. 74344° 829-87 34 (1) REPORT TO THE PRESIDENT The President, The White House. Sir : This is a report of the Hearing on the Supplemental Code of Fair Competition of the Athletic Goods Distributing Trade, con- ducted in Room 2062, Department of Commerce Building on May 28, 1934. The Supplemental Code, which is attached, was presented by duly qualified and authorized representatives of the Trade, com- plying with the. statutory requirements. THE TRADE According to the census of Wholesale Distribution for the year 1929, there were 283 establishments engaged in the distribution of sporting goods with annual net sales of $71,216,889, and employing 4,031 persons. However, this figure covers all lines of sporting goods and no further breakdown is available which covers only the dis- tribution of Athletic Goods, as defined in this Supplemental Code. OTHER PROVISIONS OF THE CODE The provisions containing supplemental definitions are considered inclusive and accurate. The Administrative provisions supplementing the General Code establish a Divisional Code Authority which is fairly and adequately representative of all the different elements in the Trade. The Trade Practice supplemental provisions are designed to cure innumerable evils existing in the Trade today, and are not considered in any way objectionable. FINDINGS The Deputy Administrator in his final report to me on said Sup- plemental Code having found as herein set forth and on the basis of all the proceedings in this matter : I find that (a) Said Supplemental Code is well designed to promote the policies and purposes of Title I of the National Industrial Recovery Act, including removal of obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof, and will provide for the general welfare by promoting the organiza- tion of industry for the purpose of cooperative action among trade groups, by inducing and maintaining united action of labor and management under adequate governmental sanction and supervision, by eliminating unfair competitive practices, by promoting the fullest possible use of the present productive capacity of industries, by avoid- ing undue restriction of production (except as may bs temporarily (2) required), by increasing the consumption of industrial and agricul- tural products through increasing purchasing power, by reducing and relieving unemployment, by improving standards of labor, and by otherwise rehabilitating industry. (b) Said Trade normally employs not more than 50,000 employees and it is not classified by me as a major industry. (c) The Supplemental Code as approved complies in all respects with the pertinent provisions of said Title of said Act, including without limitation Subsection (a) of Section 3, Subsection (a) of Section 7 and Subsection (b) of Section 10 thereof; and that the applicant association is a trade association truly representative of the aforesaid Trade ; and that said association imposes no inequitable restrictions on admission to membership therein. (d) The Supplemental Code is not designed to and will not permit monopolies or monopolistic practices. (e) The Supplemental Code is not designed to and will not eliminate or oppress small enterprises and will not operate to dis- criminate against them. (f) Those engaged in other steps of the economic process have not been deprived of the right to be heard prior to the approval of this Supplemental Code. For these reasons, the Supplemental Code has been approved. Respectfully, Hugh S. Johnson, A dminis trator. July 17, 1934. SUPPLEMENTARY CODE OF FAIK COMPETITION FOR THE ATHLETIC GOODS DISTRIBUTING TRADE A DIVISION OF THE WHOLESALING OR DISTRIBUTING TRADE Article I — Purposes To effectuate the policies of Title I of the National Industrial Recovery Act, this Supplemental Code is established as a Code of Fair Competition for the Athletic Goods Distributing Trade pursuant to Article VI, Section 1 (c) of the General Code of Fair Competition for the Wholesaling or Distributing Trade, approved by the Presi- dent of the United States on January 12, 1934. All provisions of the said General Code which are not in conflict with the provisions of the Supplemental Code are hereby specifically incorporated by refer- ence in this Supplemental Code and made part hereof. Such pro- visions of the General Code together with the provisions of this Supplemental Code are the standards of fair competition for and are binding upon every member of said Athletic Goods Distributing Trade. Article II — Definitions supplementing article ii of the general code Section 1. Wholesaler or Distributor. — For the purpose of this Supplemental Code the term " Wholesaler " or " Distributor ", as used herein, is defined to mean any individual, partnership, associ- ation, corporation, or other form of enterprise, or a definitely or- ganized division thereof definitely organized to render, and render- ing a general distribution service, which buys and maintains at his or its place of business a stock of athletic goods ; and which through salesmen, advertising, and/or sales promotion devices, sells to re- tailers and/or to schools, colleges, clubs, teams, institutional, com- mercial, and/or industrial users. Section 2. The term " member of the Trade ", as used herein, shall mean and include any wholesaler or distributor of athletic goods. Section 3. Merchandise. — The term "Athletic Goods ", as used herein, includes all the balls, implements, and equipment used in any or all of the athletic games or sports enumerated below : (a) Golf. (b) Tennis, court tennis, table and paddle tennis, badminton, racquets, squash racquets, squash tennis, handball. (c) Football, basket ball, soccer, rugby football, volley ball, water polo, and all other games generally known as athletic games or contests. (d) Baseball, including all variations thereof, played with a hard or soft ball and bat. (4) (e) La Crosse. (i) Polo and hockey, including all variations thereof. (g) Winter-sports equipment and all variations thereof, including skis, snowshoes, and all other variations thereof. (h) Track and field Athletics. (i) Boxing and