William W. Cummings, Arthur W. Lawton, and Everett Buck, Individually, and trading as United States Caramel Company

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IN THE MATTER OF WILLIAM '\Y. CUl\11\HNGS, ARTHUR '\V. LA '\VTON, AND EVERETI' BUCK, INDIVIDUALLY, AND TRADING AS UNITED STATES CARAl\1EL CO~IPANY COMPLAINT, FINDI~GS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 33J6. Complaint, Feb. 14. 1938-Decision, Mar. 30, 1938 Where a finn engaged in manufacture and sale of candy ass01"tment, among other1·s, consisting of a number of indi;'l"illually wrapped penny pieces of uniform size and shape, the enclosed, concealed differing color of a minority of which pieees entitlt•d ehance purcha;:er, without additional charge, to one of licorice pops included with assortment- Sold said assortments for display by retail dealer vendees and sale to purehasing public in :wC'ordance with aforesaid plan and thereby supplied to and placed. in ha uds of others means of eonducting lotteries ln sale of its products, in accordance with such plan, and in violation of long-st~nding public policy of the common law and criminal statutes, and that of United State Go\·ernment;

With t<'ndency and capneity to in<luee purehal'ers to buy said candy in preferenee to that offpred and sold by C'ompetitors anti unduly to hinder competition or create monopoly In excluding from candy trade competitors, including those who do not or are unwilling to oliPr or sell their products so packed and flflSPrnbled or otherwise arranged and packed for sale to purchasing public as to im·oh·e a garne of chance or other method of sale eontrary to public policy, and refmin therefrom, and to dh·ert trade unfairly to tlJemselws, and with result tllat many dealers ln and ultimate <'onsumers of candy, by reason of such method and manner of paeking aforesaid candy and Plement of chance involved in Mle thereof, wpre induced to purchase same, thus packed, etc., in prpferpnce to that offered and sold by said competitors, who do not use same or equivalent methods, aud with tendency and capacity to d~vert unfairly to themselves trade and custom from such competitors, exclude from candy trade all such com- Petitors and lessen cornpPtition therein, tend to create a monopoly thereof in themselves and in such other distributors as use same or equivalent methods, and deprive purchasing public of benefit of free competition, and with capacity and tendency to eliminate from said trade all actual competitors and exclude therefrom all potential competitors, who do not use same or equivalent methods:

1Field, That such method, acts and practices were all to the injury and prejudice of the public and competitors and constituted unfair methods ot competition.

Mr. Henry 0. Lank and Mr. D. 0. Daniel for the Commission. Perry, Saunders & Cheney, of Boston, Mass., for respondents. l60451m-39-vol. 26--66 1006 FEDERAL TR.\.DE COl\IMISSION DECISIONS Complaint 2Gl!'.T. C. Complaint 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, having reason to believe that 'Villiam ,V, Cummings, Arthur ,V, Lawton, and Everett Buck, individually, and trading as United States Carnmel Company, hereinafter referred to as respondents, have been and are using unfair methods of competition in commerce, as "commerce" is defined in said act, and it appearing to said Commission that a proceeding by it in respect thereof would be in the public interest, hereuy issue~ its complaint stating its charges in that respect as follows: PARAGRAPH 1. The respondents, 'Villiam ,V, Cummings, .Arthur "\V. Lawton, and Everett Buck, are copartners trading as United States Caramel Company, with their principal office and place of business located at 150 Orleans Street, East Boston,· l\Iass. Hespondents are now, and for some time last past lutve been, engaged in the manufacture of candy and in the sale and distribution thereof to dealers. Respondents cause and have caused their products when sold to be transported from their principal place of business in the city of East Boston, l\Iass., to purchasers thereof in the State of :Massachusetts and in other States of the United States and in the District of Columbia, at their respective places of business. There is now,' and has Leen for some time last past, a course of trade and commerce by said respondents in such candy between and among the various States of the United States and in the District of Columbia. In the course and conduct of their business respond· ents are in competition with other firms, individuals, and corponL· tions engaged in the sale and distribution of candy and similar products, in commerce between and among the various States of the United States and in the District of Columbia. PAR. 2. In the course and conduct of their business, as describetl in paragraph l hereof, respondents sell and have sold to dealers certain assortments of candy so packed and assembled as to involve the use of a lottery scheme when distributed to the consumers thereof. One of said assortments is sold and distributed to the consuming' public in the following manner:

This assortment consists of a number of individually wrapped pieces of candy of uniform size and shape, together with a number of licorice pops, which licorice pops are to be given as prizes to purchasers of said pieces of candy of uniform size and shape in the following manner: The majority of said pieces of candy of uniforn1 size and shape are of a certain color, but the minority of said pieces UNITED STATES CARAMEl, CO. 1007 1005 Complaint of candy are of a different color. The said pieces of candy of uniform size and shape in said assortment retail at the price of 1 cent each, but the purchaser who procures one of the said minority pieces of candy is entitled to receive, without additional charge, and is given, one of the licorice pops heretofore referred to. The color of the said pieces of candy of uniform size and shape is effectively concealed from the purchaser or prospective purchaser until a selection has been made and the wrapper removed therefrom. The aforesaid purchasers who procure one of the said minority pieces of candy of uniform size and shape in said assortment thus procur·e one of said licorice pops wholly by lot or chance.

PAn. 3. Retail dealer~:> who purchase respondents' candy, directly or indirectly, expose and sell the same to the purchasing public in accordance with the aforesaid sales plan. Respondents thus supply to and place in the hands of others the means of conducting lotteries: in the sale of their products in accordance with the sales plan hereinabove set forth. Said sales plan has a tendency and capacity to induce purchasers thereof to purchase respondents' candy in preference to candy and similar products offered for sale and sold by their competitors.

PAn. 4. The sale of sail.! cnnuy to the purchasing public in the lllanner above alleged involves a game of chance or the sale of a chance to procure an additional piece of candy. The use by rellpondents of said method in the sale of candy and the sale of candy by and through the use thereof and by the aid of said method is a Practice of the sort which the common law anJ criminal statutes have long deemed contrary to public policy and is contrary to an established public policy of the Government of the United States. 'I'.he use by respondents of said method has a tendency unduly to Iunder competition or to create a monopoly in this, to wit: That the l.l.se thereof has a tendency and capacity to exclude from the candytrade competitors who do not adopt and use the same method or ~~uivalent or similar methods involving the same or equivalent or snnilar elements of ciiance or lottery. Many persons, firms, and cor- Porations who make and sell candy or similar products in com- Petition with the respondents, as above alleged, are unwilling to offer for sale or to sell their products so packed and assembled as above alleged, or otherwise arranged anJ puckeJ for sale to the Purchasing public so ns to iuvoh·e a game of chance or any other tne~hod of sale that is contrary to public policy, ttnd such com- Petitors refrain therefrom.

PAR. 5. Many dealers in, and ultimate consumers of, candy are attracted by respondents' sa1J method and manner of packing sn.id 1008 FEDERAL TRADE COl\11\IISSION DECISIONS Findings 2GF.T. C.

candy and by the element of chance involved in the sale thereof in the manner above described, and are thereby induced to purchase said candy so packed and sold by respondents in preference to candy offered for sale and sold by said competitors of respondents who do not use the same or equivalent methods. The use of i!fiid method by respondents has a tendency and capacity, because of said game of chance, to divert to respondents trade and custom from their com· petitors who do not use the same or equivalent methods, to exclude from the candy trade all competitors who are unwilling to and who do not use the same or equivalent methods because the same are unlawful, to lessen competition in the candy trade, to tend to create a monopoly of said candy trade in respondents and in such other distributors of said candy as use the same or equivalent methods, and to deprive the purchasing public of the benefit of free competition. The use of said method by respondents has a capacity and tendency to eliminate from said candy trade all actual competitors and to exclude therefrom all potential competitors who do not adopt and use the same method or equivalent methods. PAR. 6. The aforementioned method, acts, and practices of respondents are all to the injury and prejudice of the public and of respondents' competitors, as hereinabove alleged. Said method, acts, and practices 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."

REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of an Act of Congress approved Sep· tember 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 February 14, 1938, issued, and there· after served, its complaint in this proceeding upon the respondents, \Villiam \V. Cummings, Arthur W. Lawton, and E\'erett Duck, in· dividually and trading as United States Caramel Company, charging them with the use o:f unfair methods of competition in commerce ill violation of the provisions o:f said act. After the issuance of said complaint and the filing o:f respondents' answer, the Commission, bY order entered herein, granted respondents' request :for permission to withdraw said answer and to substitute therefor a substitute answer admitting all the material allegations of the complaint to be true and waiving the taking o:f further evidence and all other intervening procedure, which substitute answer was duly filed in the office UNITED STATES CARAMEL CO. 1009 1005 Findings of the Commission. Thereafter, this proceeding regularly came on for final hearing before the Commission on the said complaint and the substitute answer, and the Commission having duly considered the matter and being now fully advised in the premises, finds that this proceeding is in the interest of the public and makes this its findings as to the facts and its conclusion drawn therefrom: FINDINGS AS TO THE FACTS r ARACRAPII 1. The respondents, 'Villiam ,V, Cummings, Arthur ,V, Lawton, and Everett Buck, are individuals trading as United States Caramel Company, with their principal office and place of business located at 150 Orleans Street, East Boston, :Mass. Respondents are now, and for some time last past have been, engaged in the manufacture of candy and in the sale and distribution thereof to dealers. Respondents cause and have caused their products when sold to be transported from their principal place of business in the city of East Doston, :Mass., to purchasers thereof in the State of Massachusetts and in various States of the United States and in the District of Columbia, at their respective places of business. There is now, and has been for some time last past, a course of trade and commerce by said respondents in such candy between and among the various States of the United States and in the District of Columbia. In the course and conduct of their business respondents are in competition with other firms, individuals, and corporations engaged in the sale and distribution of candy, in commerce between and among the various States of the United States and in the District of Columbia. PAn. 2. In the course and conduct of their business, as described in paragraph 1 hereof, respondents sell and have sold to dealers, in interstate commerce, certain assortments of candy so packed and assembled as to involve the use of a lottery scheme when distributed to the consumers thereof. One of said assortments is sold and distributed to the consuming public in the following manner: This assortment consists of a number of individually wrapped Pieces of candy of uniform size and shape, together with a number of licorice pops, which licorice pops are to be given as prizes to Purchasers of said pieces of candy of uniform size and shape in the f?llowing manner: The majority of said pieces of candy of uniform Size and shape are of a certain color, but the minority of said pieces ~f candy are of a different color. The said pieces of candy of uniform size and shape in said assortment retail at the price of one c~nt each, but the purchaser who procures one of the said minority pieces of candy is entitled to receive, without additional charge, and 18 given, one of the licorice pops heretofore referred to. The color Finllings 213 F. '1'. C. of the said pieces of candy of uniform size and shape is ('ffective1y concealed from the purchaser or prospective purchaser until a selection has been made and the wrapper removed therefrom. The aforesaid purchasers who procure one of the said minority pieces of candy of uniform size and shape in said m;sortment thus procure one of said licorice pops wholly by lot or chance. PAR. 3. Retail dealers who purchase respondents' candy, uirectJy or indirectly, expose and sell the same to the purchasing public in accordance with the aforesaid sales plan. Respondents thus supply to and place in the hands of others the means of conducting lotteries in the sale of their products in accordance with the sales plan hereinabove set forth. Said sales plan has a tendency and capacity to induce purchasers thereof to purchase respondents' candy iu preference to candy and similar products oflered for sale and sold by thrir competitors.

