Horlicks Corp

Text (OCR of the scan; may contain errors)

Before Mr. Fmnk Bier, trial examiner.

Mr. Rice E. S chrimshmfor the Commission. Bell, Boyd, M a1·shall & Lloyd, of Chicago, Til., for respondent.

CoMPLAINT

The Federal Trade Commission having reason to believe that Horlieks Corp. is violating and has violated the provisions of section 2' of the Clayton Act, as amended by the Robinson-Patman Act, approved June 19, 1936 (U. S. C. Title 15, sec. 13), and section 3 of the Clayton Act (U. S. C. Title 15, sec. 14), hereby issues its complaint, stating its charges with respect thereto as follows: COUN'l' I Charging violation of subsection (a) of section 2 of the Clayton Act, as amended, the Commission alleges:

PARAGRAPH 1. Respondent, Horlicks Corp., is a corporation, organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its principal office and place of business located in Racine, Wis.

PAR. 2. Respondent is now and, since June 19, 193G, has been engaged in the manufacture of malted-milk products, including maltedmilk powder, in Racine, Wis., and has sold and now sells such products to different purchasers located in the various States of the United States and the District of Columbia for use, constunptiou, or resale therein. Respondent transports said products, or causes the same to be transported, from Racine, "Wis., to said purchasers so located, thereby creating a continuous current of commerce in said products.

PAR. 3. The respondent, in the course and conduct of its business, has been and is in competition with other corporations, individuals,. partnerships, and firms engaged in manufacturing, selling, and distributing malted-milk products, including malted-milk powder, in commerce between and among the various States of the United States and the District of Coltunbia.

Some of respondent's purchasers, and some customers of such purchasers are competitively engaged in the resale of its malted-milk products at wholesale or at retail, or both, in the various territories and places where they respectively carry on their businesses. PAR. 4. In the course and conduct of its business, as above described, respondent has sold and now sells its malted-milk products to some purchasers at higher prices than it has sold and now sells such products of like grade and quality to other purchasers. For example, respondent, since on or about April 1, 1948, has sold and now sells malted-milk powder to certain favored purchasers such as Rexall Drug Co. and McKesson & Robbins, Inc., at lower prices than it has sold or offered to sell malted-milk powder of like grade and quality to other purchasers. The monetary differential between the selling price to such favored purchasers and the selling price to other nonfavored purchasers remains constant. In other words, in the event of an increase or decrease in the selling price per container to nonfavored purchasers, the price charged favored purchasers is increased or decreased by the same amount. The following table illustrates prices charged said favored purchasers and the comparable prices charged other purchasers: Container size Prices are delivered prices (minimum shipment 100 lbs. freight prepaid) in effect July 1, 1948 5-pound 10-pound | 25-pound | 100-pound | 200-pound jar tin tin drum drum Each Each Each Each Each Price to favored purchasers ... $1.15 $2, 175 $5. 25 $20. 30 $39. 80 Price to other purchasers ... $1. 50 $2, 90 $6, 76 $26, 00 $50. 00 Price discrimination:

Par COntRINOT 5 noses ceeesteucuccces $0.35 $0. 725 $1. 50 $5. 70 $10. 20 FOTO cn nenncacncccsensmnntuscoanonean 23.3 25.0 22. 2 21.9 20.4

Par. 5. The effect of such discriminations in price made by respondent, as set forth in paragraph 4 hereof, may be substantially to lessen competition or tend to create a monopoly in the lines of commerce in which respondent and its purchasers are respectively engaged; or to injure, destroy, or prevent competition with respondent or with purchasers of respondent who receive the benefit of such discriminations, or with customers of said purchasers.

Par. 6. Such discriminations in price by respondent between different purchasers of goods of like grade and quality in interstate commerce in the manner and form aforesaid, are in violation of the provisions of subsection (a) of section 2 of the above-mentioned act of Congress entitled “An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes,” approved October 15, 1914, (the Clayton Act), as amended by section 1 of the act of Congress 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. Title 15, Sec. 13, and for other purposes,” approved June 19, 1936 (the Robinson-Patman Act).

