demned by the commission and prohibited by orders to cease and desist:

Misbranding of fabrics and other commodities respecting the materials or ingredients of which they are composed, their quality, origin, or source. Adulteration of commodities, misrepresenting them as pure, or selling them under such names and circumstances that the purchaser would be misled into believing them to be pure.

Bribery of buyers or other employees of customers and prospective customers to secure new customers or induce continuation of patronage.

Making unduly large contributions of money to associations of customers. Procuring the business or trade secrets of competitors by espionage, by bribing their employees, or by similar means.

Procuring breach of competitor's contracts for the sale of products by misrepresentation or by other means.

Inducing employees of competitors to violate their contracts or enticing away employees of competitors in such numbers or under such circumstances as to hamper or embarrass them in business.

Making false or disparaging statements respecting competitors' products, their business, finanical credit, etc.

The use of false or misleading advertisements.

Making vague and indefinite threats of patent-infringement suits against the trade generally, the threats being couched in such general language as not to convey a clear idea of the rights alleged to be infringed, but, nevertheless, causing uneasiness and fear in the trade.

Widespread threats to the trade of suits for patent infringement arising from the sale of alleged infringing products of competitors, such threats not being made in good faith but for the purpose of intimidating the trade.

False claims to patent, trade-mark, or other rights or misrepresenting the scope thereof; appropriating and using trade-marks wrongfully.

Intimidation for the purpose of accomplishing enforced dealing by falsely charging disloyalty to the Government.

Tampering with and misadjusting the machines sold by competitors for the purpose of discrediting them with purchaser.

Trade boycotts or combinations of traders to prevent certain wholesale or retail dealers or certain classes of such dealers from procuring goods or goods at the same terms accorded to the boycotters or conspirators, or to coerce the trade policy of their competitors or of manufacturers from whom they buy.

Passing off of products, facilities, or business of one manufacturer or dealer for those of another by imitation of product, dress of goods, or by simulation or appropriation of advertising or of corporate or trade names, or of places of business, and passing off by a manufacturer of an inferior product for a superior product theretofore made, advertised, and sold by him.

Unauthorized appropriation of the results of a competitor's ingenuity, labor, and expense, thereby avoiding costs otherwise necessarily involved in production.

Preventing competitors from procuring advertising space in newspapers or periodicals by misrepresenting their standing or other misrepresentation calculated to prejudice advertising mediums against them.

Misrepresentation in the sale of stock of corporations.

Selling rebuilt machines of various descriptions, rebuilt automobile tires, and old motion-picture films slightly changed and renamed as and for new products.

Harassing competitors by requests, not in good faith, for estimates on bills of goods, for catalogues, etc.

Giving away of goods in large quantities to hamper and embarrass small competitors and selling goods at cost to accomplish the same purpose.

Sales of goods at cost, coupled with statements misleading the public into the belief that they are sold at a profit.

Bidding up the prices of raw materials to a point where the business is unprofitable for the purpose of driving out financially weaker competitors.

The use by monopolistic concerns of concealed subsidiaries for carrying on their business, such concerns being held out as not connected with the controlling company.

Intentional appropriation or converting to one's own use of raw materials of competitors by diverting shipments.

Giving and offering to give premiums of unequal value, the particular premiums received to be determined by lot or chance, thus in effect setting up a lottery.

Schemes and devices for compelling wholesalers and retailers to maintain resale prices on products fixed by the manufacturer.

Combinations of competitors to enhance prices, maintain prices, bring about substantial uniformity in prices, or to divide territory or business, or to put a competitor out of business, or to close a market to competitors.

Acquiring stock of another corporation or corporations where the effect may be to substantially lessen competition, restrain commerce, or tend to create a monopoly.

Various schemes to create the impression in the mind of the prospective customer that he is being offered an opportunity to make a purchase under unusually favorable conditions when such is not the case, such as

(1) Sales plans in which the seller's usual price is falsely represented as a special reduced price made available on some pretext for a limited time or to a limited class only.

(2) The use of the "free" goods or service device to create the false impression that something is actually being thrown in without charge, when, as a matter of fact, fully covered by the amount exacted in the transaction taken as a whole.

