Crete Mills

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IN THE MA'ITER OF CRETE MILLS COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. o OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 3408. Complaint, May 6, 1938-Decision, May 28, 1940 Wher.e a corporation engaged in milling and selling feed for animals, includng Its "Victor Chlck Pellets" chicken feed, to purchasers in various other States, in substantial competition with others engaged in sale and distributon of similar products in commerce among the various States and In the District of Columbia, and Including those who make, sell, and distribute similar products in commerce as aforesaid and do not in any way misrepresent the quality or character of their respective goods- ( a) llepresented, through advertisements In newspapers, farm papers, and by radio broadcasts that its said pellets would grow chicks faster, healthier, and cheaper with less likelihood of disease or death than any other feed, regardless of price, and that chicks fed therewith reached the egg-laying period in 4 weeks' less time than those fed mash feed and lay invarably at the age of 5 months, and that said pellets cost less and excel all other feeds, regardless of price;

Facts being that use of such pellets, compared with those of other feeds of same general formula, kind, and quality, would not grow chicks faster, healthier, or more cheaply than other feeds, and use thereof, compared with other comparable feeds, as aforesaid, would not reduce costs substantially nor lessen mortality rate, and said pellets, subject to aforesaid qualification, did not exceed all othet· feeds nor assure one of greater poultry profits, and they were not the only feed which was properly digested by chicks, and said pellets woulll not cause chickens to produce eggs within any definite time or period earlier than chicks fed other feeds of similar composition; and (b) llepresented, as aforesaid, that any other feed that did not contain kilndried corn was dangerous to the health and life of chicks, and that said pellets would keep !ndetlnltely, and that there was no possibility of any ingredient therein getting rancid or moldy and causing chick deaths; Facts being corn other than klln-drled Is not dangerous and does not, absent an excess of moisture, become moldy, and said pellets would not keep Indefinitely under ull conditions or be free from rancidity or mold; With elfect of misleading and deceiving substantial portion of purchasing public into erroneous und mistaken belief that all said representations were true, and with result, as consequence of such belief, that number of consuming public purchased substantial volume of its product, and trade was diverted unfairly to it from its competitors engaged in sale and dlstributon in commerce of products Intended n~d used for purpose for which It recommended Its said feed, and who truthfully represent the effectiveness of their respective products:

Held, That such acts and practices under the circumstances set forth, were all to the prejudice and injury of the public and Its competitors, and constituted unfair methods of competition In commerce.

CRETE MILLS' 1309 1308 Complaint Before 11/r. 11/iles J. Fwmas and llfr. Arthur F. Thomas, trial examiners.

Mr. R. A. McOuat for the Commission.

Perry, Van Pelt & Ill mrti, of Lincoln, Nebr., for respondent. COl\lplaint 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 Crete Mills, a corporation, hereinafter referred to as respondent, has violated the provisions of the said act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges in this respect as follows:

PARAGRAPH 1. Respondent, Crete Mills, is a corporation organized under the laws of the State of Nebraska, with its principal office at Crete, Nebr.

Respondent is engaged in the business of milling and selling feed for animals, including a chicken feed manufactured and sold under the trade name of "Victor Chick Pellets." Respondent causes said products when sold to be shipped or transported from its aforesaid place of business in the State of Nebraska to purchasers thereof at their various places of location in States of the United States other than the State of Nebraska and in the District of Columbia. Respondent maintains, and during all the times herein mentioned has maintained, a course of trade in said products so sold by it in commerce among and between the various States of the United States and in the District of Columbia.

PAR. 2. Respondent is, and at all times here,in mentioned has been, in substantial competition with other corporations, and with persons, .firms, and partnerships likewise engaged in the sale and distribution of chick feeds and other milling products similar to those sold by the respondent in commerce among and between the various States of the United States and in the District of Columbia. PAR. 3. In the course of its said business, as hereinabove described, and for the purpose of inducing the· purchase of its products, respondent has made extravagant, deceptive, false, and misleading statements concerning the efficacy and effect of its products and the results that are achieved by using it as chick feed, by means of advertisements inserted in newspapers and magazines, and by printed pamphlets, letters, testimonials, and radio programs broadcast over the air. The following are examples of the many representations that are false and misleading:

1310 FEDETIAL TRADIE COMMISSION DECJSIIONS Complaint 30F. T. C.

Victor Chick Pellets will grow your chicks faster, healthier, and cheaper, than any other feed, regardless of price.

This year any feed that does not contain kiln dried com, that is, artificially dried corn, and corn products, may kill your chicks, since last year's corn crop contained moisture In excess of the amount that it can carry safely In baby chick feeds.

Chicks fed Victor Chick Pellets reach the egg-laying stage in four weeks less time than those fed mash feed.

