more made 16 percent of our recorded
manufacturing and mining acquisitions. In 1964, however, this size group accounted for almost 25
percent of these mergers.
Firms engaged in the production of electrical machinery and chemical products were responsible
for about 25 percent of recorded acquisitions. Other large acquiring industries include nonelectrical
machinery, food, and kindred products, and transportation equipment.
Analysis of merger activity includes more than the mere counting of the number of mergers
which take place, it requires their measurement. To appraise their economic significance,
information is needed which shows the size and product characteristics of both acquiring and
acquired firms. A report on The Scope of the Current Merger Movement, prepared in 1965 for the
Senate Subcommittee on Antitrust and Monoply, contains an analysis of firms with assets
39
of $10 million or more which have been acquired since l948. Table 2 (see below) shows the
number of acquisitions of firms of this size and the value of the acquired assets. This "large"
merger series is one which has been developed and refined during the past year.
TABLE 2. A C Q U I S I T I O N S O F L A R G E M I N I N G A N D
MANUFACTURING CORPORATIONS (WITH ASSETS OF $10
MILLION AND OVER), 1948-64
All large acquisitions
Year
Number
1948 - - - - - - - - - - - - - - 1949 - - - - - - - - - - - - - - 1950 - - - - - - - - - - - - - - 1951 - - - - - - - - - - - - - - 1952 - - - - - - - - - - - - - - 1953 - - - - - - - - - - - - - - 1954 - - - - - - - - - - - - - - 1955 - - - - - - - - - - - - - - 1956 - - - - - - - - - - - - - - 1957 - - - - - - - - - - - - - - 1958 - - - - - - - - - - - - - - 1959 - - - - - - - - - - - - - - 1960 - - - - - - - - - - - - - - 1961 - - - - - - - - - - - - - - 1962 - - - - - - - - - - - - - - 1963 - - - - - - - - - - - - - - 1964 - - - - - - - - - - - - - - Total
-----------
Value
Large acquisitions made by
200 largest manufacturing
corporations 1
Number
Value
4
5
4
9
13
23
36
68
59
49
39
63
62
60
71
65
90
$64.6
66.8
154.8
201.4
326.5
678.6
1,450.2
2,156.0
2,069.6
1,458.9
1,118.5
1,949.6
1,708.3
2,144.6
2,179.7
2,791.0
2,784.3
4
5
2
7
6
16
19
37
39
28
23
36
36
27
32
33
37
$64.6
66.8
107.2
150.0
210.2
480.5
1,082.6
1,499.3
1,570.1
1,093.2
676.9
1,384.8
1,063.5
1,296.3
1,170.7
1,776.1
1,231.5
720
23,303.4
387
14,924.3
1
As of yearend 1962
Source: Bureau of Economics, Federal Trade Commission
Corporations with assets of $10 million and over accounted for about 83 percent of all assets of
U.S. manufacturing corporations in the first quarter of 1965. Over the period 1948-64, 720
“large”mergers occurred and in total these acquired companies in the year prior to acquisition had
assets of more than $23 billion. The place of the largest corporations in the merger movement is
shown in the
40
activity of the 200 largest manufacturing corporations. These 200 largest corporations during
the years 1948 through 1964 absorbed 387 other large manufacturing corporations. The total
of these acquisitions amounted to just under $15 billion or nearly two-thirds of the over $23
billion of large corporate acquisitions recorded. Changes in the large merger series parallel
quite closely that of the overall merger series shown in chart 1. In 1955, for example, the
number of large mergers which occurred were almost twice those of 1954. More
importantly, the value of assets acquired in 1955 was more than twice the 1954 figure.
While most of the acquired companies (61 percent) were in the $10 to $25 million assetsize class, they accounted for only 29 percent of the acquired assets. On the other hand, only
5 percent of the acquired firms had assets of $100 million or more but these mergers
accounted for about 23 percent of the acquired assets.
TABLE 3. MANUFACTURING CORPORATIONS ACQUIRED COMPARED WITH
TOTAL MANUFACTURING: 1959 AND 1964
Size class of acquired
firms (in millions)
Number of
large manufacturing
corporations
acquired
Total number of
manufacturing
corporations
1959
Number of acquisitions as percent
of percent of total number of
manucorporations
1964
1959
1964
$10 to $25 - - - - - $25 to $50 - - - - - - $50 to $100 - - - - - $100 to $250 - - - - Over $250 - - - - - -
417
145
70
29
2
930
353
238
165
127
998
463
270
208
173
44.8
41.1
29.4
17.6
1.6
41.8
31.3
25.9
13.9
1.2
Total - - - - - - -
663
1,813
2,112
36.6
31.4
One measure of the economic significance of these acquisitions may be seen by
comparing them with the actual number of manufacturing corporations in various asset-size
groups. Table 3 shows the number of manufacturing firms by asset-size class for 1959 and
1964. In 1959 there were 930 manufacturing corporations with assets between $10 million
and $25 million. It shows also that 417
41
companies of that size, a number equivalent to almost 45 percent of the 1959 population,
were acquired between 1959 and 1964. In total, 663 manufacturing corporations with assets
of $10 million or more were acquired between 1959 and 1964; this was equal to 36.6 percent
of all such firms in 1959. Between 1959 and 1964, a net increase of 299 companies with
assets of $10 million or more took place.
