George C. Miller & Co., Inc

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IN Tile Matrer OF GEORGE C. MILLER & COl\IPANY, INC.

~OMPL.UNT, l•'INDINGS, AND ORDER IN REGARD TO Tile ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CO~GRESS API'ROVED SEPT. 26, 1914 Docket 3106. Complaint, Apr. 1ii, 1981-Deciaion, June 29, · 1937 lV"IJere n COI'Jlorutlon cugaged in munufa<:ture and sale of cauuy, including ns;;ortments so packed and assembled as to invoi,·e use of a lottery scheme When sold nud distributed to coJJsumers thereof, and consisting of n number of boxes or packages of candy of varying size, together with punchhoard, 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 :said boxes or packages as a prize and without additional charge, or, except .Us hereinbelow set forth, nothing other than privilege of making u punch, dcvending upon number secured by chance, and purchaser of last punch In each section, and purchaser of last punch on board, similarly received "S specified box or package without additional charge-..-- Old, to wholesalers and jobbers for display and resale to purchasing public hy tlwlr retai!C'r-\·endt·es, In accordance with uforesald plan, such assort· lnents, anll thereby supJllled to and vlar!•d in the hands of others mMn& ot conductlug IotterlPs In sale of said products, In accordance with such !Jlun, contrary to public policy long rPcognlzed by the common law anll crlmlunl stututes, and to an established public policy of the United States Gow'l'llmcnt, and in competition with many who, unwilling to offer. and sell candy so {lUcked and al'lscmbled, or otherwise arranged and paclwd for sale '\V to tlle Plll'cll!lsing public, as to involve game of clJUnce, refrain therefrom; lth CIIJlaclty lllld tcudcncy of Inducing purchasers to buy Its said products in lll'Pft'l'enee to candy offpred and sold by its competitors, and with result tllnt nwuy dC'ulcers In and ultimate purchasers of candy were attracted by !!!:tid method und mumwr of pncklng said product and by element of chance involved In ~ale thereof as above slt forth, and thereby induced to purchase flll!·h cnudy, thui! padwd and sold lly It, in preference to that offered and Rolli hy said com11etitors wlw do not use same or equlvaleJJt methods, and With tendency and capacity, because of said scheme of chance, to divert to It traue und custom from Its salu competitors who do not use same or ~'Quh·lllPnt methods, exclude from such trade all competitors who are 111lW111ing to and do not use such or an equivalent method as unlawful, lesf;en compC'titlon therein und tend to create ll monopoly thereof in it lln<} such other competitors as use same or equivalent method, deprive Purchasing pnLllc of bPJwtlts of free compf'tition in trade Involved, and elirnluate from said trade all actual, and exclude therf'from all potential, li Competitors who do not adopt nnu use such or ·equh·alrnt method: eld, 'that such nets and practlees were to the prrjudlce of the public and eomvetltors and constituted unfair methods of competition. J/1'. llenry 0. Lank and Mr. P. 0. /{olinski for the Commission. J:l~] 21 m-:J{}-..-2:1 320 FEDERAL TI,tade COMMISSION DECISIONS Complaint 25F.T.C.

Col\[PLAINT Pursuant to the provisions of !Ill Act of Congress, approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers an<] duties, and for other purposes," the Federal Trade Commission, having reason to believe that the George C. l\Iiller & Co., Inc., hereinafter referred to as respondent, has been and is using unfair methods of competition in commerce, as "commerce" is defined in said act, and it appearing to saill 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 corpor11tion organized and doing business under the laws of the State of Massachusetts, with its principal office and place of business located at 927 Washington Street, in the city of Boston, State of Massachusetts. It is now, and for several years last past has been, engaged in the manufacture of candies and in the sale and distribution thereof to wholesale dealers and jobbers located at points. in the various States of the United States. It causes and has caused its stlid products when sold to be transporter! from its principal place of business in Boston, Mass., to purchasers thereof in the State of Massachusetts and in other States of the United States at their respective places of business. There is now, and has been for several years lust past, a course of trade and commerce by said respondent in such candy betwren and among the States of the United States.

In the course nnd conduct of said business, respontlent is in competition with other corporations and. with partnerships and individuals eugaged in the manufn.cture of cand.y and in the sale and distribution thereof in commerce between and among the various States of the United States.