You save over 20% in your feed costs, lower your mortality rate and bring your pullets to the laying stage in four weeks less time by feeding the modern, economical feed-Victor Chick Pellets.

Why not use the feed that will shorten the period to profits from your poultry by four weeks aml fped Victor Chick Pellets? From every angle, increased growth, cleanliness, economy, lower mortality, less disease, Victor Chick Pellets excell all other feeds regardless of price. One of the many advantages of the modern chick feed-Victor Chick Pelletsis that chick feed in pellet form will keep Indefinitely. There is no possibility of any ingredient in the feed getting rancid, or mouldy, causing chick deaths, nor will any of the ingredients lose their feeding value through deterioration. Victor Chick Pellets will im·ariably insure eggs in 5 months-and you'll get more eggs and bettet· quality eggs. That's because Vietor Chick Pellets contain the 19 ingredients vital to <'lli<'k lwalth, growth and vitality. 19 prescribed ingredients that will Insure eggs in 5 mouths. All of said statements, together with similar statements appearing in the respondent's advertising literature and in broadcasts of its radio programs, purport to be descriptive of respondent's product and of its efficacy in use as a chick feed. In all of its advertising literature, its radio broadcasts, and through other means, respondent represents through the statements and representations herein set out and other statements of similar import and effect ( 1) that Victor Chick Pellets will grow chicks faster, healthier, cheaper, with less liability to disease or ueath than any other feed regardless of price; (2) that any other feed that doe~ not contain kiln-dried corn is dangerous to health and life of chicks; (3) that chicks which are fed Victor Chick Pellets reach the egg-laying period in 4 weeks' less time than those fed mash feed; ( 4) that Victor Chick Pellets will keep indefinitely; (5) that there is no possibility of any ingredient in the feed getting rancid or moldy, causing chick deaths; (6) that pullets fed upon_ respondent's product will invariably lay e{!gs at the age of 5 months; (7) that Victor Chick Pellets cost less and excel all other feeds regardless of price.

PAR. 4. The representations made by the respondent with respect to the efficacy and effect of its product are false, deceptive, misleading, and grossly exaggerated.

In truth and in fact Victor Chick Pellets will not grow chicks faster, healthier, or cheaper nor with less liability to disease or death CRETE 1\IILLS 1311 1308 Findings than any other feed regardless of price. Chicks which are fed Victor Chick Pellets do not reach the egg-laying period in 4 weeks' less time than those chicks feJ. mash feed, nor will they invariably lay eggs at the age of 5 months. Other feeds which do not contain kilndried corn are not necessarily dangerous to chicks. Respondent's product will not keep indefinitely. It will get rancid and moldy under precisely the same conditions which would cause any chick feed in pellet form to become rancid and moldy. Many other types of chick feed are as good as respondent's product and cost no more. PAR. 5. The false anJ. misleading representations used by the respondent, as set forth herein, in connection with the sale of its product, have the capacity to and tendency to, and do, mislead and deceive members of the purchasing public into the mistaken and erroneous belief that said representations are true and that said product will accomplish the results claimed. As a direct consequence of the false, deceptive, and misleading representations of the respondent and the erroneous and mistaken beliefs induced thereby, as herein set out, the purchasing public has purchased a substantial quantity of respondent's product, with the result that trade has been diverted unfairly from competitors engaged in the business of distributing or selling other products designed for similar use, who truthfully advertise and represent the efficacy and effect of their respective products and the result that may be expected to obtain from the use thereof. As a result thereof, injury has been done and is now being done by the respondent to competition in commerce between and among the various States of the United States and in the District of Columbia. PAR. 6. The aforesaid acts and practices of the respondent as herein alleged are to the prejudice of the public and respondent's competitors and constitute unfair methods of competition 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 Commission Act, the Federal Trade Commission, on May 6, 1938, issued, and subsequently served, its complaint in this proceeding upon respondent, Crete Mills, a corpomtion, 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 anJ. other evidence in support of the allegations were introduced by R. A. McOuat, attorney for the Commission, and in opposition to the allegations of the complaint by Robert Van Pelt, attorney for the respondent, before l\files J. Furnas and Arthur F. Thomas, examiners of the Commission, theretofore 1312 FE>DERAL TRADE COMMISSION DE'C'J.S[ONS' Findings 30F.T. C.

duly designated by it, and 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 said complaint, the answer thereto, testimony and other evidence, brief in support of the complaint (respondent not having filed brief or requested oral argument); 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 Tile FACTS PARAGRAPH 1. The respondent, Crete Mills, is a corporation organized and existing under the laws of the State of Nebraska, with its office and principal place of business located at Crete, Nebr., and is now and for more than 2 years last past has been engaged in the business of milling and selling feed for animals, including chicken feed manufactured and sold under the trade name of "Victor Chick Pellets," and has caused its said product when sold to be transported from its place of business in the city of Crete, State of Nebraska, to purchasers located in various States of the United States other than the State of Nebraska. It maintains a course of trade in commerce in said products among and between the various States of the United States and in the District of Columbia. Respondent is now and for several years last past has been in substantial ~ompetition with other corporations, firms, and individuals likewise engaged in the sale and distribution of similar products in commerce among and between the various States of the United States and in the District of Columbia. There are competitors of the respondent who manufacture, sell, and distribute products similar to those of respondent among and between the various States of the United States and in the District of Columbia who do not in any way misrepresent the quality or character of their respective products.

