Golf Ball Manufacturers' Association

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IN THE MATTER OF GOLF BALL .MANUFACTURERS' ASSOCIATION, ET AL. COMPLAINT. FINDINGS. AND ORDER IN RF.GARD TO THFr ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914, AND OF SUB- SECS. 2 (a), 2 (d), AND 2 (f) OF SEC. 2 OF AN ACT OF CO:-IGRESS APPROVED OCT. 15, 1914, AS AMENDED BY AN ACT OF CONGRESS APPIWVED JUNE 19, 1936 Docket 8161. Complaint, Aug. 18, )981 '-Decision, Feb, z.5, 1938 Where (1) an unincorp6rated trade assoclal:ion, membership of which consisted of manufacturers and wholesalers of golf balls, in "Competition with one another and with nonmembers likewise thus <~ompetHi,·eJy engaged, but for the matters and things below set forth, (2) the officers of suitl asso(·iation. and (3) member manufacturers thereof, who owned and controlled Jll'llCtlcally all of the factories engaged In the pro<lnction of goll' bull;; In the United States and produced most of the golf balls sold and distributed In this country; and (1) an unincorporated association, membl'rs of which consisted of approximately 1,500, out ol' some estimated 2,500, Jlrofe~sional golfers engaged in retail sale of golf balls and golf equipment throughout the country and, as thus engaged, in competition with one another and with nonmember retailers likewise thus competitively engaged, but for the matters and things hereinbelow set forth, (2) the officers thereof, ·and (3) the members thereof, constituting a group so large aud influential in the tmde as to be able, by themseh·es and in cooperation with aforesaid members of said manufacturers' association, to control and influence the flow of trade and channels of distribution in golf balls throughout the country, as well as the prices at which, and the terms and conditions under which, nonmember retailers of such articles buy and resell the same; In pursuance, concertedly, of a common course of action aml undertaking, in which they bad combined and united and which was directed to enforcing, fixing and maintaining, throughout the United States, certain monopolistic prices, policies, sales methods, and trade practices, and, generally, a policy and practice designed to and tending to monopolize the sale and distribution of golf balls in themselves, and in the accomplishment of which, to the substantial or potential Injury of some of such manufacturers, wholesalers, and retail dealers and of ultimate purchasers and consumers of such products, they held official and unofficial meetings of their associations and members, discussed policies and practices as afore>:aid, adopted, agreed upon, nnd Issued bulletins, circulars, letter~'!, pri<'e lists, etc., announcing such polides, etc., and the imposition thereof upon all affected thereby, obtained proml~es and assurances of cooperation from one another, exchanged information, and acted concertedly to control resale markets and to require, coerclv!'Jy, recalcitrant manufacturers, wholesalers, and retailers to conform to practices and methods in question- ( a) Entered into and carried out contracts and agreements directf.'d to the maintenance of uniform whole!':ale prices to be exacted by n1annfacturers of golf balls, as between members of said professional association and other nonmember dealer purcha~ers, with respect to balls of equal grade aml 1 Amended and supplemental.

GOLF BALL MANUFACTURERS' ASSOCIATION, ET AL. 825 824 Syllabus quality, anu maue it a policy and practice to require that all manufacturers and wholesalers, as aforesaid, observe such provisions; and (b) Fixed, as a policy and practice, prices for resale of such products by nonmember retailers, and persuaued, coerced, and compelled such dealers to refrain, abstain, and desist from selling golf balls at less than designated ]Jrice, and supervised nml iuvestiguted practices and policies of retail dealers in golf balls, and acted concertedly to maintain resale prices agreed upon; and \r!there said assodation of pwfessional golfers, its officez·s, membez·s, etc.- ( c) Required, coerced, or persuaded said member manufacturers and wholesalers to enter into contracts with ~;:aid professional association for the payment of monies to it for the privilege of causing the letters "PGA" to be imprinted on golf balls sold it; and (d) Required, as a policy and practice, all manufacturers and wholesalers. selling their products to its members to refrain 'and abstain from giving, allowing, or granting, in any way or manner, any rrbate, discount, royalty, or refund, in lilly mam1e1' or form, to nonmember retailer purchasers, and acted concertedly aud coercively to require conformance of recalcitrant manufacturers and wholesalers; and \\·here such manufacturers' association, its officers, members, etc.- (e) Granted unlawful discriminations in price through puymeut of monies to aforesaid golfers' association for pridlege of causing letters "PGA" to be printed on golf balls sold to said last organization, and for partial redistribution to members thereof, or through discounts, commensurate with designated pe1·centage of such payments and in lieu thereof, direct to members on their pul'(·hases, and not allowed, in any manner or form, to nonmember retail dealer purchasers; and (f) Made payments as aforesaid, to said Ilrofes>~ional association, not made available on proportionally equal terms to all other customers competing with members of said professional association in distribution of balls of like grade and quality, for use, in part, in advertising, promoting, and (·renting a preference on the part of the pul'(·hasing public for golf balls having letters "PGA" imprinted thereon, and for the promotion of the interests and welfare of the members, to the disadvantage of the nonmember retail golf ball dealers;

With capacity and tendency to, and effect of- (1) Monopolizing, in members of said manufacturers' asf;ociation, business of manufacturing and selling golf balls to retailers of the United States, and monopolizing, in members of said professional associll.tion, retail sale of such products to consumers therein;

\2) Fixing and maintaining prices at, and conditions under, which golf balls are sold by manufacturers and wholesalers thereof and by retailers thereof to consumers;

(3) Bringing about an unlawful discrimination in prices at which such articles of same grade and quality are sold by manufacturers and wholesalers to retailers there:•in, and of substantially increasing cost to such rrtailer purchasers of said articles;

( 4) Unreasonably lessening, eliminating, restraining, stifling, ha mprrlng, and suppressing competition in the golf ball trade and industry, and drprivlng the ·purchasing and consuming public of advantages In price, service, and other considerations which they would receive and ~njoy undt>r conditions of normal and unobstructed or free nnd fair competition in said trade and Syllabus 26F.T.O.

industry, and of otherwise operating as a restraint upon and a detriment to the freedom of fair and legitimate competition in such trade and industry;

(5) Suppressing, eliminating, and discriminating against small business enterprises which are or have been engaged, or desire to engage, in manufactur- Ing, selling, or distributing golf balls, and of obstructing and preventing the establishment of new distributors of golf balls; and (6) Suppressing and eliminating all price competition among manufacturers and wholesalers in sale of such articles, and among retail dE>alers engaged in resale thereof, and of hampering and interfering with the natural flow of trade in commerce of golf balls to and through the various States, and of injuring competitors by unfairly diverting business and trade from them, depriving them thereof and otherwise driving or freezing them out of business, and of prejudicing and injuring manufacturers, wholesalers, and retailers and others who do not conform to their program or methods, or who do not desire to conform to them, but are compelled to do so by their concerted action as herein set forth; and With dangerous tendency unduly to hinder competition in the golf ball trade throughout the United States, and to create monopoly thereof in the hands of aforesaid associations, officers, and members; and Wbere said professional association, Its officers, etc.- (g) Induced and received such unlawful discrimination in price or allowance In connection with purchase of golf balls in interstate commerce, through concerted action as aforesaid, and through the formulation, adoption, and administration of policy and practice requiring payment of monies, or discount direct, as above set forth, for the privilege of imprinting letters "PGA" on golf balls sold to members ;

