Euclid Candy Co

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IN THE MATTER OF EUCLID CANDY COMPANY CO~!PL\IXT, FII'\DINGS, AND ORDim IN REGARD TO 'lhe ALLEGED VIOLATIO"' OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Doeh"ct 2882. Complaint, July 28, 1936-Dccision, Mar. 4, 1931 Where a corporation, engaged In manufacture and sale of candy, including certain 'assortments which were so packed nnd assembled as to involve use ot a lottery scheme when sold and distributed to consumers thereof, and some of which consisted of a number of penny pieces of uniform size and :;;IJape, the concealed color of the centers of n small number of which differed from that of the majority thereof, together with a number of large bars to be givt-n as prizes to purchasers of those pieces colored centers of which differed, as aforesaid, from the majority- Sold to wholesalrrs and to retailers, for display and re.,"'llle to purchasing publicin accordance with aforesaid sales plan, said assortments, and thereby sup- Plied to and placed in the hands of others the means of conducting lotter- Ies In the !>'ale of Its said products in accordance with such plan, contrary to public policy long recognized by the common law and criminal statutes and to an established public policy of the United States Government, and in competition with many who, unwilling to offer or sell candy so packed lind assembled o1· otherwise arranged all(l packed for sale to purchasing Public as to Involve a game of chnnce, or to adopt and use any method lih"olving such a game of chance or sale of a chance to win something by ehnnce, or any other method contrary to public policy, refrain therefrom; W'ith result that many dealers in and ultimate purchasers of candy were attracted by t>'ald method and manner of packing said product, and by element of chance Involved in sale thereof, as afo1·esaid, and thereby induced tt>· I>nrchase such candy thus packed and sold by It in preference to that offered and sold by said cmnpetltors who do not use same or equivalent methods; and with tendi'JH'Y and <.iiJlllCitr, brcause of said game of chance, to divert to it trade from its competitors, as nforl'said, exclude from such trade all eompetitOI'S who are unwilling to and do not use such or an equivalent nwthod because unlawful, lessen comrwtltion therein, and tend to create a lllonoJloly thereof in It and such other1· distributors as use same or an equivalent method, deprive purchasing public of the benefit of free competition in trade Involved, and eliminate from said trade all actual, and exclude therefrom nll potential competitors who do not adopt and use such or an equivalent methoo:

lleld, That stwh nets and practices were to the prejudice of the public and com1wtltors, and constituted unfair methods of compctitlnn. Defore 111 r. 0 lwrles P. Vicini, trial examiner. Jli r. llenry 0. Lank and llfr. P. 0. J{olinski for the Commission. Jfr. Philips. Ehrlich, of San Francisco, Calif., for ref:pondent. 788 FEDERAL TRADE 001\Il\IIS.SION DECISIONS Comvlaint 2-! 1!'. T. C. Complaint Pursuant to the provisions of an Act of Congress, approved Sep· tember 26, 1914, entitled "An Act to create a Federal Trade Commis· sion, to define its powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that Euclid Candy Comp~my, a corporation, hereinafter referred to as respondent, has been and is using unfair methods of competition in commerce, ns "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 pnhlie interest, hereby issues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. Respondent, Euclid Candy Company, is a corporation Qrganized and operating under the laws of the State of California, with its principal office a11d place of business located at 715 Battery Street, San Francisco, Calif. Respondent is now, and for one yeat' last past has been, engaged in the manufacture of candies and in the sale and distribution thereof to wholesale dealers, jobbers, and retail dealers located at points in the various States of the United States, .nnd causes and has eansPd its said products, when so sold, to be trans· ported from its principal place of business in the city of San Fran· ·cisco, Calif., to pnn·hast>rs thereof in other States of the United States at their rpspretive places of busirwss; and there is now, and has been for one year last past, a course of trade and commerce by said re· PpondPnt in such candy between and among the States of the Unite(l .States. In the course and conduct of said business, respondent is in -competition with other corporations and with partnerships and in· dividuals engaged in the manufacture of candy nnd in the sale antl ·distribution therpof in comnwree behw•en and amoncr the various States of the United States. "" PAR. 2. In tlle com·se a11<l conduct of its hnsiness, as described in pamgntph 1 hereof, rt>spondent sells and has sold to wholesale and retail dealers certain assortmpnts of candy so packed and assembled as to involve the us!' of a lotil'ry scheme wlwn sold and distributed to the consumers thereof.

