referring to an increased cooling capacity at high loading conditions, is not a unique feature of Fedders room air conditioners, but that, in fact, comparable room air conditioners made by other companies provide an increase in cooling capacity at high loading conditions.

The complaint further alleges that respondent has also represented that, at the time the aforesaid statements and representations were made, respondent had a reasonable basis from which to conclude that the Fedders room air conditioners, compared with other room air conditioners, had a significantly increased cooling capacity at high loading conditions under customary conditions of use. In truth and in fact, the complaint alleges, at the time the said statements and representations were made, respondent had no reasonable basis for such statements and representations.

The complaint also alleges that by and through the use of the aforesaid statements and representations in respect to RCP, respondent has represented, directly or by implication, that the Fedders room air conditioners, compared with other room air conditioners, have a significantly increased cooling capacity at high loading conditions under customary conditions of use. At the time said statements and representations were made, the complaint alleges, respondent had no reasonable basis from which to conclude that such was the fact.

In brief, the complaint alleges that respondent has (1) made a uniqueness claim for its room air conditioners when such is not a fact, (2) has represented that it had a reasonable basis for making a uniqueness claim for its room air conditioners when it had no reasonable basis for making such a claim, and (3) has represented that its room air conditioners, when compared with other room air conditioners, have a significantly increased cooling capacity at high loading conditions under customary conditions of use when it had no reasonable basis from which to conclude that such was the fact.

The above practices are alleged to have the capacity and tendency to mislead a substantial portion of the purchasing public into the erroneous and mistaken belief that said statements and representations were and are true, and into the purchase of substantial quantities of said products by reason of such erroneous and mistaken belief. The said practices are alleged to be false, misleading and deceptive, and constitute unfair methods of competition and unfair or deceptive acts or practices in commerce in violation of Section 5 of the Federal Trade Commission Act.

Respondent's Answer, filed Aug. 14, 1973, generally admitted the practices alleged in the complaint, but denied that such conduct was unlawful. Respondent also interposed an affirmative defense, asserting that respondent, "in good faith, many months prior to the issuance of

notice by the Commission of a proposed adjudicative proceeding against respondent in respect to the facts alleged in the complaint, ceased disseminating all advertising material relating to 'reserve cooling power' and has not since resumed the dissemination of any such material." Respondent's Answer also alleges "as and for mitigating circumstances *** in framing any order" that its claim as to the uniqueness of the RCP feature of its room air conditioners is the only advertising claim of respondent alleged in the complaint to be false, misleading or deceptive, and was one of approximately ten advertising claims made by respondent as to which it was required, by Commission order of Oct. 13, 1971, to furnish supporting material. Respondent's Answer asserts that it "duly furnished such material in response to all the other advertising claims above referred to, and none of such other claims has been challenged by the Commission."

Thereafter, on Aug. 17, 1973, complaint counsel filed a Motion to Strike Affirmative Defenses on the grounds that they are without merit, do not constitute an affirmative defense, and are appropriately denials. On Aug. 24, 1973, Motion of Complaint Counsel for Summary Decision was filed.

At a prehearing conference held on Aug. 27, 1973, it was agreed that complaint counsel would file a motion to amend the complaint, and on that date Motion of Complaint Counsel to Amend Complaint and to Amend Motion for Summary Decision was filed. Thereafter, on Sept. 6, 1973, the undersigned issued an order granting an extension of time until Sept. 21, 1973 for respondent to file an answer to the amended complaint, which time to answer was subsequently extended until Nov. 12, 1973.

At a further prehearing conference held on Nov. 30, 1973, respondent's Answer to Amended Complaint filed on Nov. 12, 1973, was discussed. In its Answer, respondent generally admitted the factual allegations of the complaint (see PHC Tr. 56-60), but denied those paragraphs which allege the respondent's conduct to be unlawful. At the said prehearing conference, the complaint was further amended on the record by the undersigned as follows (PHC Tr. 74):

I think the two major points were that the complaint is concerned with all Fedders room air conditioners, and is concerned with all advertisements which made the claim that reserve cooling power was unique, and in paragraphs 9 through 12, we are reading into the complaint, "compared with all other room air conditioners." Those are the amendments, and I think making them on the record here is sufficient.

Respondent, in response to the amendments made orally at the prehearing conference, filed an Answer to Further Amended Complaint on Dec. 28, 1973. So that the public record would reflect these amendments to the complaint made at the prehearing conference, an Order Further Amending Complaint was issued by the undersigned on

Jan. 10, 1974. Respondent was given until Jan. 21, 1974 to further amend its Answer, if necessary. No further answer was filed.

The First Stipulation of the Parties was filed on Mar. 19, 1974. This Stipulation provides that the term "reserve cooling power" shall refer to the description of that term which is stated in Paragraphs 5 and 8 through 11 of respondent's Answer to Further Amended Complaint, complaint counsel thereby in effect adopting respondent's definition of RCP in lieu of the definition of that term set forth in the complaint. The Second Stipulation of the Parties, also filed on Mar. 19, 1974, is an agreement that the information contained therein is a fair and accurate description of the extent of dissemination of Fedders room airconditioner advertising in four sample areas over a two-year period. A further prehearing conference scheduled for Mar. 27, 1974 was cancelled and rescheduled for Mar. 29, 1974 because of the illness of counsel for respondent. Due to the continued illness of counsel for respondent, the prehearing conference scheduled for Mar. 29, 1974 was cancelled, and a formal hearing was scheduled by the undersigned for Apr. 16, 1974.

