Appendix — Rabiner & Jontow, Inc. v. Federal Trade Commission

Supreme Court brief1968

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| Otfite-Supreme Oeust, U.S.

| LIBRARY . FILED:

_ SUPREME COURT, U. & ; FEB 9 1963

—JONNE—av, CLERK

In THE

Supreme Court of the Binited States :

. - OcToser TERM, ‘1967

RABINER & JONTOW, ING,,

a corporation now known as

ABBE RABINER, INC.,

Petitioner

Uv.

FEDERAL TRADE’ COMMISSION

APPENDIX TO PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS FOR THE

. SECOND CIRCUIT ...

) eee

ERWIN FELDMAN

Attorney for Petitioner

1350 Broadway

New York, N. Y. 10018 ©

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Note: Items listed in this appendix constitute all

- the opinions of the Federal Trade Commis-

sion in this proceeding. The opinion of the

court. of appeals will be found annexed to

the petition for a writ of certiorari in

appendix B. Pages are numbered according;

to Joint Appendix. } )

INDEX ~

ae aan: "+ PAGE

FINAL ORDER OF THE FEDERAL TRADE CoMMISSION Ila

InITIAL DECISION OF THE HEARING EXAMINER .... 13a

OPINION OF THE COMMISSION .......... ee ee 74a

DISSENTING OPINION .:......... ewe naeenks ae. 84a

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Final Order

. UNITED STATES OF AMERICA

: BEFORE

FEDERAL TRADE COMMISSION.

Com MISSIONERS : “i

Paul Rand Dixon, Chairman

Philip Elman

Everette MacIntyre

John R. Reilly

‘Mary Gardiner Jones -

dy.

In the Matter of

RABINER & JonTow, INc.,

a corporation.

Docket No. 8629

This matter having been heard by the Commission upon

respondent’s appeal from the hearing examiner’s initial deci-

sion, and the Commission, for the reasons stated: in the

accompanying opinion, having denied the appeal :

IT IS ORDERED that’ the initial decision of the hearing

examiner be, and it hereby is, adopted as the decision of

the Commission. . bs

IT IS FURTHER ORDERED that respondent shall, within

sixty (60) days after service upon it of this order; file with

the Commission a report, in writing, setting forth in detail '

the manner and form in which it has complied with the

order to cease and desist. —

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Final Order

By the Commission.. Commissioner Elman dissented and

has filed a dissenting opinion.

SEAL . Joseru W. SHEA, |

j Joseph W. Shea,

Secretary.

IssuED: September 19, 1966 |

ATTACHED ARE: (1) Opinion of the Commission by Com-

G.: - __ missioner Reilly |

- (2) Dissenting Opinion by Commis- |

sioner Elman. S,

' 13a

Initial Decision

Unitep States oF AMERICA

BEFORE

FEDERAL TRADE COMMISSION

dy.

In the Matter of

_ RABINER & JonTow, INc.,

a corporation.

ty.

"Docket No. 8629

By Leon R. Gross, Hearing Examiner,

Peter J. Dias, Myer S. Tulkoff, and

Thomas W. Smith, for the Commission:

Erwin Feldman, New York, New York,

and Alexander Kushner, Jersey City,

New Jersey, for the Respondent.:

In this proceeding under Section 2(d) of the Clayton

Act, as amended’, respondent, Rabiner & Jontow, Inc., a

New York corporation organized in 1942, which manufac-

tures and sells in interstate commerce women’s coats and

suits which retail from $70.00 to $90.00, defends its ad-

mittedly. non-proportionalized cooperative advertising pay- |

*§2(d) That it shall be unlawful for any person engaged in com-

merce to pay or contract for the payment of anything of value to or

for the benefit of a customer of such person in the course of such

commerce as ¢ompensation or in consideration for any services or

facilities furnished by or through such customer in connéction with

the processing, handling; sale, or offering for sale of any products or

commodities manufactured, sold, or offered for sale by such person,

unless such payment or consideration is available on proportionally

equal tems to all other customers competing in the distribution of

such products or commodities. ;

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I nitial Decision |

ments to favored customers. in New York, Boston, and .

- Washington, D. C., in 1960, 1961, and 1962, by asserting”

_that (1) this proceeding is not in the.public interest because

the entry of a § 2(d) order against respondent would retard, |

rather than promote, the legislative purposes of the statute;

and (2) that its non-proportionalized cooperative advertis-

ing allowances were paid in order to meet competition.

Throughout the prehearing conferences and during the

hearings, the hearing examiner ‘has reiterated to respond-

ent’s counsel that the defense that this proceeding is con-

_ trary to the public interest is not of a sort which the hear-

ing examiner is empowered to, or would, within the frame-

_ work of this particular record, adjudicate. If such defense

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may be asserted and adjudicated, it can properly be passed

upon only by the Federal Trade- Commission, itself. |

Respondent’s answer admitted the material allegations

of the complaint, but denied that its advertising payments

- or allowances to its customers violated Section 2(d) of

the Clayton Act. In its answer, the respondent asserts

“that in all instances referred to in the complaint, in which

it is alleged that respondent. made payments or granted

allowances to customers for promotion of products of the

respondent by means of advertising, in each and every in-

stance, respondent made such allowances in good faith,

to meet competition, and in accordance with the provisions” °

of the Clayton Act (Answer, p. 2). Respondent further

asserts “that in every instance where such payments or

allowances were made. . . that said- payments or allowances |

‘were granted for the suepose of defending the respondent’s

position with its customers” and that respondent “did not

engage in such practice for aggressive selling purposes”

(Answer, par. 8): :

. Respondent alleged further that advertising allowances

gil so firmly rooted and established that companies

I5a

| Initial Decision ae

similar to respondent” were compelled, in order to protect

their position as a resource, toogrant allowances and pay-

ments to their customers to meet such competition” (An-

swer,.par. 9), 4, |

It is well established now by judicial authority that a

respondent charged with violating Section 2 (d) of the Rob-

inson-Patman Act may defend such charge by asserting a

§ 2(b)* or “meeting competition defense”. Exquisite Form

Brassiere, Inc., et.al. v. Federal Trade Commission, 301 °

F. 2d 499 (G. A. D. C. 1961).

The discussion in this initial decision will focus prin-

cipally on the effectiveness with which respondent has pre-

sented and proven its meeting competition defense.

Several years ago the Federal Trade Commission con-

ducted an investigation into the garment manufacturing |

industry in general, and, on the basis of the results of that

investigation, concluded that a substantial number of firms

engaged in the manufacture and sale in interstate commerce

of garments were in-violation of Section 2( d) of the Clay-

ton Act (RX 23A-23M). Opportunity has been afforded

the various persons, firms, and corporations in the garment

industry to avail themselves of: the consent procedure pro-

_ vided for in Sections.2.1 through 2.4 of the Commission’s

7§2(b) Upon proof being made, at any hearing on a complaint

under this section, that there has been discrimination in price or serv-

ices or facilities furnished, the burden of rebutting the prima facie ‘

case thus made by showing justification shall be ‘upon the person

charged with a violation of this section, and unless justification shall

_ be affirmatively shown, the Commission is authorized to issue an

order terminating the discrimination: Provided, however, That noth-

ing herein contained shall prevent a seller rebutting the prima facie

case thus made by showing that his lower price or the furnishing of

_ services or facilities to any purchaser or purchasers was made in good

faith to meet an equally low price of a competitor, or the services or

facilities furnished by a competitor. —

™

- l6a

Initial Decision

Rules of Practice for Adjudicative Proceedings. As a result

of-the industry-wide investigation and subsequent proceed-

ings, 242 business firms have, as of the time of writing this

initial decision, availed themselves of the consent procedure

and have signed agreements containing orders to cease and |

desist which will be made effective by the Federal Trade |

- Commission‘at a time and under circumstances which the

Commission shall, in its discretion; determine to be appro-

priate? As of the date of the writing of this initial deci-

sion, only two of ‘the firms mentioned in the Press Releases

have elected to proceed to formal hearing, the House of

“Lord’s, Inc., Docket No. 8631, and the instant proceeding.

In the House of Lord’s proceeding, the hearing examiner

. found that the cooperative advertising offer was, propor-

tionalized, i.e.,.made available on proportionally equal terms,

and there had been no violation of Section 2(d). The com-

plaint was dismissed and oral argument on appeal before

the Commission has taken place. | :

In-the instant. proceeding, respondent admits and has

stipulated that its cooperative advertising payments were

not proportionalized, i.e., made available to all its customers :

on proportionally equal terms, but asserts that such coopera-

tive advertising payments were made in good faith to meet

similar practices by its competitors in the industry.

Respondent represents a specialized segment of the gar-

ment industry, i.e, women’s coats and suits which retail

from $70.00 to $90.00.* Respondent subpoenaed 17 manu-

3See FTC News Releases of May 1, 1963, August 12, 1963, Jan-

uary 3, 1964, March 13,1964, July 16, 1964, July 29, 1964, August .

18,:1964, September 25, 1964, November 18, 1964, January 26, 1965,

February 27, 1965, and April 14, 1965. (See RX 23A through RX

26D, inclusive; RX 38, RX 39, RX 40.) if

4Some testimony places this price range at $60.00-$110.00.

17a |

: Initial Decision

facturers whose competition, it asserted, it was meeting

when it made its non-proportionalized cooperative advertis-

_ ing payments in Boston, New York, and Washington, D.C.,

in 1960 through 1962, inclusive. —

This record involves for 1960 through 1962 six favored

customers in three cities: In New York City, Lord &

. Taylor, and Best & Co., Inc:; in Boston, Jordan Marsh,

Jay’s, Inc., and-R. H. Stearns Co.; in Washington, D. C.,

Woodward & Lothrop, Inc. . Although seventeen alleged

competitors of respondent were subpoenaed, it is interesting

to observe that, as to Jay’s, Inc., none of thé competitors

testified to making advertising payments, and, as to R. H.

Stearns Co., only one competitor out of seventeen testified as

to making advertising payments ; only two competitors testi-

fied to payments to Jordan-Marsh Co.; and possibly three

competitors testified to advertising allowances to Woodward

& Lothrop, Inc. Such evidence hardly sustains respondent’s -

assertion that its non-proportionalized advertising payments

were responsive to industry-wide non-proportionalized pay-

ments to its favored customers.

As part of its meeting competition tibinen: respondent .

asserts that non-proportionalized cooperative advertising

payments are rampant in, and an integral part of, the modus

operandi of the garment industry. Complaint counsel did

not contest this assertion. ‘The Federal Trade Commis-

sion’s investigation alluded to. above (see RX 24) found

such to be the fact. The fact that the garment industry, as

such, is engaged in making non-proportionalized coopera-

tive advertising payments does not exculpate or excuse un-

lawful payments. The criteria used for evaluating meeting

- competition as a defense to a-2(a) violation include the -

caveat that price discrimination is not excused on the

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18a

Initial Decision

natory pricing system.° a .

’ Moreover, the Federal Trade Commission in Flotill Pio-

grounds that it is necessary to combat a general discrimi-

| ducts, Inc., Docket No. 7226, in its opinion of June 26,

1964, has held :

But a seller is under an obligation to affirma-

tively offer or otherwise make available promotional

allowances on proportionally equal terms to all cus-

tomers who compete in the resale of its goods. This

obligation entails whatever inquiry is necessary to

establish whether customers in fact compete. If it

were otherwise, sellers could avoid their obligations

under the statute simply by closing their eyes to the

obvious. A violation of Section 2(d) is determined

by objective rather than subjective considerations,

If the favored and nonfavored’ customers actually

compete in the resale of the seller’s goods, the Act

_ may be violated without regard to the Seller’s knowl-

edge of the lawfulness or unlawfulness of a dis-

proportionate promotional allowance. To hold other-

wise would recognize the right of a seller to dis-

criminate in favor of or against any customer who

conducts his resale operations in more than one

trade area. ~ | remus

}

The Supreme Court has held, in passing upon a meeting

‘ competition defense to a-2(a) violation, “. . . The seller _

5See F.T.C. v. A. E. Staley Mfg. Co., 324 U. S. 746 (1945) :

F.T.C. v. Standard Oil Co., 355 U. S. 396 (1958) ; F.T.C. v. Cement

Institute, 333 U. S. 683 (1948) ; F.T.C. v. National Lead Co., 352

U. S. 419 (1957) ; F.T.C. v. Standard Brands, Inc., 189 F.2d 510

(2nd Cir. 1951); Standard -Oil Co. v.. Brown, 238 F.2d -54 (5th

Cir. 1956) ; Standard Oil Co. v. F.T.C., 340 U. S. 231 (1951) ; Corn

Products Ref. Co. v. F.T.C., 324 U. S. 726 (1945).

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19a

Initial Decision

has the burden of bringing himself within the exculpating

provision of §2(b), .. .” Federal Trade Commission v.

Sun Oil Co.,. 371 U.S. 505, 514.

Respondent’s meeting competition defense will exculpate

its non-proportionalized advertising payments only if such ~

discriminatory payments were made in good faith to meet

individual competitive situations. Good faith is-not present

if a seller adopts the unlawful discriminatory practices of

a competitor ; good faith is not proven in the record if the

seller acts entirely on unsupported, unverified verbal estate-

ments, nor is good faith established if the seller knew or

should have known that ‘his competitor’s system was un-

lawful or inherently illegal. (See cases cited in footnote 5,

supra. )

Once the threshold applicability of the meeting com-

petition proviso is resolved, the same criteria gov-

erning its use in Section 2(a) price discrimination

proceedings would apply to Section 2(d) and 2(e)

cases. Rowe, Price Discrimination Under the Rob-

inson-Patman Act (1962), page 420. |

In addition to the testimony of Abbe Rabiner, its presi-

dent, and representatives of its seventeen alleged competi-

tors, respondent produced as an expert witness Bernard

W. Smith, Associate Professor of Retail Merchandising at

the Institute of Retail Merchandising, New York Univer-

sity, New York, New York. Among other things, Professor .

Smith testified to the. universality of cooperative advertis-

ing payments in the garment business; that students in his

classes are taught to demand cooperative advertising pay-

ments from manufacturers if they become buyers; that the

average life of a coat and suit manufacturer is less than

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20a

Initial Decision

twenty-five years; that in 1960, 623 firms manufactured

women’s coats.and suits; that by-1963 this number had

shrunk to 552, or that 71 firms went out of business be=

tween 1960 and 1963; and that the coat and suit business

_had_lost some $18,000,000 in volume, from $698,963, Q00

in 1960 to $681,000,000 in 1963 (Tr. 948, et seq.; the

Apparel Manufacturing Industry’s Market Planning Serv-

ice of the National Credit Office issued 7% Dun and Brad-

street [RX 28, 29 in evidence] ).

Mr. Rabiner testified to the unusual Vigor and keenness :

of the competition in his business, and to the necessity of

permitting him to continue his advertising payments so that

he may stay in business. Mr. Rabiner asserts that he cannot

afford to proportionalize his cooperative advertising pay-

ments so as to make them available on proportionally equal

terms to all of his customers; and that, if the women’s coat ;

and suit business generally were required to proportionalize

their cooperative advertising payments, only the “giants”

in the industry would be able to survive. .It is Mr: Rabiner’s

contention that the order sought in this proceeding, ff made

applicable on an industry-wide basis, would encourage an

oligopolistic industry pattern contrary to the intent of the

Robinson-Patman Act. He asserts that only the “giants”,

who do a very large dollar volume of business and manufac-

ture many different lines of garments, can afford to propor-

tidnalize their cooperative advertising payments. |

Although the ladies’ coat and suit manufacturing busi-

ness has, in the aggregate, a substantial dollar yolume per

annum, other than the “giants” alluded to, it is composed

chiefly of small businesses whose individual annual dollar

volume is not large. Respondent is considered a subsfantial

concern. Its annual dollar volume exceeds $4,000,000, even

though its annual sales volume has not increased ‘to any

~~ noticable extent over the last few years.

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Initial Decision |

Professor Smith sought to define competition in. the

women’s coat and suit business in terms of “price lines”’.

The exact nature of competition for the retail customer’s

dollar spent for $60.00 to $90.00 coats and suits is not

precisely delineated nor specifically described in the record.

