Queen City Candy Co., Inc

Text (OCR of the scan at left; may contain errors)

IN THE MATI'ER OF QUEEN CITY CANDY COMPANY, INC.

Co:\IPLAINT, FINDINGS, AND ORDER D! REGARD TO THE ALLEGIW VIOLATIO~ OF SOC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 4220. Complaint, Aug. 6, 191,0-Decigion, Sept. 18, 19-W Where a corporation engaged itt manufacture of candy and in sale and distribution of certain assortments thereof which were so packed and assl'mbled us to Involve the use of a game of chance, gift entl'rprise, or lottery scheme when sold and distributed to consumers thereof, and which included (1) number of candy bars, together with push card for use in sale 1wd distribution thereof to purchasers under a plan by which persons pushing by chance certain numbers received bar without cost, and -others paid 1, 2, or 3 cents in accordance with number thus secured; and (2) various other similar assortments involving lottery or chance feature and varying only in detail from that described above- Sold such assortments to dealer and rl'tail· purchasers by whOin, as direct or indirect buyers, they were exposed and sold to purchasing publlc in accordance with aforesaid plans er methods, and thereby supplied to and plncPd in the hands of others means of conducting lotteries in sale and distribu· tion of candy in accordance with sales plans or methods above set forth, involving game of chance or sale of a chance to procure bar- of candy without cost or at price much less than normal retail price thereof, contrary to an established public policy of the United States Government and in violation of the criminal laws, and in competition with many who are unwilling to adopt and use said or any sales plans or methods involving game of chance or sale of a chance to win something by chance, or any other sales plans or methods contrary to public policy, and refrain therefrom; With result that many dealers in and ultimate consumers of said candy were attracted by such plans or methods employed by it In sale and distribution of its candy and element of chance involved therein, and were thereby induced to buy its said products in preference to candy oflered and sold by said competitors who do not use such or equivalent sales plans or methods, and with result, through use of such sales plans or methods and because of said game of chance, of unfairly diverting trade to it from its said competitors who do not use such plans or methods; to the substantial injury of competition in commerce:

Held, That such acts and practices, under the circumstnnces set forth, were all to the prejudice and injury of the public and competitors, and constituted unfair methods of competition in commerce and unfair and deceptive acts and practices therein.

Mr. D. 0. Daniel for the Commission.

COMPLAINT Pursuant to the provisions of the Feueral Trade Commission Act, and by virtue of the authority vested in it by saiu act, the Federal Trade Commission, having reason to believe that Queen City Candy QUEEN CITY CANDY CO., INC. 925 Complaint Co., Inc., a corporation, hereinafter referred to as respondent, has violated the provisions of said act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows:

PARAGRAPH 1. Respondent, Queen City Candy Co., Inc., is a corporation organized and doing business under the laws of the State of North Carolina, with its principal office and place of business located at 531 Bruns Avenue, Charlotte, N.C. Respondent is now, and for more than 1 year last past has been, engaged in the manufacture of candy and in the sale and distribution thereof to dealers. Respondent causes, and has caused, said candy, when sold, to be shipped or transported from its aforesaid place of business in the State of North Carolina to purchasers thereof in various other States of the United States at their respective points of location. There is now, and for more than 1 year ]ast past has been, a course of trade by said respondent in such candy, in commerce, between and among various States of the United States. In the course and conduct of its business, respondent is, and has been, in competition with other corporations and with individuals and partnerships f'ngaged in the sale and distribution of candy in commerce betwef'n and among various States of the United States.

PAR. 2. In the course and conduct of its business, as described in paragraph 1 hereof, respondent sells and has sold certain assortments of candy so packed and assembled as to involve the use of a game of chance, gift enterprise, or lottery scheme, when said candy i" sold and distributed to the consumers thereof. One of said assortments consists of a number of bars of candy together with a device commonly called a push card. Said bars of candy are distributed to the consumers thereof by means of said push card in substantially the following manner.

The push card contains a number of partially perforated disks, und on the face of each of said disks is printed the word "push." Within each of said disks is printed either the letter "o" or numbf'r 1, 2, or 3, and the persons pushing the disk containing the letter "o" each receive a bar of said candy without cost, and the persons pushing the disks containing either number 1, 2, or 3 pay in cents the amount appearing on the disks pushed. The said numbers printed within the said disks are effectively concealed from purcha;;ers and prospective purchasers until selections have been made and the disks separated or remond from said card. Whether a customer receins a bar of candy without cost or is require.d to pay Complaint 31 F. T. C. 1 cent, 2 cents, or 3 cents therefor is thus determined wholly by lot or chance.

