People Ex Rel. Scott v. Convenient Food Mart, Inc.

315 N.E.2d 124, 21 Ill. App. 3d 97, 1974 Ill. App. LEXIS 2161
CourtAppellate Court of Illinois
DecidedJuly 3, 1974
Docket57117
StatusPublished
Cited by13 cases

This text of 315 N.E.2d 124 (People Ex Rel. Scott v. Convenient Food Mart, Inc.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
People Ex Rel. Scott v. Convenient Food Mart, Inc., 315 N.E.2d 124, 21 Ill. App. 3d 97, 1974 Ill. App. LEXIS 2161 (Ill. Ct. App. 1974).

Opinion

Mr. JUSTICE DEMPSEY

delivered the opinion of the court:

The Attorney General of the State of Illinois sought injunctive relief and civil penalties from three corporations and two individuals for alleged violations of the Illinois Antitrust Act. (Ill. Rev. Stat. 1969, ch. 38, par. 60 — 1 et seq.) The case was tried without a jury and after the State presented its evidence the defendants moved for judgment pursuant to section 64(5) of the Civil Practice Act. (Ill. Rev. Stat. 1971, ch. 110, par. 64(5).) The court sustained the motion, found the defendants not guilty and dismissed the complaint for want of equity. The State appealed.

The corporate defendants are Convenient Food Mart, Scot Lad Foods and Bresler Ice Cream Company. The individual defendants are William and Harry Bresler. Convenient is engaged in the business of operating, and granting franchises to others to operate, limited inventory grocery markets under the registered name of Convenient Food Mart. Scot Lad Foods owns fifty percent of the stock of Convenient, and its Meadow-moor dairy division sells milk and dairy products to Convenient’s Illinois franchisees. The Bresler Company is engaged in the manufacture, distribution and marketing of ice cream and ice cream products and sells them to the same franchisees. William and Harry Bresler are officers of the Bresler Company and Convenient. They and other members of the Bresler family own the remaining fifty percent of Convenient’s stock.

Bresler and Meadowmoor are Chicago based companies and their products have been sold for many years in small grocery stores throughout the Chicagoland area. In the middle 1950’s an evolution took place in the retailing of foods and the market for their products declined drastically. Chain stores expanded rapidly; the stores increased in numbers and size and large areas were set aside for automobile parking. Purchasing power enabled them to reduce prices, and the lower prices, the wide selection of merchandise and ease of parking attracted customers.

This aggressive competition was too much for many grocers. It was estimated that every time a supermarket opened, 10 or 12 small groceries closed. Those who supplied the groceries suffered too. The situation became acute for independent suppliers when the chain stores started to produce their own merchandise or develop close associations with large producers and distributors. Meadowmoor and Bresler were unable to obtain any of the chain business. Meadowmoor, which was also hurt when the practice of home milk delivery was widely discontinued, offered one-half ownership of the company to one of the grocery chains, but its offer was not accepted.

Faced with the gradual diminution of their business and its seemingly inevitable cessation, Bresler and Meadowmoor, unknown to each other, searched for possible remedies. Learning through a mutual friend of each other’s problem and motivation, officers of the companies met, and after many discussions agreed to launch a combined attack on the difficulties besetting them. The officers conducted extensive research. They traveled to different states, observed what was being done by others, consulted with entrepreneurs of the grocery business, studied marketing techniques and experimented with various merchandising methods. From all this they developed — as a means of survival for themselves and the individual groceryman as well — a plan for making small groceries competitive with the supermarket chains.

Their concept was a number of family-owned stores that could profit from combined buying power and the lower operating costs resulting from the devotion and hard work of the family members. They designed a format of distinctive, attractively designed, clean, well-located food stores, with uniform equipment and fixtures, limited items of merchandise and ample parldng space, which would give the public maximum service by staying open each day until midnight.

Bresler and Meadowmoor agreed to unite their forces and become franchisors for such stores. Their intent was to do everything possible to keep the small grocer in business by seeking from purveyors low prices and discounts, by arranging financing for fixtures and inventories, by guaranteeing leases, preparing advertising and furnishing skilled direction and expert advice. Convenient Food Mart was incorporated in 1958 and a pilot store was opened that year in Skokie, Illinois. The policy of careful supervision over its franchisees and obtaining every possible advantage for them was successful Convenient Food Mart stores have thrived and so has the corporation. Meadowmoor and Bresler have prospered. At the time the Attorney General’s complaint was filed in 1971 there were more than 80 franchised stores in Illinois and, in addition, there were several stores owned and operated by Convenient itself.

In a four-count complaint the State charged the defendants with intending, by contract, combination or conspiracy, to fix, control and maintain the resale price of merchandise in accordance with the directives of Convenient; to compel the franchisees to buy Meadowmoor’s milk and Bresler’s ice cream in order to obtain Convenient franchises; to unreasonably restrain trade in the sale of milk, ice cream and other products to Convenient franchisees; to prevent the franchisees from buying milk and ice cream at prices lower than those of Meadowmoor and Bresler, and to permit the prices set in the stores operated by Convenient itself to control the prices of merchandise sold in franchised stores in the same market area, all in violation of sections 60 — 3(1) (a), 60 — 3(2), 60 — 3(4) of the Illinois Antitrust Act. (Ill. Rev. Stat. 1969, ch. 38, pars. 60 — 3(l)(a), 60 — 3(2), 60 — 3(4).) The complaint prayed that the franchise agreements and the contracts between Meadowmoor, Bresler and the franchisees be declared void, that Meadowmoor and Bresler be ordered to divest themselves of Convenient, that they be permanently enjoined from engaging in a similar business, and that each defendant be penalized $50,000 for the violation of each count in which it or he was named defendant.

Thus, a full circle has been turned in a decade and a half. In the late 1950’s Meadowmoor and Bresler were struggling to withstand competition which was taking away the outlets for their products. In the early 1970’s they and their offspring, Convenient, are accused of depriving competitors of outlets for their products.

The State’s evidence was both documentary and oral. Among the documents introduced into evidence were franchise and security agreements between Convenient and certain franchisees, contracts between franchisees and the Meadowmoor and Bresler companies, and a manual for Convenient store operators. The franchise agreements required the franchisees to operate pursuant to the manual and provided that he shall “* # * purchase, sell and use such products as are required for the operation of the business, as designated by CFM [Convenient], and to be ordered exclusively from suppliers approved by CFM for quality.” The agreements varied, however, and in some the words “for quality” were replaced by the words, “for volume purchasing and guaranteed sales benefits.” Convenient issues from time to time a purveyors list which designates the suppliers it has approved.

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Bluebook (online)
315 N.E.2d 124, 21 Ill. App. 3d 97, 1974 Ill. App. LEXIS 2161, Counsel Stack Legal Research, https://law.counselstack.com/opinion/people-ex-rel-scott-v-convenient-food-mart-inc-illappct-1974.