W. B. Saunders Company

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IN THE :MATTER OF W. B. SAUNDERS COMPANY, J. B. LIPPINCOTT COMPANY~ C. V. MOSBY COMPANY, CHICAGO MEDICAL BOOl · COMPANY, ET AL.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOL.A.TJOS. OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, lll4 Docket 3558. Complaint, .Aug. 26, 1938-Decision, .Aug. :!6, 1942 Where three corporations, engaged in the sale and distribution at wholesale and retail of medical books, and constituting, respectively, the larges~ wholesale distributors in New York and vicinity, in the Middle West, an in the South and Southwest of such books, substantial portion of which were purchased by schools, colleges, libraries, hospitals, and other _statef county, and municipal Institutions, and by departments and agency1es 0 the United States Government- (a) Agreed among themselves, In 1935 and 1936, that in bidding and quoting prices for the medical book business or public institutions and Govern· mental agencies they, and each of them, would uniformly bid at, and quote, the prices and discounts fixed by the respective publishers, and thereafter did adhere to and quote prices and discounts so fixed; and (b) Entered into, 'on or about May 1936, an agreement and understanding assigning to one another certain territories of the United States for the ha1;1dling and bidding for the medical boolt business of public Institutions and Governmental agencies therein, agreeiug not to bld or compete tor such business in the particular te,rr~tory assigned to one of the other dis· tributors concerned; and pursuant thereto, refrained during the year afore· said from bidding against or competing with one another in a large part of the United States, including the States of Texas, Illinois, and New York;

Tendency and effect of which agreements and understandings, and acts anJ things done pursuant thereto, were to eliminate and prevent price coJII· petition In the sale and offering for sale of medical books to public iusti· tutlons and Governmental agencies throughout the United States, and to place in the hands of said distributors power to control and enhance prices of such books, and to restrain a normal flow of trade in commerce therein : Jleld, That such acts and practices, under the circumstances set forth, were all to the prejudice of the public, and constituted unfair methods of compctl· tion and unfair acts and practices ln commerce. As respects proceeding involving alleged understandings and agreements entered into in 1935 and 1036 between the three largest wholesale distributors of medical books ln New York 111id vicinity, In the Middle West, and in tbe South and Southwest, pursuant to which they uniformly bld at and quotec the prices and discounts for the medical book business of public institutions and Governmental agencies fixed by the publishers, and also assigned cer· tain territories in the United States to one another, agreeing not to bid or compete against one another therein, and abiding thereby: A contention that it was' more profitable for said distributors,·_-·-,, to. .. confine' their sale W. B. SAUNDERS CO. E.T AL. 383 Complaint and distribution of such books within the geographical limits of the territory located in and adjacent to the cities in which their respective businesses were situated, and ·further, that as of July 1942 all of the books were received by said distributors from medical book publishers on a commission basis, did not affect disposition of proceeding in question . . Before Mr. W. W. Sheppard, trial examiner. Mr. Fletcher G. Cohn for the Commission.

Dechert, Smith & OZark, of Philadelphia, Pa., for W. B. Saunders Co.

Evans, Bayard & Frick, of Philadelphia, Pa., 'for J. B. Lippincott Co. · . Mr. William J(olm, of St. Louis, Mo., for C. V. Mosby Co. t Ballard, Spahr, Andrews & Ingersoll, of Philadelphia, Pa., for ea & Febiger.

Denning & Cross, of Washington, D. C., fort. H. McKenna, Inc. . Campbell, Olithero & Fischer, of Chicago, Ill., for Chicago 1\fedlcal Book Co. · &cTurner,o. Rodge1·s, Winn. & Sellers, of Dallas, Tex., for J. A. Majors Complaint Pursuant to the provisions of the Federal Trade Commission Act, ~nd by virtue of the authority vested in it by said act, the Federal trade Commission, having reason to believe that the above named respondents, and each of them, have violated the provisions of said act, and it appearing to the Commission that a proceeding by it in l"espect thereof would be in the public interest, hereby issues its <'om plaint, stating its charges in that respect as follows: PARAGRAPH 1. Respondent, "\V. n. Saunders Co., is a corporation, ~rganized, existing and doing business under and. by virtue of the Law.s of the State of Pennsylvania, with principal office and place of Usiness at West Washington Square, Philadelphia, Pa . . Respondent, J. B. Lippincott Co., is a corporation, organized, exist- ~g and doing business under and by virtue of the laws of the State of Wnnsylvania, with principal office and place of business at East ashington Square, Philadelphia, Pa. · Respondent, C. V. 1\fosby Co., is a corporation, organized, existing, ~-d doing business under and by virtue of the laws of the State· of· lllSsouri, with principal office and place of bi.tsiness at 3523 Pine . oulevard, St. Louis, l\fo.