OOUNT II

Charging violation of section 3 of the Clayton Act, the Commission alleges:

PAR. 7. Paragraph 1 to 3, inclusive, of count I hereof are hereby repeated and made a part of this cotmt as fully and with the same force and effect as though here again set forth in full. Pan. 8. Hespondcnt in the course and conduct of its business, as herein described, has sold and now sells or has made contracts for the sale of its malted-milk products on the condition, agreement or tmderstanding that the purchasers thereof shall not use or deal in the malted-milk products of a competitor or competitors of the respondent. Respondent, since on or about April¹, 1!)48, has sold and now sells or has made contracts for the sale of its malted-milk powder, to certain purchasers, including Uexall Drug Co. and McKesson & Robbins, Inc., at prices which were and are fixed on the conditions, agreements, or understanding that respondent supply said purchasers all their requirements of malted-milk powder, with the result that said purchasers have not and do not now deal in malted-milk powder of a competitor or competitors of respondent.

PAR. 9. The effect of said sales, or contracts for sale on said condition, agreement or understanding may be to substantially lessen competition or tend to create a monopoly in the lines of commerce in which respondent and said purchasers are respectively engaged. PAR. 10. The aforesaid acts of respondent constitute a violation of the provisions of section 3 of the hereinabove mentioned act of Congress entitled ".An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes," approved October 15, 1914 (Clayton Act).

REPORT, FINDINGS AS TO THE FaCTs, AND ORDER

Pursuant to the provisions of an act of Congress entitled "An act to ~mpplement existing laws against unlawful restraints and monopolies, and for other purposes," approved October 15, 1914 (the Clayton Act), as amended by an act of Congress approved June 19, 1936 (the Robinson-Patman Act), the Federal Trade Commission, on October 3, 1949, issued and subsequently served upon the respondent, llorlicks Corp., its complaint in this proceeding, charging said respondent, in count I thereof, with violation of subsection (a) of section 2 of said act as amended and, in count II thereof, with violation of section 3 of said act. After the issuance of the complaint and the filing of respondent's answer thereto, a trial examiner of the Commission was designated by it to take testimony and receive evidence in support of and in opposition to the allegations of the complaint, nnd a number of hearings were held and a substantial amount <>f evidence was introduced and duly recorded and filed. At a hearing held on March 15, 1950, there was read into the record a stipulation as to the facts which had theretofore been agreed upon between counsel in support of the complaint and counsel for the respondent. Said stipulation provides, among other things, that the facts set forth therein are in addition to, and not in lieu of, any a11d all evidence in the record, and that said stipulation, together with such evidence, · shall constitute the whole record herein.

Thereafter this proceeding came on for final consideration by the Commission upon the complaint, answer thereto, testimony and other evidence, stipulation as to the facts, recommended decision of the trial examiner, and memorandum of counsel supporting the complaint (no briefs having been filed and oral argument not having been re.. quested); and the Commission, having duly considered the matter and being now fully advised in the premises, makes this its findings as to the facts and its conclusion drawn therefrom.

FINDINGS AS TO 'l'HE FACTS

PARAGRAPH 1. The respondent Horlicks Corp. is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its principal office and place o£ business located in Racine, Wis. Respondent also maintains warehouses in various of the larger cities in the United States. PAR. 2. Respondent is now, and for many years last past has been, engaged in the production and manufacture of malted-milk products, including Instant Cocoa and malted milk for sale at soda fountains, malted-milk tablets, and packages of malted mille for sale to consumers through drug, confectionery, and grocery stores. Respondent now sells, and for many years last past has sold, its malted-milk products to different purchasers located in the various States of the United Sta.tes and in the District of Columbia for use, constunption, or resale therein. Respondent transports said products, or causes the same to be transported, from Racine, Wis., to said purchasers so located, thereby creating a continuous current of commerce in said products.

PAR. 3. In the course and conduct of its business, respondent has been, and is, in competition with other corporations, individuals, partnerships, and firms engaged in manufacturing, selling, and distributing malted-milk products in commerce between and among the various States of the United States and the District of Columbia. Some of respondent's purchasers, and some customers of such purchasers, are competitively engaged in the resale of its malted-milk products at wholesale or at retail, or both, in the various territories and places where they respectively carry on their businesses.