The acquisitions of large companies were spread somewhat more evenly across American
industry than was true for "all" merger activity. The six largest, in terms of values of assets
acquired, were nonelectrical machinery, petroleum products, chemicals, paper products,
transportation equipment, and electrical machinery in that order. These data show also that
in two industries, paper and textile products, the acquisitions made were equal to more than
20 percent of the total 1959 manufacturing assets of all corporations (chart 2).
Canned Fruit and Vegetable Report.—During 1965, the third and final report of the
Commission’s Economic Inquiry into Food Marketing was published. This report examines
production and consumption patterns, concentration, diversification, and integration in
merger activity; relative costs, profits, marketing patterns, product promotion, and entry
barriers in the canned fruit, juice, and vegetable industry.
This report discusses a number of interesting developments in this industry. For example,
the report points out that since 1947, U.S. production of canned fruits, juices, and vegetables
has increased by one-third (from 326 to 435 million cases annually). At the same time,
however, there have been substantial declines in the number of canning establishments since
1947; and that during a somewhat shorter period, 1958-63, employment declined by 6.5
percent.
This report indicates that profitability was clearly associated with sales size of canning
firms in 1959. The 12 largest canners, each with sales over $25 million, enjoyed average
profits before taxes equal to 8.8 percent of their net canning sales. At the other extreme, the
343 reporting firms, each with sales under $1 million, experienced average profits equal to
0.7 percent of their net canning sales. Almost 40 percent of the smallest firms reported net
operating losses.
A few large acquisitions of canning facilities by large canners were made in the 1950's;
however, these acquisitions were over42
Chart 2
ACQUIRED ASSETS OF LARGE CORPORATIONS, 1948-64, AS PERCENT OF 1959
TOTAL ASSETS BY INDUSTRY
GRAPHIC - SEE IMAGE
INDUSTRY
Paper and allied products
Textile mill products
Lumber and wood products, except furniture
Mining
Machinery, except electrical
Electrical Machinery
Chemicals and allied products
Instruments and related products
Stone, clay and glass products
Transportation equipment
Food and kindred products
Petroleum and oil products
Fabricated metal products
Printing and publishing
Primary metal industries
Leather and leather products
Rubber and plastic products
Miscellaneous manufacturing
Apparel
Tobacco manufactures
PERCENT
shadowed by the merger activity in the period 1960 to 1963. During the latter period, 42
firms included in this report were acquired. And, any of the acquisitions involved relatively
large canners. Almost 20 percent of the 39 firms with 1959 canning sales in excess of $10
million each were acquired during 1960-63.
Fifteen of the 42 acquisitions which occurred in the period 1960 to 1963 were made by
noncanning firms, thereby increasing the number of large diversified firms in the canned fruit
and vegetable industry. As result of recent acquisitions, such large and diversified
43
firms as Reynolds Tobacco, Nestle, R. T. French, and Coca Cola became canned fruit and
vegetable producers. In addition, three large dairy firms, Pet Milk Co. (peripherally in
canning prior to 1960), Carnation Co., and Borden Co. acquired large canning firms between
1960 and 1963. (By the end of 1963, the five largest dairy firms also ranked among the 20
largest canners of fruits and vegetables.)
Clearly, canned fruits and vegetables are being marketed under conditions of increasing
concentration. Not only are the larger canners doing an expanding share of total business,
but the competitive fringe of smaller canners is shrinking, as smaller canners are becoming
less capable of offering effective competition to the leaders. Moreover, not only are the
leaders strengthening their position vis-a-vis smaller firms but they also are raising the
barriers to entry confronting potential entrants. These developments suggest that the cannerbrand segment of the industry is becoming increasingly occupied by large, diversified firms
capable of developing strong consumer acceptance for their products.
National Commission on Food Marketing.—During 1965, the Commission contracted to
prepare and submit two studies to the National Commission on Food Marketing. The first
of these, Market Structure, Conduct, and Performance in Food Retailing, will deal primarily
with the changing market structure of grocery retailing in the local, regional, and national
markets during the past two decades. Attention will be devoted to recent trends toward
concentration of retail grocery store sales attributed to the leading national chains; vertical
integration; barriers to entry into food retailing; and diminishing opportunity of survival of
the independents and local chains.
The second report, Concentration, Integration, and Diversification in Food
Manufacturing, will describe in detail and evaluate the structures and structural trends of
food manufacturing industries including an analysis of market concentration, degrees of
production differentiation, and the conditions of entry. Primary attention is being given to
the place of large diversified firms in the structures of individual product industries and to
the analysis of merger activity which is extending these large firms into important positions
in an expanding number of food product industries. The study also analyzes food industry
behavioral characteristics such as of return
44
and attributes of nonprice competition, relating these to industry structures.
Although a considerable amount of work was done on both these studies in fiscal 1965,
they will not be completed until fiscal 1966.
Economic Evidence
The Division of Economic Evidence continued to concentrate its efforts primarily on
mergers. The Division reviews all mergers reported by major press and trade sources and
examines in depth those that appear to present a significant threat to competition. During
1965, investigations in depth were made of approximately 50 mergers.
