Illinois Baking Corporation

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF ILLINOIS BAKING CORPORATION COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 3495. Complaint, July 16, 1938-Decision, Mar. 27, 1939 Where a col'porat!on engaged in manufacture of ice cream cones and in sale and distribution thereof and in selling and distributing certain of its cones by means of a lottery scheme, gift enterprise, or garue of chance under which retail dealer assembling from coupons, of which it enclosed and concealed one with each 250 cone-package, letters to spell legend "S-A-F-E-T C-0-N-E-S," became entitled to receive from his jobber-seller 1,000 additional cones without additional cost- Sold assortments as aforesaid to wholesaler and jobber customers by whom coupons, in accordance with aforesaid plan and explanatory legends enclosed, were redeemed for retailer customers in accordance with such plan, and thereby supplied to and placed in the hands of others means of conducting lotteries, gift enterprises, or games of chance in sale of its products In accordance with such sales plans, contrary to public policy as long considered, and to an established public policy of the United States Government, and in competition with many who make and sell such products and are unwilling to offer or sell such cones by said or Pquivalent or similar method Involving same or equivalent or similar e!Pment of chance or lottery scheme and refrain therefrom;

With capacity and tendency to induce retail dealers to purchase lts said products in preference to those made and offered and sold by its competitors and with result that many dealers were attracted by its said method and manner of selllng its said ice cream cones and by element of. chance Involved In sale thereof as above described and wpre thereby induced to buy and s£>11 such products in preference to those offered and sold by competitors who do not use such or equivalent methods, and with effect, through use of. such method and because of said element of chance, of unfairly dh·erting trade and custom to it from its competitors aforesaid who are unwilling to and do not use such or equivalent method as unlawful, to their substantial injury: Held, That such acts and practices were all to the prejudice and injury of the public and competitors and constituted unfair methods of competition. Before Mr. Charles F. Diggs, trial examiner. Mr. D. 0. Daniel for the Commission.

1258 FEDERAL TRADE COl\11\IISSION DECISIONS Complaint 28F. T. C.

Complaint Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said act, the Federal Trade Commission, having reason to believe that the Illinois Baking Corporation, a corporation, hereinafter referred to as respondent, has violated the provisions of said act, and it appearing to the Commission that a proceeding by it in respect thereof would be inj the public interest, hereby issues its complaint, stating its charges in that respect as follows:

PARAGRAPH 1. Respondent is a corporation organized and operating under the laws of the State of Delaware, with its principal office and place of business located at 2230 South Union Avenue, Chicago, Ill. Respondent is now, and for some time last past has been, engaged in the manufacture of ice cream cones and in the sale and distribution thereof in commerce between and among the various .States of the United States and in the District of Columbia. Respondent causes, and has caused, said products, when sold, to be shipped or transported from its place of business in the State of Illinois to purchasers thereof located in the various States of the United States other than the State of Illinois and in the District of Columbia at their respective points of location. There is now, and has been for some time last past, a course of trade by said respondent in such mer· chandise in commerce between and among the various States of the United States and in the District of Columbia. In the course and conduct of said business respondent is in competition with other corporations and with individuals and partnerships engaged in the sale and distribution of ice cream cones in commerce between and among the various States of the United States and in the District of Columbia.

PAR. 2. In the course and conduct of its business ns described in paragraph 1 hereof respondent has, for the past several months, sold and distributed, and is now selling and distributing, certain of its said ice cream cones by means of a lottery scheme, gift enterprise, or a game of chance. Respondent packs and assembles its "Safe-T Cones" in packages containing 250 of said cones and also packs and assembles in each of said packages containing 250 cones, a coupon containing the following statements and legends, among others: ILLINOIS BAKING CORP. 1259 1257 Complaint T---------SAFE-T CONES COUPON---------·T Save these "SAFE-T CONE" Coupons.

Each coupon bears a letter from the name "SAFE-T CONES"

After you have saved ten coupons to spell the name "S-A-F-E-T C-0-N-E-S", you will receive one thousand "SAFE-T CONES" absolutely free.

There is a coupon packed in every box of "SAFE-T CONES".

- Look for 1t ! - MR. DEALER I Ten "SAFE-T CONE" COUPONS which spell the name "SAFE-T CONES" will be redeemed ONLY BY YOUR JOBBER for one thousand '.'SAFE-T CONES''.

