Consolidated Candy Co., Inc.

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IN THE MA'ITER OF CONSOLIDATED CANDY COl\IBANY, INC., A CORPORA- TION, AND LESLIE FINUCANE, INDIVIDUALLY, AND AS AN OFFICER OF CONSOLIDATED CANDY COMPANY, INC. COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATIO:-1 OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 19H Docket 3657. Complaint, Dec. 3, 19B8-Decision, Sept. 18, 1939. Where a corporation and an individual, who was secretary and treasurer thereof and formulated and directed its practices and policies, engaged in manufacture and sale of candy and nut confections which were sold, packed and assembled so as to involve use of a lottery scheme when sold and distributed to the consumers thereof and which included (1) number of bars of a nut confection or candy, together with push card, for sale under a plan and in accordance with said card's explanatory legend, pursuant to which customer received the confection or candy without cost or paid therefor 1, 2, or 3 cents, dependent upon the securing by chance of the letter 0 or number 1, 2, or 3 in accordance with disk selected on card, and (2) various other assortments of candy and nut confection which involved lottery or chance feature in method of sale and distribution, but were similar to that above described and varied therefrom in detail only; and acting in cooperation with one another in the matters here involved- Sold to dealers for display and resale by retail dealer purchasers thereof in accordance with aforesaid sales plan such assortments, and thereby supplied to and placed in the bands of others means of conducting lotteries in the sale of their product in accot·dance with such sales plan involving game of chanc-e or sale of a chance to secure a bar of candy or nut confection without cost or at a price much less than normal retail price thereof, contrary to an established policy of the United States Government and in violation of the criminul laws and in competition with many who are unwilling to offer and sell candy and nut confections so packed and assembled as above described or otherwise arranged and packed for sale to purchasing public so as to involve game of chance or any other method of sale contrary to public policy and refrain therefrom; \With tendency and capacity to induce purchasers of their candy and nut confections to buy their said products in preference to those offered and sold by competitors, and with result that many dealers in and ultimate purchasers of candy and nut confections were attracted by their said method and manner of packing such products and by element of chance involved in sale thereof, as above set forth, and were thereby induced to purchase such candy and nut confections thus packed and sold by them in preference to products offeretl and sold by their competitors aforesaid who do not use same or equivalent or similar method, and with tendency and capacity through use of such method and because of said game of chance to divert to them trade and custom from their said competitors who do not use any such method, to exclude from candy and nut confections trades all competitors who are unwilling to and do not use same or equivalent or CONSOLIDATED CANDY CO., INC., ET AL. 947 946 Complaint similar method as unlawful, to lrs~en competition therein and to create monopoly thereof in them and such other distributors of candy and nut confections as use same or equivalent or similar method, and to deprive purchasing public of benefit or free competition in trades in question, and with tcudcncy and capacity, through the use of such method by them in sale of their products, to eliminate from trades involved all actual, and exclude therefrom all potential, competitors who do not adopt and use such or equivalent or similar metho1ls:

Held, That such acts anu practices under tlle circumstances set forth were all to the prejudice and injury of competitors and constituted unfair methods of competition. · llefor€ Afro. John J. [( ee11.an, trial examiner. Mr. D. 0. Damiel for the Commission.

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 Consolidated Candy Co., Inc., a corporation, and Leslie Finuc::we, individually and as an officer of Consolidated Candy Co., Inc., hereinafter referred to as respondents, have violated the provisions of said act, and it appearing to the Commission that a proceeding by it in respect thereof would be to the public interest, hereby issues its complaint, stating its charges in that respect as follows:

PARAGRAPH 1. Respondent Consolidated Candy Co., Inc., is a corporation with its principal office and place of business located at 82(). Exposition Avenue, Dallas, Tex. Individual respondent Leslie l!'inucane, is secretary and treasurer of said corporation and has his principal office at the same address as corporate respondent. Said individual respondent controls, formulates, and directs the practices and policies of Consolidated Candy Co., Inc. Respondents act togt-ther and in cooperation with each other in doing the acts and things hereinafter alleged.

