Melster Candy Co

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IN THE MATTER OF MELSTER CANDY COMPANY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION 01•' SEC. (I OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 8045. Complaint, Jan. SO, 19J"!-Decision, .Aug. 9, 1981 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 whkh consisted of a number of candy burs, a number of loaf candies and a box of candy, together with push card, for sale and distribution to purchasing publlc under a plan, and in accordance with said card's explanatory legend, by which purchaser received, for five cents paid, and in accordance with number pushed by chance, one or two bars of candy, or package of loaf candy, and purchaser of last push on card was entitled to receive, free of charge, In addition to one of said bars, aforesaid box of candy- Sold, to wholesalers and jobbers, for display and resale to purchasing public in accordance with aforesaid sales plan, said assortments, and thereby supplied to and placed In the l1ands of otlH'rs means of conducting lotteries In the sale of its snld products, In nccot·dance with such plan, con· trury to public pulley long recognized by the common law and criminal statutes, and to nn established public policy of the United St.notes Government, and in comlJCtition with many who, unwilling to offer or sell candy so packed nnd assemblrd or otherwise arranged and packed tor sale to purchasing public us to Involve a game of chance, or to adopt and use said method or any method Involving game of chance or sale of a chance to win something by chnuce, or any other method contrary to public policy, refrain therefrom :

With result that many drnlers In and ultimate purchasers of candy were attracted by said method and munm•r of pacldng said product and bY element of cllllnce lnvoh·ed in sale th<'reof as above set forth, and thereby Induced to purchase such candy, thus Jlllcked and sold by it, in prefer· ence to that offerrd nnd sold by said competitors who do not use !>UCh or an equivalent method, and with tendPucy nnd cnpaclty, bt•cause of said game of chance, to divert to It trade from Its aforesaid competlt~rs who do not use such or equlvnlrnt method, exclude from such trade all competi· tors who at·e unwilling to nnd do not use any such method us unlawful, leiSscn competition In !mid trade and tend to create a monopoly thereof In It and such other distributors ns do use same or equivalent practice or method, nnd <lPprlve purchasing public of bmetlt of free competition in trade Involved, and eliminate from snld trade all actual and exc!nde ' 0 r therefrom all potential, competitors who do not adopt and use such equivalent method:

llc7d, That such nets and practices wrrc to the prejudice of the pul11iC and competitors and constituted unfair method:o1 of competition. !Jr. Ilenry 0. Lank anti !Jr. P. 0. Kolinski for the Commission· MELSTER CANDY CO. 735 734 Complaint Complaint Pursuant to the provisions of an Act of Congress, approved September 2G, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that Meister Candy 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 th10reof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Uespondent, Meister Candy Company, is a corporation organized and operating under the laws of the State of 'Viseansin, with its principal office and place of business located at Cambridge, 'Vis. Uespondent is now, and for more than one year last Past has been, engaged in the manufacture of canuies and in the sale and distribution thereof to wholesale dealers and jobbers located at points in the various States of the United States, and causes and ~as caused its said products, when so sold, to be transported from Its principal place of business in Cambriuge, 'Vis., to purchasers thereof in other States of the United States at their respective places of business; and there is 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 business, respondent is in competition with other corporations and with partnerships and individuals engaged in the' Jnanufacture of candy and in the sale anti. distribution thereof in. comlllerce between and among the 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 ~nd jobbers an assortr:lent of canuy so packed and assembled as to Involve the use of a lottery scheme when sold and uistributeu to the consumers thereof.

Said assortment manufactured and distributed by respondent is composed of a number of candy bars, a number of loaf candies, and a box of candy, together with a device commonly called a push card. Candy contained in said assortment is distributed to purchasers in the following manner:

The push card has a number of partially perforated. discs, and ~·hen n push is made and the disc separated from the card, a number ~s disclosed. Sales are 5¢ each and the card. bears statements inform- Ing customers and prospective customers that certain specified 1~8121m--39----40 736 :FEDERAL TRADE COl\11\IISSION DECISIONS Complaint 25F. T. C.

numbers entitle the customer to one bar of candy, that certain other specified numbers entitle the customer to two bars of candy, and that certain other specified numbers entitle the customer to a package of loaf candy. The purchaser of the last disc on said push card is entitled to receive, and is to be given free of charge, in addition to one of said bars of candy, the box of candy heretofore referred to. 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 number of bars of candy which a customer receives for the price of 5¢ is thus determined wholly by lot or chance.

