New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1912-12-27
KELLOGCS SUED AS TRUST
Charged with Fixing Retail
Price of Corn Flakes.
carton AS A SUBTERFUGE'
Agreements with Jobbers Al
legged To Be in Restraint of
Interstate Commerce.

Detroit, Dec. 26.-The Kellogg Toasted
Corn Flake Company is alleged TO be vio-
lating the Sherman law I'm a petition
In equity filed in the United States Dis
trict Court here to-day by order OF At
torney General Wickersham, TO settle
for all time the extent to which a manu-
facturer may control retail prices. The
company and It's officers, engaged in
the manufacture OF toasted corn flakes,
are charged with fixing prices at which
the fakes are sold to retailer and con-
sumer, preventing competition which
would reduce the price to the public,
and creating a monopoly by concentrat-
ing the entire interstate 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 patented carton In which the flakes
are packed as a mere subterfuge and de-
vice" to escape the provisions OF the
Sherman law. The government asks Tor
injunctions to prevent the company, It's
officers and agents from controlling the
price OF the breakfast food after II
leaves the hands OF the manufacturers.
The following are named as Defendants
Kellogg Toasted Corn Flake Company.
and VIII X Kellogg Wilfred {. Kellogg
and Andrew Rose. respectively president.
secretary and general manager OF the
company, all OF Battle Creek, Mich
Case Of Vast Importance.
The petition. fled by United States At
torney Clyde !. Webster, was drawn py
James A. Fowler. special assistant 10 tne
Attorney General. and Is regarded by inc
government as OF vast importance De-
cause OF it's bearing on the right OF
manufacturer TO control prices TO the con-
sumer.
II is alleged that the company sells
only TO jobbers. refusing absolutely 10
deal directly with consumers or with the
retail trade. The commodity, according
to the petition. is sold 10 jobbers at
uniform price under an agreement that
the tobbers will sell TO retailers at 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 rails TO
maintain the specified price.
BY the use OF a patented carton the de-
PENDANTS are alleged TO control the price
at which retailers sell TO consumers. II Is
polnted out that a notice signed by the
Kellogg Corn Flake Company Is printed
on n flap OF the carton in which the
flakes are packed. stating that the pack
age and its contents are sold conditionalIy
with the distinct understanding that they
will not be retailed at less than 10 cents
a package For selling at less than that
price the vender is warned by the notice
that he is liable TO prosecution as an In
frinser OF patent rights.
Carton No Protection. |
The government insists that the
patented carton can afford no protection
I'm attempting to fix resale prices by re-
tailers because, It IL 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-
chaser; the defendants having SOLD the
cartons and contents TO tobbers nave |
parted with all title TO the commodities
and have no legal right to fix prices at
which the retail purchaser from the |
tobber shall be required 10 sell; and lastly
ITS use is resorted 10 as q mere suoter, |
fuge and device 10 avoid the provisions
Of the antitrust law and the principles or |
the common law controlling such con-
tracts.
The agreements eKacted from jobbers
and tho conditions OF sale imposed upon |
and accepted by the retailers, continues
the petition, restrain the interstate COM
merce in this breakfast food. In that they
preyent II from moving in interstate com
merce az prices other than those fixed by |
the defendant company. and prevent all
competition between dealers which can
affect its cost 10 the retailer or consumer.
They produce" Il is added, "a mo-
nopoly OF said interstate commerce. In
that they concentrate In the hands of
those who abide by the terms of said
agreements and conditions OF sale the en-
tire traffic In said article, and exclude
therefrom all dealers who refuse to enter
into or abide by said agreements and
conditions.
The result OF the suit. II the Govern
ment's allegations are proved, VIII deter
mine the legality OF the business methods
NJ many manufacturers who dictate the
nrice az which their product shall be
sold TO the public, according TO govern
ment officials.
The Department Of Justice has received
many complaints against manufacturing
concerns which control retail prices by
STIMULATING that the commodity they
Mace on the market shall be sold at
en.ciaed figure. The custom Is said 10
be widespread. The principle involved 10
regarded by the department as among
the most important questions ever dealt
with under tho Sherman law