Respondents are now and for some time last past have been engaged in the manufacture of canay and nut confections and in the sale and distribution thereof to dealers. Respondents cause and have caused their products, when sold, to be shipped or transported from the aforesaid principal place of business in Texas to purchasers thereof in the various other States of the United States and in the District of Columbia, at their respective places of business. There i.;; now and has been for some time last past a course of trade by said respondents in such candy and nut confections 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 respondents 948 FEDERAL TRADE CO:Ml\IISSION DECISIONS Complaint 29F. T. C.

are in competition with other corporations and individuals and with partnerships engaged in the sale and distribution o:f candy and nut confections in commerce between and among the various States of the United States and in the District o:f Columbia. PAR. 2. In the course and conduct of their business, as described in paragraph 1 hereof, respondents sell and have sold to dealers certain assortments of candy and nut confections so packed and assembled so as to involve the use o:f a lottery scheme when sold and distributed to the consumers thereof. One of said assortments is sold and distributed to the purchasing public in the :following manner: This assortment is composed of a number of bars of a nut confection or candy, together with a device commonly called a push card. The push card contains a number of partly perforated disks and on the face o:f each disk is printed the word "push." ·within each o:f said disks is printed either the letter 0 or number 1, 2, or 3, and the persons pushing the disk containing the letter 0 receive bars o:f said nut confection or candy without cost, and the persons pushing the disks containing the number 1, 2, or 3, pay in cents the amount of the number pushed. The said numbers printed within the said disks are effectively concealed from purchasers and prospective purchasers until a push has been made and the disks separated or removed from said card. The fact as to whether a customer receives a bar of said nut confection or candy without charge, or the price to" be paid therefor, ~s determined wholly by lot or chance. The respondents manufacture, sell and distribute various assortments of candy and nut confections involving a lottpry or chance feature', but such assortments and the method of sale and distribution thereof are similar to the one herein described and vary only in detail.

PAR. 3. Retail dealers who purchase assortments of respondents' candy or nut confections, directly or indirectly, expose and sell the same to the purchasing public in accordance with the aforesaid sales plan. Respondents thus supply to and place in the hands of others a means of conducting lotteries in the sale of their products in accordance with the sales plan hereinaboye set forth. Said sales plan has the tendency and capacity to induce purchasers of candy and nut confections to purchase respondents' said products in preference to candy and nut confections offered for sale and sold by their competitors.

PAR. 4. The sale of said candy or nut confections to the purchasing public in the manner above alleged involves a game of chance or the sale of a chance to secure a bar of candy or nut confection without cost or at a price much l£>ss than the normal retail price CONSOLIDATED CANDY CO., INC., ET AL. 949 U46 Complaint thereof. The use by respondents of said method in the sale of candy and nut confections, and the sale of candy and nut confections by and through the use thereof and by the aid of said method, is a practice of the sort which is contrary to an established public policy of the Government of the United States and in violation of the criminal laws. The use by respondents of said method in the sale of their products has the tendency unduly to hinder competition or to create a monopoly in this, to wit: That the use thereof has the tendency and capacity to exclude from the candy and nut confection trades competitors whQ do not adopt and use the same method or an equivalent or similar method involving the same or an equinlent or similar element of chance or lottery scheme. Many persons,: firms, and corporations who make and sell candy and nut confec-' tions in competition with the respondent, as above alleged, are unwilling to offer for sale and sell candy and nut confections so packed and assembled as above described, or otherwise arranged and packed for sale to the purchasing public so as to involve a game of chance, or any other method of sale that is contrary to public policy, and such competitors refrain therefrom.

