Fine-Reding Candy Manufacturing Company, Inc.

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IN Tile MATTER OF FINE-REDING CANDY l\IANUF ACTURING COMPANY, INC. CO:Iiplaint, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATIOS OF SEC. 5 OF AN .ACT OF CONGRESS Al'l'ROVED SEI".r. 2G, 1914 Docket 2699. Complaint, Jan. 31, 1936-Defi.sion, J-une l!J, 1937 'Vhere a corporation eugaged in manufacture and sale of candy, including certain assortments which were so paekPd and 11Rl4Pmbled ns to involve use of a lottery scheme when sold a ud distributed to consumers thereof, and which iuchuled nsRortments Ruth as (1) number of small pietes ol candy, number of larger pieces or bars thereof, and one still larger piece, together with push cards, for sale under a plan, and in accordance with said card's explanatory l£>gend, pursuant to which purchaser received, for penny paid, one of the small pieces, or one of the larger pieces or bars, in accordance with particular number pushed by dmnce, and purchaser of last pu~h was entitled, without chargt>, to the aforesaid still larger bar; and (2) number of small bars of candy, number of medium-sized bars, and number of still larger bars, together with pul'lh card, for sale under a similar plain, and in acconlance with said card's explanatory l!'gend, pursuant to which purchaser received, for five cents paid, one of the aforesaid pieces of varying size- ~old, to wholesalers a!l(l retailen:~ for llit<play nnd resale to purchasing public by the retailer-vendee, In accordunce with afo1·esaid plan, such assortments, and thereby supplied to nnd Jllaced in the hands of others the means ot conducting lotteries in the sale of said IJrodnds, in accordance with such plan, contrary to the t•:-;tabllHhPd public policy of the se,·eral States and of the United States GO\·ernment, and contrary, in many States, to local criminal statutt>s, nnd in ('Ompetition with many who, unwilling to otter and f;elJ candy so pnclwd aud assembled, or otherwi:;e arranged and packed for sale to pnrehasiug JHlblic, as to invoh·e u game of dumce or sale therewith of a chance to pro('nre larger pieces, rpfrnin therefrom, and in com· petition with many who nre unwilling to adopt nnd u><e said or any method involving gn me of thance or sale of a chnnce to win by chance, as con· trary to public policy or criminal f;tatutes as aforesaid, or as detrimental to public mornls and to morals of the vurchasers of snell products; "Tith result that many <kalers in nnd ultimate purchasers of candy were at· tractetl by 8nitl method~ 11nd manner of packing such prod1wt, and bY element of chance involved in F\ale thereof ll:'! above set forth, aud tht>reby indu<'ed to purthast• ~<llml', tllllii! packed nnd ~<Old by it, in pref<•rence to that offen•d nnd f;old by ;;aid cump<'titors who do not use such or eqnivaler~t nwthodt!, many <leakrs were hulnc<'<l to pnrehtn;e the candy thus offered and sold by it, In JlrefPrPJlce to nll others, hPcnu><e of the game of ehnnce involYcd th<>rPin, 1111<1 with IPIHlPII<'Y nn<l capacity, heenuse of f>;aid gan1c of chance nlonc, unf;llrly to dlv<'!'t to It trn<le aud custom from its said competitor>~ who do not use same or Pflnl\·alent methods, exclude frolll such trade nll com1wtitor>1 who nre unwilliug to and do not use such or equimlcnt I)l'llCtices or nwtlw<ls, lesspn competition tlwr<'in nn<l tend to create a monopoly therpof In It and such other distributors ns use same FINE-REDING CANDY l\IANUFACURING CO .• INC. 215 214, Complaint or equivalent mf'thods, dE>prive purchnslng public of benefits of free competition in trade Involved, and eliminate from said trade all actual, and exclude therefrom all votential, competitors who do not adopt or use such or equimlent metlwds:

Held, That such nets and practices were to the prejudice of the public and competitors and constituted unfair methods of competition. Before !llr. 11/iles J. Furnas, trial examiner. 11/r. P. 0. Kolinski and 11/r. llenry C. Lank for the Commission. Air. D. G. Johnson, of Oklahoma City, Okla., for respondent. Complaint Pursuant to 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," the Federal Trade Commission, having reason to believe that Fine-Reeling Candy Mfg. Co. Inc., a corporation, 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 ?e in the public interest, hereby issues its complaint stating its char·ges ln that respect as follows:

PARAGRAPH 1. Respondent is a corporation, organized under the laws of the State of Oklahoma, with its principal place of business in the city of Oklahoma City, State of Oklahoma. Respondent is now, and for several years last past has been engaged in the manufacture of candy and the sale and distribution thereof to wholesale and retail dealers located at points in the various States of the United States, and causes said products when so sold, to be transported from its place of business in Oklahoma City, State of Oklahoma, to purchasers thereof in other States of the United States, at their respective places of business, and there is now, and has been for several years last past, n 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 the said business, respondent is in competition with other corporations and with individuals and partnerships engaged in the foa}e and distribution of candy and candy products in commerce between and among the various States of the United States. PAR. 2. In the course and conduct of its business, as described in Paragraph 1 hen'of, respondent sells and has sold to wholesale and t·etail dealers, various packages or assortments of camly, so packed and assembled as to involve the use of a lottery scheme when sold and distributed to the consumers thereof. Certain of said packages are hereinafter described for the purpose of showing the methods used by 216 }'EDEil..\L TltADE C01IJI.IISSIO:N l.lECISIONS Complaint 2;>F.T.O.

respondent, but this list is not all inclusive of the various packages, 11or does it include all the details of the several sales plans which respondent has been or is using in the distribution of candy by lot or chance:

(a) One of said assortments is composed of a number of small pieces of candy, a number of larger pieces or bars of candy, and one still larger piece of candy, together with a device commonly called a push card. The candy contained in !'aid assortment is distributed to purchasers in the following manner: The push card has a number of partially perforated discs and when a push is made and the disc separated from the card a number is disclosed. Sales are one cent each and the card bears statements informing customers and prospective customers that certain specified numbers receive one of the small pieces of candy, that certain other spedfied numbers .receive one of the larger pieces or bars of candy, and tllat the purchaser of the last push from said card receives the still larger bar of candy. The numbers on the discs or pushes are effectively concealed from the purchaser and prospective purchaser until a selection has been made and the disc separated from the card. The fact as to whether a purchaser receives a small piece of candy, a larger piece of candy, or the still larger bar of candy for the price of one cent Is thus determined wholly by lot or chance.

(b) .Another assortment manufactured nud distributed by the rcsvoudent is composed of a number of small bars of candy, a number of medium sized bars of candy, aud a number of stlll larger bars of candy, together with a device commonly called a push card. The candy contained in said assortment is distributed to purchasers in the following manner: The candy contained in said assortment is distributed to purchasers in a similar manner to that shown by the sales plan described in subparagraph (a) except that sales are five cents each instead of one cent each and the pieces or bars of candy are larger than the corresponding 11ieces or bnrs of candy in the assortment referred to in subparagraph (a). PAn. 3. The wholesale dealers to whom respondent sells its assort· ments, 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 plans. Respondent thus sup· plies to and places in the hands of others the means of conducting lotteries in the sale of its products in accordance with the sales plans hereinaboye set forth, as a means of inducing purchasers thereof to purchase respondent's said products in preference to candy offered for sale and sold by its competitors. PAn. 4. The sale of said candy to the purchasing public as above alleged involves a game of chance or the sale of a chance to procure larger pieces or bars of candy in the manner alleged. Such sales of candy, along with the sale of such chances to pro· cure additional bars of candy or packages of candy or other articles of merchandise in the manner alleged, are contrary to the established FINE-REDING CANDY MANUFACURING CO., INC. 217 . Complaint Public policy of the several States of the United States and of the Government of the United States, and in many of the States of the United States are contrary to local criminal statutes. The use by r:spondent 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 ~dopt 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.

By reason of said facts many persons, firms, and corporations who lllake and sell candy in competition with respondent, as above alleged, are unwilling to offer for sale or sell candy so packed and assembled as above alleged, or otherwise arranged and packed for sale to the Purchasing public so as to involve a game of chance, or the sale with such candy of a chance to procure additional bars 0f candy or packages of candy or other articles of merchandise Ly chance; and such ~ornpetitors refrain therefrom.

:PAn. 5. Many dealers in and ultimate purchasers of candy are attracted by respondent's said methods and manner of packing said candy, and by the element of chance involved in the sale thereof in the manner above described, and are thereby induced to purchase said candy so packed and sold by respondent, in preference to candy {l.tl'ered for sale and sold by said competitors of respondent who do ~ot use the same or equivalent methods. l\Iany dealers in candy are Induced to purchase said candy so offered for sale and sold by res~ondent, in preference to all others, because said ultimate purchasers give preference to respondent's said candy on account of the said g"arne of chanee involved therein. The use of said methods by respond- 1lnt has the tendency and capaeity unfairly, and because of said game {)f. chance alone, to divert to respondent trade and custom from its ~aid competitors who do not use the same or equivalent methods, to elc]ude from said candy trade all competitors who are unwilling to ttnd who do not use the same or equivalent methods; to lessen com- Petition in said candy trade, and to tend to create a monopoly of said candy trade in respondent and such other distributors of candy as 'llse the same or equivalent methods, and to deprive the purchasing Public of the benefit of free competition in so.id candy trade. The use c)f. said methods by the respondent has the tendency and capacity unfalrly to eliminate from said candy trade all actual competitors, and to exclude therefrom all potential competitors who do not adopt and 'llse said methods or equivalent methods that are contrary to public Policy and to criminal statutes, as above alleged. 218 FEDERAL TRADE COl\IMISSlON DECISIONS Findings 25 F. T. C. PAR. 6. Many of said competitors of respondent are unwilling to adopt and use said method or any methou involving a game of chance or the sale of a chance to win something by chance, because such methods are contrary to the public policy or to the criminal statutes of certain of the States of the United States, or because they are of the opinion that such methods are detrimental to public morals and to the morals of the purchasers of said candy, or because of any or all of said reasons.

