Continental Premium Marl

Text (OCR of the scan at left; may contain errors)

IN Tile l\IATI'ER OF CONTINENTAL PREMIUM MART C0:\1l'LAI::ST, FINDDIGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 4462. Complaint, Feb. 11, 1941-Deeision, Sept. 5, 1941 Where a corporation engaged in the competitive Interstate sale and distribu· tlon of novelty jewelry, fountain pens, billfolds, knives, wearing apparel, carnival supplles, lamps, p1·emium novelties and other merchandise, in· <:Iu<ling three assortments of Its merchamlise so packed and assembled us to lnvoh·e the use of a game of chance, gift enterprise, or lottery scheme when sold and distributed to the consumer, and which consisted of a large cardboard carton enclosing a pull card and a number of smaller cartons, each containing an article of merchandise, and benring on the end a number, function of which was to determine the chance recipient of the p11rticular article, dependent upon the securing o! the corresponding number from the pull card so that which of such articlesman~· of greater retail value than the 10 cents paid for a chancepurchaser received was determined wholly by lot- · Sold such' assortments, directly or Indirectly, to dealers and retailers by wbolll they were exposed for sale and sold to the purchasing public in accordance with the aforesaid sales plan, and that·eby supplied to and placeu in the hands of others the means of conducting lotteries In the sale and distribution of its merchandise, eoutnu·y to an established public policy of th~ United States Government and in violation of ct·imlnal laws, and in competition with many who are unwilling to use any sales methods involving chance or contrary to public policy, nnd refrain therefrom; With the result that runny dealers In and ultimate consumers of said mer· chamlise were attracted by Its said sales plans, and were thereby induced to buy Its said merchandise ln·preference to that of aforesaid competitors. with effect of unfairly diverting trade to it from 'them; to the substantial Injury of competition in commerce:

Held, That such acts and practices, under the circumstances set forth, were all to tbe prejudice and injury of the public and competitors, and con· stituted unfair methods of competition in commerce anu unfair acts and practices therein.

Before Mr. John W. Addiso-n, trial examiner. Mr. D. 0. Da,niel for the Commission.

Mr. Josepl~ ll. Bilan,~ky, of Milwaukee, "Wis., for respondent. 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 reasm1 to believe that Continental Pre· mium l\Iart, a corporation, hereinafter referred to as respondent, has violated the provisions of said act and it appearing to the Corn· COl\""TINENTAL PREMIUM MART 1235 1234 Complaint :mission that a proceeding by it in respect thereof would be in the interest of the public, hereby issues its complaint stating its charges in that respect as follows:

P ARAORAl'H 1. Respondent, Continental Premium l\Iart, is a corporation organized and existing under and by virtue of the laws of the State of 'Visconsin, with its principal office and place of business ~ocated at 822 North Third Street, Milwaukee, 'Vis. Respondent Is now vnd for more than 3 years last past has been engaged in the ~ale and distnbution of novelty jewelry, fountain pens, bill folds, knives, wearing apparel, carnival supplies, lamps, premium novelties, and oth~r merchandise to dealers and other purchasers. Respondent causes and has caused said merchandise when sold to be transported from its aforesaid place of business in the State of .,Visconsin to PUrchasers thereof at their respective points of location in the various States of the United States and in the District of Columbia. There is now and for more than 3 years last past has been a course of trade by said respondent in such merchandise in commerce between and among the various States of the United States and in the District ?f Columbia. In the course and conduct of its business respondent ~s and has been in competition with other corporations and with Jndividuals and partnerships engaged in the sale and distribution of like or similar merchandise 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 dealers and other Purchasers certain assortments of said merchandise so packed and assembled as to involve the use of a game of chance, gift enterprise, or lottery scheme when said merchandise is sold and distributed to the purchaser or consumer thereof. One of the said assortments is and has been sold and distributed to the purchasing public in sub- ~tantially the following manner. .