wrestling. (j) Archery. (k) Cricket. The term " Athletic Goods " also includes gymnasium and play- ground equipment, uniforms and other similar athletic wear manu- factured especially for athletic purposes, and felt and/or chenille emblems, letters and pennants, and megaphones, and similar prod- ducts when sold in connection with the merchandise enumerated above in this Section. Section 4. The term " Divisional Code Authority " as used herein shall mean the Divisional Code Authority for the Athletic Goods Distributing Trade, a division of the Wholesaling or Distributing Trade. Section 5. The term " General Code " as used herein shall mean the Code of Fair Competition for the Wholesaling or Distributing Trade. Section 6. The term " consignment ", as used herein is defined to mean the delivery by a distributor to any person, agent, purchaser, or otherwise under any agreement or understanding, expressed or implied pursuant to which the seller retains any lien upon or title to or interest in the goods until sold by the consignee. Article III — Administration SUPPLEMENTING ARTICLE VI OF THE GENERAL CODE Section 1. Divisional Code Authority. — (a) There shall be created a Divisional Code Authority to cooperate with the Admin- istrator in the administration of the provisions of this Supple- mental Code. (b) Such Divisional Code Authority shall be composed of seven (7) members, five (5) of whom shall be members of the National Sporting Goods Distributors Association and selected by the Board of Directors thereof, and two (2) members who shall be selected by a plan to be approved by the Administrator to represent those en- gaged in the Athletic Goods Distributing Trade who are not mem- bers of the National Sporting Goods Distributors Association. (c) The terms of office of members of the Divisional Code Authority and the method of electing their successors, whether for full new terms or for unexpired terms, shall be established in the by-laws of the Divisional Code Authority, subject to the approval of the Administrator. Section 2. Powers and Duties. — The Divisional Code Authority shall have the following powers in addition to those provided in the General Code, subject to the rules and regulations issued by the Administrator. (a) To select officers and agents and to assign to them such duties as it may consider advisable. (b) To adopt By-Laws and rules and regulations for its procedure. (c) To utilize such trade associations and other agencies as it deems necessary and proper to assist it in carrying out any of its activities, provided, however, that nothing contained herein shall in any way relieve the Divisional Code Authority of any of its re- sponsibilities under this Supplemental Code, and that such trade associations and agencies shall at all times be subject to, and comply with the provisions hereof. (d) It shall be the duty of the Divisional Code Authority to ap- point a Trade Practice Committee which shall meet with the Trade Practice Committees appointed under such other Codes as may be related to the Trade for the purpose of formulating Fair Trade Practices to govern the relationships between production and distri- bution employers under this Supplemental Code and under such others to the end that such Fair Trade Practices may be proposed to the Administrator as amendments to this Supplemental Code and such other Codes. (e) To obtain from members of the Trade such information and reports as are required for the administration of the Supplemental Code. No such individual report shall be disclosed to any other member of the Trade, including members of the Divisional Code Authority, or any other party except to such other governmental agencies as may be directed by the Administrator. No such data or information shall be published, except in combination with similar data, and in such manner as to avoid the disclosure of confidential information. In addition to information required to be submitted to the General Code Authority and to the Divisional Code Authority, members of the Trade subject to this Supplemental Code shall fur- nish such statistical information as the Administrator may deem necessary for the purposes recited in Section 3 (a) of the Act, to such federal and state agencies as he may designate; provided that nothing in this Supplemental Code shall relieve any member of the Trade of any existing obligations to furnish reports to any govern- ment agency. (f) To recommend to the Administrator any action or measures deemed advisable, including further fair trade practice provisions to govern members of the Trade in their relations with each other or with other trades, measures for industrial planning, and stabiliza- tion of employment; and including modifications of this Supple- mental Code which shall become effective as part hereof upon ap- proval by the Administrator after such notice and hearing as he may specify. (g) In order to assist in making effective the reports from the Trade in eliminating unfair competition, the Divisional Code Au- thority within one month after the effective date of the Supple- mental Code shall appoint a Committee so constituted as to give producer, consumer and governmental representation, to make a study with a view to the establishment of classification of standard of quality of products of the Trade, wherever such standards are deemed feasible; the findings and recommendations of this Com- mittee shall within one year be submitted to the Administrator and after such hearings and investigations as he maj^ designate and upon approval by him, shall be made a part of this Supplemental Code and be binding upon every member. (h) 1. It being found necessary in order to support the adminis- tration of this Supplemental Code and to maintain the standards of fair competition established hereunder and to effectuate the policy of the Act, the Divisional Code Authority is authorized : a. To incur such reasonable obligations as are necessary and proper for the foregoing purposes, and to meet such obligations out of funds which may be raised as hereinafter provided and which shall be held