PAR. 7. The afore!llentioned methods, acts, antl practices of the respondent are all to the prejudice of the public and of respondent's competitors as hereinabove alleged. Said methods, 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, 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 Sep· tember 26, 1914, 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 January 31, 1936, issued, and on February 3, 1936, served, its complaint in this proceeding upon re· spondent, Fine-Reeling Candy Manufacturing Company, Inc., a cor· poration, charging it with the use of unfair methods of competition in commerce in violation of the provisions of said act. After the issuance of said complaint and the filing of respondent's answer, the Commission, by order entered herein, granted respondent's request for permission to withdraw said answer and to substitute therefor an answer admitting all the material allegations of the complaint to be true and waiving the taking of further evidence and all other intervening procedure, which substitute answer was duly filed in the office of the Commission. Thereafter, this proceeding regularly came on for final hearing before the Commission on the said complaint and the substitute an::.·wer, briefs and oral arguments of counsel hav· ing been wai.wd; 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 find· ings as to the facts and its conclusion drawn therefrom: FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent is a corporation organized under the laws of the State of Oklahoma, with its principal place of business FINE-TIEDING CANDY 1\fANUFACUll.ING CO .. INC. 219 Fillllings in the city of Oklahoma City, State of Oklahoma. Respondent is now, and for several years last past has been, engaged in the manufacture of candy aml in the sale and distribution thereof to wholesale and retail dealers located at points in the various States of the United States. It causes said products when sold to be transported from its place of business in Oklahoma City, State of Oklahoma, to Purchasers thereof in other States of the United States at their respective places of business. There is now, and has been for several ~ears last past, a course of trade and commerce by said respondent 111 such candy between and among the States of the United States. In the course and conduct of the said business, respondent is in com- Petition with other corporations and with individuals and partnerships engaged in the sale and distribution of candy and candy prod- Ucts in commerce between and among the various States of the United States.

PAn. 2. In the comse and conduct of its business, as described in Paragraph 1 hereof, respondent sells and has sold to wholesale and retail dealers various packages or assortments of candy so packed Hnd assembled as to invoh·e the use of a lottery scheme when sold and distributed to the consumers thereof. Certain of said packages Hle hereinafter described for the purpose of showing the methods 11~ed by respondent, but this list is not all inclusive of the various l)ackages, and it does not include all the details of the several sales l'lans which respondent has been or is using in the distribution of canuy by lot or chance.

(a) One of said assortments is composed of a number of small }lieces of candy, a number of larger pieces or bars of candy, and one !still larger piece of candy, together with a device commonly called a Push card. The candy contained in said assortments is distributed to purchasers in the following manner:

The push mrd hns n lllllllhi'J' of partially !Jt>rforated di~cs U]](l wlwn a push Is Illude and the disc Sl')Jarated from the <·ard a number is disdost>d. Sales lire one cent each flll{l the <>nrd bears statt-ments Informing custonwrs and llrto;;ppctive customers that certain specified numbers receive one of the small NPees of caudy, that cf'rtain other s)lPeifiert numbf'rs receive one of the larger l•l<•ct•s or bnrs of candy, aud that the vur<>haser of the last push from said card ''<'<'<'ires the still largpr lmr of cnudy. The numbers on the discs or 1mshcs are <•frectlvel;v conc<•ulcd fz·om the vurdJilSf'r and pro>1JlPctive purchaser until a 111'h tion hns bP<'ll made and the disc separated from the card. The fact as to '"lwther n }mreh11s1•r l'f'Ceives a small picee of cnndy, n larger piece of candy, or the still lnr~er bur of cnncly for the Jlh(·e of one cent is tlms <leterminc>rt ' 1'holly by lot or ehanee.

