United States Maltsters Association

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IN THE MATTER OF UNITED STATES MALTSTERS ASSOCIATION, ET AL. COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 3555. Complaint, Aug. 24, 1988-Decision, Dec. 29, 1942 Where a substantial number of corporations which manufactured more than 65 percent of all the malt made and sold in the United States. and engaged in interstate sale thereof, and were, prior to 1930, in price competition with one another and would subsequently have been so but for agreements and practices below set forth; acting through their Association- ( a) Entered into and carried out certain understanding3 and agree"ments with Intent and effect of fL'{ing and maintaining uniform prices, terms, and conditions of sale in the sale and distribution of malt, and of otherwise restraining and eliminating competition in the sale thereof in commerce; and maintain(>d the prices thus fixed until changed by notice from their Assoc:ratlon, as more particularly below set forth; and WherEL such corporations, pursuant to said agr«:>ements, acting under the direction of a certain firm to which was paid $30,000 per annum, collected through assets~ments against each member- ( b) Organized and operated said unincorporated voluntary trade Association 1 to promote their mutual interests and serve as an Instrument for theit· joint action in restricting and eliminating competition in sale and distribution of malt in commerce; and Where said Association, directed by aforesaid firm and its business ·manager anu secretary who participated In the regular meetings of Its Executive Committee-- (c) Collected and disseminated lnformatiou as to prices, terms, and conditions of sale, and statistical uuta u;;eu in carrying out said agreemeuts; and Where its said members- ( d) Agrt>ed, through resolution,; r•ato.:-Ptl at th~ regular meetings of the Association and Its Executive Commi,H:e, upon various details in connection With the conduct of their res[Jettire businesses, and abided by them, Including such matters as uniform application of freight rutes; uniform reporting of delinquent accounts; grading standards; quotation of prices on delivery or f. o. b. final destination basis only; grading specifications for use where a ''guaranty" of SIJPCifications was required; refusal of sales to purchasers who woulll not agree not to resell; use of seller's contracts only; exclusion of ~;ales agents handling domestic malt from -sale of lmportPd; the supplying of their current price lists to the Association for distribution; the inclusion with the daily sales reports to members of a recot·d of cancellations of unfilled contracts; and the adoption of a Uniform discount of ~~ cent per bushPI for cash; (e) Agreed upon and carried out a method of price rPportlng under which they daily reported the delivered Pfices, whkh they employed at aU times, on an ''f. o. b. Chicago basis"; whereby the Association and members-by reason ti09749"'-43-vol. 35--53 FEDERAL TRADE COMl\'IISSION DECISIONS798 · Syllabus 35F.T.C.

of the Association's dally reports to them, were immediately enabled to determine that prices were at all times identical and uniform for the various grades of malt sold;

(f) Agreed to and did fix and maintain the delivered price of malt, and accomplished uniformity thereof through use of Chicago as a common basing point, from which freight was calculated irrespective of the fact that the malt plants and most of the members were not there located, but were at various points In the United States with different freight rates to given destinations; (g) Adopted and uniformly followed a method of changing the price of malt to their customers, under which any member desiring to deviate from the price quoted, wired or telephoned the secretary of the Association advising him of the new f. o. b. Chicago baso price and the effective date thereof; which Information the Association's secretary on the same day transmitted to all other members making a similar product by wire or telephone, and to all members not making slmil'ar prOlluct, by mail; It being the practice of the members, In the event of Increase, to give their customers a limited opportunity to place business at the old price and to respect contracts calling for the current and lower price, and, In the case of a decrease, to require conformance to the higher contract prices ppeclfietl; (h) Agreed to and did from time to time furni;;:h their said Association, for distribution to the remaining members, with copies of their price lists which quoted current and future prices on \"'llrluus grades at "1'. o. b~ Chicago basis"; and submitted to a checking of their books through accountants employed by firm above referred to, which checking showed no devlati?Jl In prices charged from those quoted;

(I) Agreed to, and did, adopt and maintain uniform· terms and ccmdltlons of sale; and, following a discussion of a cash discount, not theretofore allowed, between a representative of the Brewers Association and their Executive Committee and allo,~ance of a discount of 1h cent per bushel by one of their number, quoted malt on that basis; and (/) Did not deviate from such uniform prices, terms, and conditions of sale, notwithstanding fact that, except In the case of unusual and violent market fluctuations, the market price of malt and barley had little or no relation to the price of malt quotetl by them; and their varying manufacturing costs, varying prices paid for barley, and varying costs of transportation and of clenning raw barl~>y, as well as the different-e in malt producl'd by the Yarious manufacturer membt>rs, In the absence of any price fixing agreement, would preclUfle uniformity of prke and re.sult in price comr.etition; \With £>tft>d of unduly restraining and suppr·essing competition In the sale and distribution of malt in commerce, and of depriving the public of the full hf>netit of comrtetltion in said commerce-e between and among such members, and betw£>en them and their competitors: ' Held, That such acts and pmctices of said ARsoclation and members were all to the pr~>judice or competitors and of the JtUblic; bad a dangerous t£>ntlency to and did aetnally Slrppress and eliminate competition In the sale and distribution of malt In comnH'rce; placl'U In them the power to control and· enhance prlees; unrl'asonably restr'ainetl such commerce In malt; and constituted unfair methods of comt.etltlon In commerce. Before Mr . .Robert S. II all and ..Vr. Webster Ballinger, trial exammers. , Mr. Edward L. Smith for the Commission.