One of said assortments of candy is composed of a number of pieces -of candy of uniform size and shape, together with a number of large bars of candy, which large bars of candy are to be given as prizes to purchasers of said pieces of candy of uniform size and shape, in the following manner: The majority of the said pieces of candy of uni· form size and shape in said assortment have centers of the same color, but a small number of said pieces of candy have different colored .centers; the said pieces of candy of uniform size and shape retail at EUCLID CANDY CO. 789 787 Comph1lnt the price of 1¢ each, but .the purchasers who procure one of the said candies with the center colored differently from the majority of said candies are entitled to receive, and are to be given free of charge, one of the said large bars of candy heretofore referred to. The purchaser of the last piece of candy of said uniform size also receives a large bar of candy. The color of the centers of said pieces of candy of uniform size and shape is effectively concealed from purchasers and prospective purchasers until a selection has been made and the particular piece of candy is broken. The aforesaid purchasers of said candies, who procure a candy colored differently from the majority of said pieces of candy in said assortment, thus procure one of the said large bars of candy wholly by lot or chance.

PAR. 3. The wholesale dealers to whom respondent sells its assorthlents resell the same 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- ~nd places in the hands of others the means of cond.ucting lotteries ln the sale of its products in accordance with the sales plan hereinabove set forth, and said sales plall has the capacity and tendency ?f inducing purchasers thereof to purchase respondent's said product 111 preference to candy offered for sale and sold by its competitors. PAR. 4. The sale of said candy to the purchasing public, in the lnanner above alleged, involws a game of chance or the sale of a chance to procure a large bar of candy.

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 aiel of said hlethod, 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 o£ the United States. 1'he use by respondent o£ said method has a 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 :tnethod iJwolving the same or an equivalent or similar element of ('hanee or lottery scheme .

. :Many persons, firms, and corporations who make and. sell caud.y ln competition with the respondent, as above alleged, are unwilling to offer for sale or sell candy so packed and assembled. as above alleged.t or otherwise arranged and packed for sale to the purchasing public so as to involve a game of chance, and such competitors refmin therefrom.

790 FEDERAL TRADE UOMl\IISSION DECISIONS Findings 24 F. T. C. PAR. 5. Many dealers in and ultimate purchasers of candy are attracted by respondent's said method and manner of packing said <:andy, and by the element of chance involved in the sale thereof in the manner above described, and are thereby induced to pur- -chase 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 its said competitors who do not use the same or 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 re- ~pondent and such other distributors of candy as use the same or an t>qnivalent method, and to deprive the purchasing public of the bcndit of free competition in said candy trade. The use of said method by the respondent has the tendency and capacity to eliminate fronl 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.

PAR. G. 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 mC>thod that is contrary to public policy. PAR. 7. The aforementioned method, acts, and practices of respondent are all to the prejudice of the public and respondent's .competitors as hereinabove alleged. Said method, nets, and practices <:onstitute unfair methods of competition in commerce with the in· tent and meaning of Section 5 of an Act of Congress, entitled ".An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 191-t REPOnT, FINDINGS AS TO THE FACTs, AND ORDER Pursuant to the provisions of an Act of Congress, approved Sep· tember 2G, 1014, entitled "An Act to create a Federal Trade Com· mission, to define its powers and duties, and for other purposes,'' the Federal Trade Commission, on July 28, 1036, issued nnd served its complaint in this proceeding upon the respondent, Euclid Candy Company, charging it with the use of unfair methods of competition in commerce in violation of the provisions of said act. On September 4, 1936, The Euclid Canlly Co. of California, Inc., filed its unswer EUCLID CANDY CO. 791 '787 Findings dated August 31, 1936, in which answer it stated that it was the respondent designated in the complaint as Euclid Candy Company and admitted all the material allegations of the complaint to be hue and stated that it waived hearing on the charges set forth in ~aid complaint and consented that, without further evidence or other ~ntervening procedure, the Commission might issue and serve upon lt 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 the answer thereto; -and the Commission, having duly considered the same and being now ~ully advised in the premises, finds that this p1·occeding is in the ~nterest of the public and makes this its findings as to the facts and -lts conclusion drawn therefrom:

l'INDINGS AS TO THE FACTS . PARAGRAPH 1. The respondent, The Euclid Candy Co. of Califor- .tlla, Inc., named in the complaint as Euclid Candy Company, is a corl>oration organized and operating under the laws of the State of ·~a]ifornia, with its principal office and place of business located at '15 Battery Street, San Francisco, Calif. Respondent is now, and for one year last past has been, engaged in the manufacture of :andies and in the sale and distribution thereof to wholesale dealers, Jobbers, and retail dealers located at points in the various Statrs of the United States, and causes and has caused its said products, when 8? sold, to be transported from its principal place of business in the Clty of San Francisco, Calif., to purchasers thereof in other States ?f the United States at their respective places of business; and there 18 now, and has been for one year 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 bt~siness, respondent is in competition with other corporations and >nth partnerships and individuals engaged in the manufacture of <:'andy and in the sale and distribution thereof in commerce between .UIId among the various States of the United States. PAR. 2. In the course and conduct of its business, as described in }larngraph 1 hereof, respondent sells and has sofd to wholesale and retail dealers certain assortments of candy so packed and assembled as to invol \'e the use of a lottery scheme when sold and distributed to the consumers thereof.

One of said assortments of candy is composrd of a number of pieces ~f candy of uniform size and shape, together with a number of arge bars of candy, which large bars of candy are to be given as 792 FEDERAL TRADE CO~Il\II:::i:::iio~ DECISIO:XS Fin !lings 24 F. T. C. prizes to purchasers of said pieces of candy of uniform size and shape, in the following manner: The majority of the said pieces of candy of uniform size and shape in said assortment have centers of the same color, but a small number of said pieces of candy have different colored centers; the said pieces of candy of uniform size and shape retail at the price of 1¢ each, but the purchasers who procure one of the said candies with the center colored differently from the majority of said candies are entitled to receive, and are to be given frpe of charge, one of the said large bars of candy heretofore referred to. The purchaser of the last piece of candy of said uniform size also receiws a large bar of candy. The color of the centers of said pieces of candy of uniform size and shape is effectively concealed from purchasers and prospective purchasers until a selection has been made and the particular.r piece of candy is broken. The aforesaid purchasers of said candies, who procure a candy colored differently from the majority of said pieces of candy in said assortment, thus procure one of the said large bars of candy wholly by lot or chance.

PAn. 3. The wholesale dealers to whom respondent sells its assort· ments resell the same 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 ac· cordance with the aforesaid sales plan. Respondent thus supplies to an<l places in the hands of others the means of conducting lotteries in the sale of its 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 product in prt'ference to candy offered for sale and sold by its 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 !t chance to procure a large bar of candy.

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 ha,·e long deemecl contrary to public policy, and is contrary to an <'Stablished public policy of the Gowrnment of the- United Stat£>s. The use by respondent of said method has a tendency unduly to himkr competition or cr£>ate monopoly in this, to wit~ that the use thereof has the tend£>ncy and capacity to exclude from the branch of the candy traue 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 lott<'ry sclwme.

~ 1! \i I' li EUCLID CAXDY CO. 793 787 Cnndn~ion . Many persons, firms, and corporations who make and sell candy ln competition with the respondent, as above alleged, are unwilling to offer for sale or sell candy so packed and as:,;embled as above alleged, or otherwise n.rranged and packed for sale to the purchasing public in such a manner as to involve a game of chance, and such competitors refrain therefrom.