(b) Another assortment manufactured and distributed by the lef.;pondent is compm;Pd of a number of small bars of candy, a num- 220 FEDERAL TRADE 001\IM:ISSION DECISIONS Findings 25 F. T. O. ber of medium sized bars of candy, and a number of still larger bars of candy, together ~ith a device commonly called a push card. The candy contained in said assortment is distributed to purchasers in the following manner:

The cnnuy contained in salu assortment is distributed to purchasers fn a similar manner to that shown by the sales plan described in subparagraph (a) except that sales are fi\'e cents each instead of one cent <'ach and the pieces or bnrs of candy are larger than the corresponding pieces or bars of candy ill the assortment referred to in subparagraph (a.). PAR. 3. The wholesale dealers to whom respondent sells its 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 plans. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of its products in accordance with the sales plans hereinabove set forth, as a means of inducing purchasers thereof to purchase respondent's said products in preference to candy offered for sale and sold by its competitors.

PAR. 4. The sale of said candy to the purchasing public, as above found, involves a game of chance or the sale of a chance to procure larger pieces or bars of candy in the manner described. Such sales of candy, together with the sale of such chances to procure larger pieces or bars of candy in the manner described, are contrary to the established public policy of the several States of the United States and of the Government of the United States, and in many of the States of the United States are contrary to local criminal statutes. The use by respondent of said methods has the tendency unduly to hi)lder compe' titian 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 methods or equivalent or similar methods involving the same or an equivalent or similar element of chance or lottery scheme. Dy reason of said facts, many persons, firms, and corporations who make and sell candy in competition with respondent are unwilling to offer for sale or sell candy so packed and assembled as above described, or otherwise arranged and packed for sale to the purchasing public so as to involve a game of chance or the sale with such candy of a chance to procure larger pieces or bars of candy by chance, and such competitors refrain therefrom.

PAR. 5. Many dealers in and ultimate purchasers of candy are attracted by respondent's said methods and manner of packing said candy and by the element of chance involved in the sale thereof in FINE-REDING CANDY 1\IANUFACURING CO., INC. 221 .214 Order the manuer 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 safd competitors of respondent who do not use the same or equivalent metfiods. Many dealers in candy are induced to purchase said candy so offered for sale and. sold by respondent in preference to all others because of the said game of chance involved therein. The use of said methods by respondent has the tendency and capacity unfairly, and. because of said game of chance alone, to divert to respondent trade and custom from its said. competitors who do not use the same or equivalent methods; to exclude from said candy trad.e all competitors who are unwilling to and who do not use the same or equivalent methods; 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 equivalent methods; and to deprive the purchasing public of the benefit of free competition in said cand.y trade. The use of said method.s by respondent has the tendency and capacity unfairly to eliminate from said candy trade all actual competitors, and to exclude therefrom all potential competitors Who do not adopt and use said methods or equivalent methods. PAn. 6. Many of said competitors of respondent are unwilling to · adopt and use said methods orany method involving a game of chance or the sale of a chance to win something by chance because such methods are contrary to the public policy or to the criminal statutes of ce.rtain o:f the States of the United States, or because they are o:f the opinion that such methods are detrimental to public morals and to the morals of the purchasers of said candy, or because of any or all of said reasons.

CONCLUSION The aforesaid acts and practices of the respondent, Fine-Reding Candy Manufacturing Company, Inc., -are to the prejudice o:f the Public and 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 d.efine its powers and duties, nnd for other purposes."

OI!DER TO CEASE AND DESIST This proceeding having been heard by the Federal Trad.e Commisl-.ion upon the complaint of the Commission nnd the answer of respondent dated August 31, 193G, admitting all the material allegations of the con1plaint to be true and waiving the taking of further evidence and all other intervening procedure, and the Commission having made its 222 l<'EDERAL TRADE COl\Il\IISSION DECISIONS Ordr 2:) l!'. 'I.'; C. findings as to the facts and its 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 i8 ordered, That the respondent, Fine-Ueding Candy Manufacturing Company, Inc., a corporation, its officers, representati,·es, agents, and employees, in connection with the offering for sale, sale, and distribution of candy in interstate commerce, do forthwith cease and desist from :

1. Selling and distributing to jobbers and wholesale dealers for resale to retail dealers, or 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 or retail dealers assortments of candy which are used, or which may be used, without alteration or rearrangement of the contents of such assortments, to conduct a lottery, gaming device, or gift enter· prise in the sale or distribution of the candy contained in said assortments to the public.