(3) Sales of goods in combination lots only with abnormally low figures assigned to staples the prices of which are well known and correspondingly highly compensating prices assigned to staples the cost of which is not well known.

(4) Sale of ordinary commercial merchandise at usual prices and profits as pretended Government war surplus offered at a bargain.

(5) Use of misleading trade names calculated to create the impression that a dealer is a manufacturer selling directly to the consumer with corresponding savings.

(6) Plans ostensibly based on chance or services to be rendered by the prospective customer whereby he may be able to secure goods contracted for at particularly low prices or without completing all the payments undertaken by him, when, as a matter of fact, such plans are not carried out as represented and are a mere lure to secure his business.

(7) Use of pretended exaggerated retail prices in connection with or upon the containers of commodities intended to be sold as bargains at lower figures. (8) Falsely claiming forced sale of stock, with resulting forced price concessions, when, as a matter of fact, there is mingled the customary stock inferior goods, and other methods are employed so that no such concessions are in fact accorded.

Seeking to cut off and hamper competitors in marketing their products through destroying or removing their sales display and advertising mediums. Discriminating in price, with the effect of substantially lessening compe

tition.

Subsidizing public officials or employees through employing them or their relatives under such circumstances as to enlist their interests in situations in which they will be called upon by virtue of their official position to act officially, making unauthorized changes in proposed municipal bond issues, corrupting public officials or employees and forging their signatures, and using numerous other grossly fraudulent, coercive, and oppressive practices in dealing with small municipalities.

Suggesting to prospective customers the use of specific, unfair, and dishonorable practices directed at competitors of the seller.

Imitating or using standard containers customarily associated in the mind of the general purchasing public with standard weights of the product therein contained, to sell to said public such commodity in weights less than the aforementioned standard weights.

Concealing business identity in connection with the marketing of one's product, or misrepresenting the seller's relation to others-e. g., claiming falsely to be the agent or employee of some other concern, or failing to disclose the termination of such a relationship in soliciting customers of such concern, etc. Misrepresenting in various ways the advantages to the prospective customer of dealing with the seller, such as:

(1) Seller's alleged advantages of location or size.

(2) False claims of being the authorized distributor of some concern.

(3) Alleged indorsement of the concern or product by the Government or by nationally known businesses.

(4) False claim by a dealer in domestic products of being an importer, or by a dealer of being a manufacturer, or by a manufacturer of some product of being also the manufacturer of the raw material entering into said product. (5) False claim of "no extra charge for credit."

(6) Being manufacturer's representative and outlet for surplus stock sold at a sacrifice, etc.

Tying or exclusive contracts, leases, or dealings in which, in consideration of the granting of certain rebates or refunds to the customer, or the right to use certain patented equipment, etc., the customer binds himself to deal only in the products of the seller or lessor.

Showing and selling prospective customers articles not conforming to those advertised, in response to inquiries, without so stating.

Direct misrepresentation of the composition, nature, or qualities of the product offered and sold.

Use by business concerns associated as trade organizations or otherwise of methods which result or are calculated to result in the observance of uniform prices or practices for the products dealt in by them with consequent restraint or elimination of competition, such as use of various kinds of so-called standard cost systems, price lists or guides, exchange of trade information, etc.

Securing business through undertakings not carried out and through dishonest and oppressive devices calculated to entrap and coerce the customer or prospective customer, such as:

(1) Securing prospective customer's signature by deceit to a contract and promissory note represented as simply an order on approval, securing agents to distribute the seller's products through promising to refund the money paid

by them should the product prove unsatisfactory, and through other undertakings not carried out.

(2) Securing business by advertising a “free trial" offer proposition, when, as a matter of fact, only a "money back" opportunity is offered the prospective customer, etc.

Giving products misleading names so as to give them a value to the purchasing public or to a part thereof which they would not otherwise possess, such as:

(1) Names implying falsely that the particular products so named were made for the Government or in accordance with its specifications and of corresponding quality, or are connected with it in some way, or in some way have been passed upon, inspected, underwritten, or indorsed by it.