I , I UNITED STATES MALTSTERS ASSO., ET AL. 799· 797 Complaint Mr. William W. Corlett, of New York City, and Poppenhusen1 Johnston, Thompson & Raymond, of Chicago, Ill., for respondents; together with Hubbard, Baker & Rice, of Chibgo, Ill., for respondent Albert Schwill & Co.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested .in it by said act, the Federal Trade Commission having reason to believe that United States :Maltsters Association, Chilton Malting Co., The Columbia Malting Co., Froedtert Grain & Malting Co., 1Vm. E. Kreiner & Sons, Inc., The. Kurth Malting Co., Interior Malt & Grain Co., The Ladish-Stoppenbach Co., George J. Meyer Malt & Grain Corporation, Milwaukee· 1Vestern Malt Co., Northwestern Malt & Grain Co., The Francis: Perot's Sons Malting Co., Rahr Malting Co., H. 1V. Rickel & Co.,. L. Rosenheimer 1\Ialt & Grain Co., The Konrad Schreier Co., Albert· Schwill & Co., Daniel D. 1Veschler & Sons, Inc., "\Vest Bend Malting Co., and Wiscon&m Malting Co., hereinafter referred to as respondents, have violated the provisions of the said act, and it appearing to the .Commission that a proceeding by it in respect thereof would he in the public interest, hereby issues its complaint, stating its charges in that respect as follows: • PARAGRAPH 1. Respondent, United States Ma1tsters· Association, is a voluntary unincorporated association, whose membership_ is composed of respondents named in paragraph 2 hereof, which firms are engaged in the manufacture and sale of malt. It was organized in 19~0 und_er the name Bureau of Barley and Malt Statistics, its name hemg changed to its present name on or about August 10, 1933. Its. office is in Chicago, Ill. · PAR. 2." The following respondents are corporations with their principal places of business in the cities hereinafter mentioned, to wit: Name ot re~pondent: Principal place of business C'hUton Malting Co---------------------------- Chilton, Wis. The Columbia Malting Co _______________________ Chicago, 111. Froedtert Grain & ?ILtlting Co----~-------------- Milwaukee, Wis. Wm. E. Kreiner & Sons, Inc ____________________ Buffalo, N.Y. The Kurth Malting Co__________________________ Wilwaukee, Wis. Interior .1.\Ialt & Grain Co----------------------- Minneapolis, Minn. 1'be Lndlsh-Stoppcnbach CO--------------------- Milwaukee, Wis. George J. Meyer Malt & Grain Corporation ______ Buffalo, N. Y. Milwaukee Western Malt Co------------------- :Milwaukee, Wis. Northwestern Malt & Grain Co-~---------------- Chicago, Ill. The Frnncls Perot's Sons !\Ialtiug Co _______ _:__ Phlladelphhi, Pa. llahr Malting Co------------------------------ Manitowoc, Wis. ' II. W. Rickel & Co---------------------------.. - Detroit, Mich. Complaint 35F.T.C.

Name of reRp<mdent--Continued. Principal place of b.uiness L. Uosenheimer Malt & Grain Co-------------- Kewaskum, Wis. The Konrad Schreier CO--------------------- Sheboygan, Wis. Albert Schwill & Co------------------------- Chicago, III. Daniel D. Weschler & Sons, Inc _____________ Milwaukee, Wis. West Dend 1\Ialting Co--------------------- West Bend, Wis. Wisconsin Malting CO--------------------- Manitowoc, Wis. PAR. 3. The respondents named in paragraph 2 hereof are now, and since their organizations have been, engaged in the manufacture, at their respective places of busines~, of malt, and in the sale thereof. In the course and conduct of their businesses, all the said respondents, for more than 8 years last past, have caused, and &till cause, such mnlt, when sold by them, to be transported in commerce from their respective places of business to, into and through various States of the United States other than the States in which they respectively have their place of business, to the purchasers in such other States and in the District of Columbia to whom said malt is nnd has been sold. The amount of mnlt manufactured and sold by said respondents constitutes, and at all times since 1929 has constituted, more than 65 percent of all of the malt manufactured in the United States and sold therein. :Many purthasers of malt have no · regular source of supply excepting from said respondents, and since 1929 have had ru> regular source of supply of malt excepting from said respondents.

Said respondents were, prior to 1930, in competition as to price with one another in the sale of malt between and among the various States of the United States, the territories thereof, and in the District of Columbia, and but for the combination, agreement, understanding, and conspiracy hereinafter described said respondents would have been at all times since 1929, and would now be, in such competition with one another. · PAn. 4. On or about .August 5, 1030, respondents named in paragraph 2 hereof, for the pm·po:-,e of eliminating price competition among themseh·es, entered into, through and by respondent United States ::\Ialtsters ..A.association, have since carried out, and are still carrying out, through and by respondent, United States ::\Ialtsters Association, an agreement, combination, understanding, and conspir- · acy among them:-:eln~s to fix and maintain, and by which they have fi:s:ed and maintained, uniform delivered prices to be and which have been and are still being exacted by them from their purchas('TS of malt in commerce between and among the various States of the United States and' in the District of Columbia. Pursuant to, and for the purpose of carrying out the aforesaid agreement, combination, UNITED STATES MALTSTERS ASSO., ET AL. 801 797 Findings understanding, and conspiracy, respondents have done, among other things, the following :

(a) By agreement have fixed and maintained and still fix and maintain, uniform delivered prices for malt sold by respondents named in paragraph 2 hereof and by each of them. (b) Each of the respondents named in paragraph 2 hereof agreed to file and does file with the respondent association a schedule of prices terms and conditions of all sales at which it will and does ' ' sell malt.