3. Supplying to or placing in the hands of retail and wholesale dealers and jobbers assortments of candy, together with a device commonly called a "push card", for use, or which may be used, in distributing or selling candy to the public at retail. 4. Furnishing to retail and wholesale dealers and jobbers a de- Yice commonly called a "push card," either with assortments of candy or separately, bearing a legend or legends or statements informing the purchasing public that the eandy is being sold to the public by lot or chance or in accordance with a sales plan which constitutes a lottery, gaming device, ~r gi~t enterprise. It i8 further ordend, That the respondent, Fine-Reding Candy Manufacturing Company, Inc., a corporation, shall, within 30 days after service upon it of this order, file with the Commission a report in writing setting forth in detail the manner and form in which it has complied with the order to cease and desist hereinabove set forth. WILLIA1\IS-CRAHAN CO. 223 Syllabus IN THE MATI'ER OF WILLIAMS-CRAHAN COMPANY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. li OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docl•et !704. Complaint, Jan. 31, 1936-Decision, June 19, 1937 Where a corporation engaged in manufacture and sale of candy, including certain assortments which were so packed and assembled as to involve use of a lottery scheme when sold and distributed to consumers thereof, and which included assortments such as (1) number of penny pieces of candy of uniform size and shape, the enclosed concealed centers of majority of which were cream, together with a number of larger pieces to be given as prizes to chance purchasers of aforesaiu penny pieces of uniform size, etc., enclosed concealed centers of which were, instead, red cinnamon, and also to those purchasers of lust one of said uniform penny pieces in each of the two trays into which assortment was divided, without further charge, and togethel' with, also, explanatory display card for retailer's use; (2) number of small pieces of candy, together with number of larger pieces and two still larger pieces, and punchboard or push card, for sale under a plan, and in accordance with said card's explanatory legend, pursuant to which purchaser received, for five cents paid, one of the small or one of the larger pieces, in accordance with particular number pushed by chance, and maker of last push in each of the two sections into which cards were divided received one of the still larger pieces; and (3) number of bars of candy of uniform size, together with push card or punchboard, for sale under a plan, and in accordance with explanatory legend on said card or board, pursuant to which purchaser paid amount ranging from one cent to five cents for uniform size pieces thus sold, in accordance with particular number pushed by chance- Sold, to wholesalers and retailers for display and resale to purchasing public by the retailer·vendee, in accordance with aforesaid plan, such assortments, and thereby supplied to and placed in the hands of others the means of conducting lotteries in the sale of said products, In accordance with such plan·s, contrary to public policy as long recognized in the common law and eriminal statutes, and contrary to an established public policy of the United States Government, and in competition with many who, unwilling to offer and sen candy so packed and assembled, or otherwise arranged and packed for sale to purchasing public, as to involve a game of chance or sale therewith of a chance to procure larger pieces, refrain therefrom, and in competition with muny who arc unwilling to adopt and usc said or any method inmlving game of chnnrc, or sale of a chance to win by chance, or other method contrary to public policy i With result that many dealers. in and ultimate purchasers of candy were attracted by said methods and manner of pac·king such product, and by clement of chance involved in sale tlwreof as rbove set forth, and thereby induced to purchase same, thus packed and sold. by it, in preference to that otl'erell and sold by said competitors who do not use such or equivalent 158121"'-31}--17 Complaint 25 F. T. C. methods, and with tendency and capacity, because of liiaid game of chance, to divert to it trade and custom from itf! said competitors, to exclude from such trade all competitors who are unwilling to and do not use such or equivalent practices or methods as unlawful, lessen competition therein and tend to create a monopoly thereof in it and such other distributors as use same or equivalent methods, deprive purchasing public of benefits of free competition in trade involved, and eliminate from said trade all actual, and exclude therefrom all potential, competitors who do not adopt and use such or equivalent methods :

Held, That such acts and practices were to the prejudice of tile public and competitors and constituted unfair methods of competition. Defore Mr. Miles J. Furnas, trial examiner. Mr. P. 0. J(olinski and Mr. Henry 0. Lank for the Commission. Complaint Pursuant to 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," the Federal Trade Commission, having reason to believe that Williams- Crahan Company, a corporation, 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:

PARAGRAPH 1. Respondent is a corporation, organized under the laws of the State of Oklahoma with its principal office and place of business in the city of Oklahoma City, State of Oklahoma. Respondent is now, and for several years last past, has been engaged in the manufacture of candy and in the sale and distribution thereof to wholesale and retail dealers located at points in the various States of the United States, and causes said products, when so sold, to be transported from its place of business in the city of Oklahoma City, State of Oklahoma, to purchasers thereof in other States of the United States at their respective places of business, and there is now, and has been for several years 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 the said business, respondent is in competition with other corporations and with individuals and partnerships engaged in the sale and distribution of candy and candy products in commerce between and among the various States of the United States.