PAR. 4. Respondent, in the course and conduct of its business as aforesaid, has contracted to sell, has sold, and now sells its malted-milk products on the condition, agreement, or understanding that the purchasers thereof shall not use or deal in the malted-milk products of a. competitor or competitors of the respondent. Rexall Drug Co. is a large wholesaler which sells drugs, fountain supplies, including malted milk, and many other items to retail drug stores throughout the United States. Respondent, since on or about April 1, 1948, has contracted to sell, has sold, and now sells, malted milk for soda founta.in use to Rexall Drug Co. at prices which were, and are, fixed on the condition, agreement, or understanding that respondent supply said purchaser all its requirements of said malted mille, with the result that said purchaser has not dealt, and does not now deal, in said malted milk of a competitor or competitors of respondent.

PAR. 5. The effect of said sales and contracts for sale on said condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in the lines of commerce in which respondent and said purchaser are, respectively, engaged.

PAR. 6. Count I of the complaint herein charges the respondent with violation of subsection (a) of section 2 of the Clayton Act, as amended, by reason of its having sold, and now selling, malted-milk products to some purchasers at higher prices than it has sold, and now sells, such products of like grade and quality to other purchasers. In a stipulation as to the facts which is a part of the record herein, it was stipulated and agreed between counsel supporting the complaint and the respondent that the respondent could produce evidence which would demonstrate that the price differentials alleged in the complaint and shown by the record are differentials which make only due allowance for differences in the cost to the respondent of sale and delivery resulting from tho differing methods or quantities, or both, of such sale and delivery, and that witness, if called, would testify that said price differentials make only due allowances for such differences, and that such testimony could not be rebutted in any material respect. The trial examiner consequently found that the evidence in the record is insufficient to support the charges in count I of the complaint, and granLed respondent's motion to dismiss count I of the complaint.

CONCLUSION

The acts and practices of the respondent as herein found constitute a violation of section 3 of the act of Congress entitled "An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes," approved October 15,1914 (Clayton Act).

OHOl!:R '1'0 CEASE AN D DESIST

This proceeding having been heard by the Federal Trade Commission llpon the complaint of the Commission, answer of the respondent, testimony and other evidence introduced before a trial examiner of the Commission theretofore duly designated by it, stipulation as to the facts entered into by nnd between counsel supporting the complaint and the respondent, recommended decision of the trial examiner, a,nd memontndum o:f counsel supporting the complaint (no briefs having been filed and ol'al argument not having been requested); and the Commission having made its findi11gs as to the facts and its conclusion that the respondent has violated the provisions of the act of Congress entitled "An net to supplement existing laws against unlawful restraints and monopolies, and for other purposes," app1:oved October 15, 1!Jl4 (the Clayton Act):

It is m·dered, That the respondent, Horlicks Corp., a corporation, and Hs officers, agents, representatives, and employees, directly or through any corporate o1· other device, in connection with the sale, or making of any contract for the sale, of malted-milk products in commerce, as "commerce" is defined in the aforesaid Clayton Act, do forthwith cease:mel desist from:

(1) Selling or making any contract for the sale of malted-milk products on the condition, agreement, or understanding that the purchaser thereof shall not use or deal in the malted-milk products, or other goods or merchandise of, a competitor or competitors of the respondent.

(2) Fixing the price charged for malted milk products, or granting a discount from or rebate upon the priee therefor, on the condition, agreement, or understancling that the purchaser of such products shall not use or deal in the ma ltecl-milk products, or other goods or merchandise, of a competitor or competitors of the respondent.

(3) Enforcing or continuing in operation or effect any condition, agreement, or understanding in or in connection with any existing sale or contrnct for the sale of malted-milk p1·oducts, which condition, 019G7~aa----15 agreement, or understanding is to the effect that the purchaser of such products shall not use or deal in the malted-milk products, or other goods or merchandise, of a competitor or competitors of the respondent.

It is fwrthe?· ordel·ed, That the respondent shall, within sixty (60) days after service upon it of this order, file with the Commission a report, in writing, setting forth in detail the manner and form in which it has complied with this order.

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