A series of decisions by the Commission and the courts has clarified the application of
the 1950 Celler-Kefauver Anti-Merger Act. These cases have apparently had the effect of
slowing down merger activity involving the uniting of substantial competitors in the same
or similar markets, the horizontal type, as well as numerous vertical mergers. However, the
merger movement has more and more taken the form of various kinds of conglomerate
mergers, particularly of the so-called product extension, and geographic market extension
types. Extensive development of economic evidence is required to determine what, if any,
adverse competitive effects flow from mergers of this type. However, useful guidelines have
been provided by the Commission's decision barring the acquisition of Clorox Chemical Co.,
the leading producer of household liquid bleach, by Procter and Gamble Co. (D. 6901) and
its decision finding a violation in Beatrice Food Co. (D. 6653).
The Division devotes a considerable part of its efforts to the collection and evaluation of
economic data which can place mergers in an industry context. This is particularly important
in view of the fact that mergers tend to feed upon themselves in a follow-the-leader pattern
in particular industries. Among the industries in which merger activity has been particularly
noted are bakery products, confectionery goods, snack foods, coffee, plastics, textiles,
department stores, paper, apparel, chemicals, machinery, for retailing, cement, and fertilizer.
The Division also takes an active part in designing and carrying out surveys relating to
FTC's enforcement responsibilities. It has assisted in the preparation of certain cases
involving price fixing,
45
price discrimination, restraint of trade, and monopoly; and participated in analyzing industry
requests for premerger clearance. The Division assists in the review of certain false and
deceptive claims where such claims were based on data collected by sampling techniques
which raised questions as to their validity.
Financial Statistics
The Division of Financial Statistics develops probability samples of corporate
manufacturers, and, each quarter, produces with these samples estimates of the financial
condition and quarterly operation results of all manufacturing corporations. In the Bureau
of the Budget's recent report War on Waste: Cost Reduction Through Better Management,
the work of the Division of Financial Statistics was singled out as an example of how money,
time, and effort can be saved through the shortcut of using a probability sample survey
instead of taking a complete canvass.
In collaboration with the Securities and Exchange Commission, uniform and confidential
quarterly financial statements are collected from a sample of some 11,000 out of an estimated
total of more than 200,000 manufacturing corporations doing business in the United States.
The sample is stratified so that estimates may be made for each of 34 industry groups and 10
asset sizes of corporate manufacturers. These financial statistics are summarized and
published in the Quarterly Financial Report for Manufacturing Corporations, four of which
are published in every 12-month period. Each published report contains estimates for 13
income statement items, 32 balance sheet items, and 44 financial and operating ratios for
each of the 34 industry groups and 10 asset sizes of corporate manufacturers.
The most recently published reports show that the total assets of manufacturing
corporations have increased to a record total in excess of $330 billion, with all-time highs
also recorded for items such as net working capital ($102 billion), inventories ($78 billion),
net property, plant, and equipment ($127 billion), and stockholders' equity ($205 billion).
46
Chapter IX
FIELD OPERATIONS
The Bureau of Field Operations through its 11 field offices completed 1,096
investigations during the fiscal year, 695 of which involved deceptive practices, 393 restraint
of trade, and 8 wool, fur, or other consumer acts. This production was accomplished with
an average of 158 attorneys, as compared to a total production of 1,144 completed
investigations with an average of 167 attorneys employed during fiscal 1964.
The investigations completed constitute only a part of the Bureau's performance for the
fiscal year. Among other things, its New York field office handled 4 contested cases under
the Robinson-Patman Act. Its staff handled 162 assurances of voluntary compliance, out of
a total of 489 handled by the Commission, one-third of the entire volume. Its field attorneys
also negotiated with respondents on 35 consent orders, out a total of 132 handled during the
year, or approximately 38 percent of the total. Members of its staff also participated in eight
investigational hearings.
The disposition of matters by attorneys in the field offices, either through the obtaining
of assurances of voluntary compliance or by the consent settlement method, provided an
unusually suitable means of explaining to the parties involved, through direct personal
contact with field office attorneys, the effect and meaning of the requirements imposed upon
them by their assurances of voluntary compliance and by the terms of the cease-and-desist
orders. In addition, these direct personal contacts provided them with information as to how
to comply voluntarily with other laws administered by the Commission.
There has been initiated on an experimental basis in each field office a program designed
to inform business men, attorneys, or members of the general public, of the nature of the laws
administered by the Commission. This program is designed to supply answers to questions
propounded either by telephone, writing, or personal contact; and to provide speakers,
panelists, etc., to local groups having
47
an interest in the work of the Commission. It is anticipated that the results of this
experimental program will be reported initially at the close of the first quarter of fiscal 1966.
In addition, this Bureau was able to bring its workload to a more current status. At the
end of fiscal 1964, it had on hand 651 matters for investigation; during fiscal 1965, it
received 1,013. Having completed 1,096, there was on hand as of the end of the fiscal year
568 cases, or a reduction of nearly a hundred cases from the preceding year. Investigation
case production per man dropped slightly from 7.03 in fiscal 1964 to 6.9 in fiscal 1965,
primarily due to the performance of other functions just described.
