Helen Harrison Candies, Inc

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IN THE MATI'ER OF HELEN HARRISON CANDIES, INC.

COMPLAINT, FI:\'DINGS, .AND ORDER IN REGARD TO THE ALLEGED VIOLATIO:-1 OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 19'14 Docket 4467. Complaint, Feb. 21, 1941-Deci.sion, June 11, 1941 Where a corporation engaged in the manufacture and the competitive interstate sale and distribution of candy, including certain assortments which were so packed and assembled as to involve the use of games of chance, gift enterprises, or lottery schemes when sold and distributed to consumers; a typical assortment including thirty boxes of candy and a punchboard for use in sale thereof under a plan, as thereon explained, by which a purchaser paid one to five cents or nothing for a punch depending on the last digit of the number of the slip be secured from the 500-hole punchboard, and whether be received a box of candy or nothing for his money was similarly determined ;

Sold such assortments to wholesalers, jobbers, and retailers, by whom, as direct or indirect purchasers, they were exposed and sold to the purchasing public, in accordance with aforesaid sales plan, Involving game of chance to procure candy at price much less than normal retail price thereof; and thus supplied to and placed in the bands of others means of conducting lotteries in the sale of its products, contrary to the established public policy of the United States Government; and in competition with many who are uuwilling to use such or other method contrary to public policy, and refrain therefrom;

With result that many persons were attracted by its said sales plan and the element of chance involved therein and were thereby induced to buy and sell its candy In prefet·ence to that of its said competitors, whereby trade was unfairly diverted to it from such competitors and substantial injury was done to competition:

Held, That such acts and practices were all to the prejudice and Injury of the public, and its competitors, and constituted unfair methods of competition in commerce and unfair acts and practices therein. Mr. J. ll'. Brookfield, Jr., for the Commission. Latimer, Dronovan & Brown, of Chicago, Ill., for respondent. COMPLAINT Pursuant to the provisions of the Federa~ Trade Commission Act, and by virtue of the authority vested in it by said act, the· Federal Trade Commission, having reason to believe that Helen Harrison Candies, In~., a corporation, hereinafter referred to as respondent, has violated the provisions of said act, and it appearing to the Com- ~ission that a proceeding by it in respect thereof would be in th(> ~nterest of the public, hereby issues its complaint, stating its charges In that respect as follows:

FEDERAL TRADE COJ\Il\USSION DECISIONS 96 Complaint 33 F. T. C. PARAGRAPH 1. Respondent Helen Harrison Candies, Inc., is a corporation organized and doing business under and by virtue of the laws of the State of Illinois, with its office and principal place of business located at 325 North Wells Street, Chicago, Ill. Respondent is now and for more than one year last past has been engaged in the manufacture and in the sale and distribution of candy to wholesale dealers, jobbers, and retail dealers located at points in the various States of. the United States and in the District of Columbia. Respondent causes and has caused said candy, when sold, to be transported from its place of business in the city of Chicago, III., to purchasers thereof at their respective points of location in various States of the United States other than Illinois and in the District of Columbia. There is now and has been for more than six months last past a course of trade by 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 said business, respondent is and has been in competition with other corporations and with partnerships and individuals engaged in the sale and distribution of candy in commerce between and among the various States o£ the United States and in the District of Columbia.

PAn. 2. In the course and conduct of its business, as described in paragraph 1 hereof, respondent sells and has sold to wholesale dealers, jobbers, and retail dealers certain assortments of candy 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 respondent, and is a~ follows: This assortment includes 30 boxes of candy and a punchboard. Appearing on the face of the punchboarcl is the following legend: CHATTERBOX ASS'T With Helen Harrison Candies 50 FREE Nos. 11--22--33--44--5J-- 66--77--88--09--100 NUMBERS All Numbers ltECEIVE A 1 LB.

Ending In WIND.mll ASSORTMENT 1--PAY-1¢ Nos. 25--:iQ--12J--13Q-- 2-PAY-2¢ 22;'">--250---.'32;"1--423-4:;o 3-PAY-3¢ RECEIVE A 1 Lll.

