Griff' S of America, Inc.

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IN THE MATTER OF GRIFF' S OF AMERICA, INC., ET AL.

CONSENT ORDER, ETC. , IX REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-1257. Complaint, Sept. lrJ7-Decision, Sept. 25, 1967 Consent order requiring a Dallas, Texas, corporation 'which operates and franchises hamburger stands in several States and an lola, Kansas, food wholesaler, to cease inducing the payment of ilegal brokerage fees, entering into total-requirement contracts, and fixing resale prices of any commodity.

GRIFF S OF AMERICA, INC., ET AL. 619 618 Complaint 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 believe that the parties named in the caption and hereinafter referred to as respondents, have violated the provisions of Section 5 of the Federal Trade Commission 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 Griff's of America, Inc., sometimes hereinafter referred to as Griff' , is a corporation organized, existing and doing business under and by virtue of the laws of the State of Missouri, with its offce and principal place of business located at 700 Tower Petroleum Building, Dallas, Texas. Respondent Brice Wholesalers, Inc. , sometimes hereinafter referred to as Brice s, is a corporation organized, existing and doing business under and by virtue of the laws of the State of Kansas, with its offce and principal place of business located at 14 West Davis Street, Iola, Kansas.

Respondent Robert L. Fellers is an individual, sometimes referred to as Fel1ers, and from about the year 1960 to on or about November 30, 1966, has served as general manager and an offcer of respondent Griff's and in such capacity has owned and controlled 49 % of the outstanding capital stock of respondent Griff' Respondent Fellers principal place of business is now located at 901 Kentucky Street, Lawrence, Kansas. PAR. 2. Respondent Griff's was organized in 1960 for the purpose of conducting a chain of hamburger stands under the name Griff' s Burger Bars, " both company-owned and independently owned but franchised units.

Said respondent does business in some twenty States of the United States and its gross volume of business for the year 1965 including its franchised units, was approximately $20 000 000. In addition to operating and franchising hamburger stands, said respondent also purchases, either directly or indirectly, the supplies used by the various stands both company and independently owned units for shipment direct to the individual hamburger stands.

PAR. 3. Respondent Brice s for several years last past has been engaged in the purchase of food commodities and other products and in the sale and distribution thereof at wholesale, to various Complaint 72 F.

purchasers located principaHy in the Midwestern section of the United States.

PAR. 4. Respondent Fevers, for several years prior to November 1966, has actively directed and supervised the operations of respondent Griff's and has executed, on behalf of Griff' s, contracts and agreements and has entered into understandings with various suppliers of food commodities and other products, for shipment to the various hamburger outlets.

PAR. 5. In the course and conduct of their business for several years last past, respondents have caused food commodities and other products when purchased to be transported from the State of origin of shipment to destinations in other States and there is now and has been at all times mentioned herein a constant course of trade and commerce, as "commerce " is defined in the Federal Trade Commission Act, in said food commodities and other products across State lines between said respondents and the seHers of such products.

PAR. 6. In the course and conduct of their business, respondents have been and are now in competition with others in the purchase and sale and distribution of food commodities and other products in commerce.

PAR. 7. Among the products used by the various hamburger stands, both those owned and operated by respondent Griff' s and those franchised by said respondent but independently owned, are paper products.

Respondent Fevers, in or about the year 1964, contacted Continental Can Company offering to purchase the entire paper cup requirements for all of respondent Griff's hamburger stands, both company owned and franchised, in exchange for a special price from Continental Can Company.

As a result of negotiations between and among respondent Fellers, respondent Griff' s and representatives of Continental Can Company, the latter agreed to pay a brokerage fee to a broker who would be designated to represent respondents Griff' s and Fellers.

The further result of the aforementioned negotiations was that Continental Can Company agreed to and did furnish aH of the requirements of respondent Griff' s of paper cups for a period of several years from 1964 and also agreed to the nominal sale of such products to a wholesale house, to be designated by respondents Fellers and Griff' , which wholesale house was designated as respondent Bricc As a further part of the above arrangement, Continental Can GRIFF S OF AMERICA , INC., ET AL. 621 618 Complaint Company agreed to and did pay brokerage to United Sales, Inc. a brokerage company owned jointly by respondent Fellers and one Ray Mickle, and designated initially by Fellers as the broker to handle all sales of paper products by Continental Can Company for shipment to Griff's Burger Bars.