The respondent manufactures, sells, and distributes various assortments of candy involving a lottery or chance feature, but such assortments and the methods of sale and distribution thereof are similar to the one herein described and vary only in detail. PAR. 3. Retail dealers who purchase respondent's said assortments of candy either directly or indirectly expose and sell the same to the purchasing public in accordance with the aforesaid sales plans or methods. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale and distribution of its candy in accordance with the sales plans or methods hereinabove set forth. The use by respondent of said sales plans or methods in the sale of its candy, and the sale of said candy by and through the use thereof, and by the aid of said sales plans or methods is a practice of the sort which is contrary to an established public policy of the Government of the United States and in violation of the criminalla ws.

PAR. 4. The sale of candy to the purchasing public in the manner above alleged involves a game of chance or the sale of a chance to procure a bar of candy without cost or at a price much less than the normal retail price thereof. Many persons, firms, and corporations who sell or distribute merchandise in competition with respondent, as above alleged, are unwilling to adopt and use said sales plans or methods of any sales plans or methods involving a game of chance or the sale of a chance to win something by chance or any other sales plans or methods that are contrary to public p<)licy, and such competitors refrain therefrom. Many dealers in, and ultimate consumers of, said candy are attracted by said sales plans or methods employed by respondent in the sale and distribution of its candy, and the element of chance involved therein, and are thereby induced to buy respondent's candy in preference to candy offered for sale and sold by said competitors of respondent who do not use the same or equivalent sales plans or methods. The use of said sales plan or methods by respondent because of said game of chance has a tendency and capacity to, and does, unfairly divert trade to respondent from its said competitors who do not use the same or equivalent sales plans or methods and as a result thereof substantial injury is being, and has been, done by respondent to competition in commerce between and among various States of the United States. PAR. 5. The aforesaid acts and practices of respondent, as herein alleged, are all to the prejudice and injury of the public and of respondent's competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in QUEEN CITY CANDY CO., INC. 927 Findings commerce within the intent and meanmg of the Federal Trade Commission Act.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, 1he Federal Trade Commission on August 6, 1940, issued and on August 7, 1940, served its complaint in this proceeding upon respondent, Queen City Candy Co., Inc., charging it with the use of unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce in violation of the provisions of said act. After the issuance of said complaint and the filing of respondent's answer, the Commission by order entered herein granted respondent's motion for permission to withdraw said answer and to substitute therefor an answer admitting all the material allegations of fact set forth in said complaint and waiving all intervening procedure and further hearing as to said facts, which substitute nnswer was duly filed in the office of the Commission. Thereafter this proceeding regularly cnme on for final hearing before the Commission on the said complaint and substitute answer, and the Commission having duly considered the matter and being now fully advised in the premises, finds that this proce~ding 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 FAOI'S PARAGRAPH 1. Respondent, Queen City Candy Co., Inc., is a corporation organized and doing business under the laws of the State of North Carolina, with its principal office and place of business located at 531 Druns Avenue, Charlotte, N.C. Respondent is now, and for more than 1 year last past has been, engaged in the manufacture of candy and in the sale and distribution thereof to dealers. Respondent causes, and has caused, said candy, when sold, to be shipped or transported from its aforesaid place of business in the State of North Carolina to purchasers thereof in various other States of the United States at their respective points of location. There is now, and for more than 1 year last past has been, a course of trade by said respondent in such candy, in commerce, between and among various States of the United States. In the course and conduct of its business, respondent is, and has been, in competition with other corporations and with individuals and partnerships engaged in the sale and distribution of candy in commerce between and among various States of the United States.