PAR. 5. Many dealers in and ultimate purchasers of candy are attracted by respondent's said method and manner of packing said candy, and by the element of chance involved in the sale thereof in the manner abow de:,;cribed, and are thereby induced to purchase said candy so packed and sold by respondent in preference to candy 0 ffered for sale and sold by said competitors of respondent who do not llse the same or equivalent methods. The use of said method by respondent h.as the tendency and capacity, because of said game of chance, to divert to respondent trade and custom from its said competitiors who do not use the same or equivalent method; to exclude from said candy trade all competitors who are unwilling to and who <lo not use the same or an equivalent method because the same is unlawful; to lessen com1wtition in said candy trade, and to tend to c~·eate a monopoly of said candy trade in respondent and such other (hstributors of candy as use the same or an equivalent method, and to deprive the purchasing public of the benefit of free competition in :;a1d candy trade. The use of said niethod by the respondent has ths tf'.ndeney and capacity to eliminate from said candy trade all actual ~ompetitors, and to exclude therefrom all potential competitors, who do not-adopt and use said method or an equivalent method. PA:n. 6. Many of said competitors of respondent are unwilling to adopt aiel u:,;e 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 . . PAR. 7. The Commission further finds that the sale and distribution l . n Interstate commerce of assortments or packages of candy so packed and assembled as to enable retail dealers, without alteration, addition, 1)r rearrangement, to resell the same to the consuming public by lot <lr ct,r.a.nce IS• contrary to pu bl'tc po 1·tcy. CONCLUSION 'fhe aforesaid acts and practices of the respondent, The Euclid ~andy Co. of California, Inc., named in the complaint as Euclid andy Company, are to the prejudice of the public and of respond- ('llt's competitors and constitute unfair methods of competition in ~omrnerce within the intent and meaning of Section 5 of an Act of Order 24F. T. C.- Congress, approved September 26, 1914, entitled "An Act to creat~ a- Federal Trade Commission, to define its powers and duties, and for· other purposes."

ORDER TO CEASE'E AND DESIST This proceeding having been heard Ly the Federal Trade Commission upon the complaint of the Commission and the answer of thr respondent, in which answer respondent admits all the material allegations of the complaint to be true, and states that it waives hearing on the charges set forth in said complaint and consents that, without further evidence or other intervening procedure, the Commission may issue and serve upon it 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 i<J ordered, That the respondent, The Euclid Candy Co. of Califomia, Inc., named in the complaint as Euclid Candy Company, itsofficers, representatives, agents, and employees, in the offering for sale, sale, and distribution in interstate commerce of candy, do cet\:-;O and desist from:

1. Se.lliug and distributing to jobbers aud wholesale dealers fot· resale to retail dealers and to retail dealers direct candy so packetl and assembled that sales of such candy to the general public are to bfl' 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 an' used, or 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<l in said assortments to the public. 3. Packing or assembling in the same package or nssortmeut for sale to the public at retail pieces of candy of uniform size and shape having centers of a different color, together with a number of largt"r pieces of candy, which said larger pieces of candy are to be giwn as prizes to the purchasers procuring pieces of candy with a ct'nter of a particular color.

It i8 further ordered, That the respondent herein E"hall, within 30 days after service upon it of this order, file with the Commission u report in 'Writing setting forth in detail the manner· nnd form in which it has eomplie•l with this order.

NATIONAL KREAM CO., INC. 795 Complaint I~ THE :MATTER OF :NATIONAL KHEAM COMPANY, IXC.

COMPLAI~T, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OJ;' SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket ~901. Comp1uint, .1111}. 19, 19:16-Dccision, Mar. 4, 19Ji Where a corporation, engaged In jobbing foodstntr:s- Sold !1. large. variety of flavoring extracts, upon the bottle labels of which there were set forth an apparent depiction of an Italian coat-of-arms and various Italian words, Indicating and Implying to members or purchasing public that said f'Xtracts were prepared, compomljded, anu rmckageu by the Xat!ounl Chemical Laboratory, at 1\Iilan, Italy, and were imported Into the Unitcu States, and that they had been awarded first prize at certain expof:'itions in Milan and Florence, Italy, in competition with other tlavoring extracts there exhibited; facts being said extracts were eompound('d and packaged in the State of New York hy an American manufacturer, awJ saiu various representations were false;