PAn. 5. .Many dealers in, and ultimate purchasers of, candy and nut confections are attracted by respondents' said method and manner of packing said candy and nut confections and by the element of chance involved in the sale thereof in the manner above described1 land are thereby induced to purchase said candy and nut confections so packed and sold by respondents in preference to candy and nut i confections offered for sale and sold by said competitors of respond-ents who do not use the same or an equivalent or similar method. lthe use o£ said method by respondents has a tendency and capacity, Ibecause of said game or chance, to divert to respondents trade and. i 1custom from their said competitors -who do not use the same or an I equivalent or similar method, to exclude from said candy and nut II confections trades all competitors who are unwilling to and who do not use the same or an equivalent or similar method because the same is unlawful, to lessen competition in said candy and nut confections trades, to create a mono.poly of said candy and nut confections trades in respondents and such other distributors of candy and nut confections as use the same or an equivalent or similar method, and to deprive the purchasing public of the benefit of free competition in said candy and nut confections trades. The use of said method by respondents in the sale of their products has a tendency and capacity to eliminate from said candy and nut confections trades all actual competitors and to exclude therefrom all potential com- 950 FEDERAL TRADE COl\Il\IISSION DECISIONS Findings 29F. T. C.

petitors who do not adopt and use said method or an equivalent or similar method.

PAR. 6. The aforesaid acts and practices of respondents, as hereinabove alleged, are all to the prejudice and injury of respondents' -competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commi'ision Act, the Federal Trade Commission on December 3, 1938, issued and thereafter served its complaint in this proceeding upon the respondents Consolidated Candy Co., Inc., a corporation, and Leslie Finucane, individually and as an officer of Consolidated Candy Co., Inc., charging them with the use of unfair methods of competition and unfair and deceptive acts and practices in commerce in violation of the provisions of said act. On August 31, 1939, the respondents filed their answer, in which answer they admitted all the material allegations of fact set forth in said complaint and waived all intervening procedure and further hearing as to said facts. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint and the answer thereto, 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 Consolidated Candy Co., Inc., is a corporation with its principal office and place of business located at 826 Exposition A venue, Dallas, Tex. Individual respondent Leslie Finucane, is secretary and treasurer of said corporation and has his principal office at the same aclllress as corporate respondent. Said individual respondent controls, formulates and directs the practices and policies of Consolidated Candy Co., Inc. Respondents act together and in cooporation with each other in doing the acts and things hereinafter found.

Respondents are now and for some time last past have been engaged in the manufacture of candy and nut confections and in the sale and distribution thereof to dealers. Respondents cause and have caused their products when sold, to be shipped or transported from the aforesaid principal place of business in Texas to purchasers thereof in the various other States of the United States and in the District of Colum- CONSOLIDATED CANDY CO., INC., ET AL. 951 fl46 Findings bia, at their respective places of business. There is now and has been for some time last past a course of trade by said respondents in such candy and nut confections 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 respondents are in competition with other corporations and individuals and with partnerships engaged in the sale and distribution of candy and nut confections 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 their business, as described in paragraph 1 hereof, respondents sell and have sold to dealers certain assortments of candy amluut confections so packed and assembled so as to involve the use of a lottery scheme when sold and distributed to the consumers thereof. One of said assortments is sold and distributed to the purchasing public in the following manner: This assortment is composed of a number of bars of a nut confection or candy, together with a device commonly called a push card. The push card contains a number of partly perforated discs and on the face of each disc is printed the word "push." ·within each of said discs is printed either the letter 0 or number 1, 2, or 3, and the persons pushing the disc containing the letter 0 receive bars of said nut confection or candy without cost, and the persons pushing the discs containing the number 1, 2, or 3, pay in cents the amount of the number pushed. The said numbers printed within the said discs are effectively concealed from purchasers and prospective purchasers until a push has been made and the discs separated or removed from said card. The fact as to whether a customer receives a bar of said nut confection or candy without charge, or the price to be paid therefor, is determined wholly by lot or chance.

The respondents manufacture, sell and distribute various assortments of candy and nut confections involving a lottery or chance feature, but such assortments and the method of sale and distribution therpof are similar to the one herein described and vary only in detail. -!: ~ : PAR. 3. Retail dealers who purchase assortments of respondents' candy or nut confections, directly or indirectly, expose and sell the same to the purchasing public in accordance with the aforesaid sales plan. Respondents thus supply to and place in the hands of others a means of conducting lotteries in the sale of their products in accordance ·with the sales plan hereinabove set forth. Said sales plan has the tendency and capacity to induce purchasers of candy and nut confections to purchase respondents' said products in preference to candy and nut confections offered for sale and sold by their competitors. Findings 29F. T. C.