(h) Induced and received payments contracted for as aforesaid, and not made available on proportionally equal terms to all other customer competitors of such manufacturer members, to be used by such professional association for the purpose of promoting and cre>ating a preference on the part of the purchasing public for golf balls having letters ''PGA" Imprinted thereon over balls of equal grade, quality and value offered and sold by retail competitors; and (i) Knowingly induced and rE>ceived such discriminations in price, as aforesaid set forth, on purchases of golf balls made by them ; With the result that the general effect of the policies and practices requiring systematic discriminations in price for golf balls of like grade and quality between customers in the same class, as hereinabove set forth, bad been, or might be, substantially to lessen competition and tend to create a monopoly in the manufacture, sale, and distribution thereof, and to injure, destroy, and prevent competition between and among manufacturers, wholesalers, and retailers of golf balls, and deprive purchasing public of advantages in price, service, and other considerations which might be received and enjoyed under conditions of normal and unobstructed or free and fair competition in said trade and industry, and to otherwise operate as a restraint upon and a detriment to the freedom of fair and legitimate competition in such trade and industry:

Held, That such acts and practices bad a dangerous tendency m1duly to hlndE>r competition in the golf ball trade throughout the United States, and to create monopoly thereof in the bands of said associations, their officers and members, and constituted unfair methods of competition in commerce in GOLF BALL MANUFACTURERS' ASSOCIATION, ET AL. 827 824 Complaint violation of the provisions of Section 5 of an Act of Congress approved September 26, 1914, and that their said acts and practices in granting unlawful discriminations or paying, or contracting to make, payments for the promotion of said "PGA" balls and interests as hereinabove set forth, or in inducing or receiving any such discriminations or payments, as aforesaid constituted a violation of the provisions of Sections 2 (a), 2 (d) and 2 (f) of an Act of Congress approved October 15, 1914, as amended by an act approved June 19, 1936.

Defore Mr. lVilliam 0. Reeves, trial examiner. Mr. John Darsey for the Commission.

Wright, Gordon, ZMhry & Parlin, of New York City, for Golf Ball Manufacturers' Association and its officers, with whom appeared Arthur, Dry & Dole·, of New York City for Mr. Edward C. Conlin, 'V'ice president of said association, and Lewis & Kelsey, of New York City, for Mr. 'Villiam T. Brown, secretary and treasurer thereof. Lewis & Kelsey, of New York City, for A. G. Spalding and Brothers.

Reeves, Todd, Ely & Beaty, of New York City, for John Wanamaker, Inc.

Oook, Smith, Jacobs & Beake, of Detroit, Mich., for L. A. Young Golf Company.

Mr. Frank M. SlouglL, of Cleveland, 0., for 'Vorthington Ball Company.

11/r. Thomas Freeman, Jr., and Mr. W. R. BrCYWn, of Chicago, Ill., for 'Vilson Sporting Goods Company.

Arthur, Dry & Dole, of New York City, for U.S. Rubber Products Company.

/(enefick, Cooke, Mitchell, Bass &: Letchworth, of Buffalo, N. Y., for Dunlop Tire & Rubber Company.

Mr. Alan N. Mann, of New York City, for Acuslmet Process Company.

Mr. Arthur J. W. Hilly, of New York City, for Professional Golfers Association of America and its officers and members. AMENDED AND Supplemental Complaint Pursuant to the provisions of an Act of Congress approved September 26, 1914 entitled "An Act to create a Federal Trade Comlhission, to define its powers and duties, and for other purposes" (the Federal Trade Commission Act), and pursuant to the provisions of an Act of Congress approved October 15, 1914, entitled "An Act to supplement existing laws against unlawful restraints and monopolies and for other purposes" (The Clayton Act), as amended by "An Act to amend Section 2 of the act entitled "An Act to supplement 828 FEDERAl.< TRADE COMMISSION DECISIONS Complaint 26F.T.C.

existing laws against unlawful restraints and monopolies, and for other purposes" approved October 15, 1914 as amended (U. S. C. Title 15, Sec. 13), and for other purposes" (The Robinson-Patman Act), the Federal Trade Commission having reason to believe that the respondents hereinabove designated have been and are using un- .fair methods of competition in commerce as "commerce" is defined. in said Federal Trade Commission Act, and it appearing to said Commission that a proceeding by it in respect thereof would be in the public interest; and the Federal Trade Commission having reason to believe that the said respondents have violated and are now violating the provisions of Subsection "a", Subsection "d" and Subsection "f" of Section 2 of said Clayton Act as amended, hereby issues its amended and supplemental complaint against said respondents, stating its charges as follows:

Count 1 PARAGRAPH 1. The respondent, Golf llall.Manufacturers' Associa,tion, hereinafter for convenience referred to as "Manufacturers' Association," is an unincorporated trade association, with an office at 105 Nassau Street, in the city of New York, N. Y. Its officers are, or were in 1936, respondents Lawrence B. Icely, Edward C. Conlin, and 'Villiam T. Brown, president, vice-president, and secretary-treasurer, respectively. Its membership consists of manufactmers and wholesalers of golf balls. The "Manufacturers' Association" is a nonprofit organization created for the purpose of promoting the welfare and interests of its membership.

PAR. 2. Respondent A. G. Spalding and Brothers, is a corporation organized and existing by virtue of the laws of the State of New Jersey, with its main office and principal place. of business located at 105 Nassau Street, in the city of New York, N. Y. It is, and for several years last past has been, engaged in the manufacture and sale of golf balls.

Respondent John 'Vanamaker, Inc., is a corporation organized and existing by virtue of the laws of the State of Pennsylvania with its main office and principal place of business located at Chestnut Street, in the city of Philadelphia, Pa. It is, and for several years last past has been, engaged in the manufacture, purchase, and sale of golf balls. Respondent L. A. Young Golf Company is a corporation or~an­ ized and existing under and by virtue of the laws of the State of Michigan, having an office and place of business located at 6545 St. Antoine Street, in the city of Detroit, Mich. It is, and for several years last past has been, engaged in the manufacture and sale of golf balls.

GOLF BALL l\IAXUFACTURERS' ASSOCIATION, ET AL. 829 Complaint Respondent 'Vorthington Ball Company, is a corporation organized and existing under and by virtue of the laws of the State of Dhio with an office and place of business located at Elyria, Ohio. It is, and for several years last past has been, engaged in the manufacture and sale of golf balls.

Respondent Wilson Sporting Goods Company, is a corporation organized and existing under and by virtue of the laws of the State of Delaware, with an office and place of business located at 3037 Powell .A venue, in the city of Chicago, Ill. It is, and for several years last past has been, e.ngaged in the manufacture and sale of golf balls. Respondent U. S. Rubber Products Company, is a corporation '()rganized and existing under and by virtue of the laws of the State '()f De.Jaware, with an office and place of business located at 1790 Broadway, in the city of New York, N. Y. It is, and for several )'ears last past has been, engaged in the manufacture and sale of golf balls.

Respondent Dunlop Tire and Rubber Company, is a corporation '()rganized and existing under and by virtue of the laws of the State ·'()£ Delaware, having an office located at 500 5th Avenue, in the city 'Of New York, N. Y. It is, and for several years last past has been, -eng-aged in the manufacture and sale of golf balls. Respondent Acushnet Process Company, is a corporation organized :and existing under and by virtue of the laws of the State of Massa- -chusetts, with an office aml place of business located in the city of New Bedford, Mass. It is, and for several years last past has been, ·engaged in the manufacture and sale of golf balls. The above named respondents do not constitute the entire membership of the respondent "Manufacturers' Association" but are repre- :sentative members thereof. All members of the respondent "Manufacturers' Association" are made parties respondent herein as a class of which those specifically named are representative of the whole. For convenience the above named respondents will hereinafter be referred to as members of the "Manufacturers' Association.'' PAR. 3. The respondent members of the "Manufacturers' Association" cause their golf balls when sold to be transported to purchasers thereof located in the various States of the United States. They are in competition among themselves, except in so far as their said com- Petition has been· hindered, lessened, restricted, or .restrained or potential competition among them forestalled by their practices and lnethods hereinafter particularly described and set forth. There are other manufacturers and wholesalers of golf balls, who sell and distribute their said products in the various States of the United States, and who, in the ordinary course of their business, seek the same cus- 1604510--39--vol.26----55 830 FEDERAL TRADE COMMISSION DECISIO:SS Complaint 2G F. T,C. tomers that are sought by the respondent members of the "Manufacturers' Association." These nonmember manufacturers and wholesalers also cause their golf balls to be shipped and transported from the various points of manufacture and sale in certain States through and into other States of the United States. They am also in competition among themselves and with respondent members of the "Manufacturers' Association" except in so far as their said competition has been hindered, lessened, restricted, or restrained or potimtial competition forestalled as a result of the use of the practices and methods by the parties respondent hereinafter described. The respondent "Manufacturers' Association" and its officers are not engaged in commerce, but are engaged in unfair methods, hereafter described, which directly affect competition among respondent members of the "Manufacturers' Association" and nonmember manufacturers and wholesalers of golf balls, and also directly affect the competition in the sale of golf balls, between and among retail dealen:; located in the various States of the United States engaged in the retail sale of said products.