A representative of one of the competitor manufacturers,

Modelia, Inc., testified that Modelia uses an “avant garde”

styling, and therefore does not compete, with the more con-

ventionally styled lines. Several of the firms, who were

subpoenaed as “competitors” by respondent, denied that they

were competitors in-fact. ,

Where, as here, respondent defends on the grounds that

S meeting competition, the burden of proving the com-

petition, as well as proving the “meeting” of Such competi-

tion, is upon the party asserting such defense.

‘ Two decisions important to resolving the issues pre-

sented in this proceeding were rendered since the. record was

closed in this proceeding on April 28, 1965. On June 18,

1965, the Federal Trade Commission in Ace Brooks, Inc.,

et al., Docket No., 8557, affirmed a 2(d) cease and desist

order (Opinion, page 18), and, inter alia, held:

It has been recognized that the burden of es-

tablishing the Section 2(b) defense is upon the pro-

ponent. Federal Trade Commission v. Sun Oil Co.,

371 U. S. 505 (1963). ‘Since the defense has the

effect of ‘exculpating a discrimination which would

otherwise be forbidden, the evidence upon which the

defense is predicated must be of sufficient preciseness

to permit an informed determination. See Callaway

Mills Co., Docket No. 7634, a SM

(February 10, 1964); Cabin Crafts, Inc., Docket

No. 7639 RT. C. (February 10, 1964); .

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LEWES /

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Initial Decision

cf. Continental Baking Co., Docket No. 7630,

F. TX. (December 31, 1963) ; Ponca W hole-

sale Mercantile Co., Docket No. 7864, te ng,

| (February 24, 1964). We think the evidence

* . presented here does not permit such a determination.

| The evidence does not show when respondents’ com-

. petitors began granting allowances .. . or when re-

spondents themselves. initiated’ the prides: The

record fails to establish the rates used by. re-

- spondents’ competitiors to compute their allowances

,or the amounts of such allowances. . .. Respondents

_ failed to show any of the circumstances surrounding

the initiation of their allowancés to these retailers

and made no effort to establish that their allowances.

did not in fact exceed those of competitors, by.

reference either to the rates or the total amounts of

these allowances. Without evidence of a more

specific nature, the Commission is unable to make an’

informed, determination on the various questions

which must be resolved and, as a'result, is compelled

to reject respondents’ contention that they have met

their burden in awe the defense. |

“On July 2, 1965, the United: States Court of Appeals for .

the District of Columbia Circuit in Exquisite Form Bras-:

stere, Inc., et al. v. Federal Trade Commission, No. 18524,

F.2d , in an appeal from an opinion of the

Federal Trade Commission upon remand ‘(see supra, 301

_ F.2d 499 (1961), affirmed the opinion of the Commission =

finding that Exquisite had, upon remand, failed to prove its

meeting competition defense. Inter alia, the Court of Ap-

peals- —

23a .

_ Initial Decision

Exquisite Form in the present case essentially.

premises its position upon the proposition that in a ;

Section 2(d) case, if the accused company estab- ; af

lishes that its competitors have plans or systems —F

whereby they make advertising allowances to their _&€

customers, any company in the industry can combat

such systems by inventing and operating a system or

plan of its own. Exquisite Form states a number

of points, but all 6f them.arise from or are enveloped

in the proposition just stated. This, as it phases the

matter, is the crux’of the case. Admittedly the Su-

_ prenie Court has held‘ that in a price discrimination’

case (a Section 2(a) case) it is not an effective pro-

tection for.am accused company to show that it oper- - &

ated a plan or,system in order to combat its com- )

petitors’ plans @r systems; in other words, that in |

_ those cases a plan to combat other. plans is not an -

effective defense under the proviso in Section 2(b). ‘

The Court held that in such cases the combative act

had to be a specific act aimed at a lower price on the. \

part of a competitor in “individual competitive situa- °

tions, rather than * * * [in] a general system of

competition.” Exquisite Form‘argues that that rule

cannot apply to the advertising allowance practices

in the brassiere industry, because of the factual char-

acteristics ‘of that industry.and the practices in it. ®

We think the doctrine of Staley must be applied

here. There are differences, of course, between a

price discrimination (Section 2(a)) case and a case

involving advertising allowances. But we are not

shown that any such difference goes to the basic

‘FTC v. A. E. Staley Co., 324 U. S. 746 (1945).

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24a

~ Initial Decision -

thesis involved in the statute or to the rationale of

Staley. We are not shown any. compelling reason

for different treatment. =

Exquisite Form also contends that, even if the

doctrine of Staley applies, its proof satisfied ‘the

requiréments of that casé. The only evidence which

related to individual competitive situations consisted

of a table which set forth the dates of retailers’

advertisements of Exquisite Form products and com-

petitors’ products. There was no testimony which

explained how this table related to company policy.

The Commission found that Exquisite Form’s evi-

dence was insufficient to support its. contention. We

_ agree with the Commission. .

In view of this recent decision by the Court of Appeals, it”

is only necessary to apply “the rationale of Staley” to the

_ record in this proceeding.

_ Prehearing conferences in this matter were held in New

York, New York, on September 21, 22’ and 25, 1964; in

~ Washington, D. C., on November 4 and December 8, 1964,

and on January 21, 1965. Evidentiary hearings were held .

in New York, New York, on February 15-18, and March

16-22, 30, 1965; April 1-2, 26, 1965; and were concluded

on April 27, 1965. __—. | a .

Proposed findings, conclusions, and briefs have been

filed. The hearing examiner heard and observed the wit-

nesses in the hearing room and on the witness stand. He

observed their demeanor and their manner of answering

questions. He has considered the reliability, credibility and

probative value of the witnesses’ testimony in making his.

findings of fact, as well as their respective interest in the

outcome of this proceeding. . Proposed findings not made |

. 25a

Initial Decision .

herein in the form proposed, or in substantially that form,

are rejected. Any motions heretofore made and not previ-

ously ruled upon are denied. The undersigned hearing ex-

aminer has carefully considered the entire record, including ©

the exhibits, pleadings, and the testimony of the witnesses.

Based upon the entire record in this proceeding, the hearing

-examiner makes the following:

- Frnvine.or Fact

; Respondent, Rabiner & Jontow, Inc., a New York cor-

poration since 1942, with its office and principal place of

business at 512 Seventh Avenue, New York, New York,

has, since its incorporation, traded under the names of.

Finger, Rabiner & Jontow, Inc., Finger & Rabiner, Inc., -

and presently as Rabiner & Jontow, Inc. (Answer; Tr. 26,

29, 39). Respondent is now, and has been, since its incor-

poration, engaged in manufacturing and selling, in interstate

commerce, ladies’ suits and coats to retail specialty and

department stores throughout the United States under the »

99 66

_ trade names of “Bardley”, “Bardley, Jr.”, and under private

labels. Respondent’s sales exceeded $4,000,000 annually dur-

ing the period involved in this proceeding (Tr. 30-31).

~ Respondent has been under the same management, basically,

since it -cammenced business, and its policy with reference

to payment of cooperative advertising allowances has been

unchanged (Tr. 50). Respondent’s garments retail at a

price range from $70.00 to $90.00° (Tr. 30), and are

designed primarily for spring and fall sale. Its coats are

not fur trimmed.

; |

°At Tr..909, respondent’s expert, Professor Bernard W. Smith,

testified that he had beén advised that respondent’s retail prices range

from $60.00 to $110.00. These are-the figures in respondent’s pro-

posed findings (p. 2, par. 4). : |

PAS ADDIE cong RRA <oocsork tabsvicte ieee.’

Ca iebsiss

" ieeraiitins ‘ rm ht

osberrx

26a

Initial Decision’ ©

-Respondent’s garments may be described « as updated

‘classic tailored clothes, and not a high style line (Tr. 31 -32).

(See also the ‘advertisements in CX 10, CX 11, CX 12

[p..7], CX 13, CX 14B.) It sells its products only to re-

-tailers, primarily through its showroom at 512 Seventh

Avenue, New York City, which is visited by buyers repre-

_, senting these retailers. Traveling salesmen are not generally

utilized by respondent (Tr. 31, 62-63). Abbe Rabiner, re-

spondent’s president sirice its’ incorporation, has ‘general .

responsibility for sales, and Mr. Jontow: has responsibility

for general internal management. ‘Respondent usually has

four sales persons, in addition to Mr. Rabiner, in its show-

room. 5

Mr. Rabiner has had primary responsibility for respond-

ent’s policies relating to its advertising and promotion

policies. The granting of advertising allowances has been

a company policy since the company was organized (Tr. 50).

Respondent causes its. products, when sold, to be shipped

ie its factory in New Jersey to customers located in other.

states of the United States and in the District of Columbia.

Respondent has, at all relevant times, maintained a course

of trade in its products in commerce, as “commerce” is de-

fined in the Clayton Act,as amended. ._— |

The Federal Trade Commission had jurisdiction over

the parties to, and the subject matter of, this. proceeding.

This proceeding is in the public interest.

In the.course and conduct of its business in commerce,

respondent paid or contracted for the payment of something

of value to or for the benefit. of some of its customers-as

compensation for or in consideration of services or facilities

furnished by or through such customers in connection with

the offering for sale or sale of respondent’s products (Tr.

274 <

‘Imtial Decision

36-37; CX 4A-CX 7; Prehearing Stipulation and Order

dated November 4, 1964, p. 5, par. 2). °

By agreement, the evidence in this proceeding has been

limited to the years 1960 through 1962, inclusive, and to the

cities. of Boston, Massachusetts, New York, New York, and

Washington, D. C. During these years and in these Cities, ©

respondent paid promotional advertising allowances to some

' of its customers without making such advertising allowances

available on proportionally equal terms to all of its customers

competing in the sale, at retail, of respondent’s products of~

like grade and quality. Respondent’s sales and advertising

allowances paid to its favor (F) and nonfavored (N).cus-

tomers were:

~ In New York, New York: —

1960 .

é' re aoe: Advertising

Customer : ; Sales Paid

(‘F) Bet & Okc . $836,850.00 $28,722.50 |

(F) Lord & Taylor ....... 192,915.00 . 2,762.67.

(M) B Adimen 2... css. 14,259.00 Noné

S, Ki eee 1961

(F), Best &.Co. «......., . 6517212.00. —-23,833.50

‘(F) Lord & Taylor :...... _. 184,392.00 3,350.00

(N) B. Altman’........... 25,572.00 None

_(N) Bonwit Teller . eeseeen 67,338.00 . .+ . None

1962 }

(F) Best &.Co. .......... 641,024.00 35,351.82:

(F) Lord & Taylor ..... .. 104,141.00 3,053.14.

(N) B. Altman ........... "23,916.00 ~ None

* (Complaint and Answer; CX 24 in camera)

ER oe

. i a ita ta

tasaihel ih aan

° EB Sengpanaiecsaani dae i S 4.-

| ;

| 28a

“a. °

| - Instial Decision:

In Boston, Massachusetts: __ | | |

; 4960 “ o ge

& : ": | Advertising — Advertising

af Sales. he Paid ' Sales Paid

? (F) R. H. Stearns Co. ....... $32,165.00 ° $549.90 $21,790.00 $ 500.00

I gg BN Serta anager ~ 31,739.00 400.00 25,738.00 - 600.00

di (F) Jordan ,Marsh .......... 16,323.00 None- 32,718.00 \ 2,200.00

ty : . :

F (N) Chas. Sumner, Inc. ....... . 2,586.00 None’ 2,216.00. -—“None

(CN) House of Tweed, Inc. ...... 728.00 None 1,209.00. None

| (N) Delano’s ...... Aeeeeeens ‘200.00 None 6,272.00 None

14 (N) Worth, Inc. (Worth’s) .. 2,829.00 None 4,370.00 None

‘a: (N) Leeds, Ine... .0.60000 nf. 3,541.52 None 456.80 None

(N) C. Crawford Hollidge soos. gopeane None + 10,719.00 None

(N) Wm.° Filene’s Sons ; ine

i MEE Genie cece. 9,937.00 -None 8,661.00 None

4 (Complaint and Answer; CX 24 in camera)

“4 ¢ - ° ; . ; a *e«

. In Washington, D. C.: Se

je Tes 1960. “1961

_ Advertising Advertising

| eat Sales Paid Sales ' Paid

(F) Woodward & Lothrop .... $55,270.00 $3,520.78 $36,919.00 © $1,419.91 .

F m a ‘

4 (N) Raleigh Haberdasher ahiatece 2,590.00 . None — 5,365.00° None

(N): Dorothy Stead, Inc. ...... 1,688.00 None 847.00 None

4 (N) Mary Elizabeth Gowns,Inc. None . None 460.00 .None

: (N) Jane Dawson Smith ...... ~ 701.00 - None 562.00. None

(N) Jenny Shoppe ........... 883.00 . None 263.00 None

(Complaint and Answer; CX 24 in camera) .

- a . ‘

2 4

i ets ore ver tbe

29a

” Initial Decision -

In New York City, respondent’s payments to Best &

~Co., Inc. in 1960 approximated 3. 43% of sales; whereas,

its payments to.Lord. &. Taylor were 1.43% of sales.’ In.

1961, respondent’s payments to Best & Co., Inc. were 3. 66% *

of ‘sales; and to Lord & Taylor, 1.82% of sales. In 1962,

the payments or allowances to Best & Co., Inc. approxi-

mated’5.51% of sales; and to Lord & Taylor, 2. ii of

sales. .

In Boston, Massachusetts, the 1960 payments to. R H.

Stearns Co. were approximately 1.71% of sales; and to

Jay’s, Inc., 1.26% of sales. In 1961, the payments to R. H.. |

Stearns Co. were: 2.29% of sales; to Jay’s, Inc., 2.57 %

of sales; and to Jordan Marsh Co., 6. 72% of sales.

Abbe Rabiner, president: of respondent, testified, and*

it is hereby. found, that respondent’s advertising payments

were individually negotiated on an ad hoc basis for each ad-

-vertisement. Respondent promulgated no plan which set

forth the procedure by which: its customers might qualify

for an advertising allowance. Respondent’s payments were

not made available on proportionally equal terms even to the

favored customers (Tr. 46).

Pursuant to Prehearing Stipulation and Order, dated

November 4, 1964 (p. 6, par. 3), it is found that respond-

_ ent’s nonfavored customers did not receive any advertising

or promotional allowances during the relevant years in the

cities in question, ;

Respondent sold goods: of like adil and quality to both |

its favored and nonfavored customers during the years. in

question in New York City, Boston, and Washington, D. C.

Respondent’s favored customers competed in the sale, at re- *

tail, of respondent’s gagments with respondent’s nonfavored

customers. (Prehearing Stipulation of November 4, 1964,

AS ye

Stee ae SS

_ ="

B -satemmce

al ares Initial. Decision

p..5, par. 1.) The favored customers competed with other.

‘favored customers. - . |

It was stipulated, and it is hereby found, that during the

relevant years, and in the cities involved, if respondent’s

nonfavored customers were called as witnesses, they would

testify that they were neither offered nor paid advertising

or promotional allowances in connection with their pur-

chases ‘for resale of respondent’s garments. The Prehearing

Stipulation and Order dated January 6, 1965, filed January

21, 1965, names the following customers and witnesses

who would so testif#: 7 :

WasHIncrTon, D. C.

. .. Customer ? | Witness

Raleigh Haberdasher ‘Arthur Levy, Buyer

Dorothy Stead, Inc. Robert Stead, Vice Pres. & °

. . / ’ Treasurer .

Gray __, Dorothy Stead, President

Mary Elizabeth Gowns, Inc. Georgia Hayes McClerkin,

| President

Isabelle Henry, Manager ©

Jane Dawson Smith ; Carl Dawson Smith, Partner ;

x Jane Dawson Smith, Partner

_ wWJenny Shoppe ms _. Cabot Feldman, Proprietor

Lisa Matusek, Buyer

Boston, MASSACHUSETTS

Customer aoe Witness

Charles Summer, Inc... | Summer Goldman,

| ayes : ' Treasurer _

House of Tweed, Inc. Helen Hunt, Manager __

Delano’s _ a Merrill Delano, President.