in trust for the purposes of the Supple- mental Code; b. To submit to the Administrator for his approval, subject to such notice and opportunity to be heard as he may deem necessary (1) an itemized budget of its estimated expenses, and (2) an equitable basis upon which the funds necessary to sup- port such budget shall be contributed by members of the Trade ; c. After such budget and basis of contribution have been approved by the administrator, to determine and obtain equi- table contribution as above set forth by all members of the Trade, and to that end, if necessarj^, to institute legal proceed- ings therefor in its own name. 2. Each member of the Trade shall pay his or its equitable contri- bution to the expenses of the maintenance of the Divisional Code Authority, determined as hereinabove provided, and subject to rules and regulations pertaining thereto issued by the Administrator. Only members of the Trade complying with the Supplemental Code and the General Code and contributing to the expenses of their administration as hereinabove provided, shall be entitled to par- ticipate in the selection of members of the Divisional Code Authority or to receive the benefits of any of its voluntary activities or to make use of any emblem or insignia of the National Recovery Administration. 3. The Divisional Code Authority shall neither incur nor pay any obligation in excess of the amount thereof as estimated in its ap- proved budget, except upon approval of the Administrator; and no subsequent budget shall contain any deficiency item for expenditures in excess of prior budget estimates except those which the Adminis- trator shall have so approved. Section 3. Liability of the Divisional Code Authority. — Nothing contained in this Supplemental Code or in any other Code shall constitute the members of the Divisional Code Authority partners for any purpose; nor shall any member of the Divisional Code Authority be liable in any manner to anyone for any act of any other member, officer, agent, or employee of the Divisional Code Authority, nor shall any member of the Divisional Code Authority, exercising reasonable diligence in the conduct of his duties hereunder, be liable to anyone for any action or omission of an act under this Supplemental Code, except for his own misfeasance or nonfeasance. Section 4. Approval or Disapproval by the Administrator. — If the Administrator shall determine that any action of the Divisional Code Authority or any agency thereof may be unfair or unjust or contrary to the public interest, the Administrator may require that such action be suspended to afford an opportunity for investigation of the merits of such action and further consideration by such Divi- sional Code Authority or agency pending final action which shall 8 not be effective unless the Administrator approves or unless he shall fail to disapprove after thirty days' notice to him of intention to proceed with such action in its original or modified form. Section 5. In order that the Divisional Code Authority shall at all times be truly representative of the Trade, and in other respects comply with the provisions of the Act, the Administrator may pre- scribe such hearings as he may deem proper; and thereafter if he shall find that the Divisional Code Authority is not truly represent- ative or does not in other respects comply with the provisions of the Act, may require an appropriate modification of the Divisional Code Authority. Article IV — Trade Practices SUPPLEMENTING ARTICLE VII OF THE GENERAL CODE Section 1. No member of the Trade shall pay any money or make any gifts to athletic organizations, leagues, associations, athletes, winners of athletic competitions, or persons prominent in any of the various lines of sport to induce such athletic organizations, leagues, associations, athletes, winners of athletic competitions, or prominent persons to use, recommend or adopt as " official " the athletic goods or equipment of such members of the Trade and then advertise that such athletic organization, leagues, association, athletes, winners, or persons, use, recommend, or have adopted as " official " such ath- letic goods or equipment without disclosing that such organizations, leagues, associations, athletes, winners, or persons were the recipients of money or gifts from such member of the Trade. Section 2. No member of the Trade shall lease, sell, or contract to sell, athletic goods or equipment, whether patented or unpatented, for use, consumption, or resale within the United States or fix a price charged therefor, or discount from, or rebate upon such price, on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the athletic goods or equipment of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale, or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce. Section 3. No member of the Trade shall either directly or indi- rectly discriminate in price between different purchasers of com- modities, where the effect of such discrimination may be to substan- tially lessen competition or tend to create a monopoly in any line of commerce; provided, that nothing herein contained shall prevent discrimination in price between purchasers of the same class on account of differences in the grade, quality, or quantity of the com- modity sold, or that makes only due allowances for differences in the cost of selling or transportation, or discrimination in price in the same or different communities made in good faith to meet competi- tion ; and provided further, that nothing herein contained shall pre- vent persons engaged in selling the products of this Trade in com- merce from selecting their own customers in bona fide transactions and not in restraint of trade. Section 4. No member of the Trade shall use on, or in any way in connection with the sale of, any of its athletic goods or equipment, the name, nickname, or initials of any athlete or person prominent in any line of sport when a competitor has previously acquired from the said athlete or person, and with his approval, the exclusive right and good-will in and to said name, nickname, or