Sullivan Rubber Corp

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Consent Settlement 50 F. T. C. Held, 'l' ha t such acts and practices, under the circumstances set forth, were in violation of the provisions of subsec. (a) of See. 2 of the Clayton Act, as amended by the Robinson-Patman Act.

Before lJr. TV illiam L. Pack hearing examiner. lJ r. James I. Rooney and lJ r. James S. K elaher for the Commission. D. for respondent. Pheiffer eX TV eaver of Washington, Pursuant to the provisions of an Act of Congress entitled "An Act to supplement existing laws against unlawful restraints and monopo- Jies, and for other purposes " approved October 15, 1914 (Clayton, 1936Act), as amended by an Act of Congress approved June 19 (Hobin son-Patman Act), the Federal Trade Commission, on the 9th day of September, 1952, issued and subsequently served its complaint Oil the respondent named in the caption herein, charging it with violation of subsection (a) of Section 2 of the Clayton Act, as amended. The respondent, desiring that this proceeding be disposed of by the Com- the consent settlement procedure provided in Rule V of mi,'sion's Rules of Practice, solely for the purposes of this proceeding. any review thereof, and the enforcement of the order consented to aml conditioned upon the Commission's acceptance of the consent answer to said com-settlement hereinafter set forth, and in lieu of plaint heretofore fied and which, upon acceptance by the Commissioll of this settlement, is to be withdrawn from the record, hereby:

1. Admits all the jurisdictional allegations set forth in the complaint.

2. Consents that the Conunission may entcr the matters hereinafter set forth as its findings as to the facts, conclusion and order to cease in consenting toand desist. It is understood that the respondent, the Conunission's entry of said findings as to the facts, conclusion and order to cease and desist, specifically refrains from admitting or denying that it has engaged in any of the acts or practices stated therein to be in violation of law or that such acts and practices, if eng:tgc(l in, would be in violation of law.

3. Agl'ees that this consent settlement may be set aside in whole or in IJ:l't under the conditions and in the manner provided in paragraph (1' of Rule V of the Commission's Rules of Practice. 1 Tile Commission's "Notice" announcing' and promulgating the consent settlement as published herewith, fonows:

The consent settlement tendered by the parties in this proceeding, a copy of which is served herewith, was accepted by the Commission on July 29, 1953, and ordered entered of record as the Commission's findings as to the facts, conclusion, and order in disposition of this proceeding.

The time for filing report of compliance pursuant to the aforesaid order runs. from the date of service hereof.

Commissioner Howrey not participating and Commissioner Mason dissenting. The admitted jurisdictional facts, the statement of the acts and practices which the Commission had reason to believe were unlawful the conclusion based thereon, and the order to cease and desist, all of which respondent consents may be entered in final disposition of this proceeding, are as follows:

CONrMISSloN S FINDINGS AS TO TIn FACTS

PARAGRAPH 1. Respondent O'Sullivan Rubber Corporation is a Virginia corporation with its principal office and place of business located at 'Winchester, Virginia. Said respondent also does business under the trade name and style " Sullivan Rubber Corporation Laing, Harrar and Chamberlain Division " with principal place of business located at 1:35 Hudson Street, New York, New York.

PAR. 2. Hespondent is now and has been for many years last past principally engaged in the manufacture, sale and distribution of a line of rubber and composition heels and soles and other supplies and materials used in the shoe repair industry, and hereinafter referred to as shoe products. Said respondent, through its Laing, Harrar and Chamberlain Division, is also engaged in the wholesale distribution of machinery, equipment and supplies used in the repair and maintenance of shoes and the operation of shoe repair shops, and hereinafter referred to as shoe findings.

Said respondent sells said shoe products to shoe Immufaeturers and sells both shoe products and shoe findings nationally to wholesalers of shoe repair materials, known generally as shoe finders. Said shoe finders resell respondent's shoe products and shoe findings to shoe repairmen, retail shoe stores, and to retailers of shoe repair and maintenance materials.

PAR. 3. Hespondent, causes said shoe products, when sold, to be transported from the place of manufacture at IVinchester, Virginia and causes said shoe findings, when sold, to be transported from the point of origin in New York, New York, to purchasers thereof located in various other States of the United States and in the District of Columbia. There is and has been at all times herein mentioned a continuous current of trade and commerce in said products across State lines between respondent's factory and the purchasers thereof. Said products are sold and distributed for use, consumption, and resale within the various States of the United States and the District of Columbia.

PAR. 4. In the course and conduct of its business as aforesaid, respondent is now and during the times herein mentioned has been in substantial competition with other corporations and firms engaged in the business of manufacturing or selling shl)e products and shoe findings in commerce between and among the varIOUS States of the United States and in the District of Columbia. as PAR. 5. Respondent, in the course and conduct of its business, , dis-hereinbefore set forth, has been since July 1, 1949, and now is criminating in price between different purchasers of its shoe products and shoe findings of like grade and quality by selling said products to e of its shoe finder customers at higher prices than to other of its shoe finder customers.

