Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1912-12-26
Federal Officials Ask Dis
solution of Alleged KeI-
logg Combine.
AIR-TIGHT AGREEM ENTS
Claimed Prices Are Fixed and
Territory Controlled, Vio-
lating Sherman Law.

Detroit, Dec. &c. - The Kellogg
Toasted Corn Flake company is alleg-
ed to be violating the Sherman law. in
petition in equity, filed in the United
States district court here today by or
der of Attorney General Wickersham
to settle for all time the extent TO
which manufacturer may control re-
tail prices. The company and its Of
flcers engaged in the manufacture of
kellogg's toasted corn flakes, are
charged with fixing prices at which
the flakes are sold to retailer and con-
sumer, preventing competition which
would reduce the price to the public,
and creating monopoly by concen-
trating the entire interstate traffic in
this commodity in the hands of Job
bers 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 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 10 prevent the
company. its officers and agents from
controlling the price of the breakfast
food after it leaves the hands of the
manufacturer.
NAMED AS DEFENDANTS.
The following are named as defend
ants:
Kellogg Toasted Corn Flake COM
pany and Will X. Kellogg, Wilfred c.
Kellogg and Andrew Rose, respective
ly president, secretary and general
manager of the company, all of Battle
Creek, 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 regard
ed by the government as of vast i'm
portance because of it's bearing upon
the right of manufacturers 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 commodity, ac-
ccrding to the petition, is sold to job
bers at a uniform price under an
agreement that the jobbers will sell
to retailers at price fixed by the de-
PENDANTS. The defendants are charged
with strictly enforcing the agreement
OF sale by absolutely refusing to deal
with any iobber who fails to maintain
the specified price.
SOLD CONDITIONALLY.
BY the use of patented carton, the
defendants are alleged to control the
price at which retailers sell to con-
sumers. 1t is pointed out that notice
signed by the Kellogg Corn Flake COM
pany is printed on flap of the car
ton in which the flakes are packed,
stating that the package and it's con.
tents are sold conditionally with the
distinct understanding that they will
not be retailed at less than 10 cents
per package. For selling at less than
that price, the vendor Is warned by
the notice that he is liable to prosecu-
ton as an infringer of patent rights.
d. The government insists that the pat
ented carton can afford no protection
in attempting to fix resale prices by
The carton was not in fact patent
able as all of it's material features had
long been in use before the patent was
issued; the value of the carton is neg
ligible, the contents alone being de-
sired by the purchaser; the defend
ants having sold the cartons and con-
tents 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 Tesorted TO as a mere subterfuge
and device to avoid the provisions" of
the antitrust law and the principles
OF the common law controlling such
contracts.
ALI COMPETITION DESTROYED.
The agreements, exacted from job
bers and the conditions of sale impos-
, ed upon and accepted by the retailers.
continues the petition, restrain the in
terstate commerce In this breakfast
food in that they prevent it from NOV
ing in interstate commerce at prices
other than those fixed by the defend
ant company and prevent all competi-
tion between dealers which can affect
it's cost 10 the retailer or consumer.
They produce" it is added, "a monop-
oily of said interstate commerce m
4 that they concentrate in the hands OF
4 tlose who abide by the terms of said
: agreements and conditions of ss6e the
D entire traffic in said article and ex-
n clude therefrom all dealers who refuse
Y to enter into or abide by said agree.
J, ments and conditions"