Champion Spark Plug Co.

Text (OCR of the scan at left; may contain errors)

IN THE MA T'JER OF CHAMPION SPARK PLUG CO.

FINDINGS AND ORDER IN REGARD O THE ALLEGED VIOLATION OF SEes. 2 (a) AND 2 (d) AND SEC. 3 OF THE CLAYTON ACT, AS AMENDED, A!\D OF TI- FEDERAL TRADE COMMISSION ACT Docket 3977. Complaint, June, 19 Decision, July 10 , 1953 here a corporation ,which was ODe of ten eonCel'llS engaged in the manufacture of spark plu/(s and, with General Motors and tbe Electric Auto-Lite Co., made more than SO percent of all tbe spark plu/(s produced and sold in the United States; sold its said product (1) to vehicle or engine manufacturers for use by them as ori/(inal equipment and sold the same also (2) for resale for replacement to automobile manufacturers, wholesalers of automobile parts and accessories, oil companies and others, competitively eu/(aged alan/( with many of their customers, in the resale of spark plugs at wholesale and retail ;

In selling its spark plugs of like grade and Quality for resale for l'eplacen1ent since June 1D , 1D3(;, at prices which varied substantially as hetwecn (1) purchasers buying directly from it, inel\1ding its distributors, Atlas Supply Co. , Socony-Vaclluln Oil Co., and certain alltomobiic and truck manufacturers (and prior to 1941 "direct jobbers ); (2) purcbasers buying indirectly from it; and (3) purchasers buyin/( directly and purchasers buying indirectly from itautolllObile mal1l1 (a) Discriminated in price behvecn distributors and certain I'aeturers in that in 1947, as ilustrative, it sold its said products to said distributors at net prices of 2(). cents and 24.65 cents in certain types of accounts; to four automobile ruannfaeturers at 2-: cents; and to Ford, at a cost to Ford, through latter s payment of the 5 percent excise tax, of about 22 cents;

"Tit11 results, as a consequence of F'ord' s adn rtising and promotional activities, induced in part by the low price paid by Ford for such plugs, that Ford cl"alers preferred to purchase their requirements of such plugs direct from Ford, and certain of respondent's distributors, including those in competition with Ford for the business of the latter s dealers, lost the accounts; Where said corporation, in selling its said spark Vll1gs to (1) Atlas Supply Co., \which was owned by a suhsidiary of Standan) Oil Con1pany of Nev .Terser alld the Standard Oil COUlpanies of Ohio, Indiana. Kentucky, and California, pllrehascd respondent's pings for resale to said various Standard Oll companies, and tOIH)uctcd a complete 111crchandisil1g program for the resale of automobile parts and accessories, incluuing said plugs, profits of which were (livided allong said companies on the basis of tlh rnercl1andise Oil Co. , which purchased automobile rmrdwses and to (2) Socony-VaCllUn1 products, including spark plu, not only for resale through its own outlets extensive adv 'rtis- but also for its affliates, und both of which carried on -lng, training and other activities to promote the sale of respondent's spark 1,lugs through independently operated service stations selling their respective products; and to (3) various other distributors- 1 Amended.

CHAMPION SPARK PLUG CO.

Sy llabus (b) Discriminated in price in favor of said Atlas and Socony through according them a discount of 10 percent plus 10 percent from respondent's HJ47 hillng price of 29 cents and thus afforded them a price advantage of 1.1f to 2. cents pel' plug over tbe 1947 net price to its other distrihutors of 26. 1 cents per plug (and 24.6G cents per plug in certain types of accounts) 'With result t1Jat Cities Service Oil Co. , one of a number of oil companies who did not receive said additional discount, was prevented thereby from fully competing with Standard Oil Companies of Ohio and Indiana and Socony, dealers of which, as a consequen of aforesaid advertising and promotional activities, preferred to purchase their requirements of respondent's plugs from or through them; and a number of distributors who paid a higher price for its plugs than did Atlas and Socony, lost the business of indepcndently operated service stations to such favored concerns; and Where said corporation, in sellng its said spark plugs to its distributor purchasers at 29 cents cacb less 10 percent plus 5 percent al10wanccs as Special Sales Service Compensation, for resale to its "Franchise" or Basis" accounts, which, under franchises granted by it, bought from its said distrihutors at varying prices and terms fixed by respondent-and und"r such control by respondent that sales to such indirect accounts wcrc in all essential respects sales by respondent; which included (1) wholesale accounts classified as Ii Jobber Basis" accounts and " 000 Plugs Basis" accounts, charged, in 1947, 29 cents and 32 cents, respcctively; and (2) large consumer accounts classified as " ' c' :Fle( Basis" accounts and " leet Basis respectively char/(ed similar amounts- (c) Discriminated in price between its distributors and its said indirect purchasers, pach of whom was in competition with other purchasers of its spark plu/(s, and was injured to tbe extent that it paid a price higher than that paid by its competitors, and thus furlher discriminated between certain indirect purchasers;

With result that its distributors and, to a lesser extent, the more favored indirect accounts, 'were able to resell profitably to consumer " lect" accounts; and the indirect wholesale accounts paying the higber prices lost the business of all consumer accounts large enough to secure respondent' s approval for a Ineet Basis" agreement, including accounts \which they had developed: Held that aforesaid discriminatory acts and practices were in violation of subsec. (a) of Sec. 2 of the Clayton Act: and Where said respondent, which was one of the two largest spark plug manufacturers in the United States; along with General :1\0t01'8 and Electric Auto-Lite, made and sold substantially all the spark plugs purchased hy equipment manufacturers, and more than 80 percent of all such products made and sold in the United States; made substantial sales to operators of large fleets of Jnotor trucks or buses; and made about two-thirds of its total sales of spark plugs through its distrihutors, sellug in 194G a total of more than 58 million spark plugs through such distributors other than Atlas and Socony- (d) Entered from time to time into contracts with automobile manufacturers in which there was included a provision, eliminatec1 in UJ39, wherchy the manufacturers agreed to purchase from respondent thejr entire requirements of spark plugs for a specified term not exceeding Olle year and respondent agreed to supply their requirements of such products; (e) Executed, prior to 1941 , a so-callec1 "Commercial Francl1ise" agreement with operators of lms and trucking lines and with other large consumers ,which set FEDERAL TRADE COMMISSION m;CISIOKS indinl(s 50 F. T. C.

forth t1Je prices at which sucb so-called "Fleet" accounts were entitled to purchase their requirelnents of spark plugs, specified the Sources from w1Jich they were to obtain sucb rcquircments and, throug1J the inclusion of such language as "in consideration of your purchasinl( Champion Spark Plugs for your requirements, estimated to exceed 5 000 plugs per year, to service your motorized equipment and UDOn your placing an initial order for 200 plugs for sinl(lc deliycry wc extcnd to you thc following special prices, terms and conditions on all your Spark Plug purchases through this date to December 31, 19;\9, which, in effect, constituted agreements wlwreby said /' leet" accounts \:were given a special low price in consideration of their purchasing such pI ugs for all their requirements; and (f) Entered into agreements with its distributors through two forms, used prior to HJ41 and subserluent to 1940, respectively, whereby tbe distributor, in order to obtain spark plugs at a sIJccial low price as specifically set out undertook a yal'iety of services whh respect to said ranchisc accounts including the satisfactory servicing of such accounts and pCl'io(lieal reports with respect to their purchases, aild which were of such a llature that nohvithstanding disavowals therein of any expressed or implied obligation on the part of the distributor to handle such plugs exclusively, latter, in effect, ,vas required so to do, in order to obtain the special low price involved; interpreted said agreements as iilJ10sing such an obligation upon its distributors; rcfused to enter into distributor agreements with wholesale counts which refused to agree to handle respondent's plugs exclusively; and tbreatened cancellation of agreements with distributors who had taken on or indicated an intention to take on competing lines of spark plugs: Held That such acts and practices, under the circumstances set forth, were in viola tion of Sec. 3 of the Clayton Act.