During the year, approximately 2,000 cubic feet of the official records of the Commission
were accessioned by the U.S. Archivist. This quantity seems unimportant until it is related
to the total volume of official records on hand June 30, 1964, which amounted to 8,036 cubic
feet. Twenty-five percent of the records-storage space in the FTC building has been cleared
for expansion or other use.
Public requests for Commission publications continued at a high rate during the year.
Two pamphlets, "Fight Back!" and "Look for that Label," both addressed to consumers, were
in heavy demand.
48
Chapter X
APPROPRIATIONS AND
FINANCIAL OBLIGATIONS
FUNDS AVAILABLE FOR THE COMMISSION FOR THE
FISCAL YEAR 1965
Funds available to the Commission for the fiscal year 1965 amounted to $13,459,107.
Public Law 88-507, 88th Congress, approved August 30, 1964, provided $12,875,000 of
which $15,893 was transferred to the General Services Administration for additional space
rental costs, and Public Law 89-16, 89th Congress, approved April 30, 1965, provided
$600,000.
Obligations by activities, fiscal year 1965
1.
Antimonopoly:
Investigation and litigation - - - - - - - - - - - - - - - - - - - - - - - - - - $6,246,000
Economic and financial reports - - - - - - - - - - - - - - - - - - - - - - - - - 850,000
Trade practice conferences, industry guides, and small business - - 170,000
Compliance investigations for Attorney General - - - - - - - - - - - - - 143,000
2.
Deceptive practices:
Investigation and litigation - - - - - - - - - - - - - - - - - - - - - - - - - - - 3,373,000
Trade practice conferences, industry guides, and small business - - - 341,000
Textile and fur enforcement - - - - - - - - - - - - - - - - - - - - - - - - - - 1,209,000
3.
Executive direction and management - - - - - - - - - - - - - - - - - - - - - - - 299,000
4.
Administration - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 799,000
Total - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $13,410,000
Settlements Made Under Federal Tort Claims Act
During the fiscal year 1965 the Commission paid claims in the total of $438.42. No other
claims are pending for the same period.
49
Chapter XI
HEARING EXAMINERS
Sixty-three cases were disposed of by hearing examiners during fiscal 1965. At the end
of the year, there were 37 cases on hand, compared to 64 cases pending at the beginning of
the year. Twenty-nine new cases were received and 7 others were reopened or remanded,
making a total of 100 cases for disposition. There were 300 days of hearing or prehearing
conferences.
In recognition of the decreased caseload in the office of hearing examiners, steps were
taken to utilize, in the best interests of the Government, the manpower thus freed.
Hearing examiners were assigned to perform for the Commission a variety of tasks of a
suitable nature, although not strictly adjudicative. These duties included the preparation of
findings, conclusions, and recommendations for reference to the Department of justice in
cases investigated by the Commission to determine compliance with court decrees, and also
the conduct of nonpublic investigational hearings. In addition, examiners sat as special
masters in U.S. Court of Appeals proceedings and also handled cases for several other
Government agencies. Three examiners were detailed on a full-time basis to another agency
and ultimately were transferred to that agency.
51
APPENDIX (A)
FTC Cases in the Courts
Following is a summary of the principal FTC cases before the courts during fiscal 1965,
together with a brief discussion of what is involved in each case or group of cases.
RESTRAINT OF TRADE CASES
Probably the most significant restraint of trade decision in fiscal 1965 was that rendered
by the Supreme Court in the Atlantic Refining Co.-Goodyear Tire & Rubber Co. "TBA"
proceeding (D. 6486). In affirming the decision of the Seventh Circuit (Chicago), the Court
upheld the Commission's finding that an agreement between Goodyear and Atlantic, under
which Atlantic "sponsored" the sale of Goodyear tires, batteries, and automotive accessories
to its wholesale outlets and retail gasoline service station dealers was an unfair method of
competition. On all such purchases by its dealers, Atlantic received an "override" or "sales
commission" payment from Goodyear. The Court held that Atlantic, with Goodyear's
"encouragement and assistance," had unlawfully utilized its "economic leverage" over its
customers to influence their purchasing of Goodyear products. In a similar TBA proceeding,
Texaco, Inc.-B. F. Goodrich Co. (D. 6485), the Court reversed the judgment of the District
of Columbia Circuit that the Commission's order was not supported by substantial evidence,
and remanded the case to the court of appeals with instructions for it to remand the case to
the Commission for further proceedings in conformity with Atlantic Goodyear. The
Commission's other TBA proceeding, Shell Oil Co.-Firestone Tire and Rubber Co. (D. 6487),
remained pending in the Fifth Circuit (New Orleans) at the close of the year.
In other restraint of trade cases, the Sixth Circuit (Cincinnati) affirmed the Commission's
finding that Atlantic Refining Co. (D. 7471) unlawfully utilized "consignment agreements"
to fix the retail price of gasoline sold by its dealers; and in National Macaroni Manufacturers
Ass'n (D. 8524), the Seventh Circuit (Chicago) upheld the Commission's finding of unlawful
conspiracy to fix the composition of macaroni and related products for the purpose of
controlling the prices of their principal ingredients.
