C. Rickson & Co

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IN THE l\IATTER OF J. C. HICKSON & COMPANY COMPLAINT, FINDINGS, AND ORDER IN RE:}ARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2554. Complaint, Sept. 18, 1935-Decision, Dec. "', 193"1 Where a corporation t>ngaged in the growing and packing of citrus fruits, and in the sale thereof to purchasers in other Statt>s and in the District of Columbia, in substantial competition with others engaged in similar sale and shipment- (a) Set forth, in advertisemt>nts and oil labels of crates thereof, words "Indian River," through statemt>nts such as .. Indian River," "Indian Rh-er Fruit Exclusively," "Groves and packing houses Ft. Pierce, Vero Beach, 'Vhite City, Gifford, l\Iims, on the Indian River," notwithstanding fact fruit in question was not that recognized superior quality and preferred fruit raised in Indian River Valley, but was grown in area far distant therefrom, and It owned uo groves or packing houses at any point within aforesaid area and raised no fruit therein; and (b) Falsely represented number of pieces of fruit contained in certain cartons by placing thereon figure indicating that number of pieces contained tht>rein was greater than that of pieces of fruit actually packed therein; \With capacity and tendency to mislead purchasing public into erroneous belief that fruit thus labeled was grown in Indian River Valley area, and with effect of misleading and deceiving consuming public as to origin of such fruit and number of pieces packed in its said cartous, and of causing substantial number of purchasing public to buy its said products because of erroneous belief thus engendered, and of unfairly and substantially diverting trade in commerce involved to it from its competitors; to their injury and that of the public:

Held, That such acts and practices were to the prejudice of the public and competitors and constituted unfair methods of competition. Before Mr. John W. Addison, trial examiner. Mr. Alden S. Bradley and Mr. James I. Rooney for the Commisswn.

Weissbuch & Sil'oerma.n, of Miami, Fla., 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 J. C. Hickson and 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 net of Congress, and it appearing to said Corrunission that a proceeding by it in respect 24 FEDERAL TRADE COl\11\'IISSION DECISIONS Complaint 26 F. T. C. thereof would be in the public interest, hereby Issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Said respondent, J. C. Hickson and Company, is a corporation existing under and by virtue of the laws of the State of Florida, having its principal office and place of business in Miami, Fla., and has been since the issuance of its charter in the month of July 1029, engaged in the growing, packing, shipping and selling of citrus fruits, and in the course of the sale of said citrus fruits has. caused the same to be transported from the place of business of the respondent in the State of Florida to the purchasers thereof located in States other than the State of Florida and in the District of Columbia, and has maintained a constant current of trade and commerce between and among the various States of the United States. P .AR. 2. During the period of its corporate existence respondent has inserted, or caused to be inserted, in advertisements published by it the words and phrases- Indian River Indian River fruit exclusively.

Indian River Fruit Groves and packing houses Fort Pierce, Vero Beach, White City, Gifford, l\lims on the Indian River.

and has caused to be imprinted upon the labels and the crates of the fruits so sold the words "Indian River."

The use of the words "Indian River" in connection with the packing, shipping, or selling of fruit indicates to a substantial portion of the purchasing public that the fruit so packed, shipped, and sold was grown in that area along the eastern seaboard of the Stats of Florida drained by the Indian River and which section is widely famed for the excellence of the fruit there produced. The effect of the use of the words as above indicated is to falsely represent to the public that the fruits to be purchased from the respondent corporation are what is known as "Indian River" fruit. There are among the members of the purchasing public a substantial number who have an actual preference and desire for fruit characterized and known as "Indian River" fruit. The designation of fruit as being of that class of fruit known as "Indian River" fruit indicates to the minds of a substantial number of the purchasing public that the fruit is of a superior quality, and among the industry in which respondent is engaged the superior quality of such fruit is recognized and asserted. J. C. HICKSON & CO. 25 23 Complaint In truth and in fact, the fruits sold and offered for sale by the respondent under the above-stated representations are grown in an area other than that particular geographical section on the eastern seaboard of the State of Florida drained by the Indian River, and are principally, if not wholly, secured from Dade County, Fla. PAR. 3. During the entire period of its corporate existence the respondent has advertised and offered for sale various packages of crystallized fruit and other merchandise of the character and material hereinabove described, falsely representing them to have a content weight of one pound, two pounds, three pounds, or fiye pounds, according to the various packages, when in truth and in fact such packages fall materially short of having the weight represented by the respondent.