(2) That they are composed in whole or in part of ingredients or materials respectively contained only to a limited extent or not at all.

(3) That they were made in or came from some locality famous for the quality of such products.

(4) That they were made by some well and favorably known process, when, as a matter of fact, only made in imitation of and by a substitute for such process.

(5) That they have been inspected, passed, or approved after meeting the tests of some official organization charged with the duty of making such tests expertly and disinterestedly or giving such approval.

(6) That they were made under conditions or circumstances considered of importance by a substantial fraction of the general purchasing public, etc. Interfering with established methods of securing supplies in different busi nesses in order to hamper or obstruct competitors in securing their supplies.

COURT CASES

Application may be made by the commission to the United States circuit courts of appeals to enforce its order to cease and desist, or the respondent may petition the court to have the order set aside. The number of court proceedings in which the commission has been involved during the year, as well as a cumulative showing of this work throughout the commission's life, will be found in the statistical tables on pages 87 to 93 of this report. From these it will be noted that the commission has issued 851 (net) orders to cease and desist, and petitions to review these orders have been filed in only 75 cases. The United States Circuit Court of Appeals decided 30 of these cases in favor of the commission and 35 against. In 5 of these cases the commission was sustained by the Supreme Court of the United States.

Since its creation the commission has applied to the United States circuit courts of appeals for enforcement of its order to cease and desist in a total of 11 cases; of these 3 have been decided in favor of and none against the commission; 2 petitions by the commission were denied: 3 are still pending; and in three cases the applications for enforcement have been withdrawn.

The pages immediately following contain brief descriptions of cases in the courts during the year.

66

CASES IN THE UNITED STATES CIRCUIT COURTS OF APPEALS ARISING UNDER SECTION 5 OF THE FEDERAL TRADE COMMISSION ACT AND SECTION 7 OF THE CLAYTON ACT

Indiana Quartered Oak Co.-Misrepresentation in the sale of wood in violation of section 5.-The commission's order in this, a test case, directed the respondent, and its officers, directors, agents, employees, and successors to cease and desist from advertising, describing, or otherwise designating or selling or offering for sale under the term mahogany," "Philippine mahogany," or any other term of similar import, woods known under the common or trade names," red lauan,” "white lauan," "tanguile," " tanguile,” “narra," ," "apitong," "bataan," "lamao," orion," "almon," "batang," "bagaac,” “batak,” and “balachacan," or any other wood, lumber, or wood products, unless such wood or lumber, or the wood from which such products are made, is derived from the trees of the mahogany or Meliaceae family.

66

By agreement, the company filed with the second circuit its petition to review and set aside the order on October 14, 1927. Briefs were filed, not only on behalf of the immediate parties but by the Philippine government, the National Better Business Bureau, the National Hardwood Lumber Association, and the National Association of Engine and Boat Manufacturers. The case was argued on the merits on April 19 and 20, 1928, and decided in favor of the commission on May 14, 1928, the court using the following language (26 F. (2d) 340):

It was the petitioner's advertising of lauan and tanguile woods as "Philippine mahogany" that has worked deception upon the public. Purchasers from petitioner have relied upon its representations and have sold the products made from these Philippine woods as mahogany. Mahogany wood has had a long-established reputation; deception on the public in the sale of inferior woods which are not true mahogany (which deception reaches the ultimate purchaser, even though the intermediate customers knew that the woods were not mahogany) is an unfair method of competition in commerce under section 5 of the Trade Commission act.

It was not necessary for the commission to establish intent to deceive the purchasing public. For the test of unfair competition was whether the natural and probable result of the use by the petitioner of such woods was deceptive to the ordinary purchaser and made him purchase that which he did not intend to buy.

On July 26 the company filed with the Supreme Court of the United States its petition for certiorari. This was denied October 15, 1928.

The Western Meat Co. case-Stock acquisition in violation of section 7 of the Clayton Act.-This case has been discussed at length in previous reports. Briefly, the commission's order directed the company to so divest itself of all capital stock of the Nevada Packing