P .AR. 4. The respondent, Professional Golfers' Association of America, hereinafter for convenience referred to as "PGA," is an unincorporated trade association, with an office at 14 East Jackson Boulevard, in the City of Chicago, Ill. The officers of said respondent "PGA" are, or were in 1936, respondents George R. Jacobus, president; Jack B. Maekie, treasurer.; and Tom 'Valsh, Reereto,ry. Respondent "PGA" is a nonprofit assoeiation organized and rreated for the purpose of promoting the game of golf and the general welfare and interests of its members who are engaged in the sale of golf balls and golf equipment.

Its membership consists of npproximately 1,500 of nn estimated total of 2,500 professional golfers who are engaged in the retail sale of golf balls and golf equipment throughout the country. Among the members of said respondent "PGA" are respondents C. M. Irwin, Tom Kerrigan, Joe Bradley, Jim Dante, Jack Fox, Jack Hagen, John Inglis, R. C. MacDonald, Alex Main, and Jack Forrester, all individuals, engaged in the retail sale of golf balls and golf equipment. The above named members of said respondent "PGA" do not constitute the entire membership thereof but are representative members thereof. All members of respondent "PGA." are also made respondents herein, as a class, of which those specifically named are representative of the whole. Said respondent melllbers are hereinafter for convenience collectivp]y referred to as respondent members of "PGA."

GOLF BALL MA~UF.\CTURERS' ASSOCIATION, ET AL. 831 824 Complaint The respondent members of "PGA" are in competition with one another in the 1;etail sale of golf balls to consumers in the various localities in which they respectively operate, except insofar as their said competition has been hindered, lessened, restricted, or restrained or potential competition among them forestalled by the practices and methods of the parties respondent hereinafter specifically described and set forth. There are numerous other retailers of golf halls who are nonmembers of respondent "PGA" who are engaged in the sale of such products to consumers in the various localities and trade areas in the United States in competition with one another and with one or more of respondent members of "PGA," exce.pt insofar as such competition has been hindered, lessened, restricted, or restrained or potential competition among them forestalled by the use of the practices and methods of the parties respondent hereinafter described. All or nearly all of respondent lnembers of "PGA" and their competitors above mentioned are engaged in purchasing golf balls from manufacturers or wholesalers tht>leaf whid1 are transported from one State to and through other States to them as tt result of such purchases and in reselling the same to customers located in the various trade areas in which they respectively operate. All of said respondent members of "PGA" are engaged in unfair methods, as hereinafter set forth, which directly and substantially affect competition among themselves, and between themselves and other retail dealers, and among the manui'~teturers and wholesalers of said products . . PAR. 5. The respondent members of the "Manufacturers' Asso- <~Jation" own and control practically all of the factories engaged in the production of golf balls in the United States and produce most of the golf balls sold and distributed in this country. They are able to and do determine and control the prices and terms at which and tonditions under which golf balls are sold and distributed by manufacturers and wholesalers throughout the United States. The respondent members of "PGA" constitute a group of retailers of golf halls so large and influential in the trade as to be able by themselves and in cooperation with respondent members of the "Manufacturers' Association'' to control and influence the flow of trade and channels of. distribution in golf balls throughout the country, as well as the Prices at which, and the terms and cmHlitions under which nonlnernber retailers of golf balls buy and resell such products. PAR. 6. The parties respondent named herein have within the past se"eral years agreed and conspired, combined and confederated together nnd with others, and have united in and pursued a common 832 FEDERAL TRADE COl\LMISSION DECISIONS Complaint 2GF.T. C.

and concerted course of action and undertaking, among themselves and with others, to adopt, follow, carry out, enforce, fix, and maintain throughout the United States, certain monopolistic prices, policies, sales methods, and trade practices, hereinafter described, which the said parties respondent have agreed to and adhered to themselves and which they have attempted to and have, by coercion and colllpulsion imposed upon manufacturers, wholesalers, and retail dealers who were not permitted to be or did not desire to be members of either of the respondent associations, and others, to the substantial or potential injury of sollle of such manufacturers, wholesalers and retail dealers and of ultimate purchasers and consumers of golf balls. PAR. 7. The said monopolistic prices, sales methods, policies, and trade practices referred to in the preceding paragraph and which were so adopted, fixed, and put into effect are as follows: 1. A policy and practice of requiring that all manufacturers and wholesalers of golf balls who sell their said products to the men1· hers of respondent "PGA" enter into a purported license agreement with respondents, A. G. Spalding and Brothers, and U. S. Rubber Products Company permitting them to manufacture golf balls iu accordance with a process on which the said respondents profess to have obtained a patent.

2. A policy and practice of requiring that all golf balls manufactured under the aforesaid purported license agreements be sold in accordance with uniform price lists attached thereto and made a part thereof.

3. A policy and practice of requiring as a condition precedent to the sale of golf balls to respondent members of "PGA" that manufacturers and wholesalers of golf balls enter into purported license agreements or contracts with the respondent "PGA" providing for the payment of a royalty to the respondent "PGA" for the privilege of causing the letters "PG A'' to be imprinted on the golf balls so sold.

4. A policy and practice of causing, permitting, and allowing the respondent "PGA" to remit and pass along to its members a designated percentage of the royalties paid by manufacturers and wholesalers to respondent "PGA" under the aforesaid purported license agreements.

5. A policy and practice of causing, permitting, and allowing the respondent "PGA" to use the funds derived from the payment of royalties under the aforesaid purported license agreements for the purpose of promoting and creating a preference on the part of th~ purchasing public for golf balls having the letters "PGA" imprinted thereon to golf balls of equal quality and value offered for sale and sold by retail competitors of the respondent members of "PGA." GOLF BALL MANUFACTURERS' ASSOCIATION, ET AL. 833 Complaint 6. A policy and practice of requiring that manufacturers and Wholesalers of golf balls bearing the letters, "PGA" refrain and abstain from selling the same to any persons or parties other than tnembers of respondent "PGA."

7. A policy and practice of requiring that all manufacturers and Wholesalers of golf balls who manufacture and sell balls under the a.foresaid purported license agreements maintain uniform prices With those quoted in the price lists attached to and made a part of the aforesaid license agreements in the sale of their golf balls of equal grade and quality to those bearing the letters "PGA" to retail Purchasers who are nonmembers of respondent "PGA." 8. A policy or practice of granting, giving, or allowing members of the respondent "PGA" a discount on purchases of golf balls commensurate with the designated percentage of the aforesaid royalties to be received by them in lieu of said designated percentage. 9. A policy and practice of requiring that all manufacturers and '~wholesalers of golf balls who sell their products to members of respondent "PGA" refrain and abstain from giving, allowing, or granting, in any way or manner any rebate, discount, royalty, or refund in any manner or form to retail purchasers who are not hlembers of respondent "PGA."

10. A policy and practice of persuading, coercing, and eompelling retail dealers in golf balls who are not members of respondent ''~GA" to refrain, abstain, and desist from selling golf balls at a Prtce less than that designated by the parties respondent herein. 11. Generally, a policy and practice designed to and tending to tnonopolize the manufacture, sale, and distribution of golf balls in the parties respondent herein.