PAR. 4. During the entire course of its corporate existence, respondent has falsely represented cartons of fruit to contain twenty pieces of fruit, when in truth and in fact there is a substantial deviation from such representation, the cartons of fruit so represented often containing a number materially less than twenty pieces of fruit, and in some instances only twelve pieces of fruit are contained in such cartons.

PAR. 5. There are among the competitors of the respondent corporation a substantial number of persons, partnerships, and corporations who do not falsely represent the fruit offered by them for sale to be of that class of fruit known ·as "Indian River" fruit or who do in fact sell and offer for sale fruit grown in that territory along the eastern seaboard of the State of Florida drained by the Indian River, so that the same are truthfully represented or designated as I "IndianThere River"are amongfruit.t11e eompetitors of the respondent various persons, partnerships and corporations which offer for sale merchandise ofi a like nature and character with that in which the respondent deals, offering the same for sale to members of the purchasing public and truthfully representing the proper net weight of the fruit so offered I for sale, offering the same in cartons similar to those used by the re- I. spondent but truthfully representing the exact and correct weight of the merchandise so offered. There ate among the competitors of the respondent various persons, partnerships and corporations who represent to a snbstantialI number of the purchasing public the number of pieces of fruit to be obtained at a given price in a described carton, or otherwise, and such representation on the part of such competitors is truthful, and the number of pieces of fruit represented as being offered for sale in _} FEDERAL TRADE COMl\IISSION DECISIONS26 Findings 26F.T.C.

such packages are the number of pieces of fruit which are actually placed in such cartons or packages.

PAR. 6. The above acts and practices done by the respondent arc all to the injury and prejudice of the public and of the competitors of the respondent in interstate commerce, and constitute unfair methods of competition in interstate commerce within the intent and meaning of Section 5 of the 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 September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," the Federal Trade Commission on September 18, 1935, issued, and on September 20, 1935, served its complaint in this proceeding upon respJ)ndent; J. C. Hickson & Company, a corporation, 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 thereto, testimony and other evidence in support of the allegations of said complaint were introduced by Alden S. Bradley, attorney for the Commission, befor~ John ,V. Addis0\1, an examiner of the C~mmission, theretofore duly designated by it, no evidence was introduced by the respondent; and the said testimony and other evidence were duly recorded and filed in the office of the Commission.

Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint, the answer thereto, testimony and o-ther evidence and brief in support of the complaint; 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 PARAGRAPH 1. Respondent, J. C. Hickson & Company, is a corporation duly organized and existing under and by virtue of the laws of the State of Florida, with its principal office and place of business in the city of l\Iiami, State of Florida, and since its inception in 1929 has been engaged in the business of growing, packing and selling of citrus fruits and causing said citrus fruits, when sold, to be transported from its place of business in the State of Florida to the purchasers J. C. HICKSON & CO. 27 I,i l 23 Findings thereof located in States other than the State of Florida and in the District of Columbia, and has maintained a constant current of trad~ I and commerce in said produce between and among the various States I, of the United States and in the District of Columbia. I PAR. 2. In the course and conduct of its business, as aforesaid, respondent is now, and since its inception in 1929 has been, in substantial competition with other corporations, and with partnership!", firms, and individuals engaged in the sale and shipment of citrus fruits in commerce between and among the various States of the United States and in the District of Columbia. PAR. 3. Respondent in the course and conduct of its business, as aforesaid, and in the sale and distribution of citrus fruit, has caused to be inserted in advertisements published by it and imprinted on labels and crates of fruit so sold by it the following words and I phrases: Indian River, Indian River Fruit Exclush·ely,I Groves and packing houses Ft. Pierce, Vero Beach, White City, Gifford, Mims, on the Indian River.

The use of the words ''Indian River" in connection with the sale and distribution of citrus fruits indicates to a substantial portion of the purchasing public that- the fruit so labelled was grown in an area known as "Indian River Valley," which extends from Daytona Beach to West Palm Beach in the State of Florida' and is between 15 and 25 miles wide.

Among the industry in which the respondent is engaged the superior quality of citrus fruit raised in the area known as "Indian River Valley" is recognized and asserted; and there is a decided preference on the part of the purchasing public for citrus fruit grown in this area.

The citrus fruit sold and shipped by the respondent as 'aforesaid, under the aforementioned representation, had not been grown in the area known as "Indian River Valley" but had been grown in an area known as Dade County, which is far distant from the area known as "Indian River Valley."