Before lJT. Webste1" Eallin get' hearing examiner. 111". L. E. CTeel, J1'., lift. Robe1"t R. lIlachxT Hnd llfr. J. Wallace Adair for the Commission.

lJa1"shall, lIfelhoTn, Blocle c0 Belt of Toledo, Ohio, for respondent. Wilkie, Owen, fia1T, Ciallagher c0 Walton of Kew York City, for Kaiser-Frazer Corp. am,icus curiae.

lilt. L. Arthur Cireenstein and 1111'. Daniel S. Cireenstein of Philadelphia, Pa., for Berlin Auto Supply Co. amicus c'u1"iae. Beaumont, Sm.ith d; Harris of Detorit, Mich., for Hudson Motor Car Co. amicus curiae.

Coole, Bealee, lJille'l, Wrocle c0 Cross of Detroit, Mich., for Nash- Kelvinat.or Corp. amicus chain-e.

Bodman, Long7ey, BO g7e, Armstrong Dating, of Detroit., Mich. for Packard Motor Car Co. amicu.s curiae.

RitteT di; Boesel of Toledo, Ohio, for Willys-Overland :\iotors, Inc. anUCU8 C1lT"/ae.

HEPOHT, FIKDJNGS AS TO TI-IIc FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act and the provisions of an Act of Congress entitled "An Act to sup- , ( CHAMPION SPARK PLUG CO.

Findings plement existing laws agaillst ulllawful restraints and monopolies, and for other purposes " approved October 15, 1914 (Clayton Act), as amellded by an Act of Congress approved June 19, 1936 (Robinson- Patman Act), the Federal Trade Commission on June 27, 1947, issued and subsequently served its amended complaint in this proceeding upon the respondent, Champion Spark Plug Company, a corporation (said amended complaint being issued in the place of and instead the complaint against the same respondent issued 011 December 16 1939), charging said respondent in Count I thereof with violation of subsection (a) of Section 2 of said Clayton Act, as amended; in Count II thereof with viobtioIJ of subsection (d) of Section 2 of said Claythereof with violation of Section ton Act, as amended; in Count In 3 of said Clayton Act; and in Count IV thereof with violation of Section 5 of the Federal Trade Commission Act. A-fer the issuance of said amended complaint and the filing of respondellt' s answer thereto, testimony and other evidence in support of and in opposition to the allegations of said amended complaint were introduced before a hearing examiner of the Commission theretofore duly designated by it, and said testimony and other evidence were duly recorded and filed in the offce of the Commission. Thereafter, this proceeding regularly came on Jor final hearing before the Commission UpOll the amended complaint, allswer thereto, testimony and other evidence, recommended decision of the hearing examiner and exceptions thereto, written briefs of counsel supporting the complaint ounsel for respondent, and counsel for Kaiser-Frazer Corporation, Hudson Motor Car Company, Nash-Kelvinator Corporation, Packard Motor Car CompallY, and Willys- Overland Motors Inc., as amici ( uriae, and oral argument of opposing counsel; and the Commission, having duly cOllsidered the matter and having entered its order disposing of the exceptions to the recommended decision of the hearing eX trniner, and 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 conelusion drawn therefrom. FINDINGS AS TO THE FACTS PARAGRAPH 1. The respondent, Champion Spark Plug Company (sometimes hereinafter referred to as "Champion ), is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its principal offce and place of business located in Toledo, Ohio.

PAR. 2. Respondent is engaged in the business of manufacturing and selling spark plugs and spark plug parts. It neither makes nor sells anything else, except that it sells a small amount of spark plug 40H4. ;'7- Findings 50 F. T. C.

testing and cleaning apparatus purchased from others. Respondent manufactures its spark plugs in its plants in Toledo, Ohio, and Detroit Michigan, and causes them to be transported, when sold, to its customers Jocated in all States of the United States and in the District of Columbia. There is and has been at all times herein mentioned a current of trade and commerce in said product manufactured and sold by respondent between the States wherein respondent's plants are located and the other States of the United States. Respondent' spark plugs are sold by it for use, consumption, or resale within the various States of the United States and in the District of Columbia. PAR. 3. Respondent sells spark plugs throughout the United States in the same territories and places as, and in substantial competition with, other persons and corporations engaged in the manufacture and sale of spark plugs. There are approximately 40 concerns engaged in the business of manufacturing or assembling spark plugs. Respondent, General Motors Corporation (AC Spark Plug Division), The Electric Auto-Lite Company, and 7 other concerns are manufacturers of complete spllrk plugs. The remaining approximately 30 concerns either assemble spark plug parts made by others or market under their own brand name spark plugs purchased from other manufacturers or assemblers of spark plugs. More than 80 percent of all the spark plugs produced and sold in the ljnited States are manufactured by respondent, General ?Jotors Corporation (AC Spark Plug Division), and The Electric Auto-Lite Complwy, PAR. 4. Respondent sells its spark plugs to vehicle or engine manufacturers for use by such manufacturers as original equipment in vehicles or engines manufactured by them. Respondent also sells its plugs to such manufacturers and to others for resale -for replacement of original equipment. More spark plugs are sold for replacement than for original equipment. The life of a well-made spark plug is not necessarily shorter than that of the engine in which it is used bnt many are replaced during the li1'e 01' the engine in an eflort to secure more economical operation.

The spark plugs sold by respondent for use as original equipment become an integral part 01' the motor qr vehiele in which they are used, and are not resold in competition with spark plugs sold for repbcement purposes. The end use market for equipment spark plugs is separate and distinct from and noncompetitive with the replacement market.

Respondent sells spark pings to be used for replacement purposes to automobile manufacturers, \vholesalel's of automobile jmrts and accessories, oil complmies, and others. These customers of respondent and many o-f their customers are competitively engaged in the resale CHAMPION SPARK PLUG CO.

