Elisco, Charles

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IN THE MATTER OF CHARLES ELISCO, TRADING AS MAYWOOD CANDY COMPANY CO~IPLAINT, FINDINGS, AND ORDER IN REGARD TO Thil ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2970. Complaint, Nov. 6, 1936-Decision, Dec. 18, 1936 Where an Individual, engaged in packing and assembling candy Into assortments, including those which were so packed and assembled as to Involve the use of a lottery scheme when sold and distributed to the consumers thereof, and which were composed of a number of small penny packages of candy, within the majority of which there were concealed articles of merchandise or prizes of equal value and amounting to a small fractional part of a cent, and within a few of which there were similarly concealed a one cent coin, thus distributed to purchasers wholly by lot or chance- Sold to wholesalers and to retailers, for display and resale to purchasing public In accordance with aforesaid sales plan, said assortments, and thereby supplled to and placed In the hands of others the means of conducting lotteries 1n the sale of his said products in accordance with such plan, and contrary to public policy long recognized by the common law and criminal statutes, and to the established public policy of the United States Government, and in competition with many who, unwilling to offer or sell candy so packed and assembled, or otherwise arranged and packed, to the purchasing public as to Involve a game of chance or sale of a chance to win something by chance, or any other method contrary to public policy, refrained therefrom;

With result that many dealers 1n and ultimate purchasers of candy were attracted by salt! method and manner of packing said products and by element of chance Involved in sale thereof as aforesaid, and thereby Induced to purchase such candy thus packed and sold by him in preference to that otTered and sold by competitors who do not use the same or equivalent methods, and with tendency and capacity to Induce such preferential pur· chase and to divert to him trade and custom from his said competitors who do not use such methods, exclude from satd trade all competitors who are unwilling to and do not use such or an equivalent practice because unlawful, lessen competition therein and tend to create a monopoly thereof In him and such other distributors as use such or an equivalent practice, deprive purchasing public of benefit of free competition in trade involved, and eliminate from said trade all actual, and exclude all potential, competitors who do not use such or equivalent methods.

Held, That such nets and practices were to the prejudice of the public and competitors and constituted unfair methods of competition. Mr.llenry 0. Lank and Mr. P. 0. [{olinski, for the Commission. Complaint 24F.T.C.

ColiiPLAINT Pursuant to the provisions of an Act of Congress approved September 2G, 1914, entitled "An Act to create a Federal Trade Commission, to define its p6wers and duties, and. for other purposes," the Fed.eral Trade Commission, having reason to believe that Charles Elisco, individually, and trading as l\Iaywood Cand.y Company, hereinafter referred to as respondent, has been and is using unfair methods of competition in commerce, as "commerce" is defined in said act of Congress, and. it appearing to said Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PAnAGnArii 1. Respondent, Charles Elisco, is an individual doing business und.er the trade name Maywood. Cand.y Company, with his principal office and place of business located at 415 Lake Street, Maywood., Ill. Respondent is now and for six months' last past has been (•ngaged in the business of packing and. assembling candy into assortments and selling and distributing such assortments of candy to wholesale and retail dealers located at points in various States of the United States, and. causes and has caused his said products when so sold, to be transported from his principal place of business in the city of l\Iaywood, State of Illinois, to purchasers thereof in the State of Illinois and in other States of the United States, at their respective places of business; and there is now and. has been for six months last past, a course of trade and. commerce by said respondent in su<'h <'and.y between and. among the States of the United States. In the course and. conduct of said. business r£'spondent is in competition with other individuals and with partnerships and corporations engaged in the sale and distribution of candy in commerce between and among the various States of the United States.

PAn. 2. In the course and. conduct of his business as described in p~ragraph 1 hereof, respondent sells and has sold. to wholesale and retail dealers assortments of candy so packed and assembled as to involve the use of a lottery scheme when sold and distributed to the consumers thereof.