The respondent does not own, nor has it ever owned groves or packing houses at any point located within the area known as "Indian River Valley," nor has the respondent raised any fruit in said area.

The use of the words "Indian River" in connection with the sale and offering for sale of citrus fruit has the capacity and tendency to mislead the purchasing public into the erroneous belief that the said fruit so labelled has been grown in the area known as Indian Rh·er Valley.

FEDERAL TRADE CO)IMISSION DECISIONS 28 Order 26F.'l'.C. PAR. 4. In the course and conduct of its business, as aforesaid, respondent has falsely represented the number of pieces of fruit contained in certain cartons by placing thereon a n\1mber indicating that the number of pieces of fruit contained in said cartons was grettter than the number of pieces of fruit actually packed in said cartons. PAR. 5. The aforesaid acts and practices of the respondent have the tendency and capacity to, and do, mislead and deceive the consuming public as to the origin of said fruit and as to the number of pieces of fruit packed in said cartons, and have caused a substantial number of the purchasing public to purchase said products because of the erroneous belief engendered by the acts and practices of the respondent, thereby unfairly substantially diverting trade in srld commerce to the respondent from its competitors, to their injury and to the injury of the public.

CONCLUSION The aforesaid acts and practices of the respondent, J. C. Hickson &'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 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 DEEHST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of the respondent, testimony and other evidence taken before John ,V, Addison, an examiner of the Commission, theretofore duly desig~ nated by it, in support of the allegations to said complaint and in opposition thereto, and brief filed herein, 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 approved September 2G, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers ana duties, ana for other purposes." It is ordered, That the respondent, J. C. Hickson & Company, a corporation, its officers, representatives, agents, and employees, in connection with the offering for sale, sale and distribution of citrus fruits in interstate commerce, or in the District of Columbia, do forthwith cease and desist from:

(a) Representing in advertiiiements, on labels, or otherwise, that citrns fruit is "Indian Riwr Valley" fruit, unless and until said J. C. HICKSON & CO. 29 :23 Order fruit is produced in that section of the State of Florida where the fruit produced is known and sold as "Indian River Valley" fruit. (b) Representing that it owns or operates fruit groves or warehouses in that section of the State of Florida where the citrus fruit produced is known and sold as "Indian River Valley" fruit, unless nnd until it does. own or operate a fruit grove or warehouse, as the .case may be, in that section of the State of Florida. (c) Representing by figures pla~ed on the container, or other- ·wise, that the number of pieces of fruit in such container is greater than the number of pieces of fruit in such container. It is further ordered, That the respondent shall, within 60 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 this order.

160451~--39--VOL.26----5 C01DIISSIO~ DECISIOXS30 FEDERAL TRADE Syllahns 26 1''. T. C. I:x THE ~fATTEn OF ('O~FECTIO~ERS TRADING CORPOR.ATIO~ CO:\<IPLAINT, FINDDIGS. AND ORDER I~ REGARD TO THE ALLEGED VIOL.-\TON Ol~ s~:C. :; OF AN ACT OF C'ONGRE:-1S .\I'T'HOVED Sl':PT. 26, 11H4 nocl."ct 3193. Complaint, An.Q. 5, 19J"'-Decisicm, Dec. 9, 193"1 \Vlu:>re a torporntion engaged in sale apd distribution of camly, iudnding certain ar<sortnwnts which Wl're so paeked aml nssemllled as to inYolvs u:;e of a lottery sdteme when sold and distributed to consumprs thereof, a111l one of which was comvo:.;erl of a unmhpz· of penny piec('s of nuiform siw and shnve, together with ltmnhPr of larger !)iPc!'s to be gl\·pn as priz!'s tn tlw;;:e llUI'cha>"t>\'8 sel('(•tfng, by chanc!', one of ll r<>lnth'ely f('W of i">lid ll<'llity pieces, conl'ealed centers of which were piuk aud not white- ( a) nepr('sented, to customrrs and pt•ospective customers, throng It sa IN<men and agents, and through its businel:is statiout'ry, llillh(':td>', invoice!l and other printed literutnrP, that it was a mannfneturing ugent of the candy deult in by it, notwithstanding fact it 1wither owned, controll<>d, nor operated nny factory wht1tsoe,·er, aml did not make ennlly pur<·haser, repnck('d, and sold hy it, and was not agent for manufacturer OI' )nnnnftll'turers thez·cof;

