Concord Distributing Co., Inc

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

IN THE MATTER OF CONCORD DISTRIBUTING COMPANY, INC., COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 4508. Complaint, May 21, 1941-Decision, Nov. 18, 1941 Where a corporation engaged in the competitive Interstate sale and distribution of cameras, souvenir thermometers, clocks, tableware sets, dressing table sets, electric lamps, and other articles of merchandise- Furnished various devices and plans by which such merchandise was sold and distributed to the ultimate consumer wholly by lot or chance, distributing to tbe purchasing public pushcards, circulars explaining its plan of selling said merchandise, 'and allotting it as premiums or priz~s to operators of pushcards and to the purchasing public; a typical scheme involving a plan, pursuant to which a person selecting the one of 32 feminine names corresponding With that under the card's master seal received a camera, the person selecting the name concealing 'll designated number received a souvenir thermometer. and the amount paid by a customer for chance was dependent upon the particular number secured; and thereby Supplied to and placed in the hands of others the means of conducting lotteries in the sale of its merchandise In accordance with such sales plan, under which the tact as to whether a purchaser received nn article or nothing for the amount of money paid, and which article, If any, was determined wholly by lot ('lr chance, and involving sale of a chance to procure an article at much less than its -normal retail price; contrary to an established public policy of the United States Government and In competition with many who, unwiling to use such or other method contrary to public policy, refrain therefrom;

With the effect of unfairly diverting trade In commerce to it from Its said com· petitors, to the substantial injury of competition in commerce: Held, That such acts and practices as above set forth constituted unfair methods of competition in commerce and unfair acts and practices therein. Mr. J. V. 11/ishou for the Commission.

ColiiPLAINT 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 Concord Distributing Co., Inc., 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 ~nterest of the public, hereby issues its complaint, stating its charges In that respect as follows:

PARAGRAPH 1. Respondent, Concord Distributing Co., Inc., is a cor· Poration organized and existing under the laws of the State of New FEDERAL TRADE COMM1Sis~'ON' DECIS[ONS 170 Complaint 34F. T. C.

York, with its principal office and place of business located at 603 Sixth Avenue, New York, N.Y. Respondent is now, and for more than 1 year last past, has been engaged in the sale and distribution of cameras, souvenir thermometers, clocks, tableware sets, dressing table sets, electric lamps, and other articles of merchandise in commerce between and among the various States of the United States and in the District of Columbia. Respondent causes and has caused said prod· ucts, when sold, to be transported from its aforesaid place of business in the State of New York to purchasers thereof, at their respective points of location, in various States of the United States other than the State of New York, and in the District of Columbia. There is now, and for more than 1 year last past has been a course of trade by 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 said 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 articles of 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, in soliciting the sale of and in selling and distributing its merchandise, furnishes and has furnished various devices and plans of merchandising which involve the operation of games of chance, gift enterprises, or lottery schemes by which said merchandise is "sold and distributed to the ultimate consumers thereof wholly by lot or chance. The method or sales plan adopted and used by responflent was and is substantially as follows: Respondent distributes, and has distributed, to the purchasing public certain literature and instructions, including among other things push cards, order blanks, illustrations of its said merchandise, and circulars explaining respondent's plan of selling merchandise and of allotting it as premiums or prizes to the operators of said push cards and· to the purchasing public. One of respondent's push cards bears 32 feminine names with ruled columns on the reverse side thereof for writing in the name of the customer opposite the feminine name selected. Said push card has 32 small partially perforated disks on the face of which is printed the word "Push." Concealed within each disk is a number which is disclosed when the disk is pushed or separated from the card. The push card also has a large master seal and concealed within the master seal is Qne of the feminine names appearing on the face of said card. The person selecting the feminine name corresponding to the name under the master seal CONCORD DISTRIBUTING CO., INC. 171 169 Complaint receives a camera. The person selecting a certain designated number set out in the legend at the top of said card also receives a souvenir thermometer. The push card bears a legend or instructions as follows: Name Under Seal Receives a l\IASTER PHOTO FLASH CANDID CAMERA Or Any Other Premium Shown on Circular Do not remove seal until entire card is sold receives a souvenir of No.10 NEw York Worlds FAIR ___ _ KEY WITH THFIUIOMETEB 1¢ to 15¢-NO HIGHER Nos. 1 to 15 pay what you draw Nos. over 15 pay only 15¢ TOTAL-$3.95 Sales of respondent's merchandise by means of said push card are Inade in accordance with the above-described legend or instructions. Said prizes or premiums are allotted to the customers or purchasers in accordance with the above legend or instructions. The fact as to whether a purchaser receives an article of merchandise or nothing for the amount of money paid and which of said articles of merchandise the purchaser is to receive, if any, is thus determined wholly by lot or chance.