PAR. 3. The wholesale dealers and jobbers to whom :respondent sells its assortment resell said assortment to retail dealers, and said retail dealers expose said assortment for sale and sell said candy to the purchasing public in accordance with the aforesaid sales plan. Respofldent thus supplies to and places in the hands of others the means of conuucting lotteries in the sale of its product in accordance with the sales plan hereinabove set forth, and said sales plan has the capacity and tendency of inducing purchasers thereof to pur· chase respondent's said product 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 chance to procure a box 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 have long deemed contrary to public policy; and is contrary to an established public policy of the Government of the United States. The use by respondent of said method has the tendency unduly to hinder competition or create monopoly in this, to wit: that the use thereof has the tendency and capacity to exclude from the branch of the candy trade involved in this proceeding competitors who do not adopt and use the same method or an equivalent or similar method involving the same or an equivalent or similar element of chance or lottery scheme. 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 purchas~g public so as to involve a game of chance, and such competitors refrain therefrom.

1\IELSTER CANDY CO. 737 734 Finulngs PAR. 5. 1\fany 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 describe<.l, 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 metho<.l 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 an equivalent method; to exclude from said candy trade nil competitors who are unwilling to and who do not use the samd or an equilvalent method because the same is unlawful; to lessen competition in said candy trade, and to tend to create a monopoly of said candy trade in respondent and such other distributors of candy as use the same or an equivalent method; and to deprive the purchasing public of the benefit of free competition in said candy trade. The use of said method by the respondent has the tendency and -capacity to eliminate from said candy trade all actual competitors, and to exclude therefrom aU potential competitors, who do not adopt and use said method or an equivalent method.

PAn. 6. Many of sai<.l 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. PAn. 7. The aforementioned method, acts, and practices of the respondent are all to the prejudice of the public and of respondent's c?mpetitors, as hereinabove alleged. Said method, ads, 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 · nnd duties, and for other purposes," approved September 26, 1914. REI'ORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of an Act of Congress, approved Septe~ber 26, 1914, entitled "An Act to create a Federal Trade Comn.lssion, to define its powers and duties, and for other purposes,'' ~e Federal Trade Commission, on January 30, 1937, issued and on ebruary 3, 1937, sened its complaint in this proceeding upon ~he respondent, Meister Candy Company, a corporation, charging 1 ~ With the use of unfair methods of competition in commerce in \'Jolation of the provisions of said act. After the issuance of Shu 738 FEDERAL TRADE COl\Il\IISSION DECISIONS Findings 25F.T.C.

complaint, respondent filed. answer thereto admitting all the material allegations of the complaint 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 on the said complaint and answer thereto, briefs and oral argument of counsel having been waived; and. the Commission, hav· ing 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 PARAGRAPH 1. Respondent, Meister Candy Company, is a corporation organized and operating under the laws of the State of Wisconsin, with its principal office and place of business located 11t Cambridge, 'Vis. Respondent is now, and for more than one year last past has been, engaged in the manufacture of candies and in the sale and distribution thereof to wholesale d.ealers and. jobbers located at points in the various States of the United States. It causes and has caused its said. products when sold to be transported from its principal place of business in Cambridge, Wis., to purchasers thereof in other States of the United States at their respective places of business. There is 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 business, respondent is in competition with other corporation3 and with partnerships and individuals engaged in the manufacture of randy and in the sale and distribution thereof in commerce between and among the various Statl.'s of the Unit<•(l ~tat<•s. . PAR. 2. In the course and conduct of its business, as describl'd 1n paragraph 1 hm·eof, respondent sells and has sold to wholesale dealers and jobbers an assortment of candy so packC'cl and assC'mblC'd as to involve the use of a lottery schl'me when sold and distributed to the consumers thereof. Said assortment manufactured and distribute~ by respondent is composed. of a number of candy bars, a number 0 loaf candies, and a box of candy, together with a device commoi~ly called a push card. The candy contained in said assortment is dis" tributed to purchasers in the following manner: The push card h:tS a number of partially perforated uiscs, and when a push is made and the disc separated from the card a number is disclosed. Sales are 5¢ each, and the card bears statements informing customers and prospec· ti-re customers that certain specified numbers entitle the customer to one bar of candy, that certain other specified numbers entitle the cus· 1\IELSTER CANDY CO. 739 734 Flnuings tomer to two bars of candy, and that certain other specified numbers entitle the customer to a package of loaf candy. The purchaser of the last disc on said push card is entitled to receive, and is to be given free of charge, in addition to one of said bars of candy, the box of candy heretofore referred to. 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 number of bars of candy which a customer receives for the price of 5¢ is thus determined wholly by lot or chance . . PAn. 3. The wholesale dealers and jobbers to whom respondent sells Its assortment resell said assortment to retail dealers, and said retail dealers expose said assortment for sale and sell said candy to the purchasing public in accordance with the aforesaid sales plan. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of its products in accordance with the sales plan hereinabove set forth, and said sales plan has the capacity a~d tendency 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 in the manner above found involves a game of chance or the sale of a chance to Procure a box 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 have long deemed contrary to Public policy, and is contrary to an established public policy of the Government of the United States. The use by respondent of said method has the tendency unduly to hinder competition or create Ittonopoly in this, to wit: that the use thereof has the tendency and capacity to exclude from the branch of the candy trade involved in this proceeding competitors who do not adopt and use the same method or an equivalent or similar method involving the same or an equivalent or similar element of chance or lottery scheme. Many per- 80?s, firms, and corporations who make and sell candy in competition 'With respondent are unwilling to offer for sale or sell candy so packed ~nu assembled as above described, or otherwise arranged and packed or sa]e to the purchasing public so as to involve a game of chance, a.nu such competitors refrain therefrom.