\With ('ffeet of mi><learling, and deceiving m:m;v of its customers nml pro~pt•ctive customers into erroneous belief tht~t It wns a lm;;ine"'s cmu•ern which-h <'ontrolled nud opez·ated fuctory in whif'h cnndy o:old by it wns nmdc, or was agent of ~<uch lml"iness eon<·erns, lllll that }Wl'SOlli-! 1lenling with it were lmylng from the manufncturer or agent thereof, and thert>hy limitiug ]Jrofits of middlemPn nnd obtaining ,·arious advantages, lucluuing those of ~en·ice, tlPlin~ry and adjnf'tmeut of account, not obtained by pnrchasez·s from ruiddlemeu, nud of diverting buslne~<s from, ancl otherwil'e injuring and prejudicing, competitors, including many who make the cnn!liPs sold h~, them or are agents of the numufacturers tlu~reof and rightfully represent them- ~<f'lves as such manufncturers or agents, and others who purchase candy dealt iu by them and re1wll snme at profit to them~:>t>lYes, and ht Ito wise revre~<ent that they are uwnnfacturers of Fnwh product; (b) Sold, to wholesalers, job herr, and r!'tailers, assortments of candy without nam(' ther('on of mnnnfactnrer thereof and in wrllll)J('l'!'l rli:<playing names aml IHlrlresses, as care might be, of v·urious concerns other than itself, notwithstanding fact candy in question wus· not made hy any one of companies thus indic-a ted;

With etieet of misiPading and decehing maur of its cnstouwrs autl l)l'O~llectiYe cn;:tomers into the erroneous belief that candy thus sold was made hy hush•<'~"" com•prn wlwHe mune appeared thereon, and of <lh-ertiug hu,.izw><s from, nnrl otl)('rwi;;:e Injuring and }lr('jndieing, <·OmlletitOI'R, of whom many do not mi;o:brnud the men·hnn<li~e sold by them, nor pillet' tht>rt>on fnl>'e ani! mi~<len<llug In bel>! ; aml (c) Sold, to wholesalers, jobbers, nnd retailers, lottery a"i"ortml'uts ahoye described, for display and resale to purdta><in~ pnhlic in aceordanee with above set forth sni!'B plun. awl thert>hy J<npplit>d to nnd plnet>d in the huud>~ of oth~>rs thp nwans of condneting lott~>ries lu th(' sale of it.- product;;, in COX:FECTIO:XERS TRADING CORP. 31 30 Compiaint. nccol·U.nnce with such plan, nnd ns lllPIHIS of inducing pnn·lms{>rs to lny its F>nid products in prefer~>nce to thm:~> offered and sold hy competitors, contrary to public policy long recognized hy tht> common law and t•criminal stntutt>s antl to nn t>stHIJlb:lwd pnhlic policy of tlw t:united ::;tHte,.; Governmt>nt, and in competition with Jn:lny who, unwilling to offer or Sl'll candy llliHle HlHl sold by th<>m, so pn('kt>d IIJHl nf'><Pmbh•d Ol' otherwise arranged and packed for sale to 1mrchasing public a~ to !m·olle u game of chance, refrain therefrom;

\With result that many dealers in and ultimate purchasers of candy were attracted by its said method and manner of pncking same nnrl by elemt>nt of <'11ance involved in sale then•of as above slt forth, and tht-r~ehy induced to pnrf'llllse its said cllndy, ~o p:wl•ell IIJHl r-;olrt, in pr{>f(•i'CIIce to that offered by pompl•titors who do 110t U>'e >'IIHIP or I'(}HiYalent nwthotl, nnd with tentl- E>n<·y Rnd capacity, hecnn"f' of r-;aicl gnmP of <"lwnre, to diwrt to it trade and <'n~tom from its s11id com}wtiton; as nfor!'sai<l, !'XrhH!e from snill tr11de all competitors who are unwilling to and do not use ~ame or eqniYalent method lis lllllawful, le;;sen C'ompetitlon th{'rein, nnd tell(] to Pre>nte a monopoly th~>rPof in it and iu snell other ui;;tribntor~; of <'llndy as use snme or equiYnlent method, deprJ1·e vurchnslug public of bl'uefit of free competition in trade in IJ1WF;tion, and eliminate from f<llid tr1111e all aetna!, nnd {'Xclude the>r{'ft·om all pot£'ntinl, compe>titors who do not adopt and us.- sneh or £'f{Ui>BiE'IIt method:

lleld, That such nets and prnctic~>s w£'r!' to the prpjntlice of tht• pnhlic' and competitors and eonstitnted unfair method.; of <·um]•!'lltion. Before Air. MileN J. Furnas, trial examiner. J/r. Henry 0. Lan~~ and Mr. P. r. J{olin.~ki for the Commission. Mr. Alexander J. 8parnwJ, of Brooklyn, 'N. Y., for re~pondent. CoJrPLAINT Pursuant to the provisions of an ~\ct of Congress, approveu September 26, 1914, entitled "An Act to create a Federal Tmde Commission, to define its powers and duties, and for other purposes," the :Federal Trade Commission, having reason to believe that Confectioners Trading Corporation, 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, Confectioners Trading Corporation, is a corporation organized and doing business under the laws of the State of New York, with its principal office and place of business located at 380 Throop Avenue, in the city of Brooklyn, Stat{) of New York. It is now, and for several months last past has bren, engaged in the sale and dist.ribution of candy to wholesale dealers, jobbers, aJHl retail dealers located nt points in the ,·arious States of the 32 FEDERAL TRADE Co::\ll\IlSSION DECISIONS Complaint 26F. T. C.

United States. It causes the said products when sold to be transported from its principal place of business in Brooklyn, N. Y., to purchasers thereof in other States of the United States at their respective places of business. There is now, and has been for several months last past, a course, of trade and corrunerce 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 sale and distribution of candy in commerce between and among the various States of the United States. PAR. 2. In the course and conduct of its said business, as described in paragraph 1 hereof, respondent has caused and causes the representation to be made to its customers and prospective customers by its salesmen and agents, and to be set forth on its business stationery, billheads, in\oices, and other printed literature, that it is a manufacturing agent of the candy in which it deals. lly the representationis thethatdirectit is agentthe manufacturingof the concernagent,or respondentconcerns manufacturingrepresents thattheit candy which it sells, and also by said representation represents that it is agent for certain customers or purchasers and as such manufactures candy to their order. A substantial portion of the purchasing public, including dealers in candy, have expressed and. have a preference for purchasing products direct from the manufacturer or his agents, such persons believing that they secure closer prices, superior quality, and other advantages that are not obtained.d when they purchase from an independent selling agency or middleman. PAR. 3. The use by respondent of said representation that it is a manufacturer of candy, or the agent of manufacturers of candy, has the capacity arid tendency to and does mislead and deceive many of respondent's said customers and prospective customers into the erroneous belief that respondent is a business concern which controls and operates a factory in which the aforesaid candy sold by respondent is manufactured, or that it is the agent of such business concerns, and that persons dealing with the respondent are buying said candy from the manufacturer thereof or his agent, thereby eliminating the profits of middlemen and obtaining various advantages, including advantages in service, delivery, and adjustment of account, that are not obtained by persons purchasing goods from middlemen. The truth and fact is that respondent neither owns, controls, nor operates any factory whatsoever and does not manufacture said candy sold by it and ]s not the agent for the manufacturer or manufacturers of the candy which it sells, but on the contrary only purchases and repacks the candy which it sells.

CONFECTIO~EB.S TRADI.::\G CORP. 33 30 Complaint PAR. 4. There are among the competitors of responuent, referred to in paragraph 1 hereof, many who manufacture the candy which they st>ll or who are agents of such manufacturers and who rightfully rt>present that they are the manufacturers thereof or are the agents of such manufacturers. There are others of said competitors who purchase the candy in which they deal and resell the same at a profit to themselves and who in no wise represent that they manufacture said candy. The above alleged acts and practices of respondent, as set out in paragraphs 2 and 3 hereof, tend to and do divert businrss from and otherwise injure and prejudice said competitors. PAR. 5. In the course and conduct of its business, as described in paragraph 1 hereof, respondent sells and has sold to wholesale dealers, jobbers and retail dealers assortments of candy which do not and did not have thereon its name or the name of the manufacturer of the candy contained in said assortment. The candy contained in said assortment 'vas contained in wrappers bearing the legends Red Hook Chocolate Corporation, Red Hook, N. Y., thereby representing that the said candy was manufactured by the Red Hook Chocolate Corporation of Red Hook, N. Y., when such was not the fact. The ctuHly in other assortments was contained in wrappers bearing the name Harwood Candy Corporation. Other assortments contained candy in wrappers bearing the name Lincoln Choeolatt> & Confectionery Company. Other assortments contained candy in wrappers bearing the name Geiger's Candy Company. Other assortments bore the legend Allan & Allan, Corning, New York, thereby representing that the assortments contained candy manufactured by the Harwood Candy Corporation, Lincoln Chocolate & Confectionery Company, Geiger's Candy Company, and .\.llan & Allan, respectinly, when in fact the candy was not made by any one of the said companies. The misbranding of re.<;pondent's merchandise, or the false labeling thereof, has the capacity and tendency to and does mislead and deceive many of respondent's customers and prospective customers into the erroneous belief that the candy so sold was manufactured by the business concern whose name appeared on the said wrappers. There are among the competitors of respondent, referred to in paragraph 1 hereof, many \Yho do not misbrand the merchandise which they sell and who do not place thereon false and misleading labels. The acts and practices of respondent just above described tend to and do divert business from an<l otherwise injure and prt>jndice said competitors.