At the formal hearing held on Apr. 16, 1974, no witnesses were called; respondent's exhibits 1 A-Z-55, 2 A-B, and Joint Exhibit 1 A-I were received in evidence; complaint counsel's Motion to Strike Affirmative Defenses and Motion for Summary Decision were denied on the record; the record was closed for the reception of evidence; and, upon request of counsel for respondent, the filing of simultaneous proposed findings was postponed from May 16, 1974 to May 30, 1974, and the filing of replies thereto postponed from May 30, 1974 to June 10, 1974 (Tr. 99101). Respondent's time in which to submit a reply was subsequently extended to June 12, 1974.

A Stipulation of the Parties, dated Apr. 10, 1974, referring to the term "reserve cooling power," was filed on Apr. 12, 1974. On Apr. 24, 1974, an Order Incorporating into the Record Stipulation of the Parties, dated Apr. 19, 1974, was issued by the undersigned. By this Stipulation, the parties accepted respondent's definition of "reserve cooling power" for all purposes of this proceeding.

The parties have submitted proposed findings, supporting memoranda, and proposed orders. Respondent has also filed a reply brief. This proceeding is therefore before the undersigned based upon the complaint, as amended, the answers filed by respondent, the stipulations of the parties, the joint exhibit of the parties, the proposed findings and memoranda submitted by the parties, and respondent's reply brief. No witnesses were called to testify, and the exhibits of record are by stipulation. Thus, the basic facts herein are undisputed. The submissions by the parties have been given careful consideration

and, to the extent not adopted by this decision in the form proposed or in substance, are rejected as not supported by the record or as immaterial. Any motions not heretofore or herein ruled upon, either directly or by the necessary effect of the conclusions in this decision, are hereby denied. The findings of fact made herein are based on a review of the entire record and include references to the principal supporting evidence in the record. Such references are intended to serve as convenient guides, but do not necessarily represent complete summaries of the evidence considered in arriving at such findings.

References to the record are set forth in parentheses, and certain abbreviations, as hereinafter set forth, are used:

CPF - Proposed Findings of Fact, Conclusions of Fact And Law, And Order submitted by Complaint Counsel.

CM - Memorandum in Support of the Proposed Findings of Fact, Conclusions of Fact and Law, and Order submitted by Complaint Counsel.

RAFAC - Respondent's Answer to Further Amended Complaint.

RPF - Respondent's Proposed Findings of Fact and Conclusions of Law.

RB - Respondent's Brief to the Administrative Law Judge.
RO - Proposed Order submitted by Respondent.

RX - Respondent's Exhibits.

Jt. Stip. - Joint stipulation submitted by the parties. (This abbreviation will be followed by the number of the stipulation and the page number upon which the evidence being cited appears.)

Jt. Ex. - Joint Exhibit of the parties.

PHC Tr. - Transcript of the prehearing conferences, followed by the page number being referenced.

Tr. - Transcript of the formal hearing, followed by the page number being referenced.

FINDINGS OF FACT

Identity and Business of Respondent

1. Respondent Fedders Corporation, hereinafter sometimes referred to as "Fedders," is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York, with its principal office and place of business located at Edison, NJ. (Admitted, RAFAC, Par. 1).

2. Respondent Fedders is now and has been engaged in the advertising, offering for sale, sale and distribution of Fedders air conditioners, including Fedders room air conditioners (Admitted, RAFAC, Par. 1).

3. In the course and conduct of its aforesaid business, respondent

Fedders now causes and has caused its air conditioners, when sold, to be transported from its place of business in the State of New Jersey to purchasers thereof located in various States of the United States, and in the District of Columbia. Respondent Fedders therefore maintains, a substantial course of trade in said air conditioners in commerce, as "commerce" is defined in the Federal Trade Commission Act (Admitted, RAFAC, Par. 1).

4. In the course and conduct of its business as aforesaid, and at all times mentioned herein, respondent Fedders has been, and is now, in substantial competition in commerce with corporations, firms and individuals engaged in the sale of air conditioners of the same general type as that sold by respondent (Admitted, RAFAC, Par. 1).

5. In the course and conduct of its business as aforesaid, and for the purpose of inducing the sale of its said air conditioners in commerce, as "commerce" is defined in the Federal Trade Commission Act, respondent has disseminated, and caused to be disseminated, certain advertisements of its room air conditioners, including but not limited to, advertisements printed in newspapers located in various States of the United States and in the District of Columbia, which newspapers are disseminated across state lines (Admitted, RAFAC, Par. 1). The Challenged Advertisements

6. Pursuant to a resolution of the Federal Trade Commission dated June 9, 1971, and amended July 7, 1971, entitled "Resolution Requiring Submission of Special Reports Relating to Advertising Claims and Disclosure Thereof by the Commission in Connection with a Public Investigation", 36 Fed. Reg. 12,058 (June 9, 1971), as amended, 36 Fed. Reg. 14,680 (July 7, 1971) (Motion of Complaint Counsel For Summary Decision, Appendix A, p. 1, Appendix B, p. 1), on Sept. 30, 1971, the Commission ordered respondent Fedders to file a Special Report on specific advertising claims. One of the advertising claims for which the Commission requested documentation and other substantiation by Special Report was:

RESERVE Cooling Power only Fedders has this important feature. It's your assurance of cooling on extra hot, extra humid days.

The information demanded was:

All documentation and other substantiation for the claim that only the Fedders room air conditioner has extra cooling power that assures cooling on extra hot, extra humid days. (Motion of Complaint Counsel For Summary Decision, Appendix A, p. 4.)

The specific advertisement questioned by the Commission's Special Report appeared in The Monroe Morning World, Monroe, Louisiana, June 10, 1971 (Motion of Complaint Counsel For Summary Decision, Appendix A, p. 3).

7. Respondent filed its response to the Commission's Special Report on Dec. 22, 1971. In its response, Fedders admitted the lack of