The Rubber Manufacturers Association, Inc.

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IN THE MATIER OF THE RUBBER MANUFACTURERS ASSOCIATION, INC., ET AL.

·COMPLAINT AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF .SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. !!6, 1914 Docket 2354. Complaint, Apr. 5, 1935-order, July 29, 1.q35 Consent order requiring respondent corporations, excepting t·respondent association, their officers, etc., in connection with the sale and offer of mer.hanlcal rubber goods, including fire hose and chemical hose, in interstale commerce, and when acting by understanding or agreement among themselves or between any two or more of them or with others, acting directly or by or through respondent association, forthwith to cease and desi<;t from- .{ a) Fixing prices, at which said commodities would be sold ; (b) Fixing prices at which their wholesaler and retailer customers would be required to sell such commodities;

.r.c) Fixing prices at which they would sell, or offer to sell, such commodities to cltles, States and other governmental and public agencies; (d) Communicating in any manner to one another, or other manufacturers or competitors, the price at which they proposed or intended to sell com· moditles in the future, for the purpose and with the effect of hindering or preventing r.ompetitlon between and among themselves, or any two or mor<· of them, or with others; provided that nothing herein shall pre,·ent the disclosure of future prices in the ordinary course of business; (e) Fixing uniform terms and conditions of sale under which they propose to sell such commodities, for the purpose or with the effect of hindering or preventing competition;

(f) Seeking to influence or persuade competing manufacturers or dealers with regard to the price at which such competitor or competitors would or should sell such commodities, for the purpose or with the effect of sup· pressing or hindering or preventing competition; (g) Refusing to supply such commodities to any wholesaler or retailer, or other customer because he failed or refused to quote, or agree to quote, or sell at prices fixed by them; and (h) Classifying buyers or prospective buyers of such commodities for the pur· pose and with the effect of suppressing or preYentlng competition among themselves, or any two or more of them, or with others: and Ordered further, that complaint be dismissed as to two specified Individual re· spondents who only recently became members of the code authority for til·~ rubber industry and did not participate in any of the activities of said authority during the time when the acts and things alleged in the complaint were done.

Before Mr. William 0. Reeves, trial examiner. Mr. Edward L. Smith and 3/r. Robt. N. McMillen for the Commission.

Davis, Poll.;, Wardwell, Gardiner & Reed, of New York City, for respondents, who were also severally and variously represented, as THE RUBBER MANUFACTURERS ASS'N, INC., ET AL. 177 176 Complaint follows: Mr. John V. Groner, of New York City for Rubber Manufacturers Association, Inc., A. L. Viles, J. D. Lippman, 0. C. Pahline, A. B. Newhall, F. D. Hendrickson, R. E. Drake, Wm. Lichtenstein, D. D. Felix, F. Thatcher Lane, 1V. L. Finger, J. H. Connors, H. N. Young, C. D. Garretson, A. D. Kunze and Hamilton Abert; Backes & Backes, of Trenton, N. J., for Acme Rubber Manufacturing Co., Hamilton Rubber Manufacturing Co., The Home Rubber Co., and Mercer Rubber Co.; Johnson, Clapp, I ves & K n.ig ht, of Boston, Mass., for Boston 1Voven Hose & Rubber Co.; Taft, Stettinius & ll ollister of Cincinnati, Ohio, for The Cincinnati Rubber Manufacturing Co.; Gunnison, Fish, Gifford & Chapin, of Erie, Pa., for Continental Rubber Works; Mr. J. L. McKnight and Mr. F. C. Leslie, of Akron, Ohio, for The D. F. Goodrich Rubber Co.; Mr. Fredericl.:- R. Wahl and Mr. Harold G. Capron, of Akron, Ohio, for The Goodyear Tire & Rubber Co.; Kenefick, Cooke, Mitchell, B(l8s & Letchworth, of Buffalo, N. Y., for Hewitt Rubber Corp.; Zimmerman, Myers & Kready, of Lancaster, Pa., for Manhattan Rubber Manufacturing Division of Raybestos-1\Ianhattan, Inc.; Pillsbury, M ad-i- .~on & Sutro, of San Francisco, Calif., for Pioneer Rubber Mills; Mr. Ralph L. Kryder of Akron, Ohio, for Quaker City Rubber Co.; Spence, Hopkins, lVal,ser &: Hotchkiss, of New York City, for The Republic Rubber Co.; Lowe & Dougherty, of New York City, for Thermoid Rubber Co.; Arthwr & Dry, of New York City, for P. S. Rubber Products, Inc.; and MacCoy, Brittain, Evans & Lewis, of Philadelphia, Pa., for Whitehead Brothers Rubber Co. CO~IPLAINT Pursuant to the provisions of an Act of Congress entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes", approved September 26, 1914, the Federal Trade Commission, having reason to believe that the Rubber Manufacturers Association, Inc., a corporation; and A. L. Viles, J. D. Lippman, 0. C. Pahline, A. D. Newhall, F. D. Hendrickson, R. E. Drake, Wm. Lichtenstein, B. B. Felix, F. Thatcher Lane, W. L. Finger; and J. H. Connors, H. N, Youn~, C. D. Garretson, A. D. Kunze and Hamilton Abert; and Acme Rubber Manufacturing Company, a corporation, American Rubber Manufacturing Company, a <>orporation, Boston ·woven Hose & Rubber Company, a corporation, The Cincinnati Rubber Manufacturing Company, a corporation, Continental Rubber Works, a corporation, The B. F. Goodrich Rubher Company, a corporation, The Goodyear Tire & Rubber Company, Inc., a corporation, Hamilton Rubber Manufacturing Company~ R Complaint 21F. T.C.