PAR. 6. In the course and conduct of its business, as described in paragraph 1 hereof, respondent sells and has sold to wholesale dealers, jobbers, and retail dealers assortments of candy so packed allll as· 34 FEDERAL TRADE CO:\I:\IISSIOX DECISIOXS Complaint 26F. T. C.

sembled as to invoh·e the use of a lottery scheme ·when sold and dis. tributed to the consumers thereof.

One of said assortnwnts is composed of a number of pieces of candy of uniform size and shape, together with a number of larger piecl's of candy, which larger pieces of candy are to be given as prizes to purchasers of said pieces of candy of uniform size and shape in the following manner: The majority of the said pieces of candy of uniform size and shape have white centers, but a small number of said pieces of candy lta\'e pink centers. The said pieces of candy of uniform size and shape retail at the price of 1¢, but the purchaser who procures one of said candies having a pink center is entitled to receive and is to be given free of charge one of the said larger pieces of candy contained in said assortment and heretofore referred to. The color of the center of said pieces of candy of uniform size and shape is effectively concealed from purchasers and prospective purchasers until a selection has been made and the piece of candy selected broken open. The aforesaid purchasers who procure a piece cif candy having a pink center thus procure one of the said larger pieces of candy wholly by lot ot' chance.

Respondent packs, assembles alld sells various a~sortments of candy invoh·ing the above described sales plan or lottery scheme but varying in detail from the sales plan or lottery scheme. just above rlescribed.

PAR. 7. The jobbers and wholesale dealers to whom respondent sells its assortments resell said a ..;;sortments to retail dealers, and said retail dealers and the retail dealers to "·hom rrspondent sells direct expose said assortments for sale and sell said candy to the purchasing public in accordance with the aforesaid sales plan. Respondent thus supplies to a net places in the hands of others the means o Econducting lotteries in the sale of its products in accoruance with the sales plan hereinabo~ 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. 8. The sale of said candy to the purchasing public in the manner abo,·e alleged ilwoh·es a game of chance ot• the sale of n chance to procure larger pieces 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 Ion~ deemed contrary to public policy, and is contrary to an established public policy of the Go,·emment 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 therl'of has COXFECTIOXER:5 TRADING CORP. 35 30 Findings the tendency and capacity to exdude from the canlly trade competitors who do not adopt ami use the same method or an equintlent or similar method involving the same or an equivalent ot· similar element of chance or lottery scheme. l\lany 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. P.m. 9. Many dealers in and ultimate purchasers of candy are attracted by respondent's said method and manner of p:lCking said {'andy and by the element of chance involn•d 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 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 equi,·alent 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 tmde and to tend to create a monopoly of said candy trade in rpspondent and in such other distributors of candy as use the same or an equivalent method; and to deprive the purchasing public of the benefit of free <'Ompetition in said candy trade. The use of said method by 1·respondent has the tendency and capacity to eliminate from said <'ately trade all actual competitors, and to exclude therefrom all }>otentinl competitors who do not adopt and llse the said method or an equivalent method.

PAR. 10. The aforementioned methods, acts and practices of 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 ~\ct of Congress, entitled "~\n 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 Onder Pursuant to the provisions of an .Act of Congress approved September 26, l!H4, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," the Federal Trade Commission on August 5, 1937, issued and on August 36 FEDERAL TRADE CO::\IMISSION DECISIOKS Findings 26F.T.C ..