PAn. 8. For the purpose of making such sales practices, policies, and pricing methods effective, and of requiring compliance therewith and observance thereof by all manufacturers, wholesalers, and retail dealers in golf balls throughout the United States, the parties respondent herein, acting through their officers, directors, committees, and individually, in furtherance of and in pursuance of the general Pla~, undertaking, conspiracy, and policy, have collectively as groups or mdividually done the following things:

1. Formulated, adopted, followed, carried out, enforced, imposed, nnd made effective the policies, practices, and methods described in the preceding paragraph .

. 2. Held official and unofficial meetings of said responuent associations and their members at which the policies anu practices herein- ~bove. described were discussed, adopted, and agreed to, and issued nlletms, circulars, letters, price lists, and other printed matter, and Complaint 26F.T.C.

distributed the same among the members of said respondent associations and others, announcing the adoption of the policies, practices, and requirements referred to and the imposition of the same upon all affected thereby.

3. Caused practically all members of the respondent ".Manufacturers' Association" to enter into purported license agreements with respondents, A. G. Spalding and Brothers, and U. S. Rubber Products Company to manufacture their golf balls in accordance with a patented process professed to be owned by said respondents and to cause the golf balls so manufactured to be sold in accordance with uniform price lists attached to and made a part of said purported license agreements.

4. Caused all manufacturers and wholesalers of golf balls who sell their products to members of respondent "PGA" to enter into purported license agreements or contracts with respondent "PGA" providing for the payment of royalties to respondent "PG A" for the privilege of causing the letters "PGA" to be imprinted on their golf balls.

5. Caused, permitted, and allowed the respondent "PGA" to remit and pass along to its members a designated percentage of the royalties paid by the manufacturers and wholesalers to the respondent "PGA" under the aforesaid purported license agreements. 6. Caused, permitted, and allowed the respondent "PGA" to use the funds derived from the payment of royalties under the aforesaid purported license agreements for the purpose of promoting the interests and welfare of its members to the disadvantage of retail dealers in golf balls who are not members of said respondent "PGA." 7. Respondent members of the "Manufacturers' Association" have and do refuse to sell golf balls manufactured under the aforesaid purported license agreements to parties and persons who are not members of the respondent "PGA."

8. Respondent members of the "Manufacturers' Associationn maintain uniform prices with those quoted in the price lists attached to and made a part of the aforesaid license agreements in the sale of their golf balls of equal grade and quality to those manufactured and sold under said purported license agreements. 9. Respondent members of the "Manufacturers' Association" grant, give, and allow members of respondent "PGA" a discount on purchases of golf balls commensurate with the designated percentage of the aforesaid royalties to be received by them in lieu of said percentage of royalties.

10. Respondent members of the "Manufacturers' Association" refuse and refrain from giving, allowing, or granting in any way or GOLF BALL l\IAN"UFACTURERS' ASSOCIATION, ET AL. 835 824 Complaint lllanner any rebate, discount, royalty, or refund in any manner or form to retail purchasers who are not members of respondent "PGA." 11. The parties respondent herein have persuaded, coerced, and ~ompelleJ. retail dealers in golf balls who are not members of the respondent "PGA" to refrain, abstain, and desist from selling golf halls at a price less than that designated by them. 12. Respondents generally have sought and have obtained promises and assurances of cooperation from one another in establishing and making effecth·e the sales practices, policies, and pricing methods hereinabove described.

13. The parties respondent generally lun·e exchangeJ. information with reference to their respective businesses and activities to be used in furtherance of the policies and methods referred to. 14. The parties respondent generally have supervised and investigated the practices and policies of retail dealers in golf balls, and have acted concertedly to maintain certain resale prices agreed upon, to control resale markets and to coercively require recalcitrant manufacturers, wholesalers, and retail dealers to conform to such practices nnd methods.

PAn. 9. The capacity, tendency, and effect of said plan, agreement, combination, conspiracy, undertaking, policies, and methods, and the said acts and practices of said respondents in pursuance thereof, are and have been :

1 To monopolize in the respondent members of the "Manufacturers' Association" the business of manufacturing and of selling golf balls to retail dealers in the United States. 2. To monopolize in the respondent members of "PGA" the retail sale of golf balls to consumers in the United States. 3. To fix and maintain the prices at and conditions under which golf balls are sold by manufacturers and wholesalers thereof. 4. To fix and maintain the prices at and conditions under which golf balls are sold by retail dealers to consumers. 5. To bring about an unlawful discrimination in the prices at Which golf balls of the same grade and quality are sold by manufadnrers and wholesalers to retail dealers therein. G. To unreasonably lessen, eliminate, restrain, stifle, hamper, and suppress competition in the golf-ball trade and industry and to .(leprive the purchasing and consuming public of advantages in price, service, and other considerations which they would receive and enjoy Under conditions of normal and unobstructed or free and fair competition in said trade and industry; and to otherwise operate as a restraint upon and a detriment to the freedom of fair and legitimate <'ompetition in such trade and industry.

836 FEDERAL TRADE COMl\IISSION DECISIONS Complaint 26 F. T. C. 7. To substantially increase the cost to retail purchasers of golf balls.

8. To suppress, eliminate, and discriminate against small business: enterprises which are or have been engaged or desire to engage in ·manufacturing, selling, or distributing golf balls. 9. To obstruct and prevent the establishment of new distributorsof golf balls.

10. To suppress and eliminate all price competition among manufacturers and wholesalers in the sale of golf balls and among retail dealers engaged in the resale thereof.

11. To hamper and interfere with the natural flow of trade in commerce of golf balls to and through the various States of the United States; and to injure the competitors of individual respondents by unfairly diverting business and trade from them, depriving them thereof and otherwise driving or freezing them out of business. 12. To prejudice and injure manufacturers, wholesalers, and retailers and others who do not conform to respondents' program or methods or who do not desire to conform to them, but are compelled to do so by the concerted action of respondents herein alleged. PAR. 10. The above alleged acts and things done by the parties respondent have a dangerous tendency unduly to hinder competition in the golf-ball trade throughout the United States, and to create a monopoly thereof in the hands of respondents and constitute unfair methods of competition in commerce, within the meaning of Section 5 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.

Count 2 PARAGRAPH 1. Paragraphs 1 to 9 inclusive of count 1 hereof arehereby adopted and made a part of this charge as fully as if set out herein verbatim .

. PAR. 2. The parties respondent herein named have conspired and confederated together to bring about and have brought about and made effective a policy and system whereby respondent members of the Manufacturers' Association discriminate and have discriminated in price between different purchasers of golf balls of like grade and quality, in violation of Section 2a of an Act of Congress approved June 19, 1936, entitled "An Act to amend Section 2 of the act entitled 'An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes' approved October 15, 1914, as amended (U. S. C. Title 15, Sec. 13), and for other purposes.'' GOLF BALL 1\L\.:NU:F.ACTURERS' ASSOCIATION, ET AL. 837 Complaint The aforesaid discriminations in price between different purchasers of golf balls of like grade and quality were and are effected through the concerted action of the parties respondent herein through the formulation, adoption, and administration of a policy and practice of requiring the payment of purported royalties to respondent "PGA" for the privilege of causing the leters "PGA" to be imprinted on golf balls which are sold to members of the respondent "PGA," a percentage of which purported royalties to be passed along to the member purchaser with the knowledge and consent of the respondent members of the "Manufacturers' Association"; or a policy or practice of requiring that the respondent members of the "Manufacturers' Association" give members of respondent "PGA" a discount or rebate on the purchase prices quoted to the retail trade on golf balls of like grade and quality; or a policy or practice requiring that the respondent members of the "Manufacturers' Association" quote and sell members of respondent "PGA" golf balls of like grade and quality to those offered and sold the nonmember retail dealers at a price less than that at which they are sold to nonmember retail purchasers. PAR. 3. The respondent members of the "Manufacturers' Association" have contracted for the payment of, and have made payments of money to the respondent "PGA" to be used by said respondent "PGA" for the purpose of promoting the welfare and interest of their customers who are members of said respondent "PGA" in violation of Section 2d of said Act of Congress approved June 19, 1936, entitled "~\n Act to amend Section 2 of the act entitled 'An Act to ~upplement existing laws against unlawful restraints and monopolies, and for other purposes' approved October 15, 1914, as amended (U. S. C. Title 15, Sec. 13), and for other purposes." The aforesaid payments of money are effected through the payment of purported royalties to the respondent "PGA" for the privilege of causing the letters "PGA" to be imprinted on golf balls which are sold to members of the respondent "PGA," and the said payments consist of that percentage of said purported royalties which is not passed along to the respondent member purchasers of golf balls but lS l'£>tained by the respondent "PGA" and used by it for the benefit and promotion of t.he welfare of its respondent members. The said Payments of money are not available, and are not made to any cust?mers of the respondent members of the "Manufacturers' Associahon" who are not members of the respondent "PGA." PAn. 4. The respondent members of the respondent "PGA" havo knowingly induced said respondent members of the "Manufacturers' Association" to discriminate in price as charged in paragraph 2 of 838 FEDERAL TRADE COM.!IIISSION DECISIONS Findings 26F.T.C.