- Worth, Inc. » - . Joseph Worth, Treasurer °

— i

ee —

on - atten,

nus i i aaa Ahhh

a elite Ni siti n Rall, sitet dhe cet ibid hatte iad Ue since indenesh Nga

3ila a:

- Initial Decision

C ustomer

Leeds, Inc. _ Sits, Florence Rubenstein, Buyer — ’

| C. Crawford Hollidge Grace McNeeley, Buyer

Wm. Filene’s & Sons | F. B.. Gummere, Asst. to

President

NEw York, New York 7

Customer. — \ W itness

B. Altman & Co. .. Rudolph Van Gytenbeek,

| ) _*. Vice Pres. :

Sane Berbera Mussett, Buyer

oe endy Wardrop, Buyer

Bonwit Teller, Ine. . ‘George Baylis; Vice Pres.

(Stipulation limited to years

1960 and 1961 only)

| Respondent’s procedure for selecting customers for co-

_ operative advertising payments was described ‘by Mr.

.. Rabiner: ’

Q. Mr. Rabiner, would you tell me how you selected ~

_ Particular customers to whom advertising allowances.

were paid during those years? . eae |

' A. This was based purely on the competition that ex-

isted with those customers . . . from firms that manu-

. factured similar goods and where these people offered

similar offerings of advertising . . . we did the same ‘

thing as our competitors did. :

Q. Why is it, Mr. Rabiner, that, as the record shows,

allowances were given to certain customers and not

paid toothers? ~—— abt

A. Well, when certain of these custorners that you refer

to came to me and I kriew for a fact that they used .

the forms of media to advertise ready-to-wear—speci-

pee

32a

| ‘Initial Decision

ficially, our product—and similar merchandise, I

naturally worked. along with them. Others who ‘did

not come to me,... so I didn’t do anything with them”

Are you saying, then, that you gave allowances only

to those customers who came to you? e

I would say so, pretty much (Tr. 80).

Concerning the payment of allowances for “mailing

pieces,

QO.

_ A

—

AP ation ani ait os WERT al toad aa

Mr. Rabiner testified: Cale ol

In other words, this was.a practice which was limited

to those stores who had achieved a_certain import-

ant position with you that engaged in that practice?

. That is correct (Tr. 101). |

And ‘those who didn’t have that as a store policy | |

. . never. worked out any such plan for the use.of such

mailing pieces ?

To the best of my knowledge, no (Tr. 102).

ae Cr he

‘In other words, there is a distinction, therefore,

that you are bringing out between certain kinds of -

retailers who engage-in certain practices with whom

you worked out programs and those who never en-

gaged in those practices with whom you never

worked out any program?

That is‘correct (Tr. 102).

. ;

*K OK *

If I had to make the same offer to everybody,

there isn’t enough money not only in my business,

but in the whole cloak and suit industry for me to

33a

Initial Decision |

do it. I cannot make the same offer to everybody

(TR. 1126). : :

oe * * *

- . ..I try to be'as prudent and as careful as J

possibly can with the expenditures of my money.

Consequently, it becomes yery important to us to

-have the best exposure for our product throughout

the country, and in that case it behooves us to thoose

the particular retailers with whom we feel we can .

get the best exposure (Tr. 1127-28). -

In addition to the testimony of Mr. Rabiner, respondent

proffered the testimony of seventeen coat and suit manu-

facturers, who, it asserted, but did not prove, were its

competitors. It is the competition of these seventeen other

manufacturers that respondent claimed, but failed to prove,

it was meeting. Respondent also proffered ‘the testimony

of an expert witness, Bernard. W. Smith (Tr. 897-1020),

who was an associate professor. of retail therchandising

at New York University. Professor Smith testified as to .

_ the general business conditions and practices in that seg-

ment of the garment industry of which respondent is a_

' part—the manufacturers @f women’s coats and suits.

When pressed to name specifically the competitors,

whose allowances it was. meeting, respondent avas unable to

name any (Tr. 99-100).

The practice of paying non-proportionalized, coopera-

tive advertising allowances had been part of the pattern of

doing business in the garment industry for years.?

"See RX 23A-23M ; RX 24A-24H; RX 25A-25B ; RX 26A-26D,

~ all of which are FTC News Releases, plus FTC New Releases on

the same ‘subject issued on March 13, 1964, July 16, 1964, August

18, 1964, November 18, 1964, January 26, 1965, February 27, 1965,

and April 14, 1965.

34a

Initial Decision

| -Respondent’s cooperative advertising allowances were

part of its regular method of doing business and part of its

selling techniques, and had been used by respondent ever

since it started in business. -

RX 32, RX 33, RX 34, RX 35 and RX*36 are copies

of a publication entitled ‘““Coatvertising Weekly”, and con-

tain reproductions of nationwide coat and suit advertise-

ments appearing in various ‘publicity media. These are

1965 advertisements, but constitute specimens of coopera-

tive advertising which is involved in this proceeding.

The record does not contain any evidence that respond-

ent’s cooperative advertising allowances were paid by re-

spondent to meet or match a similar payment by a specifically

named competitor who, at the time, was selling competing -

merchandise .to respondent’s favored customer. Mr.

Rabiner’s testimony negates a finding that respondent’s

cooperative advertising payments were made to meet or

match a similar payment made by.a competitor. Counsel

for respondent haseemphasized throughout this record that

respondent’s cooperative advertising payments were not

made in conformity with a “plan”, either oral or written.

From its inception, in connection with the sale of its”

products, at retail, under the trade name “Bardley” or

“Bardley, Jr.”, respondent paid a: portion of the cost of

advertisements of its products which its: retail customers -

ran in newspapers, national fashion magazines, store —_

Jogues, direct mailers, and bill enclosures (Tr. 52), ‘

generally on a_fifty-fifty basis, at times a little bit more

or less on either side” (Tr. 49, 55)° Mr. Rabiner and the

particular retail customer (i.e., Best & Co., Inc., Lord &

Taylor, R. H. Stearns Co., Jay’s Inc., Jordan Marsh Co.,

oodward & Lothrop, Inc.) jointly decided whether

Tet UOT erection iecemeren

S —t 3

PLT ERECT LIT

35a

y Initial Decision ©

the advertisement, would appear in a newspaper (i.e., New

York Times or .New York Herald Tribune) or fashion —

‘Magazine (i.e, MApEMOISELLE, HaArPER’s BAzAaR or

GLamour) (Tr. 49-50). There was no radio or television

advertising (Tr. 51). Usually the retail establishment and

the trade name, “Bardley”, were named in the ad ‘cick )

There.was no real formula or yardstick by which to

determine how much of an allowance would be paid by

respondent to a favored customer (Tr. 53). “fI]t was

based primarily upon the competition that existed within

the firms what we did business with” (Tr. 53). Likewise,

there was no mathematical formula which related the ad-

_ vertising allowance to the amount of merchandise pur-

chased (Tr. 54). Each time that Mr. Rabiner negotiated

an advertising allowance, all of the elements of the advertis-

ing promotion were individually negotiated between Mr.

Rabiner and his,customer, including the determination as

_to which one of respondent’s products would be advertised

(Tr, 54). oo |

: Respondent confined the sales of its products “‘to those

quality stores that stand for the kind of product that we

preduce... .” (Tr..56). Respondent considers that it makes

.a quality product and tries to sell to retail establishments

which, in the public’s mind, sell quality products (Tr. 57-

58). In any given area, respondent has a few carefully

selected customers which meet this requirement (Tr. 58).

Respondent does not sell to other than retailers ( Tr. 63).

. The favored customers to whom respondent paid its -

advertising allowances were “For the most part, people I

had been doing business with for years, .. . for as many as

twenty and twenty-one years” (Tr. 1123). The advertising

payments by respondent in the cities and during the years -

acct eaiaalp mate!

RE hea ARS BR ct ae WR sin RONNIE BAM taal th a Doerr Sodde

‘Se

36a

| Initial Decision

involved represented the continuation of a business practice

that respondent had followed for years (Tr. 1123).

In his testimony, Mr. Rabiner emphasized that, if re-

spondent were to make its advertising payments available

on proportionally equal terms to all its customers, “there

isn’t enough money not only in my business, but in the

whole cloak and suit industry for me to do it. I cannot make

the same offer to everybody” (supra, p. 19; Tr. 1126). He-

testified further that within the present framework of the

women’s coat and suit business only “A Bobbie Brooks kind

_ of organization, a Jonathan Logan . . .” -(i.e., firms with

large sales volumes and broad product lines) can afford to -

offer a proportionalized advertising allowance (Tr. 1127).

Respondent’s evidence.on this part of its defense is incon--

clusive. <i ae ae |

It may well_be that manufacturers of ladies’ coats and

suits, being for the the most part small businessmen, cannot

afford to make their cooperative tddvertising payments —

available, to all their. customers. on proportionally equal

terms. It is possible, although not herein found, that the

advertising practices delineated in this record,”even though

unlawful within the caveat of Section 2(d) of the Robin-

son-Patman Act, may~not have had the effect, to date, of

lessening competition; creating a monopoly; or injuring,

destroying, or preventing competition. Complaint counsel

are not required in this 2(d) proceeding to prove an anti-.

competitive effect in the same manner as would be required

if this were a 2(a) proceeding. Complaint counsel have

sustained their burden ‘of proof. Indeed, respondent admits

: _ that is advertising payments were not. proportionalized—

made available to all its competing customers on propor-

. tionally equal terms—and that respondent’s favored and

‘

37a

| I nitial Decision

nonfavored customers did, and do, in fact, compete in the

sale at retail of respondent’s products of like grade and

quality. © eo. |

In the ladies’ coat and suit industry, as in other-apparel

trades, there is increasing concentration (Tr. 1096). “. ..,

In 1950 some 8,500 manufacturers sold $7%4 billign worth.

-of apparel. By the end of ’63 the number of companies

had shrunk by 2,000 or more—while dollar volume had

passed the $11 billion mark . . . side by side with a sharp |

drop in.the number of coat and suit firms, there has been

an increase-in unit output and dollar volume of business. -

‘Together, these facts add up tp one conclusion: more con-

centration of business.” —_- anni Sie 2

___: Respondent has failed to prove, in spite of its legal

burden to do so, that its non-proportionalized advertising

payments, to its favored customers were made in order to

‘meet specific, individual, competitive situations. The Court.

of Appeals’ recent decision: in Exquisite Form. Brassiere,

Inc., et al. emphasizes the necessity for such proof (supra,

pp. 9-10). Respondent relied upon the generalized testimony

of Abbe Rabiner (Tr. 50, 79, 82-83, 85-86, 88), and its

expert, Professor Bernard W. Smith. (Tr. 897, et seq.),.

for proof of the competitive ¢onditions within its industry.

Respondent did not proffer the testimony of any of its

customers, favored or .nonfavored, to prove which were

considered by respondent’s: customers to be respondent’s

competitors. Professor Smith’s testimony (Tr. 908, et seq. )

does. not help respondent to demonstrate that its non-pro-

portionalized advertising payments were: “a specific act

aimed at a. . . competitor in ‘individual competitive situa-

"RX 30, pp. 5-6, Cloak Joint Board, I. L. G. W. U. Report of the

. General Manager, dated March 20, 1965.

vate Oe ee

BOA a ds

Oe ee ee Ree Tal ee Se Ee

38a

ee ein :

; I nitial Decision,

tions, ies than * * * [irl] a general siaka of competi-

tion.’ ” (SeeE rquisite Form Brassiere, Inc., et al., supra,

p..10.) Professor Smith, inter alia, testified (Tr. 908-913) :

A. [As a general rule]—each store has-a clientele

which is based, to a large~extent, on the income

groupingsof the people who shop in the store.

“Thus, we have some stores that cater to lower-

“middle income groups, some to upper inconie groups;

and some to the wealthy people. ,

_ The prices that the stores set will correspond

with the ability of each income group to pay. These

prices are usually set in what we call price zones.

In other words, we find that certain customers will .

shop in pricing areas, let us say, from forty to sixty

dollars, or from sixty to eighty, or eighty to oné

hundred.

In other words, a customer of a certain income

group, coming into a store, may buy something at

on sixty dollars, may intend to buy something at sixty,

and actually go out with ‘something at seventy —

dollars, or vice versa: she may go in thinking to

- buy something for seventy, and find something that 7

she likes at sixty. |

So, therefore, stores usually price merchandise

in what we call price zones, and then pick a particular

. price in the price zone on which they specialize for

‘ _ One reason or another. The special price is called

_ the price line, while the zone is the range of prices

in which they operate.

Q. Would you have occasion to receive information

concerning. the retail prices at which goods of

ee at RTL IY SUP EEN SOP EER TT VEER te eee SR So ae

39a

I nitial Decision

Rabiner and Jontow were sold during the years 1961

and 1962? ek

A. Yes. I made inquiries about that. I have

found, or I have been advised, that. their prices

" ranged from’sixty to $110 at retail.®

Q. On the basis of your knowledge and experience,

what type of stores would handle merchandise of

that quality and prié line? | oa

A. Well, actually, the better departments of Gim-

bel’s, Macy’s, Lord ‘and Taylor, Altman’s, Saks—

HEARING EXAMINER Gross: You mean Saks

34th or Saks Fifth? eon : .

'THE WITNEss: No, Saks Fifth—although even

Saks 34th would handle the lower end of those

prices; they would go in the sixty-dollar price.

In other words, the prices, the top prices of the | 3

-popular stores, would over lap’the low prices of the

better stores. So that actually most of the big de-

partment stores in New York and specialty stores -

in New York would handle those price ranges, -

By Mr. Feldman:

Q. Could you tell us what retail price lines of

‘merchandise would compete with the price lines of.

Rabiner and Jontow which you have just testified

to? Lt ,

A. Well, I would say that any merchandise from

about $49 to $125 would be in competition with

that range of merchandise. |

*This contradicts Mr. Rabiner’s testimony. (See footnote, supra,

2 & |

ASE TE Ee a RR a HG

40a -

Initial Decision

Q. These price zones are established practices and

principles of retailing in this country which you

have just testified to, the use of price zones?

A. I don’t know whether the word “established” is

the. right word. They are practices, because differ-

ent stores will have their own definitions of “price

zones.” ;

* * xk

Q.' But the principle of prize zones would vary from

different types of stores, wouldn’t it?

A. Lied s right. ( lea supplied.) »

Included in this initial decision. aré six charts which

constitute a finding or resume, in abbreviated form, of the

evidence elicited by*respondent from its seventeen’ “com-

petitor” witiesses concerning these competitors’ sales and °

allowances on cooperative advertising payments to respond-

ent’s favored:customers. Usually, the testimony does not

contain the exact dollar amount of such competitors’ sales

and. advertising payments to Seen: s favored’ cus-

tomers. P

Respondent’s competitors were understandably non-

cooperative. They vigorously resisted revealing any more

of their confidential business information’ than was abso-

lutely essential.'In some instances, such competitors had

made a full report to the-Federal Trade Commission con-’

cerning: their advertising practices. Some had negotiated

consent agreements with the Commission; others were ‘in

the process of doing so. None of respondent’s competitors,

individually, paid to respondent’s favored customers the

large cooperative advertising allowances that respondent

\ oe

OA i PS SN Ai tts Dp MS aN Pee he a a

Manufac -urer

Glenhaven, Lid.

Buddy Bates Corp. |

Suitmaster Classics » Inc.

Lumay Coat Company, Inc, ;

Zelinsa-Matlick, Inc.

Jack Peit, Inc.

te BRAN PT ee hana en ery fant shasta Se ty iy A Ses th aa scan er ne — paneer seen . "

é o

4la ;

” ¢

Initial Decision :

a e

LORD & TALLOR

2EC 19.1 1962

Saies ALi swance: ‘ Referesces - «Sales aLiowances | References Seles Allowances heferences

$25,255.62 $ 35.00° COCA, te. «3,289.27 k tone 3X 20A, Tr, $46,662.55 § 236.03 mx 20k, Tr.

