York Cone Co

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IN THE MATTER OF YORK CONE COMPANY COMPLAINT. l<"INDINHS, AND ORDER IN REGARD TO Tim .\ALLEGED VIOLATION OF SJ•:C. ~OF .-\N ACT OF CO:'\"GRESS .-\l'l'IWVED SEP'J'. 26, 1914 Docket 3S~J. Compla-int, Sept. 1.1, .1939-Decision, Feb. 11, 19!,1 Where a corporation engaged in manufacture of candy and in interstate sale and distribution of cet·tain assortments then•of, together with push cards, including its "Hy-Timer" assortment composed of number of sma.ll pieces of candy of uniform size and shape, together with larger bars or pieces and peanut butter sandwiches and 160-disk two-section push card for use in sale and distribution of said products under a plan, and in accordance with said card's explanatory legend, by which purchaser received, for penny paid, one of the small pieces or larger bar or peanut butter sandwich, in accordance with success or failure in securing one of lucky numbers set out in card's legend, and purchaser of last punch in each of said two sections received, without additional cost, tray of malted milk candy- Sold such assortments to wholesalers, jobbers, and retailers, by whom, as direct or indirect purchasers thereof, they were exposed and sold to purchasing public in accordance with aforesaid sales plan, under which fact as to whether purchaser received one of small pieces of uniform size and shape or larger bar, piece, or tray of candy, or peanut butter sanuwich, was determined wholly by lot or chance, and involving game of chance or sale of a chance whereby purchaser might procure bar·s, 11ieces or trays of candy or peanut butter sandwiches at price which was much less than normal retail price ther·eof, and thereby supplied to and placed in the hands of others means by which games of chance, gift enterprises, or lottery schemes were conducted, contrary to an est:ihli::;hed public policy of the llnited States Govemment and in viqlation of criminal laws, anl In competition with many who sell like and similar products between and among the various States, and who refrain from using any method irwolv!ng game of chance or contrary to public policy;

'With the result that use of such method by it, becnu,..e of ~aid game of chance, unfairly diverted trade in commerce to it from its said competitors who do not use same or equivalent methodi'!; to substantial injury of said competition in commerce :

Held, That such acts and practices, undet• the circumstances set forth, were all to the pr€'judice and injury of the public and competitors, and constituted unfair methods of competition in commerce and unfair and deceptive acts and practices ther€'in.

Defore Mr. Miles J. Furnas and .!llr. Randolph Preston, trial examiners.

Mr. Gerard A. Rault, Mr. D. 0. Daniel, and Mr. L. P. Allen, Jr., for the Commission.

YORK CONE CO. 745 744 Complaint C<>MPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said act, the Federal Trade Commission, having reason to believe that York Cone Co., a corporation, hereinafter referred to as respondent, has violated the provisions of said act, ancl it appearing to the Commission that a proceeding by it in respect thereof would be in the interest of the public, hereby issues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. Respondent, York Cone Co., is a corporation or- ~anized and doing business under the laws of the State of Pennsylvania, with its office and principal place of business located at 615-623 South Pine Street, in the city of York, Pa. Respondent is now and for some time last past has been engaged in the manufacture of candy and in the sale and distribution thereof to wholesale dealers, jobbers, and retail dealers located at points in the various States of the United States and in the District of Columbia. Re.spondent causes, and has caused, said products when sold to be transported from its principal place of business in the city of York, Pa., to purchasers thereof,· at their respective points of location, in the nrious other States of the United States and in the District of Columbia. There is now and has been for some time last past a course of trade by respondent in such candy in commerce between and among the various States of the United States and in the District of Columbia. In the course and conduct of said business respondent is, and has been, in competition with other corporations and with partnerships and individuals 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. PAR. 2. In the course and conduct of its business, as described in paragraph 1 hereof, respondent sells and has sold to wholesale dealers, jobbers ai1d retail dealers certain assortments of candy so packed and assembled as to involve the use of games of chance, gift enterprises, or lottery schemes when sold and distributed to the consumers thereof. One of said assortments is hereinafter described for the purpose of showing the method used by respondent, and is as follows: This assortment is composed of 42 bars of candy, together with a device commonly called n push care.l. The snitl push card has 40 partially perforated disks, on the face of which is printed the word "Push." Concealec.l within the said disks are numbers ranging from 1 to 5, inclusin. When the disks are pushed or separntPd from the Complaint 32F.T. C.

card a number is disclosed. Purchasers punching numbers 1, 2, 3, 4, and 5 pay 1, 2, 3, 4, and 5 cents, respectively. The card is also divided into two sections, and the purchaser making the last push in each section receives two of said bars of candy. The numbers are effectively concealed from purchasers and prospective purchasers until the disks nre pushed or separated from the card. The bars of candy are thus sold and distributed to the purchaaing and consuming public wholly by lot or chance.