PAR. 2. In the course nnd conduct of its bushwss, as dPsniLrd in paragraph 1 hereof, respondent sells and. has sold to wholesale d.Palers and jobbrrs assortments of candy so packed 11ml assrmbled as to involve the use of a lottery scheme wlwn solll lllll distributrd to the consumers thereof.

Such ussortmPnts are composell of a. munbt>r of boxrs or package:3 of cancly of varying size, together with a d£'vice commonly callrd ll "punchbonrd." The boxes or packages of candy contained in said nssortments are distributed to purchas£'rs in substantially the following manner:

Said. punchboards contain a num~1· of holes divided into sections. In each hole a slip of paper bearing a printed numher is secreted· GEORGE C. 1\IILLER & CO., INO. 321 319 Complaint The punchboard also bears at the top thereof a number of printed legends or statements informing customers and prospective customers Which numbers receive a box of candy and the size thereof. Sales are 5¢ each, and a purchaser who obtains one of the 1mmbers calling for a. box of candy is entitled to receive the same as a prize without additional charge. The purchaser of the last punch in each section and the Purd1aser of the last punch on the board are entitled to receive a specified box or package of candy as a prize and without additional dtarge. I>urchasers of punches who do not procure one of the numbers calling for a box of candy receive nothing for their money other tllan the privilege of punching a number from said board. The ~umbers on said printed slips secreted in said punchboard are effectively concealed from purchasers and prospective purchasers until a selection ltas been made and the printed slip separated from theboard. The boxes or packages of candy are thus distributed to the consuming publi,c wholly by lot or chance . . PAn. 3. The wholesale dealers and jobbers to whom respondent'sells Its assortments resell the same to retail dealers, and such retail ·dealers elposc said :assortments for sale and sell said packages of. candy to ~le purchasing public in accordance with the aforesaid sales plan. respondent thus supplies to and places in the hands of others the lll.cans of conducting lotteries in the sale of its products in accordance with the sales plan hez·einabove set forth. Such :soles plan has the capacity :and tendency of inducing purchasers thereof to purchase respondent'-s -said products in preference to candy offered for sale llll<l sol<Il>y its competitors.

l>An. 4. 'l11l' sale of camly to the purchasing public in the manner above nll<>g~ invoh·es a game of chance or the sale r0f a chance to P1'0<'11J·e a box or package of candy.

The use by respondent of said method in the sale of candy, and the Sale of candy Ly and through the use thereof and by the aid {)f :said lll.ethod, is a Jn-actice of the sort which the common law and criminal statute('s have long de('med contrary to public policy, and is contrary ~0 an <>stablished public policy of the Government of the United tntes. The use by respondent of said method has tJ1e tendency ~duly to hinder competition or create monopoly in this, to wit: that of e Use thereof has the tendency and capacity to exclude competitors respondent who do not adopt and use the same method or .an e~uiV"alent or similar metJwd involving the same or .ru1 equimlent or· Silll. 1·1 ar element of cl1ance or lottery scheme. . !Iany persons, firms, and corporations who make and sell candy competition with the respondent, as abo,·e alleged, are .unwjJiing·:n0 offer for sale or sell candy so packed and assembled as above l!'indings 25F.T.C.

alleged, or otherwise arranged and packed for sale to the purchasing public so as to involve a game of chance, and such competitors refrain therefrom. ' · PAR. 5. 1\Iany 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 cnndy so packed and sold by respondent in preference to candy offered for sale and sold by said competitors of respondent who do not use tlle same or equivalent methods. The use of said method by respond· ent has the tendency and capacity, because of said game of chance, -to divert to respondent trade and custom from its said competitors ~wbo do not use the same or an equivalent method; to exclude from ~said. candy trade all competitors who are unwilling to and who do .110t usc the same or nn equivalent method because the same is unlaw· o:fuJ; to lessen competition in said candy trade and to tend to create n monopoly of said candy trade in respondent and such other com· petitors 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 respondent has the tendency and capacity to eliminate from said candy trade all actual competitors and to e.xclude therefrom all potential competitors who do not adopt and use said method or an equivalent method. PAR. 6. The aforementioned method, acts, and practices of re· spondent are all to the prejudice of the public and of respondent's competitors, as hereinabove alleged. Said method, acts, and practices constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Corp;rcss, approved September 26, 1914, entitled "An Act to create a FedcrnJ Trade Commission, to define its powers and duties, and for other purposes."

