FEDERAL TRADE COMMISSION DECISIONS

FINDINGS AND ORDERS, JUNE 12, 1929, TO MAY 4, 1930

IN THE MATTER OF

CALUMET BAKING POWDER COMPANY

COMPLAINT (SYNOPSIS), FINDINGS AND Order IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914.

Docket 1127. Complaint, Feb. 26, 1924 1-Decision, June 12, 1929 Where a corporation engaged in the manufacture of baking powder; in promoting the sale of its product through salesmen and demonstrators, who systematically covered and recovered assigned territories in large numbers as required satisfactorily to sustain the sale of the product and thus "demonstrated" whole States,

Employed the so-called cold water glass test of its powder and those of its competitors, before retail and wholesale grocers or dealers and their customers, bakers, chefs, and managers or owners of cafés, restaurants and hotels, department stores and cooking or demonstrating schools, housewives, and the purchasing and consuming public, together with talks, representations, and statements to show and claim the superiority of its said powder over competitive products by reason of its alleged quick and sustained action irrespective of oven and other conditions, as demonstrated by the rising or effervescence of its own product to the top of the glass and beyond, upon the addition of cold or room temperature water thereto, and/or the relative stability of the resulting foaming effervescence, in contrast with results secured from competitive powders, which in either one or both of the foregoing respects fell short, and thereby allegedly indicated corresponding shortcomings of said powders, in being too slow, or fast, or not sustained, in their action, and thus responsible for soggy or fallen bread, biscuits, etc., and unsatisfactory or unwholesome results; The facts being that the amount of effervescence of the various powders was dependent on the chemical reaction from the particular acids employed and the relative stability of its own mixture was due to inclusion in the product of a small proportion of dried white of egg (to which product said ingredient added nothing in the way of carbon dioxide strength or leavening power or efficiency), action of said powder in the test was in nowise comparable to the action taking place in baking and cooking, the test afforded no criterion whatever as regards size, character or uniformity of

1 Amended, Nov. 21, 1925.

1

Complaint

13 F. T. C. bubbles, collapse of competing foam mixtures and retention of its own under the manipulations of its salesmen and demonstrators, or otherwise, as to the efficacy or carbon dioxide or leavening strength of its powder or competing products in mixes and cooking, but falsely indicated powders of superior leavening efficiency as being inferior and was made the basis for falsely representing such powders as having only one-third to one-half the leavening power of its own product, and was in and of itself deceptive irrespective of any statements as to comparative gas strength or leavening efficiency:

With the result that through the making of said cold water glass test by its salesmen and demonstrators, as authorized, directed and required by it and its misrepresentation and false statements and those of its agents as to the alleged superiority of its powder and alleged inferiority of competitive powders, made in conjunction with and as a part of said test, countless housewives and others of the consuming and purchasing public purchased its said powder:

Held, That such practices, under the circumstances set forth, were to the prej udice of the public and competitors, and constituted unfair methods of competition.

Mr. Richard P. Whiteley for the Commission.

Mr. Daniel R. Forbes, of Washington, D. C., and Miller, Gorham, Wales & Noxon of Chicago, Ill., for respondent.

SYNOPSIS OF COMPLAINT 2

Reciting its action in the public interest, pursuant to the provisions of the Federal Trade Commission Act, the Commission charged respondent, an Illinois corporation engaged in the manufacture and sale of baking powder to wholesale and retail dealers in the various States, and with principal office and place of business in Chicago, with disparaging or misrepresenting products of competitors, misrepresenting own product, and advertising falsely or misleadingly, in violation of the provisions of section 5 of such act, prohibiting the use of unfair methods of competition in interstate commerce.