(c) Each said respondent named in paragraph 2 hereof agreed that it would not and does not deviate from the pric~s, terms, and conditions of sale stated in its prices filed with responuent association. (d) Responuent association collects from and disseminates among the respondents named in paragraph 2 hereof information as to prices, terms, and conditions of sale and other information used and useful in carrying out the said agreement, combination, understanding, and conspiracy.

PAR. 5. The acts and practices of the respondents as herein alleged are all to prejudice of the public; have a dangerous tendency to and have actually hindered and prevented price competition between ~nd among respondents in the sale of malt in commerce within the ~ntent and meaning of the Federal Trade Commission Act; have placed ~n respondents the power to control and enhance prices; have created Ill the respondents a monopoly in the sale of malt in such commerce; have unreasonably restrained such commerce in malt, and constitute unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commission Act. REPORT, FINDINGS AS TO THE FACTs, AND Onder Pursuant to the provisions of the Federal Tnule Commission Act, the Federal Trade Commission, on August 2-!, 1038, issued and subsequently served its complaint in this proceeding upon the respondents, United States .:Maltsters Association, Chilton Malting Co., The ~ol~mbia Malting Co., Froedtert Grain & l\Ialting Co., w·m. E. \.remer & Sons, Inc., The Kurth ~Ialting Co., Interior l\Ialt & Grain Co., the Ladish-Stoppenbach Co., George J. l\Ieyer l\Ialt & Grain gor~oration, Milwaukee 'Vef>tern l\Ialt Co., Northwestern l\Ialt & ram Co., Perot 1\Ialting Co. (named respondent herein under the ~style ~f "'!he Francis Perot's Sons.l\Ialting Co."), Rahr Malting Co., ~I. ~· R1ckel & Co., L. Rosenhmmer l\Ialt & Grain Co., Schreier Ialtmg Co. (named respondent herein under the style of "The Konrad I C0~IMISSION DECISl'O:!\S 802 FEDERAL TRADE Finding;; 35F.T. C.

Schreier Co."), Albert Schwill & Co., Daniel D. Weschler & Sons, Inc., West Bend Malting Co., and Wisconsin Malting Co., charging them with the use of unfair methods of competition in commerce in violation of the provisions of said act. After the issuance of said (:Complaint and the filing of respondents' answers thereto, testimony and other evidence in support of the allegations of said complaint were introduced by Edward L. Smith, attorney for the Commission, and in opposition to the allegations of the complaint by W. W. Corlett, Edward R Johuston, and Russell Baker, attorneys for the respond- ('nts, before Robert S. Hall, a trial examiner of the Commission theretofore duly designated by it, and said te::;timony and other evidence were duly recorded and filed in the office of the Commission. Subsequent thereto, 'Veb!:>ter Ballinger, a trial examiner of the Commission was duly designatl'd and appointed to prepare and file trial examiner's report upon the evidence in this matter, vice Roberts. Hall, l1Pc£'ased. Thereafter, this proceeding regularly came on for final hearing before the Commission on said complaint, answers thereto, testimony and other evidence, report of Trial Examiner ".,.cbster Ballinger upon the evidence and exceptions Jiled thereto, briefs in support of. the complaint and iu opposition thereto, and oral argumrnts of counsel; and the Commission, having duly considered the matter aml being now fully advised in the premises, finds that this proceeding is in the interest of the public and makes this its findings as to the facts and its conclusion drawn therefrom.

FINDI:XG~ AS TO THE F.\(IS PARAGRAPU 1. Ue:-:pondent, United States ~!ulsters .\s!->ociation, hereinafter referred to. as "re:;pondent .Associ~tion," is an unincorporated voluntary trade association, with its principal office and place of business located at Cl1icago, Ill. Said respondrnt Association was organized in 1S30 and existed undrr the name of "Bureau of Darley and Malt Statistics" until August 10, 1~33, when the name of said re· pondent Association was changed to '·United States ~[alsters .Associ· ation.". 1l1e member:;hip of said respondent .Association includes all 'of the comml'rcial manufacturers of malt in the United States, with the exception of fin, two of which are locate1~ in California. PAR. 2. Respondent, Chilton ~falting Co., is a corporation, having its principal place of business at 127-149 ~lain Street, Chilton, Wis. Ut'Spondent, The Columbia ~[alting Co., is a corporation, having its principal office at 332 S. La Salle Street, Chicago, Ill. Respondent, FrOl'Ut('rt Grain & )falting Co., Inc., is a corporation, having its principal place of business at ~Iilwaukee, Wis. UNITED STATES MALTSTERS ASSO., ET AL. 803 797 Findings ,,I Respondent, 'Vm. E. Kreiner & Sons, Inc., is a corporation, having its principal place of business at Buffalo, N. Y. Respondent, The Kurth Malting Co., is a corporation, having its principal place of business at l\Iilwaukee, 'Vis. Respondent, Interior Malt & Grain Co., is a ·corporation, which had its principal place of bu~iness at Minneapolis, l\Iinn. This respondent was a wholly owned subsidary of respondent, The Kurth -Malting Co. and is now out of business. · Respondent, The Ladish-Stoppenbach Co., is a corporation, having its principal place of business at Milwaukee, Wis. Respondent, George J. l\Ieyer l\Ialt & Grain Corporation, is a corporation. having its principal place of business at lluffalo, N.Y. · Respondent, Milwaukee 'Vestern l\Ialt Co., is a corporation, hav- ·ing its principal place of busine~s at Milwaukee, 'Vis. Respondent, Northwestern Malt & Grain Co., is a corporation, having its principal place of business at Chicago, Ill. Respondent, Perot Malting Co., is a corporation, having its principal office at 808 Lafayette Building, Philadelphia, Pa. This respondent was known as "The Francis Perot's Sons Malting Co." _Prior to 1937, at which time it changed its name to "Perot Malting Co." · Respondent, Rahr Malting Co., is a corporation, having its principal place of business at l\Ianitowoc, Wis. This respondent was known as ''Cereal Products Co." prior to 1933, at which time it changed its name to "Rahr Malting Co."

