Evening star. [volume] (Washington, D.C.) 1854-1972, 1912-12-26
''CornfIake Trust" Defendant
in Government Action.
PRICE FIXING is CHARGED
Exactions Placed on Jobbers and Re-
tailers, Complaint States.
PATENT STATUTES ARE USED
Special Carton for Products Held
Mere Subterfuge and Device"
to Evade Sherman Law.

DETROIT. December o6-The Kellogg
Toasted Corn Flake Company is alleged
10 be violating the Sherman law. in a
petition in equity filed in the United
States district court here today by order
Of Attorney General Wickersham to settle
for all time the extent to which manu-
facturer MAY control retail prices.
The company and its officers, engaged
in the manufacture of kellogg's toasted
corn flakes. are charged with fixing prices
at which the fakes are sold to retailer
and consumer. preventing competition
which would reduce the price to the pub
lie. and creating monopoly by concen-
trating the entire interstate traffic in this
commodity in the hands of jobbers and
retailers who abide by price agreements
cNacted by the defendants.
Patent Laws Used.
1t is alleged that the defendants have
invoked the patent laws through the use
"f "a patented carton in which the flakes
are packed as a mere subterfuge and
device to escape the provisions of the
sherman law. The government asks for
injunctions to prevent the company, its
officers and agents from controlling the
l.rice of the breakfast food after ii leaves
,he hands of the manufacturer.
The following are named as defendants:
kellogg Toasted Corn Flake Company,
and Will X. Kellogg, Wiifred c. Kellogg
and Andrew Rose. respectively president,
$ecretary and general manager OF the
company. all of Battle Greek. Mich.
The petition. filed by United States At
torney CLYDE L. Webster was drawn by
James A. Fowler. special assistant to the
Attorney General and is regarded by the
government as of vast Importance. be-
,-4use of its bearing upon the right OF
manufacturer to control prices TO the
tcnsumer.
Charges Governing Sales.
II is alleged that the company sells
only to jobbers, refusing absolutely to
zeal directly with consumers or with the
retail trade. The commodity, according
10 the petition, is sold to jobbers at a
uniform price under an agreement that
the jobbers will sell to retailers at a price
liked by the defendants. The defendants
are charged with strictly enforcing the
agreement of sale by absolutely refusing
TO deal with any jobber who fails to
maintain the specified price.
By the use of a patented carton, the
defendants are alleged to control the
price at which retailers sell to con-
sumers. 1t Is pointed out that a notice
signed by the Kellogg Corn Flake Com
pany Is printed on a flap of the carton
in which the flakes are packed, stating
that the package and it's contents are
sold conditionally with the distinct un-
derstanding that they will not be retailed
at less than 10 cents per package. For
selling at less than that price, the vender
is warned by the notice that he is liable
10 prosecution as an infringer of patent
nights.
Plea of Government.
The government insists that the patent
ed carton can afford no protection in
attempting to fix resale prices by re-
tai,ers because, it is alleged:
The carton was not in fact patentable
been in use before the patent was issued:
the value of the carton is negligible. the
contents alone being desired by the pur-
ehaser: the defendants having sold the
cartons and contents to jobbers have
parted with all title to the commodities
and have no legal right to fix prices at
which the retail purchaser from the job
her shall be required to sell; and lastly
Its use is resorted to as mere sub
trrfuge and device to avoid the pro-
Visions" OF the antitrust law and the
principles of the common law controlling
such contracts.
Commerce Restrained.
The agreements exacted from jobbers
and the conditions of sales imposed upon
and accepted by the retailers, continues
the petition. restrain interstate commerce
IN this breakfast food. in that they pre-
vent 1t from moving in Interstate COM
mcrce at prices other than those fixed by
Il ne defendant company and pra,-apt oil