Atlanta semi-weekly journal. (Atlanta, Ga.) 1898-1920, 1912-12-27
GOVERNMENT FILES SUIT
AGAINST KELLOGG CO.
Monopoly in Toasted Corn
Flakes and Control of
Prices Alleged
tBy Associated Press.l

DETROIT. Dec. 26.-The kellogg
Toasted Corn Flake company is alleged
to be violating the Sherman law, in
petition in equity, fled in the United
States district court here today by
order of Attorney General Wickersham
to settle for all time the extent to
which manufacturer may control re-
tail prices. The company and its
officers. engaged in the manufacture of
KelIogg's toasted corn fakes, are
charged with fixing prices at which the
fakes are sold TO retailer and consumer,
preventing competition. which would re-
duce the price TO the public, and Great
ing a monopoly by concentrating the en-
tire 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 a patented car
ton. in which the flakes are packed as
"a mere subterfuge and device" to
escape the provisions of the Sherman
law. The government asks for injunc-
items to prevent the company. its officers
and Agents from controlling the price OF
the breakfast food after 1t leaves the
hands OF the manufacturer.
The following are named as defend
ants:
kellogg Toasted Corn Flake company.
and win k kellogg, Wilfred c. KEEL
logg and Andrew Rose, respectively
president secretary and general man
ager 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
tn the attorney general and is regarded
by the government as of vast irnpor-
lance because of its bearing upon the
right of manufacturer to control
prices 20 the consumer.
Ii is alleged that the company sells
only to jobbers. refusing absolutely TO
deal directly with consumers or with
the retail trade. The commodity, &C
cording to the petition, is sold to job
bers at a uniform price under an agree
ment that the jobbers will sell to re-
tailers at price fixed by the defend
ants. The defendants are charged with
strictly enforcing the agreement of sale
BY absolutely refusing to deal with any
jobber who fails to maintain the speci-
ned price.
BY the use of a patented carton, the
defendants are alleged to control the
price at which retailers sell TO consum-
ers. II is pointed out that a notice
signed by the kellogg Corn Flake COM
pany is printed on a flap of the car
ton in which the fakes are packed, stat
ing that the package and its contents
are sold conditionally with the distinct
understanding that they will not be re-
tailed at less than 10 cents per package
Caught selling at less than that price
the vendor is warned by the notice that
he is liable to prosecution as an in
fringer of patent rights.
Tho government insists that the pat
ented carton can afford no protection in
attempting to fix resale prices by re-
tailers because, ii is alleged;
The carton was not in fact patentable
as all of its material features had long
been in use before the patent was is
sued; the value of the carton is negli-
gible. the contents alone being desired
by the purchaser; the defendants hav-
ing sold the cartons and contents to
jobbers nave 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 a mere subterfuge and devise to
avoid the provisions of the antitrust
law and the principles or the common
law controlling such contracts.
The agreements exacted from jobbers
and the 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 prevent il from moving in inter-
state commerce at prices other than
those fixed by the defendant company
and prevent all competition between
dealers which can affect its cost to the
retailer or consumer They produce"
il is added. "a monopoly of said inter-
state commerce in that they concentrate
I'm the hands of those who abide by the
terms of said agreements and conditions
of sale the entire traffic in said article
and exclude tnerefrom all dealers who
refuse to enter into or abide by said
AGREEMENTS and conditions"