Bennett, B. M

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IN THE MATTER OF B. :M. BENNETT, TRADING AS EMPIRE STATE CANDY COMPANY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket ..f41JO. Complaint, Dec. 5, 1940-Deci.yion, Feb. 10, 1941 'Vhere an individual engaged in manufacture of candy and in Interstate sale and distribution of various assortments thereof which were so packed and assembled as to involve use of a lottery scheme when sold and distributed to consumers thereof, and included (1) number of bars of candy, together with two-section push card, for nse in sale and distribution of said bars, all of which had retail value greater than 1 cent, under plan in accordance with which purchaser paid 1 cent, 2 cents, 3 cents, 4 cents, or 5 cents, in accordance with legend or figure revealed and secured by disk punched and selected, and purchaser of last punch in each section received two bars free, and (2) various assortments involving lot or chance feature and sales plans or methods similar to that above described, from which they varied in detail only- Sold such assortments and cards to dealers and retailers, by whom, as direct ot· indirect purchasers thereof, they were exposed and sold to purchasing public In accordance with aforesaid sales plans or methods, Involving game of chance or sale of a chance to procure bars of candy at prices much less than normal retail prices ther·eof, and thereby supplied to and placed In the hands of others means of conducting lotteries in sale of his products, In accordance with said sales plans or methods, contrary to an established public policy of the United States Government and in violation of the criminal laws, and in competition with many who make and sell candy and who are unwilling to offer or sell their products so packed and assembled as above set forth, or otherwise arranged and packed for sale to purchasing public so as to Involve game of chance or any other method contrary to public policy and refrain therefrom ;

With, tendency and capacity to Induce purchasers of his said candy to purchase same in preference to that offered and sold by his competitors, and with result that many dealers in and ultimate consumers of candy were attracted by said method and manner of packing same and by element of chance involved in sale thereof, as above set forth, and were thereby induced to purchase such candy, thus packed and sold by him, in preference to that offered and sold by his competitors, who do not use same or equivalent methods, and with tendency and capacity, through use ·of said methods and because of said game of chance, to unfairly divert trade to him from his competitors who do not use such methods, exclude from candy trade all competitors who are unwilling to and do not use same or equivalent methods as unlawful, lessen competition therein, and create monopoly thereof in him and In such other distributors of candy as use same or equivalent methods, and deprive purchasing public of bl'nefit of free competition and to eliminate from trade In EMPIRE STATE CANDY CO. 729 728 Complaint question all actual, and exclude therefrom all potential, competitors who do not adopt and use same or equivalent methods: 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 o! competition in commerce and unfair and deceptive acts and practices therein.

Mr. J. W. Brookfield, Jr., for the Commission. Erwin &l Nix, of Athens, Ga., for respondent. COlli PLAINT 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 B. M. Bennett, individually and trading under the name of Empire State Candy Co., 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 that respect as follows: PARAGRAPH 1. The respondent, B. M. Bennett, _is an individual doing business under the trade name of Empire State Candy Co., with his principal office and place of business located at 883 College Avenue, Athens, Ga. Respondent is now and for more than 1 year last past has been engaged in the manufacture of candy and in the sale and distribution thereof to dealers. Respondent causes and has caused the said candy when sold to be shipped or transported from his aforesaid place of business in the State of Georgia to purchasers thereof at their respective points of location in various States of the United States other than the State of Georgia and in the District of Columbia. There is now and for more than 1 year last past has been a course of trade by said respondent in such candy in commerce between and among the various States o£ the United States and in the District o£ Columbia.

In the course and conduct of his business respondent is in competition with other individuals and with partnerships and corporations engaged in the sale and distribution o£ candy in commerce between and among the various States of the United States and in the District of Columbia.

PAn. 2. In the course of conduct of his business as described in paragraph 1 hereof, respondent sells and has sold to dealers various assortments of candy so packed and assembled as to involve the use of a lottery scheme when sold and distributed to consumers thereof. One of said assortnwnts is sold und distributed to the purchasing 730 ·FEDERAL TRADE COMMISSION DECISIONS Complaint 32F.T.C.

public in the following manner: This assortment consists of a number of bars of candy together with a device called a push card. The card contains a number of partially perforated discs wfth the word "push" appearing on the face of each of ~aid uiscs and printed within each of said disks is either 1, 2, 3, 4, or 5 cents. The push card is divided into two sections. Each purchaser is entitled to push one number from said card. Each purchaser is entitled to and receives one bar of candy and pays therefor the amount indicated within the disk removed from said card, and the purchaser of the last punch on ettch ~ection receives two bars of candy free. All of said bars have a retail Yalue greater than 1 cent. The said amounts are effective.ly concealed from the purchasers and prospective purchasl:'l's until a push or selection has been made and the selected disk removed or separated from the card. Thus the amount to be paid by each customer for a bar of candy is determined wholly by lot or chance. The respondent manufactures, sells, and distributes various as- ~ortments of candy, involving a lot or chance feature, and such assortments and the sales plans or methods by which said assortments are distributed are similar to the one hereinabove described varying only in detail.

