Ftc v. R. F. Keppel & Bro., Inc., 291 U.S. 304 (1934)

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Federal Trade Comm’n v. R. F. Keppel & Bro., Inc.

No.194
Argued January 11, 1934
Decided February 5, 1934
291 U.S. 304

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE THIRD CIRCUIT

Syllabus

1. The Federal Trade Commission, proceeding under § 5 of the Act, ordered respondent, one of numerous candy manufacturers similarly engaged, to desist from selling and distributing in interstate commerce candy in a certain type of package, in assortments so arranged and offered for sale as to avail of the element of chance as an inducement to the retail purchaser. Each package contained display material, attractive to children and explaining the plan by which either the price or the amount of the candy received by the purchaser was affected by chance. The Commission found that the candy in this type of package was inferior in size or quality to that in other classes of packaged candy marketed without the aid of the chance feature, and that the competition between the two classes resulted in substantial diversion of trade from others to the manufacturers and distributors of the former; that this type of package was sold extensively in the retail trade to school children, among whom it encouraged gambling, and that many manufacturers refrained on moral grounds from making it, and as a result were placed in a disadvantageous competitive position.

Held:

(1) The practice complained of is a method of competition in interstate commerce. P. 308.

(2) The proceeding is "to the interest of the public" if otherwise within the purview of the Act. P. 308.

(3) The Commission correctly concluded that the practice was an unfair method of competition within the meaning of the Act. P. 314

2. The fact that a practice does not involve any fraud or deception and that competitors may maintain their competitive position by adopting it does not necessarily put it beyond the jurisdiction of the Commission. P. 309.

3. The types of practices held in earlier litigation in this Court to be subject to the Commission’s prohibition do not mark the limits of the Commission’s jurisdiction. P. 309.

4. The Act is not restricted in its operation to those methods of competition in interstate commerce which are forbidden at common law or which are likely to grow into violations of the Sherman Act. P. 310.

5. The phrase "unfair methods of competition," as used in the Act, does not admit of precise definition, but its meaning and application must be arrived at by a gradual process of judicial inclusion and exclusion. P. 312.

6. A method used by a competitor is not necessarily fair because others may adopt it without restricting competition between them. P. 312.

7. The normal meaning of the words used is the first criterion of statutory construction. P. 313.

8. A practice of the sort which the common law and criminal statutes have long deemed contrary to public policy, and which a large share of the industry regard as unscrupulous, would seem clearly to come within the meaning of the word "unfair." P. 313.

9. While it is for the courts finally to determine what are unfair method of competition under the Act, yet the conclusion of the Commission on this question are of weight, and should be sustained when based upon clear, specific, and comprehensive findings supported by evidence. P. 314.

10. It is unnecessary, even if it were possible, to define in advance what unfair methods are forbidden by the Act; new or different practices must be considered as they arise in the light of the circumstances in which they are employed. P. 314.

63 F.2d 81 reversed.

Certiorari, 290 U.S. 613, to review a judgment reversing an order of the Federal Trade Commission.