Premier Cone Baking Co

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IN THE MA Tler OF THE PREMIER CONE DAKING CO.

COJIIPLAINT, FI:\'DINGS, AND ORDER 1:\' REGARD TO THE ALLEGED VIOLATION OF SEC. 5 0~' AN ACT OF CONGRESS APPIWYED SEPT. 20, 1914 Docket 4941. Complaint, Apr. 19, 1943-Decision, June 24, 1943 Where a corporation, engaged in the manufacture and competitive interstate sale and distribution of boxes of ice-cream cones, a small number of which in each box: were molded to show a star, for use by retailer1·s and other icecream sellers in distribution of Ice cream to their customers, under a plan involving use of a lottery scheme or game of chance, by which consume1·s who secured by chance one of said star-bearing cones received without further charge an additional cone;

Sold, along with display sheets depicting chlld, adult, and ice cream cones and bearing legend "Look, Mom! Lucky Star Gets You Another FREE," su<'h assortments to wholesalers, jobbers, and fee-cream mnnufactm·ers by whom they were resold to retailers and employed as aforesaid in the sale of cones ot ice cream to purchasing public; and thereby Supplied to and placed in hands of the latter, means of condnctlng lotteries in the sale ot It~:~ products and ice cream, in accordance with said plan Involving sale ot a chance to p1·ocure a tree aduitionul ice-ct·eam cone, contrary to an established public policy of the United States Govemment and In competition with many who do not use any method contrary to public policy; With result that many dealers null ultimate put·chasers were attracted by said sales plan and the element of chance involved therein, and were induced to buy and sell its merchan<llse In preference to that sold by aforesaid competitors; and with tendency and capacity unfairly to dfvet·t trade in commerce to it from them:

licltl, That such nets and pmctices, under the circumstancf's set forth, were all to tbe prejudice and injury ot the rmbllc and comrwtltot·s, and constituted unfair methods ot competition In commerce and unfair acts nnd practices therein.

JI r. J .lV. Brookfield, Jr., fo! the Commission. Complaint Pursuant to the provisions of the Federal Trade Commission Act, and hy virtue of the authority vested in it by said act, the F£'deral Trade Commission, hr.ving reason to believe that the Premi£'r Cone llaking Co., a. corporation, hereinafter refenwl'to as respondent, has violated the provisions of the said net, and it appearing to the Commission that a proct'£'using by it in respect thert'of would hi' in the inter£'st of the public, hereby issues its complaint stating its charges in that res1wct as follows:

PARAGRAPH 1. Respondent, the Premier Cone Daking Co., is a corporation, organized and operating under and by virtue of the laws of THE PREMIER CONE BAKING CO. 951 9GO Complaint the Stat~ of Ohio, with its principal office and pli1ee of business located at 2345 Florence Avenue, Cincinnati, Ohio. Respondent is now, and for some time last past has been, engaged in the manufacture of icecream cones and in the sale and distribution thereof to dealers, jobbers, and ice-cream manufacturers in commerce between and among the Various States of the United States and in the District of Columbia. 1~respondent causes and has caused said ice-cream cones, when sold, to be transported from its aforesaid place of business in Cincinnati, Ohio, to purchasers thereof at their respective points of location in the various States of the United States other than the State of Ohio and in the District of Columbia. There is now and has been for some time last Past a course of trade by respondent in said ice-cream cones in comlllerce between and among the various States of the United States and in the District of Columbia.

In the courso3 and conduct of its said business respondent is now and has been in competition with other corporations and with individuals and firms engaged in the sale and distribution of ice-cream cones in commHce betweer~ and among the various States of the United States and in the District of Columbia.

PAR. 2. In the cour~e and conduct of its business as described in paragraph 1 hereof respondent manufactures and sells, and has manufactured and sold and distributed to ice-cream manufacturers and dealers ~certain of its ice-cream cones so molded, packed, and assembled as to 111Volve the use of a lottery scheme or game of chance, when used by t·etail dealers to distribute ice cream to the purchasing and consuming l)lJblic.

nespomlent's mC>thod of molding, packing, and assembling its ice- ~learn cones is ns follows: In each box of cones packed and assembled Y t·respondent there nre a smuU number which are molded to show a Eitar; the remainder of the cones in the box are plain. Its cones are- Sold to jobbers for resale to retailers of ice cream or are sold to retailers. '''ho distribut~ ice cream to the consuming public. Uetail dealers and Others who sell ice cream to the consuming public use the respondent's cones to distribute the cones and ice cream to their customers by chance 01'lott('ry in th~~ following manner:

.A. customer who purchases one of the cones bearing the star is :warded another cone of ice cream without additional charge. Cus- Otners who receive one of the plain cones receive only the cone for "'which they pay. The consuming purchaser is unable to dC>terminc ~whether the icc-crenm cone which he purchases bears the star until e PUrchase has been made, and thus whether the purchaser of ico ~~'earn packed in one of respondent's cones will recei re an adclitionn] 1CI!-cream cone without additional charge is determined wholly by lot. or chance.

