and false representations, to have prevented effectively the formation of a producer-controlled cooperative association among dairy farmers from whom it purchased milk in a certain area, and to have succeeded in lieu thereof in the formation of a purported dealer-controlled cooperative. (3380.)

B. FALSE ADVERTISING AND MISREPRESENTATION

A total of 188 complaints issued during the fiscal year ended June 30, 1938, charged false and misleading representations in advertisements, on labels, and otherwise. These may be classified as follows:

Thirty-eight complaints involved alleged false and misleading advertising and misrepresentation as to the therapeutic value of various medicinal and food preparations and devices. In some complaints the allegation also was made of falsely representing companies or individuals to be manufacturers.

Twenty-six complaints alleged misrepresentations as to the quality, capacity, or price of various products. Some of these complaints included disparagement of the products of competitors, false representation of companies or individuals as manufacturers, false representation of methods of manufacture, offer of so-called premiums or "free" goods, and false representation of products as complying with well-recognized, standard requirements.

Twenty-three complaints alleged false representations as to the price, quality, properties or origin of various cosmetic preparations and perfumes. Of this number, 6 complaints alleged, among other things, that perfumes purportedly imported were in reality of domestic manufacture.

Seventeen complaints charged false advertising or branding so as to confuse and mislead the public to believe that the article advertised was of different character and higher quality than it actually was. Among the products involved were motion pictures, mattresses, pottery, furs, hats and caps, rugs, spark plugs, and books. Sixteen complaints alleged that material other than silk or wool was represented falsely to be silk or wool.

Sixteen complaints charged false representations in the sale of home study courses, books, and encyclopedias. Eleven of these complaints involved alleged false representations by correspondence schools as to the nature and character of the schools and their courses of study, the availability of positions, and the earning capacity of students.

Fifteen complaints charged misrepresentation as to the qualities, properties, and effectiveness of various products. Included with these charges in some complaints were others such as misrepresentation of business status and of the amount that could be earned by agents. Fourteen complaints alleged misrepresentation as to the character

of the organization and its methods of doing business. Some of these complaints also contained allegations of misrepresentation as to the quality of merchandise, the manner in which it might be obtained, possible earnings of agents or producers, and the use of a purported puzzle contest to contact prospective agents.

Eleven complaints alleged false representation as to being a manufacturer, producer, or manufacturer's agent of such commodities as hair tonic, wines, liquors, fireworks, men's clothing, and women's hosiery. In some cases lottery or gaming devices were alleged to be used to market the product.

Six complaints alleged misrepresentation of the place of origin, representing imported articles to be of domestic manufacture or domestic articles to be imported, depending upon the preference of the public for the particular article involved. The products were bicycles, microscope glass covers, weather instruments, and women's clothing, and gloves.

Three automobile manufacturers were charged with misrepresenting prices of their cars to the public by advertising a picture of a fully equipped automobile, and placing opposite it a purported f. o. b. price which did not include the equipment shown in the illustration, or the equipment generally considered necessary to fit the car for operation. The complaints also charged that these prices were placed opposite illustrations of higher-priced cars than those to which the purported f. o. b. prices applied. (3368, 3173, 3174.)

Two complaints alleged false representations concerning the therapeutic value of certain medicines for dogs, and one complaint alleged misrepresentation concerning a food preparation for chickens and its purported power as an egg producer. (3220, 3217, 3408.)

C. MISCELLANEOUS CASES

Lotteries or gift enterprises.-Seventy-four complaints charged manufacturers and dealers in candy, chewing gum, pen knives, hunting knives, automatic razors, safety razors, watches, clocks, cigarette lighters, wearing apparel of various descriptions for both men and women, flour, coffee-making sets, bedspreads, bed sheets, and many other kinds and varieties of articles, with using schemes involving an element of chance or lottery in the sale of such products to the ultimate consumer or of furnishing to dealers the means with which to conduct such enterprises. The majority of complaints involved either the sale of novelties or the sale of candy and chewing gum.

False disparagement of competitors, and other practices.-Two complaints charged false disparagement of the products of competitors. Three complaints charged, respectively, imitation of a recognized quality product of competitors, misrepresentation as to the earning capacity of agents and that goods were given free, and the use of a

corporate business name which was the same as that of a recognized quality product of a competitor. One complaint alleged false and misleading representations to induce persons to purchase, as purported distributors, quantities of equipment for farm accounting, to be resold to farmers.

II. COMPLAINTS UNDER THE CLAYTON ACT

A. COMPLAINTS CHARGING VIOLATION OF SECTION 2 OF CLAYTON ACT AS
AMENDED BY ROBINSON-PATMAN ACT

1. ALLEGED PRICE DISCRIMINATIONS

For the purpose of brevity, the following summaries do not mention that each complaint contains allegations concerning a necessary element in all price discrimination cases, namely, the effects of the practices charged which "may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them."