20, 1:2 i ; ; , re 165-160, 162

Yes None Tr. lt, as Yes Nore ‘Tr. 21e, 219 Yes None Tr. 218, 219 »

None None Tr, 1%, 199 one "Nene Tr. 196, 199 Hone None Tr. 196, 199

3 2

‘Yes Nome + ir. 243, 250 Yes None Tr. 249, 250 Yes None Tr. 249,. 250

29,000.00 _ Noné Tr. 322, 31¢, 42,000.20 None Tr. 322, 316 90,000.00 202.00: tr. 222, 36-

: | . 21

4 :

Yes 5,70. = Te, 355 “Yes €,700.00 ‘Tr. 3s Yes 5,700.00 ..Tr. 355

for 3 years fsr 3 years for 3 years

Yes 1,945.20 5 Tr. zak, Yes 2,952.7? Tr. 394, Yes 822.60 Tr. 398

ORK SD Coy RX 9D ¢

Yes ' None it “35, =37 Yee None #; 435, 437 Yes None Tr. 435, 437

é 42 /

; fs

Yee Tone wp, <3 fee 3) 327 009 Iz. £26, $37 Yes ‘750.00 _ Tr. 62h, £27

RL LjA-! 5X 13D, I 1

Exact Amount * 241.00 Tr. 739, Zxest Amount None Ts. 8359, Exact Amount ’ 207.37 Tr. 589,

Not In Kecord X12 ct im Record . NZ 12 Not In Record FX 12

Yes Hone %. 725, 735, Yes ’ None ‘Tr. 729, 735, Yes None m. 729, 735,

. 743 ae

Yes 5,600.68 fr. £87, Yes 3,256.70 Zs. ¢ST, Yes 7,828.86 Tr. 657,

Mis” as RX PLS | RX 19

“Yes 1/ None = Tr, 71h Yes 1/* None Tr. Th Yes 1/ None Tr. TLa

None » None Tr. 786, None = None ™. 786, Hone Hone Tr. 786,

e’ . . AX 21 /_ Fra

p a ;

Yes 2,191.49 Tr. 507, eo Yes . 745.5€ Tr. 507, Yes 032.98 Tr. 507,

; RK ce RX 1A _ uA

Yes e/ Tr. 1153, Yes i, , 205.95 Tr. 1153, Yes 4,Ci«.72. Tr. 1159,

Te. live ' 11:7, 117s . 1167, L174

Yes, ‘y Tr. 1199,.. Yes 3,733.95 freus2 ster 3,763.95: Or. 1199

ue |, , for 1X2 & lice * for 1¥1 & 1962

-1/ otal sales by Linker & Company +0 Lord * Taylor, for the entiré period wes approximately $15,000. D

2/ Wo figures for 1960.

| @ Behibite which are underlined vere received "In Canera”.

a a

bine PRE ns act POLST th GSES AIA RAIL R SDS 2 iiaipals EE ainda eel LOOSE Tal in eee teas See sevecatite =

42a |

7 a

| ‘Initial Decision

| BEST& CO. | |

: 1960 : ~__ 1961 sais _1962_

Manufacturer .- Sales" Allowances References . Sales Allowances References Sales § £ Allowances References

E : . Jee G ee

fern &

Glenhaven, Ltd. $ Wone ©. - $ None .§ Tr. 131, 145, $ None $ None Tr. 131, 145, $ Wone _ $ None

| aN Foes RE 20, B : Ri 20A, B ;

Buddy Bates Corr. None “None Tr. 218 — None — None | Tr. 218 None - None

Barberini, Ltd. | Kone . None Tr. 196, 199 None None Ss Tr. 196, 195 None None

” f $ s . J a Be.

Suitmaster Classics, Inc. N N ~~ -N N Ty. N None!

sics c ad . — r. 249 jone one —— ty 249: None

Lamay Coat Company, Inc. None None . Tr. 32). None . None Tr. 321 - None | None

Modelia, Inc. ‘Yes- 350.00 Tr. 355, 370, Yes — ' None - fr. 355, 30 © Yes ” one

Tameliffe, Inc. Yes 1,206.00 Tr. 294, 396, - Yes 2,847.00 Tr. 394, 396, Yes 1,950.00

RE | RT

. ¢ a2 "

: /@elinka-Matlick, Inc. | None | None Tr. 437, uu8 None . ' None — Tr. 437, 448 - None Hone

;- | ~Handmacher-Vogel, Inc. None ’ None Tr. 50.-505, None " None Tr. 504-505, None None

\ | 526, RX 1 526, RX 12 :

~ David Crystal, Inc. Yes 2,262.45. Tr. 624, Yes 3.164. 40 Tr. 62h, oa Yes T, 409.50

rn 4 Weis RA 14A-Z_10 7 JM AS-Z JO

° “4 ; re ad

Briarbrook, Inc. Sas None Tr. 589, L/ None Tr. 589, 1/ ” None

RX 12, Ri 31 RX 12, RX 31 in :

Cuddle Coat, Inc. None None Tr. 729, 735, None None Tr. 729, 735, Rone ' None

743 7Th3 ferent

° Davidow Suits, Inc. None - Hone —sTr. 659 ‘Mone *..° None . Tr. 659 one = ti(‘«é‘éi

Linker & Company None , None Tr. 714 lone None tr. 7, © None . Wone

Devonbrook, Inc. 68,000.00 ¢f° 7,750.00 2/ Tr..787, 800, 74,000.00 2/ 11,100.00 3/ Tr. 787, 800, 74,000.00 2/ 8,650.00 2/ Tr. 787,

: RX 2) : R& 2b Ra ;

Country Tweeds, Inc. Yes None | Tr. 1159, 1168 Yes None Tr. 1159, 1168 Yes : None Tr. 1159, 1168

Jack Feit, Inc. None None Tr. 1198, 1199 None None Tr. 1198, 1199 None None Tr. 1198, 199

e y No evidence. relating to sales-to Best & Co.

; c/ Sales to Best & Co. by Devonbrook, Inc. only.

; y Advertising allowances to Best & So. by Devonbrook, Inc. and all. ite affiliates.

* Exhibits which are underined were received "En Sanera".

FORE slic dnirvia Won iid SAE

act r

Glenhaven, Ltd.

~~ Buddy Bates Corp.

Barberini, Ltd. 1/

Suitmaster Classics, Inc.

Lumay Coat Company, Inc.

Modelia, Inc.

Tomcliffe, Inc.

*@® Zelinka-Matlick, Ine.

Handmacher-Vogel, Inc.

. David Crystal, Inc.

Briarbrook, Inc. a

Cuddle Coat, Ine.

Davidow Suits, Inc.

Linker & Company

Devonbrook, Inc. ~

County Tweeds, Inc.

Jack Feit, Inc.

43a

Initial Decision

sais .

1960 _

Sales - Allowances References

$ None $ None ‘Tr. 145, 157, RE 204, B

None * —s None Tr. 218, 258 .

None None Tr. 249, 250

None None Tr. 318-319, 322

None None Tr. 372, 374

2 None Tr. 423

Yes . None Tr. 437, 438, L448

None None Tr. 504-505, 525, RX LIA

2/ | Sone Tr. 637, BX 13a-J

2/ — Tr. 588-589, RX 3)

‘None None . Tr. 729, 735, 743

Yes None Tr. 659-660

2/ None Tr. 7lé

2/ None RX 21

Yes None tr. 1159, 1169

‘ Yes None Tr. lis, 1199

2/ Barberini, Ltd. was not in

2/ No evidence relating to sales to Jay's

* Respondent's exhibits which are underlined were received. "In_ Camera".

i SOEIV SRO) ae ROO SR TSE UT Oe On Ot

126

Sales Allowances | References |

None” $ None Tr. 145, 157, RX 20A, B

None None Tr. 218, 258

None None Tr. 249, 250

42,000.00 None Tr. 318-319, 322

None None Tr. 372, 37% ;

2/ None Tr. 423 ;

Yes None Tr. 437, 438, 448

None None Tr. 504-505, 526, RX LIA

2/ None Tr. 537, RX 13A-J

Py None Tr. 588-589, RE 3)

None None Tr. 729, 735, 743

Yes None Tr. 659-660

2/ None tr. 1,

2/ None RX 2

Tes Hone - Tr. 1159, 1169

Yes None Tr. 1198, 1199 .

business during 1960 and 1961. _

Seat eee Be sate sip Oa gs tae is said Soo i ae Cae e dl Anes eae

ad “ . —— at pee scare PT Er ee *

Seti enh etek > = Takase hat Rank TARA Di te MEE IR 0 Tate y . 4 a

; vs , 4

Initial Decision

R. H. STEARNS COMPANY

Se ERAS SUP ANT

1960 | 1961

“Manufacturer Sales | Allowances References —" Sales : Allowances : References a :

Glenhaven, Ltd. . -$ None $ None Tr. LAs, 157, Rk 20A, B $ None» -. $ WSone Tr. 145, 157, RX 20a, B

Buddy Bates Corp. ; ‘None . None Tr. 218, 258 None None Tr. 218, 258 .

Barberini, Ltd. 1/ Pe, ag p | 2° : | ‘ CO se

Suitmaster Classics, Inc. None - None Tr. 219, 250 None "> None "fe, 249, 250

Lumay Coat Company 800 .00 None _ Tr, 318-319, 321 a lione Tr. 318319, 321

Modelia, Inc. ; None None Tr. 372 ; | _ None - None - Tr, 372 . c °

Toamcliffe, Inc. a None Tr. 423 - eg None | Tr. 423

Zelinka-Matlick, Inc. Yes None. Tr. 438, 4B ae ej mee a: None Tr. 438, 448 _ ; i

Handmacher-Vogel, Inc. ; ‘None ° _. None Tr. Sk, 526, rca > None Kone Tr. 504, 526 RX JA Faees te |

David Crystal, Inc. . 2/ . None Tr. 624-625, 037~640 2/ - None Tr.. 624-625, 637-640

Briarbrook, Inc. . a ry Nome Tr. 588-589, RK 32 2 None Tr. 586-589, BX 31

Cuddle Coat, Inc. , | Yes None Tr. 729, 735, 743 Yes None . Tr. 729,°735, 73 |

Davidow Saits, Inc. Yes 1559-i0°. Tr. 659, 662, RL 17 } Yes 1339.60 Tr. 659, 662, RK 17

Linker & Company Yes None Tr, 714, 721 Yes Nene. Tr. 71s, 721

Devonbrook; Inc. 2/ lene RX 21 me 2f Mone Ri cl

Country Tweeds, Inc. oP tis ‘ None Tr. 1159, 1169 ” Yes None - Tr. 1159, 1169

Jack Feit, Inc. . ‘Yes None ss Tr. :1198, 1199 Tes % Nene Tr. 1198, 1199

}/ Barverini, Ltd. was not in business during 1960 and 1961, | i a . °

2/ Evidence -f dollar amouny of sales to X. =. Stearns, if any, not in record. - : .

* Bchibits which are underlined were received "In Camera". se ; ice : 5

ee See eee arene Toa

. 3 | . . 45a

Initial Decision

4 ; @ °

oe © ce ig) she | JORDAN MARSH COMPANY —,

a vi | 1960 se , 1961”

acturer Sales Allowances ‘References : Sales Allowances References

_ Glenhaven, Ltd. $20,541.94 $ None . Tr. 145, 164, RX 20k, B $34,434.90 $ None Tr. 145, 164, RX 20A, B

Buddy Bates Corp. 17, 500.00 None Tr. 256, 258 6,000.00 a 256, 258

Barberini, Ltd. 2/ ° | . " | oe ‘ a

: Suitmaster Classics, Inc. _ 9,000.00 - None Tr. 250 | 25,000.00 ‘100.00 Tr. 250, RX 7

| Lumay Coat Company, Inc. _ None None _ Tr, 318-320. None None = Tr. 318-320

; . Modelia, Inc. | . Yes | None Tr. 372 Yes None Tr. 372

7 1 Towneliffe, Inc. .. # ’ None Tr. 423 | -2/ None . TP. 4B

= Zelinka-Matlick, Ine. i Yes None Tr. 448, 438. | Yes None | Tr. 448, 438

| " Handmacher-Vogel, Inc. | None Nene Tr. 526, 504, RX 1A -Yes_ ~ None Tr. 526, 504, RX 11A

“David Crystal, Inc. | 2/ | None | Tr. 624-625, 637-640 . 2/ None Tr. 624-625, 637-640

: Briarbrook, Inc. 2/ 1590.00 Tr. 589, RK 12, RX I Mies), % None Tr. 589, RX 12, RX 31

‘Cuddle Coat, Inc. _ . None _ None = Tr. 729, 735, 743 - None None Tr. 729, 735, 743

“Davidow Suits, Inc. 3 Yes ; None Tr. 659-660 — | ~ Yes None Tr. 659-660

Linker & — 2/ a None . Tr. Th | See None Tr. 71,

= ° «° Devonbreok, Ine. Yes | None Tr. 787, RX 2h - Yes Kone © Tr. 787, RX 21

Country Tweeds, Inc. ‘ Yes xy | ; ah Trs 1159, 1168 Yes . 6,700.00 Tr. 1159, 169

Jack Feit, Inc. Yes . None Tr. 1198, 1199 Yes None. Tr. 1198, 1199

1/_ Barberini, Ltd. was not in business during 1960 and 1961. | :

o 2/ Evidence of doller amount of sales to Jordan Marsc not in record.

d/ .No figures available for 1960.

i. ; | * Exhibits which are underlined were received "In Camera". |

qT i a

2 5

— —_ —) m ~ ‘ 5 Calais | itd bas

SIS Ree et Ente 8 ern WIP NG ROSES Sa iin pa Cs lain Sis Seca sis SO PL aa at, Tae ela ald cel es As Sel la eRe pls al OF a leat i q. oz

° ay

Initial Decision

| 1960 _ | 426) |

" Manufacturer _ Sales_ = Allowances References Sales ces References

Glenhaven, Ltd. $36,349.52 ° $ 100.00 Tr. 16h, RX 20k $4,010.60 $ None Tr. 164, RK 204

Buddy Rates jim. 1,500.00 None Tr. 257-258 700.00 None. ‘Tr. 257-258

Barberini, Ltd. }/ - a - | | - ; =. = - s

Suitmaster Classics, Inc. Yes None . fe. 249, 250 Tes ~ None « — Tr. 249, 250

lumay Coat Company, Inc. None == None «= ~S=«wT.«23184319, 32 None Wone f = Tr. 318-319, 322

Modelia, Inc. mally Yes 2/ None . Tr. 378, 379 ax , Yes Py, None Tr. 378, 379

Tomeliffe, Inc. None =o tr. 422 | None None ‘tr. 422 ‘

1 Zelinka-Matlick, Inc. : Yes iene. Tr. 437; 438, ae , es Norie * Tr. 437, 438, L48

‘2 Handmacher-Vogel, Inc. lene None . Tr. 504-505, 526, REJIA ——None None Tr. 504-505, 526, BX 1)

‘ David Crystal, Inc. _ None None fr. $12, 6214-625, 637- - None None Tr. 612, 624-625, 637=

— 640 640

Briarbrook, Inc. sl /. None Tr. 568-589, RX 3) 5, | None Tr. 588-589, RK 3}

Cuddle Coat, Inc. Yes None Tr. 729, 735, 743 | Yes. None = Tr. 729, 735, 7h3

Davidow Suits, Inc. | None None fr. 659 None None Tr. 659

"Linker & Company / Mone ss None tr. 7, 722, None None Tr. Tk, 722

Devonbrook, Inc. 22,000.00 None fr. 787, RX 2. 6,000.00 — Tr. 787, RX 21

Country ‘Tweed, Inc. Yess Se 59 a 1° 1,190.23 Tr. 1159, 1168

Jack Feit, Inc. a ee None fr. 1198, 1199 Yes 0—(ié rs tr. 1198, 1199

)/ Barberini, Ltd. was not in business during 1960 and 1961.

2/ Total. volume of sales to Woodward & Lothrop for the entire period was $45,150.00

2/ Wo evidence relating to sales to Woodward & Lothrop. aa

4/ No figures available for 1960. — . a

* Respondent's exhibits which are underlined were received "In Camera".

47a.