PAR. 6. The discriminations in price referred to in paragraph 5 hereof have been and now are effected pursuant to respondent' cumulative volume discount plan whereby it grants discounts, rebates or allowances from its list prices on shoe findings and from its net selling prices on shoe products (list prices less regular trade discount of 28 percent) based upon the customer's cumulative total of purchases of shoe products and shoe findings during one year. Said cumulative volume discount plan has the net effect, either directly or indirectly, of reducing prices charged favored customers to a substantially lowcr amount than respondent charges other of its customers for products of Jike grade and quality.

Effective July 1, 1949, and continuing thereafter to April 1950 respondent, pursuant to its cumulative volume discount plan, granted discounts, rebates or allowances based upon the customer's cumulative total of purchases of shoe products and shoe findings combined, in accordance with the following schedule:

500 but less than $10,000__ Effective in April 1950, respondent modified the foregoing plan by adding thereto extra discounts, rebates or allowances for larger volume purchases in accordance with the following schedule; Cumulative annual purchases of shoe products: Percent $35,000 but less than $45 000-- $55,000 but less than $65 000--------------- $75 000 but less than $85 000__----__---- $95 000 but less than $105 000______- Purchasers qualifying for the foregoing extra discounts, rebates or allowances on shoe products were automatically granted a discount rebate, or allowance or 5 percent on their purchases of shoe findings. Effective July 1, 1951, respondent again revised its cumulative volume discount plan and since said date has granted discounts, rebates, 01' allowances in accordance with the following schedule: Cumulative annual purchases on shoe products and shoe findings up to $50,000. On shoe findings the discount, rebate, or allowance is half that of the shoe prodnets rate as determined by the combined volume: Shoe products percent $12 500 but less than $15 000__n__n___--_nn_n-- n_- 3% $35 000 but less than $40 000nnn________n_n_n________n_____- 8 $40 000 but less than $45,000--_-__-_n _nn_n_ After combined cumulative annual purchases of shoe products and shoe findings reach $50,000, the discount. rebate, or allowance on shoe findings remains at 5 percent and discounts, rebates or allowances are granted on the cumulative annual purchases of shoe products figured separately, in accordance with the following schedule:

P CTcen t $ 60 000 but less than $ 65 000n--__--___n_--_n_nn__n-_____-- 11 $ 65 000 but less than $ 70 000---n_--___n--n_--_nn_n___--__- 1114 Many of the favored customers receiving the benefits of the aforesaid discriminations in price are competitively engag,ed in the resale of said products with other shoe findings who purchase shoe products and shoe findings from respondent and who are not favored, within thegagedvarious trading areasinin whichbusiness.said favoted customers are en- PAR. 7. The effect of such discriminations in price stated herein may be substantially to lessen competition or tend to create a monopoly in the lines of commerce in which respondent and its customers are respectively engaged; or to injure, destroy or prevent competition with respondent or with customers thereof who receive the benefits of such discriminations.

COMMISSION !; CONCLUSION

The foregoing acts and practices of said respondent as set forth herein are in violation of the provisions of subsection (a) of Section 2 of the Clayton Act as amended by the Robinson-Patman Act, approved June 19, 1936 (U. S. Title 15, Sec. 13).

ORDER TO CEASE AND DESIST

It is O1'deTed That respondent O'Sullivan Rubber Corporation, a di-corporation, its officers, agents, representatives and employees, rectly or through any corporate or other device, in or in connection with the offering for sale, sale or distribution of rubber and composition heels and soles and other supplies and materials used in the shoe repair industry and other products known commercially as findings in commerce, as "commerce" is defined in the aforesaid Clayton Act do forthwith cease and desist from discriminating in price, directly or indirectly, between different purchasers of said products:

(1) By selling such products of like grade and quality to any purchaser at prices lower than those granted other purchasers who in fact compete with the favored purchaser in the resale or distribution of such products;

(2) By selling, in competition with others, such products of like grade and quality to any purchaser at prices lower than to any other purchasers: Provided, however, that the foregoing shall not be construed to preclude respondent from defending absolutely any alleged violation of this provision of the Order by showing that none of the products sold at lower prices were resold by the purchaser at the same level of distribution as were the products sold by respondent at higher pnces.

For the purpose of comparison, the term "price" as used in this order takes into account discounts, rebates or allowances, volume or otherwise, and other terms and conditions of sale.

It is further ordered That respondent shall, within sixty (60) days after the service upon it of this order, fie with the Commission a 1'eport in writing setting forth in detail the manner and form in which it has complied with this order.

SULLIVAN RUBBER CORPORATION

(Sgd) By H. DOUGLAS WEAVER (Title) Secretary.

(Sgd) H. DOUGLAS WEAVER

Oounsel for Respondent.

PHEIFFER & WEAVER.

Date: March 4, 1953.

The foregoing consent settlement is hereby accepted by the Federal Trade Commission and ordered entered of record this 29th day July 1953.

Commissioner Howrey not participating and Commissioner Mason dissenting.