No particular form is required for the report, except that it should be signed by responsible officer of the respondent, and both the report and the accompanying exhibits should be submitted in duplicate. Your attention is invited to section 1.132 (6) of the Commission's rule revised August 1, 1963, classifying reports of compliance as public information unless respondent, at the time of filing has requested a confidential classification, showing the justification therefor, and the Commission, with due regard to statutory restrictions, its rules, and the public interest, has granted such request. Accordingly, any request for confidentiality must conform to the requirements of this rule. This matter has been assigned to Joel A. Kunin of this office, and further communications may be addressed to him. Very truly yours, JOSEPH J. GERCKE, Chief, Compliance Division. UNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSION Docket No. 8559 In the Matter of AMERICAN LINEN SERVICE CO., INC., a corporation; C & C LINEN SERVICE, INC., a corporation; CAPITOL TOWEL SERVICE COMPANY, INC., a corporation; DISTRICT LINEN SERVICE COMPANY, INCORPORATED, a corporation; ELITE LAUNDRY COMPANY OF WASHINGTON, D.C., INCORPORATED, a corporation; MODERN LINEN SERVICE, INC., a corporation; NATIONAL LAUNDRY AND LINEN SERVICE, INC., a corporation; PALACE LAUNDRY, INC., a corporation; PALACE LINENS, INC., a corporation; QUICK SERVICE LAUNDRY COMPANY, a corporation; STANDARD LINEN SUPPLY, INC., a corporation; THE TOLMAN LAUNDRY, a corporation, doing business as WASHINGTON LINEN SERVICE COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act (38 Stat. 717, 15 USCA Sec. 41, et seq., 52 Stat. 111), and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that the parties listed in the caption hereof, and hereinafter more fully described, have violated the provisions of Section 5 of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint against each and all of the parties named herein as respondents, stating its charges in that respect as follows: PARAGRAPH ONE: Respondent American Linen Service Co., Inc., is a corporation organized and doing business under the laws of the District of Columbia, with its office and principal place of business located at 2306 Georgia Avenue NW., Washington, D.C. Said respondent is a successor to the partnership of Ben E. Singer and Joseph L. Fradkins, which was engaged in the linen supply business in the Washington, D.C. metropolitan area, trading under the name of American Linen Supply Company, and is engaged in the linen supply business in the District of Columbia, Maryland, and Virginia. Said respondent in 1958 had an approximate current annual dollar volume in linen rentals of $980,000. Respondent C & C Linen Service, Inc., is a corporation organized and doing business under the laws of the State of Maryland, with office and principal place of business located at 2120 L Street NW., Washington, D.C. Said respondent is engaged in the linen supply business in the District of Columbia, Maryland, and Virginia and in the fiscal year ending May 1957, had an approximate dollar volume for linen rentals of $416,000. Respondent Capitol Towel Service Company, Inc., is a corporation organized and doing business under the laws of the State of Maryland, and its office and principal place of business at 500 Emerson Street NE., Washington, D.C. Said respondent is engaged in the linen supply business in the District of Columbia, Maryland, and Virginia and for the fiscal year ending September 30, 1957, had an approximate dollar volume for linen rentals of $280,000. Respondent District Linen Service Company, Incorporated is a corporation organized and doing business under the laws of the District of Columbia, with its office and principal place of business located at 50 L Street SE., Washington 3. D.C. Said respondent is a successor to the partnership of George J. Heon and George E. Callas, trading under the name of District Linen Service Company and is engaged in the linen supply business in the District of Columbia, Maryland, and Virginia. Respondent's predecessor, the District Linen Service Company, in 1956 had an approximate dollar value of $316,000 for linen rentals. Respondent Elite Laundry Company of Washington, D.C., Incorporated, is a corporation organized and doing business under the laws of the State of Virginia, with its office and principal place of business located at 2119 14th Street NW., Washington, D.C. Said respondent is engaged in the linen supply business in the District of Columbia, Maryland, and Virginia. Said respondent in 1957 had an approximate dollar volume in linen rentals of $658,000. Respondent Modern Linen Service, Inc., is a corporation organized and doing business under the laws of the State of Maryland, with its office and principal place of business located at 1016 Bladensburg Road NE., Washington, D.C. Said respondent is engaged in the linen supply business in the District of Columbia, Maryland, and Virginia and in 1957 had an approximate dollar volume for linen rentals ranging between $96,000 to $100,000. Respondent National Laundry and Linen Service, Inc., is a