result if there be no pre-existing substantial competition to be affected; for the public interest is not concerned in the lessening of competition, which, to begin with, is itself without real substance."

[1] This court may review this record to determine whether the evidence requires a con [275]trary conclusion to that arrived at by the Commission as to the effect of the acquisition of the stock of the Smith Company and the Parfumerie Melba, Inc., in substantially lessening competition. We must consider the extent of the trade carried on by the three companies and compare it with the volume of business carried on by their competitors previous to the period of ownership of the stock, and endeavor to ascertain whether the public interest has been affected. In Federal Trade Commission v. Curtis Co., 260 U. S. 568, 43 S. Ct. 210, 212, 67 L. Ed. 408, it was held that the court must inquire whether the Commission's findings of fact are supported by the evidence, and, if so supported, they are conclusive. At the same time, however, the Supreme Court pointed out that the statute granted jurisdiction to the courts to make and enter "upon the pleadings, testimony, and proceedings, a decree affirming, modifying, or setting aside the order," and stated that the court must also have power to examine the whole record and ascertain for itself the issues presented and whether there are material facts not reported by the Commission. The court concluded: "If there be substantial evidence relating to such facts from which different conclusions reasonably may be drawn, the matter may be and ordinarily, we think, should be remanded to the commission-the primary fact-finding body-with direction to make additional findings, but if from all the circumstances it clearly appears, that in the interest of justice the controversy should be decided without further delay, the court has full power under the statute so to do. The language of the statute is broad and confers power of review not found in the Interstate Commerce Act."

[2] In Federal Trade Commission v. Sinclair Co., 261 U. S. 463, at page 476, 43 S. Ct. 450, 454, 67 L. Ed. 746, referring to the Clayton Act, the court pointed out that the purpose of the statute was "to advance the public interest by securing fair opportunity for the play of the contending forces ordinarily engendered by an honest desire for gain," and it has been held that the purpose of the Clayton Act. (38 Stat. 730) is to prevent at incipiency forms of combination which the Sherman Law (15 U. S. C. A., § 1 et seq.) might not reach until the evil existed. Standard Oil Co. v. Federal Trade Commission, 282 F. 81, 87 (C. C. A. 3). Therefore, if the acquisition of the stock which in turn brought to the petitioner the business of each company is not of sufficient moment from the standpoint of the public interest to warrant the conclusion that it substantially lessened competition, such acquisition would not be violative of the prohibition of section 7 of the Clayton Act (15 U. S. C. A., § 18). There can be no monopolistic tendency in acquiring control of properties which added four million dollars to the petitioner's already three millions' volume of business, when the total of the country's similar business, amounting to at least one hundred and twenty-five million, is considered. In Standard Oil Co. v. Federal Trade Comm., the Circuit Court of Appeals for the Third Circuit said: "Therefore in determining whether given acts amount to unfair methods of competition within the meaning of the Federal Trade Commission Act [15 U. S. C. A., §§ 41-51], or substantially lessen competition and tend to create a monopoly

within the meaning of the Clayton Act, the only standard of legality with which we are acquainted is the standard established by the Sherman Act in the words 'restraint of trade, or commerce' and 'monopolize, or attempt to monopolize,' and by the courts in construing the Sherman Act with reference to acts 'which operate to the prejudice of the public interest by unduly restricting competition or unduly obstructing the due course of trade,' and 'restrict the common liberty to engage therein'."

We have referred to the figures as to net sales. In addition, it appears that there are from 300 to 500 different perfumery and cosmetic manufacturers throughout the United States, 3,000 face powder manufacturers, each claiming individual odors and most of them having their own trade-names. Indeed, the products of the corporations which the petitioner now controls through stock ownership, as well as its own products, are sold under trade-names.

[3] Unless there be a monopoly or tendency toward monopoly, we would not be warranted in concluding that the public had an interest as referred to in the statute. There is no evidence of increase in price brought about through the ownership of the stock or supervision of the companies, nor is there evidence of elimination of any of the lines of production, or curtailment of the same, nor evidence of divisions of territory. The effect seems to have been to increase the sales of the products of the three companies. The country at large was more thoroughly canvassed, and effort was made to sell the articles as branded by each company. Each company [276] has its separate sales force with men who handle their respective lines to the exclusion of others. There has been no increase in the cost of distribution nor enhancement of price, and we think that no injury has resulted to the public. This method of selling has been found unobjectionable and not injurious to competition. Temple Coal Co. v. Federal Trade Comm., 51 F. (2d) 656 (C. C. A. 3).