Respondents, Van Antwerp· Lea and Christian Febiger, are copartlt~rs, doing business·under the' firm name-. and styh~'of Lea~'\:.· Febiger, • ~lth principal office~, and pface of business at 600 Sout~ Washington quare, Phlladelplua, Pa. · ·' · ·• · · · · 384 FEDERAL TRADE COMMISSION . DECISIONS Complaint 35F. T.C.

Respondent, T. H. McKenna, Inc., is a corporation, organized, existing and doing business under and by virtue of the laws of the State of New York, with principal office and place of business at .s78 Lexington Avenue, New York City.

Respondent, Chicago Medical Book Co., is a corporation, organized, existing, and doing business under and by virtue of the laws of the State of Illinois, with principal office and place of business at Congress and Honore Streets, Chicago, Ill.

Respondent, J. A. Majors & Co., is a corporation, organized, existing, and doing business under and by virtue of the laws of the State of l.louisiana, ~itli principal office and place of business at Medical Arts Building, Dallas, Tex.

l")AR. 2. Respondents, ,V, B. Saunders Co., J. B. Lippincott Co., C. V. Mosby Co. and Lea & Febiger, are publishers and sellers of medical and other scientific books. A large proportion of the books and treatises on medical and allied.subjects (hereinafter referred to as medical books) sold annually and in current use in the United States are published by one or the other of said publishers. Respond· ('nts, T. H. McKenna, Inc., Chicago Medical Book Co. and J .. ft.. Majors and Co., are wholesale and retail dealers in medical books· Respondent, T. H. McKenna, Inc., is the largest wholesale distribut~r of medical books in New York City and vi~inity. Respondent, Cbt· cago Medical Book Co., is the largest wholesale distributor of medical Looks in the Middle West. Respondent, J. A. Majors & Co.,. is the largest wholesale distributor of medical books in the South and Sout~· west. Each of said respondent dealers purchases, sells, and deals 1n medical books published and sold by each of said respondent publishers.

PAR. 3. In the course and conduct of their respective businesses . each of said respondents transports books, or causes the same to be transported, from their respective places of business to their customers, purchasers, or consignees in other States of the United States; and. there is and has been at all times herein mentioned a current of trade and commerce in such books between the States wherein these severtll respondents are located and various other. States of the United States· PAR. 4. A substantial portion of the medical books sold a~nually jn the United States are purchased by schools, colleges, libraries, hos· pitals, and other State, counfy, and municipal institutions and b! departments and agencies of the United States Government. TbtS jnstitutional or governmental business is usually awarded after re· <'eipt o! bids or quotations from medical book dealers and publishers, nnd the books required are generally purchased from the lowest bid· der. Respondent dealers are or have been competitors for such busi· · · · W. B. SAUNDE-RS CO. E·T AL; 385 382 Complaint ness throughout the United States and respondent publishers also fr~quently submit bids or quotations for such business, competing therefor with respondent dealers.

PAR. 5. Each of said respondent publishers fixes and prescribes the prices and discounts to be used by medical book dealers and distributors in bidding or quoting prices on the medical books of such Publisher to Government agencies and public institutions. Each of said respondent publishers requires that the respondent dealers and other wholesale dealers to whom it sells or consigns medical books shall not quote prices to Government agencies and public institutions lower than the prices so fixed by such publisher, and sells medical hooks to such dealers on the condition, agreement and understanding that such dealers, respectively, will adhere to the prices and discounts fi:xed by the publisher, in selling or offering to sell to such Government agencies and public institutions.

