Letter from Elliot Feinberg, Assistant Director, Bureau of Competition Compliance, to Owen M. Johnson, Jr., In re Germaine Monteil Cosmetiques Corporation, Docket No. C-3099

BUAF.AU OF COMPETITION
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Owen M. 	Johnson, 	Jr., 	Esq.
Akin, 	Gump, 	Strauss, 	Hauer 	& Feld
1333 New Hampshire Ave., 	N.W.
Washington, 	o.c. 	20036
Re: 	Germaine Monteil 	Cosmetiques 	Corporation
Docket No. 	C-3098
Dear Mr. 	Johnson:
This 	is 	in response 	to your 	letter requesting a 	staff
advisory 	opinion concerning the 	scope 	of 	the 	order 	in 	the 	above
case 	if 	Revlon 	Inc. 	("Revlon") 	were 	to merge 	its 	Germaine Monteil
Cosmetiques 	Corporation 	("Germaine Montell") 	subsidiary into
Revlon. 	Specifically, 	you 	ask whether Revlon would 	be 	correct 	in
limiting the coverage of 	the 	order 	in Docket No. 	C-3098 	against
Germaine Montell 	to 	apply only 	to 	products 	manufactured by
Germaine Montell 	at 	the 	time of 	its 	acquisition by Revlon and
sold 	and promoted under the 	same or 	substantially similar brand
names.
Your 	request 	represents 	that 	at 	the 	time 	the 	order was
entered on November 	19, 	1982, 	the 	capital 	stock of Germaine
Montell 	was 	owned by 	the 	British American Tobacco 	Company.
Subsequf:ntly, 	on March 	20, 	1987, 	the 	stock was 	acquired 	by
Revlon, 	lnc. 	You 	state that 	after 	the 	acquisition of 	Germaine
Monteil, 	Revlon maintained Germaine Monteil 	as 	a 	separate
corporate 	entity 	and has 	separately 	sold 	all 	Germaine Monteil
products. 	At 	the 	time 	of 	Revlon's 	acquisition of Germaine
Montell, 	Germaine Monteil was 	selling products 	only under 	the
brand 	name 	"Germaine Monteil". 	However, 	your request 	notes 	that
the 	order 	in 	this 	matter 	refers 	to 	four 	specific 	brand names 	of
Germaine Monteil: 	Germaine Monteil, 	Rochas 	Paris, 	Tuvache,
Inc., 	and 	Sonia Rykiel.l
1 	For the 	purposes 	of 	the 	order, 	a 	product 	is 	defined 	as
any 	item of 	cosmetic, 	fragrance 	or 	soap, 	any
accessory containing 	any 	item of 	cosmetic,
fragrance 	or 	soap, 	or 	any 	related accessory,
including but 	not 	limited 	to 	any 	applicator or
brush, 	which 	is 	manufactured, 	offered 	for 	sale or
sold by respondent.
In addition 	to 	the 	foregoing, 	'product' 	is
defined 	to 	include 	any 	item which 	is 	manufactured,
(continued ... )

