E. J. Brach & Sons

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FEDERAL TRADE COMMISSION v. E. J. BRACH & SONS.

COI\IPLAINT IN THE MATTJ<;R OF THE AU,F.GED VIOLATION OF SECTION II OF AN ACT OF CO~GRESS APPROVED SEPTEMBER 26, 1014.

Docket No. 121.-July 18, 1918.

SYLJ.AUUS.

Where R corporation engagt:>d In the manufacture and sale of candy publl!lhPd and cireulutetl ad\'PrtlsemPnts falsely stating and holding out that It was selling and oflering to sell its products at prices below cost:

Held, That such advertisements constituted an unfair method of competition In violation of section 5 of the act of September 26, 19H. COMPLAINT.

The Federal Trade Commission having reason to believe, :from a preliminary investigation made by it, that E. J. Brach & Sons, hereinafter referred to as respondent, has • FEDERAL TRADE COMMISSION DECISIONS, 187 been and is using unfair methods of competition in interstate couuuerce, in dolation of the provisions of section 5 of an act of Congress approved September 26, 1914, entitled "An aet to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and it appearing that a proceeding by it in r~pect thereof would be to the interest o£ the public issues this complaint, stating its charges in that respect, on information and belief, as follows:

PARAGRAPH 1. That the respondent, E. J. Brach & Sons, is now and was at all times hereinafter mentioned a corporation organized, existing, and doing business under and by virtue of the laws of the State of Illinois, having its principal factory, office, and place of business located at the city of Chicago, in said State, now and for more than two years last past engaged in the manufacture and sale of candy and similar products among the several States of the United States, the Territories thereof, and the District of Columbia, in direct competition with other persons, firms, copartnerships, and corporations similarly enga:;red. PAn. 2. That the respondent, E. J. Brach & Sons, in the conduct of its business manufactures such candy so sold by it, in its factory located at the city of Chicago, State of Illinois, and purchases and enters into contracts of purchase for the necessary component materia Is nee< led therefor in different States and Territories of the United States, causing the same to be transported to its factory, where they are made into the finished product, sold, and shipped to the purchasers thereof; that after such products are so manufactured they are continuously moved to, from, and among other States and Territories of the United Stutes, the District of Columbia, and foreign countries, and there is continuously. and has been at all times hereinafter mentioned, a constallt current of trade and commerce in the said products between and among the various States and Territories of the United States and the District of Columbia, and especially to and through the city o£ Chicago, State of Illinois, and ther<>from to and through other States and Territories of the United State3 and the District of Columbia.

188 FEDERAL TRADE COMMISSION DECISIONS. PAR. 3. That the respondent, within the last year, for the purpose, intent, and effect of stifling and suppressing competition in the sale of candy in interstate commerce, has circulated and published throughout the States of the United States and the Territories thereof certain advertisements in which it was stated, set forth, and held out that this respondent was selling and offering to sell candy at cost, or at and for a price less than cost, and that such statements were false and misleading and calculated and designed to and did deceive and mislead the trade and general public. REPORT, FINDINGS AS TO THE FACTS, AND ORDER.

The Federal Trade Commission, having issued and served its complaint herein, wherein it is alleged that it had reason to believe that the above-named respondent, E. J. Brach & Sons, has been, and now is using unfair methods of competition in interstate commerce in violation of the provisions of section 5 of an act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and that a proceeding by it in that respect would be to the interest of the public, and fully stating its charges in this respect, ·and the respondent having entered its appearance by Fisher, Boyd<'n, Kales & Bell, its attorneys duly authorized to act in the premises, ancl having filed. its answer admitting that certain of the matters and things alleged in the said complaint are true in the manner and form therein set forth, but denying that the same were committed with the knowledge of the managing oflicers of the respondent corporation, and thereafter the respondent having entered into an agreed statement of facts, whereby it was stipulated and agreed that the Commission should talm such agreed statement of facts as the evidence in this case, and in lieu of testimony herein and proceed forthwith upon the same to make and enter its report stating its findings as to the faots 1md conclusions and its order, and the said agreed statement of facts having been heretofore duly filed, the Commission now makes its findings as to the facts and conclusions. FEDERAL TRADE COMMISSION DECISIONS, 189 FINDINGS AS TO THE FACTS.

PARAGRAPH 1. That the respondent, E. J. Brach & Sons, is now, and for more than two years last past has been, a corporation organized, existing, and doing business under and by virtue of the laws of the State o£ Illinois, having its principal factory, office, and place of business located at the city of Chicago, in said State.

