Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1912-12-27
THE CEREAL TRUST
kellogg Corn Flake Co. Vio-
Iates Antitrust Law,
Says Petition in Equity Filed al
Detroit FIXED The Prices.
Alleged Deal Only with Jobbers Re-
fused to Sell Directly TO Retailers.

IuSeu 10 sell uifeCtIy 10 neIatefSs
Detroit. Dec. 26.-The Kellogg
Toasted Corn Flake co. is alleged
to be violating the Sherman Law,
in 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 a manufacturer may
control retail prices. The company
and it's officers engaged in the manu-
facture of Kellogg's toasted corn
flakes, are charged with fixing prices
at which the flakes are sold to re-
taller and consumer. preventing com
petition which would reduce the price
to the public, and creating a monop-
oily by concentrating the entire inter
state traffic in this commodity in the
hands of jobbers and retailers who
abide by price agreements exacted by
the defendants. 1t is alleged that
the defendants have invoked the
patent laws through the use of i
patented carton in which the flakes
are packed as mere subterfuge
and device" to escape the provisions
of the Sherman law. The govern
ment asks for injunetions to prevent
the company, its officers and agents
from controlling the price of the
breakfast food after il leaves the
hands of the manufacturer.
The following are named as de-
PENDANTS:
Kellogg Toasted Corn Flake Com
pany, and viii X. Kellogg, Wilfred c.
Kellogg and Andrew Rose, respective
ly president, secretary and general
manager of the company, all of Battle
Greek, Mich.
The petition, filed by United States
| Attorney Clyde l. Webster was drawn
| by James A. Fowler. special assistant
to the Attorney General, and is re-
garded by the government as of vast
| Importance because of its hearing
upon the right of a manufacturer to
control prices to the consumer.
1t is alleged that the company sells
only to jobbers refusing absolutely
to deal directly with consumers or
with the retail trade. The COM
modify, according to the petition, is
sold to jobbers at a uniform price I'M
der an agreement that the jobbers
will sell to retailers at a price fixed
/ 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
consumers. 1t is pointed out that a
notice signed by the Kellogg Corn
Flake Co. is printed on flap of
| the carton in which the flakes are
packed, stating that the package and
| its contents are sold conditionally
with the distinct understanding that
they will not be retailed at less than
| ten cents per package. For selling
at less than that price, the vendor is
| warned by the notice that he is liable
to prosecution as an infrnger of pa
tent rights.
The government insists that the pa
tented carton can afford no protection
in attempting to fix resale prices by
retailers because it is alleged
The carton was not in fact patent
able as all of its material features
| had long been in use before the pa
tent was issued; the value of the ear
| ton is negligible, the contents alone
being desired by the purchaser: 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
jobber shall be required to sell; and
| lastly its use is resorted to as mere
| subterfuge and device to avoid the
provisions of the anti trust law and
| the principles of the common law
controlling such contracts.
The agreements. eXacted from job
bers and the conditions of sale i'm
posed upon and accepted by the re-
tailers, continues the petition. re-
strain the interstate commerce in this
breakfast food in that they prevent il
from moving in interstate commerce
at prices other than those fixed by
the defendant company and prevent
all competition between dealers which
can affect it's cost to the retailer or
consumer. They produce" it is
added, "a monopoly of said interstate
commerce in that they concentrate in
the hands of those who abide by the
terms OF said agreements and condi-
tions of sale the entire traffic in said
article and exclude therefrom all
dealers who refuse to enter into or
abide by said agree ments and condi-
TONS