4--PAY--4¢ VICTORIAN ASSORTl\IE~T ;".---6--7-8-0 LAST ~ALg I~ EACH Ol!' FIRST PAY ric 9 SECTIO~S CO:\IPLETED RECEIVE A 1 Ln. FLORAL DOX "0" ure FREE LAST SALE 0~ llOARD HECEIVES Tile llEAUTII:<'ULLY LITIIOGUAPllED 3 LB. TI~ HELEN HARRISON CANDIES, INC. 97 93 Complaint Said candy is distributed to the purchasing public in accordance with the foregoing legend and in the following manner: The punchboard contains 500 punches, each concealing a number; said numbers are not arranged in numerical sequence. 'Vlwther a purchaser pays 1, 2, 3, 4, or 5 cents, or receives his chance free, is determined by the last digit of the number of the slip punched by him from the punchboard, and whether he receives a box of candy or nothing for his money is determined by the number appearing on the slip punched by him from said board. Persons who qualify by receiving one of the designated numbers receive a Lox of candy. Persons not obtaining one of the designated numbers receive nothing. The numbers are effectively concealed from purchasers and prospective purchasers until a punch selection has been made and a particular punch separated from the board. The candy is thus distributed to purchasers of punches from the board wholly by chance, and the amount to be paid for each punch or purchase is also determined wholly by chance.

The respondent furnishes and has furnished various punchboard and candy assortments for use in the sale and distribution of its candy by means of a game of chance, gift enterprise, or lottery scheme. Such punchboards and candy assortments are similar to. the one herein descdbed, and nry only in detail.

PAR. 3. Retail dealers who purchase respondent's candy directly or indirectly, expose and sell the same to the purchasing public in accordance with the sales plan aforesaid. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of its products in accordance with the sales plan hereinabove set forth. The use by respondent of said sales plan or method. in the sale of its candy and the sales of said. candy by and through the use thereof ancl 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 the United States and in violation of the criminal laws.

PAn. 4. The sale of candy to the purchasing public by the method or plan hereinabove set forth involves a game of chance or the sale of a chance to procure candy at prices much less than the normal retail price thereof. l\Iany persons, firms, and corporations who sell and distribute camly in competition with respondent, as above alleged, are unwilling to adopt and use said metholl or any method involving a game of chance or the l:-ale of a chance to win something hy chance, or any otlwr metholl contrary to public policy, and such competitors refrain therefrom. l\Iany persons are attracted by said sales plan or methOll employed by respondent in the sale and dis- Findings 33F. T. C.

tribution of its candy and in the element of chance involved therein, and are thereby induced to buy and sell respondent's candy in preference to candy of said competitors of respondent who do not use the same or equivalent methods. The use of said method by respondent because of said game of chance has a tendency and 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 respondent from its said competitors who do not use the same or equivalent methods, and as a result thereof substantial injury is being and has been done by respondent 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 respondent, as herein alleged, are all to the prejudice and injury of the public and of respondent's competitors, and constitute unfair methods of competition in commerce an<.l 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 February 21, 1941, issued and on February 24, 1941, served its complaint in this proceeding upon the respondent Helen Harrison Candies, Inc., a corporation, charging it with the use of unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce in violation of the provisions of said act. On March 31, 1941, the respondent filed its answer, in which answer it admitted all the material allegations 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 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 TIIE FACTS PARAGRAPH 1. Respondent,. Helen Harrison Candies, Inc., is a corporation organized and doing business under and by virtue of the laws o£ the State of Illinois, with its office and principal place of business located at 325 North Wells Street, Chicago, Ill. Respondent HELEN HARRISON CANDIES, INC. 99 95 Findings is now and for more than six months last past has been engaged in the manufacture and in the sale and distribution of candy to wholesale dealers, jobbers, and retail dealers located at points in the various States of the United States and in the District. of Columbia. Respondent causes and has caused said candy, when sold, to be transported from its place of business in the city of Chicago, Ill., to purchasers thereof at their respective points of location in various States of the Unite'd States other than Illinois and in the District of Columbia. There is now and has been for more than 6 months last past a course of trade by 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 said business, respondent is and has been in competition with other corporations and with partnerships and individuals engaged in the sale and distribution of candy 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 sells and has sold to wholesale dealers, jobbers, and retail dealers certain assortments of candy 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 respondent, and is as follows :