corporation, Hewitt Rubber Corporation, a corporation, The Home Rubber Company, a ,:!orporation, The ;Manhattan Rubber Manufacturing Division of Raybestos-Manhattan, Inc., a corporation, Mercer Rubber Company, a corporation, Pioneer Rubber Mills, a corporation, Qu~ker City Rubber Company, a .corporation, The Republic Rubber Company, a corporation, Thermoid Rubber Company, a corporation, U. S. Rubber Products, Inc., a corporation, and Whitehead Brothers Rubber Company, a corporation, have been and are using unfair methods of competition in commerce, as "commerce" is defined in said act; and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, states its charges in that respect as follows:

PARAGRAPH 1. Respondent, Rubber Manufacturers Association, Inc., hereinafter referred to as association respondent, is an incorporated membership trade association, organized under the laws of the State of Connecticut, with its place of business at 444 Madison Avenue, New York, N. Y. Its membership consists of persons, partnerships and corporations, including the respondents named in paragraph 4 hereof, engaged in the manufacture of rubber goods. Within this respondent association is informally organized the Mechanical Rubber Goods Division, consisting of the persons, partnerships, and corporations engaged in the manufacture of mechanical rubber goods, including fire hose anrl chemical hose, among whom are included the respondents named in paragraph 4 hereof. PAR. 2. Respondents A. L. Viles, J. D. Lippman, 0. C. Pahline, A. B. Newhall, F. D. Hendrickson, R. E. Drake, Wm. Lichtenstein, B. B. Felix, F. Thatcher Lane, J. H. Connors and w·. L. Finger constitute, and since about June 22, 1934, have constituted, the members and administrative officers of the Code Authority for the Rubber Manufacturing Industry, under the Code of Fair Competitjon for the Rubber :Manufacturing Industry, approved by the President December 15, 1933, created under and by virtue of the provi!'li.ons of the National Industrial Recovery Act, approved June 16, 1933. Said Code Authority hereinafter will be referred to as the Master Code Authority.

PAn. 3. Respondents J. H. Connors, H. N. Young, C. D. Garretson, A. D. Kunze and Hamilton Abert constitute, and since about June 22, 1934, have constituted, the members and administrative officers of the Divisional Code Authority for the Mechanical Rubber Goods Division of the Rubber Manufacturing Industry, created pursuant to the provisions of the above mentioned Code of Fair Competition for the Rubber Manufacturing Industry. Said Code Authority hereinafter will be referred to as the Divisional Code Authority. THE RUBBER MANUFACTURERS ASS'N, INC., ET AL. 179 176 Complaint PAR. 4. Acme Rubber Manufacturing Company is a corporation organized and existing under the laws· of the State of with its principal place of business at Trenton, N. J. American Rubber Manufacturing Company is a corporation organized under the laws of the State of, with its principal place of business at Park A venue and 'Vatt Street, Oakland, Calif. Boston vVoven Hose & Rubber Company is a corporation organized under the laws of the State of Ma~sachusetts, with its principal place of business at 29 Hampshire Street, Cambridge, :Mass. The Cincinnati Rubber Manufacturing Company is a corporation organized under the laws of the State of Ohio, with its principal place of business at Norwood, in said State.