The respondent fumishes, and has furnished, various push cards for use in the sale and distribution of its candy by means of a gaml' of chance, gift enterprise, or lottery scheme. Such cards are similar to the one herein described and vary only in detail. PAR. 3. Retail dealers who purchase respondent's said candy, directly or indirectly, expose and sell the same to the purchasing public in accordance with the sales plan aforesaid. Respondent thus supplies to and places in the hands of others the means. of conducting lotteries in the sale o£ its products in accordance with the sales plan hereinabove set forth. The u>"e by respondent o£ said sales plan or method in the sale of its candy and the sale of sai.d candy by and through the use thereof and by the aid of sai.d sales plan or method is a practice o£ a sort which is contrary to an established public policy of the Government o£ the United States and in violation o£ the criminal laws.

PAn. 4. The sale of candy; to the purchasing public by the method und plan hereinabove set forth invoh·es a game of chance or the sale of u chance to procure bars of candy at a price much less than the normal retail price thereof or additional bars of candy without additional cost. Many persons, firms, and corporations who sell and distribute candy in competition with respondent, as above alleged, are unwilling to adopt and use said method or any method involving a game of chance or the sale of a chance to win something by chance or any other method contrary to public policy and such competitors refrain therefrom. Many persons are attracted by said sales plan or method employed by respondent in the sale and distribution of its candy and in the element of chance involved therein and are thereby induced to buy and sell respondent's candy in preference to candy o£ said competitors of respondent who do not use the same or equivalent methods. The use of said method by respondent because of said gnme of chance has a tendency and capacity to, and does, unfairly divert trade in commerce between and among the various States of the United States and in the District of Columbia to respondent from its said competitors who do not use the same or YORK CONE CO. 747 7H Fin\Ungs equivalent methods, and as a result thereof substantial injury is being and has been done by respondent to competition in commerce between and among the various States of the United States and in the District of Columbia.

PAR. 5. The aforesaid acts and practices of respondent, as herein alleged, are all to the prejudice and injury of the public and o£ respondent's competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on the 13th day of S£'ptember 1939, issued its complaint in the above-entitled proceeding and caused same to be served upon the respondent, York Cone Co., a corporation, 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. On the 30th day of September 1939, the respondent filed its answer. After the issuance of said complaint and the filing of respondent's answer thereto, testimony and other evidence in support of the allegations of said complaint were introduced by Gerard A. Rault, D, C. Daniel, a.nd L. P. Allen, Jr., attorneys for the Commission, before l\files J. Furnas and Randolph Preston, examiners of the Commission theretofore duly designated by it, no evidence being offered by the respondent, and the said testimony and other evidence were duly recorded and filed in the office of the Commission. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint, the answer thereto, testimony and other evidence, briefs in support of the complaint and in opposition thereto, oral argument having been waived; and the Commission having duly considered tho3 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 Tile FACTS PARAGRAPH 1. Respondent, York Cone Co., is a corporation organized and doing business, under the laws of the State of Pennsylvania, with its office and principal place o£ business located at 615-623 South Pine Stre£'t, in the city of York, Pa. Respondent is now and for ~OMMISSION DECISIONS748 FEDERAL TRADE Findings 32 F.T.C. some time last past has been engaged in the manufacture of candy and in the sale and distribution thereof to wholesale dealers, jobbers, and retail dealers located at points in various States of the United States and in the District o£ Columbia. Respondent causes and bas caused said products, when sold, to be transported from its original place of business in the city o£ York, Pa., to purchasers thereof, at their respective points .of location, in various other States of the United States and in the District o£ Columbia. There is now and has been for some time last past a course of trade by respondent in such candy in commerce between and among Yarious States of the United States and in the District of Columbia. In the course and conduct of its said business respondent has been in competition with other corporations and with partnerships and individuals engaged in the sale and distribution o£ candy in commerce between and among various States of the United States and in the District of Columbia. PAR. 2. In the course and conduct o£ its business prior to March 20, 1939, the respondent sold to wholesale dealers, jobbers, and retail dealers various assortments o£ candy with a device commonly known as a push card inqluded therein. One of such assortments was known as "Hy-Timer" and consisted of a number of small pieces of candy of uniform size and shape, together with larger bars or pieces of candy and peanut butter sandwiches. .Accompanying this assortment was a push card containing 160 partially perforated disks with numbers concealed therein. At the top of this push card was a legend or. instructions setting forth Yarious numbers which entitled purchasers punching the same to receive one of the aforesaid bars or pieces of candy or one of the peanut butter sandwiches. Purchasers not pushing one of the lucky numbers set-out in the legend received one of the aforesaid smaller pieces of candy of uniform size and shape. The numbers within the discs were conrenled from purchasers until a selection had been made and the disc pushed or separated from the board. Sales were 1 cent each and the purchasers punching one of the numbers set out in the legend calling for a larger bar or piece of candy or a peanut butter sandwich received the same. for the price of 1 cent. The push card was also divided into two sections nnd the purchaser of the last punch in each of these sections received without additional cost a tray of malted milk candy. The larger bars. pieces. or trays of candy and the peanut butter sandwiches above mentioned are of a greater value than the smaller piecl's of candy of uniform size and shape. The fact as to whether a purcha~er received one of the small pieces of candy of uniform size nnd shape or a lar~et· bar, YORK CONE CO. 749 744 Conclusion piece, or tray of candy or a peanut butter sandwich was thus determined wholly by lot or chance.

