John P. Olsen, E. W. Malang and H. H. Hentschell

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IN THE MATTER OF JOHN P. OLSEN, E. W. MALANG AND H. H. HENTSCHELL, COPARTNERS, TRADING UNDER THE STYLE AND FIRM NAME OF OZARK CREAMERY COMPANY.

COMPAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SECTION 5 OF AN ACT OF CONGRESS APPROVED SEPTEMBER 26, 1914 . Docket 1221-February 3, 1925.

SYLLABUS.

Where butter manufacturers in order to meet the public demand for small quantities had long advertised, offered and sold butter in standard, recognized unit quantities of one-fourth pound, one-half pound and one pound, of definite shape and size, in unmarked wrappers, and so packed or assembled in cartons as to make up a full pound; and thereafter a competitor, in disregard of collective action theretofore taken by members of the industry denouncing the practice and providing for its discontinuance, packed, sold and offered for sale butter in units which imitated the aforesaid standard and customary units of weight, but contained less, and were packed in cartons equal in size and similar in dress and design to the aforesaid cartons, thereby advisedly enabling and encouraging its retailer customers to sell such underweight units in their unmarked wrappers as and for units of one-fourth pound, one-half pound and one pound respectively; with the result that the purchasing public was deceived in reference to the quantity of butter purchased by it in the aforesaid units and cartons:

Held, That such misrepresentations of quantity, under the circumstances set forth, constituted an unfair method of competition. Mr. M. Markham Flannery for the Commission. COMPLAINT.

Acting in the public interest pursuant to the provisions of anAct 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," the Federal Trade Commission charges that Johns. Olsen,E. W. Malang and H. H. Hentschell,copartners, trading under the style and firm name of Ozark Creamery Company hereinafter referred to as respondents have been and are using unfair methods of competition in interstate commerce in violation of the provisions of Section 5 of saidAct, and states its charges in that respect as follows :

PARAGRAPH 1. Respondents with their principal office and place ofbusiness in the town of Neosho in the State of Missouri are en- 378 FEDERAL TRADE COMMISSION DECISIONS. Complaint. 8 F. T. C.

gaged in the manufacture of butter and the sale thereof to wholesale and retail dealers located at points in the various States of the United States. They cause said product when so sold to be transported from their aforesaid principal place of business in the town of Neosho, Mo., into and through other States of the United States to said purchasers at their respective points of location. In the course and conduct of their said business respondents are in competition with other individuals, partnerships and corporations also engaged inthe manufacture and/or sale of butter in interstate commerce. PAR. 2. To meet the demand of the consuming public for small quantities of butter acustom has long prevailed whereby creameries pack butter in units weighing respectively four ounces, eight ounces and one pound. The standard and customary carton in which such units are placed by creameries is such as to contain 1 full pound. In each such carton areplaced either four of the four-ounce, two of the eight-ounce, or one of the full pound units. Each such unit before being placed in the carton by the creamery is separately wrapped in anunmarked wrapper. When saidbutter comes into the hands of the retail dealer for sale to the consuming public the retailer either sells said package in its original form, or breaks said cartons and separately sells said units of various weights to the consumer upon his demand for butter in quantities of one-quarter pound, one-half pound,or one pound,as the casemay be. The purchasing public has long been accustomed to purchasing butter in said units and when so purchasing to ask for one-quarter pound, one-halfpound, or 1pound ofbutter, as the casemaybe. PAR. 3. Respondents, within three years last past, have packed their said butter in units weighing respectively three and one-half ounces, seven ounces, and fourteen ounces, said units being separately wrapped in unmarked paper and simulating in shape and appearance the four-ounce, eight-ounce and one-pound units of butter customarily sold to the public, all as described in paragraph 2 hereof. Respondents pack their said units in cartons resembling in shape and appearance the cartons in which said four-ounce, eight-ounce and one-pound units are packed as set out in paragraph 2 hereof, and in their said cartons respondents place either four of their said three and one-half ounce units, two of their seven-ounce units, or one of their fourteen-ounce units. Respondents cause to be marked upon said cartons the correct weight of the butter therein packed; to wit: 14 ounces. Respondents have sold and distributed among the trade in the course of their business described in paragraph 1 hereof, their said butter packed in units and cartons as in this paragraph above set out, and said butter has been offered for sale and sold by retailers to the consuming OZARK CREAMERY CO. 379 377 Findings. public in competition with the four-ounce, eight-ounce and onepound units of butter packed as described in paragraph 2 hereof, respondents' saidunits being by said dealers taken from the cartons in which they are packed and being separately sold to consumers upon their demand for, and as and for, quantities of one-quarter pound, one-half pound and one pound of butter respectively. The carrying out of this deception and the above alleged circumstances which make it possible are well known to respondents, and although respondents are ostensibly complying with the law by marking the exact weight of the total contents on the carton in which their said units are packed, respondents know or should know that customarily said carton is not seen by the ultimate purchaser of the separate units, and respondents by shaping, dressing and packing butter in such undersized and short-weight units have knowingly placed in the hands of retailers an instrument which enables and encourages retailers to commit a fraud upon the consuming public, respondents thereby increasing their own sales to the disadvantage ofmanufacturers who refuse to pack butter in similar short-weight units and thereby aid such retailers in the practice of said fraud. PAR. 4. The shaping, dressing and packing of butter in shortweight units by respondents as set out in paragraph 3 hereof, is calculated and designed to, and has the tendency and capacity to, and does, deceive the consuming public into the belief that respondents' said units contain more butter than said units do in fact contain, and causes the consuming public to purchase respondents' said units in that belief.