PAR. 4. The sale of said candy to the purchasing public in the manner above founu invoh·es a game of chance or the sale of a chance to procure an additional piece of candy. Thp use by respondents of said method in the sale of cnndy and the sale of candy by and through the use thereof and by the u.id of said method is a practice of the sort which the common Jaw and criminal statutes have long deemed contrary to public policy and is contrary to an established publit: policy of the Government of the United States. The use by respondents of said method has a tendency unduly to hinder competition or to create a monopoly in this, to wit: That the use thereof has 11 tendency and capacity to exclude from the candy trade competitors who do not adopt and use the same method or equivalent or similar methods involving the same or equivalent or similar elements of chance or lottery. Many persons, firms, and corporations who make and sell candy in competition with the respondents, as above described, are unwilling to offer for sale or to sell their products s(} packed and assembled, or otherwise arranged. an<l packed. for S!lle to the purchasing public so as to involve a game of chance or any other method of sale that is contrary to public policy, and such competitors refrain therefrom.

PAR. 5. Many dealers in, and ultimate consumers of, candy are attracted by respondents' said method and manner of packmg said candy and by the element of chance involved in the sale thereof in the manner above described, and are thereby induced to purchase said candy so packed and sold_ by re,;pondents in preference to candy offered for sale and sold by said competitors of respondents who do not use the same or equivalent methods. The use of said method by respondents has a tendency and capacity, b«:>cnHse of said garne UNITED STATES CAR.\l\IEL CO. 1011 1005 Order of chanre, to unfairly divert to respondents trade and custom from their competitors who do not use the same or pquivalent methods, to exclude from the candy trade all competitors who are unwilling to and who do not use the same or equivalent methods because the sam~ are unlawful, to lessen competition in the candy trade, to tend;to t'l'eate a monopoly of said candy trade in respondents and in such other distributors of said candy as use the same or equivalent methods, aud to deprive the pmchasing public of the benefit of free competition. The use of said method by respondents has a capacity and tendency to eliminate from said candy trade all actual competitors and to exclude thereft·om all potential competitors who do not adopt and use the same method or equivalent. methods. CONCLUSION The aforementioned method, ads and practices of respondents, William \V. Cummings, Arthur \V. Lawton, and Enrett lluck, individually aml trading as United States Caramel Company, are all to the injury and prejudice of the public and of rpspondents' competitors, as hereinabo,·e found, and constitute unfair methods of com- PPtition in commerce within the intent and meaning of Section 5 of an Act of Congress, apprond September 26, 1914, entitled "An Act to create a Fedpra] Trade Commission, to define its powers and duties, and for other purposes."

ORm:R TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and the substitute answer of respondents, 'Villiam ".,.· Cummings, Arthur \V. Lawton, and Everett lluck, individually and trading as United States Caramel Company, admitting all the material allegations of the complaint ~o be true and waiYing the taking of further evidence and all other 1l1tervening procedure, and the Commission having made its findings as to the facts and its conclusion that said respondents have violated the provisions of an Act of Congress approved September 26, 1914, ~ntitled ''An Act to create a Federal Trade Commission, to define lts powers and duties, and for other purposes." It~ ordered, That the respondents, \Yilliam ,Y. Cummings, Arthur \V. Lawton, and Everett Buck, individually and trading as United States Caramel Company, or under any other trade name, and their rt'spective agents, representation-s, or employees, in the offering for Sale, sale, and distribution in interstate commerce or in the District of Columbia of candy, do cease and desi~t from: Order 2GF.T.C.

1. Selling and distributing to dealers candy so packed and as· sembled that sales of such candy to the general public are to be made or may be made by means of a lottery, gaming device, or gift enterprise.

2. Supplying to or placing in the hands of dealers assortments of candy which are used or which may be used without alteration or rearrangement of the contents of such packages or assortments to conduct a lottery, gaming device, or gift enterprise in the sale and distribution of the candy contained in said assortments to the public.

3. Packing or assembling in the same assortment of candy for sale to the public at retail wrapped pieces of candy of uniform size and shape of different colors, together with licorice pops, or any other articles of merchandise, which said licorice pops or other articles of merchandise are to be given as prizes to the purchasers procuring pieces of candy of a particular color.

It is further ordel·ed, That the respondents shall, within 30 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. KORJENA MEDICINE CO. ET AL. 1013 Syllabus