Ideal Candy Novelties Company, Inc.

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IN THE MATTER OF IDEAL CANDY NOVELTIES COMPANY, INC., AND ABRA- HAM ARONOFF AND ROSE ARONOFF, INDIVIDUALLY AND AS OFFICERS THEREOF CO~IPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Doc-la:t 4080. Complaint, Apr. 8, 1940-Decision, No~'. 1, 1940 'Vhere a corporation and two individuals, who were its pt·esident and vice president and secretary, and fot·mulated, controlled, and directed its acts, practicl'R, and policies, engagl'd in sale and distribution of certain assortments of candy and other articles of merchandise which were so packed and asspmbled as to involve use of games of chance, gift enterprises, or lottery schemes when sold and distributed to consumers thereof, and which included (1) 150 penny pieces of individually wrapped caramels, of uniform size and shape, together with 14 common lead pencils and 8 pencil Sl'ts consisting of ruler, pencil, and penholder, for sale and distribution under a plan in accordance with which purchasers securing by chance chocolate caramels were entitled to and received without additional cost one of such pencils, those procuring one of the red caramels were similarly entitled to and received one of such pencil sets, and purchaser of last caramel in assortment also became entitled to and thus received one of such sets, and (2) vat·ions other assortments of candy and other articles involving lot or chance feature, but similar to that described and varying therefrom in detail only; acting together in coopemtion with each other in such nets and things- Sold such assortments to brokers, wholesalers, jobbers, and retailers, by whom, as direct or indit·ect purchasers thereof, said assortments and other articles were exposed and sold to purchasing public in accordance with aforesaid sales plan, and thereby supplied to and placed in the hands of others means of conducting lotteries in the sale of their products ln accordance with such plan, as above set forth, involving game of chance or sale of a chance to procure an article of merchandise at a price much less than normal retail price thereof, contrary to an established public policy of the United States Government and in violation of the criminal laws, and in competition with many who are unwilling to adopt and use said or any method involving game of chance or sale of a chance to win something by chance, or any other method contrary to public policy, and who refrain therefrom;

With result that many persons were attracted by said sales plan or method employed by them and element of chance involved therein, and were thereby induced to buy and sell their said products in preference to those of competitors aforesaid, and with tendency and capacity, through use of said method and because of such game of chance, unfairly to divert trade in commerce to them from their said competitors who do not use same or equivalent method:

IDEAL CANDY NOVELTIES CO., INC., ET AL. 1249 1248 Complllint Held, That such acts and practices, under the circumstances set forth, were all to the prejudice and Injury of the public and competitors, and constituted unfair methods of competition in commerce and unfair and deceptive acts and practices therein.

Before Mr. Ar·tlm-r F. Tlwma.Y, trial examiner. Mr. L. P. Allen, Jr., 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 bellPve that Ideal Candy Novelties Co., Inc., a corporation, and Abraham Aronoff and Rose Aronoff, individually and as officers of Ideal Candy Novelties 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 in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent Ideal Candy Novelties Co., Inc., is a corporation organized and existing under the laws of the State of New York with its principal office and. place of business located at 770 Coney Island Avenue, Brooklyn, N. Y. Respondent Abraham Aronoff, an individual, is president. of the corporah~ respondent. Respondent Rose Aronoff, an individual, is vice p-t·cci,dent and secretary of the corporate respondent. Both of the individual respondents have their offices at the sam~ addre~s as corpol·ate respondent. Respondents Abraham Aronoff and Rose Aronoff, formulate, control, and direct the acts, practices and policies of the corporate respon,dent. Said respondents act together and in coorw.ration with each other in doing the acts and things hereinafter alleged. Respondents are now, and for more than 1 year last past have bet>n, engaged in the sale and distribution of candy and other articles of merchandise in commerce between alld among the Yarions Statps of the United States and in the District of Columbia.. Respondents cause and have caused said products, when sold, to be transported from their aforesaid place of business in the State of New York to purchasers thereof, at their respective points of location, in the various States of the United Statt>s other than New York and in the District of Columbia. There is now, and has been for more than 1 year last past, a course of trade by said respondents in such products 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 and have been in competition with other corporations and individuals and with 1250 0• FEDERAL TRA,l>E CQMJ,VIIi:i~ION DECISIONS \.: Complaint.. 31 F. T. C .. partnerships engaged in the sale and distribution of like or similar products 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 brokers, wholesale dealers, jobbers, and retail dealers certain· assortmmits of candy and other articles of merchandise so packed and assembled as to involve the use of games of chance, gift enterprises, or lottery schemes when sold and distributed to the consumers thereof. One of said assortments is hereinafter described for the purpose of showing the method used by respondents and is as follows :