PAR. 4. The sale of said candy or nut confections to the purchasing public in the manner above found involves a game of chance or the sale of a chance to secure a bar of candy or nut confection without cost or at a price much less than the normal retail price thereof. The· use by respondents of said method in the sale of candy and nut con-· fections, and the sale of candy and nut confections by and through the use thereof and by the aid of said method, is a practice of the sort which. is contrary to an established public policy of the Government of the United States and in violation of the criminal laws. The use by respondents of said method in the sale of their products has the tendency unduly to hinder competition or to create a monopoly in this, to wit: that the use thereof has the tendency and capacity to exclude from the candy and nut confection trades 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 and nut confections in competition with the respondent, as above found, are unwilling to offer for sale and sell candy and nut confections so packed and assembled as above described, or otherwise arranged and packed for sale to the purchasing public so as to involve a game of chance, or any other method of sale that is contrary to public policy, and such competitors refrain therefrom.

PAR. 5. Many dealers in, and ultimate purchasers of, candy and nut confections are attracted by respondents' said method and manner of packing said candy and nut confections and by the element of chance involved in the sale thereof in the manner above described, and are thereby induced to purchase said candy and nut confections so packed and sohl by respondents in preference to candy and nut confections offered for sale and sold by said competitors of respondents who do not use the same or an equivalent or similar method. The use of said method by respondents has a tendency and capacity, because of said game of chance, to divert to respondents trade and custom from their said competitors who do not use the same or an equivalent or similar method, to exclude from said candy and nut confections trades all competitors who are unwilling to and who do not use the same or an equivalent or similar method because the same is unlawful, to lessen competition in said candy and nut confections trades, to create a monopoly of said candy and nut confections trades in respondents and such other distributors of candy and nut confections as use the same or an equivalent or similar method, and to deprive the purchasing public of the benefit of free competition in CONSOLIDATED CANDY CO., INC., ET AL. 953 Order said candy and nut confections trades. The use of said method by respondents in the sale of their products has a tendency and capacity to eliminate from said candy and nut confections trades all actual competitors and to exclude therefrom all potential competitors who do not adopt and use said method or an eqniYalent or similar method. CONCLUSION The aforesaid acts and practicl'S of respondents, as hereinabove found, are a.ll to the prejudice and injury of respondents' competitors ~mel constitute unfair ml'thods of competition in commerce and unfair and deceptive acts and practices 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 respondents, in which answer respondents admit all the material :allegations of fact set forth in said complaint, and state that they waive 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 respondents have violated the provisions of the Federal Trade Commission Act.

It is ordered, That the respondents, Consolidated Candy Co., Inc., -a corporation, its officer, and Leslie Finucane, individually and as an officer of Consolidated Candy Co., Inc., their respective representatives, agents and employees, directly or through any corporate or Qther device in connection with the offering for sale, sale and distribution of candy 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 candy or any other merchandise so l packed and assembled that safes of said candy or other merchandise to the general public a.re to be made or may be made by means of a lottery, gambling device, or gift enterprise. 2. Supplying to or placing in the hands of dealers, assortments of candy or any other merchandise together with push or pull cards, punchboards, or other lottery devices or separately which said push Qr pull cards, punchboards, or other lottery devices are to be used Qr may be used in selling or distributing said candy or other merchandise to the general public.

954 FEDERAL TRADE COl\Il\IISSION DECISIONS Order 29F.T.C.

3. Selling or otherwise disposing of candy or any other merchandise by use of push or pull cards, punchboards, or other lottery device.

It is further ordered, That the respondents shall within 60 days after service upon them of this order, file with the Commission a. report in writing, setting forth in detail the manner and form in which they have complied with this order.

1\IODEL LINGERIE CO., ET AL. 955 Syllabus