count 2 of this complaint, and. have knowingly received such discriminations in price on purchases of golf balls made by them, in violation of Section 2f of the said act entitled "An Act to amend Section 2 of the act entitled 'An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes', approved October 15, 1914, as amended (U. S. C. Title 15, Sec. 13),. and for other purposes."

PAR. 5. The general effect of the policies and practices requiring the· ~ystematic discriminations in price for golf balls of like grade and quality between customers in the same class as set forth in paragraphs 2 and 4 hereof has been or may be substantially to lessen competition and tend to create a monopoly in the manufacture, sale, and dish·ibution of golf balls, and to injure, destroy, and prevent competition between and among manufacturers, wholesalers, and retailers of golf balls and to deprive the purchasing public of advantages in pricer service, and other considerations which might be received and enjoyed under conditions of normal and unobstructed or free and fair competition in said trade and industry; and to otherwise operate as a. restraint upon and a detriment to the freedom of fair and legitimate competition in such trade and industry.

REPORT, FINDINGs AS TO THE FACTs, AND Onder Pursuant to the provisions of an Act of Congress approved St>ptember 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes" (the Federal Trade Commission Act), and pursuant to the provisions of an Act of Congress approved October 15, 1914, entitled "An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes" (the Clayton Act), as anwnded by "An .Act to amend Section 2 of the act entitled 'An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes' approved October 15, 1914 as amended (U.S. C. Title 15, Sec. 13), and for othet~ purposes" (the Robinson-Patman Act), the Federal Trade Commission, on August 18, 1937, issued, and snbseqnently servl'd, its amendt>d complaint in this proceeding upon the respondents namerl in the caption hereof, charging them with the use of unfair methods of competition in commHce, in violation of the provisions of said Federal Trade- Commission Act, and with acts and practices in violation of Subsections 2 (a), 2 (d), and 2 (£) of Section 2 of said Clayton Act as amended.

After the issuance and service of said amended complaint, respondf'nts filed their answers thereto, making general denial of the substantial allegations of the complaint. Subsequently all the respondents GOLF BALL l\IANUFACTURERS' ASSOCIATION, ET AL. 839 824 Findings petitioned the Federal Trade Commission for permission to withdraw said answers and to file in lieu thereof substitute answers to the complaint, in which substitute answers respondents admitted, for the purposes of this proceeding only, all the material allegations of said complaint except the facts alleged in paragraph 7, Subsections 1 and 2, and paragraph 8, Subsection 3, of count 1, and the same allegations as adopted and made a part of paragraph 1 of count 2 of the amended complaint-all of which allegations '"ere severally denied. Pursuant to permission granted by the Commission, said original answers were Withdrawn by said respondents anl said substitute answers were filed in lien thereof. Said respondents also consented therein that the Commission might proceed to make its findings of .fact without further proceedings and that an order might issue and be served upon the respondents requiring them to cease and desist from the unfair methods of competition alleged in the complaint. The said Commission having duly considered the above and being fully addsed in the premises, finds that this proceeding is in the interest of the public and Jnakes this its findings as to the facts and its conclusion drawn therefrom.

FINDINGS AS TO THE Facts PARAGRAPH 1. The respondent, Golf Ball Manufacturers' Association, hereinafter for conwnience referred to as "Manufacturers' Association," is an unincorporated trade association, with an office at 105 Nassau Street, in the city of New York, N. Y. Its officers are respondents Lawrence B. IcPly, Edward C. Conlin, a11d 'Villiam T. Drown, president, vice-president, and secretary-treasurer, respectively. Its membership consists of manufacturers and wholesalers of golf halls. The "Manufacturers' Association" is a nonprofit organization created for the purpose of promoting the welfare and interests of its lllemhersh i p.

PAR. 2. Respondent A. G. Spalding and Bros., is a corporation organized and existing by virtue of the laws of the State of New Jersey, with its main office and principal place of business located at 105 Nassau Street, in the city of New York, N.Y. It is, and for sev; tral years last past has been, engaged in the manufacture and sale of golf balls.

Respondent John 'Vanamaker, Inc., is a corporation organized and l'Existing by virtue of the laws of the State of Pennsylvania with its ~Min office and principal place of business located at Chestnut Street, 111 the city of Philadelphia, Pa. It is, and for several years last past has been, engaged in the manufacture, purchase, and sale of golf balls. Respondent L. A. Young Golf Company is a corporation organized· and existing under and by virtue of the laws of the State of Michigan, 840 FEDERAL TRADE COMl\IISSION bECISIONS Findiugs 2GF. T.C.

having an office and place of business located at G545 St. Antoint; Street, in the city of Detroit, 1\Iich. It is, and for several years last past has been, engaged in the manufacture and sale of golf balls. Respondent 'Vorthington Ball Company, is a corporation organize.d and existing under and by virtue of the laws of the State of Ohio will~· an office and place of business located at Elyria, Ohio. It is, and for sewral years last past has been engaged in the. manufacture and sale of golf balls.

Rt>spondent 'Vilson Sporting Goods Company, is a corporation, organized and existing undt>r and by virtue of the laws of the State~ of Delaware, with an office and place of business located at 2037 Powell Awnue, in the city-of Chicago, Ill. It is, and for several years last past has been, engaged in the manufactme and sale of golf balls. Respondent U. S. Rubber Products Company, is a corporation organized and existing under and by virtue of the laws of the State of Delaware, with an office and place of business located at 1790 Broadway, in the city of New York, N. Y. It is, and for several yeat·s last past has been, engaged in the manufacture and sale of golf balls. Respondent Dunlop Tire and Rubber Company, is a corporation organized and existing under and by virtue of the laws of the State of Delaware, having an office located at 500 5th Avenue, in the city of New York, N. Y. It is, and for· several years last past has lwen, engaged in the manufacture and sale of golf balls. Respondent Acushnet Process Company, is a corporation organized and existing under and by virtue of the laws of the State of ~Iassachusetts, with an office and place of business located in the city of New Bedfonl, Mass. It is, and for several years last past has been, engaged in the manufacture and sale of golf balls. The above-named respondents do not constitute the entire membership of the respondent "Manufacturers' Association" but are representative members thereof. All members of the respondent "Manufacturers' Associnti.on" were made parties respondent herein as a class of which those specifically named are representative of the whole. For convenience the above-named respondents will hereinafter be referred to as members of the "Manufacturers' Association." PAR. 3. The respondent members of the "Manufacturers' Associa· tion" cause their golf balls when sold to be transported to purchasers thereof located in the various States of the United States. They are in competition among themselves, except insofar as their said competition has been hindered, lessened, restricted, or restrained "or potential competition among them forestalled by their practices an~ nwthods hereinafter particularly described and set forth. There are other manufacturers and wholesalers of golf balls, who sell and GOLF BALL l\IAXUFACTURERS' ASSOCIATION, ET AL. 841 Findings distribute their said products in the various States of the United States, and who, in the ordinary course of their business, seek the same customers that are sought by the responuent members of the "Manufacturers' Association." These nonmember manufacturers and wlwlesalet·s also cause their golf balls to be shipped and transported fJ'OJu the various points of manufacture and sale in certain States through and into other States of the United States. They are also in competition among themselves and with respondent members of the "Manufacturers' Association" except insofar as their said competition has been hindered, lessened, restricted, or restrained or potential competition forestalled as a result of the use of the practices and methous by the parties responuent hereinafter described. The respondent ":Manufacturers' Association" and its officers are not engaged in commerce, but are engaged. in unfair methods, hereafter <lrs('ribed, which <lirflct ly affect competition among respondent memhrrs of the "l\IannfactnrHs' Association" and nonmember manufactnrHs and wholesalers of golf balls, and also directly affect the' competition in the sale of golf balls, between and among retail dealers located in the various States of the United States engaged in the I·etail sale of said products.