[4] It appears that in 1925, out of a total of $3,482,000 it was found that two-thirds of its business consisted of talcum powders and $61,000 in compacts, whereas the Smith Company business was $786,000 in compacts and $480,000 in extracts, and apparently it was the desire of the petitioner to obtain the Smith Company's greater volume of business in these respective articles. An officer of the petitioner explained that "upon coming into control of the Vivaudou Company we found ourselves with a condition where most of our business was done on one item, Mavis talcum. Our extract business, our compact business, and our cream business was very, very small. Try as we would, we could not increase it very much. We therefore purchased the Djer-Kiss line, because in the Djer-Kiss line its main strength lay in the extracts and compacts which we were lacking." And in explaining the reason for the purchase of the Melba line, he stated: "Upon acquiring control of Djer-Kiss we found ourselves with strong talcum and sundries, extracts, compacts. Our cream end of the business was very weak." The Melba strength lay in its creams. "We therefore purchased the Melba Company to completely round out the entire picture." The Melba cream business was about 75 per cent. of the total business of all the companies. It is properly claimed that, in view of this division of the toilet article business, the competition between these companies was not substantial and the acquisition did not substantially lessen competition in view of the

respective volumes of sales. Moreover, the testimony justifies the claim that the customer purchased under the trade-name, indicating her preference by that name. As said in International Shoe Co. Case, supra, "The existence of competition is a fact disclosed by observation rather than by the processes of logic; and when these officers, skilled in the business which they have carried on, assert that there was no real competition in respect of the particular product, their testimony is to be weighed like that in respect of other matters of fact. And since there is no testimony to the contrary and no reason appears for doubting the accuracy of observation or credibility of the witnesses, their statements should be accepted."

In the case at bar, there are distinctive odors, formulae, and trademarks as testified to. The formulae create the odor and the odor is attached to the trade-mark. These factors are involved in the competition which existed before the purchase of the stock, and necessarily are involved in the subsequent competition during the period of ownership of the stock of the other corporations by the petitioner. Yet there is a lack of competitive quality and quantity in the lines of articles produced by the petitioner, Smith Company and the Parfumerie Melba, Inc. The total volume of net sales and therefore the business carried on by these companies is not substantial when it is considered that at least $125,000,000 worth of these products are annually sold.

In Aluminum Co. v. Federal Trade Commission (C. C. A.) 284 F. 401, 407, referred to by respondent, two competitors agreed to form a second company and each participate in the stock ownership of the new company. In that case, the court said: "Prior to February 17, 1918, the Cleveland Company had been engaged in competition with the Aluminum Company. On that day it agreed with the Aluminum Company to organize, and later there was organized, a third corporation, which was to purchase, and later did purchase, the aluminum rolling mill and also the 'aluminum rolling mill business' of the Cleveland Company. This finding of the Commission is sustained by the record which includes an agreement between the two old corporations for the sale by the Cleveland Company to the new corporation, not of its rolling mill alone but its accounts receivable

*

The court found monopoly features in this merger and said that the Aluminum Company was the dominant factor in the aluminum industry and produced one-half of the pig aluminum and aluminum ingots made in the world and all that was made in the United States. "In the domestic field, one substantial competitor * * arose before the war; but during the war it succumbed to financial difficulties and its properties were purchased by the Aluminum Company." Moreover, it was found that the Aluminum Company and its subsidiaries produced one-half of the sheet aluminum made in the world, and, prior to the war, produced all the sheet aluminum made in the United States. In the instant case, there is no such proof of public [277] interest adversely affected by reason of either the purchase of the Melba Manufacturing Company in the manner described or of the stock of the Smith Company, nor was there a substantial lessening of competition.

Order reversed.

CONSOLIDATED BOOK PUBLISHERS, INC., v. FEDERAL TRADE COMMISSION

(U. S. Circuit Court of Appeals, Seventh Circuit. November 25,

1931) No. 4423

[53 F. (2d) 942. Rehearing denied November 31, 1931. Certiorari denied 286 U. S. 553. For case before Commission, see 14 F. T. C. 13, and, for supplemental findings, 15 F. T. C. 292]

1. TRADE-MARKS AND TRADE-NAMES AND UNFAIR COMPETITION.

Cease and desist order of Federal Trade Commission in respect to method of distributing set of books in interstate commerce held warranted.

Publisher in attempt to sell set of books known as "New World Wide Cyclopedia" sent out lead letter fairly construed as offering a free set to certain influential persons as advertising medium, and in response to answers sent sales agent who displayed contract which the inquirer was required to sign before receiving books, providing for certain payments and for extension service without disclosing that an additional amount would be required to be paid in order to secure extension service as evidenced by coupons mailed to subscriber, which were to be signed and returned by him at certain designated periods, with remittance.

2. TRADE-MARKS AND TRADE NAMES AND UNFAIR COMPETITION.

False and misleading representations resulting in deception of public are matters of public interest which Federal Trade Commission has power to prevent.