Findings of spark plugs at wholesale and retail in the various areas where said customers respectively carryon their businesses. PAR. 5. Respondent has sold its spark plugs to automobile manufacturers for their use in motors and motor vehicles-original equipment plugs-at prices lower than those charged by respondent for its spark plugs of like grade and quality sold to said automobile manufacturers and to others for resale for replacement of original equipment. During the period from 1937 through 1947, respondent' invoice price on spark plugs sold to passenger ear manufacturers for their use as original equipment ranged from 5 cents to 7 cents per plug. During the same period, respondent' s prices to the said passenger car manufacturers for replacement plugs ranged from approximately 22 cents to 27 cents per plug, and its prices to other direct customers for replacement plugs ranged from approximately 25 cents to 29.7 cents per plug.

It is alleged in Count I of the amended complaint herein that the effect of the aforesaid price differentials between purchasers buying for original equipment and purchasers buying for resale for replacement is and may be to substantially lessen competition or tend to create a monopoly in the line of commerce in which respondent is engaged or to injure, destroy, or prevent competition with respondent in the manufacture, distribution, and sale of spark plugs. The hearing examiner in his recommended decision found that the allegations of Count I of the amended complaint relating to the price differentials between spark plugs sold for original equipment and for replacement are sustained by the evidence, and his recommended order would prohibit all such price differentials except those which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the diiIering methods or quantities in which such commodities are to such purchasers sold or delivered. In arriving at his decision, the hearing examiuer determined that the prices at which respondent has invoiced spark plugs to automobile nianufacturcrs for use in original equipment and for resale for replacement do not represent the actual prices at which respondent sold such plugs to automobile manufacturers. The actual price, according to the hearing examiner, is determined by averaging the invoice or billing prices on original equipment plugs and on replacement plugs on the basis of volume of each purchased by the manufacturer. By this method of determining the "actual" price on sales to automobile manufacturers, the hearing examiner found that Champion s price on spark plugs sold to Ford Motor Company during J94G was J()'I" cents per plug or approximately 9'1 cents per plug below Champion s price to its distributors. In reaching his determination as to the " actual" price FEDERAL TRADE COMMISSIO=" DECISIONS ICindings 50 F. T. C.

at which respondent sold spark plugs to automobile manufacturers the hearing examiner apparently relied to a large extent upon statements made by the respondent in its answer to the amended complp,int and to statements by respondent's president in the course of testimony and oral argument before the Commission.

The Commission is of the opinion that the hearing examiner s said finding that respondent sold spark plugs to automobile manufacturers at a single, average price is not supported by the evidence. The price received by a seller or paid by a buyer in any given transaction is determined by the circumstances of the transaction. what the seller, in this case the respondent, may have considered to be the price is not necessarily the determining factor. Equipment plugs and replacement plugs sold by respondent to automobile and truck manufacturers were used in entirely separate business operations. Equipment plugs were used solely in the manufacture of engines. They became an integral part of the engine in which they were used. On the other hand repla( ejJent plugs purchased by automobile and truck manufacturers '''ere used only for resale to dealers. Equipment plugs and replacement plugs were billed on separate invoices at two different prices. The prices set by said manufacturers on new vehicles reflected the invoice cost of equipment plugs and the prices at which they resold replacement plugs were based on the invoice cost of such plugs. None of the spark plugs purchased by automobile manufacturers for use in original equipment were resold by such manufacturers as replacement plugs. pon consideration of all the circumstances surrounding the transactions between respondent and the automobile and truck manufaeturcrs to whom it sold both equipment and replacement spark plugs the Commission is of the opinion, and therefore finds, that such spark plugs were sold at two separate and distinct prices. The heating examiner also found tlmt the effect of the difference between the "average price" charged automobile manufacturers and the price charged other direct customers for spark plugs for replacement has been to gi ve the said manufacturers a price advantage over the distributors, which price advantage was utilized, in part, in advertising and sales promotional campaigns to stimulate the resale of spark plugs purchased by the manufacturers. Such price differential also according to the hearing examiner, precludes the smaller spark plug manufacturers from successfully competing for original equipment business, and has contributed to three manufacturers of spark plugs, of which Champion is one, acquiriug substantially a complete monopoly in the original equipment and replacement business of all equipment manufac:turers and approximately SO-odd perceut of all replacement business.

CHAMPION SPARK PLUG CO.

Findings The Commission s aforesaid rejection of the hearing examiner recommended finding as to the method of determining respondent' price on original equipment and replacement plugs sold to equipment manufacturers constitutes, in effect, a rej(oction of his recommended finding as to thc injury to competition between respondent's customers or customers of such customers, resulting from respondent's lower prices on original equipment plugs. Moreover, the amended complaint does not allege any injury to competition between purchasers of spark plugs for original equipment and purchasers of spark plugs for resale for replacement. The question to be resolved then, in connection with respondent's lower price on original equipment plugs than on replacement plugs, is whether the effect of such price difi'erentials has been or may be to substantially lessen eompetitiol1 or tend to create a monopoly in the line of commerce in which respondent is engageel, or to injure, destroy, or prevent competition with respondent in the manufacture, distribution, and sale of spark plugs. Counsel supporting the complaint have sought to show that as a result of respondent's lower price on origimll equipment plugs, other manufacturers of spark plugs have been excluded from slmring in the original equipment business. They contend that the smaller spark plug manufacturers cannot compete for the original equi pment business because they cannot st:md the losses involved in respondent's low prices on original equipment business. They also contend that such smaller manufacturers are excluded from large parts of the replacement market because their spark plugs lack the prestige that is acquired by spark plugs which are used as original ecpliplnent. The evidence in the record tending to support these contentions is persuasi ve. However, in the opinion of the Commission, such contentions are not supported by the greater weight of all the evidence. Substantially all of the spark plugs purchased by automobile manufacturers are supplied by three compauies: General Motors Corporation (AC Spark Plug Division), The Electric Auto-Lite Company, and respondent. Of the 20 most popular passenger automobiles in 1048, The Electric Auto-Lite Company supplied all equipment plugs for nine models; General Motors (AC Spark Plug Division) supplied all equipment plugs for five models; and Champion supplied all equipment plugs for five models. One model was sup lied by all three of the named compames.

There is some evidence in the record tending to show that some competing spark plug manufacturers were unable to sell original equipment plugs to equipment manufaeturers because they were either unable or unwilling to sell at thc price at which respondent sold, or offered to sell, to equipment manufacturers. .For example, an offcial J!'indings 50 I. . T. C. of the Blue Crown Spark Plug Company testified that his company offers to sell Blue Crown s spark plugs to certain tractor works owned or controlled by Deere & Company and to Kaiser-Frazer Corporation for original equipment at a price of 12% cents per plug, which price was approximately Blue Crown s cost of production, were rejected because the price was too high. It appears, however, that price alone was not the determining factor in causing the said offers of the Blue Crown Spark Plug Company to be rejected. Among other things which caused such rejections was the fact that the Blue Crown spark plugs had not been tested and approved by the concerns to whom the offers were made.