(Complaints referred to below are identified by docket numbers. Full text of any complaint may be obtained upon application to the Federal Trade Commission, Washington)

Cement manufacturers.—Charging a combination to eliminate price competition, resulting in increased prices for cement, the Commission issued a complaint against an unincorporated association, its officers, and 75 cement manufacturing member corporations alleged to produce 95 percent or more of all of the cement made in the United States.

Alleging violation of the Federal Trade Commission Act, the com-plaint charged that the chief means employed for effecting the cement combination was concerted use of the multiple basing point system of quoting prices. Under this system, it was alleged, identical delivered prices were made by every quoting producer entering into the combination, to any given destination in the United States. Instances of identical bids made by many producers to various Federal and State agencies were set forth in the complaint.

The complaint alleges, in effect, that each producing company knows that when it refrains from offering competitive prices in the consuming areas where it has a natural advantage and receives its. highest actual price, it will receive the same freedom from price competition when the situation is reversed. In this way there is everywhere a reciprocal waiver of natural advantages with no competition in price anywhere, according to the complaint.

"Further references to Robinson-Patman Act cases may be found on pp. 8, 67, 77, 83, 84, and 88.

Transactions under the system also were alleged to be price discriminations in violation of the Robinson-Patman Act, since under such system the true or net prices received by each producer, from various customers, were substantially different. Customers nearest the mills were obliged to pay higher net prices than were made by a local mill to distant customers, according to the complaint. (This system may be compared to that in Snow Fence Manufacturers below.)

The direct and immediate result of the respondents' combination was alleged to have been restraint upon interstate commerce with respect to cement manufactured by any of the producing respondents to be transported beyond the State in which the cement was made. Such confederated action allegedly exercised a power which individual action could not exercise or possess, and the necessary tendency and the direct and substantial effect of the combination were injury to the public. (3167.)

Snow fence manufacturers.—The Commission issued a complaint charging a group of producers of snow fence, and their trade organization, with engaging in a conspiracy to suppress competition in prices among themselves and to maintain higher initial and resale prices than otherwise would prevail in 14 States wherein they sold 90 to 95 percent of the snow fence products purchased.

In violation of the Federal Trade Commission Act, the respondents, it was alleged, combined to follow and mutually to maintain a system of identical delivered prices to purchasers residing in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, West Virginia, and Ohio.

Under their pricing system the respondent producers allegedly quoted and charged the same delivered prices at the location of every customer, defraying, without additional cost to any such customer, whatever carriage charges were necessary for delivery of carload lots or less to the respective destinations.

Violation of the Robinson-Patman Act was alleged, in that under the respondents' pricing policy the net or true prices received by a producer are the delivered prices less the actual carriage charges, and that as distances from his plant and corresponding freight charges increase, the net or true prices received by the producer diminish.

The complaint charged that the respondents' uniform delivered price system is not a system of true uniform prices, but is one under which each producer makes as many different true prices to his customers as there are destinations, with differing freight rates, at which

An order to cease and desist was issued in this case shortly after the close of the fiscal year.

he delivers his products, and that, when so operated, the system is one wherein regular, constant, and substantial discrimination in prices is inherent and inescapable.

According to the complaint, the producers discriminated in price to the greatest extent against buyers located in their respective home territories with the purpose of destroying competition in price on the part of each producer with all other producers.

The complaint charged that this system of price discrimination was a vehicle through which the respondents obtained the elimination of price competition and effectuated a monopoly or near-monopoly in their industry. (3305.)

Chicory producers. With the intent and purpose of destroying competition, two companies said to dominate the raw and granulated chicory markets in the United States, were alleged to have sold granulated chicory in interstate commerce at prices below the cost of manufacturing, selling, and distributing the product, in violation of Section 5 of the Federal Trade Commission Act.

In violation of the Robinson-Patman Act, it was charged that the respondent companies sold their product to certain purchasers at prices below those at which they sold granulated chicory of like grade and quality to other purchasers.

An amended and supplemental complaint added new charges to the effect that one respondent engaged in the following unfair methods of competition: (1) Defamed and disparaged the granulated chicory manufactured and sold by a competitor; (2) artificially colored granulated chicory manufactured and sold by it, without advising customers, and falsely represented that the color or shade was achieved by the respondent company's superior roasting process, and that the uniformity of color or shade was attributable to its careful method of assorting the chicory after roasting; and (3) combined and shipped in single railroad cars coffee substitutes, known in the trade as cereals, and granulated chicory, and fraudulently billed, described, and represented to railroad companies that such cars contained only granulated chicory, by means of which deceptions the respondent company shipped coffee substitutes and granulated chicory across State lines at freight rates substantially lower than the rates lawfully applicable to, and which should have been paid on, such combination shipments of cereal and chicory. (3224.)

Two complaints against large optical goods manufacturers.-Two complaints alleged that certain large corporations manufacturing and selling optical goods and ophthalmic products to various retailers, independent wholesalers, and chain business enterprises engaged as lessee-operators of optical departments of large department stores, were unlawfully discriminating in price between different purchasers of such commodities of like grade and quality. (3232 and 3233.)