PAn. 2. That the respondent, E. J. Brach & Sons, is now, and for more than two years last past has been, engaged in the business of manufacturing and selling candy generally in commerce throughout the States of the United States, Territories thereof, and the District of Columbia, in direct competition with other persons, firms, copartnerships, and corporations similarly engaged.

PAR. 3. That the r£'spontlent, E. J. Brach & Sons, during the period of one year prior to the 30th day of April, A. D. 1!:>18, while selling candy in commerce aforesaid at and for prices above cost of the same, published and caused to be published certain printed advertisements which were circulated among rlenlers in candy throughout the various States of the United States, in which said advertisements it was stated and held out that the respondent was selling and offering to sell candy at and for prices less than cost. PAH. 4. That the arlvertisements mentioned and descriherl in the foregoing paragraph herein were circulated and caused to be circulated by the sales department of the respondent, and the same was done without the knowledge of the managing officers of the respondent corporation, and that the said respondent is not now selling or offering to sell candy in commerce aforesaid at and for prices less than cost. CONCLUSIONS.

That the methods of competition set forth in the foregoing findings as to the facts in paragraphs 2, 3, and 4. and each and all of them, are; under the circumstances therein set forth, unfair methods of competition in interstate commerce, in violation of the provisions of section 5 of an act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties~ and for other purposes."

190 FEDERAL TRADE COMMISSION DECISIONS. ORDER TO CEASE AND DESIST.

The Federal Trade Commission, having issued and served its complaint herein and respondent having entered its appearance by its attorneys, Fisher, Boyrlen, Kales & Bell, duly authorized to act in the premises, and having filed its als,Yer admitting that certain of the matters and things all('ge<l and contained in the said complaint are true in the manner and form therein set forth, and thereafter lmving made and entered into an agreed statement of facts, wherein it was ~stipulated that the Commission should forthwith proceed upon such agreed statement of facts to make and enter its report, stating its findings as to the facts and conclusions and its order, and the Commission having made such report, which said report is hereby ref<'rred to and made a part hereof.

Now, therefore~ it is ordered, that the respondent, E. J. Brach & Sons, of Chicago, State of Illinois, and its officers, directors, representnti ,·es, agcnl s, sen·ants, and employees cease anJ uesist from direeily or indirectly publishing and circulating allvcrti~cments or printed circulars, or letters, or similar dedcrs, in which it is stated and held out that it is selling and offering to sell in interstate commerce candy at :m(l for prices le~s than cost, while actually selling such candy in inter:>tate commerce at and for prices equal to or above the cost of production.

FEDERAL TRADE COMMISSION v. TWIN CITY VARNISH CO. OF ILLINOIS.

COMPLAINT Dl THE Matler 01'' THE ALLEGED VIOLATION OF SECTION :1 Olo' Tin: ACT OJ<' COXGIU:SS, APPI!OVED SEPTEMBER 20, lll4.

Docket No. Hl9.-July 18, 1918.

SYLLADUS.

"'here a corporation enga.~ro In the• tale of varnish and kindred pro<luds paid anll offen'tl to pny to employees of cu;;tomers and of coBip<'titors' customers, sums of money, ns an inducement for tht'm to Influence thelr emplo~·e1·s to purchase Its goods or to refrain from deallng wllh Its competitorr;: Held, That such payml'nts u111l offer>~ to pur, under the rlrcumstnuees set forth, ronstituted an unfair method of competition In violation of section 5 of the net of Rf'ptec>mlwr 2fl, 1914. FEDERAL TRADE COMMISSION DECISlONS. 191 COMPLAINT.

The Federal Trade Commission, having reason to believe from a preliminnry investigation made by it that the Twin City Varnish Co. of Illinois, hereinafter referred to as respondent, has been, for more than a year last past, using unfair methods of competition in interstate commerce in violation of the provisions of section 5 of the act of Congress approved September 26, 19H, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," anll it appearing that a proceeding by it in resped thereof would be to the interest of the public, issues this complaint, stating its charges in that respect on information and belief as follows: PAnAnnAPH 1. That the respondent, Twin City Varnish Co. of Illinois, is a corporation, organized and existing and doing business under and by virtue of the laws of the State of Illinois, llit\·ing its principal oflice and place of business at the city of Chicago, in said State, and is now :tnd for more than one year last past has been engaged in selling varnish an<l kindred products throughout the States and Territories of the United States, and that at all times hereinafter mentioned.d, the respondent has carried on and conducted such business in direct competition with other persons, firms, copartnerships aud corporations selling like products. PAn. 2. That, with the intent, purpose, and effect of stifling and suppressing competition in interstate commerce in the sale of varnish and kindred products, the respondent, for more than one year last past, has been, systematically and on a large scale, seeretly paying nnd offermg to pay, to employees of both its customers and prospective customers, and its competitors' customers and prospective customers, without the knowledge and consent of their employers, large sums of money as an mduccment to influence their said employers to purchase or contract to purchase from the respondent, varnish and kindred products, or to influence such customers to refrain from dealing, or contracting to deal with competitors of the respondent. 192 FEDERAL TRADE COMMISSION DECISIONS, REPORT, FINDINGS AS TO THE FACTS, AND ORDER.