PAR. 3. The Commission finds that the respondent sold various assortments of candy along with push cards to wholesale dealers, jobbers, and retail dealers and that retail dealers who, either directly or indirectly, purchased such assortments sold the same to the purchasing public in accordance with the sales plan described in paragraph 2 hereof. The Commission further finds that the respondent, by furnishing candy and push cards as above described thereby supplied to and placed in the hands of others the means by which games of chance, gift enterprises, or lottery schemes were conducted. The Commission further finds that the use by respondent of such a method m the sale and distribution of its candy and the distribution of candy by and through the use thereof and by the aid of such a method is a prattice of a sort which is contrary to an established public policy of the Government of the United States and in violation of criminal Jaws.

PAR. 4. The Commission further finds that the sale of candy to the consuming public by the method above. described involves a game. of chance or the sale of a chance whereby the purchaser thereof may procure bars, pieces or trays of candy or peanut butter sandwiches at a price which is much less than the normal retail price thereof; that many persons, firms, and corporations sell candy in commerce between and among various States of the United States and in the District of Columbia like and similar to that sold by respondent and such competitors refrain from using any method involving a game of chance or any method contrary to public policy; that the use of said method by respondent, because of said game of chance, has a tendency and capacity to and does unfairly divert trade in commerce between and among various States of the United States and in the District of Columbia to respondent from its said competitors who do not use the same or equivalent 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 and in the District of Columbia.

CONCLUSION The aforesaid acts and practices of the respondent, as herein found, 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 dect>ptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. 322695m-41-VOL,32-48 Order 32F. 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, testimony, and other evidence taken before 1\Iiles J. Furnas and Randolph Preston, examiners of the Commission theretofore duly designated by it, in support of the allegations of said complaint, no evidence being offered by the respondent, briefs filed herein, oral argument having been waived, and the Commission having made its findings as to the facts and its conclusion that said respondent· has violated the provisions of the Federal Trade Commission Act. It is ordered, That the respondent, York Cone Co., its officers, representatives, agents, and employees, dir~ctly or through any corporate or other device, in connection with the oflering for sale, sale, and distribution of candy or any other merchandise in commerct>, as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from :

1. Supplying to or placing in the hands of others candy or any 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 such candy or other merchandise to the public. 2. Supplying to or placing in the hands of others pu~h 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.

3. Selling or otherwise disposing o£ any merchandise by means of a g~me of chance, gift enterprise, or lottery scheme. It is further ordered, That the respondent shall, within 60 days after service upon it 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 this order.

MIDDLE WEST SUPPLY CO., ETC. 751 Syllabus