Franklin Coal Company

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IN THE MATTER OF FRANKLIN COAL COMPANY COMPLAINT ( SYNOPSIS ) , FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SECTION 5 OF AN ACT OF CONGRESS APPROVED SEPTEMBER 26, 1914 Docket 1187-February 5, 1926 SYLLABUS .

Where coal produced at Mount Olive, Ill., and in a small district contiguous thereto, had long come to be well and favorably known to a substantial part of the trade and consuming public, by reason of extensive advertising, wide distribution, and reputed high quality and grade, as " Mt. Olive Coal," or " Mt. Olive District Coal " ; and thereafter a coal dealer advertised, designated, and sold coal not mined in the aforesaid district, as Mount Olive District coal, with the capacity and tendency to mislead and deceive a substantial part of the trade and purchasing public in reference to the source of the aforesaid coal and to induce the purchase thereof in such erroneous belief, to the prejudice of competitors dealing in genuine Mount Olive District coal and of those dealing in other coal, truthfully represented :

Held, That such practices, under the circumstances set forth, constituted unfair methods of competition.

Mr. O. R. Stites for the Commission.

Mr. J. J. Milligan, of St. Louis, Mo., for respondent. SYNOPSIS OF COMPLAINT Reciting its action in the public interest, pursuant to the provisions of the Federal Trade Commission Act, the Commission charged respondent, a Missouri corporation engaged in the purchase and sale of coal in wholesale quantities in interstate commerce, with principal office and place of business in St. Louis, with naming or designating its product misleadingly and advertising falsely or misleadingly in violation of the provisions of section 5 of such act, prohibiting the use of unfair methods of competition in interstate commerce, in that respondent advertised in the St. Louis papers, offered for sale, and sold, certain coal as " Mt. Olive Coal " and " Mt. Olive District Coal," in competition with coal mined in " the Mt. Olive section," lying within the counties of Macoupin and Madison, Ill., and known and designated by a substantial part of the purchasing public as, " Mt. Olive Coal " ; the complaint charging that the coal so advertised, offered and sold by respondent " is not the product of said Mt. Olive section, but is produced in the counties of Clinton and Bond in the State of Illinois, which said counties lie wholly without aforesaid Mt. Olive district, and said coal derived from said last named source FRANKLIN COAL CO. 31 30 Findings.

has a lower market value than coal produced in said Mt. Olive dis. trict " ; with the capacity and tendency to mislead and deceive purchasers into believing respondent's coal to be the product of the aforesaid Mount Olive District and with the effect of so doing, to the prejudice of the public and respondent's competitors. Upon the foregoing complaint, the Commission made the following REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of the 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," the Federal Trade Commission issued and served a complaint on the respondent Franklin Coal Co., a corporation, charging it with the use of unfair methods of competition incommerce in violation of the provisions of said act.

The respondent having entered its appearance and filed its answer herein, evidence was thereupon introduced in support of the allegations of the complaint and on behalf of respondent, Franklin Coal Co., before an examiner of the Federal Trade Commission. Thereupon, this proceeding came on for decision, and the Commission having duly considered the record and being fully advised in the premises, makes this its findings as to the facts and its conclusion drawn therefrom :

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Franklin Coal Co., is a corporation organized and existing under the laws of the State of Missouri, with its principal offices and place of business in the city of St. Louis, in said State. It is, and for more than five years last past has been, engaged in the business of selling and distributing coal in wholesale quantities to retail dealers, industrial plants and car-lot customers located in the States of Illinois, Missouri, Arkansas, Iowa, and Wisconsin. In the course and conduct of said business it employs traveling salesmen who solicit orders for coal on behalf of the respondent from its customers and prospective customers, and respondent also offers for sale and sells its coal through and by means of circular letters, price lists and similar trade literature, which it mails from time to time to its customers and prospective customers. It obtains its coal from producers and operators of mines located in the State of Illinois, and in filling orders from its customers for said coal it causes same to be transported from the mines located in the State of Illinois from which said coal was produced, through and into other States of the United States to the purchasers thereof. In Findings 10 F. T. C.

