Germania Tea Company

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IN THE Matler OF GERMANIA TEA COMPANY, AND CONSOLIDATED DRUG TRADE PRODUCTS, INC.

CO~IPLAINT, I<'INDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOL.\TIO:'>I OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEP'l'. 26, 1914 Docket 9114. Compla-int, Apr. 26, 1931-Decision, June 12, 1937 Where two corporation!3 respectively engaged in Importation and sale, and sale and distribution, of two herb products sold under trade names "Germuuia Herb Tea" and "Germanla Orange Pekoe Ten," and composed, princ!plilly and respectively, of "senna" and "juniper," and of cnfre!ne, in substantial competition with those engaged in sale of similar herb products and other preparations designed and used fot· purposes for which said corporations held out their aforesaid IU-'oduets as useful- Heprcsented, in extensive ndverti,.;ing campaigns conducted by them, consisting of radio broaucasts, circulars, pamphlets, and other printed matter, and in labels placed on aforesaid products, that they bad substantial therapeutic value in the tt·eatnwnt of obe~ity when used in connection with a designated reducing diet, facts being first-named product performed no function in treatment of obesity other than that of a laxative or purga· tive, and neither product was of value as a remedy, treatment or cure for aforesaid condition;

With effect of mlslend!ng and decehing purehasers and pt·ospective purchasers into the belief that said representations were true, and to cause purchase of snld products by reason of such erroneous bellcf>l, and with the result that trade was thereby diverted from aforesnid competitors to it; to the substantial injury ot substantial competition in comme.t·ce: Jield, That such acts and practices were to the prrjudlce of the public and competitors and constituted unfair methods of comPt'titlon. Jfr. John Darsey for the Commission.

Mr. Benjmn{n Segal, of Minneapolis, Minn., for respondents. Complaint Pursuant to the provisions of an Act of Congress, approved Sep· tember 26, 1914, entitled "An Act to create a Federal Trade Commis· sion, to define its powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that German ill Tea Company, a corporation, and Consolidated Drug Trade Prod· ucts, Inc., a corporation, hereinafter referred to as respondents, have been and are using unfair method:, of competition in commerce, as "commerce" is defined in said act, anti it appearing to said Commis· sion that a proce£'ding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charg£'s in that respect as follows:

GER:MA~IA TEA CO., ET AL. 151 150 Complaint PARAGRAPH 1. Respondent, Germania Tea Company, is a corporation existing and doing business under and by virtue of the laws o£ the State of Minnesota with its principal office and place o£ business located at 608 First A venue North in the city of Minneapolis State of Minnesota. For more than two years last past, it has be~n engaged in the importation and sale of herb products, among which Products are those which it sells under the trade names, "Germania Herb Tea" and ''Germania Orange Pekoe Tea." The respondent causes the aforesaid designated products when sold to be transported from its principal place of business in the State of Minnesota to Purchasers thereof residing in the Yarious other States of the United States.

The respondent, Consolidated Drug Trade Products, Inc., is a corporation existing and doing business under and by virtue of the laws of the State of Illinois with its principal place of business located at 544 South Wells Street in the city of Chicago, State of Illinois. It has for several years last past been engaged in the sale of various drug products. For a period of more than three (3) Years last past, it has been engag<'d in the sale and distribution of the products, "Germania Herb Tea" and "Germania Orange Pekoe 'lea," which it obtains from the respondent, Germania Tea Company llnder a distributor contract which makes provision for an advertising campaign to be conducted by the respondent, Consolidated Drug 'trade Products, Inc., in connection with the offering for sale and Sale of the aforesaid products. It causes the products, "Germania llerb Tea" and "Germania Orange Pekoe Tea," when sold to be transported from its place of business in the State of Illinois to Purchasers thereof locateu in the various other States of the United States.

In the course and conduct of their businesses, the respondents have been and are in substantial competition in commerce among and between the various States of the United States with other corporations, partnerships, firms, and individuals engaged in the sale of similar herb products, or prouucts and preparations designed and Used for the purposes for which respondellts represent their afore- Said products to be useful.