corporation organized and doing business under the laws of the District of Columbia, with its office and principal place of business located at 2035 West Virginia Avenue NE.. Washington, D.C. Said respondent is engaged in the linen supply business in the Distrist of Columbia, Maryland, and Virginia and in the fiscal year 1960 had a dollar volume of $783,989 for linen rentals. Respondent Palace Laundry, Inc., is a corporation organized and doing business under the laws of the State of Delaware, with its office and principal place of business located at 1659 N. Fort Myer Drive, Arlington, Virginia. Respondent Palace Linens, Inc., and respondent Standard Linen Supply, Inc., are corporations organized and doing business under the laws of the State of Virginia. Both Palace Linens, Inc., and Standard Linen Supply, Inc., are wholly owned subsidiaries of Palace Laundry, Inc., with their offices and principal places of business located at 1659 N. Fort Myer Drive, Arlington, Virginia. Said respondent Palace Laundry, Inc., and its respondent subsidiaries, are engaged in the linen supply business in the District of Columbia, Maryland, and Virginia and for the year 1958, had gross sales amounting to $707,929. Respondent Quick Service Laundry Company is a corporation organized and doing business under the laws of the State of Delaware, with its office and principal place of business located at 1016 Bladensburg Road NE., Washington D.C. Said respondent is engaged in the linent supply business in the District of Columbia, Maryland, and Virginia and in 1957 had a dollar volume of $117,000 for linen rentals. Respondent The Tolman Laundry, doing business as the Washington Linen Service, is a corporation organized and doing business under the laws of the District of Columbia, with its office and principal place of business located at 5248 Wisconsin Avenue NW., Washington, D.C. Said respondent is engaged in the linen supply business in the District of Columbia, Maryland, and Virginia and in 1957 had an approximate dollar volume for linen rentals of $310,000. Central Linen Service Co., Inc., not made respondent herein, is a corporation organized and doing business under the laws of the State of Maryland with its offices an principal place of business located at 2149 Queens Chapel Road NE., Washington, D.C. Said corporation participated as a co-conspirator with the respondents herein the conspiracy, combination and agreement changed herein and performed acts and made statements in furtherance of said conspiracy, combination and agreement. PARAGRAPH Two: The linen supply business consists of leasing and delivering clean linens at recurrent intervals, generally of one week or less by respondents, to users located in the States of Maryland and Virginia and the District of Columbia in connection with the user's trade, business or profession. Part of the service consists in the removal of soiled linens for which the clean linens are replacements. The respondent linen suppliers regularly cause such soiled linens to be transported from their customers' places of business located in the States of Maryland and Virginia and the District of Columbia to laundries, and after laundering they are again regularly caused to be transported by the respondent linen suppliers from the laundries to their customers for reuse. Accordingly, there has been and is now a constant and continuous current and flow in interstate commerce of such linen supplies between respondents and their customers located in the States of Maryland and Virginia and the District of Columbia. Respondents, therefore, are engaged in commerce, as "commerce" is defined in the Federal Trade Commission Act. PARAGRAPH THREE: The linen supply market in the Washington, D.C. metropolitan area, which consists of the District of Columbia, the Cities of Alexandria and Falls Church, Virginia, the Counties of Arlington and Fairfax, Virginia and the Counties of Montgomery and Prince Georges, Maryland, is dominated by the respondents herein who are the major suppliers in this market. PARAGRAPH FOUR: For many years, and continuing to the present time, respondents have maintained, effectuated and carried out and maintain, effectuate, and carry out a conspiracy, combination, agreement and understanding in the rental of linen supplies in the metropolitan area of Washington, D.C., as more fully set out below. The respondents entered this conspiracy at varying times and contributed to carrying it out and to its effect by different means and methods. PARAGRAPH FIVE: As a part of, pursuant to and in furtherance of the afore said agreement, understanding, combination and conspiracy, respondents have for many years past and continuing to the present time, combined, conspired, agreed, and cooperated between and among themselves and others to control the solicitation and allocation of customers by various means and methods of which the following are typical, but not all inclusive: 1. Agreed among themselves and with others not to solicit the customers of certain of their competitors. 2. Instructed their salesmen not to solicit the accounts of certain competitors. 