throughout their territory through the channel from manufacturer to wholesaler to retailer to consumer, and to prevent dealers from obtaining groceries and allied products direct from the manufacturer to producer, thereby suppressing competition, hindering and obstructing the natural flow thereof in the sale and distribution of groceries and allied products, all in violation of section 5 of the Federal Trade Commission act. Among the acts recited in the complaint as being used by respondents to carry into effect the alleged unlawful combination are the following: (a) Agreeing to and making threats of boycott and boycotting, intimidating, and coercing manufacturers and producers to refrain from selling direct to retailers or consumers; (b) by inducing and compelling manufacturers to cease dealing with dealers who are offensive to respondents; (c) by practicing a system of espionage against competing dealers-all with the effect of hindering and suppressing competition by forcing retailers to buy through wholesale channels instead of direct from manufacturers. The respondents filed their answer to this complaint on October 21, 1925, in which the charges of violation of law set forth in the complaint are generally and specifically denied. At the close of the fiscal year the matter was awaiting further proceeding on complaint and answer. Fictitious prices-Eclipse Fountain Pen & Pencil Co. et al.-These respondents are engaged in the manufacture and sale of fountain pens and pencils, and they are charged in the complaint with using unfair methods of competition in violation of section 5 of the Federal Trade Commission act by labeling and marking their products with fictitious and exaggerated retail prices, thereby misleading and deceiving the consuming public as to the value of their pens and pencils. Answer was filed by the respondents on April 17. 1926, denying that the prices marked on their products are fictitious or exaggerated or that they are misleading and deceptive. The testimony has been taken, and at the close of the fiscal year the case was pending the filing of the trial examiner's report upon the facts and final hearing before the commission. Furniture cases-Misbranding and misrepresentation.-During the fiscal year reported on the commission issued a number of complaints against certain furniture dealers of New York City and Lancaster, Pa., in which respondents were charged with using unfair methods of competition in violation of section 5 of the Federal Trade Commission act in that they falsely advertised, described, and sold (a) as "Mahogany," "Combination mahogany." "Genuine mahogany," "Finished in mahogany" furniture which consisted in whole or in part of woods other than mahogany; (b) as "Combination Golden Oak" furniture which was composed wholly of woods other than oak; (c) as "Combination walnut," "Two-toned walnut" furniture made in whole or in part of woods other than walnut; (d) as "French walnut finish," "French walnut combination" furniture composed wholly of wood other than walnut grown in France. ORDERS TO CEASE AND DESIST The final expression of the commission in a case is an order upon the respondent to cease and desist a particular practice or practices charged in the complaint. As shown by the following table, the commission, during the year here reported upon, issued 44 separate orders to cease and desist. All of the 44 orders covered violations of section 5 of the Federal Trade Commission act relating to unfair methods of competition, except one, namely, the order entered against the International Shoe Co., in which violation of section 7 of the Clayton Act (corporate stock acquisitions) was enjoined. As in past years, the respondents upon whom the orders were issued have in a great many cases accepted the orders and filed reports with the commission signifying their compliance with the terms of the orders. Orders to cease and desist were issued during the year as follows: Seattle, Wash. Missouri State Retail Coal Merchants' Association et al. St. Louis, Mo.. National Furniture Distributing Corporation. North Dakota Wholesale Grocers' Association et al. New York, N. Y Chicago, Ill. Minneapolis, Minn. Toilet preparations. Shoes. Toilet preparations. Furniture. Groceries. Shellacs and varnishes. A number of representative cases have been selected to indicate the nature of the orders to cease and desist issued during the year. These cases are described below: Disparagement of competitive product-Calumet Baking Powder Co.-The Calumet Co., engaged in the sale of baking powder, was charged in the complaint of the commission with employing the practice of publishing anonymously adverse, disparaging, and derogatory opinions, statements, and comments as to the wholesomeness of self-rising flour, the use of which does not require the addition of baking powder, such statements being not well founded in fact. In the order to cease and desist, entered by the commission on February 8, 1926, the respondent was prohibited from directly or indirectly (1) employing professional or other writers publicly to disparage the wholesomeness of self-rising flour and circulating or causing to be circulated such disparaging articles or statements among the trade and consuming public under the name of the writer or writers so employed, and withholding or concealing from the trade and consuming public the fact of such employment; (2) preparing and circulating or causing to be prepared and circulated among the trade and consuming public articles of anonymous authorship disparaging the wholesomeness of self-rising flour or the use thereof. Acquisition of corporate stock in violation of section 7, Clayton Act-International Shoe Co. case. This company was charged in the complaint with acquiring substantially all of the capital stock of its competitor, W. H. McElwain Co., a large shoe-manufacturing concern, thereby tending to lessen competition, restrain commerce, and create a monopoly. The commission entered its order in the matter on November 25, 1925, requiring the International Shoe Co. to (1) divest itself of all stock or share capital of W. H. McElwain Co., a corporation, which it may hold, directly or indirectly, together with all right, title, interest, and claim in and to such stock or share capital, substantially all the stock or share capital of W. H. McElwain Co. being found and declared to have been acquired and to have been held, owned, and used by International