· Respondent, II. W. Rickel & Co., is a corporation, having its principal office at 1825 Adelaide Street, Detroit, Mich. Respondent, L. Rosenheimer l\Ia lt & Grain Co., is a corporation, having its principal place of business at Kewaskum, Wis. Respondent, Schreier Malting Co., is a corporation, having its Ptinicpal place of business at Sheboygan, Wis. This respondent Was known as "The Konrad Schn•ier Co." prior to October 3, 1935, at which time it changed its name to "Schreier l\Ialting Co." . Respondent, Albert Schwill & Company, is a corporation, having _1ts office at 141 ,V, Jackson Boulevard, Chicago; Ill. · Respondent, Daniel D. 'Veschler & Sons, Inc., is a corporation, having its principal office at 4295 W. Burnham Street, Milwaukee, Wis .

. Respondent, We~t Dend Malting Company, is a corporation, hav- Ing its principal place of business at West Dend, Wis. . Respondent, Wisconsin Malting Company, is a corporation, hav- Ing its principal place of business at ~fanitowoc, 'Vis. 8{)4 , FEDERAL TRADE COMMISSION DECISIONS Findings 35F.T.C.

The above-named respondents are all commercial manufacturers of malt and constitute the entire membership of respondent Association. For convenience, the above-named respondents, except Interior Malt &, Grain Co., wiu hereinafter be referred to as "re~pondent members."

PAR. 3. At the time of the organization of the respondent Association, its membership was composed Of all of the respondent members hereinbefore named, except The Columbia Malting Co., Interior Malt & Grain Co., Schreier :Malting Co., and Wisconsin Malting Co. The Schreier Malting Co. became a member in 1931. The Columbia Malting Co. became a member in 1933, and the Wisconsin Malting Co. became a member in 1934. The Interior Malt & Grain Co., being a subsidiary of The Kurth Malting Co., did not at any time hold an individual membership in the respondent Association. PAn. 4. The respondent members of the respondent Association are now, and for several years last past have been, engaged in the business of manufacturing and selling malt. In the course and conduct of their respecti>e businesses, said respondent members cause such malt, when sold by them, to be transported from their respective places of busine~s to the various purchasers thereof located in the various States of the United States other than the States in which their re~pective shipments originate. Said respondent members maintain, and at all times mentioned herein hale maintained, a course of trade in said malt in commerce among and between the varous States of the United States and in the District of Columbia. PAR. 5. Prior to 1930 said respondent members were in competition as to price with one another in the sale and distribution of malt in commerce betwe<>n and among the nrious States of the United States and in the District of Columbia and would now be in free and open competition with one another in said commerce but for the agreements, practices, and methods as hereinafter set forth. PAn. 6. ·~bit is made chiefly from malting barley and is principally sold to brewers for the making of beer, ale, porter, and other malt beverages. There are three recognized grades of brewer's malt, viz, standard, choice, and ·fancy. The barley used in the manufacture of brewer's malt is grown chiefly in the :Middle West, largely in the four principal barley-producing States, Wisconsin, ~Iinnesota, North Dakota, and South Dakota, and to a limited extent in the States of Iowa, Michigan, Illinois, Ohio, New York, and California. 'Vhile the Department of Agriculture has divided barley into senral grades, such grading is not followed by commercial maltsters in purchasing barley for proce:-1;i~1g into malt.

UNITED STATES MALTSTERS ASSO., ET AL. 805 lj •I 797 Findings I. PAR. 7. The common and usual method of purchasing barley for malting purposes is to make the purchase by sample, as the barley to be used must be of suitable size and uniformity, and have high germinating properties. As a result, barley used for malting purposes commands a higher price in the grain market over ordinary barley. ·Malting barley is purchased by malsters directly from farm- {'rs and country elevators, and in the terminal markets of l\Iinneapolis, Milwaukee, and Chicago, of which Minneapolis is the most important. In some cases, when conditions indicattl a possible ad- ·' v-ance in barley prices, malsters occasionally purchase in "round lots" for future delivery. In such "round lots" purchases the barley is like-· wise purchased on the basis of a sample of the barley which is to be received. In rare instances barley,is purchased before it is harvested, in which case no sample is used but the purchase is made on the basis of grade. · · PAR. 8. The manufacturing process followed in the processing of malt barley consists of thoroughly cleansing the barley so as to remove therefrom, as far as possible, all foreign matter, broken and small kernels, chaff, seeds, and dirt. The clean barley is then placed in compartmeiits and subjected to a steeping and germinating process, as a result of which a change takes place in the barley which converts the nonsoluble starch to a soluble starch. The malt is then dried and stored in bins for shipment.

PAR. 9. There are several brewers located in the United States who manufacture malt for use in their breweries but who are not engaged in the commercial sale of malt. Brewers generally are dependent Upon commercial maltsters for their supply of malt. The malt manufactured by the respondent members constitutes more than 65 percent of all the malt manufactured and ~old in the United States. PAR. 10. During the time herein referred to, the respondent members entered into, and thereafter carried out, certain understandings, agreements, combinations, and conspiracies for the purpose, and with the effect, of fixing and maintaining uniform prices, terms, and conditions of sale in the sale and distribution of malt and of otherwise restricting, restraining, monopolizing, suppressing, and eliminating competition in the sale of malt in commerce among and between the several States of the United States and in the District of Columbia. Furthermore, the respondent members agreed to, and did, maintain the prices so fixed until modified or changed by notice from the re- ~pondent Association .