PAR. 3. Retail dealers who purchase respondent's assortments of candy directly or indirectly expose and sell the same to the purchasing public in accordance with the aforesaid sales plans or methods. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of his products in accordance with the sales plans or methods hereinabove set forth. Said sales plans or methods have a tendency and capacity to induce purchasers of said candy to purchase respondents candy in preference to candy offered for sale and sold by his competitors. PAR. 4. The sale of said candy to the pun·hasing public in the manner above described inYoln's a game of chance or the sale of a chance to procure btu·s of candy at prices ri.mch less than the normal retail prices thereof. The use by respondent of said methods in the sale of his candy and the sale of such candy by and through the use thereof and by the aid of said methods is a practice of the sort which is contrary to an established public policy of the Govern- Jn£>nt of the United Statps and in violation of the criminal laws. Thp use by respondent of said methods has a tendency unduly to hinder competition or to create a monopoly in that the use thereof has a tendency and capacity to exclude from the candy trade competitors who do not use and ndopt the same or equivalent methods involving the same or equivalent element of chance or lottery. )fany EMPIRE STATE CANDY CO. 731 728 Findings persons, firms, and corporations who make and sell candy in competition with respondent as above alleged are unwilling to offer for ~ale or to sell their products 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 which is contrary to public policy and such competitors refrain therefrom. PAR. 5. Many dealers in, and ultimate consumers 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 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 equivalent methods. The use of said methods by re:-;ponclent has a tendency and capacity, because of said game of chance, to unfairly divert to respondent trade from his competitors who do llot u:-;e the same or equivalent methods; to exclude from the candy trade all competitors who are unwilling to and who do not use the same or equivalent methods because the same are unlawful; to lessen competition in the candy trade; to create a monopoly of said candy trade in respondent and in such other distributors of candy as use the same or equivalent methods and to deprive the purchasing public of the benefit of free competition. The use of said methods by respondent has the tendency and capacity to eliminate from said candy trade all actual eompetitors and to exclude therefrom all potential competitors who do not adopt and use the snme or equivalent methods.

PAR. G. The aforesaid acts and practices of re~pondent as herein all<'ged are all to the prejudice and injury of the public and of respondent's competitors and constitute unfair methods of competitl.on 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 Commission Act, the Federal Trade Commission on De~member 5, 1940, issued and on Dt:>cl:'mber 6, 1940, served its complaint in this proceeding upon respondent, ll. l\I. Bennett, individually and trading under the name of Empire State Candy Co., charging him with the use of unfair methods of competition in commerce and unfair and deceptive acts and practices in comme~·ce in violation of the provisions of said act. l!'indings 32F.T. C.

On December 27, 1940, the respondent filed his answer, in which an· swer he admitted all the material n.Uegations of fact set forth in said complaint and waived all intervening procedure and further hearing as to the said facts. Thereafter, the proceeding regularly came on for final hearing before the Commission upon the said complaint and the answer thereto, and the Commission having duly considered the matter and being fully advised in the premises finds that this proceed· ing is in the interest of the public and makes this its findings as to the facts and conclusion drawn therefrom.

FINDINGS AS TO THE FACTS PARAGRAPH 1. The respondent, B. :M. Bennett, is an individual doing business under the trade name of Empire State Candy Co., with his principal office and place of business located at 883 College Avenue, Athens, Ga. Respondent is now and for more than 1 year last past has been engaged in the manufacture of candy and in the sale and distribution thereof to dealers. Respondent causes and has caused the said candy when sold to be shipped or transported from his aforesaid place of business in the State of Georgia to purchasers thereof at their respective points of location in various States of the United States other than the State of Georgia and in the District of Columbia. There is now and for more than 1 year last past has been a course of trade by said respondent in such candy in commerce between and among the various States of the United States and in the District of Columbia ..