53
The Commission, however, was not entirely successful in the courts in restraint of trade
matters in fiscal 1965. In Brown Shoe Co. (D. 7606), the Eight Circuit (St. Louis)
overturned the Commission's finding that the operation of Brown's retail store franchise
program was unlawful. The Commission had found that under this method of distribution,
selected shoe dealers were required to "concentrate" their purchases upon Brown products,
in return for various valuable benefits and services furnished them under the franchise
program. In the Commission's view, such method enabled a dominant and financially
powerful manufacturer like Brown to foreclose, effectively, smaller shoe manufacturers from
access to a significant number of independent retail outlets. The Commission's petition for
certiorari was pending in the Supreme Court at the close of the year. In Sandura Co. (D.
7042), the Sixth Circuit (Cincinnati) likewise reversed the Commission, holding that a
manufacturer's method of distribution involving a system of closed territories and other resale
restraints upon its dealers was economically justified," and therefore not unlawful. The court
noted that Sandura was “a relatively small concern competing with and losing ground to the
giants' of the floor-covering industry.”
Restraint of trade cases pending at the close of the year included: Luria Bros. & Co. (D.
6156), in the Third Circuit (Philadelphia), a highly complex matter involving illegal
restrictive agreements and arrangements by several scrap iron and steel companies; and
American Cyanamid Co. (D. 7211), in the Sixth Circuit (Cincinnati), involving an unlawful
conspiracy in the manufacture and distribution of antibiotic drugs.
In the illegal merger field, the most significant decision in fiscal 1965 occurred in
Consolidated Foods Corp. (D. 7000), wherein the Supreme Court reversed the Seventh
Circuit (Chicago) and upheld the Commission's finding of violation of section 7. The
Commission had found that Consolidated's acquisition of Gentry, Inc., a company engaged
primarily in the production of dehydrated onion and garlic products, might have the requisite
anticompetitive effects because of opportunities afforded for "reciprocal buying, "i.e., a
practice whereby Consolidated could use express or implied business coercion to induce its
suppliers to purchase some or all of their dehydrated onion and garlic needs from
Consolidated's new Gentry Division. In upholding the Commission, the Supreme Court ruled
that the court of appeals had given too much weight to “post-acquisition” evidence.
Subsequently, the Seventh Circuit handed down its decision in Ekco Products Co. (D. 8122),
affirming the Commission's finding that the merger of Ekco, a large diversified manufacturer,
with McClintock Manufacturing Co., a small corporation with a virtual monopoly in
commercial meat-handling equipment, was unlawful under section 7.
Other important merger cases pending at the close of the year included: Pillsbury Co. (D.
6000), in the Fifth Circuit (New Orleans), involving the acquisition by Pillsbury of Ballard,
its most significant regional competitor in the Southeastern United States in the family-flour
and flour-base home54
mixes lines of commerce, and Pillsbury's acquisition of Duff, a significant competitor in the
sale of flour-base home-mixes throughout the country; and Proctor & Gamble (D. 6901), in
the Sixth Circuit (Cincinnati), involving the acquisition of the Clorox Chemical Co., a
manufacturer of household bleach, by Proctor & Gamble, a leading manufacturer of related
products such as soaps, detergents, and cleansers. In Pillsbury, briefs have been filed and the
case has been orally argued.
In the Robinson-Patman discriminatory pricing area, there were several significant
decisions in cases involving the Commission. In Borden Co. (D. 7129), the Fifth Circuit
(New Orleans) reversed the Commission's finding of violation of section 2(a), and held that
the company had not unlawfully discriminated in price as between sales of "private label"
and "Borden" brand evaporated milk, since, in its view, such products were not "of like grade
and quality" as required by the statute. The Commission's petition for certiorari was pending
in the Supreme Court at the close of the year. In another section 2(a) case involving the
Borden Co. (D. 7474), the Seventh Circuit (Chicago) likewise reversed the Commission,
holding that the evidence of record failed to satisfy the statute's interstate commerce and
competitive injury requirements with regard to the company's discriminatory sales of fluid
milk.
Apart from the above, the Commission obtained favorable decisions in a number of
Robinson-Patman cases. In General Auto supplies, Inc.,. (D. 8039—National Parts
Warehouse), the Seventh Circuit (Chicago) affirmed the Commission's finding that a group
of automotive parts jobbers violated section 2(f) by knowingly inducing and receiving
discriminatory discounts from their suppliers. This case is noteworthy in that the “group
buying” organization involved was not a mere "bookkeeping device," but an ostensible
"warehouse distributor" organized and operated by the jobbers as a "limited partnership."
In Monroe Auto Equipment Co. (D. 8543), the Seventh Circuit similarly upheld the
Commission's finding that a manufacturer's granting of discriminatory discounts to
warehouse distributors on products which they purchased and later "resold" to their own
affiliated jobber outlets violated section 2(a). The Commission held that such practice could
result in injury to competing independent jobbers purchasing Monroe products from
nonaffiliated warehouse distributors at regular jobber prices. In another favorable decision,
Joseph 4. Kaplan & Sons, Inc. (D. 7813), the District of Columbia Circuit affirmed the
Commission's findings that a manufacturer of shower curtains violated sections 2(a), (d), and
(e) in connection with sales to various large department stores throughout the country.