PAR. 6. 'During the years 1935 and 1936 the three respondent dealers herein agreed, combined and conspired together, and each with the other, that in bidding and quoting prices for the medical book business of Government agencies and public institutions they, and each of them, would uniformly bid at and quote the prices and discounts fi:xed and prescribed for such business by the respective publi;:;hers of such medical books. Thereafter, in bidding and competing for · . such business said respondent dealers, in furtherance of said agreelhent, combination and conspiracy, have adhered to and quoted the Prices and discounts on medical books fixed and prescribed by th10 ·respective publishers thereof.

PAR. 7. In or about May 1936 said respondent dealers entered into an agreement and understanding, each with the other, dividing and assigning certain territory in the United States for the purpose of httndling and bidding for the medical book business of schools, colleges, libraries, hospitals, and Government agencies and institutions in such territory. Each of said respondents agreed not to bid otcompete for such business in the states or territory assigned to one of the others. Pursuant to said agreement and understanding, said respondents have ceased and refrained from bidding against or com- Peting with each other for such business in a large part of the United States, including the States of Texas, Illinois, and New York. ~.AR. 8. The tendency and effect of the acts and practices above complained of has been and is to lessen, eliminate, and prevent price competition in the sale and offering for sale of medical books to schools, colleges, libraries, ·hospitals, and other public institution~ and Government agencies throughout the United States, including •• 1 - ! 386 FEDE-RAL TRADE COMMISSION DECISIONS Findings 35F. T.C.

departments, agencies and instrumentalities of the Federal Government; to place in respondents the power to control and enhance prices for such books; to increase the prices paid by such purchaser1 thereof; and to obstruct, restrain and interfere with the normal a~d natural flow of trade and commerce in such books. The aforesai acts and practices of respondents, and each of them, are all to t~e prejudice of the public, and constitute unfair methods of compe~l­ tion in commerce and unfair acts and practices in commerce within the intent and meaning o£ the Federal Trade Commission Act. REPORT, FINDINGS AS TO THE FACTs, AND Or.oer Pursuant to the provisions of the Feder:al Trade Commission Act, the Federal Trade Commission on August 26, 1938, issued and subsequently served its complaint in this proceeding upon the responden~s named in the caption hereof, charging them with the use of unfair methods of competition in commerce and unfair acts and practices in commerce in violation of the provisions of said act. After the filing of answers by each of the respondents in this proceeding, stipu· lations were entered into by all the respondents, except respondent, J. n. Lippincott Co., ,-,hereby it was stipulated and agreed that, · subject to the approval of the Commission, statements of facts signed and executed by respondents and by ,V, T. Kelley, Chief Counsel for the Federal Trade Commission, may be taken as the facts in this proceeding in lieu of testimony in support of the charges stated in the complaint and in opposition thereto, and that the Commission m?Y proceed upon said statements of facts to make its report stating Its findings as to the facts and its conclusion based thereon and enter its order disposing of the proceeding without the presenta~ion of argu· ment or the filing of briefs. Respondent J. n. Lippincott·Co. not having entered into a stipulation, testimony, and other evidence were taken before an examiner of the Commission theretofore duly. designat.ed by it, and said testimony and other evidence were duly recorded and filed in the office of the Commission.

. Thereafter, the proceeding regularly came on for final hearin,• (f before the Commission upon the complaint, answers, stipulations (the stipulation executed by responclentst T. H. McKenna, Inc., Chicago Medical Book Co., and J. A. Majors & Co., having been ap· proved, accepted, and filed), testimony and other evidence, rel)ort o~ the tdal examiner and exceptions th~reto, and brief in support of the complaint and brief in opposition thereto filed by respon~ent, J. B. Lippincott Co. (oral argument not having b~en requested); and the Commission, having duly considered the matter and being W. B. SAUNDE.RS CO. ET AL. 387 382 Findings now fully advised in the premises, finds that -this proceeding is in the interest of the public and makes this its findings ns to the facts nnd its conclusion drawn therefrom.