There is a dltference in ice cream cones "SAFE-T CONES" are better. They will not drip inside or outside. ILLINOIS BAKING CORPORATION 2230 S. Union Avenue, Chicago, Ill. Phone MO~roe 4051 T----------------------------------------------T The letters in the corners of said coupons are one of the letters in the Words "Safe-T Cones" and retail dealers obtaining coupons the letters on which spell the words "Safe-T Cones" are entitled to receive and are to be given by the jobber from whom said cones were purchased one thousand additional cones free of charge or without additional cost. The said printed coupons are sealed in the packages containing 250 cones and the letters in the corners of the coupons cannot be ascertained until the package of cones has been delivered and opened by the retail dealer. Retail dealers thus secure additional cones wholly by lot or chance.

PAn. 3. The wholesale dealers and jobbers to whom respondent sells the above described packages of ice cream cones containing the above described printed slip, resell such packages of cones as packed by respondent to retail dealers and redeem the said coupons in accordance With the above described legends. The respondent thus supplies to and Places in the hands of others the means of conducting lotteries, gift enterprises, or games of chance in the sale of its products in accordance With the sales plan hereinabove set forth and said sales plan has the capacity and tendency to induce retail dealers to purchase respondent's said products in preference to ice cream cones manufactured and offered for sale and sold by its eomoetitors. 200346'"-4G-vol. 28-82 1260 FEDERAL TRADE COl\Il\IISSION DECISIONS Findings 28F.T.C.

PAR. 4. The sale of ice cream cones in the manner above described involves a game of chance, gift enterprise, or a lottery scheme, and the use by respondent of said method in the sale of ice cream cones and the sale of ice cream cones by and through the use thereof and by the aid of said method is a practice of the sort which has long been deemed contrary to public policy and is contrary to an established public policy of the Government of the United States. Many persons, firms, and corporations who make and sell ice cream cones in competition with the respondent as above described are unwilling to offer for sale or sell ice cream cones by said method or an equivalent or similar method involving the same or an equivalent or similar element of chance or lottery scheme and usch competitors refrain therefrom. Many dealers are attracted by respondent's said method and manner of selling its ice cream cones and by the element of chance involved in the sale thereof in the manner above described and are thereby induced to buy and sell respondent's products in prefer· ence to products offered for sale and sold by competitors of respond ent who do not use the same or an equivalent method. The use d said method by respondent because of said element of chance has tho capacity and tendency to and does unfairly divert trade and custom to respondent from its said competitors who are unwilling to and who do not use the same or equivalent method because the same is unlaw· ful. As .a result thereof, substantial injury is being, and has been, done to said competitors of respondent.

PAR. 5. The aforesaid acts and practices of respondent as herein alleged are all to the prejudice of the public and of respondent's com· petitors and constitute unfair methods of competition in commerce within the intent and meaning of the Federal Traue Commission Act. REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on July 16, 1938, issued and thereafter served its complaint in this proceeding upon respondent Illinois Baking 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 ILLINOIS BAKING CORP. 1261 1257 Findings therefor an answer admitting all the material allegations of fact set forth in said complaint and waiving all intervening procedure and further hearing as to said facts, 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 substitute answer, and the Commission having duly considered the matter 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 is a corporation organized and operating under the laws of the State of Delaware, with its principal office and place of business located at 2230 South Union Avenue, Chicago, Ill. Respondent is now, and for some time last past has been, engaged in the manufacture of ice cream cones and in the sale and distribution thereof in commerce between and among the various States of the United States and in the District of Columbia. Respondent causes, and has caused, said products, when sold, to be shipped or transported from its place of business in the State of Illinois to purchasers thereof located in the various States of the United States other than the State of Illinois and in the District of Columbia at their respective points of location. There is now, and has been for some time last past, a course of trade by said respondent in such merchandise in commerce between and among the various States of the United States and in the District of Columbia. In the course and conduct of said business respondent is in competition with other corporations and with indi- Yiduals and partnerships engaged in the sale and distribution of ice cream cones in commerce between and among the various States of the United States and in the District of Columbia. PAR. 2. In the course and conduct of its business as described in paragraph 1 hereof respondent has, for the past several months, sold and distributed, and is now selling and distributing, certain of its said ice cream cones by means of a lottery scheme, gift enterprise, or a game of chance. Respondent packs and assembles its ''Safe-T Cones" in packages containing 250 of said cones and also packs and assembles in each of said packages containing 250 cones, a coupon containing the following statements and legends, among others: Findings Save these " SAFE -T C 0 N E" Coupons.