Shoe Co. in violation of section 7 of said act of Congress; (2) cease and desist from the ownership, operation, management, and control of the assets, propertjes, rights, and privileges acquired by it from W. H. McElwain Co. subsequent to the acquisition by it of the stock or share capital of W. H. McElwain Co., together with all improvements and additions thereto, which assets, properties, rights, and privileges are found and declared to have been acquired and to be now held by International Shoe Co. as the result of the acquisition by International Shoe Co. of the stock or share capital of W. H. McElwain Co. in violation of section 7 of said act of Congress; (3) divest itself of all assets, properties, rights, and privileges acquired by it from W. H. McElwain Co. subsequent to the acquisition by it of the stock or share capital of W. H. McElwain Co., together with all improvements and additions thereto, which assets, properties, rights, and privileges are found and declared to have been acquired and to be now held by International Shoe Co. as the result of the acquisition by International Shoe Co. of the stock of share capital of W. H. McElwain Co. in violation of section 7 of said act of Congress. On March 24, 1926, respondent, International Shoe Co., filed a motion to suspend operation of the order until the Supreme Court of the United States shall have announced its decision in the case of the Federal Trade Commission v. Thatcher Manufacturing Co., decided April 16, 1925, by the Circuit Court of Appeals for the Third Circuit, review of which writ of certiorari was granted in October, 1925, the respondent showing that (1) the Thatcher case presented for decision by the Supreme Court for the first time the construction and meaning of a portion of section 7 of the Clayton Act relied upon by the commission in the instant case; (2) the Thatcher case, as respects one of four stock acquisitions there dealt with, involves facts somewhat similar and in part analogous to the facts shown on this record, so that the decision there might well be determinative of the issue here. The commission, on consideration of respondent's motion, on June 2, 1926, ordered that the enforcement of the commission's order be suspended until the matter of Thatcher Manufacturing Co., docket 738, Swift & Co., docket 435, and Western Meat Co., docket 456, now pending in the Supreme Court of the United States, are decided. Adulteration of grain.-The respondents in this case were Garnett S. Zorn and H. Boltze, who carried on the business of selling grain under the trade name of S. Zorn & Co. They were charged in the commission's complaint with unfair methods of competition in the misrepresentation and adulteration of oats and were directed by order of the commission, dated October 31, 1925, to cease and desist from using the word "oats" in descriptions or designations in connection with the sale of "screenings," "wild oats," or "mill oats" artifically mixed with cultivated oats unless the word "oats" is accompanied by a word or words plainly designating that such is an artificial mixture of "screenings," "wild oats," or "mill oats" with cultivated oats and not a natural mixture from the field where the oats were cultivated. North Dakota Wholesale Grocers Association.-This association and its members, composed of wholesale grocers, serving the public throughout North Dakota and parts of Montana, Minnesota, and South Dakota, were named respondents in this case. They were charged with, and in the order of the commission entered July 20, 1925, were required to cease and desist from conspiring, confederating, or cooperating among themselves or with others, in the following practices: (1) Adopting and maintaining or endeavoring to adopt and maintain uniform selling prices on grocery products sold by respondent members; (2) arranging or attending meetings of competing jobbers or circulating information among competing jobbers for the purpose of causing them to adopt or adhere to uniform selling prices in their competition with each other; (3) agreeing among themselves or with other competing jobbers to maintain manfacturers' list prices as the jobbers' resale prices and to make no indirect concessions therefrom, such as prepayment of freight or giving the buyer the benefit of the saving in handling costs on shipments made direct from the manfuacturers; (4) inducing and procuring competing jobbers to adopt and adhere to the manufacturers' list prices as the jobbers' selling prices on various commodities, inducing manufacturers to increase their list prices and discounts to the jobber for the purpose of increasing the jobbers' gross margins and selling prices and making them uniform, and reporting or threatening to report to manufacturers such jobbers as failed or refused to adopt the manufacturers' list prices and adhere to them as their selling prices in competition with respondent members; (5) preventing or attempting to prevent competitors who undersell respondent members from securing goods from manufacturers on equal terms with respondent members through concerted objections lodged with manufacturers and through concerted refusals or threatened refusals to buy from manufacturers if they sell such competitors of respondent members; (6) recommending or procuring the circulation of scurrilous and defamatory attacks on competitors who undersell respondent members among the customers or prospective customers of such competitors; (7) circulating among respondent members favorable comment concerning such manufacturers as refuse to sell certain competitors of respondent members and urging respondent members to give increased support and cooperation to such manufacturers; (8) reporting to officers of respondent association the names of manufacturers who have sold direct to retailers for the purpose of enabling the officers to use the power and influence of respondent association to induce such manufacturers to remain completely loyal to respondent jobbers as their exclusive channel of distribution in respondent's territory, and by reporting to respondent members the failure of such efforts with suggestions that the members refuse to handle the goods of such manufacturers; (9) concerted withdrawal or seeking pledges of concerted withdrawal of patronage from manufacturers who sell or attempt to sell jobbers and retailers indiscriminately and concertedly concentrating their sales efforts on the goods of so-called |