PAR. 2. In the course and conduct of its business, as d£>scribed in paragraph 1 hereof, respondent sells and has sold to wholesale and WILLIAMS-CRAHAN CO. 225 223 Complaint retail dealers, various packages or assortments of candy, so packed and assembled as to involve the use of a lottery scheme when sold and distributed to the consumers thereof. Certain of said packages are hereinafter described for the purpose of showing the methods used by respondent, but this list is not all inclusive of the various packages, nor does it include all the details of the several sales plans which respondent has been or is using in the distribution of candy by lot or chance:

(a) One of said assortments is composed of a number of pieces of candy of unifonn size, shape, and quality, together with a number of larger pieces of c;andy, which larger pieces of candy are to be given as prizes to purchasers of said pieces of candy of uniform size, shape, and quality, in the following manner: The majority of the said pieces of candy of uniform size, shape, and quality, have cream centers, but a small number of said pieces of candy have centers containing red cinnamon. The said pieces of candy of uniform size, shape, and Quality, retail at the pl·ice of one cent each, but the purchaser who procures one of the snill pieces of caudy lHtving a center of red cinnamon, Is entitled to receiye, and is to be given free of chrn-ge, one of the said larger pieces of candy heretofore rcferrt>d to. The ns~ortment is packed in two trays, and the Purchaser of the last piece of candy of uniform size, shape, and quality in each tray, is entitled to receive, and is to be given free of charge, one of tlle larger pieces of candy heretofore referred to. The fact as to wllether the Pieces of candy of uniform size, shape, and quality are of whipped c1·eam throughout, or contain red cinnamon, is effectively concealed from the pur· chasers and prospective purchasers until a selection bas been made and the Piece of candy brol,en open. The aforesaid purchasers procuring a candy having red cinnamon in the center thus procure one of the said larger pieces of candy wholly by lot or chance, and tile purchaser of the last piece of candy of uniform size, shape, and quality, in each of said trays, also procures one of the larger pieces of candy wholly by lot or chance. The respondent furnishes to said wholesale and retail dealers, with said assortment, a display card to be used by the retail dealer in offering said candy to the public. The display card bears a legend or statement informing the prospective purchaser that the said candy is being sold in accordance with the above described sales plan. (b) Another assortment manufactured and distributed by respondent is composod of a number of small pieces of candy, together with a number of larger pieces of candy, and two still larger pieces of candy, and a device commonly known as a punchboard or push card. The candy contained in said assortment is distributed to purchasers in the following manner:

The push card has a number of partially perforated discs, and when a push is made and the disc separated from the card, a number is disclosed. The <liscs on said curd are divided Into two sections and sales are 5¢ each. The Complaint 25F.T. C.

card bears statements or legends informing customers and prospective cus· tomers that certain numbers indicated receive one of the small pieces of candy, that other numbers receive one of the larger pieces of candy, and that the last push In each section receives one of the stlll larger bars of candy. The legends on the discs or pushes are effectively concealed from the purchaser and pros· pective purchaser until a selection has been made and the disc separated from the card. The fact as to whether a purchaser receives one of the small pieces of candy, one of the bars of candy, or one of the still larger bars of candy in said assortment, is thus determined wholly by lot or chance. (c) Another assortment manufactured and distributed by respondent is composed of a number of bars of candy of uniform size, together with a device commonly known as a J?USh card or punchboard. The candy contained in said assortment is distributed to purchasers in the following manner:

The push card has a number of partially perforated discs, and when a push is made and the disc separated from the card, a number is disclosed. The numbers of said discs are 1¢, 2¢, 3¢, 4¢, or 5¢, and the customer pays the price marked on said disc. The numbers on said discs are effectively con· cealed from the purchasers and prospective purchasers until a selection has been made and the disc separated from the card. The fact as to whether a purchaser pays 1¢, 2¢, 3¢, 4¢, or 5¢ for a bar of candy Is thus determined wholly by lot or chance.

PAR. 3. The wholesale dealers to whom respondent sells its 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 plans. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of its products in accordance with the sales plans hereinabove set forth, as a means of inducing purchasers thereof to purchase respondent's said products in preference 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 a <'hance to procure (a) and (b) larger pieces of candy; or (c) bars of candy at a price less than 5¢.

The use by respondent of the said methods of the sale of candies, and the sale of candies by and through the use thereof and by the aid of said methods 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 methods has the dangerous tendency unduly to hinder competition or create monopoly in this, to "·it: that the use thereof has the tendency and capacity WILLIAl\IS-CRAHAN CO. 227 223 Complaint 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 equivalent or similar element of chance or lottery scheme. 'Vherefore, many 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 assembled 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. 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 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 its said competitors who do not use the !'arne or an equivalent method; to exclude from said candy trade all competitors who are unwilling to and "·ho 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 rreate 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. 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 method that is contrary to public policy. PAR. 7. The aforementioned methods, acts, and practices of the l'l'spondent are all to the prejudice of the public and of respondent's tompetitors as hereinabove alleged. Said methods, acts, and practices constitute unfair methods of competition in commerce within the intent ami 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, 1914. Findings 25F.T.O.