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, ,V. B. Saunders Co., is a corporation ~rganized, existing, and doing business under and by virtue of the aws of the State of Pennsylvania, with its principal office and place of business at west vVashington Square, Philadelphia, Pa. ~respondent, J. n. Lippincott Co., is a corporation, organized, ~'llJsting, and doing business under and by virtue of the laws o-f the ~tate of Pennsylvania, with its principal office and place of business ocated at East 'Vashington Square, Philadelphia, Pa. Respondent, C. V. l\Iosby Co., is a corporation, organized, existing, ~n.d doing business under and by virtue of the laws of the State of - 1Jssouri, with its principal cffice and place o-f business located at 3523 Pine noulevard, St. Louis, Mo.

llespondents, Van Antwerp Lea and Christian Febiger, are co- Partners, doing business under the firm name and style of Lea & ~ebiger, with their principal oflico and place of business located at Goo South ·washington Square, Philadelphin, Pa. ~{respondent, T. H. McKenna, Inc., is a corporation, organized, ~'listing, and doing business under and by virtue of the laws of tho tate o-f New York, with its principal office and place of business 1 ocateu at 878 Lexington Avenue, New York, N.Y. . lle~pondent, Chicago Medical nook Co., is a corporation, organlzed, existing, and doing business under and by virtue of the laws of the State of Illinois, with its principal office and place of business located at Congress and Honore Streets, Chicago, Ill. Respondent, J. A. Majors & Co., is a corporation, organized, existing, and doing business under and by virtue of the hnYs of the State o-f Louisiana, with its principal office and place of business located at the Medical Arts nuilding, Dallas, Tex. PAn. 2. Respondents, ,V, n. Saunders Co., J.-n. Lippincott Co., C. V. Mosby Co., and Lea & Febiger, are publishers and sellers of "arious. medical and other scientific books. Respondents, T. H. ~IcKenna, Inc., Chicago Medical nook Co., and J. A. Majors & Co., nre distributors of medical books at wholesale and retail. Respondent, T. H. McKenna, is the largest wholesale distributor of medical hooks in New York, N. Y., and vicinity; respondent, Chicago l\fedi- ~al Book Co., is the largest wholesale distributor o-f medical books In the Middle 1Vest; and respondent, J. A. Majors & Co., is the 35F. 'f. C. F,indings largest wholesale distributor of medical books in the South and Southwest. Each of said respondent medical book distribu~or~ during the years 1935 and 1936 purchase~, sold, and dealt i~ medlc:k. books published and sold by the aforesaid respondent medical bo publishers.

PAR. 3. In the course and conduct of their respective businesse~ respondents, T. H. McKenna, Inc., Chicago Medical Book Co., ~nnl J. A. Majors & Co., each transported, and do transport, medic. books, or caused, and cause, the same to be transported from their respective places of business to purchasers thereof located in Sta~es of the United States other than the States in which their respective places of business are located, and have received, and receive, fro~ States other (han those States in which their respective places 0f business are located, medical books from the publishers thereo · Said respondents have maintained, and maintain, a current of tra~e in commerce in medical books between and among the States whereill their places of business are located ~nd various other States _of the United States.

PAR. 4. A substantial portion of the medical books sold annually in the United States were, and are, purchased by schools, colle~es: libraries, hospitals, and other State, county, and municipal institu tions, and by departments and agencies of the United States Government.