Continental Rubber 'Vorks is a corporation organized under the laws of the State of Pennsylvania, with its principal place of business at Erie, in said State.

The B. F. Goodrich Rubber Company is a corporation organized under the laws of the State of Michigan, with its principal place of business at Akron, Ohio.

The Goodyear Tire and Rubber Company, Inc., is a corporation organized under the laws of the State of Delaware, with its principal place of business at Akron, Ohio.

Hamilton Rubber Manufacturing Company is a corporation organized under the laws of the State of New Jersey, with its principal place of business at Trenton, in said State. Hewitt Rubber Corporation is a corporation -organized under the laws of the State of New York, with its principal place of business at Buffalo, in said State.

The Home Rubber Company is a corporation organized under the laws of the State of New Jersey, with its principal place of business at Trenton, in said State.

Manhattan Rubber Manufacturing Division of Raybestos-Manhattan, Inc., is a corporation organized under the laws of the State of New Jersey, with its principal place of business at New York, N. Y. Mercer Rubber Company is a corporation organized under the laws of the State of, with its principal place of business at Hamilton Square, N. J.

Pioneer Rubber Mills is a corporation organized under the laws of the State of, with its principal place of business at San Francisco, Calif.

Quaker City Rubber Company is a corporation .organized under the laws of the State of Pennsylvania, with its principal place of business at 'Vissinoming, in said State.

180 FEDERAL TRADE COM:l\:IISSJON DECISIONS Complaint 21 F. T. C. The Republic Rubber Company is a corporation organized under the laws of the State of Oliio, with its principal place of business at Youngstown, in said State. · Thermoid Rubber Company is a corporation organized under the laws of the State of New Jersey, with.its principal place of business at Trenton, in said State.

U. S. Rubber Products, Inc., is a corporation organized under the laws of the State of New Jersey, with its principal place of business at 1990 Broadway, New York, N.Y.

Whitehead Brothers Rubber Company is a corporation organized under the laws of the State of New Jersey, with its principal place of business at Trenton, in said State.

The respondents named in this .paragraph, 4, hereinafter will be referred to as the corporate respondents. PAR. 5. All of the corporate respondents are, and at all times hereinafter mentioned have been, engaged in the sale of mechanical rubber products, including fire hose and chemical hose, to wholesalers of, dealers in, and consumers of said commodities located throughout the United States; and pursuant to such sales, and as a part thereof, regularly have shipped and do ship such commodities to their said customers at their respective places of business in States other than the States of the origin of such: shipments. Prior to May 1933 these respondents were in active competition with each other, and with other members of the industry, in making and seeking to make such sales; and, but for the facts alleged in paragraphs 6 and 7 hereof, such competition would have continued to the present time. These respondents manufacture the total supply of fire hose and chemical hose in the United States.

PAR. 6. In or about the month of May, 1933, the corporate respondents, and other members of the association respondent, acting with and through the association respondent, entered into and thereafte:.carried out an agreement, combination and conspiracy, as hereinafter more particularly set forth, for the purpose of restraining trade in mechanical rubber goods, including fire hose and chemical hose, fixing prices at which such commodities should be and would be sold, suppressing competition among corporate respondents in their sales to wholesalers, dealers and consumers, suppressing competition among dealers in said commodities, and suppressing competition between said corporate respondents and dealers in sales to consumers of such c·ommodities. Respondents A. L. Viles, J.D. Lippman, 0. C. Pahline, A. B. Newhall, F. D. Hendrickson, R. E. Drake, 'Vm. Lichtenstein, D. B. Felix, F. Thatcher Lane, \V. L. Finger, J. H. Connors, H. N. Young, C. D. Garretson, A. D. Kuntze and Hamilton Abert thereafter THE RUBBER MANUFACTURERS ASS'N, INC., ET AL. 181 176 Complaint 1:1,nd in or about the month of June, 1934, and after their appointment and qualification as members and administrative officers of the respective Code Authorities, as alleged in paragraphs 2 and 3 hereof, entered into and joined in said agreement, combination and conspiracy, and under color of the power and authority given them as said Code Authorities, aided and assisted in carrying out and accomplishing the purposes of said agreement, combination and conspiracy, as hereinafter more particularly set forth. PAR. 7. In forming said agreement, combination, and conspiracy, and to carry out and accomplish its purposes, the respondents have done and performed, and still do and perform, the following acts antl things:

(1) Corporate respondents, with other members of the association respondent, acting through and with the association respondent- ( a) Agreed to fix from time to time, and did fix from time to time, uniform prices at which all would and did sell rubber good~,, including fire hose and chemical hose.