. PAR. 11. Pursuant to said understandings, agreements, combinations, and compiracies, and in furtherance thereof, said respondent Inembers, under the direction of, and with the cooperation of, Steven~ 806 FEDERAL TRADE COM.MISSION DECISIONS Findings 35F. T. C.

son, Jordan & Harrison, organized and operated respondent Association as an unincorporated voluntary tra.de association to promote the mutual interests of the respondent members and to serve as an instrument or vehicle for the joint and cooperative purpose and action of respondent members in hindering, frustrating, suppressing, lessening, restraining, and eliminating competition in price and otherwise, in the sale and distribution of malt in commerce among and between the various States.

During all times since the organization of respondent Association, A. R. Stevenson, o.r some other member of the firm of Stevenson, ·Jordan & Harrison, acted as business manager of respondent Association, and A. II. Dyer, an employee of the firm of Stevenson, Jordan & Harrison, acted as secretary of s~id respondent Association. Other members or employees of said firm of Stevenson, Jordan & Harrison attended and participated in the regular meetings of the Executive Committee of said respondent .Association.

The respondent United States :\Ialtsters Association, from its inception and throughout its entire. existence, has been directed and guided by the firm of Stevenson, Jordan & Harrison, which firm was paid a salary of $30,000 per annum, payable in monthly installments of $2,500. Assessments were made against each member of said respondent Association in the form of dues for the purpose of financing the Association.

The re!"pondent Association, pi.t:-suant to the purposes for which it was organized, has, during its entire existence, collected and dis- II seminated among the respondent members information as to prices, .I of sale, and other information and statistical terms, and conditions I data. useful for and which have been used in carrying out said -under- i standings, agreements, combinations, and conspiracies. R£'gular meetings of the m£'mhers of the respondent Association were held, usually monthly, from its inception July 1, 1930, which meetings were usually attended by all or a majority of the respondent members. Such meetings of respondent members WE.'re usually preceded by n meeting of the Executive Committee, at which time various matters were discussed b£'fore submission to the general meeting. While the membership of the respondent Association consisted of only 15 to 18 members durmg the course of its existence, the Executive Committee consisted of from 5 to 7 members, exclusive of the representatives of Stevenson, Jordan. & Harrison, who usually at· tended the meetings of the Executive Committee. At the meetings of the Executive Committee and the meetings of the regular members, matters of general interest to the respondent members were discussed and considered. It was also customary to distribute to members of UNITED STATES 1\IALTSTERS ASSO., ET- AL. 807 tl 797 Findings the Executive Committee and to respondent members, copies of the Association's daily report for the preceding day, showing prices at which malt was being sold by the respondent members. PAR. 12. In furtherance of said understandings, agreements, combinations, and conspiracies, and in order to carry out the purposes for which said respondent Association was organized, the respondent members agreed from time to time upon various details in connection with the conduct of their respective businesses, which were adopted by means of resolutions passed by the respondent members at the regular meetings of the respondent Association and 'its Executive Committee. All such resolutions when adopted by the respondent members at such meetings were uniformly followed by such respondent members without any deviation therefrom. Examples of sucli agreements adopted in the form of resolutiqns are the follo\ving: 1. At a meeting of re~pondent Association held August 5, 1930, the respond~nt members agreed that the freight rate to all points not· previously listed in the freight-rate schedule be supplemented to the regular freight-rate schedule nnd be sent to each member and, pending such action, that each member apply the freight rate from Chicago, except to intermediate points between Minneapolis and Chicago. 2. At a regular mee>ting of the responde>nt Association held August 22, 1930, the respondent members agreed upon a method of reporting delinquent accounts to the respondent Association, whereby in the future each r('spondent member would report monthly all 'accounts that are unpaid after 60 days or more from date of invoice and also report all accounts that are covered by note settlement. 3. At n regular meeting of responde>nt Association held September 11, 1930, respondent nwmbers agreed upon the adoption of grading Etan~ards to apply immediately to all sales of barley malt. 4. At a regular m£'eting of respondent Association held September 11, 1!:>30, responrlent members agreed to quote only delivered prices or f. o. b. final destination.

5. At a regular meeting of rE>spondent Association held October 31, 1?30, the respondent members agreed to adopt the grading specifications recommE>ncled hy the Executive Committee in all instances where a "guaranty'' of specifications is required. 6. At a rE>gular meeting of re~pondent Association held June 29, 1933, responde>nt members agreed not to sell malt to purchasers unless such purchasers agreed not to resell said malt, and said respondent members haw since cnrriE>d ~ut said agreement. 'l. At a regular meeting of the respondent Association held October 18, 1933, responde>nt member>rs agreed that only seJlE'rs' contracts sho~ld Findings 35F.T.C.

be used on any malt sale and that no riders should be added that would alter the spirit or substance of the standard lonn of contract. 8. At a r£>gular meeting of respondent Association held December 15, 1933, respondent members agreed not to permit sales agents handling domestic malt to sell imported malt.