6, 1937, served its complaint in this proceeding upon Tespondentr Confectioners Trading Corporation, 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 motion for permission to withdraw said answer and to substitute therefore an answer dated November 3, 1937, admitting all the material allegations of the complaint to be true and waiving the taking of further evidence aml all other intervening procedure, which answer was duly filed in the office of the Commission on November 9, 1937. Thereafter this proceeding regularly came on for final hearing before the Commission on the said complaint and the substitute answer, 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 PARAGRAPH 1. Respondent, Confectioners Trading Corpomtion, is a corporation organized and doing business under the laws of the State of New York, with its principal office and place of business located at 380 Throop A venue, in the city of Brooklyn, State of New York. It is now, and for several months last past has been engaged in the sale and distribution of candy to wholesale dealers, jobbers a.nd retail dealers located at points in the various States of the United States. It canoes the said products when sold to be transported from its principal place of business in Brooklyn, N. Y., to purchasers thereof in other States of the United States at their respective places'of business. There is now, and has been for se,·eral months last past, a course of trade and commerce by said respondent in such candy between and among the States of the United States. In the course and conduct of said business, respondent is in competition with other corporations and with partnerships and individuals engaged in the sale and distribution of candy in commerce between and among the various States of the Unifed States. PAR. 2. In the course and conduct of its said business, as described in paragraph 1 hereof, respondent has caused and causes the representation to be made to its customers and prospective customers by its salesmen and agents, and to be set forth on its business stationery, billheads, invoices, and other printed literature, that it is a manufacturing agent of the candy in which it deals. Dy the representation that it is the manufacturing agent, respondent represents that it is the direct agent of the concern or concerns manufac- CO:NFECTIONERS TRADING CORP. 37 30 Findings turing the candy which it sells, and also by said representation represents that it is agent for certain customers or purchasers and as such manufacturers candy to their order. A substantial portion of the purchasing public, including dealers in candy, have expressed and have a preference for purchasing products direct from the manu· facturer or his agents, such persons believing that they secure closer prices, superior quality, and other advantages that are not ob· tained when they purchase from. an independent selling agency or middleman.

PAR, 3. The use by respondent of said representation that it is a manufacturer of candy, or the agent of manufacturers of candy, has the capacity and tendency to and does mislead and deceive many of respondent's said customers and prospective customers into the erroneous belief that respondent is a business concern which controls and operates a factory in which the aforesaid candy sold by respond· ent is manufactured, or that it is the agent of such business concerns, and that persons dealing with the respondent are buying said candy from the manufacturer thereof or his agent, thereby eliminating the profits of middlemen and obtaining various advantages, including advantages in service, delivery, and adjustment of account, that are not obtained by persons purchasing goods from middlemen. The truth and fact is that respondent neither owns, controls nor operates any factory whatsoever and does not manufacture said candy sold by it, and is not the agent for the manufacturer or manufacturers of the candy which it sells, but on the contrary only purchasl.'s and repacks the candy which it sells.

PAR. 4. There a·re among the competitors of respondent, referred<l to in paragraph 1 hereof, many who manufacture the candy which they sell or who are agents of such manufacturers and who rightfully represent that they are the manufacturers thereof or are the agents of such manufacturers. There are others of said compet.itors who purchase the candy in which they deal and resell the same at a profit to themselves and who in no wise represent that they manu· facture said candy. The above described acts and practices of re· spondent, as set out in paragraphs 2 and 3 hereof, tend to and do divert business from and otherwise injure and prejudice said competitors.