There is substantial evidence in the record that manufacturers automobiles and other vehicles, in selecting a particular spark plug, take into consideration such factors as the quality and performance of the spark plug in the engine in which it is to be used, the ability and capacity of the spark plug manufacturer to supply the requirements of the purchaser, the public acceptance of the spark plugs, and the availability of the spark plugs and service thereon throughout the United States, as well as the price.

The record does not disclose any undue mortality rate on the part of smaller spark plug manufacturers or any undue loss of business by them which can be attributed to the fact that respondent has sold its original equipment spark plugs at a lower price than it charged for replacement spark pings.

The Commission, upon consideration of the whole record, is of the opinion, and therefore finds, that the greater weight of the evidence fails to establish that the eflect of respondent' s price diflerentials between purchasers buyil1g for original equipment and purchasers buying for resale for replacement has been or may be to substantially lessen competition or tend to create a monopoly in the line of commerce in which respondent is engaged, or to injure, destroy, or prevent competition with respondent in the manufacture, distribution, and sale of spark plugs. In view of this determination, it is not necessary to determine whether, as respondent claims, the lower prices on original equipment plugs were made in good faith to meet equally low or lower prices and the services and facilities offered by its competitors. PAn. 6. In the course and conduct of its aforesaid business respondend bas, since ,June 19, 1936, sold its spark plugs for replacement of origil1al equipment at prices which have varied substantially as between (1) purehasers buying directly from respondent; (2) purchasers buying indirectly from respondel1t; and (3) purchasers buying directly and purchasers buyil1g indirectly from respol1 dell t. _ . .. , CHAMPION SPARK PLUG CO.

Findings Direct purchasers of replacement spark plugs from respondent included those accounts classified by respondent as distributors, Atlas Supply Company, Socony- V aCUllm Oil Company, and certain automobile and truck manufacturers. Prior to January 1 , 1941 respondent also sold directly to accounts classified by it as direct jobbers. The prices charged by respondent for replacement spark plugs sold to certain direct purchasers during the years 1939 through 1947 are shown in the following tabulation: Price Per Pll1g Charged. Ce,-ain Direct Purchasers tor Replneement Plugs (All prices subject to a 2% cash discount) i 1942 Type or name of direct: HJ30 - ;940 . 1941 1913 I 1944 HJ45 HJ46 1947 purchaser Distributor: Invoice price-- . $0. $0. $0. $0. 33 1$0. SO. 33 I qO. 33 $0. $0. Less 10% 279 278 279 297 i . 297 297 I . 2\17 261 261 Direct jobber B Atlas Supply Co.

:13 . 33 Invoice price -- 31 . 33 i . Less 10%-10%- _ 2511 2511 2511 I 2G73 I . 2G7: 2673 2673 2349 2349 Socony-VaClJurn Oil Co.

lvoiee price n :)1 . 33 Less 10S';_ 279 279 279 297 297 297 Less JO%-1O%1) 2673 2349 2:149 Kaiser- Frazer Corp_ Stnu81Xi.kcr C On-L -- 2.j . 24 Hcdson Motor Car COu P8ckardl\1otOT Car COn . 24 Ford i\lotor Co-- . 24 22 . 22 A All distributor accounts were paid an additional 5% rebate OIl spark plugs they resold to certain type:" of DUCCOUJltThis classification was eliminated Jan. 1 , 1011. C Price reduced to 29t Sept. 1 , 1\)45. D Additional 100; J allo\\"ance aftp,r 1\ov. 1 , 1944. Ii Pricl, reduced from 2/(: to 215. 1\! on Sept. 1 , 1945, Dnd to 241' on Nov . 1, 1945. F Price reduced from 27(; to 2(U on Sept. 1 , 1945. arl(1 to 'lit on Oct. 12 , l!J45. G trice reduced from 27t to 2(). on Sept. 1 , 194.1, a,nd to 24 on Dec. 1 , 1945. H Price redue8d from 27 to 24e on Sept. 1 , 1915. I Prjcf reduced from 24 to 21 on 1\1 ay 2, HJ4G. 1I0\\'ever, Ford p8,ys the F(:deral Excisr. Tax, which respondent pays for other juul"cbu,scrs. Sllch tax is 5(/;) of 21 , making- :Foru' s cost approxirnatcJy 22t. PAR. 7. Respondent has, since June 19, 1936, sold its spark plugs of like grade and quality to its distributors and to automobile manufacturers for resale for replacement at varying and different prices. For example, as indicated in the tabulation in Paragraph Six, respondent' billing or invoice price to its distributors in 1947 was 29 cents per plug. Such billing price was subject, however, to a discount of 10 percent which was paid by respondent to the distributors quarterly. Thus respondent's net price to its distributors in 1947 was 26.1 cents per plug. Respondent's distributors were also granted an additional 5 percent rebate on spark plugs they resold to eerblin types of accounts, and on such sales respondent' s net price in 1947 was 24. 65 cents per plug. During the same period, respondent's invoice price to Ford Motor Company for spark plugs for resale for replacement was 21 cents per plug. However, Ford paid the Federal Excise Tax on the plugs it Findings 50 F. T. C.

purchased for resale, while respondent paid such tax on the plugs sold to distributors. Such excise tax was 5 percent and thus Ford's cost on such plugs was approximately 22 cents per plug as against 26. cents and 24.65 cents per plug paid by respondent's distributors. Ford Motor Company resold the spark plugs it purchased from respondent to Ford dealers. Distributors handling respondent's plugs were in competition with Ford Motor Company for the business of many of said Ford dealers. Ford Motor Company has carried on extensive advertising and sales promotional campaigns and has maintained a large force of field men for the purpose of promoting the purchase by Ford dealers of Champion spark plugs and other automobile parts from Ford Motor Company and to aid said Ford dealers in reselling such products. As a result of such advertising and promotional activities on the part of Ford Motor Company and also as a result of exhortations, by Ford' s field men, to Ford dealers to purchase from Ford Motor Company, Ford dealers prefer to purchase their requirements of Champion spark plugs from Ford Motor Company. There is evidence in the record that certain of respondent's distributors have lost the business of Ford dealers because of such preference on the part of said dealers to do business with Ford Motor Company. The low prices paid by Ford Motor Company for respondent' s spark plugs was one of the factors which caused Ford to engage in the various advertising and promotional campaign:: to promote the purcha::e by ord dealers of champion spark plugs from Ford Motor Company. The Commission concludes, and therdore finds, that the direct of respondent' s said discriminations in price between distributors and certain automobile manufacturer:: on spark plugs sold for resale for replacement bas been and may be to injure, destroy, and prevent competition with the purcba::ers paying the lower prices. P Al1. 8. Tbe price:: at which respondent has sold its ::park plugs to its distributors and to Atlas Supply Company (sometimes hereinafter referred to as "Atla:: ) and Soeony-Vacu1ltl Oil Company (sometimes . hereinafter referred to as "Socony ) have varied substantially. Respondent has billed or invoiced its spark plugs to its distributors and to Atlas and Socony at Lbe ::value price, but such billing or invoice price does not represent the prices actually received by re::pondent. As shown in the tabulation in Paragraph Six hereof, respondent' s net price to its di::trilmtors in 1947 was 26.1 cents per plug (on spark plugs resol'd to certain types of ac( ounts the distributor s net price was 24.65 cents per plug). I\respondent's billing or invoice price to Atlas and Socony of 29 cents per plug was reduced by discounts of 10 percent and 10 percent, with the result that respondent's net price to those customers in ) 947 was 23.49 cents per plug. Thus, during the CHAMPION SPARK PLUG CU.