1) AR. 2. In the course and conduct of their business, and for the Pllrpose of inducing the purchase of their products, respondents have Cooperatively printed anu circulated through the se-veral States to customers and prospectin customers, pamphlets and other advertising matter and have made use of radio broadcasts over stations of sufficient power to conny the programs emanating therefrom Complaint 25F.T.O.

into the various States of the United States other than the State wherein said program originated. In all of said advertisements and radio broadcasts and on the labels placed on said products, the respondents make many statements wherein they represent that said products have a substantial therapeutic value in the treatm<>nt of obesity when used in connection with a designatell r<>ducing diet. In truth and in fact, said herb products now dPsignatecl ns "Germania Herb Tea" and uGermania Orange Pekoe Tea" arc of no value as a remedy for obesity. Neither preparation plays any important part in reducing excess weight when used in connection with any designated diet. The principal ingredients of lthe product are "senna" which is a strong purgative and "juniper" which is a diuretic. Neither of these ingredients are of any material value in the treatment of obesity or in reducing excess weight. ~\ continuous use of these products might result in harmful effects to a substantial portion of the persons w~ing the same without the dir<'C'tion and supervision of a doctor.

PAR. 3. Under the foregoing facts and circumstances, the representations and statements used by the respondents in the sale of their herb products are false and misl<'ading. The nse of such statements and representations has the capacity and tendency to mislead and deceive ultimate purchasers and consumers int<l tllQ erroneous and mistaken beliefs that said products have a substantial therapeutic value in the treatment of obesity and into the purcha~e of respond· ent's herb products on account of said beliefs induced by the reprefientations of the respondents. As A. result thereof, trade is unfairly diverted to respondents from competitors engaged in selling in commerce, as herein described, products of the same kind and nature as those of respondents or selling products which actually do have substantial therapeutic Yaluc in the treatment of obesity. In con- ~equcnce thereof, injury has been done by respondents to competition in commerce among and between the various Stat<'s of the United States.

PAR. 4. The aforementioned methods, acts aud practices of respond· ents are all to the prejudice of the public and respondents' competitors as hereinabove alleg<'d. Said methods, acts, and practices con· stitutc unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress, entitled "An Act to create n. Federal Tmde Commission, to d<'fine its pow<>rs and duties, and for other purposes," approved SeptembH 2G, 1914. GER::\!ANIA TEA CO., ET AL. 153 150 Find lugs lb:roRT, FINDINGS AS TO THE Facts, AND Onder Pursuant to 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," the Federal Trade Commission, on April 26, 1937, issued and served its complaint in this proceeding upon respondents, Germania Tea Company, and Consolidated Drug Trade Products, Inc., charging them With the use of unfair methods of competition in commerce in violation of the provisions of said act. On l\Iay 20, 1937, the respondents :filed their answers in which answers they admitted all the material a.llegations of the cqmplaint ~o be true and stated that they waived hearing on the charges set forth in the said complaint and consented that, without further evidence or other intervening procedure, the Commission might issue and sen·e upon them findings as to the facts ;and conclusion and an order to cease and desist from the violations of law cl1argP<l ·in the complaint. Thereafter, the proceeding regularly came on for fi~1al hearing before the Commission on the :said complaint and the answer thereto, and the Commission having ~uly considered the sanw, and being now fully advised in the premlses, finds that this proceeding is in the interest of the public, and lnakes this its findings as to the facts and its conclusion drawn therefrom:

Jo'INDINGS AS TO THE FACTS PAuAcU.\I'II 1. Respondent, Germania Tea Company, is a 1\lmnefiota corporation having its principal office and place of business nt oG08 First AYenue, North, l\1inueupolis, .1\Iinn. For several years it has been engaged in the importation and sale of herb products, 11tnong which products are those sold under the trade name "Ger- 1llunia Herb Ten," and "Germania Orange Pekoe Tea." The re- .<;pondent causes the aforesaid designated products when sold to be tr·nnsported from its place of business in Minnesota to purchasers I·esiding in the various oth£>r States of the United States. The respondent, Consolidated Drug Trade Products, Inc., is an liiinois corporation with its principal place of business nt 544 South ~sells Street, Chicago, Ill. For several years it has been engaged 111 the sale of various drug products. For n period of more than 1ht·pe years it has been engaged in the sale and distribution of the ]>roducts "Germanin Herb Tea" and "Germanin Orange Pekoe Tea" '"llich it obtains from the respondent, Germanin Tea Company, ltnder n distributor contract which provides for an advertising camllaign to be conducted by the respondent, Consolidated Drug Trade :Products, Inc. It causes the products designated above, when sold, Conclusion 25F.T.C.

to be tmnsported from its place of business in the State of Illinois to purchasers who are located in the various other States of the United States.

In the course and conduct of their businesses, the parties respondent herein have been and are in substantial competition in commerce among and between the various States of the United States with other corporations, partnerships, firms, and individuals engaged in the sale of similar herb products and other preparations designed and used for the purposes for which respondents represent tl1eir aforesaid products to be useful.

PAR. 2. For the purpose of inducing the purchase of the aforesaid products, respondents have conducted extensive advertising campaigns in the various States of the United States consisting of radio broadcasts, circulars, pamphlets, and other printed matter. In all of said radio broadcasts, printed matter, and labels placed on said products, the respondents have made many statements wherein they r£.>present that the aforesaid products h'lve a substantial therapeutic value in the treatment of obesity when used in connection with a designated reducing diet.

In truth and in fact the herb products "Germania Hru·b Tea" and ''Germania Orange Pekoe Tea" are of no value as a remedy, treatment, or cure for obesity. The principal ingredients of the product "Germanin Herb Tea," are "senna," which has laxative and purgativr qualities, and "juniper" which is a diuretic. The ingredients of the product "Germanin Herb Tea" have no therapeutic value in the treatment of obesity and perform no functions in this respect other than those of a laxative or purgative. The principal ingredient of the product "Germanin Orange Pekoe Tea," is caffeine. This product has no therapeutic value as a remedy.:, treatment or cure for obesity.

PAR. 3. Respondents' false and misleading representations of and concerning the said products, as hereinabove set forth, have the capacity and tendency to mislead and deceiye, have misled and deceived, nnd do mislead and deceive purchasers and prospective purchasers into the belief that such representations are true and to cause the purchase of sahl protlucts as the result of such erroneous belief~. Trade is thereby diverted from its aforesaid competitors to respondents, to the snh::tantirll injmy of snhstantial comprtition in interstate commerce.

CONCLUSION The aforesaid acts and pructicl's of the respondents, Germanin Tea Company, and Consolidated Drug Trade Products, Inc., are to the GERMANIA TEA CO., ET AL. 155 150 Order 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, approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, 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 and the answers of respondents, in which answers respondents admit all the material allegations of the complaint to be true, and state that they waive hearing on the charges set forth in said complaint and consent that, without further evidence or other intervening procedure, the Commission may issue and serve upon them findings as to the facts and conclusion and an order to cease and desist from the violations of law charged in the c:complaint, and the Commission having made its findings as to the facts and conclusion that said respondents have violated the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Fedcrnl Trade Commission, to define its powers and duties, and for other purposes." It is ordered, That the respondents, Germani a Tea Company and Consolidated Drug Trade Products, Inc., their officers, representatives, agents, and employees, in c01mection with the offering for sale, !::ale and distribution of herb products now designated as "Germania Herb Tea" and "Germania Orange Pekoe Tea," or of the same or similar products designated by any other name or names in interstate commerce or in the District of Columbia, do forthwith cease and desist from representing:

1. That the product now designated as "Germania Herb Tea" performs any functions in a reducing program other than those of a laxative or purgative;

2. That the product now designated as "Germania Orange Pekoe Tea" performs any function or has any value in the treatment of obesity, or, in a reducing program, other than the caffeine supplied through its consumption.

It iafurther ordered, That the respondents shall, within 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.

Syllnbns 25F. T. C.