9. At a r£>gul:rr me£>ting of respondent Assoeiation ·held Jan nary 10, 1931, respondent nwmbers agreed that each respondent member send 2;) copies of its currrnt prir-P list to the respondent Association ior distribution by the respondent Association to eaf'h of the respondent membt>rs. \which was gt>nerally continued until 19!0. 10. At a r<'gular merting of respondent Association held )lay 11, 1937, respondent nwmbrrs agreed that the respondent Association add a i"<'cord of cancellations of unfilled contracts to the daily ~ales report to nwmh<'rs. .

11. At a rPgulal· nw<'ting of the respon1l£'nt Association held Feb- . ruary 10, 19:38, re:->pond£>nt memb£>rs ngr<'<'d to allow a uniform discount of % c£>nt per bushel for cash, which \Viii thereafter continued as the unifol'm !'ash discount for all n'spondent members. PAn. 13. Pursn:mt to sai(l undt>l"stnndings, combinations, and conspiraci<'s, and in furl herance thPl·eof. said r<'spondent members, with the acti,·e cooperation of rrspontlt-nt .\association, a~reed upon, nJopteLl, nnd carrie,] out a method of price reporting which has l.wen followed t hrou~hout the PxistPnre of re~potldent. .Association. Throat\gh this price repor1ing ~y:-:tem. Paeh of the respondents ugreed to, an,} did, make daily reports to the re~ponclent Association <Jf sales m:ule hy it, '\ which information wns in turn immediately compiled anrl ii'suPd to nil members of the Association in the form of daily r£>ports from the rt>spondent .Asso(·intion to its members. AJI of the respomlent members of the .Association l1ave at all times quoted nnJ sold malt f. o. b. point of deli ,·ery or at delivered prices. IIowevPr, in reportiu:! prices at which mnlt was ~old in th<'ir daily reports to the respon(lent Association, the respondent members report<'d such prict>s on what was known as the "f. o. b. Chicago basis." This repre~enti-'Ll th<' price at which the malt would have been sold if the Eales had lwen made f. o. b. Chicago. By reporting to the Association on '•f. o. b. Chicago basis," the Association was immediately enabled to determine the uniformity of prices maintained by the respondent memheN: an,}, in turn, the Association, by rpporting sales in its daily repm1s on an "f. o. b. Chicago basis" to the respomh•nt. members, enabled surh re<:pondent members to determine if uniformity in price was being followed.

The prices "f. o. b. Chicago basis" reported by the respecti\'e re- EpondPnt members in their daily reports since tl_1e organization of UNITED STATES MALTSTERS ·ASSO., ET AL. 809 797 Findings respondent Association, have at all times been identical abd uniform for the various grades of malt sold, and there has at no time been any deviation from such reported prices by any of the respondent members. PAB. 14. Pursuant to said understandings, agreements, combinations, ,and conspiracies, and in furtherance thereof, said respondent members agreed to fix and maintain, and did fix and maintain, the del.ivered price of malt. Uniformity of delivered prices was achieved by the respondent members through the use of Chicago, Ill., as a common basing point, that is, as the point :from which the freight was calculated, irrespective of the fact that the malting plants of most of the respondent members were not located in Chicago but were. located at various other points in the United States and had different freight rates to given destinations. By using a common point as a; basis for price quotations, namely, Chicago, Ill., and basing the freight calculation on the fiction that all shipments originated at Chicago, the respondent members attained a uniformity of delivered prices. PAn. 15. Pursuant to said understandings, agreements, combinations, and conspiracies, and in :furtherance thereof, said respondent members, with the active cooperation of respondent Association, further agreed upon, adopted, and carried out a definite method of modifying or changing the price of malt to the customers of the respondent members, which has been uniformly followed by all respondent members.

Whenever any respondent member offered or proposed to offer malt for sale at a price other than the price it had theretofore quoted, as . shown by any price list distributed by it or as shown upon its daily report to the Association, such member promptly wired or telephoned the Secretary of the Association, advising him of the price "f. o. b. Chicago basis" quoted and whether such price would be effective immediately or at a future date; and usually confirmed the telegram or telephone message by mail. Immediately upon receipt of the telegram or telephone message from such member, the Secretary of respondent Association on the same day advised all other respondent members .of the Association making a similar product, by wire or telephone, the new price"£. o. b. Chicago basis'' offered or proposed and the effective date thereof, and transmitted the same information the same day to all other members who were not maki1;g a similar product, by mail. In the event such price quotation involved an increase in the price ?f malt, it was customary for such res·pondent member, upon such Increase in price, to notify its various customers and prospective customers of such increase and give them an opportunity within a certain sp~cified time within which to place orders at the previous or lower Price. A respondent member, in reporting an increase in the quota- 810 FEDERAL TRADE COl\L\USSION DECISIONS Findings 35F.T.C.

tion on the price of malt, usually advised the respondent Association that as of the date of notification, or effecti\e at some future date, it would increase the price of malt.

Immediately upon receipt of notification from the respondent Association of change in quoted price, all the respondent members uniformly adopted such price and immediately notified their customers and prospective customers of such change in price and, where the change involved an increase in price; gave such customers and pro- 5.-pective customers nn opportunity to purchase at the previous price within a specified time.

In those cases when the re~pondent members had contracted with their customers for· future delivery of malt at the current price existing at the time of the execution of such contract, such prices were uniformly maintained against any increase in the price of malt; and in the case of a decrease in price the respondent members generally required performiuH"e of the contract at the prices specified therein.

PAR. 16. Pursuant to said understandings, agreements, combinations, and conspiracies, and in furtherance thereof, said respondent members further agreed to, and did from time to time, furnish the respondent Association with copies of their price lists, showing cur- J·rnt and future prices, in quantities sufficient in number to permit. the Association to distribute such price lists to the remaining respondent members of said .Association. Immediately upon receipt of fiuch price lists the respondent .Association distributed &uch lists to the various respondent members. Such price lists all quoted prices on various grades of malt at "f. o. b. Chicago basis" und usually Fpecified that such prices were to be effective either immediately or at some Fpecified date in the future and were to remain in efff'ct for E:pecific future peri01ls of time.