Findings year 1947, Atlas and So cony enjoyed a price advantage over respondent' s other distributors of a minimum of 1.16 cents per plug and a maximum of 2.61 cents pel' plug.

Atlas Supply Company is a corporation the entire stock of which is owned by Stanco, Incorporated, and the Standard Oil Companies of isOhio, Indiana, Kentucky, and California. Stanco, Incorporated, a wholly owned subsidiary of Standard Oil Company of New Jersey. Atlas purchased respondent's plugs for resale to the said various Standard Oil Companies exclusively. It conducted for the various Standard Oil Companies a complete merchandising program for the resale of automobile parts and accessories, including respondent' spark plugs. The pro.fits earned by Atlas were divided among the various Standard Oil Companies on the basis of the total amount of merchandise purchased by each through Atlas. Socony-Vacuum Oil Company purchased automobile products, including spark plugs, not only for resale through its own outlets but also for its affliates. Included among respondent' s distributors who did not receive the additional discount granted A tlas and Socony were a number of oil companies, of which Cities Service Oil Company was one. Cities Service Oil Company was in competition with the Standard Oil Companies of Indiana and Ohio and with Socony in the sale of respondent' spark plugs. Respondent's failure to grant Cities Service Oil Company the same discounts granted Atlas and Socony has prevented Cities Service Oil Company from fully competing with the said Standard Oil Companies of Indiana and Ohio and Socony. Atlas and Socony each carryon extensive advertising, training, and other sales promotional activities for the purpose of promoting the sale of Champion spark plugs through independently operated service stations which seJl Standard Oil and Socony products, respectively. Such advertising and promotional activities have caused these service station dealers to prefer to purchase their requirements of Champion spark plugs from or through the respective Standard Oil Companies and Socony.

There is substantial evidence in the record that a number of respondent's distributors who paid a higher price for Champion spark plugs than did Atlas and Socony lost the business of independently operated service stations to the Standard Oil Companies and Socony The Commission concludes, and therefore finds, that the effect 0 respondent' s said discriminations in price between its distributors an. Atlas and Socony on spark plugs has been and may be substantialJ to injure, destroy, and prevent competition with the purchasers payin the lower prices.

Findings 50 F.

As a defense to the above-described discriminations in price between distributors and Atlas and Socony, respondent claims that its lower prices to Atlas and Socony were made in good faith to meet an equally low price of a competitor. The Commission is of the opinion, and finds, that the evidence does not support this defense of the respondent. During the entire period covered by the amended complaint respondent sold spark plugs to Atlas in substantially the same manner as it did prior to the amendment of the Clayton Act on June 19 , 1936. Despite testimony to the effect that during this period Atlas received some verbal offers from other spark plug manufacturers quoting lower prices than those which Atlas was paying to respondent, it does not appear that respondent varied its price in any way to meet such offers. Also, during this period Atlas purchased some of its requirements of spark plugs from AC Spark Plug Company. Atlas received no quotations from other competitors of respondent after 1941. However, on September 1, 1945 (or on October 1, 1945) respondent reduced its price to Atlas to less than the price which Atlas was then paying to the AC Spark Plug Company; There is no evidence of any quotations by competitors of respondent to So cony since August 1944. However, on September 1, 1945, respondent reduced its price to Socony by approximately 3 cents per plug lld thereafter continued the discriminations in price heretofore described. Respondent also claims as a defense to the above-described discriminations in price that the price differentials were justified by differences between its cost of selling to distributors and to Atlas and Socony. In support of this defense, respondent has presented statements with supporting testimony purporting to show a comparison of its cost of selling to Atlas and Soc,ny with its cost of selling to all other distributors as a group for the year 1946. Respondent did not maintain its rccords in such a manner as would permit an 'iccurate determination of its cost of selling to any particular customer. Jonsequently, for thc purposes of its cost justification respondent has Lttempted to allocatc its total selling expenses for the year 1946 as 'ctween Atlas and Socony on the one hand and its other 485 distribu- )rs on the other, and thereafter to compute an avcragc cost of selling '1 individual spark plug to the customers in each group. Respondent 1S thus attempted to divide its 487 distributors into two groups, one oup composed of Atlas and SOGony and thc other composed of its her 485 distributors. Such a grouping fails to take into consideran the fact that among the 485 distributors in one of the groups \re are those upon whom respondent expended a comparati very 'ill amount of sales effort. For example, there is evidence that :Jondent expended a comparativcly small amount of sales effort CHAMPION SPARK PLUG CO.

Findings in selling to Cities Service Oil Company, probably less than was expended on sales to Atlas and Socony. However, for the purposes of its cost justification respondent included Cities Service Oil Company in the group to which respondent has allocated a major portion of its selling expenses. Respondent's cost of doing business undoubtedly varied as among its different customers. All of its selling expenses were not applicable on a proportionately equal basis to sales to all of its customers. However, in the absence of a sound basis for deterthe sales tomining the actual cost of selling to particular customers, the entire sellingeach customer must bear their proportionate share of expense. A cost justification based on the difference between an estimated average cost of selling to one or two large customers and an a verage cost of selling to all other customers cannot be accepted as a are other featuresdefense to a charge of price discrimination. There of respondent's cost justification which raise basic questions as to the soundness of certain of the procedures followed and allocations made in determining the cost differentilLls. For example, in one of the tabulations, selling expenses were allocated as between Atlas and Socony on the one hand, and all other distributors on the other, on the basis of an e.stimate by respondent's president that respondent expended 10 times as much sftles efI'ort on sales to regular distributors as it expended on sales to Atlas and Socony. For the purposes of the tabulation, however, a ratio of 1) to 1 was used. The fact that estimates are used in an attempted cost justification does not of itself make such cost justification wholly void of probfttive value. Howestimates usedever, there should be more of a record basis for the than there was for the estimates used by the respondent in its cost justification.