Said assortments, sold and distributed. by respondent, are composed of a number of small packages of candy which said packages retail at the price of one cent each. Each of said small packages of cand.y contains, in addition to the candy, an article of merchandise or a one cent coin. The majority of these articles of merchandise or prizes contained. within the said packages have a value of 11 small fractional part of one cent, but 11 small number of the said packages contain a one cent coin. The articles of merchandise or prizes or MAYWOOD CANDY COMPANY 247 245 Complaint the one cent coin are concealed from the consuming public within the small packages of candy until after a selection has been made nnd the particular package selected broken open. The articles of merchandise, although having value of only a fractional part of a cent, are, nevertheless, of unequal value and are of a much lesser value than the one cent coins. The articles of merchandise or prizeg of unequal value and the one cent coins are thus distributed to purchasers of the small packages of candy wholly by lot or chance. PAR. 3. The wholesale dealers to whom respondent sells his assortments resell said assortments to retail dealers, and said retail dealers and the retail dealers to whom respondent sells direct expose said assortments for sale and sell said candy to the purchasing public in accordance with the aforesaid sales plan. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of his products, in accordance with the sales plan hereinabove set forth and said sales plan has the capacity and tendency of inducing purchasers thereof to purchase· respondent's said products in preference to candy offered for sale and sold by his competitors. PAR, 4. The sale of said candy to the purchasing public in the manner above alleged involves a game of chance or the sale of a chance to procure an article of merchandise of greater value or a one cent coin.

The use by respondent of said method in the sale of candy, and the sale of candy by and through the use thereof and by the aid of said method, is a practice of the sort which the common law and criminal statutes have long deemed contrary to public policy; and is contrary to an established public policy of the Government of the United States. The use by respondent of said method has the dangerous tendency unduly to hinder competition or create monopoly in this, to wit: that the use thereof has the tendency and capacity to exclude from the branch of the candy trade involved in this proceeding competitors who do not adopt and use the same method or an equivalent or similar method involving the same or an equivalent or similar element of chance or lottery scheme. l\Iany persons, firms, and corporations who make and sell candy in. competition with the respondent, as above alleged, are unwilling to offer for sale or sell candy so packed and n.ssembled as above alleged, or otherwise arranged and packed(l for sale to the purchasing public so n.s to involve a game of chance and such competitors refrain therefrom.

PAR. 5. l\Iany dealers in and ultimate purchasers of candy are attracted by respondent's said methotl and manner of packing said candy, and by the element of chance involved in the sale thereof 248 FEDERAL TRADE COMl\USSION DECISIONS Findings 24F. T.C.

in the manner above described, and are thereby induced to purchase said candy so packed and sold by respondent, in preference to candy offered for sale and sold by said competitors of respondent who do not use the same or equivalent methods. The use of said method by respondent has the tendency and capacity, because of said game of chance, to divert to respondent trade and custom from said competitors who do not use the same or an equivalent method; to exclude from said candy trade all competitors who are unwilling t<> and who do not use the same or an equivalent method because the same is unlawful; to lessen competition in said candy trade, and to· tend to create a monopoly of said candy trade in respondent and such other distributors of candy as use the same or an equivalent method, and to deprive the purchasing public of the benefit of free competition in said candy trade. The use of said method by the respondent has the tendency and capacity to eliminate :from said candy trade all actual competitors, and to exclude therefrom all potential competitors, who do not adopt and use said method or an equivalent method.