PAn. 4. The respondent, Professional Golfers' Association of Alllerica, hereinafter fot' convenience referred to as "PGA," is an llnincorporatPd trade association, with an office at 14 East Jackson noulevard, in the city of Chicago, Ill. The officers of said respondent "PGA" nre respondents George R Jacolms, president; Jack B. Mackie, treasurer; and Tom 'Valsh, secretary. Respondent "PGA" is a nouprofit association organized and created for the purpose of !Jromoting the gnme of golf and the general welfare and interests of its members who are engaged in the sale of golf balls and golf l:'qnipment.

Its nwmber!:-ihi p consists of approximately 1,500 of an estimated total of 2,500 professional golfers who are engaged in the retail sale of golf balls and golf equipment throughout the country. A.n10ng the members of said respondent "PGA" are respondents C. l\I. Irwin, Tom Kerrigan, Joe Bradley, Jim Dante, Jack Fox, Jack Hagen, John Inglis, R. C. MacDonald, Alex Main, and Jack F'onester, a II in<lividnals, ·engaged in the retail sale of golf balls and golf equipment. The above-named members of said respondent "PG.A" do not constitute the entire membership thereof but are representative members thereof. All members of respondent "PGA" Were. made respondents herein, as a class, of which those specifically llnmed are representati,·e of the whole. Said respondent members are he1·einafter for convenience collectively referred to as respondent 11WJnbers of "PGA."

842 FEDERAL TRADE COl\:Il\IISSION DECISIONS Findings 2GF. T.C.

The respondent members of ''PGA" are in competition with one another in the retail sale of golf balls to consumers in the various localities in which they respectively operate, except insofar as their said competition has been hindered, lessened, restricted, or restrained or potential competition among them forestalled by the practices and methods of the parties respondent hereinafter specifically described and set forth. There are nu~erous other retailers of golf balls w1w are nonmembers of respondent "PGA" who are engaged in the sale of such products to consumers in the various localities and trade areas in the United States in competition with one another and with one or more of respondent members of "PGA," except insofar as such competition has been hindered, lessened, restricted, or restrained or potential competition among them forestalled by the use of the practices and methods of the parties respondent hereinafter described. All or nearly all of respondent members of "PGA" and their competitors above mentioned are engaged in purchasing golf balls from manufacturers or wholesalers thereof which are transported from one State to and through other States to them as a result of such purchases and in reselling the same to customers located in the various trade areas in which they respectively operate. All of said respondent members of "PGA" are engaged in. unfair methods, as hereinafter set forth, which directly and substantially affect competition among themselves, and between themselves and other retail dealers, and among the manufacturers and wholesalers of said products.

PAR. 5. The respondent members of the ''Manufacturers' Association" own and control practically all of the factories engaged in the production of golf balls in the United States and produce most of the golf balls sold and distributed in this country. The respondent members of "PGA" constitute a group of retailers of golf balls so large and influential in the trade as to be able by themselves and in cooperation with respondent members of the "Manufacturers' Association" to control and influence the flow of trade and channels of distribution in golf balls throughout the country, as well as the prices at which, nnd the terms and conditions under which nonmember retailers of golf balls buy and resell such products. PAR. 6. The parties respondent named herein have within the past several years agreed, combined, and united in and pursued a common and concerted course of action and undertaking, among themselves and with others, to adopt, follow, carry out, enforce, fix, and main· tain throughout the United States, certain monopolistic prices, poli· cies, sales methods, and trade practices, hereinafter described, which the said parties respondent have agreed to and pursued to the sub- GOLF BALL MAXUF.ACTURERS' ASSOCIATION, ET AL. 843 Findings stantial or potential injury of some of such manufacturers, wholesalers, and retail dealers and of ultimate purchasers and consumers o:f golf balls.

PAR. 7. The said monopolistic prices, sales methods, policies, and trade practices referred to in the preceding paragraph and which were so adopted, fixed, and put into effect are as follows: 1. A policy and practice of coercing, in connection with the sale of golf balls to respondent members of "PGA," manufacturers and wholesalers of golf balls to enter into contracts with the respondent "PGA" proyiding for the payment of monies to the respondent "PGA" for the privilege of causing the letters "PGA" to be imprinted on the golf balls so sold.

2. A policy and practice of causing, permitting and l\llowing the respondent "PGA" to remit and pass along to its members a designated percentage of the monies paid by manufacturers and wholesalers to respondent "PGA" under the aforesaid contracts. .. . rr 3. A policy and practice of causing, permitting, and allowing the respondent "PGA" to use the funds derived from the payment r<lf monies under the aforesaid contracts for the purpose of ·promoting and creating a preference on the part of the purchasing public :for golf balls having the letters "PGA" imprinted thereon to golf balls of equal quality and value offered for sale and sold by retail·com- ·petitors of the respondent members of "PGA." " 4. The policy and practice of requiring that all manufacturers and wholt:-salers of golf balls who manufacture and sell balls under the aforesaid contracts observe the provisions of said contracts with respect to the maintenance of uniform prices as between members of the respondent "PGA" and other retail dealer purchasers who are nonmembers of respondent "PGA" in the sale of their golf balls of equal gmde and quality.

5. A policy or practice of granting, giving, or allowing members of the respondent "PGA" a discount on purchases of golf balls c6m- Inensurate with the designated percentage of the aforesaid payments ·to be received by them in lieu of said designated percentage. 6. A policy and practice of requiring that all manufacturers and wholesalers of golf balls who sell their products to members of respondent "PGA" refrain and abstain from giving, allowing, or granting in any way or manner any rebate, discount, royalty, or refund in any mannt:-r or form to retail purchasers who are not members of respondent "PGA."

'i. A policy and practice of persuading, coercing, and compelling retail dealers in golf balls who ara not members of respondent "PGA" to refrain, abstain, and desist from selling golf balls at a price less than that designated by the parties respondent herein. Findings 26 F. T.C. 8. Generally, a policy and practice designed to and tending to monopolize the sale and distribution of golf balls in the parties respondent herein.

PAR. 8. For the purpose of making such sales practices, policies, and pricing methods effective, and of requiring compliance therewith nnd observance thereof by nll manufacturers, wholesalers, and retail dealers in golf balls throughout the United Stat~s, the parties respondent herein, acting through their officers, directors, committees, and individually, in furtherance of and in punmance of the general plan, undertaking, and policy, have collectively as groups or individually done the following things:

1. Fommlated, adopted, followed, carried out, enforced, imposed, and made effective the policies, practices, and methods df'scribed in the preceding paragraph.