The Federal Trade Commission, having issued and served its complaint herein, wherein it is alleged that it had reason to belie\·e that the above-named respondent, the Twin City Varnish Co. of Illinois, has been, and now is, using unfair methods of competition in interstate commerce, in violation of the provisions of section 5 of an act of Congress appro,·ed SPptemuer 26, 1914, entitled "An act to create a Federal Tnule Commission, to define its powers and duties, and for other purposes," and that a proceeding by it in that respect would be to the interest of the public and fully stating its charges in this m-;pect, and the respondent having cnwred its appearance by Oeorgc ·w. Welwr, its president, and having filed its answer admitting that the matters nnd things aliPgcd in the said complaint are true in the manner and form then~in set forth, and agreeing and consenting that the Commission shall forth with proceed to make ami enter its report, stating its findings as to the facts and its order disposing of this proceeding without the introduction of testimony in support of the same, and waiving any and all right to the introdnction of such testimony~ the Commission makes this report and findings as to the facts and conclusions:

FJNJHNOR AS TO Tile FACTS.

PARAGRAPH 1. That the respondent, the Twin City Varnish Co. of Illinois, is a corporation orgtmized, existing, and rloing business under and by virtue of the laws of the State of Illinois, with its home office located at the city of Chicago, in said State of Illinois, now and for more th:m one year last past engaged in the business of selling varnish and kindred products generally in commerce throughout the States and Territories of the United States in direct competition with other persons, firms. copartnerships. and corporations manufacturing and selling like products. PAR. 2. That for more than one year last past the respondent has given and offered to give employees of both its customers and prospective customers and its competitors' cus- FEDERAL TRADE COMMISSION DECISIONS. 193 tomers and prospective customers as an inducement to influence their employers to purchase or to contract to purchase from the respondent varnish and kindred products or to influence such employers to refrain from dealing or contracting to deal with competitors of the respondent, without other consideration therefor, large sums of money. CONCLUSIONS.

That the methods of competition set forth in the foregoing findings a..<; to the facts in paragraph;; 1 and 2, and each and all of them, are under th~ circumstances therein set forth unfair method,; of competition in intf'l'state commerce, in violation of the prodsions of section.) of the ad of Congres.~ approved September 21), HH ·L entitled "An act to l'reate a Frderal Trade Commission, to define its powet·s and duties, and for other purpost's."

ORUI':R TO ('F,.\SE .\:s"O DESIST • . The Federal Trade Commission having issued and set·ved its complaint herein, and the respondent having entered its appearance, by George ,V, 'Veber, its president, and having filed its answet· admitting that the mntters and thing::; alleged and contained in the said complaint at·e true in the manner and form therein set forth, and agt·eeing and consenting that the Commission shall forthwith prot'eed to make and enter its report, stating· its findings as to the facts and its order disposing of this proceeding without the introdnction of testimony in support of the "ame, and waiving any and all rights to the introduction of such testimony, and the Commission having made and filed its report containing its findings as to the facts and its conclusions that the responcknt has violated section 5 of an act of Congress appt'O\'ed St•pt~muer 26, llh, entitled "An act to create a Fedeml Tnulo Commission, to define its powers and duties, and for other· purposes," which said report is hereby referred to and made a part hereof. Now, therefore. It is orde,red that the respondent, the Twin City Varnish Co. of Illinois, and its officers, directors, agt>nts. senants, and employees. cease and desist from directly or indirectly. 1~7430°--20----13 194 FEDERAL TRADE COM~fiSSION DECISIONS, Giving or offering to gin employe.es of its customers or prospective customers, or those of its competitors' customers or prospective customers, as an inducement to influence their ~employers to purchase, or to contract to purchase, from the respondent varnish and kindred products, or to influence such employers to refrain from dealing, or contracting to deal, with competitors of the respondent, without other con- !:iideration therefor, money.