Upon consideration of the aforesaid statements and supporting testimony presented by respondent in support of its cost justification supporting the com-and rebuttal evidence iTJtroduced by counsel plaint, the Commission finds that the evidence fails to estftblish that respondent' s price differentiftls in favor of Atlas and Socony made sellng to those customers.only due allowance for differences in cost of PAR. 9. In addition to the purchasers described hereinabove to whom respondent also negotiated and respondent sold spark plugs direct, job- entered into contracts or agreements with numerous wholesalers, bers, and COTJsumers of spark plugs, by which such purchasers were 11,ccorcled the opportunity of purchasiTJg respoTJdent's spark plugs through ChampioTJ distributors at varying prices according to the type of contract or agreement entered into by the particular purchaser. Prior to .J anuary 1 , 1941 , respondent' s direct accounts, other than Atlas and Socony and equipment manufacturers, were classified Findings 50 F. T. C.

by respondent as distributors and as direct jobbers. The agreements entered into between Champion and its distributors prior to 1941 provided that Champion would pay to the distributors as "special sales service compensation" 10 percent of its billing price on all spark plugs purchased by the distributors (such payments to be made quarterly), in consideration of the distributors doing certain sales promotional work; satisfactorily servicing franchise accounts; sending Champion periodic reports of purchases by franchise accounts; reporting to Champion the names of dealers not handling Champion spark plugs; making no sales directly or indirectly to any accounts, except those sold as regular dealers at dealers' prices in the territory regularly covered by their salesmen, unless and until such account was approved for a franchise by Champion or Champion had given its written approval to service them; paying their accounts promptly; conducting their business methods and distribution of Champion spark plugs in a manner completely satisfactory to Champion; and giving Champion the right to audit their sales and customers' accounts and orders at any time by any disinterested certified public accountant for the purpose of ascertaining the distribution and sale by them of Champion spark plugs. In supplemental agreements respondent agreed to increase the amount of the payment from 10 percent to 15 percent on all sales by the distributors to Wholesale Franchise and Commercial c" Franchise accounts.

To obtain a franchise, an applicant made application to Champion on forms prepared by Champion. The application was in the form of an order from a distributor named in the order and was signed by both the applicant and the distributor. The application contained among other things, the following: "tve hereby order from the first named Supplier listed below 250 Champion Spark Plugs " * * and request you to give your approval of a -franchise to us upon our agreement to carry a minimum stock of 250 Champion Spark Plugs during the year . IVe estimate our (year J requirements at 1 000 or more plugs, and understand that prices and terms of payment are subject to change without notice." The form- used provided a space for Champion s approval of the franchise.

As of ,January 1 , 1941, subsequent to the issuance of the original complaint herein, respondent discontinued its sales to so- called direct jobbers. The agreements entered into between respondent and its distributors subsequent to 1940 were slightly different from those described above. Under the revised agreements distributors were authorized to sell Champion spark plugs in the territory regularly covered by their salesmen upon the terms and conditions set forth in the agreements. Among other things, the agreements specified the prices CHAMPION SPARK PLUG CO.

Findings which the distributors would pay Champion, as well as the "Resale Prices Established in 'Fair Trade' States- Suggested Resale Prices in Other States and D. The distributors agreed to secure the written approval of Champion before selling or servicing Franchise accounts. After January 1, 1945, such Franchise accounts were referred to as "Basis Accounts. Distributors also agreed to report to Champion all sales to such Franchise or Basis Accounts. The agreement provided for the payment by Champion of the 10 percent special sales service compensation; also, the separate arrangement whereby Champion paid the distributor an additional 5 percent on all sales made by the distributor to Wholesale Franchise and Commercial COO Franchise accounts was continued. The methods and forms used in obtaining Champion s approval before selling to Franchise accounts were substantially the same as those used prior to 1941. Negotiations with applicants for a franchise were carried on by respondent's representatives. The terms and conditions of sales to such Franchise accounts were fixed by Champion. The degree of control exercised by respondent over sales to such Franchise accounts was such that such sales were in all essential respects sales by respondent. These indirect accounts are considered by the Commission to be "purchasers" within the meaning of the Clayton Act, as amended. The Franchise and Basis accounts which purchased Champion spark plugs through Champion s distributors included wholesale accounts and large consumer accounts. The wholesale accounts were classified by respondent as follows, and in 1947 paid the prices shown: Jobber Basis Account (29 cents). (From 1942 to 1946, this classification was entitled Jobber Franchise. Prior to 1942, it was entitled Wholesale Franchise.

5000 Plugs Basis (32 cents). (Classification eliminated January 1, 1948. Prior to 1946 this classification was entitled Mer- . chandise Franchise account.

Seri:ice Franchise. (Classification eliminated January 1, 1946. The large consumer accounts were classified by respondent as follows; and in 1947 paid the prices shown:

"0" Fleet Basis (29 cents). (Prior to 1946 this classification was entitled C" Fleet Franchise. Fled Basis (32 cents). (Classification eliminated January 1 1948. Prior to 1946 this classification was entitled "B" Fleet Franchise. ) A" Fleet Franchise. (Classification eliminated January 1 1946.

.. ,g______._________, __ ... . Findings 50 F.

Respondent sold its spark plugs of like grade and quality directly to its distributors and until.J anuary 1, 1941, to direct jobbers and inc directly to its Franchise and Basis accounts, an as classified by re spondent, at the prices shown in the following tabulation. Prices Per Plug Charged Certain Direct and Indirect Purchasers IAn prices subject to a 2% cash discount) 1943 1944 1945 1946 1947 Type of Account i 1939 i 1940 I 1941 11942 n $0. 33 $0. $0.IJistributor_ !$0. 31 $0. 31 !$0. 31 i $0. $0. $0. . Less10%-- 279 . 279 I . 279 . 2?7 297 297 297 261 261 D . 3:1 . 2IJlstnbutoL- -- ---------- .31 . 31 I .31 . 2805 2465 2465 Less 10-5%- . 2635 . 2805 2805 2805 2635 . 2G35 Direct Jobber A_u - 31 . 31 - _Wholesale and Commer- cial " C" Franchise Accounts:

Wbolesale Franchise Bi C Fleet Franchise B 325 325 325 Jobber Basis c C Fleet Basis Other Franchise Ac ounts:

Merchandise Fran- t , g8J Basis C::: I 365 365 365 365 365 B Fleet Franchise B - - - i Fleet BasisC Service Franchise H A Fleet Franchise HU---B A From 1939 through 1940 inclusive. Classification eliminated Jan. 1 , 1941. B From 1939 through 194,5 inclusive. Classifcation eliminated Jan. 1 , 1946. c FrDil 1946 through 1D47 inclusive.

D Price reduced to 2Dt Sept. I, 1945.

Each of the aforesaid indirect purchasers of respondent's spark plugs were in competition with other purchasers of respondent' s spark plugs in the areas in which they sold. In such competition each indirect account was injured to the extent that the price it paid was higher than the price paid by its competitors. For example, respondent has granted certain consumer accounts which it classified as "Fleet" accounts the privilege of purchasing its spark plugs at prices which were as low or lower than the prices at which many other indirect accounts, who were attempting to sell to the Fleet accounts, purchased. By reason of the lower prices accorded them respondent' s distributors and to a lesser extent the more favored indirect accounts, were able to resell profitably to such Fleet accounts at the prices established by respondent, and as a result, the indirect wholesale accounts paying the higher prices lost the business of all consumer accounts which were large enough to secure respondent' s approval for a Fleet Basis agreement. This was true even of accounts which had been developed by the indirect wholesale accounts purchasing at one of the less favored pnces.