2. Held official and unofficial meetings of said respondent associations and their members at which the policies and practices hereinabove described were discussed, adopted, and agreed to, and issued bulletins, eirculars, letters, price lists, and other printed matter, and distributed the same among the members of said respondent associations and others, announcing the adoption of the policies, practices, and requirements referred to and the imposition of the same upon all aft'ected then•by.

3. Caused manufacturers and wholesalers of golf balls who sell their products to members of respondent "PGA" to enter into contracts with respondellt "PGA" providing for the payment of money to respondent "PGA" for the privilege of causing the letters "PGA" to be imprinted on their golf balls.

4. Caused, permitted, and allowed the respondent "PGA" to remit and pass along to its members a designated percentage of the monies paid by the manufacturers and wholesalers to the respondent "PGA" under the aforesaid contracts.

'5. Caused, permitted, and allowed the respondent "PGA" to use the funds derived from the payment of monies under the aforesaid contracts for the purpose of promoting the interests and welfare of its members to the disadvantage of retail dealers in golf balls who are not members of said respondent "PGA."

6. Respondent members of the "Manufactmers' Association" have obsen·ed the provisions of the aforesaid contracts with respect to the maintenance of uniform prices as between members of the "PGA" and others than members of the "PG A" in the sale of golf balls of equal grade and quality to those sold to members of the "PGA" under the provisions of said contracts.

7. Respondent members of the "Manufacturers' Assoeiation" have gi,·en and allowed members of respondent "PGA" a discount on GOLF BALL MANUFACTURERS' ASSOCIATION, ET AL. 845 824 l''l.nnlngs purchases of golf balls commensurate with the designated percentage of the aforesaid payments of money to be received by them in lieu of said percentage thereof.

8. Respondent members of the ":Manufacturers' Association" refuse nnd refmin from giving, allowing, or granting in any way or manner any rebate, discount, royalty, or rt>fund in any manner or form to retail dealH purchasers who are not members of respondent "PGA." 9. The parties respondent herein have persuaded, coerced, and compelled retail dealers in golf balls who are not members of the respomlent "PGA" to refrain, abstain, and desist from selling golf balls at a price less than that designated by them. 10. RespondeJ)ts generally have sought and have obtained promises and assurances of cooperation from one another in establishing and making effective the sales practices, policies, and pricing methods lwreinabove described.

11. The parties respondent generally have l'xchanged information with reference to their respective businesses and ac.tivities to be used in furtherance of the policies and methods referred to. 12. The parties respondent generally have supervised and investigated the practices and policies of retail dealers in golf balls, and have acted concertedly to maintain certain resale prices agreed upon; to control resale markets and to coercively require recalcitrant manufacturers, wholesalers, and retail dealers to conform to such practices and methods.

PAR. 9. The cap~tcity, tendency, and effect of said plan, agreement, lindertaking, policies, and methods, and the said acts and pr11ctices of said rt>spondents in pursuance thereof, are and have been: 1. To monopolize in the respondent members of the "Manufachtrers' Association" the busine:-:;s of manufacturing and of selling golf balls to retail dealers in the United States. 2. To monopolize in the respondent members of "PGA" the retail sale of golf balls to consumers in the United States. 3. To fix and maintain the prices at and conditions under which golf halls are sold by mnnnfacturers and wholesalers thereof. 4. To fix and maintain the prices at and conditions under which golf balls are sold by retail dealers to consumers. 5. To bring about an unlawful discrimination in the prices at Which golf b:dls of the same grade and quality are sold by manufacturers and ,dwlesalers to retail dealers therein. 6. To unreasonably lessen, eliminate, rest min, stifle, hamper, and suppress competition in the golf ball trade and industry and to deprive the l>urchasing und consuming public of advantages in price, service, and other CDllsidemtions which they would receive and enjoy under conlt>ut51•-au-vol. 21>-i•6 CO~C\IISSJO"N DECISJOXS846 FEDERAL TRADE Findings ~6F. T.C.

ditions of normal and unobstructed or free and fair competition in said trade and industry; and to otherwise operate as a restraint upon and a detriment to the freedom of fair and legitimate competition in such trade and industry.

7. To substantially increase the cost to retail dealer purchasers <Jf golf balls.

8. To suppress, eliminate, and discriminate against small business ·~nterprises which are or have been engaged or desire to engage in manufacturing, selling, or distributing golf balls. 9. To obstruct and prevent the establishment of new distributors ()f golf balls.

10. To suppress and eliminate all price competition among manu- :facturers and wholesalers in the sale of golf balls and among retail dealers engaged in the resale thereof.

11. To hamper and interfere with the natural flow of trade in commerce of golf balls to and through the various States of the United States; and to injure the competitors of individual respondents by unfairly diverting business and trade from them, depriving them thereof and otherwise driving or freezing them out of business. 12. To prejudice and injure manufacturers, wholesalers, and retailers and others who do not conform to respondents' program or methods or who do not desire to conform to them, but are compelled to do so by the concerted action of respondents herein alleged. PAR. 10. The above alleged acts and things done by the parties respondent have a dangerous tendency unduly to hinder competition in the golf ball trade throughout the United States, and to create a moJwpoly thereof in the hands of respondents and constitute unfair methods of competition in commerce within the meaning of Section 5 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.

PAR. 11. The parties respondent herein named have brought about and made effective a policy and system whereby respondent members of the "Manufacturers' Association" discriminate and have discrimi· nated in price between different purchasers of golf balls of like grade and quality, in violation of Section 2a of the Clayton Act as amended by an Act of Congress approved June 19, 1!>36, entitled "An Act to amend Section 2 of the act entitled 'An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes' approved October 15, 1914, as amended (U. S. C. Title 15, Sec. 13), and for other purposes."

The aforesaid discriminations in price between different purchasers of golf balls of like grade and quality were effected through the con· certed action of the parties respondent herein through the formula· GOLF BALL l\IANUFACTTJRERS' ASSOCIATION, ET AL, 847 Findings tion, adoption, and administration of a policy and practice of requiring the payment of monies to respondent "PGA" for the privilege of causing the letters "PGA" to be imprinted on golf balls which ~re ~old to members of the respondent "PGA," a percentage of which monies to be passed along to the member purchaser with the knowledge and consent of the respondent members of the "Manufacturers' Association"; or a policy or practice of requiring that the respondent members of the "Manufacturers' Association" give members of respondent "PGA" a discount or rebate on the purchase prices quoted to the retail trade on golf balls of like grade and quality; or a policy or prn.ctice requiring that the respondent members of the "Manufacturn·s' Association" quote and seu members of respondent "PGA" golf balls of like grade and quality to those offered and sold the nonmember retail dealers at a price less than that at which they are sold to nonmember retail purchasers.

PAR. 12. The respondent members of the "Manufacturers' Association" have contracted for the payment of, and have made payments of money to the respondent "PGA" to be used by said respondent "PGA" for the purpose of promoting the welfare and interest of their customers who are members of said respondent "PGA" in violation of Section 2 (d) of the Clayton Act as amended by an Act of Congress approved June 19, 1936, entitled "An Act to amend Section 2 of the act entitled 'An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes' approved October 15, 1914, Rs amended (U. S. Q. Title 15, Sec. 13), and for other purposes."

The aforesaid payments of money were effected through the payment of monies to the respondent "PGA" for the privilege of causing the letters "PGA" to be imprinted on golf balls which are sold to members of the respondent "PGA," and the said payments consist of that percentage of said monies which is not passed along to the respondent member purchasers of golf balls but is retained by the respondent "PGA" and used by it for the benefit, and promotion of the welfare of its respondent members. The said payments of money are not available, and are not made to any customers of the respondent members of the "Manufacturers' Association" who are not members of the respondent "PGA."