Twenty-six of these stores received discriminations on purchases from Kaplan through a
wholly-owned subsidiary of an organization owned and controlled by the stores.
In Forster Mfg. Co. (D. 7207), the First Circuit (Boston) upheld the Commission's finding
that a dominant manufacturer and seller of "woodenware" products had discriminated in
price with the deliberate intention and with
55
the effect of injuring its smaller competitors. However, the court held that the Commission
had applied an overly restrictive test in rejecting Forster’s “meeting competition” defense,
and remanded the case to the Commission for the application of a "reasonable and prudent
person" standard under section 2 (b).
Robinson-Pitman matters pending at the close of the fiscal year included: Exquisite Form
Brassiere, Inc. (D. 6966), in the District of Columbia Circuit, involving the merits of the
company's section 2(b) defense to a charge of granting unlawful advertising and promotional
allowances in violation of section 2(d) (in a previous decision, the court had ruled that such
defense was applicable to a section 2(d) charge as a matter of law); and Foremost Dairies,
Inc. (D. 7475), in the Fifth Circuit (New Orleans), involving issues of interstate commerce
and competitive injury in connection with Foremost's discriminations in sales of fluid milk.
DECEPTIVE PRACTICE CASES
In the year's most significant deceptive practice decision, Colgate-Palmolive Co. and Ted
Bates & Co. (D. 7736), the Supreme Court upheld the Commission's finding that a television
"demonstration" of a shaving cream's ability to shave sandpaper was deceptive and
misleading. In reversing the First Circuit (Boston), the Court held that it is an unlawful trade
practice to falsely represent that a televised test, experiment, or demonstration provides a
viewer with visual proof of the truth of a product claim, regardless of whether the claim itself
is true in actual fact. In a similar shaving cream “mock-up” case, Carter Products, Inc. (D.
7943), the Fifth Circuit (New Orleans) granted permission to withdraw the petition for
review. The matter had been held in suspense pending the outcome of Collate. Two other
cases involving the same type of deceptive "demonstration," General Motors Corp. and
Libby-Owens-Ford Glass Co. (D. 7643), remained pending in the Sixth Circuit (Cincinnati).
In Mary Carter Paint Co. (D. 8290), the Supreme Court granted the Commission's petition
for certiorari to review a decision of the Fifth Circuit (New Orleans) overturning the
Commission's finding that the company's use of the word "free" in its price advertising of
paint was misleading and deceptive.
In another significant deceptive practice matter, the Ninth Circuit (San Francisco) upheld
the Commission's findings in Stauffer Laboratories, Inc. (D. 7841). The Commission's order
requires the company to stop representing that the mechanical device ("Magic Couch") and
plan which it sells will effect weight reduction, or tone and firm sagging muscles.
The Commission's efforts to eradicate deception in the watch industry continued to
receive court approval during fiscal 1965. In W.M.R. Watch Case Corp. (D. 8573), and
Waltham Watch Co. (D. 8396), the District of Columbia Circuit affirmed Commission ceaseand-desist orders directed against various deceptive practices in the marketing of watches and
watch
56
parts. The same court of appeals also upheld the Commission in Brite Manufacturing Co.
(D. 8325), involving a company's failure to disclose the foreign origin of imported
watchbands. In that case, the court specifically affirmed the Commission's taking of "official
notice" that a substantial segment of the purchasing public prefers domestic products, and
believes that products unmarked as to country of origin are made in America.
In Coro, Inc. (D. 8346), the First Circuit (Boston) upheld the Commission's finding that
a costume jewelry and watch manufacturer supplied "insert sheets" to "catalogue houses"
containing fictitious retail prices, and falsely representing that its watches were
"unconditionally guaranteed." In another fictitious pricing matter, the Second Circuit (New
York) affirmed the Commission in Heavenly Creations, Inc. (D. 8448), involving
"preticketing" of a variety of products.
In Western Radio Corp. (D. 74-68), the Seventh Circuit (Chicago) upheld an order of the
Commission prohibiting deceptive statements regarding the operational range of a pocketsized portable radio transmitter, and misrepresentation of the licensing requirements
necessary to operate this equipment.
In Heinz W. Kirchner, d/b/a Universe Co. (D. 8538), the Ninth Circuit (San Francisco)
sustained the Commission's finding that the characteristics of a swimming-aid device called
"Swim-Ezy" had been misrepresented to the public.
In J.C. Martin Corp. (D. 8520), the Third Circuit (Philadelphia) a Commission order
prohibiting merchandising by means of a game of chance, gift enterprise, or lottery scheme.
The court also held that the Commission's proceeding was not barred by a former
Commission proceeding against the same respondents, under either the doctrine of res
adjudicata or collateral estoppel.
In A. Robbin & Co. (D. 8532), the Seventh Circuit (Chicago) ruled in the Commission's
favor in the first proceeding brought under the Flammable Fabrics Act of 1953 to reach court
decision.