The Commission concludes, and therefore finds, that the effect of respondent' s said discriminations in price between its disti'ibutors and . .

CHAMPION SPARK PLUG CO.

Findings its indirect purchasers and between certain indirect purchasers has been and may be to substantially injure, destroy, and prevent competition with said distributors and with said indirect purchasers who paid lower prices for respondent' s spark plugs than their competitors. of the amended PAn. 10. It is alleged in Paragraph Seven of Count I complaint herein that respondent has sold its various special brands varyingof spark plugs to certain of its purchasers at prices widely from the prices paid by other purchasers for its regular Champion brand of spark plugs. It appears that the allegation to the effect that such special brand spark plugs were of the same grade and quality as respondent's regular Champion brand of spark plugs is not sustained by the evidence. The allegations in Paragraph Seven of Count I of the amended complaint should, therefore, be dismissed. PAIL 11. Prior to 1840 respondent from time to time entered into contracts with some LUtomobile manufacturers under which the automobile manufacturers agreed to purchase from respondent their entire requirements of spark plugs for a specified term not exceeding one requirements of sparkyear and respondent agreed to supply their plugs. This provision was eliminated from respondent's agreements with automobile manufacturers in 1839.

Prior to 1941 respondent and the operators of bus and trucking called "Fleet ac-lines and other large consumers of spark plugs-socounts -executed a "Commercial Franchise" which set forth the prices at which the Fleet accounts were entitled to purchase their requirements of spark plugs. These documents specified the sources from which the Fleet accounts were to obtain their requirements of spark plugs and provided that in case none of the specified sources were handling Champion spark plugs, such requirements would be supplied by Champion. In separate agreements between respondent and its distributors, the distributors agreed to service franchise accounts in a manner satisfactory to respondent. One of the forms of commercial franchise used during the year 1939 contained thc followmg provlslOn :

In consideration of yonI' purchasing ChamIJion Spark Plugs for your require IDt-'tS , estimated to exceed 5 000 pings per year, to service your motorized cquipllh:nt and upon Y01lT placing an initial order for 200 plugs for single delivery, we extend to yon the following special prices, tenns and conditions on a11 your Spark PIng purchases from this date to December in, 1839. (ConlIll. Ex. (j7- The Commercial Franchises executed by respondent and said Fleet accounts were, in practical eJIed, agreements between them whereby the Fleet accounts were given the right to purchase Champion spark plugs at a special low price in c,onsicler,ltion for their purchasing Champion spark plugs for all their requirements. FjmImAL TRADE COMMISSIO DECISIONS Findings 50 F. T. C.

In dealing with its distributors respondent has used two forms of agreements, one prior to 1941 and the other subsequent to 1940. Both of these forms contained provisions to the effect that there was no express or implied obligation on the part of the distributor t.o handle respondent' s spark plugs exclusively. However, notwithstanding these recitals in t.he contracts, the services to be rendered by the distributors in order to obtain their spark plugs at a special low price, all as specifically set out in the contract, were such that it was not practical for a distributor to handle the spark plugs of a competitor of re- Paragraphspondent. (A description of such services is contained in Nine above. ) The agreement.s, in effect, required the distribut.ors t.o handle respondent's spark plugs exclusively in order to obtain a special low price from respondent.

That respondent int.erpret.ed its agreements wit.h its dist.ribut.ors as s plugs exclusivelyrequiring the distribut.ors to handle respondent' into dis-is shown by t.he fact t.hat respondent. has refused to enter t.ributor agreements with wholesale accounts because such accounts refused to agree t.o handle respondent.'s plugs exclusively, and has canceled and t.hreat.ened t.o cancel agreements with distributors who have taken on, or indicated an intention to take on, a competing line of spark plugs. For example, t.he Scheufler Supply Company, Inc. a wholesale automotive distributor in Great. Bend, Kansas, had been trying for 20 years to get. a Champion distributorship. Scheufler was told by respondent's vice president that respondent "had only one distributing cont.ract and that was an exclusive contract " and that "they were not. giving t.hat. kind oJ a contract unless it was exclusively handled by the distributor and no other plugs handled whatsoe\' er. Scheufler purchased its requirements of Champion spark plugs through a distributor and Scheufler s purchases of Champion spark plugs were greater than all of the other purchases by the distributor through which Scheufler purchased. A salesman of the respondent told a jobber in Xewcastle, Pennsylvania, in 1937 to get his "house in order so that hethat he r the jobbc;r':1 would have fresjJondent' s saleman l could extend us a better price " and it was understood by said jobber t.hat. in order t.o get the better price t.he jobber would have to handle Champion spark plugs on an exclusive basis. Respondent. canceled it.s distribut01s contrad wit.h Paul A\ltomotive, Inc., Lnnsing, .Michigan, in 1948 , after t.hat concern started handling spark plugs manufactured by a competitor of respondent. In May 1948 C. E. Hamlin & Company, .lackson, Michigan, one of respondent' s distributors, sought permission t.o handle Hastings spark plugs and was informed by respondent's district. manager that respondent had canceled its distributor s contract with Paul Automotive CHAMPION SPARK PLUG CO.

Findings Inc., because that concern had taken on the Hasting plugs. Hamlin was thus persuadpd to continue selling Champion spark plugs on an exclusive basis.

The record thus establishes that although respondent's written agreement with its distributors stated that the distributors were not required to handle Champion spark plugs exclusively, the actions of the parties show that their arrangements were in fact exclusive dealing agreements.

Ilespondent is one of the two largest spark plug manufacturers in the United States in volume of plugs sold. Respondent, General Motors Corporation and The Electric Auto-Lite Company manufacture and sell substantially all of the spark plugs purchased by equipment manufacturers, and more than 80 percent of all the spark plugs manufactured and sold in the United States. Approximately one-sixth of respondent's total sales of spark plugs were to equipment manufacturers. In the year 1946, equipment manufacturers purchased approximately 34 000 000 spark plugs. Respondent's sales to such accounts were not less than one-third of that number. The accounts which were parties to the Fleet Franchise exclusive dealing agreements with respondent were operators of large fleets of motor trucks or busses. The COO Fleet Franchise, for example, was entered into only with operators of over 500 vehicles. Respondent's sales to such Fleet accounts were substantial. Approximately two-thirds of respondent' s total sales of spark plugs were made through its distributors. In 1946 respondent sold a total of more than 58 000 000 spark plugs through its distributors other than Atlas Supply Company and Socony Oil Company. The accounts to which respondent sold spark plugs under exclusive dealing agreements, ,which aJei3 represented a substantial portion of the total sales of park plugs in the United States, "ere closed to competitors of respondent. Upon the whole record, the Commission concludes, and therefore finds, that the eilect of the aforesaid exclusive dealing agreements may be to substantially lessen competition and tend to create a monopoly in the line of commerce in which respondent is engaged. PAR. 12. Count II of the amended complaint herein charges respondent with violation of subsection (d) of Section 2 of the Clayton Act as amended. The acts and practices of the respondent which counsel supporting the complaint rely upon to support their contention that this charge of the complaint is sustained, and which the hearing examiner found do sustain the charge, are that from June 19 , 1936 to January 1 , 1941, respondent sold its spark plugs to its customers classified by it as distributors and direct jobbers at the same invoice price; that during this period respondent contracted to pay and did 403-143- 37 FEDERAL TRADE CUMMI88ION DECISIONS Findings 50 F. T. C.

