The Barre daily times. (Barre, Vt.) 1897-1959, 1912-12-26
Government Sues Kellogg
Toasted Corn Flake
Concern
IMPORTANT ACTION
CENTERS AT DETROIT
Well-Known Concern Is Ac-
cused of Preventing
Competition

Detroit. Dec. 26.-The kellogg Toasted
Corn Flake company is alleged to DC
violating the Sherman law, in a petition
in equity. filed in the United States dis.
trct court here to-day by order of At.
torney General Wickersham to settle
for all time the extent to which a manu-
iacturer 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 flakes are sold to retailer and
consumer, preventing competition when
would reduce the price to the public, and
creating a monopoly by concentrating
the entire interstate traffic in this CONF
modify in the hands of jobers and retail
ers who abide by price agreements eS-
acted by the defendants.
1t is alleged that the defendants have
invoked the patent laws through the use
of a patented carton in which the flakes
are packed as 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
price of the breakfast food Otter it leaves
the hands of the manufacturer.
The following are named as defend
ants:
Kellogg Toasted Corn Flake company
and VIII X. Kellogg, Wilfred c. Kellogg
and Andrew Rose, respectively president,
secretary and general manager of the
company, all of Battle Creek, Mich.
The petition. filed by United States
Attorney Clyde /, Webster, was drawn
by James A. Fowler, special assistant to
the attorney general, and is regarded by
the government as of vast Importance
because of its bearing upon the right Of
q manufacturer to control prices to tile
consumer.
1t is alleged that the company sells
only to iobbers. refusing absolutely to
deal directly with consumers or with the
retail trade. The commodity, according
to the petition, il sold to jobbers at
uniform price under an agreement that
the jobbers viii sell to retailers at a
price fixed by the defendants. The de-
PENDANTS are charged with strictly en-
forcing the agreement Of sale by abso-
lutely refusing to deal with any iobbcr
who fails to maintain the specified price.
BY the use of patented carton, the
defendants are alleged to control the |
price at which retailers sell to consum-
ers. 1t is pointed out that notice |
signed by the Kellogg Corn Flake COM
pany is printed on flap of the carton
in which the fakes are packed, stating |
that the package and its contents are I
sold conditionally with the distinct un-
lerstanding that they will not be re-
tailed at less than ten cents per package.
For selling at less than that price, the
fendor is warned by the notice that he
: liable to prosecution as an infringer of
,atent rights.
The government insists that the pat
,nted carton can afford no protection in
attempting to fix resale prices by re-
alters because, it is alleged:
The carton was not in fact patented
Is all of its material features had long
,een in use before the patent was is-
'ued; the value of the carton is neglici-
lie, the contents alone being desired by
he purchaser; the defendants having cold
he cartons and contents to jobbers have
,arted with all title to the commodities
nd have no legal right to fix prices at
which the retail purchaser from the job
'er shall be required to sell; and lastly
its use il resorted to as mere subter-
uge and device to avoid the provisions |
y
# the common law controlling such
The agreements exacted from jobbers
nd the conditions of sale imposed upon
nd accepted by the retailers, continues
he petition, restrain the interstate COM
nerce in this breakfast food in that they /,
revent it from moving in interstate
ompany and prevent all competition be-
ween dealers which can affect its cost to
he retailer or consumer "They pro-
nee" it is added. IA monopoly OF said
commerce in that they eoncen- >
rate in the hands of those who abide {
Y the terms OF said agreements and y
OF ale the entire traffic in Q
aid article and cxclnde therefrom an /! Il
ebtors who refuse to enter into or abide I
y said agreement and conditions.