(b) Agreed to fix from time to time, and did fix from time to time, uniform prices at which their wholesaler and retailer customers should resell such rubber goods.

(c) From time to time agreed upon uniform prices to be quoted by them in response to invitations by cities and other goYemmental and public agencies.

(d) Agreed to file, and from time to time filed, with the association respondent the prices at which they would sell such rubber goods, agreed that such prices would be, and such prices were, uniform as among said respondents, and agreed that none would sell below the prices so filed.

(e) Agreed upon the terms and conditions that were to be a part of all sales made, including, but without limitation, discounts for cash and allowance for freight. (f) Investigated all reported departures by any manufacturer of such rubber goods from the prices and terms of sale so agreed upon and fixed, and by mass action and mass persuasion forced the manufacturer so departing from such agreements to rectify such departure.

(g) Agreed to refuse to supply, and did refuse to supply, any wholesaler or retailer with their said products who failed or refused to quote or to sell at prices fixed by these respondents as alleged in subdivision (b) above, and agreed to and did close to such offending wholesaler or retailer all sources of supply. 182 FEDERAL TRADE COl\IMISSION DECISIONS Complaint 21 F. T. C. (2) Respondent members and administrative officers of the Master Code Authority and of the Divisional Code Authority, acting under color of office and employing power and authority pretended by them to be theirs as members and administrative officers of such Code Authorities, which pretended powers and authority were not given them by any provisions of the said Code, but which were expressly withheld from them by Article VIII thereof, have cooperated with and aided the association respondent and the corporate respondents in carrying out and accomplishing the purposes of said agreement, combination and conspiracy, alleged in paragraph 6 hereof, by- ( a) Investigating, checking, exhorting, advising, and requiring the several members of the industry under their jurisdiction to adhere to certain prices on mechanical rubber goods and particularly fire hose, which prices they knew were fixed by agreement as alleged in paragraph 7 hereof.

(b) Interpreting, construing and enforcing rules with respect to uniform terms of sale, to the end that no discount or price advantage accrue to any customer of the members of the industry. (a) Arbitrarily and without authority classifying buyers without giving them a chance to be heard, and enforcing such classification on the industry in the face of direction of the National Recovery Administrator to the contrary. (d) Advising, encouraging and assisting members of the in· dustry not to grant to the Federal Government, State governments, and municipalities the benefits of price competition. contemplated by Executive Order 6767 of the President of the United States.

(e) Encouraging, assisting and cooperating with members of the industry in .requiring wholesalers and retailers to maintain resale prices fixed by agreement of the corporate respondents. (f) Actively assisting and cooperating with the members of the industry in the conduct ·of boycotts directed against those who did not maintain resale prices dictated by the corporate respondents.

PAR. 8. The said agreement, combination and conspiracy and the things done thereunder and pursuant thereto, as hereinabove alleged, have had and have the effect of unduly restraining trade among the States of the Union in rubber goods, particularly fire hose and chemical hose; of substantially suppressing competition among the respondents in sales to wholesalers, retailers and consumers, and among wholesalers in their sales to retailers, and among retailers in their sales to consumers, and between respondents and retailers in their THE RUBBEH ~IANUFACTURERS ASS'N, INC., ET AL. 183 176 ' Order sales to consumers; of subst~ntially enhancing prices to the consuming public and maintaining prices at artificial levels; and otherwise depriving the public of the benefits that would flow from normal competition among and between the respondents, wholesalers and retailers. And such agreement, combination and conspiracy and the things done thereunder and pursuant thereto, as above alleged, constitute unfair methods of competition within the meaning of the Act of Congress approved September 26, 1914, above entitled, and are to the prejudice of the public interest. ORDER TO CEASE AND DESIST The Commission having the above matter under consideration, and it appearing that the respondents, with the exception of J. D. Lippman and A. B. Newhall, have made application to withdraw the answers heretofore filed by them, and tender in lieu thereof consent answers under the Rules of Practice of the Commission, wherein said respondents, although insisting that all things done by them 'Were warranted by the Code for this industry formulated and approved under the National Industrial Recovery Act, and therefore done in good faith, nevertheless waive hearing on the charges set forth in the complaint and consent that the Commission may make, enter, issue, and serve upon them, without hearing, without evidence, and without findings as to the facts, an order to cease and desist from the methods of competition alleged in the complaint. And the Commission having duly considered the complaint and such answers and being fully advised in the premises- It is therefore orclered, That the respondents, The Rubber Manufacturers Association, Inc., a corporation; A. L. Viles, 0. C. Pahline, F. D. Hendrickson, R. E. Drake, 'Vm. Lichtenstein, B. B. Felix, F. Thatcher Lane, ,Y, L. Finger, J. H. Connors, H. N. Young, C. D. Garretson, A. D. Kunze, and Hamilton Abert; and Acme Rubber Manufacturing Company, a corporation; American Rubber Manufacturing Company, a corporation; Boston Woven Hose & Rubber Company, a corporation; The Cincinnati Rubber Manufacturing Company, a corporation; Continental Rubber 1Vorks, a corporation; The B. F. Goodrich Rubber Company, a corporation; The Goodyear Tire & Rubber Company, Inc., a corporation; Hamilton Rubber Manufacturing Company, a corporation; Hewitt Rubber Corporation, a corporation; The Home Rubber Company, a corporation; Raybestos- Manhattan, Inc., a corporation; Mercer Rubber Company, a corporation; Pioneer Rubber Mills, a corporation; Quaker City Rubber Company, a corporation; The Republic Rubber Company, a corpora- Order 21F. T.C.