PAR. 5. During the years 1935 and 1936, respondents, T. JI, 1\{C- Kenna, Inc., Chicago Medical Book Co., and J. A. Majors & ~o., agreed among and between themselves that in bidding and quoting prices for the medical book business of public institutions and .go"; ernmental agencies they, and each of them, would uniformly b1d 11h nnd quote the prices and discounts fixed and prescribed for sued business by the respective publishers of such medical books; ~n thereafter, during the aforesaid period, in bidding and competing for such business, said respondent medical book distributors, in £urd therance of said agreement, did adhere to and quote the prices a.n discounts .on medical books fixed and prescribed by the respcctl re publishers thereof. . · , . PAR. 6. On or ab<;mt May 1936 said respondent medical book died tributors entered into, and thereafter carried out, an agreement an understanding each with the· other, dividing and assigning to on~ another certain territories in the United States for the purpose 0 handling and bidding for the medical book business of schools, colleges, libraries, hospitals, and other Governmental agencies and institutions in such territories. Each of said respondent medical book distributo~S agreed not to bid or compete for such business in the particular terri- W. B. SAUNDERS CO. ET AL. 389 Order ~ry assigned to one of the other ·respondent medical book distributors . . Utsuant to such agreement and understanding, said respondent med- ~~al ?ook distributors did cease and refrain during the year 1936 from 1ddmg against or competing with one another for such business in a 1 ~tge part of the United States, including the States of Texas, Illinois, and New York. The said medical books were received by respondent Illedical book distributors in com~erce between and among the several ~states of the United States, in some instances by means of outright sale ~·on1 the publishers thereof and in other instances by means of con. 810'<;lllh.ent from the publishers thereof. th Respondent book distributors contend that it is more profitable for ern to confine their sale and distribution of medical books, purchased as above set forth, within the geographical limits of the territory located in and adjacent to the States in which their respective businesses ~te situated, and, further, that as of July 1942 all of the books which hey receive from medical book publishers are received on a consign- :ent basis. The Commission concludes, however, that these matters 0 not affect the disposition of the present proceeding. I · PAlt. 7. The tendency and effect of the aforesaid agreements and I ~nderstandings and the acts and things done pursuant thereto have een to lessen, eliminate, and prevent price competition in the sale andII {l~ering for sale of medical books to schools, colleges, libraries, hosfhtals, and other public institutions and Governmental agencies . roughout the United States, including departments, agencies, andi• Instrumentalities of the Federal Government, and to place in the hands of said respondent medical book distributors the power to control and :~hance prices of such books, to increase the price paid by purchasers ereof, and to obstruct, restrain, and interfere with a normal and natural flow of trade in commerce in such books. . CONCLUSION . • • . r l lhe aforesaid acts and practices of respondents, T. H. McKenna, t nc., Chicago Medical Book Co., and J. A. Majors & Co., and each of ,helh., are all to the prejudice of the public and constitute unfair methods of competition in commerce and unfair acts and practices in com- ~erce within the intent and meaning of the Federal Trade Commission ct.

ORDER TO CEASE AND DESIST . this proceeding l;~ving been heard by the Federal Trade Commis- 81011 upon the complaint of the Commission, the answers of respond~ . t~ts, testimony and other evidence with respect to respondent, J. B. 1Ppincott Co., taken before an examiner of the Commission thereto- 390 FEDE.RAL TRADE CU.MMISSION DECISIONS Order 35F. T.C.

store duly designated by it and briefs filed by said respondent and by counsel for the Commission, and upon certain stipulations as to the facts entered into between W. T. Kelley, Chief Counsel for the Co.1~· mission, and respondents, other than, J. B. Lippincott Co., whlC 1 provide, among other things, that without further evidence or ~th~~ intervening procedure the Commission may issue and serve upon sal d respondents findings as to the facts and conclusion based thereon ~n an order disposing of the proceeding; anci the Commission having made its findings as to the facts and its conclusion that certain of re· spondents have violated the provisions of the Federal Trade Corn· mission Act .

. It is ordel•ed, That respondents, Chicago Medical Book Co ..a co~ poration, T. H. McKenna, Inc., a corporation, and J. A. Majors Co., a corporation, their officers, agents, and employees, or any two or more of said respondents, '\with or without the cooperation of other~ not parties hereto, in connection with the offering for sale, sale, and distribution of medical books in commerce, as "commerce" is defin~ t in the Federal Trade Commission Act, do forthwith cease and desis from entering into, continuing, or carrying out, or directing, insti¥at~ ing, or cooperating in any mutual understanding, agreement, combinai tion, or conspir-acy to fix, establish, or maintain the prices of medi~t~ books, or to determine, establish, or control the territory in whlC d any of said respondents offers for sale or sells medical books, nn ''I from doing any of the following acts or things pursuant thereto: . : 1. Refraining from offering for sale or selling medical books 1n any place, locality, or territory.

2. Fixing, establishing, or maintainjng any price, discount, or other terms- of sale for any medical book or books to any purchaser or class or group of purchasers. · It is fwrther ordered, That respondents shall, within 60 days after~ the service upon them of this order, file with the Commission a rep?~ in writing setting forth in detail the manner and form in whlC they have complied with this order.

It is further ordered, That with respect to respondents, W. :B. Saul ders Co., a corporation, J. B. Lippincott Co., a corporation, C. . · Mosby Co., a corporation, and Van Antwerp Lea and Christian Feb~ {!er, copartners, trading under the firm name and style of Lea t Febiger, this proceeding be, and the same hereby is, closed without prejudice to the right of the Commission, should future facts so W~~­ rant, to reopen the same and resume trial thereof in accordance '\Vlt 1 its regular procedure.

TEETERBABE CO. OF COLORADO 391 Complaint