Each coupon bears a letter from the name "SAFE-T CONES"

After you have saved ten coupons to spell the name ''S-A-F-E-T C-0-N-E-S'', you will receive one thousand "SAFE-T CONES" absolutely free There is a coupon packed in every box of "SAFE-T CONES"

-Look for it!- :MR. DEALER! Ten "SAFE-T CONE" COUPONS which spell the name "SAFE·T CONES" will be redeemed ONLY BY YOUR JOBBER for one thousand "SAFE-T CONES."

There is a difference in ice cream cones "SAFE-T CONES'' are better. They will not drip inside or QUtside ILLINOIS BAKING CORPORATION 2230 S. Union Avenue, Chicago, Ill. Phone MONroe 4051 '--------------------------------------------------T The letters in the corners of said coupons are one of the letters in the words "Safe-T Cones" and retail dealers obtaining coupons the letters on which spell the words "Safe-T Cones" are entitled to receive and are to be given by the jobber from whom said cones were purchased one thousand additional cones free of charge or without additional cost. The said printed coupons are sealed in the packages containing 250 cones and the letters in the corners of the coupons cannot be ascertained until the package of cones has been delivered and opened by the retail dealer. Retail dealers thus secure additional cones wholly by lot or chance.

PAR. 3. The wholesale dealers and jobbers to whom respondent sells the above described packages of ice cream cones containing the above described printed slip, resell such packages of cones as packed by respondent to retail dealers and redeem the said coupons in accordance with the above described legends. The respondent thus supplies to and places in the hands of others the means of conducting lotteriest gift enterprises, or games of chance in the sale of its products in accordance with the sales plan hereinabove described and said sales plan has the capacity and tendency to induce retail dealers to purchase respondent's said products in preference to ice cream cones manufactured and offered for sale and sold by its competitors. PAR. 4. The sale of ice cream cones in the manner above described involves a game of chance, gift enterprise, or a lottery scheme, and ILLINOIS BAKING CORP. 1263 1257 Order the use by respondent of said method in the sale of ice cream cones and the sale of ice cream cones by and through the use thereof and by the aid of said method is a practice of the sort which has long been deemed contrary to public policy and is contrary to an established public policy of the Government of the United States. Many persons, firms, and corporations who make and sell ice cream cones in competition with the respondent as above described are unwilling to offer for sale or sell ice cream cones by said method or an equivalent or similar method involving the same or an equivalent or similar element of chance or lottery scheme and such competitors refrain therefrom. Many dealers are attracted by respondent's said method and manner of selling its ice cream cones and by the element of chanre involved in the sale thereof in the ma1mer above described and are thereby induced to buy and sell respondent's products in preference to products offered for sale and sold by competitors of respondent who do not use the same or an equivalent method. The use of said method by respondent because of said element of chance has the capacity and tendency to and does unfairly divert trade and custom to respondent from its said competitors who are unwilling to and who do not use the same or equivalent method because the same is unlawful. As a result thereof, substantial injury is being, and has been, done to said competitors of respondent.

CONCLUSION The aforesaid acts and practices of respondent as herein found are all to the prejudice and injury of the public and of respondent's competitors and constitute unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commission Act. ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and the answer of respondent, in which answer respondent admits all the material allegations of the complaint to be true, and states that it waives all intervening procedure and further hearing as to said facts, and the Commission having made its findings as to the facts and conclusion that said respondent has violated the provisions of the Federal Trade Commission Act.

It is ordered, That the respondent, Illinois Baking Corporation, its officers, representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, Order 28F. T. C.

sale and distribution of ice cream cones or any other merchandise in commerce, as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Selling or distributing ice cream cones so packed and assembled that sales of such cones are to be made or may be made by means of a game of chance, gift enterprise, or lottery scheme. 2. Selling or distributing ice cream cones together with coupons so designed or printed that the use of said coupons in the sale or distribution of said cones constitutes the operation of a game of chance, gift enterprise, or lottery scheme. 3. Selling or otherwise disposing of any merchandise by means of a game of chance, gift enterprise, or lottery scheme. It is further ordered, That the respondent shall, within 60 days after s~rvice 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.

COLUMBIA REFINING CO. 1265 Syllabus.