P .AR. 6. .Many of said competitors of respondent are unwilling to adopt and use said method or any method involving a game of chance or the sale of a chance to win something by chance or any other method that is contrary to public policy. r AR. 7. The aforementioned method, acts and practices of the respondent are all to the prejudice of the public and of respondent's competitors, as hereinabove alleged. Said method, acts, and practices constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress, entitled "An Act to create a Federal Trade Commission, fo define its powers and duties, and for other purposes," approved September 26, 1914. REPORT, FINDINGS AS TO Tile F .AOI'S, AND ORDER Pursuant to the provisions of n.n Act of Congress, approved September 26, 1914, entitled "An Act to create a. Federal Trade Commission, to define its powers and duties, and for other purposes," the Federal Trade Commission, on November 6, 1936, issued and served its complaint in this proceeding upon respondent, Charles Elisco, individually, and trading as 1\faywood Candy Company, charging him with the use of unfair methods of competition in commerce in violation of the provisions of said act. On November 23, 1936, respondent filed his answer dated November 20, 1936, in which answer he admitted all the material allegations of the complaint to be true and stated that he waived hearing on the charges set forth in the MAYWOOD CANDY COMPANY 249 :245 Findings said complaint and consented that, without further evidence or other intervening procedure, the Commission might issue and serve upon him findings as to the facts and conclusion and an order to cease· and desist from the violations of law charged in the complaint. Thereafter the proceeding regularly came on for final hearing before the Commission on the said complaint and answer thereto, and the Commission, having duly' considered the same and being now fully advised in the premises, finds that this proceeding is in the interest of the public and makes this its findings as to the facts and its condusion drawn therefrom:

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Charles Elisco, is an individual doing business under the trade name 1\Iaywood Candy Company, with his principal office and place of business located at 415 Lake Street, 1\faywood, Ill. Respondent is now and for six months last past has been engaged in the business of packing and assembling candy into assortments and selling and distributing such assortments of candy to wholesale and retail dealers located at points in various States of the United States, and causes and has caused his said products, when so sold, to be transported from his principal place of business in the city of 1\faywood, State of Illinois, to purchasers thereof in the State of Illinois and in other States of the United States, at their respective places of business; and there is now and has been for six months last past a course of trade and commerce by said respondent in such candy between and among the States of the United States. In the course and conduct of said business respondent is in competition with other individuals and with partnerships and corporations engaged in the sale and distribution of candy in commerce between and among the various States of the United States. PAR. 2. In the course and conduct of his business as described in paragraph 1 hereof, respondent sells and has sold to wholesale and retail dealers assortments of candy so packed and assembled as to involve the use of a lottery scheme when sold and distributed to the consumers thereof.

Said assortments sold and distributed by respondent are composed of a number of small packages of candy which said packages retail at the price of one cent each. Each of said small packages of candy contains, in addition to the candy, an article of merchandise or a one cent coin. The majority of these articles of merchandise or prizes contained within the said packages have a value of a small fractional part of one cent, but a small number of the said packages contain a Findings 24 F. T. C. one cent coin. The articles of merchandise or prizes or the one cent coin are concealed from the consuming public within the small packages of candy until after a selection has been made and the particular package selected broken open. The articles of merchandise, although having value of only a fractional part of a cent, are nevertheless of unequal value and are of a much lesser value than the one cent coins. The articles of merchandise or prizes of unequal value and the one cent coins are thus distributed to purchasers of the small packages of candy wholly by lot or chance.

PAn. 3. The wholesale dealers to whom respondent sells his assortments resell said assortments to retail dealers, and said retail dealers and the retail dealers to whom respondent sells direct expose said assortments for sale and sell said candy to the purchasin~ public in accordance with the aforesaid sales plan. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of his products in accordance with the sales plan hereinabove set forth, and said sales plan has the capacity and tendency of inducing purchasers thereof to purchase respondent's said products in preference to candy offered for sale and sold by his competitors. PAn. 4. The sale of said candy to the purchasing public in the manner above alleged involves a game of chance or the sale of a chance to procure an article of merchandise of greater value or a one cent coin.