PAR. 17. In order to uetermine that the respondent members were selling malt at the pric<>s reported to the .Association, the books of the re:;pondent members of the Association were checked from time to time by accountants f'mployed by the firm of Stevenson, Jordan, & Harrison in order to a~certain that the prices reported by the Respondent members in the-ir daily rE-ports and in price lists coincided with the prices charged by sucli rE>:-pondent members to their custom- HS as appt•:trt'd from their books and invoice~. Except as to minor f'rrors in computation, no deviation from quoteu prices was found by such check of the books and records of respondent members. PAR, 18. Pursuant to said understandings, agreements, combinations, and conspiracies, and in furtherance thereof, said respondent members agr«'ed to adopt, and did adopt and maintain, uniform terms UNITED STATES MALTSTERS ASSO., ET AL. 811 797 Findings and conditions of sale in connection with the sale and distribution of their malt. Prior to 1938 no cash discount was allowed by any respondent member to any of its customers. In February 1938, a representative of the Brewers' Association met with the Executive . Committee of respondent Association to discuss the allowance of a · cash discount on the purchase of malt from respondent members. Thereafter, at a meeting of the Association on February 10, 1938, Mr. Ruh, an officer of respondent, Albert Schwill & Co., announced that his company had decided to allow a cash discount of Y2 cent per bushel. Thereafter, all of the responqent members immediately .quoted malt to customers and prospective customers on the basis of a cash discount of 1h cP.nt per bushel.

PAR. 19. Pursuant to said understandings, agreements, combinations, and conspiracies, and in furtherance thereof, said respondent ·members have uniformly maintained prices, terms, and conditions of • sale of malt and have not deviated therefrom. The principal element entering into the cost of malt is the cost of the malting barley, which represents approximately from 80 to 85 percent of the cost of manufacturing malt. Except in the case of unusual and violent fluctuations in the malting-barley market, the market price of malting barley since the organization ot the respond· ent Association has had little or no relation to the price of malt quoted by respondent members. For example, although there has ~)een a wide variance in the prices paid for malti:I1g barley by the Individual respondent members, the price of malt has remained absolutely constant without change of any kind from November lG, Hl38, to the time the testimony in this case was concluded on March 17, 19-ll. The prices during tl;is ('lltire period, which were unifo~mly charged by all of the respondent members for the various grades of barley malt, were 85 cents per lmshel for standard malt, 89 cents per' bushel for choice malt, and !13 cenb per bushel for fancy malt, "f. o. b. Chicago basis." In the case of bulk shipments, the respondent members charged the above prices less 1 cent per bushel, or 84 cents, 88 cents, and 92 cents for standard, choice, and fancy malt, respectively, "f. o. b. Chicago basis."

PAR. 20. The Commission further finds that there are important factors connected with the manufacture and sale of malt which, in the absence of any price-fixing agreement, would preclude uniformity of price and result in price competition.

Xet manufacturing costs of the respondent membHs were not uniform but, based upon reports made by such respondent members to the respondent Association, such costs varied as much as 20 percent to 30 percent. · · • 812 FEDERAL TRADE COMl\IISSION DECISIO"XS Findings 35F.T.C.

The prices paid for barley by the various re~pondent members were not uniform but, instead, much of such barley was purcha~ed on a fluctuating market. The prices paid for barley purchased direct from the farmers, from country elevators, and upon the various exchanges were all different.

The cost of transportation of barley was not uniform among all of said respondent members. Certain of respondent members who were suitably located for lake transportation caused their barley to be shipped by boat to their processing plants; others were required to use rail transportation. The cost of shipping by boat was much lower than the cost of shipping by rail. Certn,in of the respondent mem~rs, by reason of their location between freight rate break points, were entitled to the malting-in-transit privilege, whereby the barley was unloaded at their plants, processed, and the shipment <'Ontinued as malt at the same rate as applied to the barley, which • is lower than the freight rate on malt. Other respondents, not being • located at such intermediate points between so-called freight rate break points, were not entitled to such malting-in-transit privilege, which increased the transportation rate of their product. The location of certain of respondent members' planfs near the point of m;igin of the barley used for malting purposes in some instances ga,·e such respondent members an advantage in cost of transporting barley.

The difference in cost of cleaning raw barley before subjecting it to the st(>(>ping process varied among the respondent members from 3 to 10 cents per bmhel. Furthermore, these cleaning costs varied from year to year and from month to month, and even varied in various cars deliverrd in the same shipment, dt>pending upon the character awl nature of the barley shipped.

Tlu.~ ditTer<>nce in m:tlt pi"OducPd by the \"nrious r·e:::l)()llll<>nt mPmfx.rs also <:on~titutt•J a factor which bhoulol bring about price competition among tile l"l'~pondcnts. In the original S<'lection of barley for malting purpost>s, ¥arion~ maltsters ~om('times differ as to the gra1le of barley pt"l'ferrt>J in making malt, and the fini:;heJ malt distributed by such malt~ters was rwt uniform as betwe<>n E>ach other, and in some cases brewmastl•rs found it neee..::-ary to keep the malt of different maltsters ~parnte in making their bt-Pr. In fact, the malt of certain of the l'£'spotlllent nwmbers was refu:-ed by certain brewers because such malt did not measure up to the brewers' standards ns well ns the malt proLlucE>tl Ly otller re~pondent members.