REPORT, FINDINGS AS TO THE FAors, AND ORDER 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, on January 31, 1936, issued, and on February 3, 1936, served its complaint in this proceeding upon respondent, '\Villiams-Crahan Company, a corporation, charging it with the use of unfair methods of competition in commerce in violation of the provisions of said act. Thereafter, respondent filed its answer dated August 31, 1936, admitting all the material allegations of the com· plaint to be true and waiving the taking of further evidence and all other intervening procedure. Thereafter, this proceeding regularly came on for final hearing before the Commission <.'11 the said com· plaint and answer thereto, briefs and oral arguments of counsel having been waived; 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 conclusion drawn therefrom: FINDINGS AS TO THE FACTS PM!AGRAPI-I 1. Respondent is a corporation organized under the laws of the State of Oklahoma, with its principal office and place of business located in the city of Oklahoma City, State of Oklahoma. Re· spomlent, is now, and for several years last past, has been engaged in the manufacture of candy and in the sale and distribution thereof to wholesale and retail dealers located at points in the various States of the United States. It causes said products when sold to be trans· ported :from its place of business in the city of Oklahoma City, State of Oklahoma, to purchasers thereof in other States of the United States at their respective places of business. There is now, and has been :for several years 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 the said business, respondent is in competition with other corporations and with individuals and partnerships engaged in the sale and distribution of candy and candy products in commerce between and among the various States of the United States.

PAR. 2. In the course and conduct of its business, as described in paragraph 1 hereof, respondent sells and has sohl to wholesale and retail dealers various packages or assortments of candy so packed and assembled as to im·olve the use of a lottery scheme when sold and distributed to the consumers thereof. Certain of said packages WILLIAl\IS-CRAHAN CO. 229 Findings are I1ereinafter described for the purpose of showing the methods used by respondent, but this list is not all inclusive of the various packages and it does not include all the details of the several sales plans which respondent has been or is using in the distribution of candy by lot or chance.

(a) One of said assortments is composed of a number of pieces of candy of uniform size, shape, and quality, together with a number of larger pieces of candy, which larger pieces of candy are to be given as prizes to purchasers of said pieces of candy of uniform size, shape, and quality, in the following manner: The majority of the said pieces of candy of uniform size, shape, and quality have cream centers, but a small number of said pieces of candy have centers containing red cinnamon. The said pieces of candy of uniform size, shape and quality retail at tlu:. price of 1¢ each, but the purchaser who procures one of the said pieces of candy having a center of red cinnamon is entitled to receive and is to be given free of charge one of the said larger pieces of candy heretofore referred to. The assortment is Packed in two trays, and the purchaser of the last piece of candy of Uniform size, shape, and quality in each tray is entitled to receive ancl is to be given free of charge one of the larger pieces of candy heretofore referred to. The fact as to whether the pieces of candy <lf uniform size, shape, and quality are of whipped cream throughout, or contain red cinnamon, is effectively concealed from the purchasers and prospective purchasers until a selection has been made and the piece of candy selected broken open. The aforesaid purchasers procuring a candy having red cinnamon in the center thus Procure one of the said larger pieces of candy wholly by lot or chance, and the purchaser of the last piece of candy of uniform size, shnpe, and quality in each of said trays also procures one of ihe larger Pieces of candy wholly by lot or chance. Responde>nt fumishe3 to said wholesale and retail dealers with said assortment a display card to be used by the retail dealer in offering said candy to the public. 'I'he display card bears a statement or legend informing the prospective purchaser that the said candy is bei11g sold in accordance with the above described plan.

(b) Another assortment manufactured and distributed by respond- E>nt is composed of a number of small pieces of candy, together with a number of larger pieces of candy and two still larger pieces of candy, and a device commonly known as a "punchboard" or "push card." The candy contained in said assortment is distributed to Purchasers in the following manner: The push card has a number of partially perforated discs, and when a push is made and the disc Separated from the card a number is disclosed. The discs on said 230 FEDERAL TRADE COl\f:MlSSION DECISIONS Findings 2~F.T.O.

card are divided into two sections, and sales are 5¢ each. The card bears statements or legeitds informing customers and prospective customers that certain numbers indicated receive one of the small pieces of candy, that other numbers receive one of the larger pieces of candy, and that the last push in each section receives one of the still larger pieces of candy. The legends on the discs or pushes are effectively concealed from the purchaser and prospective purchaser until a selection has been made and the disc separated from the card. The fact as to whether a purchaser receives one of the small pieces of candy, one of the larger pieces of candy, or one of the still larger pieces of candy in said assortment, is thus deter· mined wholly by lot or chance.