Initial Decision

Respondent has failed to prove by a preponderance of —

reliable, probative, and substantial evidence that garments

manufactured by its seventeen “competitors”, ‘or any of.

them, did, in fact, compete with respondent’ 's garments for

the business of its favored customers, or for the retail

customers’ dollars. The burden of proving this competition .

was upon respondent. The price zones, testimony of Pro-

fessor Smith (Tr. 897, et seq.), standing alone, “does not

| prove such competition. Representatives of “most- of . the

competitors who were subpoenaed denied competition with

the Rabiner & Jontow lines. Not one of respondent’s cus-.

tomers was called to testify as to competition between

respondent and’ other manufacturers. a

Evidence of competition between respondent and the

firms which it subpoenaed*may be summarized:

; Glenhaven, Ltd.:

Bernard Gold, Vice president and general sales manager

for the past seven yeats, appeared on behalf of Glenhaven,

Ltd., 512 Seventh Avenue, New York, New York (Tr. 122,

. et seq.). This firm manufactures ladies’ suits (no coats),

which retail fr6m $30.00 to $40.00. Occasionally, some of

its items may retail for as much as $60.00. It sells to retail

department stores and specialty shops (Tr. 130). There is

little price competition between the Glenhaven and Rabiner

& Jontow lines (Tr. 125-26). Respondent’s garments retail

at higher prices. Mr, Gold testified (Tr. 190) :

Q. Are you a competitor, is Glenhaven a competitor

_ of Rabiner & Jontow?

A. I don’t believe so, ao, sir,

j ree

i an 2 y 3 ie

Oe a een 1. SE ee eee i

Ce ay ee a ee Dil Miia TA? ida nein asin

Bar. /

a 3%

4 48a |

Initial Decision

“Mr. Gold ‘further testified that, although Glestaicen did

make /advertising- allowances to some of its customers dur-

ing 1960, 1961, and 1962 (Tr. 145), it did not pay.any ysuch ©

allowances to Best & Co., Inc:, Jordan: Marsh Co., Jay’s,

Inc., and R. H. Stearns Co, It. paid $100.00 to Woodward

& prem Inc. in 1960; $35.00 to Lord & Taylor in 1960;

and $238.00 to Lord & Taylor j in 1962.

On occasion Eastman Kodak would give Glenhaven

money to promote the sale. of garments made from Kodel,

and the Wool Bureau would allocate funds ,to promote

the sale of garments made from wool. These monies were

given to Glenhaven, which, in turn, allocated them ‘to the

retail firms (Tr. 148). Glenhaven suggested that the fabric

advertising be carried in local newspapers ( 3. 58). °

Glenhaven used its own advertising funds to promote a par-

ticular line (Tr. 153), and a partitular fabric.

During 1960, 1961, and 1962, Glenhaven placed in-

stitutional advertising in the fashion magazines, such as

Mademoiselle; Glamour, Harper’s Bazaar, and Vogue (Tr.

174). Such advertisements contained the names of the. stores

at which Glenhaven’s advertised garments could be pur-

chased. Glenhaven would notify these stores that their

names would appear in the advertisemerits (Tr. 175). Mr.

Gold, with his sales staff, selected the store whose name.

appeared. in the ‘institutional ads in the fashion magazines

(Tr. 176). As many. as five or six Glenhaven customers ’

might be listed in a single ad (Tr. 180). The ad showed thé |

garment; the name of the company, and the’names of stores

at which the garment was available (Tr. 181).

‘When Glenhaven spent its own money for advertising,

it was on a “promotional basis for a particular fabric group *

to a ‘particular city. In some of the cases of the fiber.

-. money we would offer it to the whole country” (Tr. 183).

49a

Initial Decision

Respondent has failed to prove that Glenhaven suits

compete forthe retail consumers’ dollars with suits manu-

factured by Rabiner & Jontow. -Respondent has failed to

“prove that, at the level at which Glenhaven suits are pur-

_ . Chased by retail firms for resale, they compete in fact with

“Bardley” (Rabiner & Jontow) garments. :

- Respondent has further failed to prove that the adver-

tising allowances, which respondent paid. to its favored

customers, were granted to meet or match similar or identi- ~~

_ Cal advertising allowances paid by Glenhaven to such

favored customers. ; 3

ve Barberini, Ltd.:

Kermit Bass, president, appeared on behalf .of Bar-

berini, Ltd., 512 Seventh Avenue, New York, New York

(Tr. 192, et seq.). This firm manufactures and sells for |

~ resale ladies’ coats and suits which retail from $80.00 to

$150.00 (Tr. 193). Barberini, Ltd. was incorporated and

Mirst commenced to do business in May 1962. During the

years involved in this proceeding, Barberini did not sell its

products to any of respondent’s favored customers in any.

of the relevant trading areas (Tr. 193, 196).- Barberini —

granted no advertising allowances to. —— s favored

customers (Tr. 198-99, 204). |

Respondent failed to establish for the years here ins |

volved any competition whatsoever between respondent and ,

Barberini, Ltd. . . ‘

Buddy B Bates C orp.:

_ Buddy Bates, president, appeared on behalf of Buddy

| Bates Corp., 250 West 39th Street, New York, New York

asta i A i Ne bee! a

H Oo» init a

Hea ini Blah LE Sih ME RINSE TARR LS B SANFL gM AA ASA 08 ions Ste cs

: ,

AAR ee i aos? en ocean

50a"

Initial Decision

(Tr. 210, et seq.). This corporation manufactures ladies’

coats and suits (Tr. 210), which ordinarily retail from

. $60.00 to $150.00, and during the years 1960 through 1962,

retailed from $50.00 to $110 (Tr. 212, 215). During these

years, Buddy Bates’ suits retailed principally at $50.00,

$55.00, $59.00, and $69.00 (Tr. 302-303). Mr. Bates testi-

fied that there is a basic style difference between Buddy

_ Bates’ garments and those’ manufactured by respondent

(Tr. 304). He was not too’ familiar with the Rabiner &

' Jontow line, but he did not consider Rabiner & Jontow to.

_ bea competitor, nor has it been represented-to him as a :

competitor by any of Buddy Bates’ customers (Tr. 215-16,

304). No advertising allowances were paid by Buddy Bates |

to respondent’s favored customers during the years involved

(Tr.219)., .

Respondent has failed to establish by reliable, probative,

and substantial evidence in this record that the non-propor-

tionalized cooperative advertising payments, which it made

to its favored customers during the years in question, were

made to meet or match similar payments by Buddy Bates,

Inc. :

Suitmaster C lassics, Ine.:

Harry Snyder, president, appeared on behalf of Suit

master Classics, Inc.,-221 West 37th Street, New York,

New York (Tr. 247, et seq.). This company manufactures

ladies’ suits retailing from $40.00 to $50.00.(Tr. 248, 254)...

During the years in question, it sold to Jordan Marsh Co.,

Woodward & Lothrop, Inc., Best. & Co., Inc., and Lord &

Taylor (Tr. 249). It paid $100.00 to Jordan Marsh Co.

in 1961. Suitmaster’s volume item in its line was a man- -

tailored, one-button suit which retailed at $39.98 (Tr. 251-

Se ee

Sla |

Initial Decision

54). Suitmaster gave only one form of advertising allow- -

ance, i.e., one dollar per suit to all persons who purchased:

and “advertised the one-button suit. -Mr. Snyder testified

(Tr. 254-55);

_ Q. Were you in competition with Rabiner and’

Jontow during 1960 through 1962?

A... . As far as Rabiner and Jontow, I. believe

they make higher-priced suits... .

I would say that my competition would be, -in ;

my eyes, the people who make suits at my price

bevel, . ...

Q. Would you therefore consider yourself in com-

petition with a firm whose retail price range is from

seventy dollars to ninety dollars? |

A. Not in my eyes, no, sir.

Respondent failed to prove by reliable, probative, and

substantial evidence in this record that its advertising pay-

ments.to its favored customers were made to meet or match

similar payments by Suitmaster Classics, Inc.

Lumay Coat C ompany, Inc.: -

_ Sidney Malvin, Secretary-treasurer, appeared on behalf

- of Lumay Coat Company, Inc., 230 West 38th Street, New

York, New York (Tr. 311, et seq.). This company manu-

factures and sells ladies’ coats and suits (Tr..311), popular- -

priced fashion garments, retailing from $70.00 to $90.00

(Tr. 313). The company has made no attempt to promote ©

the Lumay trade name (Tr. 313-14, 323-24). Of the re-

spondent’s six favored customers: and during the years

involved, Lumay paid only-$202.00 to Lord & Taylor in

PO IR CPOE NE

a La la y

x | shoe _ 52a

Initial Decision

hi oe ae tee

; 1962. Lumay’s sales to Lord & Taylor for the three years

: ; involved were $29,000 in 1960; $42,000 in 1961; and

| * — $90,000. in 1962, a total of $161,000—with.a $202.00

allowance on one job lot (Tr: 322). Mr. Malvin testified -

. .-? (Tr. 336-37): <, , : :

Q. Are you familiar with the product manufactured

_and sold by Rabiner & Jontow? —

A. Yes, sir.

Q. Is yours a competitive item from the point of

view of style? -

A. No. ,

-* ¢

Q. And they [respondent ] make coats and suits? .

A. ‘Yes.

} Q: Out of a typical fabric like. you &, woolen

; fabrics? |

; A. Woolen fabrics. That is where the similarity

4 ends. | |

: x Ox *

Ir} my opinion, they [respondent] make a classic

i coat;:a classic suit.. Ours [Lumay] is a little more

| ‘fashion. ,

:. Q. Therefore, you don’t consider that there is any

; _ Competition at retail?

» + A. I don’t think so, no.

* + *

(Continuing) I would say our merchandise

doesn’t compete. I think the merchandise they make,

the type of merchandise we make, complement one

another.

ee ee ee

53a

Initial Decision

_ Respondent has failed to prove by reliable, probative,

and substantial evidence that its advertising payments to

its favored customers during the years involved were made

to meet, or match similar payments by Lumay Coat Com-

pany, Inc. to the same favored customers.

M odelia, Inc.: ee

j |

Gunther Oppenheim, president, appeared on behalf of.

Modelia, Inc., 205 West 39th Street, New York, New

York (Tr. 346, et seq.). This company manufactures

ladies’. coats (Tr. 346), which retail the spring line from

$60.00 to $165.00, and the winter line from $70.00 to

$300.00 (Tr. 348-49). Some of the firm’s winter coats

are fur lined (Tr. 349), and Mr. Oppenheim characterized _

their styling as high-fashion, avant garde—a “gimmick

operation” (Tr. 357). The firm specializes in novelty

products. Mr. Oppenheim’s opinion is that Modelia is a

“trend-setter” of the industry with respect to introducing

'. new fabrics (Tr. 357-58). He testified:

In a sense, I don’t believe there is one single com-

pany in the entire trade which I consider competi-

tion (Tr. 366-67). _

Q. Is it your position hat . . . a coat which sélls for

the same price as the one which you sold to the store

would not be in competition with you if it was on

the racks? | ‘y pes

A. No, our styling conception is completely differ-

ent. This is a well known fact (Tr. 367

Siete ap ATURE 2 ol RMON aE. 5 4

PIAS in ici NEAR SH ett I Na ney ee Age EN eh Ra Ee Minis api Bnd A At wi a Ct ge hen ek RL at ah

' 54a

Initial Decision |

Q. You had no competition ?

.A. I do not feel that I had any compictition (Tr

. 368). | |

| _* * ® |

Q. Mr. Oppenheim, was Rabiner & Jontow your

competitor. during 1960, 1961 and 1962?”

A. I do not consider them a competitor of ours (Tr.

390). |

The record shows that Modelia Oe a total of $6700

advertising allowances to Lord & Taylor for the years 1960,

1961 and 1962 (Tr. 355), and $350.00 to Best & Co., Inc.

for the three years. After Mr. Oppenheim testified that

the Modelia line does not compete with the Rabiner &

Jontow line of garments, it was incumbent’ upon respondent

to place in this record some reliable, probative, and sub-

stantial evidence to prove that Mr. Oppenheim was in error.

Respondent has failed to do this. The record does not sup-

port a finding that the non-proportionalized advertising

allowances paid by respondent to its favored customers, and

particularly to Best & Co., Inc. and Lord & Taylor, were

given to meet or match a similar. or identical advertising —

payment by Modelia, Inc.

Towncliffe, Inc.:

‘Howard B. Herbert appeared on behalf of Towncliffe;

Inc., 512 Seventh Avenue, New York, New York (Tr. 398

et seq.). This company manufactures ladies’ coats and suits

(Tr. 391). Their suits retail at $70.00 to $125.00, and the

coats retail from $90.00 to $125.00 (Tr. 392). The firm

markets under the names, ‘“Towncliffe” and “Towntree”’

(Tr. .392).. They manufacture conservative, well-made,

55a

Initial Decision

tailor type garments (Tr. 393). Towncliffe’s suits are made

of wool, cotton, and silk (Tr. 399), while respondent utilizes —

primarily wool (Tr. 1119; 1141-42). Towncliffe made the

following advertising payments to two of respondent’s

favored customers during the periods involved :

Lorp & Taytor

oe oe $1945.20

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ee eee $ 831.60 ,

Best & Co., INc.

1960 ........ cao StS ~ $1200.00 -..

i te ei: $2847.00 .. ° -

PME oh Tre ee ora $1950.00 (Tr. 395)

However, the evidence does not support a finding that

respondent’s advertising payments to Lord & Taylor and

Best & Co., Inc. during the years in question were made

to meet or match advertising payments made by Towncliffe.

Most of the time Towncliffe deferred to the decision of * |

its customer who was going to run the ad (Tr. 399),

Towncliffe had no advertising budget as such .(Tr. 400).

During 1960, 1961, and 1962, if Towncliffe engaged in

advertising, it was either cooperative or editorializing ad-

vertising (Tr: 401). ;

_ There is no evidence to show which of Towncliffe’s

products were promoted by ‘Lord & Taylor and Best & Co., :

Inc. . ‘

The Towncliffe representative testified:

Q. The evidence in this case shows that Rabiner &

Jontow’s retail price range is from $70 to $90. Your .

[Towncliffe’s] price range runs higher. Do you

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—

56a

_ Initial Decision

consider’ yourself in competition as to your entire

price range? (Tr. 425-26.).

A. ... we wouldn’t be in competition from $90 to

$125. I would say we are in competition from $70

to $90 (Tr. 426).

‘Respondent has failed to prove that its non-proportion-

alized advertising allowances to its favored customers were

granted to meet or match similar Towncliffe advertising

allowances .for products which compete at the retail level

with respondent’s product& for the consumers’ dollars, and

competed for sales to the favored customers.

2 elinka-M atlick, Inc.:

‘ David Zelinka appeared on behalf of Zelitika-Matlick,

Inc., 512’ Seventh Avenue, New York, New York (Tr. 433,

et seq.). This firm manufacturers ladies’ coats and suits.

(Tr. 433). Its spring coats retail from $80.00 to $110.00

_and the spring suits from $80.00 to $130.00 (Tr. 433-34),

Its.winter coats retail from $90.00 to $200.00, and winter

suits from $90.00 to $200.00 (Tr. 434). The firm manu-

factures high-style fashion garments (Tr. 435, 480). Mr.

Zelinka testified that his firm does not compete with re-

spondent. He testified that it makes “a higher: priced line

than Rabiner & Jontow” (Tr. 481). The two lines overlap ©

price wise at the very lowest level. Even there, Mr. Zelinka

denied ‘that Rabiner & Jontow garments competed with

Zelinka-Matlick garments. Mr. Zelinka opined that the

same price range is only one of several elements which

cause competition betweert different manufacturers of

ladies’ coats and suits (Tr. 480-82).

57a

Initial Decision

After Mr. Zelinka’s denial that theté was competition

between the Rabiner & Jontow. line and the Zelinka-Matlick

line, the burden was then upon respondent to prove by a

preponderance of reliable, probative, and: substantial evi-

dence that such competition does and did exist. Such proof

has not been made. Respondent’s act of naming Zelinka-

Matlick, Inc. as a competitor does not constitute proof of

the fact. Respondent has not: proven’ that_its advertising

allowances to its favored customers were granted to meet

or match similar allowances by Zelinka-Matlick, Inc. to the

_ Same favored customers. i

Handmacher-V ogel, 1 ncor porated:.