COLLATERAL SUITS AGAINST THE COMMISSION FOR
INJUNCTIVE AND OTHER RELIEF
In a proceeding brought by Lone Star Cement Corp. (D. 8585), the Ninth Circuit (San
Francisco) affirmed the decision of the district court (W.D. Wash.) denying the company's
motion for summary judgment and granting the Commission's motion to dismiss for failure
to exhaust administrative remedies. Lone Star's suit charged that the Commission lacked
authority to conduct further proceedings with regard to one of the acquisitions challenged in
its section 7 complaint, because of a failure to satisfy the statute's interstate commerce
requirements.
In J. Weingarten, Inc. (D. 7714), the Fifth Circuit (New Orleans) reversed the holding of
the district court (E.D. Tex.) and dissolved an injunction preventing the Commission from
remanding its administrative
57
proceeding to a hearing examiner for the taking of further evidence. The court of appeals
held that the Commission had not prejudged the case, and had acted with reasonable
"dispatch" in its handling of the proceeding.
The district court in Minneapolis (D. Minn.) granted the Commission's motion for
summary judgment and dismissed a complaint for declaratory judgment and injunctive relief
filed by Nash Finch Co. (D. 4589), challenging the conduct of an investigational hearing to
determine the company's compliance with a pre-1959 Clayton Act order issued against it.
The District of Columbia Circuit reversed the holding of the district court (D.D.C.) that
it was without jurisdiction to entertain a complaint filed by The Elmo Division of Drive-X
Co. (D. 5959), and remanded the matter to the lower court for further proceedings. The
company contends that the Commission acted improperly in instituting a new proceeding
against it rather than adhering to the terms of a consent agreement in an earlier proceeding
providing for reopening only upon findings of change of law or fact, or the public interest
so required.
The district court in St. Louis (E.D. Mo.) granted the Commission's motion to dismiss a
complaint filed by Anheuser-Busch, Inc. (File 611 0155) on the grounds that the court lacked
jurisdiction over the subject matter, and that the complaint failed to state a claim upon which
relief could be granted. The matter has been appealed to the Eighth Circuit (St. Louis).
Anheuser Busch is unwilling to furnish certain production data requested in a subpoena
issued in connection with the Commission's investigation of alleged discriminatory practices
and other trade restraints in the distribution of yeast.
SUITS TO COMPLIANCE WITH COMMISSION
ORDERS AND SUBPOENAS
During fiscal 1965 the Commission was successful in its suits to obtain compliance with
its section 6(b) orders calling for the filing of "special" reports. In Artnell Co. (File 237
8136), the Seventh Circuit (Chicago) affirmed the judgment of the district court (N.D.Ill.)
granting the Commission's motion for summary judgment in a proceeding to require Artnell
to submit quarterly financial data for the Commission's use in its financial reports program.
Artnell subsequently complied. In Dartmouth Finishing Corp. (22-66-395), the district court
(D. Mass.) entered a consent judgment imposing statutory penalties of $2,000 for
Dartmouth's failure to comply with a section 6(b) order of the Commission. The court also
directed that the company be held liable for full statutory penalties should it fail fully to
comply with the court's judgment. And in three other instances, the companies involved
elected to comply "voluntarily" with Commission report orders, following the filing of
compulsory process by the Commission in district courts: Huntington Manufacturing Co.
(File 641 0084.) (N.D. Ill.); Bausch Machine Tool Co. (25-66-275) (D. Mass.); and Summit
Timber Products Co. (24-44-050) (W.D. Pa.).
58
In subpoena cases, the Commission filed for enforcement in Roytex, Inc. (File 621 0563)
in the District Court for the Southern District of New York and obtained an order directing
compliance. Roytex thereafter appealed to the Second Circuit (New York). After its
application for stay pending appeal was denied by the court of appeals and the Supreme
Court, the company complied with the Commission's subpoena. The appeal was dismissed
without prejudice on consent of the parties. In A & R Agency (File 632 3604), the
Commission filed for enforcement in the District Court for the Northern District of Illinois
(Chicago). The court entered an order directing compliance, with satisfactory results.
CRIMINAL CONTEMPT PROCEEDING
In a noteworthy proceeding, Holland Furnace Co. (D. 6203), the Seventh Circuit
(Chicago) found the company and three of its top officials guilty of criminal contempt for
willfully violating an order of the court commanding obedience to the Commission's order
to cease and desist from various deceptive practices in the sale of furnaces and furnace parts.
Holland was fined $100,000, and its president, Mr. Cheff, was sentenced to 6 months'
imprisonment. The other two company officials were each fined $500. Holland's petition
for certiorari was subsequently denied. Mr. Cheff's petition for certiorari was pending at the
close of the year.
59
APPENDIX (B)
Penalty Enforcement Proceedings
When a report of a requested investigation contains provable violations of an order to
cease and desist, the staff attorney examines the usually voluminous record, and, if indicated,
drafts a complaint and supporting trial memorandum, which is certified by the Commission
to the Attorney General of the United States for transmittal to the appropriate U.S. Attorney.
In the vast majority of the cases referred by the Department of Justice to the various U.S.
Attorneys, members of the Division's staff are requested to prepare pleadings and take
depositions for use in the trial of the case. In many instances the staff attorney assumes the
full burden of litigation.
