Advertising Specialty National Association v. Federal Trade Commission

238 F.2d 108, 1956 U.S. App. LEXIS 5335, 1956 Trade Cas. (CCH) 68,528
CourtCourt of Appeals for the First Circuit
DecidedNovember 5, 1956
Docket4982
StatusPublished
Cited by47 cases

This text of 238 F.2d 108 (Advertising Specialty National Association v. Federal Trade Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Advertising Specialty National Association v. Federal Trade Commission, 238 F.2d 108, 1956 U.S. App. LEXIS 5335, 1956 Trade Cas. (CCH) 68,528 (1st Cir. 1956).

Opinion

MAGRUDER, Chief Judge.

Petitioners in this case ask us, pursuant to the authority of § 5(c) of the Federal Trade Commission Act, as amended, 38 Stat. 719, 52 Stat. 112, 15 U.S.C.A. § 45(c), to review and set aside a cease and desist order of the Federal Trade Commission. The petition contains sufficient allegations of fact to establish the jurisdiction of this court on review.

On February 7, 1952, the Commission issued its complaint in this case charging Advertising Specialty National Association (hereinafter termed the Association), its member manufacturers and jobbers and its individual officers, with conspiracy to restrain competition in the sale of advertising specialties through adoption and use of unfair methods of competition in violation of § 5(a) of the Federal Trade Commission Act, as amended 66 Stat. 632, 15 U.S.C.A. § 45 (a). The complaint named the Association and 23 manufacturers, 9 jobbers, and 11 Association officials in their individual capacities and as representatives of all of the members of the Association and their agents.

The complaint alleged the formulation and execution, pursuant to conspiracy, of a variety of practices alleged to be in restraint of trade. These included the establishment and resale maintenance of manufacturers’ list prices; the requirement that manufacturers sell to jobbers on a list price basis 1 only; the adoption of uniform practices as to salesmen’s compensation, anticipatory discount schedules, free goods, sample charges, and C. O. D. shipments; the prevention of sales from member manufacturers to jobbers not members of the Association; and the arbitrary restriction of jobber membership in the Association. The practices relating to the alleged conspiracy to fix prices in the resale of advertising specialties by jobbers are the only allegations of the complaint which are now pertinent.

The alleged conspiracy embraces that segment of the advertising specialty industry comprising the Association and its member concerns. The industry is conceded to be an unusual one. The functional utility of the hundreds of products which it manufactures and sells is secondary to an overriding common purpose — good-will advertising. The products include calendars, pencils, thermom *112 eters, leather products, yardsticks, paint paddles, cigarette lighters, knives, letter openers, combs, key cases, notebooks, desk sets, refrigerator dishes, windshield scrapers, and many others. The ultimate purchasers are not the ultimate users. Instead, advertising specialty products are bought by the purchasers for gift presentations. They are imprinted with advertising material specified by the purchaser, usually bearing his name and often a message of expected high persuasive content. The specialty is then presented without charge by the buyer to his donee.

Advertising specialties, generieally, are designed to constitute a distinct medium of advertising much as radio or the press. The industry views itself basieálly as a service rather than a sales industry. Products of different manufacturers for the most part are not comparable, varying as to shape, appearance and value, and there is little price competition among these products. Competition at the manufacturer level is largely in ideas, though at the jobber level there is the possibility of price competition with respect to the products of the same manufacturer resold and distributed through multiple outlets.

The industry is comprised of direct selling manufacturers who merchandise through their own sales force to the ultimate purchaser, manufacturers who sell to jobbers, and manufacturers who market their products both through their own sales force and to jobbers. Jobbers are themselves a unique class in the distribution field. The jobber does not ordinarily maintain an inventory or physically handle his stock, although he carries sample stock. When he secures an order it is transmitted to the manufacturer, imprinted with the advertiser-purchaser’s name and shipped by the manufacturer directly to the buyer under the jobber’s label. Except for the absence of a physical transfer of the goods to the jobber, however, the relationship between the manufacturer and jobber is essentially the same as that between any supplier and his distributor. In fact, the jobber functions as much like a retailer as a jobber (since his sale is not for further resale as is the usual jobber’s); but the precise functional classification is not critical to this action, and traditionally these distributors have been denoted as jobbers.

The advertising specialty industry has displayed dynamic growth, and there is frequent entry of new members into the industry. During the depression, total annual sales for the entire industry were approximately $16,000,000. In 1947, estimated sales were $125,000,000-$150,000,-000. By 1951 this figure had grown to $300,000,000. Members of the Association accounted for roughly 40 per cent of the latter figure, and included in the Association were most of'the so-called prestige manufacturers and jobbers in the industry, among them the four or five largest.

The Association provides a forum for discussion of industry problems, separately among the functional groups and jointly among all members. It also provides a medium for expressing the composite views and aspirations of the member firms.

A Manufacturers Manual of Industry Practices sets forth for the guidance of manufacturers supplying jobbers the majority concept of sound trade practices, and an analogous Jobbers Manual of Practices similarly incorporates the majority jobber view of sound jobber practices.

Association meetings are held semiannually — in the spring and fall — and a Specialty Fair is held each fall. The jobbers group and the manufacturers group are accustomed to meet separately and repeatedly during these gatherings. Joint meetings of the two groups are held in addition to the group meetings. Problems of mutual interest and concern are entered on an agenda and discussed at length at such meetings.

The consensus of jobber opinion with regard to manufacturer relations has been periodically incorporated in jobber recommendations submitted to the manufacturers, who would proceed to consid *113 er these recommendations. The entire proceedings of the group meetings have been recorded in minutes compiled by the secretary of the Association, and the jobber recommendations and manufacturer action thereon have been similarly recorded.

The jobber and manufacturer manuals, containing provisions for annual supplements, have been largely a patchwork compendium of points of discussion, recommendations, and group action abstracted from the minutes and allied papers of Association meetings.

After extended hearings, the hearing examiner, on October 8, 1858, entered his initial decision and order dismissing the complaint as to all respondents. He held that none of the charges in the complaint had been sustained and that although an “inference of agreement could reasonably be drawn” from portions of the record, the evidence of agreement was “inconclusive”. He also stated that “There is no question of credibility presented.” 2

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238 F.2d 108, 1956 U.S. App. LEXIS 5335, 1956 Trade Cas. (CCH) 68,528, Counsel Stack Legal Research, https://law.counselstack.com/opinion/advertising-specialty-national-association-v-federal-trade-commission-ca1-1956.