The use by respondent of said method in the sale of candy, and the sale of candy by and through the use thereof and by the aiu of said method, is a practice of the sort which the common law and criminal statute~>s haw• long deemed contrary to public policy; and is contro.ry to an established public policy of the Government of the United States. The use by respondent of said method has the dangerous tendency unduly to hinder competition or create monopoly in this, to wit: that the use thereof has the tendency and capacity to exclude from the branch of the candy trade involved in this proce('ding competitors who do not adopt and use the same method or an equivalent or similar method involdng the same or an ('quivalNtt or similar clement of chance or lottery scheme. 1\Iany person~, firms and corporations who make and sell candy in comp('tition with the respondent as abm·e alleged are unwilling to offer for sale or sell can<ly so packed and a.<>sembled as above alleged~ or otherwise arranged and packed for sale to the purchasing public so as to involve a game of chance, and such competitors refrain therefrom.

PAR. 5. ~1 any uealers in anu ultimate purchasers of candy are attracted by responuent's said method and manner of packing said MAYWOOD CANDY COMPANY 251 245 Order candy, and by the element of chance involved in the sale thereof in the manner above described, and are thereby induced to purchase said c~ndy so packed and sold by respondent in preference to candy offered for sale and sold by said competitors of respondent who do not use the same or equivalent methods. The use of said method by respondent has the tendency and capacity, because of said game of chance, to divert to respondent trade and custom from said competitors who do not use the same or an equivalent method; to exclude from said candy trade all competitors who are unwilling to and who do not use the same or an equivalent method because the same is unlawful; to lessen competition in said candy trade and to tend to create a monopoly of said candy trade in respondent and such other distributors of candy as use the same or an equivalent method; and to deprive the purchasing public of the benefit of free competition in said candy trade. The use of said method by the respondent has the tendency and capacity to eliminate from said candy trade all actual competitors and to exclude therefrom all potential competitors who do not adopt and use said method or an equivalent method. PAn. 6. .Many of said competitors of respondent are unwilling to adopt and use said method or any method involving a game of game of chance or the sale of a chance to win something by chance or any other method that is contrary to public policy. PAR. 7. The Commission further finds that the sale and distribution in interstate commerce of assortments of candy as described in paragraph 2 hereof are contrary to public policy. CONCLUSION The aforl'said acts and practices of the respondent, Charles Elisco, individually, and trading as Maywood Candy Company, are to the prejudice of the public and of respondent's competitors and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress, approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes." ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and the answer of respondent, in which answer respondent admits all the material allegations of the complaint to be true and states that he waives hearing on the charges set forth in said complaint and consents that, without further evidence or other intervening procedure, the Commission may Order 24F.T.C.

issue and serve upon him findings as to the facts and conclusion and an order to cease and desist from the violations of law charged in the complaint, and the Commission having made its findings as to the facts and conclusion that said respondent has violated the provisions of an Act of Congress, approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

It is ordered, That the respondent, Charles Elisco, individually, and trading as Maywood Candy Company, his agents, representatives, and employees, in the sale, offering for sale, and distribution in interstate commerce of candy, do cease and desist from: (1) Selling and distributing to jobbers and wholesale dealers for resale to retail dealers, and to retail dealers direct, candy so packed and assembled that sales of such candy to the general public are to be made, or may be made, by means of a lottery, gaming device, or gift enterprise.

(2) Supplying to or placing in the hands of wholesale dealers and jobbers and retail dealers packages or assortments of candy which are used, or which may be used, without alteration or rearrangement of the contents of such packages or assortments, to conduct a lottery, gaming device, or gift enterprise in the sale or distribution of the candy contained in said assortments to the public. (3) Packing or assembling in the same assortment of candy for sale to the public at retail small packages of candy of uniform appearance, a few of which small packages of candy have concealed within them a one cent coin in addition to the candy contained in said small packages.

It is further ordered, That the respondent, Charles Elisco, individually, and trading as Maywood Candy Company, shall, within 30 days aiter service upon him of this order, file with the Commission a report in writing setting forth in detail the manner and form in which he has complied with this order.

RITTENHOUSE CANDY COMPANY 253 Syllabus