Edward Haipert, vice president’and treasurer, appeared.

on behalf of Handmacher-Vogel, Incorporated, 533 Sev-

enth Avenue, New York, New York (Tr. 493, et seq.). It

manufactures and sells in interstate commerce women’s

suits. Its “Handmacher” ‘Suits retail from $60.00 to

$100.00. Its “Weathervane” unlined’ suits retail. from

$30.00 to $50.00 (Tr. 494). Its garments cover a “broad —

- spectrum of suit styling” (Tr. 496) with emphasis on high

style. ; ! ;

The only one of respondent’s favored customers to

whom Handmacher-Vogel granted advertising allowances

during the years here involved was Lord & Taylor. The

allowances were: for 1960, $2191.49: for 1961, $745.58;

and for 1962, $632.98 (RX 11 in camera).

Of the nine payments to Lord & Taylor by Hand-

macher-Vogel, seven were used to advertise the spring and

summer line which retails from $30.00 to $50.00. (RX

11B, RX 11G, RX 11H, RX 111, RX 11J and RX 11L,

all in camera.) This line does not compete price wise with

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_ 58a

Initial Decision

the Rabiner & Jontow” tae which retails, as Previously

found, from $70:00 to $90.00.

Handmacher-Vogel’s advertising payments were noi

made according to a plan, but were negotiated separately

at the time they were made (Tr. 516). In sonié instances,

Handmacher-Vogel paid the full cost of the ad. In other

instances, it paid only:.a: part of such cost (Tr. 517).

Handmacher-Vogel’s advertising payments were not based

upon the volume of business done with a customer, nor the

importance of the retailer in terms of ‘prestige. It was

_ hegotiated at a particular instance in time (Tr. 519),

The retailer took the initiative in attempting to secure

_Handmacher-Vogel advertising allowances (Tr. 520). |

Handmacher-Vogel refused some requests, and granted”

— others (Tr. 520-21). 7 7

Handmacher-Vogel advertises generally in Vogue,

Harper’s, and Mademoiselle. These ads sometimes featured

. the names of the Handmacher-Vogel accounts in a particu-

lar city (Tr. 555).

Respondents has failed to prove that its advertising pay-

ments to its favored customers were made to meet or

match similar payments by Handmacher-Vogel, Incorpo-

rated to the same. customers,

Briarbrook, Inc.:

Bertram Barber, president, ‘appeared ‘on behalf of

| Briarbrook, Inc., 512 Seventh Avenue, New York, New .

York (Tr. 568, et seq.)..This company is a manufacturer

of ladies’ suits (Tr. 570). Briarbrook’s spring suits retail

from $60.00 to $110.00; summer suits from $40.00 to

$55.00; and the fall suits from $70.00 to $125.00 (Tr.

pip

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‘59a

Initial Decision -

570-71). The suits can be described as “fashion” or style

garments (Tr.°571). Mr. Barber’s testimony does not

prove that Briarbrook is in fact in competition with Ra-

biner & Jontow (Tr. 580-599). Evidence was elicited con-

cerning Briarbrook advertising allowances to Jordan Marsh

Co. and Lord & Taylor (two of respondent’s favored

customers [RX 12; Tr. 600-601]. Mr. Barber was unable

to testify as a certainty that.the payments were in fact

advertising allowances (Tr. 599). His testimony does not

. Prove that respondent’s advertising payments to its favored

customers were made to meet or match similar or identical

payments by Briarbrook to the same favored customers.’

Respondent failed to establish the existence of competi-

tion between respondent and Briarbrook, Inc. for sales to

respondent’s favored customers. Respondent, likewise, did

not introduce any specific evidence that its. garments and

the Briarbrook garments did and do, in fact, compete for

the retail purchasers’ dollars,

David Crystal, Incorporated:

Harold Cohen, comptroller, appeared on behalf of

David ‘Crystal, Incorporated, 498 Seventh Avenue, New

York, New York (Tr. 606, et seq.). He has been its’

comptroller since July 1, 1963 (Tr. 607). David Crystal —

is primarily a manufacturer, of a classic line of ladies’ suits

that sell under the trade name of “David Crystal” (Tr.

613). os

HEARING EXAMINER Gross: Would you character-

ize the general styling ‘of David ‘Crystal, Inc. as

pretty similar to the line of Rabiner & Jontow?

THE Witness: Well, I don’t propose to be a fashion

man. But from my information with people in the

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60a

Initial Decision

industry and people in my company, it appears that

» Rabiner and Jontow and David Crystal’s myang. 3 is

very similar. Er 612.)

Mr. ‘Cohen’ ‘had been eile of David | ae

Incorporated only since July 1, 1963, and was not qualified

. to testify specifically to the competition, if any, ‘between

“respondent. and David Crystal for the coat and suit, busi-

ness of the respondent's favored: customers. Mr. Cohen

_ +. produced papers which are in evidence as RX 13A-13J, RX

- 14A-=14Z10, RX 15A-15Z10, and. RX 16A-16Z2, all iu

camera.” The exhibits,” ‘plus “Mr. Cohen’s testimony, |

-support \a finding’ that David Crystal made cooperative

advertising payments to some of respondent’ s favored ‘

| customers, as follows: Se .

1960 1961. | 1962

‘| ~Lord.&-Taylor .>...'..: ree, $750.00

. rao A (RX 15A-15Z10, (RX 13F

yee, é in camera) im camera)

Bost & OR. a stasacd<% $8250.38 $6184.08 $7401.50

pee, eee “ (RX 14A-14Z10, _ (RX 16A-15Z10, (RX 16A-16Z2,

< im camera) ." in camera) - im camerq)

: Some of the David Crystal’ exile (RX 13A through

RX& ‘16Z2; in camera) indicate, and it is found, that many

- of the advertising allowances,. which made up the five

' “general totals giyen above, were paid,to promote David

Crystal’s garments which were not competitive to respond-

ent’s garments. At the outset of Mr. Cohen’s testimony,

he testifled that Mr. Vineent Draddy, presiderit of David -

Crystal, would be best qualified to testify concerning its

competition, if. any, with respondent within’ thé framework

'* of respondent’ s “meeting competition: defense”: «Mr.

- ~~ Draddy was“not thereafter subpoenaed. -

were

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6la

I nitial Decision

The record. does not contain substantial and probative:

evidence that respondent’s advertising payments to its

favored customers were made in response to a specific, — &§

competitive situation to meet or match similar or identical |

advertising paymerits by David. Crystal, Incorporated to g

the same favored’ customers. The evidence also fails to ;

. establish that the garments manufactured by respondent . _ a

competed with the garments manufactured by David. . *-

. Crystal, Incorporated for sales to the favored customers,

, ; 3

or for sales to retail customers. ;

. ‘ : . 4

ba 4

_ Davidow Suits:

Archibald Davidow, one of its principal stockholders

and officers, appeared on behalf of Davidow Suits, 205 _ |

West 39th Street, New York, New York (Tr. 650, et seq. ). .

_. This company manufacturers and sells women’s suits for

resale at retail under the label “Davidow” for a price of '

$125.00 and up (Tr. 652-53). Prior.to 1960, Davidow a

Suits developed a cooperative advertising plan which ‘was

offered to all Davidow customers throughout the country :

(Tr. 657). Davidow has been very selective in its market-

ing and sells to very few marketing outlets in.each mar- ‘

keting area (Tr. 657). Davidow may also give only one — :

of these very few outlets the exclusive right to buy and ( §

resell’ a specified style in a particular area (Tr. 658), :

Davidow has mariy styles in its line, and it, has marketed ;

' generally by giving exclusive styles where advertising “is

put on it” (Tr. 659). Although many Davidow styles are’ .£

carried by more than one retail outlet in a marketing area, —&|

if a style is advertised, it will usally be available only at

the retail outlet which advertises it (Tr. 659).

SON dea oe

62a

Initial Decision

The Davidow cooperative advertising plan was”made

available to all Davidow customers throughout the country

(Tr. 659). Davidow made no sales to Best & Co., Inc. in

New York City in 1960, 1961 arid 1962; nor to Woodward

& Lothrop, Inc. in ‘Washington, D. C., in 1960 and 1961;

and. it did not offer to sell its products to these establish- «

‘ments, and it did not pay nor offer to pay any advertising .

allowances to them (Tr. 659). In 1960 and 1961, Davidow

did not pay any advertising allowances to Jay’s Inc., nor to

Jordan Marsh Co..in Boston (Tr. 660). Jay’s and Jordan ~

” Marsh were offered Davidow’s advertising plan, but re- ©

fused it (Tr. 660). Pursuant to the plan, payments were ,

made in 1960 and 1961 to R. H. Stearns Co. in: Boston—

$1559.10 in 1960, and $1339.60 in 1961 (RX 17m cam-

era); and to Lord & Taylor in New York City, $5606.68

in 1960; $8358 in 1961; and $7828.86 in 1962 (RX 19 in

camera). Davidow’s letter“Offering its cooperative adver-

tising plan to its customers is in evidence as RX 18 m

camera. ;

In 1960, Davidow Suits paid advertising aici to

the extent of 50% of the cost of the advertising actually

expended by Lord & Taylor. Payments were made based.

upon tear sheets of the advertisement, plus a stated sum for

production costs (Tr. 663). Lord & Taylor’s advertising

department did the art work for the advertisement. Later

Davidow changed its arrangement with Lord & Taylor

from that of paying 50% of the cost of the advertisement

to a basis of paying 5% of anticipated sales during the

course of a year. Mr. Davidow testified that his firm

has received more benefit from the 5% of sales arrangement

than from the former 50% of cost plan (Tr. 664-65).

Davidow's 5% arrangement with Lord & Taylor was not

duplicated with any other Davidow i in Boston,

‘wrew ia ee

63a

Initial Decision

New York City, or Washington, D. C. Davidow paid for |

all its advertising in fashion magazines (Tr. 669).

Davidow’s cooperative advertising plan, exemplified by

RX 18 in camera, was offered to all Davidow. customers

(Tr. 673). | |

' There is not’ any reliable, probative, and substantial

evidence that respondent’s non-proportionalized. advertising

payments to its favored customers in New York City,

Boston, and Washington, D. C., were made in good faith

to meet or match identical or similar payments by Davidow

Suits to the same customers. —

Linker & Company, Inc.:

Maurice Linker, president, appeared on behalf of

Linker & Company, Inc., 512 Seventh Avenue, New: York,

New York (Tr. 706, et seq. ).» He has been in the ladies’

garment business for twenty-five years (Tr. 707). From »

1960 to 1963, its garments retailed from $49.00 to $69.00 ..

(Tr. 708). During these years, the company .did not use -

its funds to advertise its products (Tr. 710). Linker never

received any money from any textile, fur or fiber company

to be used in cooperative advertising (Tr. 713). During

the three year period, Linker sold about $15,000 to Lord &

Taylor, and $500,000 to Peck & Peck: One specialized

$1,000 advertising allowance was paid to Peck & Peck

over the three year period. Linker made gafments to

"Peck & Peck specifications. It did not seek to build up its

own label. The garments, which Linker made for Peck. &

Peck, were classic—basic (Tr. 718). The styles of the

merchandise manufactured by Linker for Peck & Peck

were usually “confined” to Peck & Peck only, and not sold

to. other Linker customers (Tr. 721).

Linker sold R. H. Stearns Co. in Boston, but gave them

no advertising allowances (Tr. 721). Linker gave no -

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Initial Decision :

advertising allowances to the stores it sold in Washington,

D. C. (Tr. 722). :

Respondent’s non-proportionalized advertising payments

to its favored customers were not made to meet or match

similar or identical advertising payments by Linker & Com-

pany, Inc. to the same favored customers.

| C uddle Coat, Inc.:

Justin Lipman, vice president, uy on behalf of

Cuddle Coat, Inc., 500 Seventh Avenue, New York, New

York (Tr. 725, et seq.). A Cuddle Coat advertisement in

The New York Times’ magazine section of February 28,

1962, in which the name of the manufacturer and retailer

(Lord & Taylor) appeared, is in evidence as RX 37. Cuddle

‘ Coat, Inc., a division of Petite Miss Co., manufactures and

sells highly styled, only untrimmed coats which retail from

$50.00 to $75.00. It caters to smaller girls’ and misses’

sizes (6 to 14 or 5 to 13)—the younger market (Tr. 731).

During the years from 1960 to 1962, the firm sold Wood-

ward & Lothrop, Inc. in Washington, D. C.; R. H. Stearns

Co. in Boston; and Lord & Taylor in New York City (Tr.

729). Cuddle Coat mentioned the names of some of its —

retail outlets in its ads (RX 37; Tr. 737).. During the

years 1960 to 1962, it did not make cooperative advertising

payments: to its retail store customers (Tr. 735). Mention.

of the retail establishments in its ads was for the purpose

of giving Cuddle Coat prestige—not the retail outlet (RX

37; Tr.'736).

In addition to Lord & Talyor, Cuddle Coat sold in New

York City to Franklin Simon, Macy’s, Gimble Bros., and

Bonwit Teller. It did not’ pay any advertising allowances

t Eon See ace) ane ENE

. 65a

Initiql Decision i

to anyone (Tr. 743, 749). It was not Cuddle Coat’s policy

‘

during the pertinent years to give money toward advertising

(Tr. 747). . : |

The Cuddle Coat representative testified that The New

York Times’ magazine Section requires 60 days lead time °

‘

magazines require 90, days lead time. |

In the fashion magazines, Vogue,, Mademoiselle, and

for the placement of fashion advertisements, and fashion

_ Harper’s, Cuddle Coat usually did not mention. the retail

establishments selling its merchandise. . | . |

A one page color advertisement in The New York

Times’ magazine section cost Cuddle Coat about. $5,000.

Cuddle Coat usually ran ‘such advertisements in The New

York Times’ magazine section about twice a year. (Tr.

737). Unlike respondent’s procedures, Cuddle Coat adver-

tisements were not worked out in consultation with its re-

tail store customers; nor were its retail store. customers

asked to cooperate (Tr. 738-39). Cuddle Coat’s advertis-”

ing policy was totally different in purpose and execution

from respondent’s advertising policy. A retail store was

mentioned in the Cuddle Coat ad strictly as a matter of

“convenience”, so that the Cuddle Coat office “wouldn’t be

badgered by telephone calls and letters in New York City”

inquiring where the Cuddle Coat in the advertisement might

be purchased (Tr. 740). At the time Cuddle Coat men-

_ tioned Lord & Taylor in its advertisements in, The New

York .Times, it was also selling in New York City to

Franklin Simon, Macy’s, Gimbel.Bros., and Bonwit Teller,

as above found. =

Since Cuddle Coat didn’t give advertising allowances

to any of its customers (Tr. 743), respondent’s advertising

allowances could not “have been made to meet or match

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2 4

Initial Decision

those of Cuddle Coat. Respondent’s evidence fails to prove

that its nen-proportionalized advertismg payments to its

favored customers were ‘made in good faith. to meet or,

match similar advertising payments made by. Cuddle Coat,

Inc.-to the same favored customers.

. Devonbrook, Inc.: . 2

- Morton nie comptroller and assistant secretary, ap-

peared on behalftof Devonbrook, Inc., 1400 Broadway, and

, 500-512 Seventh Avenue, New York, New York (Tr. 769,

et seq.). This company has the following subsidiaries :

Devonshire. Junior, Inc.; Brandshire, Inc.; Devshire, Ltd. ;

. Heart Throb, Inc.; Devonaire, Ltd.; Devonknit, Inc.; and

Miss Devon, Inc. Devonbrook’ stock is publicly held, and

traded over the counter (Tr. 770). The principals in the

company are Sigfried Alper, Owen Alper, and William |

- Alper—‘“a father, brother and son” combination. The com-

pany manufactures and sells junior dresses and*suits, which

‘retail in the fall season from $23.75. to $42.75 (Tr. 770)..

In the spring season, the line retails at wire 75 to $39.75 (Tr.

771).

Devonbrook and its subsidiaries did not use traveling

salesmen. They sold from their showrooms at the addresses

stated above.

In 1960, 1961, and 1962, the companies did not partici-

. pate in national advertising, as such (Tr. 777).