This assortment includes 30 boxes of candy and a punchboard. Appearing on the face of the punchboard is the following legend: CHATTERBOX ASS'T With Helen Harrison Candies 50 FREE ~OS. 11--22--33--44--55 NUMBERS --6~77-88--99--100 All Numbers RECEIVE A 1 LB. Ending in WINDMILL ASSORTMENT 1--PAY..:....1¢ ~OS. 25-50--125-150-- 2--PAY--2¢ 225-250--325--425-450 3--PAY--3¢ RECEIVE 1 LB. 4-PAY--4¢ VICTORIA~ ASSORTMENT 5-6-7-8--9 LAST SALE IN EACH OF FIRST PAY 5¢ 9 SECTIONS COMPLETED RECEIVE A 1 LB. FLORAL BOX "0" are FREE LAST SALE ON BOARD RECEIVES THE BEAUTIFULLY LITHOGRAPHED 3 LB. TIN Said candy is distributed to the purchasing public in accordance With the :foregoing legend, and in the following manner: Findings 33F. T. C.

The punch board contains 500 punches, each concealing a number; said numbers are not arranged in numerical sequence. 'Vhether a purchaser pays 1, 2, 3, 4, or 5 cents, or receives his chance free, is determined by the last digit of the number of the slip punched by him from the punchboard, and whether he receives a box of candy or nothing for his money is determined by the number appearing on the slip punched by him from said board. Persons who qualify by receiving one of the designated numbers receive a box of candy. Persons not obtaining one of the designated numbers receive nothing. The numbers are effectively concealed from purchasers and prospec~ tive purchasers until a punch selection has been made and a particular punch separated from the board. The candy is thus distributed to purchasers of punches from the board wholly by chance, and the amount to be paid for each punch or purchase is also determined wholly by chance.

The respondent furnishes and has furnished various punchboard and candy assortments for use in the sale and distribution of its candy by means of a game of chance, gift enterprise, or lottery scheme. Such punchboards and candy assortments are similar to the one herein described, and vary only in detail.

PAR. 3. Retail dealers who purchase respondent's candy, <lirectly or indirectly, expose and sell the same to the purchasing public in accordance with the sales plan aforesaid. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of its products in accordance with the sales plan hereinabove set forth. The use by respondent of said sales plan or method in the sale of its candy and the sales of said candy 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.

PAR. 4. The sale of candy to the purchasing public by the method or plan hereinabove set forth involves a game of chance or the sale of a chance to procure candy at prices much less than the normal retail price thereof. Many persons, firms, and corporations who sell and distribute candy in competition with respondent, as above found, are unwilling to adopt and use said method or any method involving a game of chance or the sale of a chance to win something by chance, or any other method contrary to public policy, and such competitors refrain therefrom. l\Iany persons are attracted by said sales plan or method employed by respondent in the sale and distribution of its candy and in the element of chance involved therein, and are thereby induced to buy and sell respondent's candy in preference to candy of said competitors of respondent who do not use the same M equiva- HELEN HARRISON CANDIES, INC. 101 95 Order lent methods. The use of said method by respondent because of said game of chance has a tendency and 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 respondent from its said competitors who do not use the same or equivalent methods, and as a result thereof substantial injury is being and has been done by respondent to competition in commerce between and nmong the various States of the United States and in the District of Columbia.

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 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 answer of respondent, in which answer respondent admits all the material allegations of fact set forth in said complaint 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 respondent, Helen Harrison Candies, Inc., 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 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 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, punchboards, push or pull cards or other lottery devices either with assortments of candy or other merchandise or separately, which said punchboards, push or pull cards or other lottery devices are to be used, or may be nse>d, in sE-lling or distributing such candy or other merchandise to the public.

Order 33F.T.O.

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 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.

SANDERS MANUFACTURING CO. 103 Complaint