3. Refused to service customers of certain competitors even though such accounts requested their service. 4. Requested and secured permission of certain of their competitors to service the customers of such competitors. 5. Traded customers between and among themselves. 6. Warned competitors that certain of their accounts had approached respondents for service in order that such competitors could take measures to hold such accounts. 7. Made or caused to be made false and disparaging remarks concerning the financial standing, business integrity, and quality of service of new competitors attempting to enter the metropolitan Washington, D.C., linen supply market. 8. Offered the customers or prospective customers of new competitors in the metropolitan Washington, D.C., area free service or rentals below cost for the purpose of impairing the ability of newcomers to compete in the linen supply business. PARAGRAPH SIX: Further contributing to the elimination of competition between and among these respondents and to the effects of the agreement, understanding, combination and conspiracy, has been the utilization by certain of the respondents of requirements contracts. Such contracts requiring customers to take all their linen supplies from one supplier are characterized by unreasonably long term contracts and lengthy automatic renewal after the expiration date, with inadequate provision for cancellation by respondents' customers. PARAGRAPH SEVEN: Commencing on or about 1953, three of the respondents. American Linen Service Co., Inc., Elite Laundry of Washington, D.C., Incorporated, and National Laundry and Linen Service, Inc., either directly or indirectly acquired fifty percent of the preferred and voting common stock of the C & C Linen Service, Inc. These respondents at that time constituted four of the five largest of the eleven major linen suppliers in the metropolitan Washington, D.C. area. As a result of such stock acquisition, the related voting arrangement and the use of interlocking directors and officers, competition that normally would have existed and did exist to a certain extent between and among these particular respondents was restrained, hindered and substantially eliminated, thus further contributing to the deterioration of competition in this market. The foregoing relationship was not dissolved until on or about March of 1961. PARAGRAPH EIGHT: New entrants to the linen supply market in the metropolitan Washington, D.C., area, have been hindered, handicapped and prevented from competing successfully in the linen supply business because of the unfavorable competitive climate present in this market and brought about by the unfair practices and conditions hereinbefore described. Some of these concerns have been acquired by respondents herein, thus removing them as competitive factors in this market. The purchase agreements placed these linen supply operators under restrictive covenants, prohibiting a return to the linen supply business, in many cases, for periods exceeding five years. These acquisitions coupled with the unreasonable length of the restrictive covenants have been an important factor in contributing to the anticompetitive practices in this market and facilitated these respondents in placing in effect and carrying out the agreement, understanding, and conspiracy as herein alleged. For example, in June 1953, the linen supply business of Columbia Linen Service, Inc., was purchased by respondent, National Laundry and Linen Service, Inc., then operating as National Laundry Company; in December 1955, the linen supply business of Union Linen Service, Inc., was purchased by Palace Laundry, Inc.; in April 1956 the linen supply business of Capital Laundry, Inc., was purchased by C & C Linen Service; in April 19591 the stock of Lovely Linens, Inc., was acquired by the C & C Linen Service, Inc. PARAGRAPH NINE: The agreement, understanding, combination and conspiracy, and the acts and practices of respondents pursuant to and in furtherance of, or in contribution to same, as alleged herein, have had and do now have the effect of hindering, lessening, restricting, restraining, destroying and eliminating competition, actual and potential, in the rental of linen supplies; have deprived customers of the benefits of full and free competition and seriously hampered their exercising free choice in the selection of their suppliers; have had and do now have a tendency to unduly hinder competition or to create in respondents a monopoly; have constituted an attempt to monopolize; have foreclosed markets and access to markets to competitors or potential competitors in the linen supply business; and are all to the prequdice and injury of competitors of respondents and to the public; and constitute unfair methods of competition and unfair acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission, on this 6th day of March, A.D., 1963, issues its complaint against said respondents. By the Commission. [SEAL] Mr. HAROLD LIPSKY, Federal Trade Commission, JOSEPH W. SHEA, Secretary. MAY 8, 1961. DEAR MR. LIPSKY: This will confirm our conversation with you in April 1961 regarding the signing of the cease-and-desist order