tion; Thermoid' Rubber Company, a ~orporation; United States Rubber Products, Inc., a corporation; and 'Vhitehead Brothers Rubber Company, a corporation; be and hereby are permitted to withdraw the answers heretofore filed by them, and to file consent answers in lieu thereof, and the substituted answers tendered are received and filed.

It is further ordered, That said corporate respondents, except the respondent association, their officers, agents, representatives, and employees, forthwith cease and desist, in connection with the business of selling and offering for sale mechanical rubber goods, including fire hose and chemical hose, in interstate commerce, from doing and performing, by understanding, agreement or combination among themselves or between or among any two or more of them, or with others, acting directly or by or through the respondent association1 the following acts and things :

(1) Fixing prices, at which said commodities would be sold. (2) Fixing prices at which their wholesaler and retailer customers would be required to sell such commodities. (3) Fixing prices at which they would sell, or offer to sell, such commodities to cities, States and other governmental and public agencies.

(4) In any manner communicating to on,e another, or other manufacturers or competitors, the price at which they proposed or intended to sell commodities in the future, for the purpose and with the effect of hindering or preventing competition between and among themselves, or any two or more of them, or with others; provided that nothing herein shall prevent the disclosure of future prices in the ordinary course of business. (5) Fixing uniform terms and conditions of su.le under which they propose to sell such corrunodities, for the purpose or with the effect of hindering or preventing competition. (6) Seeking to influence or persuade competing manufacturers or dealers with regard to the price at which such competitor or competitors would or should sell such commodities, for the purpose or with the effect of suppressing or hindering or preventing competition.

(7) Refusing to supply such commodities to any wholesaler or retailer, or other customer because he failed or refused to quote, or agree to quote, or sell at prices fixed by them. (8) Classifying buyers or prospective buyers of such com .. modities for the purpose and with th~ effect of, suppressing or preventing competition among tl~eJr~~lves, or any two or more of them, or with others.

THE RUBBER MANUFACTURERS ASS'N, INC., ET AL. 185 176 Order It is further ordered, That said individual respondents, A. L. Viles, 0. C. Pahline, F. D. Hendrickson, R. E. Drake, ·wm. Lichtenstein, B. B. Felix, F. Thatcher Lane, W. L. Finger, J. H. Connors, H. N. Young, C. D. Garretson, A. D. Kunze and Hamilton Abert, their agents and representatives, acting as individuals or in a representative capacity as members or officers of a code authority or other Qrganization, forthwith cease and desist from doing or performing, Qr aiding, assisting or cooperating with the other respondents or any Qf them in doing or performing, any of the acts or things restrained by the above terms of this order.

The Commission finding that respondents, J. D. Lippman ami A. B. Newhall, have only recently become members of the Code Authority for the Rubber Industry and did not participate in any Qf the activities of the Code Authority during the time the acts and things alleged in the complaint were done, it is ordered that the complaint as to these two respondents be dismissed. It is further ordered, That within 60 days from the date of the service of this order upon said respondents, they shall file with the Commission a report in writing setting :forth in detail the manner and form in which this order has been complied with. 186 FEDERAL TRADE COl\Il\IISSION DECISIONS Complaint 21F. T.C.