:P.An. 5. Many 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 e hlanner above described, and are thereby induced to purchase said candy so packed and sold by respondent in preference to candy Order 25F. T. C.

offered 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 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 an equivalent method; to exclude from said candy trade all competitors who are unwilling to and who do not use the same or an equivalent method because the same is unlawful; to lessen competition in said candy trade, and to tend to create a monopoly of said candy trade in respondent and in such other distributors of candy as use the same or an equivah•nt 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 exclude therefrom all potential competitors who do not adopt and use said method or an equivalent method. PArr. G. Many of said competitors of respoll(lent am unwilling to adopt and use said ml'thod or any metho1l involving a game of chance or the sall' of n. chance to win something by chance or any other metho1l that is contrary to public policy. CONCLUSION The aforesaid method, acts, and practices of respondent, Meister Candy Company, a corporation, are to the prejudice of the public and of respondent's competitors and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress, approved SPptember 2G, 1!)14, entitled "A.n Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

ORDER TO CEASE AND DJo:SJST This proceeding having bren heard by the Fedrral Trade Com· mission upon the complaint of the Commission and the answer of respondent dated June 4, 1037, admitting all the material allegations of the complaint to be true and wnivinll' the taki1w of further ev1'd ence and all other intervening procedure,"" and the"' Cmnmtssl.· ·on having made its findings as to the facts and its conclusion that Stlld respondent has violated the provisions of nn Act of Concrrrss, upproved September 26 1914 entitled "An Act to create; Federal ' ' h .Trade Commission, to define its powers and duties, and for ot er purposes."

It is ordered, That the respondent Meister Candy Company, a cor· pora t wn,. Its· offi cers, representatives,' agents, and employees, lll· con- 1\IELSTER CANDY CO. 741 734 Order ~ection 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 are designed to 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 assortments of candy which are used, or \Which are designed to be used, without alteration or rearrangement of the contents of such assortments, to conduct a lottery, gaming device, or gift enterprise in the sale or distribution of the candy contained in said assortments to the public.

3. Packing or assembling in the same package or assortment of ~andy, for sale to the public at retail, bars of candy, together with a <levice commonly called a "push card," which push card is for use, or which is designed to be used, in distributing or selling said ~andy to the public at retail.

4. Furnishing to wholesale dealers and jobbers, for distribution to retail dealers, a device commonly called a "push card,'' either with .Packages or assortments of candy or separately, bearing a legend or legends or statements informing the purchasing public that tho ~~ndy is being sold to the public by lot or chance or in accordance '\\'1th a sales plan which constitutes a lottery, gaming device, or gift e.nterprise.

It is further ordered, That the respondent, Meister Candy Com- Pa_ny, a corporation, shall, within 30 days after service upon it or ~h1s order, file with the Commission a report in writing setting forth In detail the manner and form in which it has complied with the <lrder to cease and desist hereinabove set forth. Syllabus 25F. T, C.