pay to distributors quarterly as special sales service compensation for service furnished by its distributors in connection with the resale of its spark plugs an amount equal to 10 percent of their total purchases and an additional amount of 5 percent on all purchases made by distributors for ,Vholesale Franchise and Commercial C" Franchise accounts as compensation for servicing all franchise accounts; and that respondent did not make available to its direct jobbers compensation for the rendition of like service on proportionally equal terms. llespondent discontinued selling direct to customers classified by it as direct jobbers on.J anuary 1, 1Gil. The payments made by respondent to its distributors as "Special Sales Service Compensation" and Special tVarehouse Compensation" were the payments or discounts off billing price described in the findings herein pursuant to the allegations in Count I of the amended complaint. The Commission is of the opinion that the said payments by respondent to its distributors were in fad reductions in the net prices paid by sa.id distributors and II OJ' the amended complaintthat, under the circumstances, Count should be dismissed.

Count IV of the amended complaint herein charges that the acts and practices of the respondent alleged in Count I to constitute a violation of subsection (a) of Section 2 of the Clayton Act, as amended and the acts and practices alleged in Count III to constitute a violation of Section 3 oj' the Clayton Act, as well as certain oj' respondent' acts and practices in fixing and ma,intaining varying and discriminatory resale prices on its spark plugs, all constitute unfair methods of competition rmd unfair acts and practices in commerce in violation of Section 5 of the Federal Trade Commission Act. Subsequent to the issuance of the amended complaint in this proceeding, the Commission issued a complaint against one of respondent' s principal competitors, in which acts and practices similar to those described in Counts I and III of the amended complaint herein are alleged to constitute violations of the amended Clayton Act only. Consequently, in order to avoid unwarranted unequal treatment of competing respondents, the Commission makes no findings as to that portion of Count IV which charges that the acts and practices of the respondent alleged in Counts I and III also constitute a violation of the :Federal Trade Commission Act.

Subsequent to the completion of the hearings herein, the Federal Tmde Commission Act was amended with respect to certain contntets and agreements which establish minimum or stipulated resale prices (Public Law No. 542, approved .July 14, IGiJ2--the ::IcGuire Act). This amendment had the effect of making legal certain of the acts and practices which it is contended the respondent engaged in, in eon- Order exam-nection with the fixing ami maintaining of resale prices. .For ple, it is contended that respondent's agreements with its distributors which fixed the exact prices at which the distributors were to resell spark plugs were illegal because the Miller-Tydings Act, which permits the fixing of minimum resale prices under certain circumstances does not permit the fixing of exact resale prices. The aforesaid Mc- Guire Act bas the effect of permitting, under certain circumstances contracts or agreements which prescribe stipulated, or exact, prices, as well as minimum prices. Certain of the respondent's acts and practices which may have been illegal at the time they were committed may not, therefore, be illegal under the existing law. Under these ci1' umstances, an order to cease and desist such practices would be inappropriate Furthermore, the amended complaint herein, having been issued prior to the enactment of the aforesaid fifcGuire Act, may not have suffciently informed respondent as to its acts and practices in connection with the fixing and maintaining of resale prices challenged therein.

Upon consideration of all the foregoing and the further fact that the order to cease and desist ' which is being entered herewith pursuant to the ch:ugc in Count I of the amended complaint will be effective in preventing respondent from fixing and maintaining discriminatory prices as between its direct and indirect customers who compete with each other in the resale of respondent's spark plugs, the Commission is of the opinion that Count IV of the amended complaint should be dismissed in its entirety.

CONCLUSJON The acts and practices of the respondent as hereinabove found in Paragraphs 6 , and 9 are in violation of subsection (a) of Section 2 of the Clayton Act, as amemled, and tire acts and pra.ctices of the respondent as hereinabove found in Paragraph 11 IDre in violation 01'- Section 3 of said Clayton Act.

Commissioners Howrey and Carretta not pa.rticipating for the reason that oral argument on the merits was heard prior to their appointment to the Commission OHmm TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the amended complaint of the Commission, answer of the respondent, testimony and other evidence in support of and in opposition to t.he allegations of said amended complaint taken before a hearing examiner of the Commission theretofore duly designated by it rc( omrnended de( ision of the hearing examiner with exceptions Order 50 F. T. C.

thereto, briefs of counsel supporting the complaint, counsel for the respondent, and counsel for Kaiser-Frazer Corporation, Hudson Motor Car Company, Nash-Kelvinator Corporation, Packard Motor Car Company, and vVillys-Overland Motors, Inc., as amici curiae, and oral argument of opposing counsel; and the Commission having issued its order disposing of the exceptions to the recommended decision and having made its findings as to the facts and its conclusion that respondent has violated subsection (a) of Section 2 of the Clayton Act, as amended, and Section 3 of said Clayton Act: It is ordered That respondent, Champion Spark Plug Company, a corporation, and its offcers, representatives, agents, and employees directly or through any corporate or other device, in or in connection with the sale, for replacement purposes, of spark plugs in commerce as "commerce" is defined in the Clayton Act, do forthwith cease and desist from:

(a) Discriminating, directly or indirectly, in the price of said spark plugs of like grade and quality:

1. By selling to any direct purchaser at net prices higher than the net prices charged any other direct purchaser who in fact competes in the resale and distribution of said spark plugs with the purchaser paying the higher price.

2. By selling to any indirect purchaser at net prices higher than the net prices charged any other direct or indirect pun haser who in fact competes in the resale and distribution of said spark plugs with the purchaser paying the higher price.

(b) Selling or making any contract or agreement for sale of spark plugs on the condition, agreement, or understanding that the purchaser shall not use or deal in or sell the products of a competitor or competitors of the respondent.

(c) Enforcing in any manner or continuing in operation or effect any condition, agreement, or understanding, in or in connection with any existing contract or agreement for sale of spark plugs, which condition, agreement, or understanding is to the efiect that the purchaser shall not use or deaJ in or sell the products of a competitor or competitors of the respondent.

(d) Granting any rebate or fixing any price to any purchaser of spark plugs on the condition, agreement, or understanding that such purchaser shall not use or deal in the products of a competitor or competitors of the respondent.

It is further ordered That the allegations of Counts II, IV, and Paragraphs Five and Seven of Count I of the amended complaint herein be, and they hereby are, dismissed.

CHAMPION SPARK PLUG CO.

Order It is further ordend That the respondent, Champion Spark Plug Company, 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. Commissioners I-owrey and Carretta not participating for the reason that oral argument on the merits was heard prior to their appointment to the Commission.

Syllabus 50 F. T. C.