Respondent furnishes and has furnished various other push cards accompanied by said order blanks, instructions, and other printed matter for use in the sale and distribution of its merchandise by means of a game of cpance, gift enterprise, or lottery scheme. The sales plan or Inethod involved in connection with the sale of all of said merchandise by means of said push cards is the same as that hereinabove described, varying only in detail.

PAR. 3. The persons to whom respondent furnishes the said pushcards use the same in purchasing, selling and distributing respondent's lnerchandise, in accordance with the aforesaid sales plan. Respondent , thus supplies to, and places in the hands of, others the means of conducting lotteries in the sale of its merchandise in accordance with the sales plan hereinabove set forth. The use by respondent of said sales plan or method in the sale of its merchandise and the sale of said 172 FEDE:RAL TRADE COMMI'ESION' DECI.S[QNS Findings 34F.T. C.

merchandise 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 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 corporations, who sell and distribute merchandise in competition with the respondent, as above alleged, 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 that is contrary to public policy and such competitors refrain therefrom. The use of said method })y 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 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 l\fay 27, 1941, issued and there· after served its complaint in this proceeding upon respondent, Concord Distributing Co., 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 tlle provisions of said act. Respondent in its answer admits all the material allegations of fact contained in the complaint and waives all intervening procedure and further hearing as to the :facts. Thereafter, this proceeding regularly came on for final hearing before the Commission on complaint and answer, and the Commission, having duly considered the matter, and being now fully advised in the premises, finds that this proceeding is in the public interest and makes this its findings as to the facts and its conclusions drawn therefrom, CONCORD DISTRIBUTING CO., INC. 173 1()() Findings FINDINGS AS TO TIIE FACTS P ARAGRArH 1. Respondent, Concord Distributing 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 603 Sixth Avenue, New York, N.Y. Respondent is now and for more than 1 year last past, has been engaged in the sale and distribution of cameras, souvenir thermometers, clocks, tableware sets, dressing table sets, electric lamps, and other articles of merchandise in commerce between and among the various 'States of the United States and in the District of Columbia. Respondent causes and has caused said products, when sold, to be transported from its aforesaid place of business in the State of New York to purchasers thereof, at their respective points of location, in various States of the United States and in the District of Columbia. There is now, and for more than 1 year last past has been a course of trade by 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 articles of 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, in soliciting the sale of and in selling and distributing its merchandise, furniE>hes and has fur- 'nished various devices and plans of merchandising which involve the operation of games of chance, gift enterprises, or lottery schemes by which said merchandise is sold and distributed to the ultimaw consumers thereof wholly by lot or chance. The method or sales plan adopted and used by respondent was and is substantially as follows:

Respondent distributes, and has distributed, to the purchasing public certain literature and instructions, including among other things, push cards, order blanks, illustrations of its said merchandise, and circulars explaining respondent's plan of selling merchandise and of allotting it as premiums or prizes to the operators of said push Cftrds and to the purchasing public. One of respondent's push cards bears 32 feminine names with ruled columns on the reverse side thereof for writing in the name of the customer opposite the feminine name selected. Said push card has 32 small partially perforated discs on the face of which is printed the word "Push." Concealed within each disc is a number which is not disclosed until' the disc :COIVIJ.VITS,S'I'O'l\~ DEICIS['ON'S 174 , FEDERAL. TRADE :Findings ' is pushed or separated from .the card;::·The; push card also large master seal, concealed within which is one o.f the names appearing on· the face of said carcl. The person selectin feminine name correspondii1g to the: na1:ne under the master receives a camera .. The person selecting a cert.ain'dpsigi1ated set out in· the legend afthe top of said card also receives a sou thermometer. The push card be_ars a legend or instructions 'follows: · · Name Urid.er' Se.al Receives a MASTER PHOTO FLASH CANDID. CA'!.fERA or Any Other Premium Shown on Circular · Do not remove seal until entire card is sold receives a souvenir of No. 10· NEw York Worlds FAIR KEY WITH 'l'HEilMOllfETER 1¢ to 15¢-NO HIGHER ' 1¢ to 15¢-No HraaEk Nos. 1 to 15 pay what you draw .Nos. over 15 pay only 15¢ TOTAL---$3. 95 Sales of respondent's merchandise by means of said push card are· made in accordance with the' above-described legend or instructions. Said prizes or prei:nimxis are allotted .to the ~ustoJl1ers ·or purchasers iri accordance with the above legend or instructions .. The fact as t~ whether a putchaser ~eceiyes. an article of 1~erchandise~ or nothing for the amount of money paid and which ·of said articles of mer· chandise the purchaser is to receive, if. any, is' deterinineq wholly by lot or chance. . . . . . . .. Respondent furnishes. and has furnished various· oth~r push cards accompanied by said order blanks, instructions, and· other printed matter for' use in the sale and distribution of its merchandise by means of a garne of chance, gift enterprise, or lottery scheme .... The sales plan or ·method involved in connection with the sale of all of said merchandise by' means of said push cards is .the sa1ne as that hereinabove desc;-ibed, varying only in detail par. 3. The persons to whom respondent furnishes the said push cards use the same in selling. and distributing respondent's merchandise, in accordance with the aforesaid sales 'plan. Respondent thus supplies to, and places in the liands o_:f, others the means ·of conduct~ .CONCORD· DISTRIBUTING :CQ.,~ INC~·- _- ~' }75 -Order ·ncr lotteries 'in· the sale 6£ its merchandise in ·acc~rdance. with the ~aks plan hereinabove set forth. The use by .respondent of said sale~ ~lan or method in the sale of its m()rchandise and the sale of said merchandise by and through the use thereof and by the aid of said s[Lles plan or method is a practice bf a sort w~iich is contrary to. an established public policy of the government of the United States of '· America. . . PAR. 4. The sale of merchandise. to the purchasing,publiciin,the wanner above found involves a game of chance ·or the sale of a chance to· procure :an article· of merchandi~e at ·a price much less than. the .. normal retail price thereof .. _Many corporations,, individuals :_and partnerships, who sell.and distribute merchandisein competition with the respondent, .as above: found, are unwilling to n,clopt and use said method or any method involving a game :of chance. or tlle sale of a chance .to· win something. by chance, .or· any other:. method tl_1at is contr~ry to public policy· and such_ competitors refrain_ therefrom. 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 Stat.es and in the District of C9~um~ia ·to -respondent from its said competitors who do not use the same or equivalent methods, and as a result thereof substantial injui·y is being, and has been, done by respondent to competition in .coinmerce .between and among the various States of the United States and in the District of II Columbia. I·I I CONCLUSION' .I, .I The aforesaid acts and practices of respond(mt as herein set. forth ,.I'I constitute unfair methods of competition in commerce and unfair, I 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 respondent's answer admitting all the material allegations of fact contained in the complaint and waiving all intervening proce'dt1re ·and further hearing as to the facts, and the Commission having made. i.ts findings as to the facts and conclusion that the respondent has violated ~'the provisions of the Federal Trade Commission Act. · . It is ordered, Th~t respondent, Concord Distributing Co., Inc., a corp\)ration, its officers, directors, representatives, agents and employees, directly or through any corporate or other device, ' in connec-~ . . . COMMI'SS'IO~ DEClS[O}.."'S 176 FEDERAL TRADE Order 34F.T.C.

tion with the offering for sale, sale and distribution of cameras, souvenir thermometers, clocks, tableware sets, dress:ng table sets, electric lamps or any other articles of merchandise in commerce, as "commerce" is defined by the Federal Trade Commission Act, do forthwith cease and desist from:

1. Selling or distributing any merchandise so packed or assembled that sales of such merchandise to the 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, punch boards or other lottery devices, either with assortments of merchandise or separately, which said push or pull cards, punch boards or other lottery devices are to be used, or may be used, in selling or distributing said 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 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.

THE WHOLESALE DRY GOODS INSTITUTE, INC., ET AL. 177 Syllabus