initials for the use on the same line of goods, and where the effect of the use by the said member of the Trade of the said name, nickname, or initials is to deceive or tend to deceive the purchasing public as to the source or make of the said line of goods, and where the tendency is to in- juriously affect the business of the competitor; provided, that noth- ing contained herein shall be construed to deprive any person of any right which may be enjoyed under any existing law. Section 5. No member of the Trade shall maliciously and/or knowingly induce or attempt to induce the breach of existing con- tracts between competitors and any athlete or person prominent in any line of sport relating to the use of said athlete's or person's name, nickname, or initials, or maliciously and/or knowingly interfere with or obstruct the performance of any such contractual duties or services. Section 6. No Member of the Trade shall stamp the name " offi- cial " on playground balls, footballs, soccer balls, basket balls or volley balls (of either inseam or outseam styles) which are not top grade, conventional type, or on special playground balls, special footballs, special soccer balls, special basket balls or special volley balls which are inferior in quality, inferior in workmanship or in- ferior in any other respect to the top grade, conventional type, of ball of such Member of the Trade. 1 Section 7. No member of the Trade shall offer for sale as " sec- onds ", as " defective ", or as " of inferior quality " any merchan- dise, which is in fact not defective or inferior in some material respect. Section 8. No member of the Trade shall sell baseballs, play- ground balls, footballs, soccer balls, basket balls, volley balls, and golf balls, unless the said balls are branded with a name or other mark of identification. Section 9. No member of the Trade shall guarantee any athletic goods except as to their freedom from defects affecting the quality, quanthVy, grade, or construction thereof, or replace for any other cause, any such product which has been used. . Section 10. Iso member of the Trade shall give trophies or other things of value for the adoption or use, of any merchandise by any team, club, association, league, or educational institution, excepting only professional baseball leagues operating in organized baseball. No member of the Trade shall make any donation of balls or money to professional baseball leagues in excess of a schedule of donations when such schedules shall be announced by the Divisional Code Authority and approved by the Administrator. Section 11. No member of the Trade shall stamp the names " Of- ficial ", " Official League ", " National League ", or "American League ", on other than the manufacturer's finest quality baseballs, made of the best quality wool yarn containing at least 95% wool. 1 See paragraph 2 of order approving this Code. 10 Section 12. No member of the Trade shall sell merchandise on more favorable terms of credit than the following : (a) On current orders, 30 days net, 2% ten days or 2% 10th proximo. (b) On advance spring orders shipped November 1st and spring samples whenever shipped, March 31st, dating, 2% if paid April 10th. (c) On advance fall orders shipped after June 1st, and fall samples whenever shipped. September 30th dating, 2% if paid October 10th. (d) On foreign or export business, credit terms are subject to the discretion of the seller. (e) The rate of discount allowed on prepayment of invoices, not to exceed 6% per annum. (f ) Past due accounts shall be subject to the legal rate of interest provided for by the laws of the state governing the operation of the contract of sale. Section 13. The consignment method of sale is prohibited, except where the Divisional Code Authority may allow under circumstances to be defined by it. Section 14. Except as may be due to differences in cost, no mem- ber of the Trade shall quote and/or sell at lower prices on direct factory shipments, than on the same type, quality, quantity, and size of products for delivery from his stock. Section 15. No member of the Trade shall quote and/or sell at lower prices to federal, state, county, or municipal authorities or political subdivisions thereof, than those which are offered under substantially like conditions, on the same type, quantity, quality and grade of merchandise to schools and colleges. 1 Section 16. No member of the Trade shall quote and/or sell at a combination price, two or more different items of merchandise with- out showing the unit prices thereof. Section 17. No member of the Trade shall advertise in school publications, score boards, season schedules, and other mediums of similar character, except such mediums as hold a second-class mail permit or have the approval of the Divisional Code Authority, sub- ject to appeal to the Administrator. Section 18. No member of the Trade shall increase the value of any merchandise sold by additional work thereon or by applying additional material thereto without making a reasonable addi- tional charge for such additional work and/or additional material. Section 19. No member of the Trade shall furnish articles of merchandise to schools, dealers, clubs, for the purpose of samples without invoicing such merchandise to the prospective customer at his quoted prices and terms, subject to return within thirty (30) days for credit. In case where sizes are required as samples no more than one of the same article may be shipped. Article V — Modification This Supplemental Code and all the provisions thereof are ex- pressly made subject to the right of the President in accordance with 1 Seo paragraph 2 of order approving this Code. 11 the provisions of Sub-section (b) of Section 10 of the Act, from time to time to cancel or modify any order, approval, license, rule or regulation issued under Title I of the said Act. Article VI — Effective Date This Supplemental Code shall become effective on the 10th day after its approval by the Administrator. Approved Code No. 201 — Supplement No. 13. Registry No. 1657-01. o UNIVERSITY OF FLORIDA 3 1262 08584 3265