London Fog gets leeway from FTC

March 29, 1995|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

The Federal Trade Commission yesterday amended a 17-year-old consent order, allowing London Fog Corp. to restrict the discounting of its products, giving it more control over the selling of its famous raincoat.

However, the FTC let stand provisions restricting communications between the company and retailers, which it said could lead to illegal price-fixing by the Eldersburg-based company and its retailers.

"It's a positive for us," said Douglas C. Hillman, president of the company's trade division. "What this allows us to do is compete in the marketplace in a fair manner and it allows us to continue to build the image of the brand and bring new product innovation to the market place."

The FTC decision amends a 1978 consent order that had set strict limits on London Fog's dealings with retailers. That 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.

The order's restrictions had caused "severe competitive harm," according to the company's October petition to the FTC.

Two main provisions of the 1978 order were that London Fog could neither set prices in advertising paid for jointly by the company and retailers, nor withdraw its line from retailers who ignored suggested prices.

While yesterday's order lifts these two restrictions, the FTC would not remove provisions prohibiting London Fog from discussing the price levels with retailers. This would raise the possibility of illegal price-fixing between London Fog and the retailer, the decision said.

London Fog, which has about $350 million in annual sales, asked the FTC in October to change the order. Mr. Hillman said retailers had used the well-known London Fog brand to attract customers and then not have enough available for sale.

"They were using us as loss leaders and thus damaging the brand," Mr. Hillman said.

The new ruling could also have been used in a previous London Fog strategy of trying to force retailers to maintain the price of its top-of-the-line London Fog brand. But that policy was unpopular with retailers and was dropped after Arnold P. Cohen was removed as chairman in August.

"This is not to prevent stores from running promotions," said Mr. Hillman. "The London Fog brand will still be promoted at price reductions to the consumer," he said. "We just want it done on an organized basis, we want full representation of the products there and we want to make sure there is sufficient product."

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