PAR. 5. Above alleged acts and things done by respondents are all to the prejudice of the public, and of respondents' competitors, and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress entitled "An Act To create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914 REPORT, FINDINGS AS TO THE FACTS, AND ORDER.. Pursuant to the provisions of an Act of Congress approved September 26, 1914, the Federal Trade Commission issued and served a complaint upon John P. Olsen,E. W. Malang and H. H. Hentschell, respondents, copartners trading under the style and firm name of Ozark Creamery Company, charging them with the use of unfair methods of competition in commerce in violation of the provisions of said act.

Respondents having entered their appearance herein and having made, executed and filed an agreed statement of facts in which it is 380 FEDERAL TRADE COMMISSION DECISIONS. Findings. 8F. T. C.

stipulated and agreed by respondents that the Federal Trade Commission shall take such agreed statement of facts as the facts in this case and in lieu of testimony, and proceed forthwith upon such agreed statement of facts to make its findings as to the facts and conclusion and such order as it may deem proper to enter therein, without the introduction of testimony, or the presentation of argument, in support of same or in opposition thereto, and the Federal Trade Commission being now fully advised in the premises:makes this its findings as to the facts and conclusion : FINDINGS AS TO THE FACTS .

PARAGRAPH 1. Respondents, John P. Olsen, E. W. Malang and H. H. Hentschell, copartners trading under the style and firm name of Ozark Creamery Company with their principal office and place of business in the city of Neosho, in the State of Missouri, are engaged in the manufacture of butter and the sale thereof to wholesale and retail dealers located in various States of the United States. They cause said product when so sold to be transported from their aforesaid principal place of business in the town of Neosho, Mo., into and through the several States of the United States to said purchasers at their respective points of location. In the course and conduct of their said business respondents are in competition with other individuals, partnerships and corporations also engaged in the manufacture, and inthe sale ofbutter in interstate commerce. PAR. 2. To meet the demand of the consuming public for small quantities of butter, a custom has long prevailed whereby creamery companies shape butter in sizes weighing respectively 4 ounces, 8 ounces and 1 pound. The standard and customary carton in which such units are placedby said creamery companies is such as to contain one full pound. In each such carton is placed either four of thea-ounce, two of the 8-ounce or one of the full pound units. Each such unit before being placed in the carton by the creamery companies is separately dressed in an unmarked wrapper. The butter so shaped, wrapped and packed in said carton is distributed by and through wholesale dealers or jobbers and also soldby creamery companies direct to retailers. 'Retail dealers located in the States of Oklahoma, Texas, and Arkansas sell to consumers or purchasers said separate, unmarked units of butter which bear no designation by which the purchasers may ascertain their weights. Prior to the institution or use of the method or practice hereinafter more particularly described purchasers were accustomed to and did receive fullweight units, whether they purchased 4 ounces,8 ounces or 1 pound of butter so packed.

