London Fog asks FTC to modify order

November 05, 1994|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

Seeking a bigger stick to persuade retailers to keep prices high for its top brand, London Fog Corp. has asked the Federal Trade Commission to modify a 16-year-old consent order that has hemmed in the company's ability to influence the retail price of its coats.

The Darien, Conn.-based raincoat manufacturer wants the change as part of its five-month effort to persuade retailers not to discount its top-of-the-line London Fog products as a way to boost the prestige of the brand. Instead, the company has offered its less expensive Towne brand to be used in discount promotions.

The program is part of the company's turnaround strategy that ** includes the closing of plants in Hancock and Williamsport and the shifting of most of its production overseas. Its last remaining U.S. factory in Baltimore is to reopen by the end of January after retooling.

The FTC, which announced the filing yesterday, will accept comments on the petition until Dec. 5, after which the four-person commission will rule.

The 1978 consent order prevents the company from flexing its financial muscle with retailers by either withholding advertising dollars or the coats themselves.

"What we can do, really, is just continue to explain to our stores why it is to their benefit and the benefit of the consumer to keep the price up," said Douglas C. Hillman, president of the company's trade division. "There is nothing we can do from a marketing, sales or legal standpoint to enforce the program."

The consent order resulted from an FTC investigation in the late 1970s into whether London Fog -- then a subsidiary of Interco Inc., a St. Louis-based conglomerate -- was setting prices through what is called "resale price maintenance."

Two main provisions of the order are that London Fog could not set prices in advertising paid for jointly by the company and retailers, and London Fog could not withdraw its line from retailers who ignore its suggested prices.

These restrictions -- which do not apply to London Fog's competitors, have caused "severe competitive harm," according to the company's petition to the FTC.

If the company pays for part of the advertising, "the manufacturer should be entitled to require that the advertising and promotional materials convey pricing that is accurate and consistent with the brand image and quality of its products," the petition said.

It also said the company should not be forced to sell to retailers who do not cooperate.

"Without the right to announce prices for its products and unilaterally terminate those retailers who fail to comply, London Fog cannot act with any reasonable certainty that its marketing plans will be carried out by its retailer-customers," the petition said.

However, Alan G. Milstein, editor and publisher of Fashion Network Report, does not expect the effort to hold up under resistance from retailers. "They are really barking up the wrong tree in trying to dictate to their retailers," he said.

But Howard Davidowitz, chairman of Davidowitz & Associates Inc., a national retail consulting firm, said London Fog should be allowed to protect its brand's price, as other apparel companies do.

"If you are a brand, you have to stand for something," he said.

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