952 FEtDE'RAL TRADIE COMMISS:I:QN DE·CLS[Joins Complaint 36F.T.C.

Respondent supplies to the dealer selling its cones a display sheet bearing the following legend :

(Depicting child, adult and ice cream cones.) LOOK, MOl\!! LUCKY STAR Get You Another FREE I Respondent has manufactured, packed, and assembled other icecream cones to be used in the distribution of ice cream by lottery or games of chance which vary in detail, but are the same in principle as those above-described.

PAR. 3. The wholesale dealers and jobbers and ice-cream manufacturers to whom respondent sells the above-described ice-cream cones resell said cones as packed by respondent to retail dealers, and said retail dealers sell and distribute cones to the purchasing public in accordance with the aforesaid sales plan. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of its products and ice cream in acconlance with the sales plan hereinabove set forth. The us,, by respondent of said sales plan or method in the sale and distribution of its mercha1\disc and the sale of said merchandif'e by and through the use thereof and by the aid of said sales plan or method and practice is c•)ntrary to an established public policy of the Government of the United States. PAR. 4. The sale of said ice-cream cones to the purchasing public in the manner above alleged involves a game of chance or the sale of a chance to procure an additional ice-cream cone free. :Many individuals, firms, and corporations ·who manufacture, sell, and distribute ice-cream cones in competition with the respondent as above alleged do not use said sales plan or method or any sales plan or method involving a game of clumce or the sale of 11 chance to win something by chance or any other sales plan or method that is contrary to public policy. 1\Iany dealers and ultimate purchasers of ice-cream cones are attracted Ly respondent's said method and sales plan and by the element of chance involved therein, and have bt>en and are inuuced to buy and sell responuent's merchancli!->e in preference to merchandise offered for sale and sold by said competitors of respondent who do not use the same or equivalent sales plans or nwthods. The use of said plan or method Ly respondent, because of said game of chance, has 11 tendency and capacity unfairly to divert trade in commerce between and amo1~g the various States of the United States and in the District of Colmnb!ll to respondent from its said competitors who do not use the 'same or equivalent sales plans or methods.

PAR. 5. The aforesaid acts and practices of respondent as herein· above alleged are all to the prejudice and injury of the public an? of respondent's competitors and constitute unfair methods of compctl· THE PREMIER CONE BAKIN"G CO. 953 9::10 Findings tion in commerce and unfair 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 April 19, 19:1.3, issued and subsequently served its complaint in this proceeding upon respondent, the Premier Cone Daking Co., a corporation, charging it with the use of unfair methods of competition and unfair acts and practices in commerce in violation of the provisions of said act. On :May 14, 1943, respondent filed its 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. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint and the answer thereto; 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 tp the facts and its conclusion drawn therefrom.

FINDINGS .\8 TO Tile FACTS PARAGRAPH 1. Respondent, the Premier Cone Daking Co., is a corporation, organized and operating under and by virtue of the laws of the State of Ohio, with its principal office and place of business located at 2345 Florence Avenue, Cincinnati, Ohio. Respondent is now, ~nd for some time last. past has been, engaged in the manufacture of lee cream cones and in the sale and distribution thereof to dealers, jobbers, and ice-cream manufacturers. Respondent causes said prod- Uct, when sold, to be transported from its aforesaid place of business in Cincinnati, Ohio, to purchasers thereof at their respective points of location in the various States of the United States other than the State of Ohio and in the District of Columbia. There is now, and has ?een for some time last past, a course of trade by respondent in said lee-cream cones in commerce between and among the various States of the United States and in the District of Columbia. In the course and conduct of its said business respondent is now, and has been ' in competition with other corporations and with individuals. and firms engaged in the sale and distribution of ice-cream cones m commerce between and among'.., the various States of the United States ant} in the District of Columbia.

PAn. 2. In the course and conduct of its business as described in }!nragraph 1 hereof, respondent manufactures and sells, and has man- . llfach~red a~u sold nnu distributed, to ice-cream manufacturers and fi2S713--43--vo!.36----63 954 FEDERAL 'I'RIADE CO:MMJSSTON DECLSILOiNS Findings 3GF.T.C.

dealers certain of its ice-cream cones so molded, packed, and assembled as to involve the use of a lottery scheme or game of chance when used by retail dealers to distribute ice cream to the purchasing and consuming public.