(c) Another assortment manufactured and distributed by respond· ent is composed of a number of bars of candy of uniform size, to· gether with a device commonly known as a "push card" or "punch· board." The candy contained in said assortment is distributed to purchasers in the following manner: The push card has a number of partially perforated discs, and when a push is made and the disc separated from the card a number is disclosed. The numbers on said discs are 1¢, 2¢, 3¢ 4¢, or 5¢, and the customer pays the price marked on said disc. The numbers on said discs are effectively concealed from the purchasers and prospective purchasers until a selection has been made and the disc separated from the card. The fact as to whether a purchaser pays 1¢, 2¢, 3¢, 4¢, or 5¢, for a bar of candy is thus de· termined wholly by lot or chance.

PAn. 3. The wholesale dealers to whom respondent sells its as· sortments 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 pub· lie in accordance with the aforesaid sales plans. Respondent thus supplies to and places in the hands of others the means of conduct· ing lotteries in the sale of its products in accordance with the sales plans hereinabove set forth, as a means of inducing purchasers thereof to purchase respondent's said products in preference 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 described involves a game of chance or the sale of a chance to procure (a) and (b) larger pieces of candy, or (c) bars of candy at a price less than 5¢. The use by respondent of the said methods in the sale of candies, and the sale of candies by and through the use thereof and Ly the aid of said methods, 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 WILLIAMS-CRAHAN CO. 231 223 Conclusion policy of the Government of the United States. The u~e by respondent of said methods has the tendency unduly to hinder competition or create monopoly in this, to wit: that the use thereof has the tendency ~nd capacity to exclude from the branch of the candy trade involved lll this proceeding competitors who do not adopt and use the same :methods or equivalent or similar methods involving the same or an equivalent or similar element of chance or lottery scheme. Many Persons, firms, and corporations who make and sell candy in competition with the respondent, as above found, are unwilling to offer for sale or sell candy so packed and assembled as above described, 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. Many dealers in and ultimate purchasers of candy are attracted by respondent's said methods and manner of packing said candy and by the element of chance involved in the sale thereof in the manner above described, and are thereby induced to purchase !?aid 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 methods by respondent has the tendency and capacity, because of said game o£ chance, to divert to respondent trade and custom from its said com- Petitors who do not use the same or equivalent methods; to exclude from said candy trade all competitors who are unwilling to and who do not use the same or equivalent methods because the same are 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 equivalent methods; and ~o deprive the purchasing public of the benefit of free competition lll said candy trade. The use of said methods 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 methods or equivalent methods. PAn. 6. J\fany of said competitors of respondent are unwilling to adopt and use said methods or any method involving a game of chance or the sale of a chance to win something by chance, or any other lllethod that is coutrary to public policy. CONCLUSION The aforesaid acts and practices of the respondent, 'Villiams-Crahan Company, a corporation, are to the prejudice of the public and of respondent's competitors, and constitute unfair methods of competi- Order 25F.T.C.

tion 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 ans>Yer of re· spondent dated August 31, 1936, admitting all the material allega· tions of the complaint to be true and waiving the taking of further evidence and all other intervening procedure, and the Commission having made its findings as to the facts and its conclusion that said respondent has violated the provisions of an Act of Congress, ap· proved September 26, 1914, entitled "An Act to create a Federal Trade Commisson, to define its powers and fluties, and for other purposes."

It is ordered, That the respondent, \Villiams-Crahan Company, a corporation, its officers, representatives, agents, nnd employees, in connection with the offering foi· sale, sale, and distribution of candy in interstate commerce, do cease and desist from: 1. Selling and distributing to wholesale dealers and jobbers, for resale to retail dealers and to retail dealers direct, candy so packed and assembled that sales of said 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 retail and wholesale dealers and jobbers, packages or assortments of candy which are 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 con· tained in said assortments to the public.

3. Packing or assembling in the same package or assortment of candy for sale to the public at retail pieces of candy of uniform size and shape having centers of a different color, together with larger pieces of candy, which larger pieces of candy are to be given as prizes to the purchaser procuring a piece of candy with a center of a par· ticular color.

4. Supplying to or placing in the hands of retail and wholesale dealers and jobbers assortments of candy, together with a device commonly called a "push card" or a "punchboard," for use or which may bo used in distributing or selling said candy to the public at retail.

WILLIAl\fS-CRAHAN CO. 233 223 Order 5. Furnishing to retail and wholesale dealers and jobbers a device commonly called a "push card" or a "punchboard," either with packages or assortments of candy or separately, bearing a legend or legends or statements informing the purchasing public that the candy is being sold to the public by lot or chance or in accordance with a sales plan which constitutes a lottery, gaming device, or gift enterprise. It is further ordered, That the respondent 'Villiams-Crahan Company, a corporation, shall, within 30 days after service upon it of this orderr file with the Commission a report in writing setting forth in detail the manner and form in which it has complied with the order to cease and desist hereinabove set forth.

234 FEDERAL TRADE COMl\:IISSION DECISIONS Syllabus 25F.T.C.