In addition to the foregoing, respondent Fellers, in or about the year 1964, contacted respondent Brice s and an agreement was entered into whereby all purchases of paper products on behalf of respondent Griff's from Continental Can Company were to be biled to respondent Brice s and were to be drop-shipped by Continental Can Company to the various hamburger stands located throughout the Midwest and Western States of the United States. Continental Can Company performed pursuant to the foregoing agreement.

It was further agreed among the respondents that all discounts or rebates received from the purchase of Griff' s entire requirements of paper cups from Continental Can Company were to be divided between respondent Griff' s and respondent Bricc s in accordance with a prearranged and established formula agreed to among all respondents.

Respondents also have agreed to and have fixed the prices at which such paper products purchased from Continental Can Company would be and have been resold to the various hamburger stands, including the independently owned and operated units. In connection with the above referred-to agreement and understanding, early in the year 1966 respondent Bricc s agreed to and did advance to respondent Griff' s an amount of $35 000. Most of this amount constituted an advance payment of respondent Griff' share of discounts or rebates to be realized from the sale of paper cups by Contincntal Can Company throughout the remainder of the year 1966, and was, in fact, realized from such sales as aforesaid. The remainder of said advance ,vas a rebate received from Brice s on purchases of syrups and other products. Rebates derived from paper cup purchases were designated by respondents as "advertising allo\vances.

PAR. 8. The acts and practices of respondents, as herein alleged have been to the prejudice of thc public and to competitors of respondents; have a tendency to hinder, suppress and injure competition in thc sale and distribution of such paper cups as are used in the operation of Griff' s Burger Bars; and have a tendency to hindcr, suppress and injure competition between Griff' s Burger Bars, and independently owned hamburger stands, including those units operated under a franchise from Griff' Dccision and Order 72 F.

Such acts and practices constitute unfair methods of competition in commerce, or unfair or deceptive acts or practices in commerce within the intent and meaning of Section 5 of the Federal Trade Commission Act.

DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Bureau of Restraint of Trade proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; and The respondents and counsel for the Commission having, pursuant to the Commission s 1963 Rules of Practice, executed an agreement containing a consent order, an admission by the respondents of al1 the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by the respondents that the law has been violated as al1egea in such complaint, and waivers and provisions as required by the Commission s rules; and The Commission, having reason to believe that the respondents have violated said Act, and having determined that complaint should issue stating its charges in that respect, hereby issues its complaint, has accepted said agreement, makes the following jurisdictional findings, and enters the following order: 1. Respondent Griff's of America, Inc. , is a corporation organized, existing and doing business under and by virtue of the laws of the State of Missouri, with its offce and principal place of business located at 700 Tower Petroleum Building, Dai1as Texas.

Respondent Bricc Wholesalers, Inc., is a corporation organized existing and doing business under and by virtue of the laws of the State of Kansas, with its offce and principal place of business located at 14 West Davis Street, Iola, Kansas. . Respondent Robert L. Fel1ers is an individual, formerly president of Griff' s of America, Inc., with his offce and principal place of business located at 901 Kentucky Street, Lawrence Kansas.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest. AMERICAN CYANAMID CO. ET AL. 623 618 Syllabus ORDER It is ordend That respondents Griff' s of America, Inc., and Bricc Wholesalers, Inc. , each a corporation, and their offcers agents, representatives and employees, and respondent Robert L. Fevers, an individual, and his agents, representatives and employees, directly or through any corporate or other device, in connection with the purchase or sale of any commodity in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from entering into, continuing, cooperating in, or carrying out any agreement, understanding, combination, conspiracy or planned common course of action between or among any of said respondents or between any of said respondents and others not parties hereto to do or perform any of the fonowing acts or things:

(1) Induce any seller of any commodity to payor ahow a brokerage fee, commission or discount, to an agent or representative of any buyer:

(2) Negotiate with any seHer for the purchase of any commodity on condition that the buyer s entire requirements be supplied by such seller, provided such seHer pay a brokerage fee to an intermediary specified by respondents and/or that said seHer recognize an intermediary specified by said respondents to act as a wholesaler when said wholesaler is, in fact, an agent of or subject to the control of, said respondents or any of them.

(3) Fixing or establishing prices for resale of any commodity by any means to any retailer.

It is further ordered That the respondents herein shah, within sixty (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 which they have complied with this order.