PAR. 2. In the course and conduct of its business as set out in paragraph 1 hereof, and for the purpose of inducing members of the public to purchase its said product, respondent has caused and causes advertising to be published in newspapers, farm papers, and by radio broadcasts, in which it represents that:

(a) Victor Chick Pellets will grow chicks faster, healthier, and cheaper with less likelihood of disease or death than any other feed regardless of price;

(b) Any other feed that does not contain kiln-dried corn is dangerous to the health and life of chicks;

CRETE MILLS 1313 1308 Conclusion (c) Chicks which are fed Victor Chick Pellets reach the egg-laying period in 4 weeks' less time than those fed mash feed; (d) Victor Chick Pellets will keep indefinitely; (e) There is no possibility of any ingredient in the feed getting rancid or moldy, causing chick deaths;

(f) Pullets fed upon respondent's product will invariably lay eggs at I the age of 5 months; I (g) Victor Chick Pellets cost. less and excel all other feeds, regardle!'s of price.

PAR. 3. The Commission finds that the use of Victor Chick Pellets, when compared with pellets of other feeds of the same general formula, II kind, and quality, will not grow chicks faster, healthier, or cheaper ~ than other feeds; other than kiln-dried corn is not dangerous and does I not become moldy unless it contains an excess of moisture; as compared j with other feeds of the same general formula, kind, and quality, the l use of Victor Chick Pellets will not reduce feeds costs substantially nor lessen the mortality rate of chicks; as compared with other feeds of the same general formula, kind, and quality, Victor Chick Pellets do not excel all other feeds nor is one assured of greater poultry profits by feeding same; Victor Chick Pellets will not keep indefinitely under all conditions or be free from rancidity or mold; Victor Chick Pellets is not the only feed which is properly digested by chicks nor will it cause chickens to produce eggs within any definite time or period earlier than chicks fed other feeds of similar composition. PAR. 4. The Commission further finds that the statements and representations made by the respondent in its advertising matter and radio broadcasts concerning the benefits to be derived from respondent'sproduct, Victor Chick Pellets, as herein set forth, have the capacity l I and tendency to and do mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that all said representations are true. As a result of this erroneous belief, a number of the consuming public has purchased a substantial volume of respondent's product, with the result that trade has been diverted unfairly to the respondent from its competitors engaged in the businessof selling and distributing in commerce among and between the various I States of the United States products intended and used for the purpose for which respondent recommends its said product, and who truthfully iIrepresent the effectiveness of their respective products. l CONCLUSION The aforesaid acts and practices as herein found are all to the prejudice and injury of the public and of respondent's competitors and I 1314 FEDERAL TRADE -GOMl\'IISSIION DECISIONS Order 30F.T.C.

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, the answer of the respondent, testimony, and other evidence taken before J\Iiles J. Furnas and Arthur F. Thomas, examiners of th.e Commission theretofore duly designated by it, in support of the allegations of the complaint and in opposition thereto, brief on behalf of the Corrunission filed herein (respondent not having filed brief or requested oral argument), and the Commission having made its findings as to the facts and its conclusion that said respondent has violated the provisions of the Federal Trade Commission Act.

It is ordered, That the respondent, Crete Mills, a corporation, its officers, representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, and distribution of its chicken feed now known as "Victor Chick Pellets," or any other chicken feed containing substantially similar ingredients, whether sold under that name or any other name, in commerce as "commerce'~ is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by inference, that:

1. Said product will grow chicks faster, healthier, cheaper, and with less likelihood of disease or death than any other feed, regardless of price.· 2. Any feed containing corn other than kiln-dried is dangerous to the health and life of chicks.

3. Chicks which are fed said product reach the egg-laying period in less time than those fed mash feed.

4. Said product will keep indefinitely.

5. There is no possibility of any ingredient in the feed getting rancid or moldy and causing chick deaths.

6. Pullets fed upon respondent's product will invariably lay eggs within any definite time or period earlier than chickens fed upon feeds of similar composition.

7. Said product costs less than other similar feeds, or that respondent's product excels all other feeds, regardless of price. 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.

1\Ir.,DONNELL & SONS, JNC. 1315 Syllabus