If one of the Devonbrook customers would feature a

particular Devonbrook garment in an advertisement,

Devonbrook would give the retail outlet an allowance equal

toa dollar per garment, provided the retailer mentioned the

Devonbrook name, and submitted tear sheets as proof that

the advertisement had been run.. The average cost to Devon-

— Sn ae

67 a

Initial Decision

brook of such advertisements would be about $200.00 to

$300.00. Most of such advertisements were run in The

New York Times (Tr. 778-79). The Devonbrook customer

usually submitted a debit emo with a tear sheet of the ad

attached (Tr. 779). If a Devonbrook customer spent

$2,000 on an advertisement and sold only ten Devonbrook

garments, such customer would have been paid only $10.00.

So the burden was on Devonbrook’s retail outlets. to be very

astute in selecting the Devonbrook merchandise to be ad-

vertised (Tr. 780). The Devonbrook look . . . is accepted

in the junior market as young, fashionable and. popularly

priced” (Tr. 781). es).

During the years: involved in‘ this ‘proceeding, Devon-

_ brook did. not engage in national advertising of any kind P

(TF. 782). Devonbrook has learned that, when the cus-

tomers advertise its products in the local newspapers, they

get the best results (Tr. 783).

Devonibrook did no business with Lord & Taylor during

_ the years involved. Devonbrook’s only advertising pay-

ments to any of respondent’s favored customers for the

relevant years were to-Best & Co., Inc., as follows: 1960—_

$7,750; 1961—$11,100;° and’ 1962—$8,650 -(RX 21 in

camera). :

Respondent’s non-proportionalized advertising pay-

- ments to its favored customers were not made to meet

or match specific ‘or similar payments by Devonbrook to

the same customers. The evidence will not support a find-

ing that respondent’s garments and Devonbraok’s garments

competed with each other for the patronage of retail estab-

lishments, or for retail customers’ dollars.

ce)

@ cum wistotih ‘ is iainaacnss

Initial Decision

Country Tweeds, Inc.: °

Harry Glassman, controller, appeared on behalf of

Country Tweeds, Inc., 250 West 39th Street, New York,

New York (Tr. 1158, et seq.). This company manufactures

ladies’ coats which retail from $75.00 to $225.00, roughly

(Tr. 1159). During the relevant years, Country Tweeds

would cooperate with stores generally for newspaper adver-

usually, and sometimes more, up to the amount of a commit-

ment which it would make to such customers at the begin- °

ning of the season (Tr. 1160). After a particular retail

establishment had spent the amount which Country Twéeds

had allocated to it, all further advertising was at the retail

establishment’s own expense (Tr. 160).

During the relevant years, Country Tweeds advertised

in Life, Vogue, Harper’s Bazaar, and “maybe one or two ~

others” (Tr. 1161). Some of Country Tweed’s retail stores

may have been mentioned, but Country Tweeds:“were then

told” that they could not mention the names of some of .

their customers .without mentioning all, so they stopped

‘mentioning any names (Tr. 1161-62).

During 1960, 1961, and 1962, Country Tweeds never

received any allowance from any textile fiber house or

textile company to be used in advertising their products

(Te. 1366)... ;

Country Tweeds paid Lord & Taylor a $4,299.99

advertising allowance in 1961, and $4,014.72 in 1962

(Tr. 1167). They’ paid Woodward & Lothrop, Inc.,

$1,190.23 in 1961 (Tr. 1168), and $1,641.98 in 1962

(Tr. 1169);.and paid $6,700 to Jordan Marsh Co. for

cooperative advertising in 1961, and. $2,979 -in 1962

(Tr. 1169).

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69a

Initial Decision

During the years in question, Country Tweeds provided »

their customers mailing pieces, brochures, with the company

name upon them without charge. Country Tweeds fur-

nished such mailing pieces to those customers who requested

them. All their customers did not request them (Tr. 1169).

Their free mailing pieces were made known to their cus-

tomers “by word of mouth” (Tr. 1170). Their 1961

advertising payment to Lord & Taylor of $4,299.99 in-

cluded a $1,350 figure for advertising in a Lord & Taylor

catalogue (Tr. 1170). fact |

Mr. Glassman testified (Tr. 1173):

Q. Do you know the company. Rabittér"& Jontow? '

A. I frankly never heard of them until I received

this subpoena. |

Country Tweeds make a “prestige” garment which they

sell to “prestige” retail establishments (Tr. 1174), They

have a few customers in each retail market (Tr. 1175).

In 1960 and 1961, Country Tweeds sold to Woodward

& Lothrop, Inc., exclusively, in Washington, D. C., and

to Jordan Marsh Co., exclusively, in Boston (Tr. 1175-76).

The evidence fails to prove that during the years in-

volved Rabiner & Jontow, Inc. competed with Country |

Tweeds, Inc. for sales to respondent’s six favored cus-

tomers, or that Country Tweeds’ garments competed. with |

respondent’s garments for the dollars of the ultimate con-

sumer—the retail purchaser. Although Country Tweeds,

Inc. paid advertising allowances to some of, respondent’s

favored customers during the years involved, the hearing

examiner cannot find from the evidence that respondent’s

non-proportionalized advertising allowances. were paid to

meet or match a similar payment by Country Tweeds, Inc.

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70a i :

Initial Decision

“in ‘individual competitive situations, rather than * * *.

[in] a general system of competition.’” (See Exquisite

Form Brassiere, Inc., et al., supra, p. 10),

Jack Feit, hess :

Due to the illness of its president, Lillian Hertzberg, its

bookkeeper, appeard on behalf of Jack Feit, Inc., 530

Seventh Avenue, New York, New York (Tr. 1191, et seq. ).

This company manufactures coats and suits, mostly suits,

which retail from $70.00 to $125.00 (Tr. 1202). She testi-

fied that the only advertising allowance paid by Jack Feit

to any of respondent’s favored customers during the years

1961 and 1962 was $3,783.95 paid to Lord & Taylor (Tr.

1199, 1203). Jack Feit sold its garments ‘to some of re-

spondent’s other favored customers, but did not pay any

advertising allowances to these others. It did not make its

cooperative advertising payments pursuant to any puBlished

plan (Tr. 1204).

The evidence in this record fails to establish that re-

spondent’s non-proportionalized advertising allowances paid

to its favored customers were paid to meet or match a

specific, similar payment by Jack Feit, Inc. to the same

favored customers.

Respondent failed to prove that Jack Feit, Inc. competes

with it in the sale of coats and suits to respondent’s favored

customers. Respondent failed, likewise, .to prove that Jack

Feit’s garments compete with Rabiner & Jontow’s garments

for the dollars of the ultimate consumer—the retailer pur-

chaser.

CONCLUSIONS OF LAW

Respondent, Rabiner & Jontow, Inc., 512 Seventh Ave-

nue, New York, New York, a New York corporation,

71a

Initial Decision

which has been doing business continuously since 1942,

- manufactures and sells in interstate commerce ladies’ coats

and suits under the trade names of “Bardley”, “Bardley,

Jr.”, and under private labels. Respondent’s products are

sold for resale at retail. :

) Respondent has been, at all relevani times, and now is,

engaged in commerce as “commerce” is defined in’ thé

Clayton Act, as amended. -

Respondent has been, and now is, in competition with

other persons, firms and corporations who manufacture and

* sell for resale at retail similar lines of ladies’ coats and suits.

The Federal Trade Commission has jurisdiction over

Rabiner & Jontow, Inc. and the subject matter: of this pro-

ceeding. This proceeding is in the public interest. .

In the course and conduct of its business jn commerce

during the years 1960, 1961, and 1962, in the Cities of

New York, New York, Boston, Massachusetts, and Wash-.

ington, D. C., respondent’ paid non-proportionalized adver-

tising allowances to its favored customers, as hereinabove

found, without making such payments available to all of its.

other, nonfavored, customers who competed with its favored

customers. in the sale at retail of respondent’s products of

like grade and quality. | ee

Respondent represents that segment of ladies’ coat and

suit manufacturers, whose garments usually sell at retail -

basically in the price range between $70.00 and $90.00. -

Respondent’s non-proportionalized advertising payments

did, and do, constitute a violation of Section 2(d) of the -

Clayton Act, as amended, and should be enjoined.

Respondent has failed to prove by reliable, probative,

and substantial evidence that its garments compete with

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| I uitial Decision

the sail of the ‘ ‘competitors”, whom it, subpoenaed,

for sales to the rétail establishments who purchase respond-

ent’s garments, or for — to the ultimate consumer—the

retail buyer.

‘Respondent has failed to to prove by reliable, probative,

‘sia substantial evidence that its advertising payments were

made in good faith to meet or match the same or similar)

advertising payments made by any one or more of its comé

petitors to the same customers to whom respondent made

-. its advertising payments.

-Respondent’s evidence fails to bring its non-pr opor-

tionalized advertising payments within the criteria estab-

lished by the Federal Trade ‘Commission in. its opinion in .

Flotill Products, Inc., Docket No. 7226 (supra, pp. 5-6) ;

" Ace Books Inc.; et al., Docket No. 8557 (supra, pp. 8-9) ;

and.Exquisite Form’ Brassieve, Inc., et al., NY. Federal Trade

Commission (C. “A. ‘=D: C. No. 18524). = — fii 2d

(supra, pp. 9-19).

Counsel scaecentie the complaint have a the ma-

terial allegations of the complaint by reliable, probative, and

substantial evidence, and respondent has failed to prove

that its unlawful, non-proportionalized advertising pay-

ments were made to meet a specific payment of a competitor

in an individual competitive situation, rather ‘than in a

general system of competition. “

ORDER

Now, THEREFORE, IT IS ORDERED that. respondent

Rabiner’& Jontow, Inc., a corporation, its officers, directors,

agents, representatives, and employees, directly or through —

any corporate or other device in the course of its business

73a

Initial Decision

in commenrice, as “commerce” is defined in the Clayton Act,

as amended; do forthwith cease and desist from:

Paying or contracting for the payment of anything

of value to, or for the benefit of, any customer of the

respondent as compensation or in consideration for ad-

_vertising or promotional services, or any otlter service.

or facility furnished by or ‘through such: customer in

connection with the handling, sale or offering for sale

of wearing apparel products manufactured, sold or of-

fered for sale by respondent, unless such payment or

consideration is ‘made available on proportionally equal —

terms to all other customers competing with ‘such

favored customer in the distribution: or resale of such

products. | 7

Leon R.. Gross.

ray ps Leon R. Gross, _

| - Hearing Examiner,

July 16, 1965 e

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- 74a

Opinion of the Commission

UNITED STATES OF AMERICA

_ BEFORE |

FEDERAL TRADE COMMISSION

CoM MISSIONERS:

Paul Rand Dixon, Chairman.

Philip Elman

Everette MacIntyre 7 |

John R. Reilly : fs es

‘ Mary Gardiner Jones | :

- a.

In the Matter of -

- RABINER & Jontow, INc.,

a corporation. _

Docket No. 8629

By Reilly, Commissioner :

This matter is before the Commission on the appeal of

respondent, Rabiner & Jontow, Inc., from an initial de-

cision of the hearing examiner holding that respondent had-

violated subsection (d) of section 2 of the Clayton Act, as

amended, and ‘ordering respondent to cease and desist from

the practices found to be unlawful.

-° The complaint herein alleged that respondent, a manu-

facturer of ladies’ suits and coats, had granted promotional

allowance to certain of its customers without making such

allowances available on proportionally equal terms to other

“customers competing in the sale of respondent’s products.

The respondent admitted many of the material allegations

of the complaint in its answer but claimed as an affirmative

75a

Opinion 0 f the C ommission

defense that inevery instance in which it granted promo-

tional allowances it did so in good faith to meet competition.

The hearing-examiner found, primarily on the basis of re-.

' spondent’s admissions ‘and stipulations of fact, that during

the years 1960 through 1962 respondent had granted ad-

vertising allowances to certain favored customers located

_in the cities of Boston, ‘Massachusetts, New York, New

York, and Washington, D. C.; that other customers com-

-peting in the sale, at retail, of respondent’s products did

not receive any advertising. or promotional allowances dur-

ing this period; that allowances’ granted by. respondent were

individually negotiated on an ad hoc basis for each adver-

tisement ;‘that respondent had no plan whereby competing

customers might qualify for an, advertising allowance; and.

that respondent’s payments. were not made available on

proportionally equal terms even among favored customers.

To establish the claim that its allowances were justified .

under the 2(b) proviso as good faith efforts to meet al-

* lowances furnished by competitors, réspondent called as

_ witnesses the president of the corporation, Abbe Rabiner,

representatives of 17 coat and suit manufacturers, and an

associate professor of retail mechandising at New York

University whe testified as an expert witness. The examiner

rejected this defense, holding that respondent had failed’

to prove through the testimony of these witnesses that its

non-proportionalized advertising payments were made in

order to meet comparable payments in specific, ‘individual,

competitive situations. The examiner -found in this con-

nection that the testimony of Rabiner and the expert wit-

ness related only to general competitive conditions in that ~

segment of the garment industry of which respondent is

. Part and not to the.issue of whether respondent’s discrim-

inatory payments were made defensively in good faith -

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76a

“Opinion of the Commission

. response to promotional payments offered to its customers

by competing garment manufacturers. The examiner also

‘found that respondent had’ failed to prove through the

testimony of the 17 manufacturers’ representatives that it

was in fact competing with those particular manufacturers

in the distribution of its products. He also found that none

of these. mariufacturers, individually, paid to respondent’s

favored customers the large cooperative advertising allow-

ances that respondent paid. He concluded from his review

of the record that there was no evidence that respondent’s

allowances were granted to meet or match a similar pay-

ment by a specifically named competitor who, at the time,

was selling competing merchandise to. respondent’s favored ‘

customers. .

In its appeal from the initial decision respondent does

not contest the examiner’s finding of a prima facie violation

of 2(d). It contends, however, that the complaint should

be dismissed on two grounds; the first being lack of public

interest in the proceeding and the second, that its allowances

were made in good faith to meet competition.

Respondent’s “public interest’’ argument-.is based pri-.

_marily-on the undisputed fact that violations of 2(d) have

been widespread in the wearing apparel industry. This

argument, as we understand it, is not that the Commission

- should have made no attempt to correct these illegal prac-

tices but that the Commission has gone about it in the

wrong way. The.respondent is, of course, well aware of

the Commission’s efforts to secure industrywide compli-

_ ance with section-2¢d). See Jn the Matter of Abby-Kent

Co., Inc., Docket No. C-328, et al. An investigation under-

abet by the Commission in 1961 disclosed that a large

number of- garment manufacturers were discriminating

ities competing customers in the granting» of advertising

-—.

77a

Opinion of the Commission

and promotional allowances. The Commission thus having |

reason to believe that violations of section 2(d). existed

throughout the industry made the determination, after con-

sidering and rejecting other proposed remedial approaches,

that a general correction of these practices could best be

accomplished by affording members of the industry an-

opportunity to sign consent agreements containing orders

to cease and desist from granting discriminatory allow-

ances. Subsequent thereto, the Commission during ‘a period

of approximately two years accepted agreements and orders

from 298 apparel’ producers including those significant -

sellers who were granting the largest. amounts of allow-’

ances to the greatest number of buyers. On August 9,

1965, all outstanding orders were made effective, the Com-

mission having determined at that time that this particular

_ Phase of the wearing apparel inquiry was for the most part

terminated and that “The few. unresolved matters do not

involye suppliers who constitute a force capable of com-

petitively disadvantaging those indystry members who will _

be ‘under order.” Abby-Kent, supra. The Commission .

- further pointed out that: its enforcement program in this

industry would, when necessary, be supplemented by formal

proceedings against selected buyers who knowingly induce

or receive discriminatory allowances.

Although cognizant of the foregoing facts; respondent —

now asks us to reconsider our enforcement policy in the

light of the decision in the Max Factor and Shulton cases."

In these two cases complaints charging two cosmetic manu-.

‘ facturers with violating section 2(d) were dismissed, the

_ Commission having found that the respondents were only

two among a large number of suppliers participating in

1Docket Nos. 7717 and 7721, July 22, 1964.

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78a

Opinion of the Commission

special promotional . events . sponsored by a single buyer.