by linen supply purveyors in the Washington area. Speaking for the Central Linen Service Co., Inc., as I have explained to your Mr. Von Brandt, the Department of Justice and all who would listen, we and we alone have been responsible for whatever competition there has been in the area since October 1946. Our complaints and our many appeals to the Department of Justice and the Federal Trade Commission, though unheeded, nevertheless, is on the record. To expect us to sign a cease-and-desist order of unfair practices for which we have been battling many years singlehanded, would be most unjust. We, in true conscience, refuse to be a party to the whitewashing of the linen supply industry in this area, who in 1943 signed a previous cease-and-desist order. However, we do not wish to seem uncooperative with regard to your efforts to set up some control of fair trade and competition, so we wish to state that we would have no objection to signing a document stating that we have no intention in partaking in any price fixing and unfair competitive practices in the future. Before closing, please bear in mind that the Central Linen Co., Inc., has helped practically every new linen supplier to get started in an area where every major linen company did everything to discourage him. Yours truly, CENTRAL LINEN SERVICE, Secretary and Treasurer. CX211. 1 See stock purchase agreement FTC entered, exhibit 1 year and could have been offered to anyone but was not. to C & C. Its market value was $100,000. This company in existence The purchase price was $21,000 Senator MAGNUSON. Now, Mrs. Ingerman, do you have a statement? Will you put that in the record, too? CIVIL DEFENSE STATEMENT OF MRS. MARIE INGERMAN, WOMEN'S INTERNATIONAL LEAGUE FOR PEACE AND FREEDOM CUT IN CIVIL DEFENSE ASKED Mrs. INGERMAN. Yes. We were going to ask for a further cut in the civil defense. Senator MAGNUSON. All right. We will be glad to have it in the record. We are sorry we cannot hear you in detail, but we have just been stopped. (The statement referred to follows:) OPPOSITION TO CIVIL DEFENSE APPROPRIATIONS My name is Mrs. Marie Ingerman, research assistant for the legislative office of the Women's International League for Peace and Freedom at 120 Maryland Avenue NE., Washington, D.C. The league is opposed to any appropriations for civil defense, because we believe a civil defense system is futile. We acknowledge the usefulness of a disaster relief program for natural disasters such as floods, earthquakes, tornadoes, and landslides, but we believe a civil defense system for nuclear war to be both a moral degradation and a danger to democratic society. No civil defense system could be adequate enough to save all lives in a nuclear war, because it would be limited only to certain areas, available only to those near enough to enter shelters at the time, and practical for only certain kinds of nuclear attack. There is no predictable, rational basis upon which to build one certain kind of civil defense system; a society irrational enough to launch a nuclear attack will not follow any rational or predictable pattern of attack. The ultimate logic of the present proposed program would require taking society underground and being prepared to stay there for an extended length of time. The cost of such a program has been estimated at $100 to $200 billion. The cost to our social and political structures would be even more staggering. Whether a society driven underground through terror would behave like a rational social unit is open to question; it is certain that it would not behave like a democracy. A civil defense program of any less magnitude than this would have to take into account all kinds of possibilities for survivors of a nuclear attack. They might emerge from their shelters into (1) A highly radioactive atmosphere. (2) A society in need of great medical attention, but bereft of most of its doctors. (Shelters cannot save lives, but only postpone death.) (3) A world in which all food and water resources had either been destroyed or contaminated beyond use. (4) A world in which many insects and underground animals more immune to radiation would run rampant, spreading disease as they went. (5) A society in which complete breakdown of the governmental structure made the law of the jungle prevalent. A civil defense system is a direct extension of an irresponsible fatalism which believes in the inevitability of thermonuclear war. As one educator has said, "Teachers need to help pupils to remain morally secure by challenging them to a rational approach of living in a nuclear age by waging an all-out war for peace.” A group of architects has also spoken out (American Institute of Architects Journal, December 1963) against fallout shelters specifically, as an inherent part of civil defense. They stated, "We feel it is our duty to point out the architectural absurdity of a national shelter program ***. The purpose of architecture is the creation of environments in which civilizations can develop War destroys what civilizations have built; therefore war is the antithesis of architecture. Planning for war prevents the fulfillment of what has been |