In the course and conduct of his business respondent is in competition with other individuals and with partnerships and corporations engaged in the sale and distribution of candy in commerce between and among the various States of the United States and in th,e District of Columbia.

PAR. 2. In the course and conduct of his business as described in paragraph 1 hereof, respondent sells and has sold to dealers various assortments of candy so packed and assembled as to involve the use of a lottery scheme when sold and distributed to consumers thereof. One of said assortments is sold and distributed to the purchasing public in the following manner: This assortment consists of a num· her of bars of candy together with a device called a push card. The card contains a number of partially perforated disks with the word "push" appearing on the face of each of said disks and printed within each of said disks is either 1, 2, 3, 4, or 5 cents. The push card is di. vided into two sections. Each purchaser is entitled to push one num· her from said card. Each purchaser is entitled to and receives one EMPIRE STATE CANDY CO. 733 728 Findings bar of candy and pays therefor the amount indicated within the disk removed from said card, and the purchaser of the last punch on each section receives two bars of candy free. All of said bars have a retail value greater than 1 cent. The said amounts are effectively concealed from the purchasers and prospective purchasers until a push or selection has been made and the selected disk removed or separated from the card. Thus the amount to be paid by each customer for a b:1r of candy is determined wholly by lot or chance. The respondent manufactures, sells, and distributes various assortments of candy, involving a lot or chance feature, and such assort· ments and the sales plans or methods by which said assortments are distributed are similar to the one hereinabove described varying only in detail.

PAn. 3. Retail dealers who purchase respondent's assortments of candy directly or indirectly expose and sell the same to the purchasing public in accordance with the aforesaid sales plans or methods. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of his products in accordance with the sales plans or methods hereinabove set forth. Said sales plans or methods have a tendency and capacity to induce purchasers of said candy to purchase respondent's candy in preference to candy offered for sale and sold by his competitors. PAn. 4. The sale of said candy to the purchasing public in the manner above described involves a game of chance or the sale of a chance to procure bars of candy at prices much less than the normal retail prices thereof. The use by ·respondent of said methods in the sule of his candy and the sale of such candy by and through the use thereof and by the aid of said methods is a practice o:f the sort which is contrary to an established public policy of the Government of the United States und in violation of the criminal laws. The use by 1·respondent of said methods has a tendency unduly to hinder competition or to create a monopoly in that the use thereof has a tendency and capacity to exclude from the candy trade competitors who do not use and adopt the same or equivalent methods involving the same or equivalent elements of chance or lottery. 1\Iany persons, firms, and corporations who make and sell candy in competition with re- . spondent as above found are unwilling to offer for sale or to seld their products 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 which is contrary to public policy and such competitors refrain therefrom. Order 32F.T. C.

PAR. 5. Many dealers in, and ultimate consumers 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 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 respondt>nt who do not use the same or equivalent methods. The use of said methods by respondent has a tendency and capacity, because of said game of chance, to unfairly divert to respondent trade from his competitors who do not use the same or equivalent methods; to exclude from the candy trade all competitors who are unwilling to and who do not use the same or equivalent methods because the same are unlawful; to lessen competition in the candy trade; to create a monopoly of !:iaid candy trade in respondent and in such other distributors of candy as use the same or equivalent methods and to deprive the purchasing public of the benefit of free competition. The use of said methods by respondents has the tendency and capacity to eliminate from said candy trade all actual competitors and to ·exclude therefrom all potential competitors who do not adopt and use the same or equivalent methods.

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 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 respondent, in which answer respondent admits all the material allegations of fact set forth in said complaint and states that he 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 respondent, B. 1\f. Bennett, individually and trading as Empire State Candy Co., or trading under any other name or names, his respresentatives, 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 mer- El\fPIRE S1'ATE CANDY CO. 735 728 Order chandise in commerce, as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from: ( 1) St:>lling or distributing candy or any merchandise so packed and assembled that sales of such candy or other merchandise to the general public are to be made, or may be made, by means of a game of chance, gift enterprise, or lottery scheme. (2) Supplying to or placing in the hands of others push or pull cards, punchboards, or other lottery devices, either with assortments of candy or other merchandise or separately, which said push or pull cards, punchboards, or other lottery devices are to be used, or may be used, in selling or distributing such candy or other merchandise to the public.

(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 service upon him of this order, file with the Commission a :report in writing setting forth in detail the manner and form in which he has complied with this order.

Syllabus 32F.T.C.