Owen M. 	Johnson, 	Jr., 	Esq. 	Page 	2
Relying upon 	J.B. 	Williams 	co., 	108 	F.T.C. 	56 	(1986), 	your
request 	seeks 	an 	interpretation of 	the 	order 	that would 	limit 	the
coverage 	of 	the 	order 	to 	"any products 	manufactured by Germaine
Monteil 	at 	the 	time of 	its 	acquisition, 	and modifications
thereto, 	sold and promoted under 	the 	same 	or 	substantially
similar brand names." 	For the 	reasons 	set 	forth 	below, 	I 	believe
your 	interpretation of 	the 	order's 	coverage is 	too 	narrow.
The 	facts 	that you 	have presented seem analogous 	to 	those 	in
the 	J.B. 	Williams 	matter. 	In that 	case, 	Beecham, 	Inc. 	had
purchased the 	stock of 	J.B. 	Williams 	and both companies 	sold over
the 	counter pharmaceutical 	products. 	Beecham 	filed 	a 	request 	to
reopen and modify 	the 	orders 	contending that 	it 	should not 	be
bound by 	the Commission orders 	prohibiting 	false 	advertising 	by
J.B. 	Williams. 	However, 	the Commission 	found 	that Beecham was 	a
successor under 	the 	orders 	and was 	bound by 	the 	orders 	in
connection with 	the 	advertising of 	J.B. 	Williams 	consumer
products. 	S.e.e. Letter to 	James 	T. 	Halverson, 	Esq., 	J.B. 	Williams
Company, 	Inc., 	Docket No. 	8547, 	April 	11, 	1984, 	p. 	2.
In 	a 	subsequent 	request 	to 	reopen and modify 	the 	orders,
Beecham 	sought 	to 	limit 	the 	product 	coverage of 	one 	of 	the 	orders
on 	the 	grounds 	that 	covered products 	had been reformulated and
the 	Beecham and 	J.B. 	Williams 	manufacturing 	facilities 	had been
integrated. 	The 	Commission denied the 	request 	to 	limit 	the
order's 	product 	coverage 	but 	reiterated 	its 	previous
determination that 	Beecham was 	bound by 	the 	order only with
respect 	to 	J.B. 	Williams 	products. 	The Commission then stated
that 	such products 	would 	include 	products 	manufactured by J.B.
Williams 	when 	it was 	acquired by Beecham as 	well 	as 	modifications
of 	those 	products 	and any derivative 	products. 	However, 	product
coverage was 	not 	limited to 	those 	categories 	and 	in the event
that 	the 	determination of 	product coverage became 	an 	issue, 	the
Commission held that 	it would be 	resolved on a 	case-by-case
basis. 	~ J.B. 	Williams, 	108 	F.T.C. 	at 	60 	(order 	reopening 	and
modifying cease 	and desist 	order).
1( ... continued)
offered 	for 	sale 	or 	sold by 	respondent 	for 	resale
to consumers 	together with 	any 	'product' 	as
defined 	hereinabove.
Also, 	the 	order provides 	that 	Paragraphs 	I.Band 	II 	shall
not 	apply 	to 	any product, 	as 	defined 	in 	the 	order, 	which 	is
manufactured, 	offered 	for 	sale 	or 	sold under 	any brand of
Tuvache, 	Inc. 	or Sonia Rykiel.

Owen M. 	Johnson, 	Jr., 	Esq. 	Page 	3
Based on 	J.B. 	Williams, 	I 	believe 	that 	Revlon would be 	bound
by the 	order 	against Germaine Monteil 	after merging Germaine
Monteil 	into 	Revlon only with respect 	to 	the 	products, 	as 	defined
in 	the 	order, 	of 	Germaine Monteil. 	Such products 	would 	include
all 	products 	sold under 	the 	Germaine Monteil 	name, 	products 	with
any other 	brands 	or 	names 	owned by Germaine Monteil 	at 	the 	time
of 	the 	acquisition by Revlon or 	subsequently acquired by Germaine
Monteil, 	products 	with 	substantially similar brand names 	and 	any
derivative 	products. 	Of 	course, 	the 	order's 	scope 	is 	not
necessarily 	limited to 	these 	categories 	and whether the 	order
covers 	a 	particular situation will 	depend 	on the 	applicable
facts.
Thus, 	I 	believe 	that you 	have 	construed J.B. 	Williams 	too
narrowly 	in you 	proposal 	to 	limit 	the 	order's 	coverage 	to 	brands
manufactured 	and 	sold by Germaine 	Monteil 	at 	the 	time 	of 	its
acquisition by Revlon. 	For example, 	I 	believe 	the 	order would
apply 	to 	products 	sold under 	the 	Germaine Monteil 	name 	even
though 	the 	product was 	not made 	by Germaine Monteil 	when 	it 	was
acquired 	by Revlon. 	Similarly, 	the 	order would 	apply 	to 	brands
acquired by Germaine Monteil 	after 	its 	acquisition by Revlon 	and
to 	products 	with brands 	owned by Germaine Monteil 	despite 	their
not 	having been manufactured by Germaine 	Monteil 	when 	it 	was
acquired by Revlon.
This 	opinion 	is 	restricted to 	the 	facts 	as 	you 	have
represented 	them 	in your 	request. 	Moreover, 	a 	staff 	opinion 	is
not 	binding upon 	the 	Commission, 	and 	the 	Bureau may 	at 	any 	time
reconsider, 	revoke, 	or 	rescind 	its 	opinion. 	Further, 	this
opinion will 	not 	preclude 	the 	Commission 	from 	taking 	any 	action
it 	deems 	appropriate, 	including an 	action 	for 	civil 	penalties,
for 	any violation of 	the 	order.
Sincerely yours,
Elliot 	Feinberg
Assistant 	Director
Bureau 	of 	Competition