Respondent's method of molding, packing, and assembling its icecream cones is as follows: In each box of cones packed and assembled by respondent there are a small number which are molded to show a star; the remainder of the cones in the box are plain. Its cones are sold to jobbers for resale to retailers of ice cream or are sold to retailers who distribute ice cream to the consuming public. Retail dealers and others who sell ice cream to the consuming public use the respondent's cones to distribute the cones and ice cream to their customers by chance or lottery in the following manner:

A customer who purchases one of the cones bearing the star is awarded another cone of ice cream without additional charge. Customers who receive one of the plain cones rec·eive only the cone for which they pay. The consuming purchaser is unable to determine whether the ice-cream cone which he purchases bears the star until tho purchase has been made, and thus whether the purchaser of ice cream packed in one of respondent's cones will receive an additional ice-cream cone without additional charge is determined wholly by lot or chance.

Respondent supplies to the dealer scmng its cones a display sheet bearing the following legend:

(Depleting child, adult, and Ice cream coneH) I,ook, 1\lom! Lucky Stur, Get You Anotlwr FTIEI~! Respondent has manufactured, packed, and assembled other icecream cones to be used in the distribution of ice creain by lottery or games of chance which vary in detail but nre the same in principle as those above described.

PAn. 3. The wholesale dealers and jobbers and ice-cream manufacturers to whom respondent sells the above-described ice-cream cones resell said cones ns packed by rpspondent to rclail dealers, and said retail dealers sell nnd distribute cones to the purchasing public in ncconlance with the aforesaid sales plan. Respondent thus supplies to and places in the hands of others the mrnns of conducting lottrries in the sale of its products and ice cream in accordance with the sales plan hereinabove set forth. The use by n'spondent of saia sales plan or method in the sale and distribution of its merchandise and the sale of said merchandise by awl through the use· tlwreof and by the aid of said sales plan or nwthotl and practice is contrary to an estal.J· lished public policy of the Gonrnment of the United Stqtes. THE PREMIER CONE BAKING CO. 955 950 Order PAn. 4. The sale of said ice-cream cones to the purchasing public in the lnanner above found involves a game of chance or the sale of a chance to procure an additional ice-cream cone free. Many individuals, firms, and corporations who manufacture, sell, and distribute icecream cones in competition with the respondent, as above found, do not use said sales plan or method, or any sales or method involving a game of chance or the sale of a chance to win something by chance, or any other sales plan or method that is contrary to public policy. M:any dealers and ultimate purchasers of ice-cream cones are attracted by respondent's said method and sales plan and by the element of chance involved therein, and have been, and are, induced to buy and sell respondent's merchandise in preference to merchandise 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 plan or method by respondent, because of said game of chance, has a tendency and capacity unfairly to divert trade in commerce between and among the v-arious 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 sales plans or methods.

CONCLUSION 'lhe aforesaid acts and practices of respondent as hereinabove found llle all to the prejudice and injury of the public and of respondent's competitors and constitute unfair methods of competition in commerce ?nd unfair acts and practices in commerce within the intent and mean- Ing of the Federal Trade Commission Act.

Onder TO CEASE AND DESIST . This proceeding having been heard by the Federal Trade Commis- Sion on the complaint of the Commission and the answer of the respondent, in which answer respondent admits all the material allegations of fact set forth in said complaint, and states that it waives all inter- Ve_ning procedure and further hearings as to said facts, and the C~m­ lllission having made its findings as to the facts and its conclusion that said respondent has violated the provisions of the Federal Tru<le Cotnmission Act.

It is ordered, That the respondent, the Premier Cone Daking Co., a <'Ot·poration, 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 ice-cream cones or other merchandise in commerce, as "commerce" is defined in the Federal 'trade Commission Act, do forthwith cease and desist from: COM~lls:SIIO'N DE,CIS[Oils 956 FE1DERAL 'IRJADE Order 36 F. T. C.

1. Selling or distributing ice-cream cones so molded, packed, or assembled that sales to the general public of ice cream or other· mer· chandise, when packed in said ice-cream cones, are to be made or, due to the manner in which said ice-cream cones are molded, packed, or assembled at the time they are sold by respondent, may be made, by means of a game of chance, gift enterprise, or lottery scheme. 2. Supplying to or placing in the hands of others ice-cream cones, some of which are molded with a star or other means of identification, together with a sales plan whereby such cones are to be used, or may be used, in distributing extra cones or containers of ice cream or other merchandise by lot or chance.

3. Selling or otherwise disposing of any merchandise by means of a game of chance, gift enterprise, or lottery scheme. It isfurther' order('(l, That the respondent, the Premier Cone Baking Co., a corporation, shall, within CO days after service upon it of this order, file with the Commission n. report in writing setting forth in detail the manner and form in which it has complied with this order to cease and desist.

SCREEN BROADCAST CORPO'RArriON, ET AL. 957 Syllabus