carrying on its business as aforesaid, respondent has been at all times hereinbefore mentioned, and now is, in direct, active competition with many individuals, partnerships and other corporations similarly engaged in the sale and distribution of coal in commerce between and among various States of the United States, particularly the States of Illinois, Missouri, Arkansas, Iowa, and Wisconsin. PAR. 2. In the course and conduct of its aforesaid business respondent is, and for more than five years last past has been, selling and distributing in interstate commerce large quantities of coal produced from mines located at Pocahontas, in Bond County, and Breese and Beckemeyer, in Clinton County, Ill., as and under the trade name and brand of " Mt. Olive District Coal," and in the course of dealing in said coal, respondent has, for more than two years last past, offered for sale, advertised and represented in circular letters, price lists and similar trade Iterature, which it mailed to its customers and prospective customers, said coal as " Mt. Olive District Coal " ; and respondent still sells and distributes coal from said mines at Pocahontas, Breese, and Beckemeyer, Ill., under the name of, and as and for " Mt. Olive District Coal." Said coal is sold and distributed in interstate commerce by respondent in direct, active competition with, among others, coal produced at Mount Olive, Ill., and in the "Mt. Olive District " as defined in paragraph 3 hereof. PAR. 3. For more than 40 years last past there has been and still is produced at Mount Olive, Ill., and in a small district contiguous to said Mount Olive, including Staunton, in said Statewhich district is known and referred to in the trade and among the consuming public as " The Mt. Olive District "-a coal having peculiar characteristics of fracture and composition, which has become known to and designated by the trade and a substantial part of the consuming public as " Mt. Olive Coal " and/or " Mt. Olive District Coal." Coal produced at mines located in said district is, and during the period aforementioned has been, sold and distributed, and extensively advertised by producers and dealers (one producer alone having expended between $10,000 and $12,000 per annum for the past 20 years on said advertising) , throughout Illinois, Missouri, Arkansas, Iowa, Wisconsin, and other States as " Mt. Olive Coal " and " Mt. Olive District Coal." Said coal is, and throughout the period aforementioned has been well and favorably known to a substantial part of the trade and consuming public as " Mt. Olive Coal" and/or " Mt. Olive District Coal," because of its having been produced at Mount Olive, Ill., or in said Mount Olive District, including Staunton, and also because of the aforesaid advertising, wide distribution and its reputed high quality and purity. FRANKLIN COAL CO. 33 30 Conclusion PAR. 4. The coal produced at Pocahontas, Breese, and Beckemeyer, Ill. , including said coal advertised and marketed by respondent as and for " Mt. Olive District Coal," as set forth in paragraph 2 hereof, is not in fact " Mt. Olive District " coal as understood by the trade and consuming public; and said coal so marketed by respondent has different characteristics of fracture and composition and is generally less favorably known among the trade and purchasing public than said coal produced at Mount Olive, Ill., and in said Mount Olive District as hereinbefore defined, including Staunton. The coalproducing properties at Pocahontas, Breese, and Beckemeyer, including the mines from which respondent's coal is obtained, are now, and at all times herein mentioned have been, wholly without said Mount Olive District, which district includes Staunton, and are regarded by the trade and purchasing public as being no part of the coalproducing section known and hereinbefore defined as the " Mt. Olive District." The aforesaid Mount Olive District, including Staunton, is in Macoupin and Madison Counties, Ill.; whereas said mines at Pocahontas are in Bond County and approximately twenty miles distant from said Mount Olive District; and said mines at Breese and Beckemeyer are in Clinton County, Ill., and approximately thirty miles distant from said Mount Olive District. PAR. 5. The respondent's representing, advertising, selling anddistributing its coal produced at Pocahontas, Breese, and Beckemeyer, Ill., as and for " Mt. Olive District Coal," as set forth in paragraph 2 hereof, is false and misleading, and has and had the capacity and tendency to mislead and deceive a substantial part of the trade and purchasing public into the erroneous belief that said coal was produced at Mount Olive, Ill., or in aforesaid Mount Olive District, and is what is known as " Mt. Olive District Coal " as defined in paragraph 3 hereof, and to induce purchasers to buy said coal in such erroneous belief, thereby diverting trade from competitors of respondent who sell and distribute coal in interstate commerce under truthful representations, particularly those who sell coal produced in said Mount Olive District.

CONCLUSION The acts and practices of respondent as hereinabove set forth, and under the conditions and circumstances set forth in the foregoing findings as to the facts, are unfair methods of competition in commerce and constitute a violation of section 5 of the 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."

43256°-29-VOL104 Order 10 F. T. C.

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 , Franklin Coal Co. , and the testimony and evidence submitted, and the Commission having made its findings as to the facts, with its conclusion that the respondent has violated the provisions of the 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,"

Now, therefore, it is ordered, That the respondent, Franklin Coal Co. , a corporation, its officers, agents, servants, representatives, and employes, cease and desist- (1) From using in advertisements, or by or through any other means whatsoever, in connection with the sale or offering for sale in interstate commerce of coal produced at Pocahontas, Bond County, Ill., and/or Breese and Beckemeyer, Clinton County, Ill., the words or phrases " Mt. Olive " and " Mt. Olive District," as trade names for, or as descriptive of said coal.

(2) From using the words or phrases " Mt. Olive " and " Mt. Olive District " as trade names for, or as descriptive of any coal marketed by respondent in interstate commerce, unless said coal has been produced at Mount Olive, Ill., or in the small geographical section contiguous to said Mount Olive, including Staunton,in said State. It is further ordered, That the respondent, Franklin Coal Co. (a corporation) shall, within sixty days after the service upon it of a copy 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 the order to cease and desist hereinbefore set forth. CALUMET BAKING POWDER CO. 35 Syllabus