REPORT, FINDINGS AS TO Tlle FACTS, AND ORDF.R Pursuant to the provisions of an Act of Congress, approved Scp· tc•mber 2G, 1!)14, entitled "An Act to create a Federal Trnue Corn· mission, to define its powers and duties, and for other purposes," the. Fcilerlll Trade Commission, on April 15, 1037, issued and on :\ april 16, 1037, servrd its complaint in this proceeding upon the re· r-:pondrnt, G('orge C. :Miller & Co., Inc., a corporation charging it with the nse of unfair methods of competition in commerce in violation of tho provisions of said act. After the issuance of said complaint, the respondent filed answer thereto admitting all the material allega· GEORGE C. MILLER & CO.,· INC. 323 319 Findings ti~ns of the complaint to be true and waiving the taking of further :vrd~nce and all other intervening procedure. Thereafter, this pro~ ·eedmg regularly came on for final hearing before the Commission on the said complaints and answer thereto, briefs and oral argument 0.£ counsel having been waived; n.nd the Commission having duly con- Sidered the same and being now fully advised in the premises finds ~ltat this proceeding is in the interest of the public and makes this lts findings as to the facts and its conclusion drawn therefrom: FINDINGS AS TO THE FACTS ~ ARAORAPII 1. Respondent is a corporation organized and doing busmess under the laws of the State of Massachusetts, with its princi-· }lal office and place of business located at 927 Washington Street, in the city of Boston, State of Massachusetts. It is now, and for several years last past has been engaged in the manufacture of candies ?nd in the sale and distribution thereof to wholesale dealers and }jobbers located at points in the various States of the United States. of business in Boston, Mass., to purchasers f romt cau~csIts principaland has causedpJace its said products when sold to be transported t 1<'l'cof in the State of Massachusetts and in other States of the Dnited States at their respective places of business. There is now, and has been for several years last past, a course of trade and comliJerce by said respondent in such candy between and among the States of the United States. In the course and conduct of said business, respondent is in competition with other corporations and with part- -~lerships and individuals engaged in the manufacture of candy and 111 the sale and distribution thereof in commerce between and among tlte Various States of the United States. · PAn. 2. In the course and conduct of its business, as described in Paragraph 1 hereof respondent sells and has sold to wholesale dealers and jobbers as;ortments of candy so packed and assembled as involve the use of a lottery scheme when sold and distributed to !h e consumers thereof.

f Such assortments are composed of a number of boxes or packages ~ candy of vurvinrr size torrcther with a device commonly called a 'p " ,.., ' ,.., . d . .d Unchbonrd." The boxes or packages of candy contame m sm ~ssortrnents are distributed to purchasers in substantially the follow- ~~g manner: Said punch boards contain a number of holes divided b to sections. In each hole a slip of paper bearing a printed numer is secreted. The punchboard also bears at the top thereof n llumber of printed Jrrrcnds or statements informing customers and llrospcctive customers"' which numbers receive a box of candy and Findings 25 F.T.C. the size thereof. Sales are ~ each, and a purchaser who obtains one ofthe numbers calling for a box of candy is entitled to receive the same as a prize without additional charge. The purchaser of the last punch in each section and the purchaser of the last punch on the board are entitled to receive a specified box or package of candy as a prize and without additional charge. Purchasers of punches who do not procure one of the numbers calling for a box of candy receive nothing for their money other than the privilege of punching a number from said board. The numbers on said printed slips ~ecreted in said punchboarll are effectively concealed from purchasers and prospective purchasers until a selection has been made and the printed slip separated from the board. The boxes or packages of candy are thus distributed to the consuming public wholly by lot or chance.