With effect of misleading large number of Italian Americans who vrefer, us ~'lliJt•rior to such products produced In this country, those prounceu abroad, Into the belief that they were buying such importeu anc.l. vreferl'ed extracts or Italian origin; and with capacity. and tendency to mislenu and ueceive Ilnrchasing public into belief that said extracts, thus ln!Jeled, were componndeu and packaged abroad and imported into this country, anu to induce Snl'h public, acting in such erroneous beliefs, to buy its "aid prouucts, and thereby unfairly divert trade to it from its competitors who rightfully und truthfully represent their merchanuise, and do not in nn~·wise falsely represent the same; to the substantial injury of competition in commerce: Held, That such acts and practices were to the prejudice of the public and competitors, and constituted unfair methods of competition. llefore Mr. W. lV. Sheppard, trial examiner. Jb. Astor II ogg for the Commission.

Mr. ll enry Duke, of Long Island City, N. Y., for respondent. Complaint Pursuant to the provisions of an Act of Congress, approved September 26, 1914, entitled "An Act to create a Federal Trade Comtnission, to define its powers and duties, and for other purpos«:>s," t~1e Federal Trade Commission, having reason to believe that N ationa! Kream Company, Inc., a corporation, hereinafter refened to a.s .the respondent, has been and is using unfair methods of compehtiOn in commerce, as "commerce" is defined in said act, and it appearing to the said Commission that a proceeding by it in respect 796 FEDERAL TRADE COl\DIISSION llECISIOKS Comvtn lut 2-!F.T.C. thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect its follows: PARAGRAPH 1. Said respondent, National Kream Comp~tny, Inc., is a corporation, organized and existing under the laws of the State of New York, with its office and principal place of business at 3()0 Furman Street, Borough of Brooklyn, in the city and State of N evv York. Respondent is now and, for more than one year last past, has been, engaged in the business of a jobber of foodstuffs, including a variety of flavoring extracts. Respondent sells and distributes said products in commerce between and among the various States of the United States and the District of Columbia; cttusing said products, when sold, to be shipped from its phtee of business in the State of New Y or·k to purchasers thereof located in a State or States of the United States other than the State of New York PAR. 2. In the course aml conduct of its business aforesaid, respondent is now, and for more than one year last past, has been, in substantial competition with other corporations, individuals, partnerships, and firms engaged in the business of selling and distributing foodstuffs and flavoring extracts in commerce between and among the various States of the United States and the District of Columbia. PAR. 3. In the course and conduct of its business, as aforesaid, tha respondent sells n large variety of flavoring extracts. To the bottles which contain said flavoring extract are afiixed labels, containing a reproduction of what appear~rs to lle an Italian coat of arms a11d the following wot:ding:

HrevPtto No. C13!'i-ltPgistration 35:.! E~trntti-Bertoln Insupt'l'Ublli l'l'Plllilltl·nlle E~";vosbdoul l\1 ita no e Firmzp-1 00:1 UOSOLIO uogA I.nhot·atorio-Chlmlco Nazionnle Milano Italia l'ItODOTTI lli!POHTATI Agent! Gcnerall l'nramonnt Sales Co.

N.Y. U.S. A.

lf.! Oz.

NATIONAL KREAM CO., INC. 797 795 Complaint The tmnslation for the foregoing Italian wording is as follows: Diploma No. C135-Registration 352 BERTOLA EXTRACT Incomparable First Prize at the Expositions in Milan and Florence---1903 ROSOLIO ROSA National Chemical Laboratory Milan Italy Imported Products General Agents Paramount Sales Co., N.Y. U.S. A.

%Oz.