Respondent, as charged, engaged in the sale of its product, as above set forth, in competition with competitive products including the "K. C. Baking Powder" of the Jaques Manufacturing Co., a wholesome product, properly composed of good materials, i. e., of that standard of purity commonly used in the trade and in nowise adulterated, falsely and misleadingly asserts (said false and misleading assertions being among numerous others concerning said K. C. powder), in advertisements, articles, and other writings in newspapers and trade journals, and in circulars, letters, pamphlets, and other trade literature, and orally through salesmen and other agents, that said K. C. Baking Powder is (a) cheap, (b) of a poor

'As amended.

and inferior quality, (c) composed of inferior materials, (d) carelessly compounded by inexact methods, so that it does not function properly, uniformly or satisfactorily in the preparation of foodstuffs and renders food products in which used, unwholesome, and (e) adulterated; with the direct effect and result of misleading the trade into believing said K. C. Baking Powder to be "an inferior, impure, adultered, and undesirable product; to prejudice the trade against the said Jaques Manufacturing Co. and its said product, and to injure and damage the business and good will of said company ".

Respondent further, as charged, employs through its canvassers, salesmen, and demonstrators a false and misleading purported comparative test of its powder with those of its competitors, to wit, the so-called water glass test or foaming test, in which it places samples of the two powders to be compared in glasses or similar containers and adds and stirs in a small quantity of water, with the result that the mixture of respondent's powder (which contains a minute quantity of albumen or white of egg), rises higher in the glass and remains sustained longer than the mixture of such competitive powders as that of the aforesaid Jaques Manufacturing Co. or the Royal Baking Powder Co. or other competitive powders containing no white of egg, sometimes with statements of the demonstrator to the effect that the test represents the respective leavening strength and efficiency of the two powders concerned.

The aforesaid test, as alleged, whether accompanied by such statements or not, "does not represent the leavening strength of the respective powders and the results shown in the comparative tests are misleading and deceptive in that the method used by respondent when applied to a powder containing no white of egg can not and will not fairly or accurately evidence the gas strength of the competitive baking powder and said method inherently possesses the capacity and tendency to deceive the merchant or consumer before whom said comparative water glass test may be made ", by said house-to-house canvassers and demonstrators, who are "carefully trained and instructed in the manner of so manipulating the said samples above referred to that the desired deceptive and misleading results are obtained, all of which tend to create a state of mind in the purchasing public which is detrimental to the purchase and use of powders of respondent's competitors and especially products of the Jaques Manufacturing Co. and of the Royal Baking Powder Co., and consequently tend to injure the trade and business conducted by said competitors".

Respondent further, as charged, for several years last past, in making its aforesaid test through its house-to-house persons, can

vassers, demonstrators, and salesmen, against competitive powders also containing white of egg, "varies its manipulations and treatments of the two respective powders tested so as to cause the mixture in the glass containing respondent's powder to rise higher and to remain sustained longer in the glass than the mixture in the glass containing the competitor's powder, thereby falsely misleading and deceiving the purchasing public into the belief that Calumet Baking Powder has a greater leavening strength or efficiency than the powder of the said competing company so tested against".

The above alleged acts and things done by respondent, as charged, "are all to the prejudice of the public and respondent's competitors, and constitute unfair methods of competition in commerce within the intent and meaning of section 5".

Upon the foregoing complaint, the Commission made the following

REPORT, FINDINGS AS TO THE FACTS, AND ORDER

Pursuant to the provisions of an act of Congress approved September 26, 1914 (38 Stat. 717), the Federal Trade Commission issued and served an amended complaint upon the respondent, Calumet Baking Powder Co., charging it with the use of unfair methods of competition in commerce in violation of the provisions of said act. The respondent having filed its answer herein, hearings were had and evidence was thereupon introduced on behalf of the Commission and the respondent before an examiner of the Federal Trade Commission duly appointed.

Thereupon this proceeding came on for a final hearing on the briefs and oral argument, and the Commission having duly considered the record and being fully advised in the premises, makes this its findings as to the facts in accordance with and in affirmation of the findings of the trial examiner and conclusions drawn therefrom:

FINDINGS AS TO THE FACTS

PARAGRAPH 1. The respondent, Calumet Baking Powder Co., is, and has been for more than 10 years prior to the date of the service of the amended complaint herein, a corporation duly organized under the laws of the State of Illinois, having at all said times. its principal factory and place of business in the city of Chicago in said State.

PAR. 2. The respondent is and has been since about 1890 engaged in the manufacture of baking powder under the brand name "Calumet Baking Powder " and throughout said period has been and still is engaged in the sale of said baking powder to various individuals,