We held in our opinion that the entry of cease and desist —

orders against these particular respondents would not be

an equitable and fully effective method of eliminating the

discriminatory practices and that in the circumstances

shown to exist the “enforcement policy best calculated to

achieve the ends contemplated by-Congress” was one based

on Section 5 of the Federal Trade Commission Act and

directed at the recipient of the discriminatory allowances.

Respondent contends that on the basis of our holding in

Max Factor and Shulton' we should dismiss the complaint -

against it and bring suit against its favored customers under

Section 5 for inducing discriminatory allowances. This

“argument is rejected. Our disposition of the two Cases: re-

- Tied upon by respondent cannot be interpreted as a policy

decision to proceed only against buyers who induce 2(d) |

violations rather than against the seller who has violated

2(d). The fact that in a given industry or market buyers

may be largely responsible for inducing discriminatory ~

practices is not sufficient reason for suing them to the ex-

clusion of the supplier. It may,be that more often than not .

large buyers aré responsible for a seller’s discriminations.

And Congress was fully aware of this fact. when it: passed

the Robinson- Patman Act. The Act nevertheléss is directed

_Against the seller as well as the buyer. In any event, our.

enforcement policy must be guided by the circumstances as

we see them which will also take into'account the respective

; effectiveness of the various remedies available to us. For

example, proceeding against buyers under Section 5-would

certainly be indicated where such a suit against one or. two |

buyers would have the same remedial effect as a multitude

of actions against sellers under 2(d). Grand Union vy.

ee me 300 F, 2d 92 (2nd Cir. 1962), American News

Opinion of the C ommission

"Co. v. FT. C., 300 F.2d 104 (2nd Cir. 1962), Giant Food

Inc. v. F. T. C., 307 F. 2d 184 (D. C. Cir. 1962), R: H.”

Macy's & Co., Inc. v. F. T. C.,.326 F. 2d 445 (2nd Cir. 1964).

Furthermore, we fail to detect any similarity in the

circumstances under which this case was brought and those

of the Max Factor and Shulton cases. Our investigation

« of the wearing apparel industry had disclosed the likeli-

hood that in many instances department and specialty store

cKains had: been responsible for the discriminatory allow-

ances. In other instances it seemed ‘likely that it was the

‘ suppliers themselves who had ‘initiated the practice. Being

fully aware’ of the existing situation, the Commission made

the determination long before ‘it. brought ‘suit against re-

_Spondent that the elimination of the discriminatory prac-

tices could best be achieved by proceeding against’ the sup-

pliers. It has executed this policy by securing consent

agreements from all but a few firms, which include the re-

spondent, where the facts disclosed by the investigation

' gave it reason to believe that 2(d) was being violated. Thus

7 the factual situation here is diametrically opposite that

shown to exist in the cosmetic cases. Here a decision not to

" dispose of ‘the.case on the merits would not only be unfair .

to suppliers already under order but would tend to weaken

'. the Commission’s entire enforcement program in this. in-

‘dustry...’ ee = ee

Respondent also asserts that the proceeding is not in

the public interest because small manufacturers cannot af-

ford to make promotional payments on the same basis or .

in the same amount as their larger competitors. It: states

in this connection that some large apparel manufacturers

have set up programs providing for proportionalized allow-

ances of up to 50 percent and higher of the buyers’ cost -of

advertising and further claims that it would be impossible

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. .

80a

Opinion of the C a |

for it to grant such large payments on. proportionally equal

terms to all-of its competing customers. As found by the:

hearing examiner. the evidence on this point is inconclusive.

. But even if respondent were able to prove its inability to

duplicate the lawful promotional programs of the very large

apparel manufacturers there is nothing in the record to in-

dicate that respondent could not establish its own nondis-

criminatory promotional plan and, when necessary to meet’

competition, deviate from: that olan by paying to certain

customers the same amount as the larger competitor whose _

allowance it is rheeting.

In its appeal from the examiner’s holding that’ its dis-

criminatory promotional payments were not granted in good

faith to-meet competitors’ allowances, respondent in effect

concedes that it has failed to make out a meeting competition

defense under established legal criteria, It contends in this.

connection that there is a difference bétween’ price discrim-

ination and the granting of disctiminatory allowances and

that: the Commission, therefore, should utilize different:

standards for determining the sufficiency of the meeting

competition defense in 2(d) cases as distinguished from

those involving prima facie violations of 2(a). .

Respondent has failed to suggest any standards or tests

for determining whether, and under what circumstances,

an advertising allowance has been properly granted to meet

in good faith a competitor’s allowance although it obviously

_ believes that the practice of making promotional payments

on a discriminatory basis for 20 odd years without. attempt-

ing to establish a nondiscriminatory program comes within

the realm of permissible behavior. It does suggest however

. the elimination of one element of proof required in a meet-

ing competition defense to a 2(a) violation and that is proof:

that the discriminatory payment was made in response to a

8la

Opinion of the Commission

payment offered by another seller in an actual competitive |

situatfon. This element of proof, however, goes to the

“actual core” of the meeting’ competition defense which °

“consists of the provision that whencver a lawful lower

price of a competitor threatens to deprive a seller of a cus-

. tomer, the seller, to retain that customer, may in good faith

‘meet that lower price.” Standard Oil Co. v. F. 7,6.

U. S. 231, 242.” , :

Respondent’s argument, as we understand it, is that the.

granting of promotional allowancés is a legitimate method

of competing and that in an industry in which the practice

of granting allowances is widespread a seller should be per-

mitted to grant disproportionate allowances to meet com-

petition generally without showing that any, particular pay-

ment was made to meet a specific competitive offer. There

is, of course, nothing inherently unlawful about promotional

allowances. Cooperative advertising has traditionally ‘been

regarded as a legitimate method of sales. promotion. Con-

gress has found however that 4 sales promotional allowance

“becomes unjust when ; . . the customer is derivin. from it

. , 5S

equal benefit to his own business and is thus enabled to shift

to his vendor substantial. portions of his own advertising”

allowances, ‘cannot, do so.” H. R. Rep. No, 2287,, 74th

Cong., 2d Sess, 15-16 (1936). Consequently, the basic pur-

pose of 2(d) was to insure that competing purchasers from’

the same seller would receive allowances on a nondiscrimin-

atory Basis. This purpose would be defeated if a seller could

justify discriminations by the general showing that its com-

_ petitors were granting promotional allowances and ‘that it °

would be competitively disadvantaged by failure to utilize

allowances as a.method: of. sales promotion. If this were

the rule, all sellers could justify discriminations in the grant-

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82a. i Soot oe

Opinion of the Commission

ing of promotional allowances merely by, showing the gen-

eral use of such allowances by others in the industry and the

value of such allowances as a competitive tool. The granting

- - of promotional allowances would then be governed by a

_° broad ‘reading of 2(b), not by 2(d) which requires that

promotional payments be made available on proportionally

equal terms. ’ 7 | :

The meeting competition defense, however, is an, excep-

tion to the prohibitions of the statute arid, as such, must be

strictly construed. -The Great Atlantic & Pacific Tea Co. v.

Federal Trade Commission, 106 F. 2d 667 (3rd Cir. 1939), -

- United States v. Scharton, 285 U. S.518, Spokane & I. E. Rw

Co., v. U. S., 241 U. S. 344. In cases brought under both

2(a) and 2(d), therefore, a discrimination may be justified

as a good faith “meeting of competition” only when the

seller is otherwise complying with the applicable sub-section.

and the particular discrimination is made in a genuine de->

fensive response to another seller’s offer in a specific trans- -

action,” In other words, a seller who has-made no attempt to

comply with the substantive requirements of the Act is pre-

cluded from claiming that his discriminations were made in

good faith to meet competition.* .We have held therefore

that.a seller engaging in cooperative advertising must do so

2Tt is for this rea$on that the Commission and the courts have con-

sistently held that discriminations made generally to meet competition

do not come within the meeting competition defense. “Section 2(b)

- permits a single company to self one customer at a ‘lower’ price and of

that only to the extent that it-is made ‘in good faith to meet an equally

low price of a competitor’”. Federal Trade Commission v. Cement

Institute, et al., 333 U. S. 683, 725.

8See in this cgnnection Federal Trade Commission v. A. E. Staley

Mfg. Co., 324 U. S. 746, wherein one of the reasons given by the

Court for rejecting the 2(b) defense was that respondents had

“never attempted to establish their own non-discriminatory price sys-

tem, and then reduced'their price when necessary to meet competition”.

September 19, 1966

83a .

Opinion of .the Commission |

through a comprehensive, nondiscriminatory program, and

that after such a program has been established, deviations -

from it.in the.form of more generous allowances may be

_ excused in individual instances shown to be good faith at-

tempts to meet promotional allowances furnished by com- |

petitors. Exquisite Form Brassiere, Inc. v. Federal Trade

‘

Commission, 1965 Trade Cas. J 71,491. ”

Respondent’s argument that’ the hearing: examiner erred _

in dismissing its 2(b) defense ig rejected. We are of the

opinion, that respondent has failed to establish that its dis-

i Se allowances.were made in good faith to meet

competitors’ allowances for the Teasons set forth in the -

initial decision. . | |

Respondent’s appeal is denie#: The hearing examiner’s

~ initial decision will be adopted ‘as the decision of the Com-

‘mission. , os .

Commissioner Elman dissented and. has filed a dissent- |

ing opinion. on

~ . Sa

Dissen ting Opinion ~

UNITED STATES oF AMERICA

: BEFORE

FEDERAL TRADE COMMISSION

ComMMISSIONERS:

Paul Rand Dixon, Chairman

Philip Elman

Everette MacIntyre

John R. Reilly

Mary Gardiner Jones

dp.

¥ -

In the Matter of

RABINER & JoNTOow, INc.

a corporation

Docket No. 8629

— +

Commissioner Elman, dissenting:

This case.is part of the Commission’s program, ‘edieated

in 1962, to eliminate discriminatory promotional allowances

in the wearing apparel industry. through the imposition of.

orders upon a number of sfippliers. I will not repeat here

in detail any reasons for believing. that that program has

been neither effective: nor equitable. See Abby Kent Co.,

Inc., Docket No. C- 328 (August 9, 1965) ‘(dissenting

opinion):

As the Commission recognizes, violations of Section

_2(d) have been widespread in the wearing apparel industry ;

department and specialty store chains to a large extent

‘have been responsible for discriminatory allowances in the

industry ; and individual-suppliers, like respondent, have felt

‘Gompelled to grant such allowances because of general com-

‘petitive conditions in the industry. The wearing apparel

industry is-highly fragmented, consisting of thousands of:

SR ko eooerere ne ee ee ee

85a

Dissenting Opinion

manufacturers, most of them very small in relation to the

chain and department store buyers. For most manufac: -

turers, the buyer is in the driver’s seat; whatever he wants

in the way of advertising or Promotional allowances, the

buyer is usually in a good position to get.

Respondent is one of the two suppliers, out of the group

of about 300 sued by the Commission, which refused to

sign 2(d) consent orders. The suppliers which signed such

orders represent only a fraction of the entire industry, and

only eight of the outstanding orders are directed against -

members of respondent’s particular segment of the industry

—ladies’ coats and suits. As respondent points out, more

than 500 of its direct competitors,are not under order. It

is not hard to see why an enforcement policy designed to

place even a substantial number of suppliers under order

can accomplish little. The ability: of large and powerful -

buyers to exact discriminatory allowances: from suppliers

Not under order remains unimpaired. Even if the Commis-

sion could be sure of full compliance with the outstanding

orders, this basic gap would not be plugged. Moreover, the

impression persists that issuance of. these orders has had

little or no effect in eliminating discriminatory allowances

in the industry. According to industry spokesmen, “there

is a great missing step between the law and its enforce-

ment” and “the Commission orders have not deterred some

leading retailers frorn continuing to demand and receive

discriminatory advertising allowances.” (New York Times,

July 10, 1966, sec. 3, p. 1.) In view of the general competi-

tive conditions prevailing in the industry and the Commis-

sion’s. limited capacity to police outstanding orders, many

suppliers under order apparently feel that they must con-

tinue to grant discriminatory allowances.

Dicrpiigt trea

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Dissenting Opinion -

The Commission’s enforcement policy is deficient in yet |

another respect. If, as seems to be assumed, many :de-

‘partment and ‘specialty store chains have ‘a practice of in-

ducing and receiving discriminatory promotional allow-

ances, that practice is surely not confined to ladies’ coats and

‘suits or to any other single line or product. Department

stores nowadays sell almost everything under’ the sun.

Even if the Commission were to place under order every

supplier in the wearing apparel industry—and no one sug-

-gests that it should or could—large department and chain

store buyers would still be able to obtain discriminatory

allowances on all the other products they carry. Thus, the

imposition of orders on cloak-and-suiters like respondent

does not even make a dent in the problem of alleged abuses |

of buying power by large retailers. The issuance of this

order, like the other orders against suppliers, has moved

the Commission no closer to its goal of eliminating prevalent

illegal and discriminatory promotional allowances—whether |

in the ladies’ coat and suit industry, the wearing apparel -

industry generally, or “in any other industry making pro-

ducts sold in chain or department stores.

I think it is also inequitable to issue this order a

respondent. The Commission holds that it is not a defense -

that these allowances were granted in response to general

competitive conditions in that segment of the garment in-

dustry of which respondent is part. Again, I will not repeat

here my reasons for believing that the Commission’s in-

terpretation of the 2(b) defense imposes an impossible and

unrealistic burden on sellers. See, e.g., National Dairy

Products Corp., Docket No. 7018 (decided July 28, 1966)

(dissenting opinion) ; Tri-Valley Packing Co., Docket No.

87a

Dissenting Opinion

- order to satisfy the Commission that it was meeting com-

petition in good. faith, a respondent must prove that the.

“payments were made in order ‘to ‘meet comparable pay-

ments in specific, individual, competitive situations”; it is

not enough to show that it acted defensively in response to

“general competitive conditions” prevailing in the segment

of the industry in whicti it does business. To prove its

_, ood faith, a respondent must conte forward with “docu-.

_ mentation” or “specific evidence” showing that it used

“reasonable diligence in verifying the existence” of

comparable allowance offered by a particular cumpetitor. .

As applied to the circutnstances existing in the wearing

apparel industry, these requirements of proof make the 2( b)

_ defense unavailable, as a practical matter, to any supplier

against which the» Commission determines to proceed.

Whatever the technical justification fqr the Commission’s

position, we should recognize the actual commercial con-

sequences.. In this industry, as the Commission has |

* recognized, discriminatory allowancés are both ‘“‘wide-

spread” ‘and secretive”. Abby Kent C 0., supra. To

bar a single seller, or only some sellers, from granting

allowances in an industry where the practice as become

_ an everyday competitive necessity, and where it derives

from the’ covert exertion of pressure by large and powerful

buyers, means that such sellers will have to compete’ at a

substantial disadvantage: In this industry, if.a chain or’

départment store buyer tells a seller that he wants a promo-

tional allowance, the seller need not be informed whether

the buyer has already received a specific offer of a compar-

able allowance from a specific competitor; hé knows well

enough from general conditions prevailing in the industry

that the buyer can and will obtain such an allowance,

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Dissenting Opinion

whether from the seller or a competitor, and unless the

seller grants.the requested allowance he will lose the account.

‘What more does ‘he have to know in onder’ to meet competi-

tion in good faith?

For these reasons and others I have oe eee else-

where, it seems to me to be a serious mistake in the alloca-

tion of its enforcerfient resources for the Commission’ to

have channeled, and to be continuing to.channel, its energies _

primarily in the direction of imposing 2(d) orders_on a

relatively small number of. suppliers in_seattered segments

. of the wearing apparel industry. It would have been, and

2 _, Still would bé, far more effective and more equitable for the

~ Commission .'to pursue an enforcement policy realistically

designed to accomplish the central objective of the Robin-

_ son-Patman Act, i.e., “to curb and prohibit all devices by

~ which large buyers gained discriminatory preferences over

smaller ones by virtue of their greater purchasing power”.

F. T. C. v. Henry Broch & Co., 363 U. S. 166, 168. I

would follow here the general enforcement ‘policy—aimed

primarily at alleged abuses of buying power—which was

stated not too long ago in Max Factor and Shulton (Docket

Nos. 7717 and 7721, July 22, 1964).

September 19, 1966

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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.