Said representations made upon the labels, as aforesaid, indicate and imply to the members of the purchasing public that the said flavoring extracts are prepared, compounded and packaged by the ~ational Chemical laboratory at Milan, in Italy, and are imported Into the United States. Said language further implies that the said product was awarded first prize at certain expositions in the ?ities of Milan and Florence, Italy, in competition with other flavor- Ing extracts there exhibited. In truth and in fact, said flavoring e~tracts are not prepared, compounded and packaged by a National Chemical Laboratory in Milan, Italy, and are not imported into the United States; they were not exhibited at any Italian exposition, U~d were awarded no medals or other prizes; but, on the contrary, said flavoring extmcts are prepared, compounded and packaged in the State of New York by an American manufacturer. . 'there is n large number of Italian-Americans among the purchas- Ing public who show a preference for goods produced abroad, under th~ belie£ that they are superior to those produced in this country, l>aid belief prevailing particularly i11 extracts and the like. These Purchasers are led to believe, because of the statements contained on the label and the fact that said label is printed in the Italian lang'llagc, that they are buying an imported extract of superior merit to the domestic product. The're are among respondent's competitors ~ally who s<'ll both the domestic and imported products, and who, ln the course and conduct of their businf'ss, honestly and truthfully tepresellt their merchandise.

PAn. 4. The above and foregoing representations, as shown Ly thel ubeJs llSPd by rpspondent, as described in paragraph 3, have the ca- 14Gi5r.m--39--,·oJ. 24-53 Findings 24F.T.C.

pacity and tendency to, and do mislead and deceive the purchasing public into the belief that the said flavoring extracts so labeled are prepared, compounded and packaged abroad, and imported into the United States, and have the capacity and tendency to, and do induce the said purchasing public, acting in such erroneous belief, to pur· chase respondent's product, thereby diverting trade to the respondent from those of its competitors who do not misrepresent and falsely label their products; and in t!1is manner respondent does substantial injury to competition in interstate commerce~. PAR. 5. The above~ acts and things done or caused to be done by the respondent, were and are each and all to the prejudice of the public and of respondent's competitors, and constitute unfair methods of competition in interstate commerce within the meaning and intent of Section 5 of "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commis· sion, to define its powers and duties, and other purposes," the Fed· era! Trade Commission, on the 19th day of August 1936, issued and served its complaint in this proceeding upon respondent, National Kream Company, Inc., a corporation, charging it with use of unfait methods of competition in commerce in violation of the provisions o:f said act. After the issuance of said complaint and the filing of re· spondent's answer thereto, testimony and other evidence in support of the allegations of said complaint were introduced by Astor Hogg, attorney for the Commission, before W. ·w. Sheppard, an examiner of the Commission theretofore duly designated by it and in opposition to the allegations of the complaint by Henry M. Duke, attorney for the respondent; and said testimony and other evidence were duly recorded and filed in the office of the Commission. Thereafter, the proceeding regularly came on for final hearing before the Commis· sion on the said complaint and answer thereto, t~stimony and othet evidence, and brief in support of the complaint (respondent's coun· sel having waived the filing of brief) 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 NATIONAL KREAM CO., INC. 799 795 Findings makes this its findings as to the facts and its conclusion drawn therefrom:

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, National Kream Company, Inc., is a corporation organized and existing under the laws of the State of N"ew York. Its office and principal place of business is located at ~60 Furman Street, Borough of Brooklyn, in the city of New York In said State. For more than one year last past, respondent has been engaged in the business of jobbing food stuffs, including a variety of flavoring extracts. It sells and distributes said products in commerce between and among the various States of the United States and the District of Columbia, causing said products when sold, to be shipped from its place of business in the State of New York to the Purchasers thereof located in States of the United States other than the State of New York. In the course and conduct of its business as aforesaid, respondent is now and for more than one year last past has been in substantial competition with other corporations and with ~artnerships, firms, and individuals engaged in the business of sell- Ing and distributing food stuffs and flavoring extracts in commerce between and among the various States of the United States and the District of Columbia.

PAR. 2. In the course and conduct of its business as aforesaid, respondent sells and has sold a large variety of flavoring extracts. To the bottles which contain said flavoring extracts are affixed labels containing a reproduction of what appears to be an Italian coat-of-arms and the following words :

Brevetto No. C135-Reglstratlon 352 Estrattl-Bertola Insuperabill Premlatl-alle Esposlzlonl Milano e Firenze-1903 ROSOLJO ROSA Labor a torlo-Chlmlco Nazlonale Milano Italia PRODOTTIIMPORTATI Agentl Generall Paramount Sales Co.

N.Y. U.S.A.

lh Oz.