PAR. 13. The respondent members of the respondent "PGA" have knowingly induced said respondent members of the "Manufacturers' Association" to discriminate in price as aforesaid, and have know~ ingly received such discriminations in price on purchases of golf balls made by them, in violation of Section 2 (f) of the Clayton Act as amended by an Act of Congress approved June 19, 1936, entitled "An Act to amend Section 2 o£ the act entitled 'An Act to supple- Order 26F,T.C.

ment existing laws against unlawful restraints and monopolies, and for other purposes' approved October 15, 1914, as amended (U. S. C. Title 15, Sec. 13), and for other purposes." PAR. 14. The general effect of the policies and practices requiring the systematic discriminations in price for golf balls of like grade and quality between· customers in the same class as set forth in para~ graphs 11 and 13 hereof has been or ma,y be substantially to lessen competition and tend to create A. monopoly in the manufacture, sale, and distribution of golf balls, and to injure, destroy, and prevent competition between and among manufacturers, wholesalers, and re~ tailers of golf balls and to deprive the purchasing public of advan~ tages in price, service, and other considerations which might be re· ceived and enjoyed under conditions of normal and unobstructed or free and fair competition in said trade and industry; and to other~ wise operate as a restraint upon and a detriment to the freedom of fair and legitimate competition in such trade and industry. CONCLUSION The aforesaid acts and practices of respondents have a dangerous tendency unduly to hinder competition in the golf ball trade through· out the United States, and to create a monopoly thereof in the hands of respondents and constitute unfair methods of competition in com~ merce within the meaning of Section 5 of 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; and the acts and practices, set forth in paragraphs 11 to 14: inclusive, of the said respondents are in Violation of Sections 2 (a), 2 (d) and 2 (f) of the Clayton Act as amended by an art of Coug:ress approved June 19, 193G, entitled "An Act to amend Section 2 of the act entitled 'An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes' approved October 15, 1914, as amended (U. S. C. Title 15, Sec. 13), and for other purposes."

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commis~ sion upon the amended complaint of the Commission and the answers filed by the parties respondent herein on February 7, 1938, admitting with certain exceptions all the material allegations of the complaint for the purpose of this proceeding only, and waiving the taking of further evidence and other intervening procedure, and the Commission having malle its findings as to the facts and its conclusion that said respondents have violated the provisions of an Act of Congress GOLF DALL l\IANU:J.'ACTURERS' AS::iOCIATIO)T, ET AL. 849_ 824 On.Ier approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and Sections 2a, 2d and 2f of an Act of Congress approved October 15, 1914, entitled "An Act to supplement existing laws against unlawful restraints ;nd monopolies, and for other purposes" as amended by an Act of Congress approved June 19, 1936, entitled "An Act to amend Section 2 of the act entitled 'An Act to supplement existing laws against unlawful restraints and monopolies, and for other purposes' approved October 15, 1914, as amended (U.S. C. Title 15, Sec. 13), and for other purposes." It i~ ordered, That the parties respondent herein, and their agents: representatives, servants, and employees in connection with the sale, offering :for sale or purchase of golf balls in interstate commerce or in the District of Columbia, cease and desist from: 1. Entering into and carrying out any agreement or combination among themselves or among any of them, to fix and maintain uniform wholesale prices to be exacted by the manufacturers o:f golf balls, ar their agents, servants, or representath·es, flom retail dealer purchasers thereof;

(It is not intended that the foregoing paragraphs shall abridge any lawful right of a licensor under a patent or a patent license agreement to apply to any lawful action taken under patents or license agreements relating thereto) ;

2. Fixing, enforcing, and maintaining, by agreement or combination among themselves, or among any of them, resale prices for golf balls;

(It is not intended that the provisions of the two preceding paragraphs shall abridge or preclude any lawful action with reference to prices which is permitted by the act commonly called the Miller- Tydings Act, namely, Title 8 of the Act of Congress appt·oved August 17, 1937, entitled "An Act to provide additional revenue for the District of Columbia, and for other purposes"; or any other then existing Federal Law.) It is f1uther ordered, That the respondent., Professional Golfers Association, its officers, members, agents, or representatives, cease and desist :from :

1. Requiring, coercing, or persuading the respondent Golf Ball Manufacturers' Association, its officers, members, agents, or representatives, or any of them, or any other corporation, partnership, ~rm, or individual, to enter into any agreement or contract provid- Ing :for or resulting in a difference in price in :favor of members of the "PGA," through the payment of any monies, or any thing of value for the privilege of causing the letters "PGA" or any other -~50 FEDERAL TRADE COMMISSION DECISIONS Order 26F.T. C.

insignia or mark of like character to be imprinted on golf balls manufactured and sold by any of the respondent manufacturers or any other manufacturer, corporation, partnership, firm, or in· dividual, directly or indirectly to !he rf'spondent "PGA" or any of its respondent members.

2. Entering into any combination, understanding or agreement among thelllilelves, or among any of them, to hinder or prevent, by intimidation, coercion, withdrawal, or threatened withdrawal of patronage or custom, either expressed or implied, or promises or agreements to increase such patronage or custom, any person, firm, partnership, or corporation, or any agent or representative thereof, from selling or buying golf balls in interstate commerce, from or to whomsoever, or ,,t whatsoever price or terms may be agreeJ upon between any seller or purchaser.

It is further ordel·ed, That the respondent Golf Ball Manufacturers' Association, its officers, members, agents, or representatives, or any of them, in connection with the sale or offering for sale of golf balls in interstate commerce, cease and desist from: 1. Granting or giving the following unlawful discriminations in price, namely, the payment of anything of value to respondent Professional Golfers' Association, either as a royalty for the privilege of causing the letters "PGA" or any other insignia, brand or mark to be imprinted on golf balls sold to members of the respondent Professional Golfers Association or otherwise, which payment is, directly or indirectly, in whole or in part, passed along to or used for the benefit of the members of said Professional Golfers Asso- ~iation; or the making of any payment directly to such members in lieu of any such pa.yment to the Professional Golfers Association. 2. Granting or giving any other price discrimination of substantially similar character to the respondent Professional Golfers Association or its members under substantially like circumstances and conditions in ·connection with the sale of golf balls of like grade and quality;

3. Paying or contraeting to pay to the Tespondent Professional Golfers Association anything of value either as a royalty for the privilege of causing the letters "PGA" or any other insignia of like character to be imprinted on golf balls or otherwise, which pay· mentis intended to be used or is in effect used, directly or indirectly, in whole or in part, for the:. purpose of advertising, promoting, or creating a preference on the part of the purchasing public for golf balls having the letters "PGA" or any other insignia, brand, or mark impressed thereon, unless such payments are made available on proportionally equal terms to all other customers competing with GOLF BALL l\1A~UFACTURERS' ASSOCIATION, ET AL. 851 824 Order the members of the Professional Golfers .Association in the distribution of golf balls of like grade and quality; 4. Otherwise granting to the respondent Professional Golfers Association any advertising or promotion allowances of substantially !:iimilar character, unless such payments are made available on proportionally equal terms to all other customers competing with the members of the Professional Golfers Association in the distribution of golf balls of like grade and quality;

(It is not intended that the provisions of the :foregoing paragraphs (1) to (4) inclusive shall preclude lawful contributions made to promote the general welfare of the game of golf). 1 t i8 further ordel·ed, That the respondent, Professional Golfers Association, its officers, members1 representatives, agents, and employees, cease and desist from :

1. Inducing or receiving any discrimination in price or allowance in connection with the purchase of golf balls in interstate commerce which the manufacturers of golf balls are prohibited from giving under the provisions of paragraphs (1) to ( 4) inclusive immediately preceding this paragraph of this order; 2. Inducing or receiving any similar discrimination in price or allowance in the purchase of golf balls in interstate commerce under substantially like circumstances and conditions. It i8 fw·ther ordered, That the parties respondent herein, within 60 days of the date of the service upon them of this order, file with the Commission reports in writing stating the manner and form in which they shall have complied with this order. 852 :FEDERAL TTIADE CO.:\ll\IISSIOX DECISIOXS Complaint !Wl•'.T.C.