OZARK CREAMERY CO. 381 377 Findings. PAR. 3. For more than one year prior to the issuance of the complaint herein, and in the course of their business as described in paragraph 1 hereof, and in imitation of units of standard and customary size as described in paragraph 2 hereof, respondents packed, shipped and soldbutter in units weighing 312 ounces instead of said customary and standard units weighing 4 ounces,and in units weighing 7 ounces instead ofsaid customary and standard units weighing 8ounces, and inunits weighing 14 ounces instead of said customary and standard units weighing 16 ounces. To further carry out such deceptive practice, respondents used cartons which equalized in size and which, by similarity of dress and design, otherwise simulated cartons in which the full-weight units were sold. In each such carton respondent placed either four of the 31/2-ounce or two of the 7ounce, or one of the 14-ounce units. These they sold and shipped as described in paragraph 1 hereof to retail dealers who supplied and sold to customers or purchasers the small unmarked units for and as 4-ounce, 8-ounce and 1-pound units, respectively, when, in fact, such units contained less than such respective weights. The carrying out of the deception and the circumstances which made it possible were well known to respondents, and although respondents wereostensiblycomplying with the law by marking the exact weights of the total contents on the outer wrapper or carton, respondents knew that customarily the outer wrapper or carton is not seen by the ultimate purchaser of the separate small units, and respondents, by shaping, dressing and packing butter in such undersized and oddweight units, knowingly placed in the hands of retail dealers an instrument which enabled and encouraged retail dealers to sell butter in such small, odd and deceptive weight units as and for 1/4-pound, 12-pound and 1-pound units.

PAR. 4. For a long period of years it has been the custom of the trade to advertise, sell and offer for sale, butter in standard, recognized quantities of 1 pound, 12 pound and 14 pound, and there is a very large number of competitors of respondent who manufacture and market their product in commerce in quantities of 1 pound, ½ pound and14 pound,ofsimilar shape and appearance to that used by respondents, which said product is sold in competition with the underweight units sold by respondents.

PAR. 5. Butter manufacturers competing inthe States ofArkansas, Oklahoma, and Texas assembled at the invitation of the Federal Trade Commission atDallas,Tex., onApril 2, 1920, in open meeting presided over by aduly authorized representative of the Commission did, by means of a resolution, define and denounce said method of competition which, in the experience of the industry, had proven to result in fraud on the public. At the time of its adoption by rep- 382 FEDERAL TRADE COMMISSION DECISIONS. Order. 8 F. Т. С.

resentatives of the industry, and in announcements thereof by the Commission, such resolution was designated and known as " Trade Practice Submittal-Butter Manufacturers." August 1, 1920, was named in the said resolution as the date upon which the practice or method so denounced was to entirely cease, and which on said date did practically cease.

PAR. 6. Respondents were and are well acquainted with the purpose, intent, and spirit of said action taken by representatives of the industry at Dallas, Tex., on April 2, 1920, in the form of said Trade Practice Submittal .

PAR. 7. Such shaping,dressing and packing ofbutter in said oddweight units hereinbefore described, is calculated to, designed to, and has the tendency and capacity to, and does, deceive the public into the belief that it is purchasing butter in units, cartons or packages containing more butter than said units, cartons or packages do, infact, contain.

CONCLUSION. L The above practices of said respondents,under the conditions and circumstances described in the foregoing findings,are unfair methods of competition in interstate commerce and constitute a violation of Section 5 of the Act approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its power andduties, and for other purposes."

:

ORDER TO CEASE AND DESIST.

This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of respondents and a stipulation as to the facts, and the Commission having made its findings as to the facts and its conclusion that the respondents have violated the provisions 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,"

It is now ordered, That respondents, Johns. Olsen, E. W.Malang, and H. H. Hentschell, copartners,trading under the style and firm name of Ozark Creamery Company, and each of them, and their agents, employees and servants, do cease and desist from selling or offering for sale, to distributors,dealers or others, butter in shapes, sizes and/or dress in imitation of or resembling the standard or recognized shapes, sizes or dress generally known to the purchasing public to contain four ounces, eight ounces and one pound of butter respectively, when such shapes and sizes contain less than said standard respective weights. : F. W. DOBE. 383 Syllabus.

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