This assortment consists of 150 pieces of caramel candy of uniform size and shape, together with 14 common lead pencils and 8 pencil sets. The said pencil sets contain a ruler, a pencil arid a penholder. Seven of the said caramels are red, 14 are chocolate and the remainder, 129, are vanilla. The said caramels are individually wrapped and the color of each is effectively concealed from purchasers and prospective purchas_ers· until a purchase has been made and the wrapper removed therefrom. All of the caramels retail at the price of 1 cent . e!J.ch. Purchasers procuring 1 of the said chocolate caramels nre entitled to and receive, without additional cost, 1 of the said pencils. Purchasers procuring 1 of .the said red caramels are entitled to and receive, without additional cost, 1 of the said pencil sets. The purchaser of the last caramel in said assortment is entitled to and receives, without additional cost, 1 of the said pencil sets. The said pencils and pencil sets are thus distributed to the purchasing and consuming public wholly by lot or chance.

Respondents sell and distribute and have sold and distributed various nssortments of candy and other articles of merchandise involving a lot or chance feature but such assortments are similar to the one _. hereinabove described and vary only in detail. PAR. 3. Retail dealers who purchase respondents' said candy and other articles of merchandise, directly or indirectly, expose and sell the same 1 to the purchasing public in accordance with the sales plan aforesaid. Respondents thus supply to and place in the hands of others the means of conducting lotteries in the sale of their products in accordance with the sales plan· hereinabove set forth. The use by respondents of said sales plan or method in the sale of their products and the sale of said products by and through the use thereof and by the aiel of said sales plan or method is a practice of a sort which is contrary to an established public policy of the Government of t}_le United States and in violation of the criminal laws. ideal CANDY NOVELTIES I co., 'INC.,. ET AL. j251 · 124S PAri. 4. The sale of- candy and other articles of merchandise to the ~.purchasing public in the manner above alleged involves a game oJ' · chance or the sale of a chance to procure ·an article of merchandise at a price m~ch less than the -normal retail price thereof. Many per sons, firms, and corporations wlio sell or distribute ca1idy and othet articles of merchandise in competition with the respondents, as above alleged, are unwilling to adopt and use said method or any method involving a game of chance or the sale of a elmnce to win 'something . by chance or any other method that is eontrary t~ public policy and such competitors refrain therefrom. Many pet'soils are attracted by said sales plan or method employed by resp011dents in the sale and distribution of their candy and other articles of merchandise and the element of chance involved therein and are thereby induced to buy and sell respondents said products in preference to products offered - for sale and sold by said competitors of respondents who do not use the same or equivalent methods. The use of said method by respondents because of said game. of chance has a tendency and a capacity to, and does, unfairly divert trade in commerce between and among the various States of the .United States and in the District of Columbia to respondents from their said competitors, who do not use the same or equivalent method, and as a result thereof substantial injury is being and has been clone by respond(mts to competition in commerce between and among the various States of the United States and in the District of Columbia.

PAR. 5. The aforesaid acts and practices of respondents, as herein alleged, are all to the prejudice and injury of the public and of respondents' competitors and constitute unfaii· 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 pro\'isions of the Federal Trade Commission Ael the Federal Trade. Commission on April 8, 1~40, issued and ser-i;ed its complaint in this proceeding upcin respondents Ideal Candy Nov· elties Qo., Inc., a corporation, and Abraham Aronoff and Rose Aronoff, individually and as officers of Xdeal Candy N ovelt.ies Co., Inc., charging them with the use of unfair methods of competition in commerce and unfair and deceptive acts and practices in emnmerce in violation of the provisions of said act. On October 2, 1940, 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. •0 Findings 31F.T.O.

Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint and 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 PAR..4.GRAPH 1. Respondent Ideal Candy Novelties Co., Inc., is a corporation organized and existing under the laws of the State of New York with its principal office and place of business located at 770 Coney Island A venue, Brooklyn, N. Y. Respondent Abraham Aronoff, an individual, is president of the corporate respondent. Respondent Rose Aronoff, an individual, is vice-president and secretary of the corporate respondent. Both of the individual respondents have their offices at the same address as corporate respondent. Respondents Abraham Aronoff and Rose Aronoff, formulate, control, and direct the acts, practices, and policies of the corporate respondent. Said respondents act together and in cooperation with each other in doing the acts and things hereinafter set forth. Respondents are now and for more than 1 year last past have been, engaged in the sale and distribution of candy and other articles of merchandise in commerce between and among the various States of the United States and in the District of Columbia. Respondents cause and have caused said products, when sold, to be transported from their aforesaid place of business in the State. of New York to purchasers thereof, at their respective points of location, in the various States of the United States other than New York and in the District of Columbia. There is now, and has been for more than 1 year last past, a course of trade by said respondents in such products 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 and have been in competition with other corporations and individuals and with partnerships engaged in the sale and distribution of like or similar products 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 brokers, wholesale dealers, jobbers, and l'Ptail dealers certain assortments of candy and other articles of merchandise so packed and assembled as to involve the use of games of chance, gift enterprises, or lottery schemes when sold and distributed to the consumers thereof. One lDEAL CANDY NOVELTIES CO., INC., ET AL. 1253 1248 Findings of said assortments is hereinafter described for the purpose of showing the method used by respondents and is as follows: This assortment consists of 150 pieces of caramel candy of uniform size and shape, together with 14 common lead pencils and 8 pencil EJ-ets. The said pencil sets contain a ruler, a pencil and a penholder. Seven of the said caramels are red, 14 are chocolate and the remainder, 129, are vanilla. The said caramels are individually wrapped and the color of each is effectively concealed from purchasers and prospective purchasers until a purchase has been made and the wrapper removed therefrom. All of the caramels retail at the price of 1 cent each. Purchasers procuring 1 of the said chocolate caramels are entitled to and receive, without additional cost, 1 of the said pencils. Purchasers procuring 1 of the said red caramels are entitled to and receive without additional cost, 1 of the said pencil sets. The purchaser of the last caramel in said assortment is entitled to and receives, without additional cost, 1 of the said pencil sets. The said pencils and pencil sets are thus distributed to the purchasing and consuming public "'holly by lot or chance. Respondents sell and distribute and have sold and distributed various assortments of candy and other articles of merchandise involving a lot or chance feature but such assortments are similar to the one hereinabove described and vary only in detail. PAR. 3. Retail dealers who directly or indirectly purchase respondents' said candy and other articles of merchandise expose and sell the same to the purchasing public in accordance with the sales plan aforesaid. Respondents thus supply to and place in the hands of others the means of conducting lotteries in the sale of their products in accordance with the sales plan hereinabove set forth. The nse by respondents of said sales plan or method in the sale of their products and the sale of said products by and through the use thereof and by the aid of said sales plan or method is a practice of a sort which is contrary to an established public policy of the Government of the United States and in violation of the criminal laws.

PAR. 4. The sale of candy and other articles of merchandise to the purchasing public in the manner above found involves a game of chanre or the sale of a chance to procure an article of mercha,ndise at a price much less than the normal retail price thereof. :Many persons, firms, and corporations who sell or distribute candy and other articles of merchandise in competition with the respondents, as above found, are unwilling to adopt and use said method or nny method involving a game of chance or the sale of a chance to win Order 31 F. T. C.

something by chance or any other method that is contrary to the public policy and such competitors refrain therefrom. Many persons are attracted by said sales plan or method employed by respondents in the sale and distribution of their candy and other articles of merchandise and the element of chance involved therein and are thereby induced to buy and sell respondents' said products in preference to products offered for sale and sold by said competitors of respondents who do not use the same or equivalent methods. The use of said method by respondents, because of said game of chance, h&s a tendency and a capacity to, and does, unfairly divert trade in commerce between and among the various States of the United States and in the District o£ Columbia to respondents from their said competitors who do not use the same or equivalent method. CONCLUSION The aforesaid acts and practices of respondents, as herein found, are all to the prejudice and injury of the public and of respondents' competitors and constitute unfair methods o£ 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 o£ 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 iB ordered, That the respondent Ideal Candy Novelties Co., Inc., a corporation, its officers, Abraham Aronoff and Rose Aronoff, individually, and as officers of Ideal Candy Novelties Co., Inc., its and their respective representatives, agents, and employees, directly or through any corporate or other 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 and distributing candy or any merchandise so packed. and assembled that sales of such candy or other merchandise to the public are to be made, or may be made, by means o£ a game M chance, gift enterprise, or lottery scheme. IDEAL CANDY NOVELTIES CO., INC., ET AL. 1255 1248 Ot·der 2. Supplying to or placing in the hands of others, assortments of candy or other merchandise or any lottery devices, which are to be used, or which may be used, to conduct a game of chance, gift enterprise, or lottery scheme in the sale or distribution of said candy or other merchandise to the public.

3. Supplying to or placing in the hands of others for sale to the public, packages or assortments of candy composed of individually wrapped pieces of candy of uniform. size and shape and of different colors, together with articles of merchandise or larger pieces of candy which are to be, or may be, given as prizes to the purchasers procuring pieces of said candy of a particular color. 4. Seliing or otherwise disposing of any merchandise by means of a game of chance, gift enterprise, or lottery scheme. It is fwrther ordered, That the respondent 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 wbic;h they have complied with this order.

296516m--41--vol.Sl----82 1256 FEDERAl, TRADE COM!\USSJON DECISIONS Complaint 31 F. T. C.