3. TRADE-MARKS AND TRADE-NAMES AND UNFAIR COMPETITION.

Federal Trade Commission's jurisdiction embraces false and fraudulent advertising, misbranding, and other practices which result in deceiving public.

4. TRADE-MARKS AND TRADE-NAMES AND UNFAIR COMPETITION.

Sale at same time of cyclopedia under two different names is unfair method of competition which Federal Trade Commission may prevent.

5. TRADE-MARKS AND TRADE-NAMES AND UNFAIR COMPETITION.

Practices opposed to good morals because characterized by deception, bad faith, fraud, and oppression are unfair methods of competition.

ON PETITION FOR REHEARING

6. TRADE-MARKS AND TRADE-NAMES AND UNFAIR COMPETITION.

Injury as result of unfair method of competition, to warrant interference by Federal Trade Commission, need not be expressed in specific terms of money.

(The syllabus is taken from 53 F. (2d) 942)

Petition to set aside order of Federal Trade Commission.

Original proceeding by the Consolidated Book Publishers, Inc., to set aside an order of the Federal Trade Commission to cease and desist from certain acts.

Order affirmed.

Raymond P. Fischer, Herman A. Fischer, John G. Campbell, Carlton L. Fischer, Edward W. Everett, Winston, Strawn & Shaw, and Campbell, Clithero & Fischer, all of Chicago, Ill., for petitioner.

Robert E. Healy, Chief Counsel, Federal Trade Commission, Martin A. Morrison, and G. Edwin Rowland, all of Washington, D. C., for respondent.

Before EVANS and SPARKS, Circuit Judges, and WILKERSON, District Judge.

This is an original proceeding by petitioner in which it seeks to have this court review a proceeding brought by the Federal Trade Commission against it under the act creating the Commission, approved September 26, 1914, 38 Stat. 717 (title 15, U. S. C., § 41, et seq. [15 U. S. C. A., § 41 et seq.]) resulting in an order,25 issued against petitioner May 6, 1930, to cease and desist from certain acts.

[943] The evidence shows that petitioner was, at the time of the hearing before the Commission, and previously thereto had been, engaged in distributing a set of books under the title "New World Wide Cyclopedia" in interstate commerce in competition with others similarly engaged. In the course of its business, it sent what it called a "lead letter" 20 to persons whose names appeared on selected mail

It is now ordered that the respondent, Consolidated Book Publishers, Inc., its officers, agents, representatives, and employees, in connection with the offering for sale of any books, set of books, or publications in commerce among the several States of the United States, or in the District of Columbia, cease and desist from:

(1) Selling or offering for sale, either at wholesale or retail, any set of books of the same text and content material under more than one name or title at the same time.

(2) Advertising or representing in any manner to purchasers or prospective purchasers that any book or set of books offered for sale and sold by it will be given free of cost to said purchaser or prospective purchaser when such is not the fact.

(3) Advertising or representing in any manner that a certain number of sets or any set of books offered for sale or sold by it has been reserved to be given away free of cost to selected persons as a means of advertising, or for any other purpose when such is not the fact.

(4) Advertising or representing in any manner that purchasers or prospective purchasers of its encyclopedia are only buying or paying for loose leaf supplements intended to keep the set of books up-to-date, or that purchasers or prospective purchasers are only buying or paying for services to be rendered by a research, or other bureau, for a period of ten years, when such is not the fact.

(5) Selling the text and content material of any set of books in such a way or manner, and with the purpose and intent, that said text and content material may be resold by any other person, firm, or corporation under any other name or title than that being used by respondent for said text and content material.

(6) Advertising or representing in any manner that it maintains a research bureau employing a staff of competent editors and experts for the purpose of answering inquiries from subscribers, when such is not the fact.

(7) Advertising or representing in any manner the inquiries addressed to its research bureau are referred to and answered by experts and specialists in the particular subject inquired about, unless such inquiries are actually referred to and answered by said experts and specialists.

(8) Advertising or representing in any manner that its set of books is a new and up-todate encyclopedia, when such is not the fact.

26 WORLD WIDE EDUCATIONAL SERVICE

537 South Dearborn St., Chicago

DEAR SIR: Without cost to you and without any obligation on your part, we are holding a complete 8-volume set of the World Wide Cyclopedia.

A few of these sets are being distributed as an advertising feature to obtain an original owners list in certain communities. Because of the standing you enjoy in your community we feel your name would be of special value to us as a local reference.

Should your opinion be asked at some future time, we request only that you speak of the work as you find it and say what you conscientiously think of its merits. A most attractive feature is the Loose-Leaf Extension Service, which keeps the work constantly up-to-date.

It is necessary for you to initial and return the enclosed card, confirming the correctness of address (or make corrections) and we will see to it that you are supplied with complete details without cost or obligation.

Please treat the foregoing as personal and confidential.

104717-39-12