PAR. 21. The afore,.,ai•l underFtantling:", agre('ments, combinations, nml con"piracies, and tlle things done theremHl('r and pw·suant thereto and in furth~rance thereof as hereinnboYe found, have had, and do UNITED STATES :MALTSTERS ASSO., ET AL. 813 797 Order have, the effect of unduly lessening, restricting, restraining, and suppressing competition in the sale and distribution of malt in commerce among and between the several States of the United States, and of depriving the public of the full benefit of competition ~n said commerce between and among the respondent members and between them and th~ir competitors.

CONCLUSION The acts and practices of the respondents as herein found are all . to the prejudice of competitors of respondents and of the public, and have a dai1gerous tendency to and have actually frustrated, hindered, suppressed, lessened, restrained, and eliminated competition in the sale and distribution of malt in commerce as "commerce" is defined in the Federal Trade Commission Act; have placed. in respondents the power to control and enhance prices; have unreasonably restrained such commerce in malt; and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of the Federal Trade Commission Act.

ORDER TO CEASE AND DESIST . This proceeding having been heard by the Federal Trade Commis- Sion upon the complaint of the Commission, the answers of the respondents, testimony and other evidence in support of the allegations of said complaint and in opposition thereto, taken before Robert S. Hall, ~.trial examiner of the Commission theretofore duly designated by lt, report of 'Vebster Ballinger, a trial examiner appointed to prepare and file a trial examiner's report upon the evidence, vice Robert S. Hall, deceased, and exceptions filed thereto, briefs filed in support of the complaint and in oppsition thereto, and oral arguments of counsel; anu the Commission having made its findings as to tlle facts and its conclusion that said respondents have violated the provisions of the Federal Trade Commission Act .

. I~ is ordered, That the respondents, United States 1\faltsters Assoc~atwn, an unincorporated association, Chilton 1\Ialting Co., a corpora- ~Ion,. The Columbia Malting Co., a corporation, Froedtert Grain & .Ialt~ng Co., a corporation, 'Vm. E. Kreiner & Sons, Inc., a corpora- ~on, The Kurth 1\Ialting Co., a corporation, The Ladish-Stoppenbach o., a. corporation, George J.l\Ieyer 1\Ialt & Grain Corporation, a coriorahon, Milwaukee 'Vestern 1\Ialt Co., a corporation, Northwestern Rlalt & Gr.ain Co., a corporation, Perot :Malting Co., a corporation, L ahr 1\Ialt~ng Co., a corporation, II. ,V, Rickel & Co., a corporations · Rosenhelffier Malt & Grain Co., a corporation, Schreier Malting Co., a ~orporation, Albert Schwill & Co., a corp?ration, Daniel D. 'Vesch- 50!lH!lm-43-vol. 35-:1-1 814 FEDERAL TRAD'E COl\imission DECISIONS Order 33F. T.C.

ler & Sons, Inc., a corporation, 'Vest Bend Malting Co., a corporation, and 'Visconsin Malting Co., a corporation, and their respective officers, agents, representatives, and employees, in connection with the offering for sale,,sale, and distribution of malt in commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from entering into, continuing, cooperating in, qr carrying out any common course of action, agreement, understanding, combination, or conspiracy between and among any two or more of said respondents or between any one or more of said respondents and others not parties hereto to do or perform any of the following acts or practices:

1. Establishing, fixing, or maintaining prices, terms, or conditions of sale for malt, or adhering to or promising to adhere to the prices, terms, or conditions of sale so fixed.

2. Holding or participating in any meeting, discussion, or exchange of information among themselves or under the auspices of respondent United States Maltsters Association or any other medium or agency concerning proposed or future prices, terms, or conditions of sale. 3. Exchanging, distributing, or relaying among manufacturing respondents or any of them or through respondent United States Malt1 sters Association or through any other medium or central agency, price lists or other information showing current or future prices, terms, or conditions of sale or information showing current or future prices, terms, or conditions of sale of any particular respondent. 4. Authorizing or permitting examination of the books or 'other records of the respon,dent manufacturers by any agen~ of the United States }!laltsters Association or by any agent of the respondents or any of them, to determine or check the prices at w}iich any given respondent manufacturer has made sales, is currently making sales, or expects to make sales.

5. Formulating, establishing, putting into operation, continuing, or using in any way any rep~rting plan using' Chicago, 111., or any other common basing point which results in the establishment and maintenance among the respondent members or any two or more of them of uniform delivered prices to any given destination. 6: Quoting prices, terms, and conditions of sale deteimin~d under a method or system of a common basing point for the purpose, or with the effect, of making the delivered price quotation of any two or more of the respondents the same to any given destination. 7. Formulating or putting into operation any other practice or plan which has the purpose or the tendency or effect of fixing prices for malt, or otherwise restricting, restraining, or eliminating competition in the sale and distribution of such products. UNITED STATES MALTSTERS ASSO., ET AL. 815 97 Order 8. Employing or utilizing respondent,· United States 1\Ialtsters Association, or any other medium or central agency as an instrument, vehicle, or aid in performing or doing any of the acts and practices prohibited by this order.

It i.s further ordered, That the complaint herein be, and it hereby is, dismissed as t.o Interior Malt & Grain Co., a corporation. It is further ordered, That the respondents shall, within 60 days after service upon them of this order, file with the Commission a report in writing, setting forth in detail the manner and form in which they have r.complied with this order.

816 . FEDERAL TRADE COMMISSION DECISIONS Syllabus 35F.T.C.