PAR. 5. In the course and conduct of its business as described in paragraph 1 hereof, respondent sells and has sold to wholesale dealers, jobbers, and retail dealers assortments of candy which do not and did not have thereon its name or the name of the manufac· turer of the candy contained in said assortment. The candy con· tainell in said assortment was contained in wrappers bearing the 38 FEDERAL TRADE CO.Ml\IISSION DECISIONS Findings 26F. T. C .. legends Red Hook Chocolate Corporation, Red Hook, N. Y., thereby representing that the said candy was manufactured by the Red Hook Chocolate Corporation of Red Hook, N.Y., when such was not the fact. The candy in other assortments was contained in wrappers bearing the name Harwood Candy Corporation. Other assortments contained candy in wrappers bearing the name Lincoln Chocolate & Confectionery Company. Other assortments contained candy in wrappers bearing the name Geiger's Candy Company. Other assortments bore the legend Allan and Allan, Corning, N. Y., thereby representing that the assortments contained candy manufactured by the Harwood Candy Corporation, Lincoln Chocolate & Confectionery Company, Geiger's Candy Company, and Allan & Allan, respectively, when in fact the candy was not made by any one of the said companies. The misbranding of respondent's merchandise, or the false labeling thereof, has the capaeity and tendency to and does mislead and deceiye many of respondents customers ald prospective customers into the erroneous belief that the candy so sold was numufaetnred by the business concern whose name appeared on the said wrappers. There are among the competitors of respondent, 1-eferred to in paragraph 1 hereof, many who do not misbrand the merchandise which they sell and who do not place· thereon false nnd misl('ading hthels. The ads and practices of respondent just above described tend to and do divert business from and otherwise injure and prejudice said competitors. P .An. 6. In the course and condurt of its busi1wss as described in paragraph 1 hereof, respondent sells and has sold to wholesale dealers, jobbers and retail dealers Assortments of rnndy so paeked and assembled as to involve the use of a lottery scheme when sold nnd distributed' to the consumers thereof. One. of said assortments is composed of a number of pieees of candy of uniform size Rnd shape together with a number of larger pieces of candy which larger pieces of candy are to be given as prizes to purchasers of said pie~es of candy of uniform size and shape in the following manner: The majority of the said pieces of candy of uniform size and shape have white centers, but a small number· of said pieces of cnndy have pink centers. The said pieees of candy of uniform size and shape retail at the price of 1¢, but the purchaser who procures one of said candies having a pink center is E';ntitled to rece,ive and is to be giwn free of charge one of the said larger pieces of candy contained in said assortment and heretofore referred to. The color of the c~nter of said pieces of candy of uniform size and shape is effectively concealed from purchasers and prospective purchasers until a selection has been made and the CONFECTIONERS TRADING CORP. 39 30 Findings piece of candy selected broken open. The aforesaid purchasers who procure a piece of candy having a pink center thus procure one of the said larger pieces of candy wholly by lot or chance. Respondent packs, assembles, and sells various assortments of candy involving the above described sales plan or lottery scheme but nrying in detail from the sales plan or lottery scheme just above described.

PAR. 7. The jobbers and 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 uforesaid 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, 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.

P.\R. 8. The sale of said candy to the purchasing public in the manner above found involves a game of ehance or the sale of a chance to procure larger pieces 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 nse by respondent of s:tid 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 candy trade 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 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. 9. 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 tht>reof 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 an equivalent method. The use of said method by CO:U:\IlSSIO~ DECISIONS40 FEDERAL TRADE Ot·der 26F. T. C.

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 equivalent method; and to depri\Te 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 their·efrom all potential competitors who do not adopt and use the said method or an equivalent method. CONCLUSION The aforesaid acts and practices of the respondent, Confectioners Trading 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 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 Leen heard by the Federal Trade Commission upon the complaint of the Commission and the answer dated November 3, 1937 and filed herein on November 9, 1937 by the respondent, admitting all the material allegations 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, approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes." It is ordered, that the respondent, Confectioners Trading Corporation, its officers, representatives, agents, and employes, in connection with the offering for sale, sale and distribution in interstate commerre of candy, do forthwith cease and desist from: 1. Representing, directly or indirectly that it is a manufacturing ngPnt of the candy which it sells, or that it is the direct agent of the concern or concerns manufacturing the candy which it sells and distributes, or that it is the agent for certain customers or purchasers, and as such manufactures the candy which it sells to their order; COKFECTIO.XERS TRADING CORP. 41 30 Order 2. Representing, directly or indirectly by labels, wrappers or otherwise that the candy which it sells or offers for sale is manufactured by any concern other than the actual manufacturer or manufacturers thereof;

3. Selling and distributing to jobbers and wholesale dealers for resale to retail dealers, or to retail dealers din•ct, candy so packed aud 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;

4. Supplying to or placing in the hands of wholesale dealers and jobbers or retail dea.lprs 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 enterprise in the sale or distribution of the candy contained in sa"id assortments to the public; and 5. Packi11g 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 said larger pieces of candy are to be given as prizes to the purchaser procuring a piece of candy having a center of a particular color.

It is further ordered, That the responde-nt, Confectioners Trading Corporation, 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 here~nabove set forth. 42 FEDERAL TRADE COl\Il\HSSION DECISIONS Complaint 26 F.T. C.