During fiscal 1965, penalties totaling $40,600 were recovered. In addition, eight
injunctions requiring future compliance with Commission orders were obtained.
Penalty statistics are as follows:
Pending July 1, 1964 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 38
Filed during year - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4
_____
Total for disposition - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 42
Disposed of during year - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 14
_____
Pending June 30, 1965 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 28
DECEPTIVE PRACTICES CIVIL PENALTY CASES
Cases Concluded
Tropic Industries, Inc. (N.D. Ill). Misrepresentations in connection with the sale of
vending machines. Dismissed.
International Motels, Inc. (N.D. Calif.). Misrepresentations in connection with the sale
of correspondence course in motel management. Dismissed.
Commercial Distributors of America, Inc. (E.D., Pa.). Misrepresentations in connection
with the sale of vending machines. Judgment for $5,000 and injunction.
61
American Candle Co., Inc. (E.D.N.Y.). Misrepresentations as to composition of candles.
Judgment for $1,500 and injunction.
Velox Service, Inc. (S.D.N.Y.). Misrepresenting price, value, and performance of certain
merchandise. Judgment for $500 and injunction.
Vitasafe Corp. (S.D.N.Y.). Misrepresentation of a free trial offer of vitamin capsules and
refusal to cancel orders for undelivered merchandise. Judgment for $18,000 and injunction.
United Products Co. (N.D. Ohio). Misrepresenting earnings from servicing candy
vending machines and the assistance given to purchasers of such machines. Judgment $1,500
and injunction.
R. D. Anderson (W.D. Ky.). Misrepresentations made in connection with the interstate
sale of silverware coupons and silverware. Judgment for $9,500 and injunction.
Israel Rettinger(E.D.N.Y.). Misrepresenting the manufacture of rainwear and other
merchandise. Judgment for $1,500 and injunction.
Endeavor Press (S.D.N.Y.). Misrepresentation in connection with the interstate sale of
contest aids. Closed.
International Photographers (S.D. Calif.). Misrepresentation in connection with the
interstate sale of photographs and photographic albums. Judgment for $1,500.
David Fischer (S.D.N.Y.). Fictitious pricing of waterproof coatings and paint. Closed.
Cases Pending
Peanut Novelty Company (N.D. Tex). Selling and distributing lottery devices.
Universal Educational Guild, Inc. (E.D.N.Y.). Misrepresentations in connection with the
sale of encyclopedias.
Post-Graduate School of Nursing, Inc. (N.D. 111.). Misrepresentations in connection
with a correspondence course designed to qualify purchasers in the field of practical nursing.
American Rug & Carpet Co., Inc. (S.D.N.Y.). Deceptive use of oriental names to
describe domestic rugs.
Atlantic Products (Nebr.). Misrepresentations of photographic albums and certificates
for photographs.
Pruvo Pharmacal Co. (E.D. Wis.). Misrepresenting the therapeutical value of a drug
preparation.
Roland S. Jenkins (N.D. Ohio). Misrepresentation in connection with the interstate sale
of vending machines and vending machine supplies.
George R. Hoffman (Kans.). Misrepresentation in connection with the interstate sale of
correspondence courses.
Herbold Laboratory, Inc. (S.D. Calif.). Misrepresentations as to the efficacy of
preparations for use on the hair.
Madway Main Line Homes, Inc. (E.D. Pa.). Pricing misrepresentations in the sale of
prefabricated homes.
62
APPENDIX (C)
Bureau of Textiles and Furs
Civil Penalty and Criminal Cases
During fiscal 1965, one suit for civil penalties was concluded with the recovery of a
$2000 penalty and an injunction against further violation of the Commission's order under
the Wool Products Labeling Act of 1939.
Penalty Cases Statistics:
Pending July 1, 1964 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3
Filed during year - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2
______
Total for disposition - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 5
Disposed of during year - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1
_______
Pending June 30, 1965 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4
Criminal Cases Statistics:
Pending July 1, 1964 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2
Filed during year - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 0
_______
Total for disposition - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2
Disposed of during year - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 0
_______
Pending June 30, 1965 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2
Civil Penalty Cases Concluded
Lawrence Blanket Co. (Dist. Mass.). Misbranding wool products, blankets. Judgment
for $2000 and injunction.
Civil Penalty Cases Pending
Woody Fashions, Inc. (S.D.N.Y.). Misbranding wool products, coats. H. M. Prince
Textiles, Inc. (S.D.N.Y.). Misbranding wool products, yarn and fabrics.
63
Raymond's, Inc. (Dist. Mass.). False advertising and false invoicing of fur products and
failure to maintain required records.
Asheville Textile Corp. (S.D.N.Y.). Misbranding and false invoicing of wool products,
imported fabrics.
Criminal Cases Pending
Radley Furs, Inc. (S.D.N.Y.). Misbranding and false invoicing of fur products by failure
to show they were dyed.
Stone & Stone, Inc. (S.D.N.Y.). Misbranding and false invoicing of fur products by
failure to show they were dyed and by failure to show the true country of origin of the furs.
U.S. GOVERNMENT PRINTING OFFICE:1966
64
@FedFRASER