Findings 24F.T.C.

The English translation of the foregoing Italian wording is as follows:

Diploma No. C135-Registration 3G2 BERTOLA EXTRACT Incomparable First Prize at the Expositions in Milan and Florence-1903 ROSOLIO ROSA National Chemical Laboratory Milan Italy Imported Products General Agents Paramount Sales Co., N.Y. U.S. A.

lh Oz.

PAn. 3. The representations made upon the labels as set forth in paragraph 2 hereof indicate and imply to the members of the purchasing public that the said flavoring extracts are prepared, com· pounded and packaged by the National Chemical Laboratory, at Milan, Italy, and are imported into the United States. Sa.id language further indicates and implies that the said extracts were awarded first prize at certain expositions held in the cities of Milan and Florence, Italy, in competition with other flavoring extracts there exhibited. The representations made by respondent are false and misleading in that said flavoring extracts are not and were not prepared, compounded or packaged by National Chemical Laboratory of Milan, Italy, and are not and were not imported into the United States from any foreign country. They were not exhibited tlt any Italian exposition and were awarded no medals or other prizes. As a matter of fact, said flavoring extracts are and were prepared, compounded, and packaged in the State of New Yorl.: by an American manufacturer.

PAn. 4. There are a .large number of Italian Americans among tho purchasing public who have and show a preference for flavoring extracts produced abroad under the belief that they are superior to those produced in this country. These purchasers are led to believe because of the statements contained on the labels and the fact that the said labels nre printed in the Italian language, that they are buying imported extracts of Italian origin for which they hHe 11 preference.

PAn. 5. The above and :foregoing representations, as shown hy the labels used by respondent us described in paragraph 2 hereof, have the en pacity and tendency to mislead until tlecei ve the purdtasiug public into the belief that the said flavoring extracts so labeled are Ill J! 1:

I NATIONAL KREA:M CO., INC. 801 I 795 Order and were prepared, compounded and packaged abroad, and imported into the United States; and have the capacity and tendency to induce the said purchasing public acting under such erroneous beliefs to Purchase respondent's products, thereby unfairly diverting trade to the respondent from its competitors who rightfully and truthfully represent their merchandise and who do not in any wise falsely represent their products; and in this manner, respondent does substantial injury to competition in interstate commerce. CONCLUSION The aforesaid acts and practices of the respondent, National Kream Company, Inc., a corporation are to the prejudice of the public and of respondei1t's competitors, and constitute unfair methods of com- Petition in commerce, within the intent and meaning of Section 5 of an Act of Congress, approved September 26, 1914, entitled "An ~ct 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, the answer of respondent, testimony and other evidence taken before W. ,V, Shep- ~ard, an examiner of the Commission theretofore duly designated by It, in support of the allegations of said complaint and in opposition thereto, brief of the Commission filed herein (respondent having ~waived the filing of brief) and the Commission having ma,de its find- ~ngs as to the facts and its conclusion that said respondent had vioated the provisions of an Act of Congress, approved September 26, ~914:, entitled "An Act to create a Federal Trade Commission, to define its powers a.nd duties, and for other purposes." It is ordered, That the respondent, National Kream Company, !nc., a corporation, its officers, representatives, agents, and employees, In connection with the offering for sale, sale, and distribution of ' ~~voring extracts or compounds in interstate commerce and in the !strict of Columbia, do cease and desist 1. From directly or indirectly advertising, designating or representing, through the use of words of any foreign language, or symbols, or picturizations, or through any other means or in any mantier, that flavoring extracts or compounds manufactured or com- P0t_lnded in the United States are manufactured or produced in Italy or In any other foreign country and imported into the United States; Order 24F.T.C.

2. From directly or indirectly ad:vertising, designating or representing, through the use of words, symbols or picturizations falsely indicating its flavoring .extracts or compounds were exhibited at any exposition or a warded a prize at any such exposition, that such products are of superior merit.

It is further ·ordered, That the respondent shall, within 30 days after the service upon it of this order, file with the Commission B report in writing setting forth in detail the manner and form in which it has complied with this order.

KALO INOCULANT CO. 803 Syllabus