Findings 31 F. T. C. PAR. 2. In the course and conduct of its business, as described in paragraph 1 hereof, respondent sells and has sold certain assortments of candy so packed and assembled as to involve the use of a game of chance, gift enterprise or lottery scheme, when said candy is sold and distributed to the consumers thereof. One of said assortments consists of a number of bars of candy together with a device commonly called a push card. Said bars of candy are distributed to the consumers thereof by means of said push card in substantially the following manner:

The push card contains a number of partially perforated disks, and on the face of each of said disks is printed the word "push." 'Within each of said disks is printed either the letter "o", or number 1, 2, or 3, and the persons pushing the disks containing the letter "o" each receive a bar of said candy without cost, and the persons pushing the disks containing either number 1, 2, or 3 pay in cents the amount appearing on the disk pushed. The said numbers printed within the said disks are effectively concealed from purchasers and prospective purchasers until selections have been made and the disks separated or removed from said card. 'Vhether a customer receives a bar of candy without cost or is required to pay 1 cent, 2 cents, or 3 cents therefor is thus determined wholly by lot or chance. The respondent manufactures, sells and distributes various assortments of candy involving a lottery or chance feature, but such assortments and the methods of sale and distribution thereof are similar to the one herein described and vary only in detail. PAR. 3. Retail dealers who purchase respondent's said asso1tments of candy, either directly or indirectly, expose and sell the same to the purchasing public in accordance with the aforesaid sales plans or methods. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale and distribution of its candy in accordance with the sales plans or methods hereinabove set forth. The use by respondent of said sales plans or methods in the sale of its candy, and the sale of said candy by and through the use thereof, and by the aid of said sales plans or methods is a practice of the sort which is contrary to an established public policy of the Government of the United States and in violation of the criminal laws.

PAR. 4. The sale of candy to the purchasing public in the manner above described involves a game of chance or the sale of a chance to procure a bar of candy without cost or at a price much lt>ss than the normal retail price thereof. Many persons, firms, and corporations who sell or distribute merchandise in competition with respondent, as above described, are unwilling to adopt and use said sales QUEEN City CANDY CO., INC. 929 024 Order plans or methods or any sales plans or methods involving a game of chance or the sale of a chance to win something by chance or any other sales plans or methods that are contrary to public policy, and such competitors refrain therefrom. Many dealers in, and ultimate consumers of, said candy are attracted by said sales plans or methods employed by respondent in the sale and distribution of its candy, and the element of chance involved therein, and are thereby induced to buy respondent's candy in preference to candy offered for sale and sold by said compt>titors of respondent who do not use the same or equivalt>nt sales plans or methods. The use of said sales plans or methods by respondent because of said game of chance has a tendency and capacity to, and does, unfairly divert trade to respondent from its said competitors who do not use the lame or equivalent sales plans or methods and as a rt>sult thereof r::ubstantial injury is being, and has been, done by respondent to competition in commerce between and among various States of the United States.

CONCLUSION The aforesai<.l acts and practices of respondent, as herein found, are all to the prejudice and injury of the public and of respondent's eompetitors and constitute unfair methods of competition in commerce and unfair and de~eptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

ORDER 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 respondent, in which substitute answer respondent admits all the material allegations of fact set forth in said complaint and ~states that it waives all intervening procedure and further hearing as to said facts, and the Commission having made its findings as to the facts and conclusion that said respondent has violated the provisions of the Federal Trade Commission Act. It i.rJ ordered, That the respondent, Queen City Candy Co., Inc., n corporation, its officers, representatives, agents, and employees, directly or through any corporate or other device in connection with the offering for sale, sale, and distribution of candy or any other merchandise in commerce, as commerce is defined in the Fed- £1ral Trade Commission Act, do forthwith cease and desist from: 1. Selling or distributing candy or any other merchandise so packed nnd assemble1l that sales of said candy or otht>r merchandise are to be Order 31 F. T. C.

made, or may be made, by means of a lottery, gaming device, or gift enterprise.

2. Supplying to or placing in the hands of others assortments of candy or other merchandise together with push or pull cards, punchboards or other lottery devices, which said push or pull cards, punchboards or other lottery devices are to be used or may be used in selling or distributing said candy or any other merchandise to the public. 3. Supplying to or placing in the hands of others push or pull cards, punchboards or other lottery devices either with assortments of candy or other merchandise or separately, which said push or pull cards, punchboards or other lottery devices are to be used or may be used in selling or distributing such candy or other merchandise to the public.

4. Selling or otherwise distributing any merchandise by means of a game of chance, gift enterprise, or lottery scheme. It t~ further ordered, That the respondent shall within 60 days after service upon it of this order fil~ with the Commission a report in writing setting forth in detail the manner and fonn in which it has complied with this order.

HILL BROTHERS CO., E'l' AL. 931 Syllabus