PAR. 3. The wholesale dealers and jobbers to 'whom respondent sells its assortments resell the same to retail dealers, and such retail dealers expose said assortments for sale and sell said packages of candy to the purchasing public iu accordance with the aforesaid sales plan. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of its products in accordance with the sales plan hereinabove set forth. Such sales plan has the capacity and tendency of inducing purchasers thereof to purchase respondent's said prollucts in preference to candy offered for sale and sold by its comprtitors.

PAR. 4. The sale of candy to the purchasing public in the manner above found involves a game of chance or the sale of a chance to procure a box or package 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 metholl, 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 respond· ent of said method has the tendency unduly to hinder competition or create monopoly in this, to wit: that the use thereof has the tendency and capacity to exclude competitors of respondent who do not adopt and use the same method or an equivalent or similar method involving the same or an equivalent or similar element of chance or lottery scheme. Many persons, firms, and corporations who make and sell candy in competition with the responuent are unwilling to offer for sale or sell candy so packed and assembled as above describeu, or otherwise arran~ed and packeu for sale to the purchasing public so as to invoh·e a game of chance, and such cow· petitors refrain therefrom.

GEORGE C. 1\IILLER & CO., INC. 325 Order PAR. 5. l\Iany dealers in and ultimate purchasers of candy are attracted by respondent's said method and manner of packing said ~~ndy and by the element of chance involved in the sale thereof in : manner above described, and are thereby induced to purchase ~aid candy so packed and sold by respondent in preference to candy off!~red for sale and sold by said competitors of respondent who do not use the same or an equivalent method. The use of said method by t~spondent has the tendency and capacity, because of said game of c lance, to divert to respondent trade and custom from its said competitors who do not use the same or an equivalent method; to exclude from said candy trade all competitors who are unwilling to and who do not use the same or an equivalent method because the same is unlawful; to lessen competition in said candy trade and to tend to create a monopoly of said candy trade in respondeJit. and such other competitors of candy as use the same or an ~'lui valent method; and to deprive the purchasing public of the benebt of free competition in said candy trade. The use of said method Y respondent has the tendency and capacity to eliminate from said candy trade all actual competitors and to exclude therefrom all po- !en~iai competitors who do not adopt and use said method or an <:!Utvalent method.

CONCLUSION lel~fhe aforesaid acts and practices of the res~o~dent, George ~· 1\Iil- &. Co., Inc., a corporation, are to the prejudice of the public and of respondent's competitors and constitute unfair methods of corn· Petition in commerce within the intent and meaning oi Section 5 of un Act of Congress approved s~ptember 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, lllld f or other purposes."

ORDER TO 'CEASE AND DESIST . 'this procecdin(l' havin(l' been heard by the Federal Trade Commis- Sion e e · · d h fil d } Upon the complaint of the Comm1ssron an t e answer e \erein on April 29 1937 by the respondent admitting all the material 11 1<:gations of the 'complaint to be true, and the respondent having filin(J' of briefs and oral argument, and the Commission )"' 111~ed tav "" · · . Jng made its findin(l's as to the facts and 1ts conclusion t Iutt sa1·dtesp to> c 01ldent has violated the provisions of an Act of congress, ap- ~ 1•r Ved September 26, 1914, entitled "An Act to. create a Federa tude Commission to define its powers and duhes, and for other llurposes." ' Order 251'. T. a~ It is ordered, That the respondent, George C. Miller & Co.., Inc., a corporation, its office~rs, representatives, 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 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 ot jobbers assortments of candy which are used, or which may be used without alteration or rearrangement of the contents of such assort· ments, to conduct a lottery, gaming device, or gift enterprise in the sale or distribution of the candy contained in said assortments to the public.

3. Supplying to or placing in the hands of wholesale dealers or jobbers assortments of candy, together with a device commonly called a "punchboard" for use, or which may be used, in distributi.J1g or selling said candy to the public at retail. 4. Furnishing to wholesale dealers or jobbers a device commonly called a "punchboard," either with assortments of candy or sepa· rately, bearing a legend or legends or statements informing the pur· chasing public that the candy is being sold to the public by lot or chanc<', or in accordance with a sales plan which constitutes a lottery, gaming device, or gift cnterpris(l.

It i.~ further ordered, That the respondent, George C. Miller & Co., 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 compliNl with the order to cease and desist hereinabove stt forth. WOLF CREEK SOAP CO •. 327 Syllabus