This assortment consists of a large cardboard carton in which is contained a number of smaller cartons, each of which smaller cartons contains an article of merchandise and on the end of each of said srnaller cartons there appears a number. One end of said large cart9n is so constructed as to constitute a device commonly known as a Pull card. Said pull card contains a number of partially perforated Pull tabs and on the reverse side of each of said tabs there appears a number which corresponds to the number appearing on the end of one of said smaller cartons. Sales are 10 cents each and each purchaser pulls one of said tabs from the pull card. The purchaser is entitled to and receives the smaller carton bearing the number which corresponds to the number appearing on the reverse side of the tab Complaint 33F.T.C.

pulled by such purchaser. The numbers on the reverse sides of said tabs are effectively concealed from purchasers and the prospective purchasers until selections have been made and the tabs have been separated or removed from the said card. Many of the said articles of merchandise contained in this assortment have a normal retail value greater than 10 cents. The fact as to which of said articles of merchandise a purchaser is to receive and whether or not he receives an article of merchandise of greater retail value than the amount to be paid therefor are thus determined wholly by lot or chance . . Respondent sells and distributes, and has sold and distributed, various assortments of its merchandise, together with devices for use in the sale or distribution of such merchandise, to the purchasing public by means of a game of chance, gift enterprise or lottery scheme but the sales plans or methods employed in connection with each of said assortments are substantially the same as the sales plans or methods hereinabove described, varying only in detail. PAR. 3. Retail dealers who purchase respondent's said assortments of merchandise, either directly or indirectly, expose for sale 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 and distribution of his merchandise in accordance with the sales plans or methods hereinabove described. The use by respondent of said sales plans or methods in the sale of its merchandise, and the sale of said merchandise by and through the use thereof and by the aid of said sales plans or methods, is a practice of a sort which is con· trary to an established public policy of the Government of the United States and in violation of criminal laws.

PAR. 4. The sale of. merchandise to the purchasing public in the manner above alleged involves a game of chance or the sale of a chance to procure an article of merchandise at a price much less than the normal retail price thereof. Many persons, firms, and cor· porations who sell and distribute merchandise in competition with respondent, as above alleged, are unwilling to adopt and use said sales plans or methods or any sales plans or methods involving a game of chance or the sale of a chance to win something by chance or any other sales plans or methods that are contrary to public policy, and such competitors refrain therefrom. Many dealers in and ulti· mate consumers of said merchandise are attracted by said sales plans or methods employed by respondent and the element of chance in· volved therein and are thereby induced to buy respondent's mer· chandise in preference to merchandise offered for sale and sold by said competitors of respondent who do not use the same or equivalent CONTINENTAL PREMIUM MART 1237 1234 Findings sales plans or methods. The use of said sales plans or methods by respondent because of said game of chance has a tendency and capacity to and does unfairly divert trade to respondent from its said competitors who do not use the same or equivalent sales plans or 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 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 February 11, 1941, issued and on February 12, 1941, served its complaint in this proceeding upon the respondent, Continental Premium Mart, a corporation, charging it ~ith the use of unfair methods of competition and unfair and decephve acts and practices in violation of the provisions of said act. On March 21, 1941, respondent filed its answer in this proceeding. A hearing was held in this matter on June 5, 1941, at which time a stipulation as to the facts, entered into by and between counsel for the Commission and counsel for the respondent, was· read into the record and certain testimony was introduced by respondent. The filing of briefs and the presentation of oral ~argument in support of 8nd in oposition to the allegations of said complaint were waived. '!'hereafter this proceeding came on for final hearing before the Commission on said complaint, answer, stipulation and testimony, and the Commission having duly considered the same and being now ~u]]y advised in the premises finds that this proceeding is in the . ~nterest of the public and makes this its findings as to the facts and lts conclusion drawn therefrom.

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Continental Premium Mart, is a corporation organized· and existing under and by virtue of the laws of the State of 'Wisconsin, with its principal office and place of business located at 822 North Third Street, Milwaukee, ·wis. Respondent is now, and for more than 3 years last past has been, engaged in the sale and distribution of novelty jewelry, fountain pens, bill folds, 1238 FEDERAL TRADE COMM;lssion DECISIONS Findings 33F.T.C.

knives, wearing apparel, carnival supplies, lamps, premium novelties, and other merchandise to dealers and other purchasers. Respondent causes and has caused said merchandise when sold to be transported from its aforesaid place of business in the State of Wisconsin to purchasers thereof at their respective points of location in the various States of the United States and in the District of Columbia. There is now, and for more than 3 years last past has been, a course of trade by said respondent in such merchandise in commerce between and among the various States of the United States and in the District of Columbia. In the course and conduct of its business respondent is and. has been in competition with other corporations and with individuals and partnerships engaged in the sale and distribution of like or similar merchandise 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 dealers and · other purchasers three assortments of said merchandise so packed and assembled as to involve the use of a game of chance, gift enterprise, or lottery scheme when said merchandise is sold and distributed to the purchaser or consumer thereof. Such assortments were and are known as "Captain Kidd's Bazaar," "Trading Post" and "Play Ball" and are and have been sold and distributed to the purchasing public ·in substantially the following manner:

Each of said assortments consists of a large cardboard carton in which is contained a number of smaller cartons, each of which smaller cartons contains an article of merchandise and on the end of each of said smaller cartons there appears a number. One end of said large carton is so constructed as to constitute a device commonly known as a pull card. Said pull card contains a number of partially perforated pull tabs and on the reverse side of each of said tabs there appears a number which corresponds to the number appearing on the end of one of said smaller cartons. Sales are 10 cents each and each purchaser pulls one of said tabs from the pull card. The purchaser is entitled to and receives the smaller carton bearing the number which corresponds to the number appearing on the reverse side o£ the tab pulled by such purchaser. The numbers on the reverse sides of said tabs are effectively concealed from purchasers and the prospective purchasers until selections have been made and the tabs have been separated or removed from the said card. Many of the said articles of merchandise contained in this assortment have a normal retail value greater than 10 cents. The facts as to which o£ said articles of merchandise a purchaser is to receive and whether or not he receives an article o£ merchandise of greater retail value CONTINENTAL PREMIUM MART 1239 1234 Conclusion than the amount he paid therefor are thus determined wholly by lot or chance. The said assortments, when purchased by respondent, Were pa,cked and assembled as above described. · PAn. 3. The Commission finds that retail dealers who purchase r~spondent's said assortments of merchandise, either directly or in- , ~lrectly, expose for sale 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 ~onducting lotteries in the sale and distribution of its merchandise ln accordance with the sales plans or methods hereinabove described. The use by respondent of said sales plans or inethods in the sale of its merchandise, and the sale of said merchandise by and through the use thereof and by the aid of said sales plans or methods, 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 criminal laws.

PAR. 4. The Commission finds that the sale of merchandise to the purchasing public in the manner above described involves a game of chance or the sale of a chance to procure an article of merchandise at a price much less than the normal retail price thereof. Many persons, firms, and corporations who sell and distribute merchandise lh competition with respondent, as above described, are unwilling to adopt and use said sales plans or methods or any sales plans or lllethods involving a game of chance or the sale of a chance to win sotnething by chance or any other sales plans or methods that are ~ontrary to public policy, and such competitors refrain therefrom. • Inny dealers in, and ultimate consumers of, said merchandise are attracted by said sales plans or methods employed by respondent and the element of chance involved therein and are thereby induced to buy respondent's merchandise in preference to merchandise offered for sale and sold by said competitors of respondent who do not use the satne or equivalent sales plans or methods. Tile use of said sales plans or :methods by respondent because of said game of chance has a tendency and capacity to and does unfairly divert trade to respondent from. its said competitors who do not use the same or equivalent sales Plans or 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. · CO~CLUSIO~ The aforesaid acts and practices of respondent, as herein found, are al] to the prejudice and injury of the public and of respondent's com- Order 83F. T. C~ petitors and constitute unfair methods of competition in commerce and unfair acts and practices in commerce within the intent anil 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 respondent, a stipulation as to the facts entered into by and between counsel for the Commission and counsel for the respondent and certain testimony jntroduced by respondent, 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 the respondent, Continental Premium Mart, 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 novelty jewelry, fountain rens, bill folds, knives, wearing apparel, carnival supplies, lamps, premium novelties 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 any merchandise so packed and assembled that sales thereof are to be made or may be made by means of a lottery, gaming device, or gift enterprise. · 2. Supplying to or placing in the hands of others, assortments of any merchandise, together with push or pull cards or any other device, which said push or pull cards or other device are to be used or may be used in selling or distributing said merchandise to the public by means of a game of chance, gift enterprise, or lottery scheme.

3. Supplying to or placing in the hands of others push or pull cards or other devices either with assortments of merchandise or separately which said push or pull cards or other devices are to be used o.r may be used in selling or distributing such merchandise to the public by means of a game of chance, gift enterprise, or lottery scheme.

4. Selling or otherwise distributing any merchandise by means of a game of chance, gift enterprise, or lottery scheme. It ia further ordered, That the respondent shall within 60 days after service upon it of this order, file with the Commission a rep~:t in writing, setting forth in detail the manner and form in which 1t has complied with this order.

W. HrLLYEH RAGSI>:ALE', ETC. 1241 Syllabus